exv10w1






U.S.$675,000,000 10.750% Senior Notes due 2016




NORTEL NETWORKS LIMITED




Purchase Agreement




May 21, 2008




[                    ]

[                    ]

As Representatives of the

several Initial Purchasers listed

in Schedule 1 hereto

c/o [                    ]

[                    ]

New York, New York [          ]




Ladies and Gentlemen:




     Nortel Networks Limited, a Canadian corporation (the “Company”), proposes to issue and sell to
the several Initial Purchasers listed in Schedule 1 hereto (the “Initial Purchasers”), for whom you
are acting as representatives (the “Representatives”), U.S.$675,000,000 aggregate principal amount
of its 10.750% Senior Notes due 2016 (the “Notes”). The Notes will be issued pursuant to an
Indenture, dated as of July 5, 2006, among the Company, Nortel Networks Corporation, a Canadian
corporation (“NNC”) and Nortel Networks Inc., a Delaware corporation (“NNI” and, together with NNC,
the “Guarantors”), and The Bank of New York, as trustee (the “Trustee”), as supplemented by the
first supplemental indenture as of July 5, 2006 and the second supplemental indenture as of May 1,
2007 (the “Original Indenture”) and as further supplemented by a third supplemental indenture to be
entered into by and between the Company, the Guarantors and the Trustee on the Closing Date (as
defined below), as it may be further amended or supplemented from time to time (the “Indenture”),
and will be guaranteed on an unsecured senior basis by the Guarantors (the “Guarantees” and,
together with the Notes, the “Securities”). The Company and the Guarantors are referred to herein
together as the “Issuers”. The Securities and the Issuers’ $450,000,000 principal amount 10.750%
Senior Notes due 2016 previously issued under the Indenture will be treated as a single class of
securities under the Indenture.



     The Securities will be sold to the Initial Purchasers without being registered under the
United States Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an
exemption therefrom, and without the filing of a prospectus with any securities regulatory
authority in Canada (each, a “Canadian Securities Regulator” and, together, the “Canadian
Securities Regulators”) under the securities laws, rules and regulations of any province or
territory of Canada (collectively, the “Canadian Securities Laws”), in reliance upon exemptions
from the prospectus requirements of the applicable Canadian Securities Laws. The Company has
prepared a preliminary offering memorandum (including, with respect to sales in British Columbia,
Mani-



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toba, Ontario, Alberta, Saskatchewan and Quebec (collectively, the “Relevant Provinces”), the
preliminary Canadian offering memorandum (the “Canadian Preliminary Offering Memorandum”)) dated
May 21, 2008 (the “Preliminary Offering Memorandum”) and will prepare an offering memorandum
(including, with respect to sales in the Relevant Provinces, a Canadian offering memorandum (the
“Canadian Offering Memorandum”)), dated the date hereof (the “Offering Memorandum”), setting forth
information concerning the Company, the Guarantors and the Securities. Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. The Issuers hereby
confirm that they have authorized the use of the Preliminary Offering Memorandum, the other Time of
Sale Information (as defined below) and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchasers in the manner contemplated by this Agreement.
Capitalized terms used but not defined herein shall have the meanings given to such terms in the
Preliminary Offering Memorandum. References herein to the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum shall be deemed to refer to and include all
documents incorporated by reference therein.



     At or prior to the time when sales of the Securities were first made (which is on the date of
this Agreement) (the “Time of Sale”), the following information shall have been prepared
(collectively, the “Time of Sale Information”): the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on Annex A hereto.



     Holders of the Securities (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of a Registration Rights Agreement to be dated the
Closing Date (as defined below) and substantially in the form attached hereto as Exhibit A (the
“Registration Rights Agreement”), pursuant to which the Issuers will agree, subject to the terms
and conditions of the Registration Rights Agreement, to file with the United Sates Securities and
Exchange Commission (the “Commission”) (i) one or more registration statements (collectively, the
“Exchange Offer Registration Statement”) registering the issuance of senior notes of the Company
(the “Exchange Notes”) and the guarantees of the Guarantors (the “Exchange Notes Guarantees” and,
together with the Exchange Notes, the “Exchange Securities”) evidencing the same continuing
indebtedness as and which are identical in all material respects to the Notes and the Guarantees,
respectively (except that the Exchange Securities will not contain terms with respect to transfer
restrictions in the United States), and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Securities Act (the “Shelf Registration Statement”).



     Each Issuer hereby confirms its agreement with the several Initial Purchasers concerning the
purchase and resale of the Securities, as follows:



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     1. Purchase and Resale of the Securities.



     (a) The Issuers agree to issue and sell the Securities to the several Initial Purchasers as
provided in this Agreement, and each Initial Purchaser, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions set forth herein, agrees,
severally and not jointly, to purchase from the Issuers the respective principal amount of
Securities set forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price equal
to 99.00% of the aggregate principal amount thereof, plus accrued interest, if any, from May 28,
2008 to the Closing Date. The Issuers will pay the several Initial Purchasers a commission equal
to 1.875% of the respective principal amounts of the Notes set forth opposite the names of the
several Initial Purchasers in Schedule 1 hereto. The Issuers will not be obligated to deliver any
of the Securities except upon payment for all the Securities to be purchased as provided herein.



     (b) The Issuers acknowledge and agree that the Initial Purchasers are acting solely in the
capacity of arm’s length contractual counterparties to the Issuers with respect to the offering of
Securities contemplated hereby (including in connection with determining the terms of the offering)
and not as financial advisors or fiduciaries to, or as agents of, any Issuer or any other person.
Additionally, no Initial Purchaser is advising any Issuer or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Issuers shall consult with
their own advisors concerning such matters and shall be responsible for making their own
independent investigation and appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall have no responsibility or liability to the Issuers with respect thereto. Any
review by the Initial Purchasers of the Issuers, the transactions contemplated hereby or other
matters relating to such transactions will be performed solely for the benefit of the Initial
Purchasers and shall not be on behalf of the Issuers.



     (c) The Issuers understand that the Initial Purchasers intend to offer the Securities for
resale on the terms set forth in the Time of Sale Information. Each Initial Purchaser, severally
and not jointly, represents, warrants and agrees that:




     (i) it is a qualified institutional buyer within the meaning of Rule 144A under the
Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) under
the Securities Act and National Instrument 45-106-Prospectus and Registration Exemptions
(“NI 45-106”) of Canada;




     (ii) it has not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the Securities
Act (“Regulation D”) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act; and




     (iii) it has not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities as part of their initial offering except:



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     (A) within the United States to persons whom it reasonably believes to be QIBs
in transactions pursuant to Rule 144A under the Securities Act (“Rule 144A”) and in
connection with each such sale, it has taken or will take reasonable steps to ensure
that the purchaser of the Securities is aware that such sale is being made in
reliance on Rule 144A; and




     (B) in accordance with the restrictions set forth in Annex C hereto and in
Canada, to residents of Canada, who are accredited investors within the meaning of
NI 45-106, in transactions which are exempt from the prospectus requirements of
applicable Canadian Securities Laws.



     (d) Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 6(f) and 6(g) (to the
extent such opinions relate to exemptions from registration and prospectus requirements under
applicable law), counsel for the Company and counsel for the Initial Purchasers, respectively, may
rely upon the accuracy of the representations and warranties of the Initial Purchasers, and
compliance by the Initial Purchasers with their agreements, contained in paragraph (c) above and
Annex C hereto, and each Initial Purchaser hereby consents to such reliance.



     (e) Each Issuer acknowledges and agrees that the Initial Purchasers may offer and sell
Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may
offer and sell Securities purchased by it to or through any Initial Purchaser so long as otherwise
in compliance with the terms and conditions of this Agreement.



     (f) Each Initial Purchaser severally and not jointly represents and covenants that (i) it has
taken reasonable precautions to ensure that passwords to any website containing the Electronic
Roadshow are not provided to any prospective investor in the Securities that is a resident in, or
acting on behalf of an entity resident in, any of the provinces or territories of Canada and (ii)
in order to obtain access to the Electronic Roadshow on any website on which the Electronic
Roadshow is made available to potential investors, each potential investor is required to confirm
electronically that it is not a resident in, or acting on behalf of an entity resident in, any of
the provinces or territories of Canada.



     2. Payment and Delivery.



     (a) Payment for and delivery of the Securities will be made at the offices of Cleary Gottlieb
Steen & Hamilton LLP at 9:30 A.M., New York City time, on May 28, 2008, or at such other time or
place on the same or such other date, not later than the fifth business day thereafter, as the
Representatives and the Company may agree upon in writing. The time and date of such payment and
delivery is referred to herein as the “Closing Date”.



     (b) Payment for the Securities shall be made by wire transfer in immediately available funds
to the account(s) specified by the Company to the Representatives against delivery to



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the nominee of The Depository Trust Company, for the account of the Initial Purchasers, of
global notes representing the Securities (collectively, the “Global Notes”), with any transfer
taxes payable in connection with the sale of the Securities duly paid by the Company. The Global
Notes will be made available for inspection by the Representatives not later than 1:00 P.M., New
York City time, on the business day prior to the Closing Date.



     3. Representations and Warranties of the Issuers. The Issuers represent and warrant,
jointly and severally, to, and agree with, the Initial Purchasers as of the Time of Sale and the
Closing Date that:




     (a) Preliminary Offering Memorandum, Time of Sale Information and Offering Memorandum.
The Preliminary Offering Memorandum, as of its date, did not, the Time of Sale Information,
taken as a whole, at the Time of Sale, did not, and at the Closing Date will not, and the
Offering Memorandum, as of its date and as of the Closing Date will not contain any 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; provided that the Issuers make no representation or warranty with
respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser through the Representatives expressly for use in the Preliminary Offering
Memorandum, the other Time of Sale Information or the Offering Memorandum, it being
understood and agreed that the only such information furnished by any Initial Purchaser
consists of the information described in Section 7(b) below.




     (b) Additional Written Communications. The Company (including its agents and
representatives, other than the Initial Purchasers in their capacity as such) has not
prepared, made, used, authorized, approved or referred to and will not prepare, make, use,
authorize, approve or refer to any written communication that constitutes an offer to sell
or solicitation of an offer to buy the Securities (each such communication by the Company or
its agents and representatives (other than a communication referred to in clauses (i), (ii)
and (iii) below) an “Issuer Written Communication”) other than (i) the Preliminary Offering
Memorandum, (ii) the Offering Memorandum, (iii) the documents listed on Annex A hereto,
including a term sheet substantially in the form of Annex B hereto, which constitute part of
the Time of Sale Information, and (iv) the Electronic Roadshow and any other written
communications, in each case used in accordance with Section 4(c). Each such Issuer Written
Communication, when taken together with the Time of Sale Information, did not, and at the
Closing Date will not, contain any 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; provided that the Company
makes no representation and warranty with respect to any statements or omissions made in
each such Issuer Written Communication in reliance upon and in conformity with information
relating to any Initial Purchaser furnished to the



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Company in writing by such Initial Purchaser through the Representatives expressly for
use in any Issuer Written Communication.




     (c) Incorporated Documents. Except as otherwise disclosed therein, the documents
incorporated by reference in the Time of Sale Information and the Offering Memorandum, when
filed with the Commission and the Canadian Securities Regulators, conformed or will conform,
as the case may be, in all material respects to the applicable requirements of the United
States Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules and
regulations of the Commission thereunder and applicable Canadian Securities Laws, and did
not and will not contain any 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 therein, in
the light of the circumstances under which they were made, not misleading.




     (d) Financial Statements. The consolidated financial statements and the related notes
thereto of NNC and its subsidiaries included or incorporated by reference in each of the
Time of Sale Information and the Offering Memorandum comply in all material respects with
the applicable requirements of the Securities Act, the Exchange Act and applicable Canadian
Securities Laws and present fairly the consolidated financial position of NNC and its
subsidiaries as of the dates indicated and the results of their operations and the changes
in their cash flows for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles in the United States applied on
a consistent basis throughout the periods covered thereby; the other financial information
included or incorporated by reference in each of the Time of Sale Information and the
Offering Memorandum has been derived from the accounting records of NNC and its subsidiaries
and presents fairly the information shown thereby; and the “Summary consolidated financial
data of NNC” set forth in the Time of Sale Information and the Offering Memorandum is
accurately presented in all material respects and prepared on a basis consistent with the
audited and unaudited historical consolidated financial statements from which it has been
derived.




     (e) No Material Adverse Change. Since the date of the most recent consolidated
financial statements of NNC included or incorporated by reference in the Time of Sale
Information and the Offering Memorandum (exclusive of any amendment or supplement thereto on
or after the date of this Agreement), except in each case as otherwise disclosed in,
incorporated by reference in or contemplated by the Time of Sale Information and the
Offering Memorandum; (i) there has not been any change in the capital stock or long-term
debt of NNC and its consolidated subsidiaries, or any dividend or distribution of any kind
declared, set aside for payment, paid or made by NNC on any class of its capital stock, or
any material adverse change, or any event that could reasonably be expected to result in a
material adverse change in the business, properties, senior management, financial condition,
stockholders’ equity or results of operations of NNC and its subsidiaries taken as a whole;
(ii) none of NNC or any of its subsidiaries has entered into



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any transaction or agreement or incurred any liability or obligations, direct or
contingent, in each case, that is material to NNC and its subsidiaries taken as a whole; and
(iii) none of NNC or any of its subsidiaries has sustained any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority, in each case, that is material to NNC
and its subsidiaries, taken as a whole.




     (f) Organization and Good Standing. The Issuers (i) have each been duly organized and
are validly existing and in good standing under the laws of their respective jurisdictions
of organization and (ii) have all corporate power and authority necessary to conduct their
businesses as described in the Time of Sale Information and the Offering Memorandum, except
where the failure to have such power or authority would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the business,
properties, senior management, financial condition, stockholders’ equity or results of
operations of NNC and its subsidiaries taken as a whole or on the performance by the Issuers
of their obligations under the Securities (a “Material Adverse Effect”).




     (g) Capitalization. NNC has an authorized capitalization as set forth in the Time of
Sale Information and the Offering Memorandum.




     (h) Due Authorization. Each Issuer has the corporate power and authority to execute
and deliver this Agreement, the Notes, the Indenture (including the Guarantees set forth
therein), the Exchange Securities and the Registration Rights Agreement (the “Transaction
Documents”), as applicable, and to perform its obligations hereunder and thereunder.




     (i) The Indenture. (x) The Original Indenture has been duly authorized, executed and
delivered by each Issuer and constitutes and (y) the execution and delivery of the Indenture
(as supplemented by a third supplemental indenture to be entered into by and between the
Company, the Guarantors and the Trustee on the Closing Date) has been duly authorized by
each Issuer and assuming due authorization thereof by the other parties thereto, when duly
executed and delivered in accordance with its terms by each of the parties thereto, will
constitute, a legal, valid and binding obligation of each Issuer enforceable against each
such Issuer in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights (including applicable non-U.S. laws or governmental actions)
and to general principles of equity (it being understood that the enforceability thereof in
Canada may be limited by the Currency Act (Canada), which precludes Canadian courts from
awarding a judgment for an amount expressed in a currency other than Canadian Dollars and to
the extent that any requirement to pay interest at a greater rate after than before default
may not be enforceable in Canada if the same is construed by a Canadian court to constitute
a penalty) (collectively, the “Enforceability Ex-



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ceptions”); and the Original Indenture conforms, and on the Closing Date the Indenture
(as supplemented by a third supplemental indenture to be entered into by and between the
Company, the Guarantors and the Trustee on the Closing Date) will conform, in all material
respects, to the requirements of the United States Trust Indenture Act of 1939, as amended
(the “Trust Indenture Act”), and the rules and regulations of the Commission applicable to
an indenture that is qualified thereunder.




     (j) The Notes and the Guarantees. The issuance and sale of the Notes have been duly
authorized by the Company and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, the Notes will be duly issued and
will constitute valid and binding obligations of the Company enforceable against the Company
in accordance with their terms, subject to the Enforceability Exceptions, and will be
entitled to the benefits of the Indenture; and the execution and delivery of each Guarantee
has been duly authorized by the applicable Guarantor and, when duly endorsed by such
Guarantor as provided in the Indenture, each Guarantee will constitute a valid and binding
agreement of such Guarantor, enforceable against such Guarantor in accordance with its
terms, subject to the Enforceability Exceptions.




     (k) The Exchange Securities. On the Closing Date, (i) the issuance of the Exchange
Notes, if required to be issued, will have been duly authorized by the Company and, when the
Exchange Notes have been duly executed, authenticated, issued and delivered in exchange for
the Notes as contemplated by the Registration Rights Agreement and the Indenture, the
Exchange Notes will be duly issued and will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture; and (ii)
the execution and delivery of the Exchange Note Guarantees, if required to be delivered,
will have been duly authorized by the applicable Guarantor and, when duly endorsed by such
Guarantor as contemplated by the Registration Rights Agreement and the Indenture, each
Exchange Note Guarantee of a Guarantor will constitute a valid and binding agreement of such
Guarantor, enforceable against such Guarantor in accordance with its terms, subject to the
Enforceability Exceptions.




     (l) Purchase and Registration Rights Agreements. The execution and delivery of this
Agreement has been duly authorized by each Issuer; it has been duly executed and delivered
by each Issuer; and the Registration Rights Agreement has been duly authorized by each
Issuer and, when duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and binding agreement of each such Issuer
enforceable against each such Issuer in accordance with its terms, subject to the
Enforceability Exceptions, and except that rights to indemnity and contribution thereunder
may be limited by applicable law and public policy considerations.




     (m) Descriptions of the Transaction Documents. The Indenture and each of the
Registration Rights Agreement, the Securities and the Exchange Securities will con-



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form in all material respects to the description thereof, contained in the Time of Sale
Information and the Offering Memorandum.




     (n) No Violation or Default. None of the Issuers is (i) in violation of its charter or
by-laws or similar organizational documents; (ii) in default, and no event has occurred and
is continuing that, with notice or lapse of time or both, would constitute such a default,
under any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Issuer is bound or to which any of the property or assets of such
Issuer is subject; or (iii) in violation of any applicable law or statute or any applicable
judgment, order, rule or regulation of any relevant court or arbitrator or governmental or
regulatory authority, except, in each case as otherwise disclosed in, incorporated by
reference in or contemplated by the Time of Sale Information and the Offering Memorandum,
and except, in the case of clauses (ii) and (iii) above, for any such default or violation
that would not, individually or in the aggregate, have a Material Adverse Effect.




     (o) No Order or Proceedings. There is no order, ruling or direction of any Canadian
Securities Regulator which would deny the benefit of an exemption otherwise provided for
under applicable Canadian Securities Laws with respect to the distribution of the Securities
or the Exchange Securities, and no proceedings which would reasonably be expected to result
in any such order or ruling have been instituted or are pending or, to the knowledge of the
Issuers, threatened.




     (p) No Conflicts. The execution, delivery and performance by each Issuer of each of
the Transaction Documents to which each is a party, the issuance and sale of the Securities
and compliance by each Issuer with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents by each Issuer will not (i) conflict
with or result in a breach or violation of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of any Issuer pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which any Issuer is a party or by
which any Issuer is bound or to which any of the property or assets of any Issuer is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar
organizational documents of any Issuer, or (iii) result in the violation of any applicable
law or statute or any applicable judgment, order, rule or regulation of any relevant court
or arbitrator or governmental or regulatory authority; except, in the case of clauses (i)
and (iii) above, for any such conflict, breach or violation that would not, individually or
in the aggregate, have a Material Adverse Effect.




     (q) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority in
the United States or Canada is required for the execution, delivery and performance by each
Issuer of each of the Transaction Documents to which each is a party, the issuance and sale
of the Securities and compliance by each Issuer with the terms



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thereof and the consummation of the transactions contemplated by the Transaction
Documents and, if required, the issuance and delivery of the Exchange Securities in exchange
for the Notes, except for (i) such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable state securities laws in
connection with the purchase and resale of the Securities by the Initial Purchasers, (ii)
notices to be filed by the Company under s.12 of the Securities Act (Quebec), (iii) the
delivery of the requisite number of copies of the Offering Memorandum to, and the filing of
the required reports in the prescribed form and executed in accordance with applicable
securities laws of the Relevant Provinces, together with the requisite filing fees and, in
the case of British Columbia, the requisite fee checklist, (iv) with respect to the Exchange
Securities, such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under the Securities Act, and applicable state securities
laws, as contemplated by the Registration Rights Agreement, (v) such consents, approvals,
authorizations, orders and registrations or qualifications as may be required with respect
to the Exchange Securities, under applicable provincial securities laws and Part VIII of the
Canada Business Corporations Act, and (vi) with respect to the filing of a shelf
registration statement, if required, as contemplated in the Registration Rights Agreement,
such consents, approvals, authorizations, orders and registrations or qualifications as may
be required under Part VIII of the Canada Business Corporations Act.




     (r) Legal Proceedings. Except as described in, incorporated by reference in or
contemplated by the Time of Sale Information and the Offering Memorandum, (i) there is no
litigation, arbitration, legal proceeding or governmental or regulatory investigation
involving NNC or any of its subsidiaries that, if determined adversely to NNC or such
subsidiary, would individually or in the aggregate, have a Material Adverse Effect, and (ii)
to the knowledge of the Issuers, no such litigation, arbitration, proceeding or
investigation is pending or threatened.




     (s) Independent Accountants. (i) KPMG LLP who have certified certain consolidated
financial statements of NNC and its subsidiaries and the Company and its subsidiaries for
the fiscal year ended December 31, 2007 are independent public accountants with respect to
NNC and its consolidated subsidiaries and the Company and its consolidated subsidiaries
within the rules of the Public Company Accounting Oversight Board and (ii) Deloitte & Touche
LLP, who have certified certain consolidated financial statements of NNC and its
subsidiaries and the Company and its subsidiaries for fiscal years prior to 2007, were,
during the period of their engagement as NNC’s auditors, independent public accountants with
respect to NNC and its consolidated subsidiaries and the Company and its consolidated
subsidiaries within the rules of the Public Company Accounting Oversight Board.




     (t) Title to Intellectual Property. Except as disclosed in the Time of Sale
Information and the Offering Memorandum, NNC and its subsidiaries maintain its Material
Intellectual Property (as defined below) in a commercially reasonable, prudent manner



10









 







consistent with its past practices and with respect to any Material Intellectual
Property that has been infringed, misappropriated or diluted, in each case in a material
respect, by a third party, NNC or the relevant subsidiary has, unless NNC or such subsidiary
has reasonably determined that such action would be of negligible value, economic or
otherwise, taken commercially reasonable steps consistent with its past practices to sue for
infringement, misappropriation or dilution and recovered any and all damages for such
infringement, misappropriation or dilution, and/or taken such other actions as NNC or such
subsidiary reasonably deemed appropriate under the circumstances to protect such Material
Intellectual Property.




     “Material Intellectual Property” means, at the time of determination, any intellectual
property that is one of the 100 most valuable items of intellectual property owned by NNC
and its subsidiaries taken as a whole at such time to the business of NNC and its
subsidiaries taken as a whole, as such business is presently conducted or proposed to be
conducted, as reasonably determined by NNC and its subsidiaries, acting in their reasonable
discretion.




     (u) Investment Company Act. No Issuer is, and after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof as described in the Time of
Sale Information and the Offering Memorandum, no Issuer will be, an “investment company” or
an entity “controlled” by an “investment company” within the meaning of the United States
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company Act”).




     (v) Disclosure Controls. Except as disclosed or incorporated by reference in the Time
of Sale Information and the Offering Memorandum, NNC and its subsidiaries maintain an
effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of
the Exchange Act) that is designed to ensure that information required to be disclosed by
NNC in reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and
forms, including controls and procedures designed to ensure that such information is
accumulated and communicated to NNC’s management as appropriate to allow timely decisions
regarding required disclosure. NNC and its subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by Rule 13a-15 under
the Exchange Act.




     (w) Accounting Controls. Except as disclosed or incorporated by reference in the Time
of Sale Information and the Offering Memorandum, NNC and its subsidiaries maintain a system
of “internal control over financial reporting” (as defined in Rule 13a-15(f) under the
Exchange Act) that complies with the requirements of the Exchange Act and has been designed
by, or under the supervision of, NNC’s principal executive and principal financial officers,
or persons performing similar functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of fi-



11









 







nancial statements for external purposes in accordance with generally accepted
accounting principles. Except as disclosed or incorporated by reference in the Time of Sale
Information and the Offering Memorandum, NNC and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Except as disclosed in each of the Time of Sale
Information and the Offering Memorandum, as of December 31, 2007 and, to the knowledge of
the Issuers, as of the Time of Sale and the Closing Date, there has been no material
weakness in NNC’s internal control over financial reporting.




     (x) No Unlawful Payments. NNC and the Company each has policies and procedures in
effect that prohibit the following activities by any director, officer, agent, employee or
other person associated with or acting on behalf of either of them or any of their
respective subsidiaries: (i) the use of corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii) any direct or
indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) the violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977; or (iv) any bribe, unlawful rebate, payoff, influence payment, kickback or
other unlawful payment.




     (y) Solvency. Except as disclosed in or incorporated by reference in the Time of Sale
Information and the Offering Memorandum, including without limitation in the risk factor
titled “NNC’s Guarantee may be unenforceable, subordinated or limited in scope under the
insolvency and creditor protection laws of Canada” and “NNI’s Guarantee may be unenforceable
under U.S. federal and state fraudulent conveyance statutes”, immediately after the Closing
Date, each Issuer (after giving effect to the issuance of the Securities and the other
transactions related thereto as described in the Time of Sale Information and the Offering
Memorandum) will be Solvent. As used in this paragraph, the term “Solvent” means, (A) with
respect to NNI on a particular date, that on such date (i) the fair market value of the
assets of NNI, at a fair valuation viewing NNI as a going concern, exceeds its debts and
liabilities, subordinated, contingent or otherwise (in each case determined on a
consolidated basis); (ii) the present fair saleable value of the property of NNI exceeds the
amount that will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise (in each case determined on a
consolidated basis) as such debts and other liabilities become absolute and matured; (iii)
NNI will be able to pay its debts and liabilities, subordinated, contingent or otherwise as
such debts and liabilities become absolute and matured; and (iv) NNI will not have
unreasonably small capital with which to conduct the business in which it is engaged as such
busi-



12









 







ness is now conducted and proposed to be conducted after the Closing Date; and (B) with
respect to NNC or the Company on a particular date, (i) the aggregate property of NNC or the
Company at fair valuation, or if disposed of at a fairly conducted sale under legal process,
is sufficient to enable payment of all its obligations, due and accruing due; (ii) the
property of NNC or the Company is, at a fair valuation, greater than the total amount of
liabilities, including contingent liabilities, of NNC or the Company, as applicable; (iii)
NNC or the Company has not ceased paying its current obligations in the ordinary course of
business as they generally become due; and (iv) NNC or the Company is not for any reason
unable to meet its obligations as they generally become due; in each case, it being
understood that the Issuers cannot be certain as to how a court would apply the foregoing
standards to any contingent liabilities in determining whether the relevant Issuer was
solvent at the relevant time.




     (z) No Broker’s Fees. Neither NNC nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would
give rise to a valid claim against NNC or any of its subsidiaries or any Initial Purchaser
for a brokerage commission, finder’s fee or like payment in connection with the offering and
sale of the Securities.




     (aa) Rule 144A Eligibility. On the Closing Date, the Securities will not be of the
same class as securities listed on a U.S. national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system;
and each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its
respective date, contains or will contain all the information that, if requested by a
prospective purchaser of the Securities, would be required to be provided to such
prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act.




     (bb) No Integration. Neither the Company nor any of its affiliates (as defined in Rule
501(b) of Regulation D) has, directly or through any agent (other than the Initial
Purchasers, as to which no representation is made), sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the Securities
Act), that is or will be integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.




     (cc) No General Solicitation or Directed Selling Efforts. None of the Company or any
of its affiliates or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no representation is made) has (i) solicited offers for, or offered
or sold, the Securities by means of (A) any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D or (B) in any manner involving
a public offering within the meaning of Section 4(2) of the Securities Act, or (ii) engaged
in any directed selling efforts with respect to the Securities within the meaning of
Regulation S under the Securities Act (“Regulation S”), and all such persons have complied
with the offering restrictions requirements of Regulation S.



13









 






     (dd) Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 1(c) (including Annex C hereto)
and their compliance with their agreements set forth therein, and except in connection with
the transactions contemplated by the Registration Rights Agreement, it is not necessary, in
connection with the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in the manner
contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum, to
register the Securities under the Securities Act or to comply with the prospectus
requirements under applicable Canadian Securities Laws.




     (ee) No Stabilization. None of the Issuers has taken, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Securities.




     (ff) Margin Rules. Neither the issuance, sale and delivery of the Notes nor the
application of the proceeds thereof by the Company as described in the Time of Sale
Information and the Offering Memorandum will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.




     (gg) Forward-Looking Statements. No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained or
incorporated by reference in the Time of Sale Information and the Offering Memorandum has
been made or reaffirmed without a reasonable basis or has been disclosed other than in good
faith.




     (hh) Statistical and Market Data. Nothing has come to the attention of the Issuers
that has caused the Issuers to believe that the statistical and market-related data included
or incorporated by reference in the Time of Sale Information and the Offering Memorandum is
not based on or derived from sources that are reliable and accurate in all material
respects.




     (ii) Sarbanes-Oxley Act. With respect to the period subsequent to the filing of NNC’s
Annual Report on Form 10-K for the year ended December 31, 2007, except as disclosed in or
incorporated by reference in the Time of Sale Information and the Offering Memorandum, to
the knowledge of NNC, there is and has been no failure on the part of NNC or its
subsidiaries or their respective directors or officers, in their capacities as such, to
comply in all material respects with any applicable provision of the United States
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith
(the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906
related to certifications.



14









 





     4. Further Agreements of the Issuers. The Issuers jointly and severally covenant and
agree with each Initial Purchaser that:




     (a) Delivery of Copies. The Company will deliver, without charge, to the Initial
Purchasers as many copies of the Preliminary Offering Memorandum, any other Time of Sale
Information, any Issuer Written Communication and the Offering Memorandum (including all
amendments and supplements thereto) as the Representatives may reasonably request.




     (b) Offering Memorandum, Amendments or Supplements. Before finalizing the Offering
Memorandum or making or distributing any amendment or supplement to any of the Time of Sale
Information or the Offering Memorandum or filing with the Commission any document that will
be incorporated by reference therein, the Company will furnish to the Representatives and
counsel for the Initial Purchasers a copy of the proposed Offering Memorandum or such
amendment or supplement or document to be incorporated by reference therein, for review, and
will not distribute any such proposed Offering Memorandum, amendment or supplement or file
any such document with the Commission to which the Representatives reasonably object.




     (c) Additional Written Communications. Before making, preparing, using, authorizing,
approving or referring to any Issuer Written Communication, the Company will furnish to the
Representatives and counsel for the Initial Purchasers a copy of such written communication
for review and will not make, prepare, use, authorize, approve or refer to any such written
communication to which the Representatives reasonably object.




     (d) Notice to the Representatives. The Company will advise the Representatives
promptly, and confirm such advice in writing, (i) of the issuance by any governmental or
regulatory authority of any order preventing or suspending the use of any of the Time of
Sale Information, any Issuer Written Communication or the Offering Memorandum or the
initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any
event at any time prior to the completion of the initial offering of the Securities as a
result of which any of the Time of Sale Information, taken as a whole, any Issuer Written
Communication, taken together with the Time of Sale Information, or the Offering Memorandum
as then amended or supplemented would include any 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 existing when such Time of Sale Information, Issuer Written
Communication or the Offering Memorandum is delivered to a purchaser, not misleading; and
(iii) of the receipt by the Company of any notice with respect to any suspension of the
qualification of the Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its reasonable best
efforts to prevent the issuance of any such order preventing or suspending the use of any of
the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum or
suspending any such qualification of the Securi-



15









 







ties and, if any such order is issued, will obtain as soon as possible the withdrawal
thereof.




     (e) Ongoing Compliance of the Offering Memorandum and Time of Sale Information. If at
any time prior to the earlier of (x) completion of the initial offering of the Securities
and (y) the date that is six months following the Closing Date, (i) any event shall occur or
condition shall exist as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances existing when the Offering Memorandum is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to comply
with law, the Company will promptly notify the Initial Purchasers thereof and promptly
prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Offering Memorandum (or any document to be filed with the
Commission and incorporated by reference therein) as may be necessary so that the statements
in the Offering Memorandum as so amended or supplemented (including such document to be
incorporated by reference therein) will not, in the light of the circumstances existing when
the Offering Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with law.




     (f) Canadian Reports. The Issuers will file, within the time periods prescribed by the
applicable Canadian Securities Laws, such documents and reports as may be required to be
filed by the Issuers with Canadian Securities Regulators under the applicable Canadian
Securities Laws relating to the private placement of Securities by the Initial Purchasers;
provided that the Initial Purchasers have delivered a request to effect such filings
together with such information as to permit the Issuers to do so, and the Issuers will pay
any filing fee prescribed with respect thereto.




     (g) Blue Sky Compliance. The Company will arrange for the qualification of the
Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Representatives shall reasonably request and will continue such qualifications in effect
so long as required for the offering and resale of the Securities; provided that
none of the Issuers shall be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not
otherwise so subject.




     (h) Clear Market. During the period from the date hereof through and including the
date that is 30 days after the date hereof, the Issuers will not, without the prior written
consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any
debt securities (other than any equity linked or convertible securities or any inter-



16









 







company debt or any related external coupon stripping transactions) issued or
guaranteed by any of the Issuers and having a tenor of more than one year.




     (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the
Securities as described in the Time of Sale Information and the Offering Memorandum under
the heading “Use of proceeds”.




     (j) Supplying Information. While the Securities remain outstanding and are “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Issuers will,
during any period in which the Company is not subject to and in compliance with Section 13
or 15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of such holders or
such prospective purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.




     (k) PORTAL and DTC. The Company will assist the Initial Purchasers in arranging for
the Securities to be designated Private Offerings, Resales and Trading through Automated
Linkages (“PORTAL”) Market securities in accordance with the rules and regulations adopted
by the Financial Industry Regulatory Authority (“FINRA”) relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and settlement through The
Depository Trust Company (“DTC”).




     (l) No Resales by the Company. Until the Securities are Freely Tradeable (as such term
is defined in the Registration Rights Agreement) or the issuance of the Exchange Securities,
the Company will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Securities that have been acquired by any of
them, except for Securities purchased by the Company or any of its affiliates and resold in
a transaction registered under the Securities Act.




     (m) No Integration. None of the Company, any of its affiliates (as defined in Rule
501(b) of Regulation D) or any person acting on behalf of the Company or such affiliate
will, directly or through any agent (other than the Initial Purchasers, as to which no
covenant is given), sell, offer for sale, solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act), that is or will be integrated
with the sale of the Securities in a manner that would require registration of the
Securities under the Securities Act.




     (n) No General Solicitation or Directed Selling Efforts. None of the Company or any of
its affiliates or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no covenant is given) will (i) solicit offers for, or offer or sell,
the Securities by means of (A) any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or (B) in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (ii) engage in any



17









 







directed selling efforts with respect to the Securities within the meaning of
Regulation S, and all such persons will comply with the offering restrictions requirement of
Regulation S. The Company and its affiliates will not provide access to the Electronic
Roadshow (as defined in Annex A) to any prospective investor in the Securities that is a
resident in, or acting on behalf of an entity resident in, any of the provinces or
territories of Canada (it being understood that no covenant is made by the Company with
respect to any action taken by any Initial Purchaser).




     (o) No Stabilization. None of the Issuers will take, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Securities.




     (p) The Issuers agree that each Note, or an ownership statement issued under a direct
registration statement or other electronic book entry system acceptable to the Ontario
Securities Commission with respect to a Note, will bear the following legend:




UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THIS SECURITY IN CANADA BEFORE [the date that is
four months and one day following the closing date of the distribution of
the Notes].



     5. Certain Agreements of the Initial Purchasers. Each Initial Purchaser hereby
represents and agrees that it has not and will not use, authorize use of, refer to, or participate
in the planning for use of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum
and the Offering Memorandum, (ii) a written communication that contains no “issuer information” (as
defined in Rule 433(h)(2) under the Securities Act) that was not included (including through
incorporation by reference) in the Preliminary Offering Memorandum or the Offering Memorandum, (ii)
any written communication listed on Annex A or prepared pursuant to Section 4(c) above (including
the Electronic Roadshow), (iv) any written communication prepared by such Initial Purchaser and
approved by the Company in advance in writing or (v) any written communication relating to or that
contains the terms of the Securities and/or other information that was included (including through
incorporation by reference) in the Preliminary Offering Memorandum or the Offering Memorandum.



     6. Conditions of Initial Purchasers’ Obligations. The obligation of each Initial
Purchaser to purchase Securities on the Closing Date as provided herein is subject to the
performance in all material respects by each Issuer of their respective covenants and other
obligations hereunder and to the following additional conditions:




     (a) Representations and Warranties. The representations and warranties of each Issuer
contained herein shall be true and correct at the Time of Sale and on and as of the Closing
Date; and the statements of each Issuer and their respective officers made in



18









 







any certificates delivered pursuant to this Agreement shall be true and correct on and
as of the Closing Date.




     (b) No Downgrade. Subsequent to the Time of Sale, (i) no downgrading shall have
occurred in the rating accorded the Securities or any other debt securities or preferred
stock issued or guaranteed by any Issuer by any “nationally recognized statistical rating
organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act; and (ii) no such organization shall have publicly announced that
it has under surveillance or review, or has changed its outlook with respect to, its rating
of the Securities or of any other debt securities or preferred stock issued or guaranteed by
any Issuer (other than an announcement with positive implications of a possible upgrading).




     (c) No Material Adverse Change. Subsequent to the Time of Sale, no event or condition
of a type described in Section 3(e) hereof shall have occurred or shall exist, which event
or condition is not described in or contemplated by the Time of Sale Information (excluding
any amendment or supplement thereto or any document filed with the Commission after the Time
of Sale and incorporated by reference therein) and the Offering Memorandum (excluding any
amendment or supplement thereto or any document filed with the Commission after the date
hereof and incorporated by reference therein) and the effect of which in the reasonable
judgment of the Representatives, makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the terms and in the manner contemplated by
this Agreement and the Offering Memorandum.




     (d) Officers’ Certificate. The Representatives shall have received on and as of the
Closing Date a certificate, on behalf of NNC, of either (A) the chief executive officer and
the chief financial officer of NNC or (B) one of the aforesaid officers and any one of the
Corporate Secretary, the Controller or the Treasurer of NNC (i) confirming that such
officers have reviewed the Time of Sale Information and the Offering Memorandum and, to the
best knowledge of such officers after reasonable investigation, the representations set
forth in Section 3(a) and 3(b) hereof are true and correct, (ii) confirming that the other
representations and warranties of the Issuers in this Agreement are true and correct (in
each case, if not qualified as to materiality or Material Adverse Effect, in all material
respects) and that the Issuers have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to the Closing
Date in all material respects and (iii) to the effect set forth in paragraphs (b) and (c)
above.




     (e) Comfort Letters. On the date of this Agreement and on the Closing Date, each of
KPMG LLP and Deloitte & Touche LLP shall have furnished to the Representatives, at the
request of the Company, letters, dated the respective dates of delivery thereof and
addressed to the Initial Purchasers and the Board of Directors of each of the Issuers, in
form and substance reasonably satisfactory to the Representative, containing state-



19









 







ments and information of the type customarily included in accountants’ “comfort
letters” to initial purchasers with respect to the financial statements and certain
financial information contained or incorporated by reference in the Time of Sale Information
and the Offering Memorandum.




     (f) Opinion of Counsel for the Company. Gordon A. Davies, Esq., Deputy General Counsel
and Corporate Secretary of NNC and the Company, Cleary Gottlieb Steen & Hamilton LLP,
special U.S. counsel for the Issuers, and Ogilvy Renault LLP, Canadian counsel for the
Issuers, shall have furnished to the Representatives, at the request of the Company, their
written opinion or letter, as the case may be, dated the Closing Date and addressed to the
Initial Purchasers, in form and substance reasonably satisfactory to the Representatives, to
the effect set forth in Annexes D-1, D-2 and D-3, respectively, hereto.




     (g) Opinion and 10b-5 Statement of Counsel for the Initial Purchasers. The
Representatives shall have received on and as of the Closing Date an opinion and 10b-5
statement from Cahill Gordon & Reindel llp, counsel for the Initial Purchasers, and
an opinion from Blake, Cassels & Graydon LLP, Canadian counsel for the Initial Purchasers,
with respect to such matters as the Representatives may reasonably request, and such counsel
shall have received such documents and information as they may reasonably request to enable
them to pass upon such matters.




     (h) No Legal Impediment to Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any United States
federal or Canadian federal, state, provincial, territorial or foreign governmental or
regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the
Notes or the issuance of the Guarantees; and no injunction or order of any United States
federal or Canadian federal, state, provincial, territorial or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of the Notes or the
issuance of the Guarantees.




     (i) Good Standing. The Representatives shall have received on and as of the Closing
Date evidence reasonably satisfactory to the Representative of the good standing of the
Issuers in their respective jurisdictions of organization and the jurisdictions of their
principal executive offices, in each case in writing or any standard form of
telecommunication, from the appropriate governmental authorities of such jurisdictions.




     (j) Registration Rights Agreement. The Initial Purchasers shall have received a
counterpart of the Registration Rights Agreement that shall have been executed and delivered
by a duly authorized officer of each Issuer.



20









 






     (k) PORTAL and DTC. The Securities shall have been approved by the FINRA for trading
in the PORTAL Market and shall be eligible for clearance and settlement through DTC.




     (l) Additional Documents. On or prior to the Closing Date, the Issuers shall have
furnished to the Representatives such further certificates and documents as the
Representatives may reasonably request.



     All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.



     7. Indemnification and Contribution.



     (a) Indemnification of the Initial Purchasers. The Issuers, jointly and severally, agree to
indemnify and hold harmless each Initial Purchaser, its affiliates, directors and officers and each
person, if any, who controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering Memorandum, any of the
other Time of Sale Information, the Electronic Roadshow, any Issuer Written Communication or the
Offering Memorandum (or any amendment or supplement thereto) or any omission or 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, except insofar as such losses,
claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity with any information
relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser
through the Representatives expressly for use therein, it being understood and agreed that the only
such information furnished by any Initial Purchaser consists of the information described as such
in subsection (b) below.



     (b) Indemnification of the Issuers. Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless each Issuer, each of the Issuer’s officers and directors and each
person, if any, who controls any Issuer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a)
above, but only with respect to any losses, claims, damages or liabilities that arise out of, or
are based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to such Initial Purchaser furnished
to the Company in writing by such Initial Purchaser through the Representatives expressly for use
in any of the Time of Sale Information and the Offering Memorandum (or any amendment or supplement
thereto), it being understood and agreed that the only such informa-



21









 







tion consists of: the information contained in (a) the Preliminary Offering Memorandum and
the Offering Memorandum in the third paragraph, the third sentence of the eighth paragraph and the
sixth sentence of the twelfth paragraph and the fifteenth paragraph under the caption “Plan of
distribution” and the names of the Initial Purchasers on the cover page; provided,
however, that the Initial Purchasers shall not be liable for any losses, claims, damages or
liabilities arising out of or based upon the Company’s failure to amend or supplement any of the
Time of Sale Information or the Offering Memorandum pursuant to Section 4(b).



     (c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under paragraphs (a) or (b) above except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under paragraphs (a) or (b)
above. If any such proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and
any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time
after notice of the action to retain counsel reasonably satisfactory to the Indemnified Person;
(iii) the named parties in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different from or in addition
to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the Indemnified Person
and representation of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood and agreed that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for any Initial Purchaser, its affiliates, directors and
officers and any control persons of such Initial Purchaser shall be designated in writing by the
Representatives and any such separate firm for the Issuers, their respective officers and directors
and any control persons



22









 







of the Issuers shall be designated in writing by the Company. The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with such consent or if there be a
final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or judgment. No
Indemnifying Person shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or
could have been a party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.



     (d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Issuers on the one
hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Issuers on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Issuers
on the one hand and the Initial Purchasers on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received by the Company from
the sale of the Securities and the total discounts and commissions received by the Initial
Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering
price of the Securities. The relative fault of the Issuers on the one hand and the Initial
Purchasers on the other 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 any Issuer or by the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.



     (e) Limitation on Liability. The Issuers and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such In-



23









 







demnified Person in connection with any such action or claim. Notwithstanding the provisions
of this Section 7, in no event shall an Initial Purchaser be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the offering of the Securities exceeds the amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’
obligations to contribute pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.



     (f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at
law or in equity.



     8. Termination. This Agreement may be terminated in the absolute discretion of the
Representatives, by notice to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date (i) trading generally shall have been suspended or materially limited
on the New York Stock Exchange, the NASDAQ Global Market, the Toronto Stock Exchange or the
over-the-counter market; (ii) trading of any securities issued or guaranteed by any Issuer shall
have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium
on commercial banking activities shall have been declared by New York, Ontario, United States
federal or Canadian federal authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or crisis, either
within or outside the United States or Canada, that, in the reasonable judgment of the
Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with
the offering, sale or delivery of the Securities on the terms and in the manner contemplated by
this Agreement, the Time of Sale Information and the Offering Memorandum.



     9. Defaulting Initial Purchaser.



     (a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the
Securities that it has agreed to purchase hereunder, the non-defaulting Initial Purchasers may in
their discretion arrange for the purchase of such Securities by other persons satisfactory to the
Company on the terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such
Securities on such terms. If other persons become obligated or agree to purchase the Securities of
a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in
the Time of Sale Information, the Offering Memorandum or in any other document or arrange-



24









 







ment, and the Company agrees to promptly prepare any amendment or supplement to the Time of
Sale Information or the Offering Memorandum that effects any such changes. As used in this
Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the
context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this
Section 9, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase.



     (b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the
Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser
to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase
hereunder plus such Initial Purchaser’s pro rata share (based on the principal
amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been
made.



     (c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the
Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities,
or if the Company shall not exercise the right described in paragraph (b) above, then this
Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers.
Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part
of the Issuers, except that the Issuers will continue to be liable for the payment of expenses as
set forth in Section 10(a) hereof and except that the provisions of Section 7 hereof shall not
terminate and shall remain in effect.



     (d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it
may have to the Company, the Guarantor or any non-defaulting Initial Purchaser for damages caused
by its default.



     10. Payment of Expenses.



     (a) Whether or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Issuers, jointly and severally, agree to pay or cause to be paid all
costs and expenses incident to the performance of their respective obligations hereunder, including
without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities; (ii) the costs incident to the preparation and printing of the
Preliminary Offering Memorandum, any other Time of Sale Information and the Offering Memorandum
(including any amendment or supplement thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the
Issuers’ counsel and independent accountants; (v) the reasonable fees and expenses incurred in
connection with the registration or qualification and determination of eligibility for investment
of



25









 







the Securities under the laws of such jurisdictions as the Representatives may reasonably
designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the
reasonable related fees and expenses of counsel for the Initial Purchasers); (vi) any fees charged
by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any
paying agent (including related fees and expenses of any counsel to such parties); (viii) all
expenses and application fees incurred in connection with the application for the inclusion of the
Securities on the PORTAL Market and the approval of the Securities for book-entry transfer by DTC;
and (ix) all expenses incurred by the Company in connection with any “road show” presentation to
potential investors, including all air travel expenses relating thereto (but excluding any expenses
associated with accommodations of any employees of the Initial Purchasers in connection with any
such “road show” presentation and any expenses associated with any meals in connection with any
such “road show” presentation).



     (b) If (i) this Agreement is terminated pursuant to Section 8(ii), (ii) the Company for any
reason fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial
Purchasers decline to purchase the Securities for any reason permitted under this Agreement, the
Issuers, jointly and severally, agree to reimburse the Initial Purchasers for all out-of-pocket
costs and expenses (including the reasonable fees and expenses of their counsel) reasonably
incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated
hereby.



     11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the Representatives and the other parties hereto and their
respective successors and any controlling persons referred to herein, and the affiliates, officers
and directors of each Initial Purchaser and the respective officers and directors of the Issuers
referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein. No purchaser of Securities from any Initial Purchaser
shall be deemed to be a successor merely by reason of such purchase.



     12. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Issuers, and the Initial Purchasers contained in this Agreement or
made by or on behalf of the Issuers, or the Initial Purchasers pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities
and shall remain in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Issuers or the Initial Purchasers.



     13. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule
405 under the Securities Act; and (d) the term “written communication” has the meaning set forth in
Rule 405 under the Securities Act.



26









 





     14. Miscellaneous.



     (a) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Initial Purchasers shall be given to the Representatives c/o
[                    ], [                    ], New York, New York [          ] (fax: [          ]); Attention: [         
      ], with a copy to Corey Wright, Esq., Cahill
Gordon & Reindel llp, 80 Pine Street, New York, New York 10005 (fax: (212) 269-5420).
Notices to the Company shall be given to it at 195 The West Mall, Toronto, Ontario, Canada M9C 5K1
(fax: (905) 863-7386) (or such other address and fax number as shall be furnished to the
Representatives); Attention: Gordon A. Davies, with a copy to Craig B. Brod, Esq. and Sandra L.
Flow, Esq., Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 (fax:
(212) 225-3999).



     (b) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.



     (c) Judgment Currency. The Issuers shall, jointly and severally, indemnify each Initial
Purchaser, their respective affiliates, each person, if any, who controls any of such parties
within the meaning of the Securities Act or the Exchange Act and each of their respective officers,
directors, employees and agents against any loss incurred by such party as a result of any judgment
or order being given or made in favor of such party for any amount due under this Agreement and
such judgment or order being expressed and paid in a currency (the “Judgment Currency”) other than
United States dollars and as a result of any negative variance between (i) the rate of exchange at
which the United States dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the spot rate of exchange in The City of New York at which such
party on the date of payment of such judgment or order is able to purchase United States dollars
with the amount of the Judgment Currency actually received by such party. The foregoing indemnity
shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.
The term “spot rate of exchange” shall include any premiums and costs of exchange payable in
connection with the purchase of, or conversion into, United States dollars.



     (d) Consent to Jurisdiction. Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement, the Transactions
Documents or the transactions contemplated hereby or thereby may be brought in any federal or New
York State court located in New York City, New York County, and each of the Issuers hereby consents
to the non-exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying of the venues of
any such suit, action or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient form. Process in any such suit,
action or proceeding may be served on any of the Issuers anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,



27









 







each Issuer agrees that service of process on any such Issuer as provided in clause (b) above
shall be deemed effective service of process on such Issuer.



     (e) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.



     (f) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.



     (g) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.




28












 





     If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.



	 	 	 	 	 
	 	Very truly yours,



NORTEL NETWORKS LIMITED

 	 
	 	By:  	/s/ Michael W. McCorkle
 	 
	 	 	Name:  	Michael W. McCorkle 	 
	 	 	Title:  	Treasurer 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	           /s/ Paviter S. Binning
 	 
	 	 	Name:  	Paviter S. Binning 	 
	 	 	Title:  	Executive Vice-President and
Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	NORTEL NETWORKS CORPORATION

 	 
	 	By:  	/s/ Michael W. McCorkle
 	 
	 	 	Name:  	Michael W. McCorkle 	 
	 	 	Title:  	Treasurer 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	          /s/ Paviter S. Binning
 	 
	 	 	Name:  	Paviter S. Binning 	 
	 	 	Title:  	Executive Vice-President and
Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	NORTEL NETWORKS INC.

 	 
	 	By:  	                                                               /s/ Lynn C. Egan
 	 
	 	 	Name:  	Lynn C. Egan 	 
	 	 	Title:  	Assistant Secretary 	 



29









 






	 	 	 	 	 




Accepted: May 21, 2008



[                    ]



For itself and on behalf of the

several Initial Purchasers listed

in Schedule 1 hereto.



BY: [                    ],





			
	By:	 	/s/ Authorized Signatory 

       Authorized Signatory









      








30









 








Schedule 1




	 	 	 	 	 
	 	 	Principal Amount	 
	Initial Purchaser	 	of Notes	 
	 
	 	 	 	 
	[                    ]
	 	$	202,500,000	 
	 
	 	 	 	 
	[                    ]
	 	$	202,500,000	 
	 
	 	 	 	 
	[                    ]
	 	$	67,500,000	 
	 
	 	 	 	 
	[                    ]
	 	$	67,500,000	 
	 
	 	 	 	 
	[                    ]
	 	$	45,000,000	 
	 
	 	 	 	 
	[                    ]
	 	$	45,000,000	 
	 
	 	 	 	 
	[                    ]
	 	$	45,000,000	 
	 
	 	 	 
	Total
	 	$	675,000,000	 






31









 






Annex A




Additional Time of Sale Information




     A pricing term sheet containing the terms of the securities and certain other information
substantially in the form of Annex B.



A-1









 





Annex B




	 	 	 
	

Pricing supplement dated May 21, 2008

	 	

CONFIDENTIAL





This supplement to the preliminary offering memorandum dated May 21, 2008 should be read together
with the preliminary offering memorandum before making a decision in connection with an investment
in the Notes and the related Guarantees. The information in this supplement supersedes the
information contained in the preliminary offering memorandum to the extent that it is inconsistent
therewith. Defined terms used but not defined herein have the meaning ascribed to them in the
preliminary offering memorandum.




	 	 	 	 	 	 	 
	Issuers:	 	 	 	Nortel Networks Limited
	Guarantors:	 	 	 	Nortel Networks Corporation and initially Nortel Networks Inc.
	Security Description:	 	 	 	Senior Notes add-on
	Distribution:	 	 	 	144A/Reg S with Registration Rights triggered if Notes not
freely tradeable on the fifth business day after the 1 year
anniversary of the Issue Date
	Face:	 	 	 	$675,000,000 
	Gross Proceeds:	 	 	 	$668,250,000 
	Coupon:	 	 	 	10.750% 
	Maturity:	 	 	 	July 15, 2016
	Offering Price:	 	 	 	99.00% 
	Yield to Maturity:	 	 	 	10.933% 
	Ratings:	 	 	 	B3/B-
	Interest Pay Dates:	 	 	 	July 15 and January 15
	Beginning:	 	 	 	July 15, 2008
	Clawback:	 	 	 	Up to 35% at 110.75%
	Until:	 	 	 	July 15, 2009
	Optional redemption:	 	 	 	Makewhole call at T+50bps prior to July 15, 2011, then:
	 

	 	 	 	On or after:
	 	Price:
	 	 	 	 	 
	 

	 	 	 	July 15, 2011
	 	105.375% 
	 

	 	 	 	July 15, 2012
	 	103.583% 
	 

	 	 	 	July 15, 2013
	 	101.792% 
	 

	 	 	 	July 15, 2014 and thereafter
	 	100.000% 
	Change of control:	 	 	 	Putable at 101% of principal plus accrued interest
	CUSIP:	 	 	 	656569AL4
	 	 	 	 	Reg S: C65614AD8
	ISIN:	 	 	 	USC65614AD80
	Denominations/Multiple:	 	 	 	2,000x1,000
	Trade Date:	 	 	 	May 21, 2008
	Settlement Date:	 	(T+4)	 	May 28, 2008
	Use of Proceeds:

	 	 	 	The net proceeds of the
offering of the Notes,
together with available cash,
will be used to redeem the
$675.0 million of 2008
Convertible Notes	 	 
	Bookrunners:

	 	 	 	[                    ]	 	 
	 

	 	 	 	[                    ]	 	 
	Co-Managers:

	 	 	 	[                    ]	 	 






B-1









 






	 	 	 	 	 	 	 
	 

	 	 	 	[                    ]	 	 
	 

	 	 	 	[                    ]	 	 
	 

	 	 	 	[                    ]	 	 
	 

	 	 	 	[                    ]	 	 






B-2









 






Annex C




Restrictions on Offers and Sales Outside the United States 




     In connection with offers and sales of Securities outside the United States:




     (a) Each Initial Purchaser acknowledges that the Securities have not been registered
under the Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an exemption from, or in
transactions not subject to, the registration requirements of the Securities Act.




     (b) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees
that:




     (i) Such Initial Purchaser has offered and sold the Securities, and will offer
and sell the Securities, (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the offering of the
Securities and the Closing Date, only in accordance with Regulation S under the
Securities Act (“Regulation S”) or Rule 144A or any other available exemption from
registration under the Securities Act and, with respect to offers and sales in the
Relevant Provinces, only to accredited investors within the meaning of NI 45-106 in
transactions which are exempt from the prospectus requirements of applicable
Canadian Securities Laws.




     (ii) None of such Initial Purchaser or any of its affiliates or any other
person acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and all such persons have complied
and will comply with the offering restrictions requirement of Regulation S.




     (iii) At or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, such Initial Purchaser will have sent to each distributor,
dealer or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the distribution compliance period a
confirmation or notice to substantially the following effect:




“The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the “Securities Act”), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with



C-1









 






Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S”.




     (iv) Such Initial Purchaser has not entered and will not enter into any
contractual arrangement with any distributor with respect to the distribution of the
Securities, except for any such arrangements with its affiliates or with the prior
written consent of the Company.




Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in this
Agreement have the meanings given to them by Regulation S.




     (c) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees
that, in relation to each Member State of the European Economic Area which has implemented
the Prospectus Directive (each, a “Relevant Member State”), with effect from and including
the date on which the Prospectus Directive is implemented in that Relevant Member State (the
“Relevant Implementation Date”) it has not made and will not make an offer of the Securities
to the public in that Relevant Member State prior to the publication of a prospectus in
relation to the Securities which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another Relevant Member State and
notified to the competent authority in that Relevant Member State, all in accordance with
the Prospectus Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of the Securities to the public in that Relevant Member
State at any time:




     (i) to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose is
solely to invest in securities;




     (ii) to any legal entity which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its
last annual or consolidated accounts; or




     (iii) in any other circumstances which do not require the publication by the
Company of a prospectus pursuant to Article 3 of the Prospectus Directive.




For purposes of paragraph (c), the expression an “offer of the Securities to the public” in
relation to any Securities in any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the offer and the Securities to
be offered so as to enable an investor to decide to purchase or subscribe the Securities, as
the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State and the term “Prospectus Directive” means



C-2









 






Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member
State.




     (d) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees
that: (i) it has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the
“FSMA”) of the United Kingdom) received by it in connection with the issue or sale of the
Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company
or the Guarantors; and (ii) it has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom.




     (e) Each Initial Purchaser acknowledges that no action has been or will be taken by the
Company that would permit a public offering of the Securities, or possession or distribution
of any of the Time of Sale Information, the Offering Memorandum or any other offering or
publicity material relating to the Securities, in any country or jurisdiction where action
for that purpose is required.




     (f) Each Initial Purchaser severally and not jointly represents and covenants that (i)
it has taken reasonable precautions to ensure that passwords to any website containing the
Electronic Roadshow are not provided to any prospective investor in the Securities that is a
resident in, or acting on behalf of an entity resident in, any of the provinces or
territories of Canada and (ii) in order to obtain access to the Electronic Roadshow on any
website on which the Electronic Roadshow is made available to potential investors, each
potential investor is required to confirm electronically that it is not a resident in, or
acting on behalf of an entity resident in, any of the provinces or territories of Canada.



C-3









 





Annex D-1




[Form of Opinion and Letter of Gordon A. Davies, Esq.,

Deputy General Counsel of NNC and the Company]





D-1-1









 








Annex D-2




[Form of Opinion and Letter of Cleary Gottlieb Steen & Hamilton LLP, Special U.S. Counsel to the Issuers]





D-2-1









 








Annex D-3




[Form of Opinion of Ogilvy Renault LLP, Canadian Counsel for the Issuers]





D-3-1









 








Exhibit A




[Form of Registration Rights Agreement]





1