Exhibit 99.2
NORTEL NETWORKS CORPORATION
550,000,000 COMMON SHARES
UNDERWRITING AGREEMENT
June 6, 2002
Credit Suisse First Boston Corporation
RBC Dominion Securities Inc.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Nortel Networks Corporation, a Canadian corporation
(the "COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several Underwriters named in Schedule A hereto (the
"UNDERWRITERS") 550,000,000 of its common shares (the "COMMON SHARES") (the
"FIRM SECURITIES") and, at the election of Credit Suisse First Boston
Corporation ("CSFBC") and RBC Dominion Securities Inc. ("RBC," and together with
CSFBC, the "REPRESENTATIVES"), sell to the Underwriters an aggregate of up to an
additional 82,500,000 Common Shares (the "OPTIONAL SECURITIES") (the Firm
Securities and the Optional Securities which the Underwriters may elect to
purchase pursuant to Section 3 hereof are herein collectively called the
"OFFERED SECURITIES"). The Underwriters hereby severally agree to purchase from
the Company in the respective percentages set forth in Schedule A hereto, upon
and subject to the terms and conditions contained herein on the First Closing
Date (as defined below), the Firm Securities at a price per Common Share of
U.S.$1.41 for each U.S. Offered Security (as defined in Section 3 below) and
Cdn.$2.17 for each Canadian Offered Security (as defined in Section 3 below). In
consideration of the Underwriters' purchase of the Firm Securities provided for
herein and in consideration of the services to be rendered by the Underwriters
in connection therewith, the Company agrees to pay to the Underwriters, on the
First Closing Date a fee (the "UNDERWRITING FEE"), equal to 4% of the aggregate
purchase price of the Firm Securities, which Underwriting Fee shall be payable
in U.S. dollars in respect of the U.S. Offered Securities and in Canadian
dollars in respect of the Canadian Offered Securities, as set forth in Section 3
below.
The Company hereby agrees with the several Underwriters as follows:
2. (A) Representations, Warranties and Covenants of the Company. The
Company represents, warrants and covenants to, and agrees with, the Underwriters
that:
(a) A registration statement on Form S-3 (File number
333-88164) with respect to common shares, preferred shares, debt
securities, warrants to purchase equity securities, warrants to
purchase debt securities, share purchase contracts and share purchase
or equity units, has been prepared by the Company in conformity in
all material respects with the requirements of the United States
Securities Act of 1933 (the "ACT"), and the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"SEC") thereunder, has been filed with the SEC 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) "U.S. PROSPECTUS" means the Basic Prospectus,
together with any amendments or supplements thereto, including without
limitation, any preliminary prospectus supplement and any prospectus
supplement (the "PROSPECTUS SUPPLEMENT") (including in each case all
documents incorporated therein by reference) specifically relating to
the Offered Securities, as filed with the SEC pursuant to Rule 424(b)
of the Rules and Regulations. The SEC has not issued any order
preventing or suspending the use of the U.S. Prospectus or the
distribution of securities thereunder, and, to the Company's knowledge,
no proceedings for such purpose are pending before, or threatened by,
the SEC.
(b) The Company has prepared and filed with the securities
regulatory authorities (collectively, the "CANADIAN SECURITIES
REGULATORS") in each of the provinces and territories of Canada
(collectively, the "QUALIFYING PROVINCES") in accordance with National
Instrument 44-101 - Short Form Prospectus Distributions (the "POP
PROCEDURES") and National Instrument 44-102 - Shelf Distributions (the
"SHELF PROCEDURES"), a preliminary short form base shelf prospectus
dated May 13, 2002 relating to common shares, preferred shares, debt
securities, warrants to purchase equity securities, warrants to
purchase debt securities, share purchase contracts and share purchase
or equity units (in the English and French languages, as applicable,
the "CANADIAN PRELIMINARY PROSPECTUS") and has obtained a preliminary
decision document (the "DECISION DOCUMENT") dated May 14, 2002 from the
Ontario Securities Commission (the "OSC"), in its capacity as principal
regulator pursuant to the mutual reliance review system procedures
provided for under National Policy 43-201 - Mutual Reliance Review
System for Prospectuses and Annual Information Forms of the Canadian
Securities Regulators (the "MRRS").
(c) The Company has prepared and filed in the Qualifying
Provinces, in accordance with the POP Procedures and the Shelf
Procedures, a final short form base shelf prospectus dated May 29, 2002
relating to common shares, preferred shares, debt securities, warrants
to purchase equity securities, warrants to purchase debt securities,
share purchase contracts and share purchase or equity units (in the
English and French languages, as applicable, the "CANADIAN FINAL
PROSPECTUS") and has obtained a final Decision Document dated May 30,
2002 from the OSC, in its capacity as principal regulator pursuant to
the MRRS on behalf of the Canadian Securities Regulators.
(d) The Company has also prepared and delivered to the
Underwriters as contemplated by Section 2(r) hereof a preliminary
prospectus supplement dated June 3, 2002 to the Canadian Final
Prospectus relating to the Offered Securities (the "CANADIAN
PRELIMINARY Supplement") in both the English and French languages. The
Company will prepare and file in the Qualifying Provinces, in
accordance with the Shelf Procedures, promptly, and in any event
within the earlier of: (A) the date the final prospectus supplement to
the Canadian Final Prospectus relating to the Offered Securities (the
"CANADIAN FINAL SUPPLEMENT") is first sent or delivered to a purchaser;
and (B) two Business Days after the execution and delivery of this
Agreement, the Canadian Final Supplement, in both the English and
French languages, setting forth the Shelf Information (defined below).
The information, if any, included in the Canadian Final Supplement that
is omitted from the Canadian Final Prospectus but that is deemed under
the Shelf Procedures to be incorporated by reference into the Canadian
Final Prospectus as of the date of the Canadian Final Supplement is
referred to as the "SHELF INFORMATION". "CANADIAN PROSPECTUS" means the
Canadian Final Prospectus, together with the Canadian Final Supplement,
including the documents incorporated by reference therein, provided
that prior to the filing of the Canadian Final Supplement in the
Qualifying Provinces, "Canadian Prospectus" shall mean the Canadian
Final Prospectus, together with the Canadian Preliminary Supplement,
including the documents incorporated by reference therein. The U.S.
Prospectus and the Canadian Prospectus are referred to collectively
herein as the "PROSPECTUS". None of the Canadian Securities Regulators
has issued any order preventing or suspending the use of the Canadian
Prospectus or the distribution of securities thereunder and, to the
Company's knowledge, no proceedings for such purpose are pending
before, or threatened by, any Canadian Securities Regulator.
(e) The Registration Statement, as amended, as of the time it
became effective and as of the date of this Agreement and the U.S.
Prospectus complied and, in the case of any amendment or supplement to
any such document, or any material incorporated by reference in any
such document filed with the SEC after the date as of which this
representation is being made, will comply, in all material respects, at
all times during the period specified in Section 5(d) hereof and on the
Closing Date, with the provisions of the Act, the Rules and
Regulations, the United States Securities
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Exchange Act of 1934 (the "EXCHANGE ACT") and the rules and regulations
of the SEC thereunder. The Registration Statement, as of the time it
became effective and as of the date of this Agreement, did not and will
not at any time during the period specified in Section 5(d) hereof and
on the Closing Date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein not misleading;
and the U.S. Prospectus, as amended or supplemented as of the date of
this Agreement and at the time the Registration Statement became
effective, did not and will not, at any time during the period
specified in Section 5(d) and on the Closing Date, 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.
Notwithstanding the foregoing, the Company makes no representation or
warranty as to: (i) that part of the Registration Statement that
constitutes the Statements of Eligibility and Qualifications under the
Trust Indenture Act (Form T-1) of the Trustees; 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 Company through the Representatives by or on behalf of
any Underwriter specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(b) hereof.
(f) The Company has been duly incorporated under the laws of
Canada and is not discontinued and has not been dissolved; the Company
has corporate power and authority to conduct its business as described
in the Prospectus and to enter into and perform its obligations under
this Agreement.
(g) The execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company, and
this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
(h) The issuance and sale of the Offered Securities have been
duly authorized by the Company and, when the Offered Securities have
been delivered and paid for pursuant to this Agreement on each Closing
Date (as defined below), such Offered Securities will have been,
validly issued, fully paid and nonassessable; and the shareholders of
the Company have no preemptive rights with respect to the Offered
Securities.
(i) The issuance and sale by the Company of the Offered
Securities and the compliance by the Company with all the provisions of
this Agreement and the consummation by the Company of the other
transactions contemplated by this Agreement, do not require the
consent, approval, authorization, order or qualification of, or filing
or registration with, any governmental body or regulatory authority in
the United States or Canada, except for (i) any consents, approvals or
notifications under Canadian Securities Laws (which consents or
approvals the Company has applied for or obtained); (ii) the filing of
the Canadian Final Supplement with the Canadian Securities Regulators
and the Prospectus with the SEC; (iii) required approvals, notices and
filings to or with the Toronto Stock Exchange (the "TSX") and the New
York Stock Exchange (the "NYSE"); and (iv) any qualifications required
under blue sky or state securities laws.
(j) The issuance and sale of the Offered Securities and the
performance by the Company of all of its obligations under this
Agreement will not conflict with or result in a breach or violation of
(A) the constating documents or by-laws by the Company or (B) any of
the agreements to which the Company is a party filed as an exhibit to,
or incorporated by reference into, the Registration Statement or the
Prospectus, other than any conflict, breach or violation which would
individually or in the aggregate not have a material adverse effect on
the financial condition, business, properties or results of operations
of the Company and its subsidiaries taken as a whole ("MATERIAL ADVERSE
EFFECT").
(k) Except as disclosed in the Prospectus, to the knowledge of
the Company, there is no litigation, arbitration or legal proceeding
involving the Company or any of its subsidiaries that, if determined
adversely to the Company, would individually or in the aggregate have a
Material Adverse Effect, and no such litigation, arbitration or legal
proceeding is pending or threatened.
(l) Except as disclosed in the Prospectus, since the date of
the latest unaudited consolidated financial statements included or
incorporated by reference in the Prospectus there has been no change,
nor any development or event involving a prospective change, which
would result in
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a Material Adverse Effect and, except as disclosed or contemplated by
the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(m) The historical consolidated financial statements
(including the related notes and supporting schedules) of the Company
contained or incorporated by reference in the Registration Statement
and the Prospectus comply in all material respects with the applicable
requirements under the Act, the Exchange Act (except that certain
supporting schedules are omitted) and Canadian Securities Laws; such
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada and the United
States noted therein and fairly present the financial position of the
Company at the respective dates indicated and the results of its
operations and its cash flows for the respective periods indicated.
(n) The Company is a "reporting issuer" (or equivalent
thereof) in each Qualifying Province where such concept exists not in
default in any material respect of any requirement under Canadian
Securities Laws.
(o) The authorized capital of the Company is as set forth in
the Prospectus under "Description of Share Capital". No person has any
agreement or option, or right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option, for the
purchase from the Company of any unissued shares, securities or
warrants of the Company except as otherwise described in the Prospectus
and other than: (i) issuances of stock options or issuances of Common
Shares upon exercise of stock options pursuant to compensation
arrangements existing on the date hereof, (ii) issuances required in
connection with earnout payments for acquisitions prior to the date
hereof or upon the exercise of any outstanding securities or rights
convertible, exchangeable or exercisable for Common Shares, or (iii)
the Company's sale of its purchase contracts, as evidenced by equity
units, pursuant to an underwriting agreement dated the same date as
this Agreement, and the issuance of Common Shares upon settlement of
such purchase contracts.
(p) The Company is eligible to distribute securities pursuant
to the POP Procedures in each of the Qualifying Provinces.
(q) At the respective times of filing (or, in the case where a
Canadian Preliminary Supplement has been delivered to the Underwriters
by the Company, the date of such delivery) and at all times subsequent
to the filing thereof during the period of distribution or distribution
to the public, as the case may be, of the Offered Securities in Canada,
the Canadian Prospectus (and any amendment thereto) will comply in all
material respects with the requirements of all applicable securities
laws in each of the Qualifying Provinces and the respective regulations
made thereunder, together with applicable published national and local
policy statements, rules, notices, blanket orders and blanket rulings
of the Canadian Securities Regulators (collectively, the "CANADIAN
SECURITIES LAWS"), and the Canadian Prospectus will provide full, true
and plain disclosure of all material facts relating to the Company and
to the Offered Securities as required by Canadian Securities Laws, and
the Canadian Prospectus will not contain any misrepresentation (as
defined in Canadian Securities Laws) (provided that the foregoing
representation and warranty of the Company shall not apply, in each
case, to the written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use
in connection with the preparation of the foregoing documents).
(r) The delivery by the Company to the Underwriters of
commercial copies of the Prospectus shall constitute the consent of the
Company to use such documents in connection with the distribution of
the Offered Securities pursuant to the terms of this Agreement.
(s) The Company has not filed any confidential material change
reports under Canadian Securities Laws since May 29, 2002.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the
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terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, the number of Firm Securities set forth opposite the names of
the several Underwriters in Schedule A at a purchase price equal to the
aggregate of (i) the number of Firm Securities to be sold in Canada (each a
"CANADIAN OFFERED SECURITY" and, collectively, the "CANADIAN OFFERED
SECURITIES") multiplied by Cdn.$2.17 (the "CANADIAN PURCHASE PRICE") and (ii)
the number of Firm Securities to be sold outside of Canada (each a "U.S. OFFERED
SECURITY" and, collectively, the "U.S. OFFERED SECURITIES") multiplied by
U.S.$1.41 (the "U.S. PURCHASE PRICE"). The Canadian Purchase Price will be
payable to the Company in Canadian dollars and the U.S. Purchase Price will be
payable to the Company in U.S. dollars. In consideration of the Underwriters'
purchase of the Firm Securities, the Company agrees to pay to the Underwriters
on the First Closing Date a fee (i) with respect to the Canadian Offered
Securities, equal to 4% of the Canadian Purchase Price, which fee shall be
payable to the Underwriters in Canadian dollars and (ii) with respect to the
U.S. Offered Securities, equal to 4% of the U.S. Purchase Price, which fee shall
be payable to the Underwriters in U.S. dollars. The Underwriters shall advise
the Company of the number of U.S. Offered Securities and Canadian Offered
Securities not later than 5:00 p.m. on the business day following the date
hereof, provided, however, that the aggregate number of the U.S. Offered
Securities and the Canadian Offered Securities shall equal the number of Firm
Securities.
The Company will deliver against payment of the purchase price the Firm
Securities in the form of one or more permanent global securities (the "FIRM
GLOBAL SECURITIES") deposited with The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee for DTC. Interests in any Firm
Global Securities will be held only in book-entry form through DTC, except in
the limited circumstances described in the Prospectus. Payment for the Firm
Securities shall be made by the Representatives in Federal (same day) funds by
official check or checks or wire transfer to an account designated by the
Company at either of Citibank N.A. or Royal Bank of Canada (New York branch)
drawn to the order of Nortel Networks Corporation at the office of Cleary,
Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 8:30
A.M. (New York time), on June 12, 2002, or at such other time not later than
seven full Business Days ("BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in the State of New York or
chartered banks in the Province of Ontario are authorized or required by law or
executive order to close) thereafter as the Representatives and the Company
determine, such time being herein referred to as the "FIRST CLOSING DATE",
against delivery to DTC of the Firm Global Securities representing all of the
Firm Securities. The Firm Global Securities will be made available for checking
at the above office of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at least 24 hours
prior to the First Closing Date.
In addition, upon written notice from the Representatives given to the
Company from time to time not more than 30 days subsequent to the date of this
Agreement, the Underwriters may purchase all or less than all of the Optional
Securities at the same purchase price per Optional Security as they pay for each
Firm Security. The number of Optional Securities to be purchased in United
States dollars (the "U.S. OPTIONAL SECURITIES") will be in the same proportion
as the U.S. Offered Securities, in respect of the First Closing Date, are to the
total number of Offered Securities and the Firm Securities to be purchased in
Canadian dollars (the "CANADIAN OPTIONAL SECURITIES") will be in the same
proportion as the Canadian Offered Securities, in respect of the First Closing
Date, are to the total number of Firm Securities. In consideration of the
Underwriters' purchase of the Optional Securities, the Company agrees to pay to
the Underwriters on each Option Closing Date (as defined below) (i) with respect
to each Canadian Optional Security, purchased on that date, a fee equal to 4% of
the purchase price therefor, which fee shall be payable to the Underwriters in
Canadian dollars and (ii) with respect to each U.S. Optional Security purchased
on that date, a fee equal to 4% of the purchase price therefor, which fee shall
be payable to the Underwriters in U.S. dollars. The Company agrees to sell to
the Underwriters the number of Optional Securities specified in such notice and
the Underwriters agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased from the Company by the
Underwriters on a pro rata basis according to the number of Firm Securities
purchased by each Underwriter. No Optional Securities shall be sold or delivered
unless the Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion thereof
may be exercised from time to time and to the extent not previously exercised
may be surrendered and terminated at any time upon notice by the Representatives
to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as the "OPTION CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Option
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Closing Date, if any, being sometimes referred to as a "CLOSING DATE"), shall be
determined by the Representatives but shall not be later than seven full
business days after written notice of election to purchase Optional Securities
is given. The Company will deliver against payment of the purchase price for the
Optional Securities the Optional Securities being purchased on each Option
Closing Date in the form of one or more permanent global securities in
definitive form (each, an "OPTIONAL GLOBAL SECURITY") deposited with DTC and
registered in the name of Cede & Co., as nominee for DTC. Payment for such
Optional Securities shall be made by the Representatives in Federal (same day)
funds by official certified check or checks or wire transfer to an account
designated by the Company at either of Citibank or Royal Bank of Canada, New
York branch drawn to the order of Nortel Networks Corporation at the office of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
against delivery to DTC of the Optional Global Securities representing all of
the Optional Securities being purchased on such Option Closing Date.
The Company shall not be obligated to deliver any Offered Securities
except upon payment for all Offered Securities to be purchased pursuant to this
Agreement as herein provided.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Offered Securities for sale to the public as set forth in,
and only through, the Prospectus. The Offered Securities will be offered for
sale in Canada at Cdn.$2.17 per Offered Security and in the United States and
elsewhere at U.S.$1.41 per Offered Security.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) The Company (i) shall furnish promptly to the
Representatives and to counsel for the Underwriters 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 Offered Securities, and a copy of the U.S.
Prospectus filed with the SEC and (ii) shall advise the Representatives
promptly of any proposal to amend or supplement the Registration
Statement or the U.S. Prospectus and will not effect such amendment or
supplementation without the Representatives' consent, which shall not
be unreasonably withheld.
(b) The Company shall deliver promptly to the Representatives,
without charge, such number of the following documents as the
Representatives may reasonably request: (i) conformed copies of the
Registration Statement (excluding exhibits thereto); (ii) the
Prospectus; and (iii) any documents incorporated by reference in the
Prospectus; and the Company authorizes the Underwriters and all dealers
to whom any Offered Securities may be offered or sold by the
Underwriters to use such documents during the period referred to in
Section 5(d) in connection with the sale of the Offered Securities in
accordance with the applicable provisions of the Act, the Rules and
Regulations and Canadian Securities Laws; provided that the Company
shall be deemed to have complied with the requirements of clause (iii)
of this paragraph with respect to any document filed electronically
with the SEC or a Canadian Securities Regulator.
(c) Promptly following the execution and delivery of this
Agreement (and concurrently with the execution of this Agreement in
respect of those opinions contemplated in (v) and (vi) below to be
dated the date of the Canadian Preliminary Supplement), the Company
shall deliver to each of the Underwriters:
(i) a copy of the Canadian Final Supplement in the
English language signed and certified;
(ii) a copy of the Canadian Final Supplement in the
French language signed and certified;
(iii) a copy of the certificates of authentication in
respect of the Canadian Final Prospectus and the Canadian
Final Supplement signed and certified as required by the
Canadian Securities Laws;
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(iv) a copy of any other document required to be
filed by the Company under the laws of each of the Qualifying
Provinces in compliance with the Canadian Securities Laws in
connection with the offering of the Offered Securities;
(v) legal opinions dated the date of each of the
Canadian Preliminary Supplement and the Canadian Final
Supplement, in form and substance satisfactory to the
Representatives, addressed to the Underwriters, the Company
and counsel to the Underwriters from counsel to the Company to
the effect that the French language version of the Canadian
Prospectus, except for the consolidated financial statements
and notes to such statements and the related auditors' report
on such statements and any financial information in the
Canadian Prospectus, including any such information contained
in any document incorporated by reference therein and certain
other information (collectively, the "FINANCIAL INFORMATION")
and any exhibit to any document incorporated by reference
therein, as to which no opinion need be expressed by such
counsel, is, in all material respects, a complete and accurate
translation of the English language version thereof, and that
the English and French language versions are not susceptible
of any materially different interpretation with respect to any
material matter contained therein; and
(vi) opinions dated the date of each of the Canadian
Preliminary Supplement and the Canadian Final Supplement, in
form and substance satisfactory to the Representatives,
addressed to the Underwriters, the Company and their
respective counsel from the auditors of the Company to the
effect that the French language version of the Financial
Information contained in the Canadian Prospectus is, in all
material respects, a complete and proper translation of the
English language version thereof.
(d) During such period following the date of this Agreement
(A) in the case of the offering of the Offered Securities in the United
States, if in the opinion of counsel for the Underwriters, a prospectus
is required by law to be delivered, and (B) in the case of the offering
of the Offered Securities in the Qualifying Provinces, until the
completion of distribution or distribution to the public, as the case
may be; the Company shall furnish copies of: (i) any amendment to the
Registration Statement; (ii) the Prospectus or any amendment or
supplement thereto; or (iii) any document incorporated by reference in
any of the foregoing or any amendment or supplement to any such
incorporated document to the Representatives and to counsel for the
Underwriters prior to filing any of such items with the SEC or a
Canadian Securities Regulator and shall not file any such item to which
the Representatives shall reasonably object; provided that despite any
such objection but after consultation with the Representatives,
including the furnishing to the Representatives of drafts thereof, the
Company may file any amendment, supplement, report or statement which
in the opinion of its counsel it is required to file pursuant to the
Act, the Exchange Act or Canadian Securities Laws.
(e) The Company shall advise the Representatives promptly: (i)
when any post-effective amendment to the Registration Statement related
to or covering the Offered Securities becomes effective; (ii) of any
request by the SEC or a Canadian Securities Regulator for an amendment
or supplement (insofar as the amendment or supplement relates to or
covers the Offered 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 Offered
Securities ); (iii) the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
issuance of any order by the SEC or a Canadian Securities Regulator
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 (insofar as it relates to the Offered
Securities); and (iv) of receipt by the Company of any notification
with respect to the suspension of the qualification of the Offered
Securities for sale in any jurisdiction or the initiation of any
proceeding for the purpose. If at any time during the period referred
to in Section 5(d) when the Prospectus related to the Offered
Securities is required to be delivered under the Act or under Canadian
Securities Laws, 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,
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the Exchange Act or the Canadian Securities Laws, the Company shall
promptly prepare and file with the SEC or a Canadian Securities
Regulator, as the case may be, subject to Section 5(d), an amendment or
supplement that will correct such statement or omission or an amendment
or supplement which will effect such compliance.
(f) If, during the period referred to in Section 5(d), the SEC
or a Canadian Securities Regulator shall issue a stop order suspending
the effectiveness of the Registration Statement or retracting or
suspending the use of the Prospectus, the Company shall make every
commercially reasonable effort to obtain the lifting of that order at
the earliest possible time.
(g) As soon as practicable, or in accordance with Rule 158 of
the Rules and Regulations, the Company shall make generally available
to its security holders and to the Representatives an earnings
statement (which need not be audited) of the Company and its
consolidated subsidiaries, that will satisfy the provisions of Section
11(a) of the Act and Rule 158 thereunder.
(h) The Company will pay all expenses incidental to the
performance of its obligations under this Agreement including (i)
expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Offered Securities, the printing
(or reproduction) of this Agreement, the Offered Securities, the
Prospectus and amendments and supplements thereto, and any other
document relating to the issuance, offer, sale and delivery of the
Offered Securities; (ii) the cost of qualifying the Offered Securities
for listing on the NYSE and the TSX and any expenses incidental
thereto, (iii) for any expenses (including reasonable fees and
disbursements of counsel) incurred in connection with qualification of
the Offered Securities for sale under the laws of such jurisdictions as
the Representatives designate and the printing of memoranda relating
thereto, (iv) for expenses incurred in distributing any Registration
Statement, Basic Prospectus and Prospectus (including any amendments
and supplements thereto) to the Underwriters. The Company will
reimburse the Underwriters for all reasonable travel expenses of the
Underwriters and the Company's officers and employees and any other
reasonable expenses of the Underwriters and the Company in connection
with attending or hosting meetings with prospective Underwriters of the
Offered Securities. For the avoidance of doubt, the Underwriters shall
pay for the fees and expenses of their counsel in connection with the
performance of their respective obligations under this Agreement.
(i) In connection with the offering, until the Representatives
shall have notified the Company and the other Underwriters of the
completion of the sale of the Offered Securities, the Company will not
take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, stabilization or manipulation
of the price of any security of the Company or to facilitate the sale
of the Offered Securities.
(j) In connection with the offering, until the Representatives
shall have notified the Company and the other Underwriters of the
completion of the sale of the Offered Securities, neither the Company
nor any of its affiliates has or will, either alone or with one or more
other persons, bid for or purchase for any account in which it or any
of its affiliates has a beneficial interest any Offered Securities or
attempt to induce any person to purchase any Offered Securities
(provided that this subsection (j) shall not apply to directors and
officers who purchase Offered Securities in this offering pursuant to
the Prospectus); and neither it nor any of its affiliates will make
bids or purchases for the purpose of creating actual, or apparent,
active trading in, or of raising the price of, the Offered Securities.
(k) For a period of 60 days after the date of the initial
offering of the Offered Securities by the Underwriters, the Company
will not offer, sell, contract to sell, pledge, or otherwise dispose
of, directly or indirectly, or file with the SEC or a Canadian
Securities Regulator a registration statement or another offering
document relating to, any securities of the Company that are
substantially similar to the Offered Securities, any additional Common
Shares, or securities convertible into or exchangeable or exercisable
for Common Shares or warrants or other rights to purchase Common Shares
of the Company, without the prior written consent of the
Representatives, or publicly disclose the intention to make any such
offer, sale, pledge, disposition or filing, other than (i) issuances of
8
stock options or Common Shares upon exercise of stock options or
otherwise pursuant to compensation arrangements existing on the date
hereof, (ii) issuances required in connection with earnout payments for
acquisitions prior to the date hereof or upon the exercise of any
outstanding securities or rights convertible, exchangeable or
exercisable for Common Shares, (iii) issuances of rights under the
Company's shareholder rights plan and the Common Shares issuable upon
exercise of those rights, (iv) the Company's sale of its purchase
contracts, as evidenced by equity units, pursuant to an underwriting
agreement dated the same date as this Agreement, and the issuance of
Common Shares upon settlement of such purchase contracts, and (v) any
filing of a registration statement in connection with any of the items
listed in the foregoing clauses (i) to (iv).
(l) The Company will reimburse the Underwriters against any
documentary, stamp or similar issuance tax, including any interest and
penalties, on the creation, issuance and sale of the Offered Securities
and on the execution and delivery of this Agreement. All payments to be
made by the Company hereunder shall be made without withholding or
deduction for or on account of any present or future taxes, duties or
governmental charges whatsoever unless the Company is compelled by law
to deduct or withhold such taxes, duties or charges. In that event, the
Company shall pay such additional amounts as may be necessary in order
that the net amounts received after such withholding or deduction shall
equal the amounts that would have been received if no withholding or
deduction had been made.
(m) The Company shall make every reasonable effort to arrange
for the qualification of the Offered Securities for sale under the laws
of such jurisdictions as the Representatives may reasonably designate
and the Company shall approve, which approval shall not be unreasonably
withheld, and the Company shall pay all reasonable expenses (including
reasonable fees and disbursements of counsel) in connection with such
qualifications, and shall maintain such qualifications in effect during
the period set forth in Section 5(d); provided, however, that the
Company 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 Company, in any
jurisdiction where it is not at such date so subject.
(n) Prior to the filing of the Canadian Final Supplement (and
any amendments thereto), the Company shall permit the Underwriters and
their counsel to participate fully in the preparation of such documents
and allow the Underwriters and their counsel to conduct all due
diligence which the Underwriters may reasonably require in order to
fulfill their obligations under Canadian Securities Laws and in order
to enable the Underwriters to execute responsibly any certificate
required to be executed by the Underwriters in connection with the
Canadian Preliminary Supplement and the Canadian Final Supplement (and
any amendments thereto).
(o) The Company will use its commerically reasonable best
efforts to ensure that the Offered Securities will be listed and posted
for trading on the NYSE and the TSX upon issuance.
6. Conditions of the Obligations of the Underwriters. The obligations
of the Underwriters to purchase and pay for the Firm Securities on the First
Closing Date and for the Optional Securities on each Option Closing Date will be
subject to the accuracy in all material respects of the representations and
warranties not qualified as to materiality or Material Adverse Effect and the
accuracy in all respects of the representations and warranties qualified as to
materiality or Material Adverse Effect on the part of the Company herein, to the
accuracy in all material respects of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance in all material
respects by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) 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 Company or the
Representatives, threatened by the SEC or a Canadian Securities
Regulator.
9
(b) The Underwriters shall have received a letter, dated the
date of this Agreement, of Deloitte & Touche LLP confirming that they
are independent public accountants within the meaning of the Act, the
Rules and Regulations and Canadian Securities Laws and to the effect
that:
(i) in their opinion the consolidated financial
statements examined by them and included in the Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act, the related published
Rules and Regulations and Canadian Securities Laws;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information and the procedures specified by the Canadian
Institute of Chartered Accountants for a review of interim
financial statements by an entity's auditor, on the unaudited
condensed consolidated financial statements included in the
Prospectus;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
unaudited condensed consolidated financial statements of the
Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that
caused them to believe that:
(A) the unaudited condensed consolidated
financial statements included in the Prospectus do
not comply as to form in all material respects with
the applicable accounting requirements of the Act and
the related published Rules and Regulations and
Canadian Securities Laws or any material
modifications should be made to such unaudited
condensed consolidated financial statements for them
to be in conformity with accounting principles
generally accepted in the United States of America
and Canada, as the case may be;
(B) the unaudited consolidated net sales,
net operating income, net income and net income per
share amounts for the three-month periods ended March
31, 2002 and March 31, 2001 included in the
Prospectus do not agree with the amounts set forth in
the unaudited condensed consolidated financial
statements for those same periods;
(C) at the date of the latest available
consolidated balance sheet read by such accountants,
or at a subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in long-term debt in excess of $50 million
of the Company and its consolidated subsidiaries or,
at the date of the latest available consolidated
balance sheet read by such accountants, there was any
decrease in consolidated net current assets or net
assets, as compared with amounts shown on the latest
consolidated balance sheet included in the
Prospectus; or
(D) for the period from the closing date of
the latest consolidated income statement included in
the Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year and with
the period of corresponding length ended the date of
the latest consolidated income/loss statement
included in the Prospectus, in consolidated net
sales, net operating income/loss or in the total or
per share amounts of consolidated income/loss before
extraordinary items or net income/loss;
except in all cases set forth in clauses (C) and (D)
above for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or
which are described in such letter; and
10
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Prospectus (in each
case to the extent that such dollar amounts, percentages and
other financial information are derived from the general
accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change in U.S.,
Canadian or international financial, political or economic conditions
as would, in the judgment of the Representatives be likely to prejudice
materially the success of the proposed issue, sale or distribution of
the Offered Securities, whether in the primary market or in respect of
dealings in the secondary market, (ii) any change, or any development
or event involving a prospective change, in the financial condition,
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a
majority in interest of the Underwriters, including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities; (iii) any material
suspension or material limitation of trading in securities generally on
the NYSE, the TSX or any setting of minimum prices for trading on such
exchange other than as a result of systems difficulties experienced by
either the NYSE or the TSX, or any material suspension of trading of
any securities of the Company on either the NYSE or the TSX; (v) any
banking moratorium declared by U.S. Federal, New York or Canadian
authorities; (vi) any major disruption of settlements of securities or
clearance services in the United States or Canada, or (vii) any attack
on or outbreak or escalation of hostilities or act of terrorism
involving the United States or Canada, any declaration of war by
Congress or any other national or international calamity or emergency
if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such attack, outbreak,
escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Underwriters shall have received an opinion, dated
such Closing Date, of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Legal Officer of the
Company, that:
(i) The Company has been duly incorporated under the
laws of Canada, with corporate power and authority to conduct
its business as currently conducted and described in the
Prospectus and is not discontinued and has not been dissolved;
(ii) The Offered Securities have been duly authorized
by all necessary corporate action of the Company, and have
been issued by the Company and are fully paid and
nonassessable;
(iii) The execution and delivery of this Agreement
have been duly authorized by all necessary corporate action of
the Company and this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its
terms;
(iv) The Registration Statement is effective under
the Act and, to the best of such Counsel's knowledge, no stop
order with respect thereto has been issued, or proceeding for
that purpose has been instituted or threatened, by the SEC;
(v) To the best of such 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 SEC or a Canadian Securities
Regulator;
(vi) To the best of such Counsel's knowledge, other
than as disclosed in the Prospectus neither the Company nor
any of its properties is involved in any litigation,
arbitration or legal proceedings which would individually or
in the aggregate have a
11
Material Adverse Effect, nor is there any such litigation,
arbitration or legal proceedings pending or threatened;
(vii) The statements set forth under the caption
"Description of Share Capital" in the Basic Prospectus,
insofar as they purport to constitute a summary of certain
terms of the Offered Securities, fairly summarize in all
material respects the matters referred to therein;
(viii) The issue and sale of the Offered Securities
by the Company pursuant to this Agreement and the performance
by the Company of its obligations pursuant to this Agreement
do not conflict with or constitute a breach of or default
under (A) the constating documents or by-laws of the Company,
or (B) any of the agreements to which the Company is a party
which are filed as an exhibit to, or incorporated by reference
into, the Registration Statement or the Prospectus, other than
a conflict, breach or default which would not have a Material
Adverse Effect;
(ix) Assuming that the choice of the laws of the
State of New York as the governing law of this Agreement has
been made in good faith and not with a view to avoiding the
consequences of the laws of any other relevant jurisdiction,
such choice would, to the extent such laws were specifically
pleaded and proved as a fact by expert evidence, be recognized
and applied in an action brought before a court of competent
jurisdiction in the Province of Ontario, and such laws would
accordingly be applied by such court to all issues which under
conflict of law rules in the Province of Ontario are
characterized to be contract issues, except for such laws as
such court considered: (1) to be procedural in nature; (2) to
be revenue, penal, public or similar laws; and (3) the
application of which would be inconsistent with the public
policy of Ontario;
(x) The submission by the Company to the
non-exclusive jurisdiction of the federal and state courts in
the Borough of Manhattan in The City of New York, contained in
Section 15 of this Agreement, would be recognized and given
effect to by the courts of the Province of Ontario as a valid
submission to the jurisdiction of such courts, provided that
the provisions of Section 15 respecting service of process on
the Company are duly complied with.
(xi) The Company is a "reporting issuer" or
equivalent in each of the Qualifying Provinces where such
concept applies and does not appear on any list of defaulting
reporting issuers in any Qualifying Province where the
Canadian Securities Regulator therein maintains such a list
and makes such a list publicly available;
(xii) No person has any agreement or option, or right
or privilege (whether pre-emptive or contractual) capable of
becoming an agreement or option, for the purchase from the
Company of any unissued shares, securities or warrants of the
Company except as otherwise described in the Prospectus and
other than: (i) issuances of stock options or issuances of
Common Shares upon exercise of stock options pursuant to
compensation arrangements existing on the date hereof, (ii)
issuances required in connection with earnout payments for
acquisitions prior to the date hereof or upon the exercise of
any outstanding securities or rights convertible, exchangeable
or exercisable for Common Shares, or (iii) the Company's sale
of its purchase contracts, as evidenced by equity units,
pursuant to an underwriting agreement dated the same date as
this Agreement, and the issuance of Common Shares upon
settlement of such purchase contracts; and
(xiii) The Company is eligible to distribute
securities pursuant to the POP Procedures.
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 Section 6(d)(iii) above
that:
12
(i) enforceability may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other
laws or foreign governmental actions affecting the enforcement
of creditors' rights generally;
(ii) equitable remedies, including the remedies of
specific performance and injunction, may only be granted at
the discretion of a court of competent jurisdiction;
(iii) the Currency Act (Canada) precludes the courts
in Canada from awarding a judgment for an amount expressed in
a currency other than Canadian dollars; and
(iv) no opinion is expressed with respect to the
enforceability of any provisions relating to indemnity and
contribution.
In rendering his opinion, he may rely as to matters of fact, to the
extent he deems proper, on certificates of responsible officers of the Company
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 Company with respect to the verification, characterization and
quantification of various assets and 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 Company, the due execution and delivery, pursuant to due authorization,
of such agreement and that such agreement constitutes a valid and binding
agreement of all such parties.
Such counsel shall further deliver a letter to the effect that:
(A) the Canadian Prospectus or any document
incorporated by reference therein (in each case,
except the consolidated financial statements and
schedules and other financial and related statistical
data included therein, as to which such counsel
expresses no view), appeared on their face to be
appropriately responsive in all material respects to
the requirements of the Canadian Securities Laws
applicable in the Province of Ontario;
(B) no information has come to such
counsel's attention that causes him to believe that
the Registration Statement (except the consolidated
financial statements and schedules and other
financial and related statistical data included
therein, as to which such counsel expresses no view)
at the time it became effective, contained any untrue
statement of a material fact or omitted to state any
material fact necessary in order to make the
statements therein not misleading, or that the
Prospectus (except as aforesaid) as of the date of
the Prospectus and as of the date of such opinion
contained or contains any untrue statement of a
material fact or omitted or omits to state any
material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading;
provided, that, in each of (A) and (B) above, counsel's opinion shall not extend
to (i) that part of the Registration Statement that constitutes the Statements
of Eligibility and Qualifications under the Trust Indenture Act (Form T-1) of
the Trustees, or (ii) statements in or omissions from the Prospectus based upon
written information furnished to the Company by any Underwriter.
(e) The Underwriters shall have received an opinion, dated
such Closing Date, of Osler, ▇▇▇▇▇▇ & Harcourt LLP, special Canadian
tax counsel to the Company, that (a) the statements set forth in the
Prospectus under the headings "Canadian Federal Income Tax Consequences
for Non-Residents", insofar as such statements purport to summarize
certain federal income tax laws of Canada, constitute a fair summary of
the principal Canadian federal income tax consequences of an investment
in the Offered Securities and (b) the Offered Securities are qualified
investments under the Income Tax Act (Canada) and the Regulations
thereunder for trusts governed by registered retirement savings plans,
registered retirement income funds and deferred profit sharing plans
13
(collectively, "Deferred Income Plans") and trusts governed by
registered education savings plans, and, in addition, the Offered
Securities will not constitute "foreign property" for Deferred Income
Plans and other persons subject to tax under Part XI of the Income Tax
Act (Canada).
(f) The Underwriters shall have received an opinion, dated
such Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, special Canadian counsel to the
Company, that:
(i) The issue and sale of the Offered Securities by
the Company pursuant to this Agreement and the performance by
the Company of its obligations pursuant to this Agreement (x)
do not require the consent, approval or authorization of or
filing or registration with, any governmental body or
regulatory authority in Canada except for (i) required filings
with relevant Canadian securities regulatory authorities; and
(ii) required approvals, notices and filings to or with the
TSX; and
(ii) All documents have been filed and all requisite
proceedings have been taken by the Company and all approvals,
permits, consents and authorizations of the Canadian
Securities Regulators under the Canadian Securities Laws have
been obtained by the Company to qualify the Offered Securities
for distribution or distribution to the public in each of the
Qualifying Provinces through investment dealers or brokers
duly registered under the applicable laws of the Qualifying
Provinces who have complied with such applicable laws,
provided, however, that such counsel need express no opinion
as to whether the Canadian Prospectus constitutes full, true
and plain disclosure of all material facts relating to the
Company and the Offered Securities.
The opinions expressed above will be subject to those
assumptions and qualifications reasonably satisfactory to such counsel.
In rendering such opinion, counsel may rely as to matters of fact, to
the extent it deems proper, on certificates of responsible officers of
the Company and its subsidiaries or public officials. Counsel may also
rely upon legal opinions provided to it. In addition, counsel may rely
upon determinations of responsible officers of the Company with respect
to certain factual matters. Furthermore, counsel may assume without
independent verification the authenticity of any document or instrument
submitted to it as an original, the conformity to the authentic
original of any document or instrument submitted to it as a certified,
conformed or photographic copy and the genuineness of all signatures.
(g) The Underwriters shall have received an opinion, dated
such Closing Date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special
United States counsel to the Company, that
(i) The execution and delivery of this Agreement have
been duly authorized by the Company under the law of the State
of New York and this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its
terms;
(ii) The statements set forth in the Prospectus
Supplement under the caption "U.S. Federal Income Tax
Consequences," insofar as such statements purport to summarize
the principal federal income tax consequences of an investment
in the Offered Securities, provide, subject to the
qualifications and limitations stated therein, a fair summary
of such provisions; and
(iii) The issue and sale of the Offered Securities
pursuant to this Agreement and the performance by the Company
of its obligations under this Agreement (x) do not require any
consent, approval, authorization, registration or
qualification of or with, any governmental authority of the
United States, except for such as have been obtained or
effected under the Act, the Exchange Act and the Rules and
Regulations of
14
the NYSE (but we express no opinion as to any consent, approval,
authorization, registration or qualification that may be required under
state securities or blue sky laws).
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(f)(ii) and
(iii) above that:
(i) enforceability may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other
laws or foreign governmental actions affecting the enforcement
of creditors' rights generally;
(ii) equitable remedies, including the remedies of
specific performance and injunction, may only be granted at
the discretion of a court of competent jurisdiction; and
(iii) no opinion is expressed with respect to the
enforceability of any provisions relating to indemnity and
contribution.
In rendering such opinion, counsel may rely as to matters of fact, to
the extent it deems proper, on certificates of responsible officers of the
Company and its subsidiaries or public officials. Counsel may also rely upon
legal opinions provided to it. In addition, counsel may rely upon determinations
of responsible officers of the Company with respect to the verification,
characterization and quantification of various assets and liabilities.
Furthermore, counsel may assume without independent investigation: (i) the
authenticity of any document or instrument submitted to it as an original, the
conformity to the authentic original of any document or instrument submitted to
it as a certified, conformed or photographic copy and the genuineness of all
signatures on such originals or copies; and (ii) with respect the validity,
binding effect or enforceability of any agreement or obligation of the Company,
such counsel has assumed that the Company and each other party to such agreement
or obligation has satisfied those legal requirements that are applicable to it
to the extent necessary to make such agreement or obligation enforceable against
it (except that no such assumption is made as to the Company regarding matters
of the law of the State of New York).
Such counsel shall further deliver a letter to the effect that, in the
course of such counsel's acting as special U.S. counsel to the Company in
connection with its preparation of the Registration Statement and the
Prospectus, based on such counsel's participation in conferences and telephone
conversations with representatives of the Company, representatives of the
independent public accountants for the Company, representatives of the
Underwriters and representatives of counsel for the Underwriters, during which
conferences and conversations the contents of the Registration Statement and the
Prospectus, portions of certain of the documents incorporated by reference
therein and related matters were discussed, and such counsel's review of certain
corporate records and documents furnished to such counsel by the Company, such
counsel's understanding of the U.S. federal securities laws and the experience
such counsel has gained in their practice thereunder, such counsel advises that
(1) the Registration Statement (except the financial statements and schedules
and other financial and related statistical data included therein, as to which
such counsel express no view), at the time it became effective, and the
Prospectus (except as aforesaid), as of the date thereof, appeared on their face
to be appropriately responsive in all material respects to the requirements of
the Act and the Rules and Regulations thereunder other than Regulation S-1 under
the Act and (2) the documents incorporated by reference in the Registration
Statement and the Prospectus (except the financial statements and the schedules
and other financial and related statistical data included therein, as to which
such counsel expresses no view), as of the respective dates of their filing with
the SEC, appeared on their face to be appropriately responsive in all material
respects to the requirements of the Act and the Rules and Regulations
thereunder, and (y) no information has come to such counsel's attention (A) that
causes such counsel to believe that the Registration Statement (except the
financial statements and schedules and other financial and related statistical
data, included therein, as to which such counsel expresses no view) at the time
it became effective contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein not
misleading, or (B) that the Prospectus (except as aforesaid) as of the date of
the Prospectus and as of the date of such opinion contained or contains any
untrue statement of a material fact or omitted or omits to state any material
fact necessary in order to make
15
the statements therein, in the light of the circumstances under which they were
made, not misleading, provided, that, in each of (x) and (y) above, counsel's
letter shall not extend to statements in or omissions from the Prospectus based
upon written information furnished to the Company by any Underwriter or to that
part of the Registration Statement that constitutes the Statements of
Eligibility and Qualifications under the Trust Indenture Act (Form T-1) of the
Trustees.
(h) The Underwriters shall have received from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special United States counsel for the
Underwriters, such opinion or opinions, dated such Closing Date, with
respect to the validity of the Offered Securities, the Prospectus and
other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(i) The Underwriters shall have received an opinion, dated
such Closing Date, from Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special Canadian
counsel to the Underwriters with respect to such matters relating to
the sale of the Offered Securities as the Representatives may require;
provided that such counsel providing such opinion shall be entitled to
rely on or deliver the opinions of local counsel in the relevant
Qualifying Provinces.
(j) The Underwriters shall have received a certificate, dated
such Closing Date, of either (x) both the President and Chief Executive
Officer and the Chief Financial Officer (provided that, if the
aforesaid offices are held by one person, such person's signature shall
also be accompanied by that of an officer set forth in (y)) or (y) of
one of the aforesaid officers and any one of the Corporate Secretary,
the Controller, the Treasurer, any Assistant Secretary, any Assistant
Controller or any Assistant Treasurer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state on behalf of the Company as to the accuracy
in all material respects of the representations and warranties not
qualified as to materiality or Material Adverse Effect and the accuracy
in all respects of the representations and warranties qualified as to
materiality or Material Adverse Effect on the part of the Company
herein, that the Company has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date, and that,
subsequent to the date of the most recent consolidated financial
statements included or incorporated in the Prospectus there has been no
change, nor any development or event involving a prospective change
which would result in a Material Adverse Effect except as set forth in
or contemplated by the Prospectus or as described in such certificate.
(k) The Underwriters shall have received a letter, dated such
Closing Date, of Deloitte & Touche LLP which meets the requirements of
subsection (b) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
(l) CSFBC shall have received, on or prior to the date of this
Agreement, lockup letters from each of the directors of the Company and
each of the executive officers named in Schedule B hereto. The form of
such lockup letter is attached as Schedule C hereto. For greater
certainty, delivery to CSFBC of a lockup letter for each such director
or officer pursuant to the underwriting agreement in respect of
purchase contracts entered into as of the same date of this Agreement
shall be deemed to satisfy the requirements of this section.
The Company will furnish the Underwriters with such conformed copies of
such opinions, certificates, letters and documents as the Underwriters
reasonably request. The Representatives may in their sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder, whether in respect of an Option Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act, the
Exchange Act, Canadian Securities Laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not
16
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through either of the Representatives specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below; provided, further, that with respect
to any untrue statement or alleged untrue statement in or omission or alleged
omission from any preliminary prospectus the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Underwriter that sold
the Offered Securities concerned to the person asserting any such losses,
claims, damages or liabilities, to the extent that any such sale was an initial
sale by such Underwriter and any such loss, claim, damage or liability of such
Underwriter results from the fact that there was not sent or given to such
person at or prior to the written confirmation of the sale of such Offered
Securities to such person, as applicable, a copy of the U.S. Prospectus
(exclusive of any material incorporated therein) or the Canadian Final
Supplement together with the Canadian Final Prospectus if the Company had
previously furnished copies thereof to such Underwriter.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of Section
15 of the Act, against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act, the Exchange Act,
Canadian Securities Laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through either of the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in
the Prospectus furnished on behalf of each Underwriter: the fifth,
twelfth, seventeenth, eighteenth and nineteenth paragraphs under the
caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall be liable for any
settlement of any action contemplated by subsections (a) or (b) above
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not
be unreasonably withheld), effect any settlement of any
17
pending or threatened action in respect of which any indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action and (ii) does
not include a statement as to or an admission of fault or failure to
act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
as well as any other equitable considerations; provided, however, that
(i) in no case shall the Underwriters be responsible, in the aggregate,
for any amount in excess of the purchase discount or commission
applicable to the Offered Securities, as set forth in this Agreement
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. Benefits received by the Company shall be deemed to
be equal to the sum of the total net proceeds from the offering (before
deducting expenses) of the Offered Securities. Benefits received by the
Underwriters shall be deemed to be equal to the total purchase
commissions received in connection with the offering of the Offered
Securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Offered Securities sold by it exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. The
Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective purchase obligations and not
joint.
(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act or the
Exchange Act; and the obligations of the Underwriters under this
Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Company within
the meaning of the Act or the Exchange Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First Closing Date or any Option Closing Date and the number of the Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of the Offered Securities that
the Underwriters are obligated to purchase on such Closing Date, the
Representatives may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons including any of the
non-defaulting Underwriters, but if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of the Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total number of the Offered Securities that
the
18
Underwriters are obligated to purchase on such Closing Date and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Offered Securities by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9
(provided that if such default occurs with respect to Optional Securities after
the First Closing Date, this Agreement shall not terminate as to the Firm
Securities or any Optional Securities purchased prior to such termination). As
used in this Agreement, the term "Underwriter" includes any person substituted
for a Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect and if any Offered Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall remain in effect. If the purchase of the Offered Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (v), (vi) or (vii) of Section 6 (c), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters will be mailed, delivered or telegraphed and confirmed
to the Underwriters, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory Group, or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
Attention: Assistant Secretary; provided, however, that any notice to a
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for
the several Underwriters in connection with this purchase, and any action under
this Agreement taken by the Representatives will be binding upon all the
Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. The
transmission by facsimile of a copy of the execution page hereof reflecting the
execution of this Agreement by any party hereto shall be effective to evidence
that party's intention to be bound by this Agreement and that party's agreement
to the terms, provisions and conditions hereof, all without the necessity of
having to produce an original copy of such execution page.
14. Severability. If any provision of this Agreement is determined to
be void or unenforceable in whole or in part, it shall be deemed not to affect
or impair the validity of any other provision of this Agreement and such void or
unenforceable provision shall be severable from this Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT SUCH RULES WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably appoints CT
Corporation System, as its authorized agent in the Borough of Manhattan in The
City of New York upon which process may be served in any such suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Company, by the person serving the same to the
address
19
provided in Section 10, shall be deemed in every respect effective service of
process upon the Company, as the case may be, in any such suit or proceeding.
The Company further agrees to take any and all action as may be necessary to
maintain such designation and appointment of such agent in full force and effect
for a period of seven years from the date of this Agreement.
The obligation of the Company in respect of any sum due to any
Underwriter shall, notwithstanding any judgment in a currency other than United
States dollars, not be discharged until the first business day, following
receipt by such Underwriter of any sum adjudged to be so due in such other
currency, on which (and only to the extent that) such Underwriter may in
accordance with normal banking procedures purchase United States dollars with
such other currency; if the United States dollars so purchased are less than the
sum originally due to such Underwriter hereunder, the Company agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Underwriter against such loss. If the United States dollars so purchased are
greater than the sum originally due to such Underwriter hereunder, such
Underwriter agrees to promptly pay to the Company, as the case may be, an amount
equal to the excess of the dollars so purchased over the sum originally due to
such Underwriter hereunder.
20
If the foregoing is in accordance with the Underwriters' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
NORTEL NETWORKS CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
President, Chief Executive Officer
and Chief Financial Officer
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Treasurer
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
RBC DOMINION SECURITIES INC.
Acting on behalf of themselves
and as the Representatives of the
several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ ▇▇▇▇▇ ▇. HOST
-------------------------------
▇▇▇▇▇ ▇. Host
Director, Head of Global Communications
Equipment Technology Group
21
SCHEDULE A
AMOUNT OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
Credit Suisse First Boston Corporation ................. 182,875,000
RBC Dominion Securities Inc. ........................... 182,875,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. ............................ 27,500,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. .............................. 27,500,000
CIBC World Markets Corp. ............................... 26,950,000
ABN AMRO Rothschild LLC ................................ 16,500,000
HSBC Securities (USA) Inc. ............................. 16,500,000
▇▇ ▇▇▇▇▇ Securities Corporation ........................ 16,500,000
TD Securities Inc. ..................................... 16,500,000
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. ................................. 12,100,000
National Bank Financial Inc. ........................... 12,100,000
Scotia Capital Inc. .................................... 12,100,000
-----------
Total 550,000,000
SCHEDULE B
Officers Required to Provide Lock-Up Letters Pursuant To Section 6(l)
▇.▇. ▇▇▇▇
Director, President, Chief Executive Officer and Chief Financial Officer
▇. ▇▇▇▇▇▇▇
President, Global Customer Customer Care & Supply Chain Operations
N.J. ▇▇▇▇▇▇
Chief Legal Officer
▇.▇. ▇▇▇▇▇▇▇
President, Americas
▇. ▇▇▇▇▇▇▇▇
President, Metro & Enterprise Networks
▇.▇. ▇▇▇▇▇▇
Controller
▇. ▇▇▇▇▇
President, Wireless Networks
▇.▇. ▇▇▇▇▇▇▇
Senior Vice President, Human Resources
▇. ▇▇▇▇▇▇▇▇▇
Treasurer
▇. ▇▇▇▇▇▇▇
Chief Technology Officer
▇. ▇▇▇▇▇▇▇▇
President, Optical Long-Haul Networks
▇. ▇▇▇▇▇
President, Europe, Middle East and Africa
M. Tariq
President, Asia
SCHEDULE C
June , 2002
Credit Suisse First Boston Corporation
[ ]
c/o Credit Suisse First Boston Corporation
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
As an inducement to the Underwriters to execute an
underwriting agreement (the "EQUITY UNITS UNDERWRITING AGREEMENT"), pursuant to
which to which an offering will be made that is intended to result in the
establishment of a public market for equity units (the "EQUITY UNITS"), and/or
an underwriting agreement (the "COMMON SHARE UNDERWRITING AGREEMENT" and,
together with the Equity Units Underwriting Agreement, the "UNDERWRITING
AGREEMENTS"), pursuant to which an offering will be made of common shares (the
"OFFERED COMMON SHARES" and, together with the Equity Units, the "SECURITIES")
of Nortel Networks Corporation, and any successor (by merger or otherwise)
thereto, (the "COMPANY"), the undersigned hereby agrees that from the date
hereof and until 60 days after the later of the respective offering dates set
forth on the final prospectus supplements used to sell the Securities (the
"OFFERING DATE") pursuant to either or both of the Underwriting Agreements, to
which you are or expect to become parties, the undersigned will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
common shares of the Company (the "COMMON SHARES") or securities convertible
into or exchangeable or exercisable for, or entitling the holder to receive, any
shares of Common Shares, enter into a transaction which would have the same
effect, or enter into any swap, hedge or other arrangement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common
Shares, whether any such aforementioned transaction is to be settled by delivery
of the Common Shares or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or disposition, or
to enter into any such transaction, swap, hedge or other arrangement, without,
in each case, the prior written consent of Credit Suisse First Boston
Corporation and RBC Dominion Securities Inc. In addition, the undersigned agrees
that, without the prior written consent of Credit Suisse First Boston
Corporation and RBC Dominion Securities Inc., it will not, during the period
commencing on the date hereof and ending 60 days after the Offering Date, make
any demand for or exercise any right with respect to, the registration of any
Common Shares or any security convertible into or exercisable or exchangeable
for, or entitling the holder to receive, the Common Shares.
Any Common Shares received upon exercise of options granted to
the undersigned will also be subject to this Agreement. Notwithstanding the
foregoing, the undersigned may transfer the undersigned's Common Shares (i)
provided they were purchased on the open market, (ii) as a bona fide gift or
gifts, provided that the donee or donees thereof agree to be bound in writing by
the restrictions set forth herein, (iii) to any corporation controlled by the
undersigned or trust for the direct or indirect benefit of the undersigned or
the immediate family of the undersigned, provided in the case of a transfer to
any such trust that the trustee of the trust agrees to be bound in writing by
the restrictions set forth herein, and provided further that any such transfer
shall not involve a disposition for value other than for the benefit of the
undersigned's immediate family, or (iv) as pledges of Common Shares in
connection with the purchase of such Common Shares upon the exercise of stock
options following termination of employment or service with the Company,
provided that the lender or lenders to whom such Common Shares are pledged agree
in writing to be bound by the restrictions set forth herein. For purposes of
this agreement, "immediate family" shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin.
In furtherance of the foregoing, the Company and its transfer
agent and registrar are hereby authorized to decline to make any transfer of
Common Shares if such transfer would constitute a violation or breach of this
Agreement.
This Agreement shall be binding on the undersigned and the
successors, heirs, personal representatives and assigns of the undersigned. This
Agreement shall lapse and become null and void if the Offering Date shall not
have occurred on or before June 19, 2002.
Very truly yours,
--------------------------------
Name:
Title:
24
