Securities Law & Instruments

Headnote

Order pursuant to subsection 46(4) of the BusinessCorporations Act (Ontario)(the "OBCA") - trust indenturesgoverned by the United States Trust Indenture Act of 1939, asamended, exempted from the requirements of Part V of the OBCAwith respect to cross-border offerings. No relief from PartV for offerings made only in Canada.

Statutes Cited

Business Corporations Act, R.S.O. 1990, c. B-16,as amended, ss. 46(2), 46(4), Part V.

Securities Act, R.S.O. 1990, c. S.5, as amended.

Securities Act of 1933, Act of May 27, 1933,48 Stat, 74, 15 U.S. Code, Secs. 77a-77aa, as amended.

Trust Indenture Act of 1939, Act of August 3,1939, 53 Stat, 1149, 15 U.S. Code, Secs. 77aaa- 77bbb, as amended.

IN THE MATTER OF

THE BUSINESS CORPORATIONSACT, R.S.O. 1990,

CHAPTER B. 16, AS AMENDED(THE "OBCA")

AND

IN THE MATTER OF

DEUTSCHE BANK TRUST COMPANYAMERICAS

AND

HSBC BANK USA

AND

NORTEL NETWORKS CORPORATIONAND

NORTEL NETWORKS LIMITED

 

ORDER

(Subsection 46(4) OBCA)

UPON the application by Deutsche BankTrust Company Americas ("Deutsche Bank") and HSBCBank USA ("HSBC" and, together with Deutsche Bank,the "Applicants") to the Ontario Securities Commission(the "Commission") for an order pursuant to subsection46(4) of the OBCA, exempting certain trust indentures of NortelNetworks Corporation and Nortel Networks Limited (collectively,the "Issuers") from the requirements of Part V ofthe OBCA;

AND UPON considering the applicationand the recommendations of staff of the Commission;

AND UPON the Applicants and the Issuershaving represented to the Commission as follows:

1. Deutsche Bank is a banking corporationorganized under the laws of New York and is neither residentnor authorized to do business in Ontario.

2. HSBC is a New York banking corporationand trust company and is neither resident nor authorized todo business in Ontario.

3. Nortel Networks Corporation ("Nortel")has advised the Applicants that it is a corporation incorporatedunder the Canada Business Corporations Act (the "CBCA")and is a reporting issuer under the Securities Act(Ontario) (the "Securities Act").

4. Nortel Networks Limited ("NNL")has advised the Applicants that it is a corporation incorporatedunder the CBCA, is a subsidiary of Nortel and is a reportingissuer under the Securities Act.

5. The Issuers filed a shelf registrationstatement on Form S-3 in respect of a prospectus dated May30, 2002 (the "Registration Statement") with theU.S. Securities and Exchange Commission (the "SEC")pursuant to the United States Securities Act of 1933and an unallocated base shelf prospectus dated May 29, 2002(the "Canadian Base Shelf Prospectus") with theCanadian securities regulatory authorities (the "CanadianSecurities Authorities") in accordance with the shelfprocedures set forth in National Instrument 44-102 - ShelfDistributions, both of which are currently effective.

6. Securities of up to an aggregate offeringprice of U.S.$2.5 billion (including securities issued undera prospectus supplement dated June 12, 2002) may be offeredfor sale by Nortel and NNL to the public (i) in Canada, fromtime to time, under the Canadian Base Shelf Prospectus andone or more shelf prospectus supplements (the "CanadianProspectus Supplements" and, together with the CanadianBase Shelf Prospectus, the "Canadian Shelf Prospectus")and (ii) in the United States of America (the "U.S."),from time to time, under the Registration Statement and oneor more related prospectus supplements (the "U.S. ProspectusSupplements" and, together with the Registration Statementand the Canadian Shelf Prospectus, the "Shelf Prospectuses").

7. Under the Shelf Prospectus, Nortel mayoffer senior and subordinated debt securities, which may bebonds, debentures, notes or other evidences of indebtednessor guarantees of Nortel.

8. Under the Shelf Prospectus, NNL may offersenior and subordinated debt securities (guaranteed by Nortel),which may be bonds, debentures, notes or other evidences ofindebtedness of NNL.

9. Senior debt securities may be offered underthe Shelf Prospectuses by Nortel in the U.S. and Canada pursuantto a trust indenture, and one or more trust indentures supplementalthereto, to be entered into between Nortel and Deutsche Bank,as trustee. Senior guaranteed debt securities may be offeredunder the Shelf Prospectuses by NNL in the U.S. and Canadapursuant to a trust indenture, and one or more trust indenturessupplemental thereto, to be entered into between NNL, Nortel,as guarantor, and Deutsche Bank, as trustee. All such seniordebt securities are collectively referred to herein as the"Senior Debt Securities" and all such trust indenturesin respect of the Senior Debt Securities are collectivelyreferred to herein as the "Senior Trust Indentures".

10. Subordinated debt securities may be offeredunder the Shelf Prospectuses by Nortel in the U.S. and Canadapursuant to a trust indenture, and one or more trust indenturessupplemental thereto, to be entered into between Nortel andHSBC, as trustee. Subordinated guaranteed debt securitiesmay be offered under the Shelf Prospectuses by NNL in theU.S. and Canada pursuant to a trust indenture, and one ormore trust indentures supplemental thereto, to be enteredinto between NNL, Nortel, as guarantor, and HSBC, as trustee.All such subordinated debt securities are collectively referredto herein as the "Subordinated Debt Securities"and, together with the Senior Debt Securities, are referredto herein as the "Debt Securities". All such trustindentures in respect of the Subordinated Debt Securitiesare collectively referred to herein as the "SubordinatedTrust Indentures" and, together with the Senior TrustIndentures, as the "Trust Indentures". Forms ofthe Trust Indentures were filed with the SEC (as exhibitsto the Registration Statement) and the Canadian SecuritiesAuthorities.

11. Each Trust Indenture will be governedby the laws of the State of New York, will provide that thereshall always be a trustee thereunder that satisfies the requirementsof sections 310(a)(1), 310(a)(2) and 310(b) of the UnitedStates Trust Indenture Act of 1939 (the "TIA") andwill contain provisions in conformity with the requirementsof the TIA.

12. As a result of the filing of a U.S. ProspectusSupplement with the SEC pursuant to which Debt Securitiesare offered in the U.S., each Trust Indenture related theretowill be subject to and governed by the TIA. As a result ofthe filing with the Commission of a Canadian Prospectus Supplementpursuant to which Debt Securities are offered in Ontario,each Trust Indenture in respect of such securities will besubject to Part V of the OBCA.

13. Because the TIA regulates the issue ofdebt securities under trust indentures in the U.S. in a mannerthat is consistent with Part V of the OBCA, holders of DebtSecurities in Ontario will not, subject to paragraph 14, deriveany additional material benefit from having the Trust Indenturesbe subject to Part V of the OBCA.

14. Each of the Applicants has undertakento file with the Commission a submission to the non-exclusivejurisdiction of the courts and administrative tribunals ofOntario and appointment of an agent for service of processin Ontario (a "Submission to Jurisdiction and Appointmentof Agent for Service of Process").

15. Nortel and NNL have advised the Applicantsthat any Canadian Prospectus Supplement under which Debt Securitieswill be offered will disclose the existence of this Orderand any material risks associated with the purchase of DebtSecurities under a Trust Indenture by a holder in Ontario,as a result of the absence of a local trustee appointed underthe Trust Indenture.

16. The Deputy Director under the BusinessCorporations Act (Canada) (CBCA) issued four orders datedDecember 6, 2002 exempting each of the Trust Indentures fromthe trust indenture provisions of Part VIII of the CBCA.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to subsection46(4) of the OBCA that, other than any supplemental trust indenturesunder which Debt Securities are offered solely in Canada pursuantto a Canadian Prospectus Supplement and not concurrently inthe U.S. pursuant to a U.S. Prospectus Supplement, each TrustIndenture is exempted from Part V of the OBCA, provided that(i) the Trust Indenture is subject to and governed by the TIA,and (ii) prior to the issuance of securities under the TrustIndenture, Deutsche Bank or HSBC, as trustee thereunder, asthe case may be, has filed with the Commission a duly executedSubmission to Jurisdiction and Appointment of Agent for Serviceof Process.

January 21, 2003.

"Howard I. Wetston"                    "H.Lorne Morphy"