Exhibit 4.4

                                                       EDC LOAN NO. 880-UK-24189
                                                                  EXECUTION TEXT

================================================================================

                                 LOAN AGREEMENT

                                      dated

                                  MARCH 4, 2003

                                     between

                             MITEL NETWORKS LIMITED

                                       and

                            EXPORT DEVELOPMENT CANADA

                                  GBP 4,100,000

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Doc #16228
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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

PARTIES........................................................................1
RECITALS.......................................................................1

SECTION 1 - DEFINITIONS AND ACCOUNTING MATTERS.................................1
      1.1 Certain Defined Terms................................................1
      1.2 Accounting Terms and Determinations.................................12
      1.3 Terms Generally.....................................................12
      1.4 Business Day Adjustment.............................................12
SECTION 2 - LOANS, RECORDS AND DISBURSEMENTS..................................12
      2.1 Advances............................................................12
      2.2 Loan Account........................................................12
      2.3 Disbursements.......................................................13
      2.4 Disclaimer..........................................................13
      2.5 Currency of Advances................................................13
SECTION 3 - REPAYMENT OF PRINCIPAL AND PAYMENT OF INTEREST....................13
AND FEES......................................................................13
      3.1 Principal...........................................................13
      3.2 Interest............................................................13
      3.3 Voluntary Prepayment................................................14
      3.4 Mandatory Prepayments...............................................15
      3.5 Administration Fee..................................................15
      3.6 Risk Premium Fee....................................................15
      3.7 Commitment Fee......................................................16
      3.8 Application of Payments.............................................16
SECTION 4 - PLACE AND MANNER OF PAYMENT.......................................16
      4.1 Place and Manner of Payment.........................................16
SECTION 5 - YIELD PROTECTION, ETC.............................................17
      5.1 Additional Costs....................................................17
      5.2 Change in Market....................................................17
      5.3 Illegality..........................................................18
      5.4 Broken Funding......................................................18
      5.5 Taxes...............................................................18
SECTION 6 - CONDITIONS PRECEDENT..............................................19
      6.1 Conditions Precedent to the Initial Advance.........................19
      6.2 Conditions Precedent to all Advances................................21
      6.3 Waiver..............................................................22
SECTION 7 - REPRESENTATIONS AND WARRANTIES....................................22
      7.1 Representations and Warranties......................................22
SECTION 8 - COVENANTS.........................................................24
      8.1 Covenants...........................................................24
SECTION 9 - EVENTS OF DEFAULT.................................................28
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                                      -2-

      9.1 Events of Default...................................................28
      9.2 Default Remedies....................................................30
SECTION 10 - MISCELLANEOUS....................................................31
      10.1  No Waiver.........................................................31
      10.2  Notices...........................................................31
      10.3  Expenses..........................................................33
      10.4  Successors and Assigns............................................33
      10.5  Headings..........................................................33
      10.6  Counterparts......................................................33
      10.7  Governing Law; Submission to Jurisdiction.........................33
      10.8  Treatment of Certain Information; Confidentiality.................35
      10.9  Disclosure........................................................35
      10.10 Judgment Currency.................................................35
      10.11 Currency of Account and Payment...................................35
      10.12 Severability of Provisions........................................35

SCHEDULE "A" Disbursement Terms
SCHEDULE "B" Guarantees
SCHEDULE "C" Opinions of Borrower's Counsel
SCHEDULE "D" Opinions of Guarantors' Counsel
SCHEDULE "E" MNC General Security Agreement
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                                                       EDC LOAN NO. 880-UK-24189

THIS LOAN AGREEMENT dated March 4, 2003 is made

BETWEEN

      MITEL NETWORKS LIMITED,
      a private company limited by shares
      incorporated in England and Wales, under the
      number 1309629, whose registered office is
      Portskewett, Monmouthshire, NP2G 5YR, Wales
      (hereinafter called the "Borrower")

AND

      EXPORT DEVELOPMENT CANADA,
      a corporation established by an Act of the
      Parliament of Canada, having its head
      office at Ottawa, Ontario
      (hereinafter called "EDC")

EDC, at the  request of the  Borrower,  is  prepared to lend up to an  aggregate
principal  amount of  GBP4,100,000  to assist in financing the purchase of Goods
and Services on the terms and subject to the conditions  hereof, and accordingly
the parties agree as follows:

                 SECTION 1 - DEFINITIONS AND ACCOUNTING MATTERS

1.1   Certain Defined Terms
      In this Agreement, the following terms shall have the following meanings:

      "Administration  Fee"  means the fee  payable  to EDC by the  Borrower  in
      accordance with section 3.5 hereof;

      "Advance" means an advance of funds made or deemed to be made by EDC to or
      for the account of the Borrower  under this Agreement and "Advanced" has a
      correlative meaning;

      "Affiliate" means any Person that directly or indirectly  controls,  or is
      under common Control with, or is Controlled by, any other Person;

      "Authorization"  means  any  consent,  registration,   filing,  agreement,
      certificate, license, approval, permit, authority or exemption from, by or
      with  any  Governmental  Authority  and  all  corporate,   creditors'  and
      shareholders' approvals or consents;
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                                      -2-


      "Bank" means the principal office of Bank of Montreal, located at Toronto,
      Canada;

      "Bank  Facility"  means the revolving  bank facility made available to MNC
      pursuant to the Amended and Restated Credit  Agreement made as of February
      27, 2003  between MNC, as borrower,  Bank of Montreal,  as  administrative
      agent, lead arranger and lender, and the lenders from time to time parties
      thereto,  as same  may be  amended,  amended  and  restated,  extended  or
      replaced;

      "Bank Facility Lenders" means the lenders from time to time under the Bank
      Facility;

      "Bank  Facility   Lenders'   Security   Documents"  means  all  documents,
      instruments and agreements  pursuant to which a security interest over the
      property of the Borrower,  MNC, MNI and/or MNSI has been created in favour
      of the Bank  Facility  Lenders as security for the  obligations  of any of
      such persons under or pursuant to the Bank Facility;

      "Borrower's  Charge"  means the Charge Over Book Debts to be issued by the
      Borrower  in favour of EDC  pursuant  to which the  Borrower  will grant a
      charge  over its book  debts and other  debts now or in the  future due or
      owing to the  Borrower  and  arising in respect of goods sold or leased or
      services rendered to customers located in the United Kingdom,  as security
      for the obligations of the Borrower to EDC hereunder;

      "Business  Day"  means a day on  which  banks  are open  for  business  in
      Toronto,  Canada and London,  England but does not in any event  include a
      Saturday or a Sunday;

      "Canadian Dollars" and "CAD" each means the currency of Canada;

      "Change  of  Control"  means the  Borrower  ceasing  to be a wholly  owned
      subsidiary of MNC;

      "Collateral" means all right, title and interest of the Borrower, MNC, MNI
      and MNSI  (collectively,  the "Obligors") in and to the  "Collateral",  as
      that term is defined in the Bank Facility Lenders' Security  Documents and
      the Security Documents;

      "Commitment"  means the  commitment of EDC to provide to the Borrower,  by
      way of Advances,  the aggregate  principal  amount  established in section
      2.1,  as  such  amount  may be  cancelled,  reduced  or be  otherwise  not
      available to be borrowed from time to time pursuant to this Agreement;

      "Commitment  Fee"  means  the  fee  payable  by  the  Borrower  to  EDC in
      accordance with section 3.7 hereof;

      "Contract"  means the contract  dated August 30, 2001 between the Borrower
      and the Exporter for the  purchase of the Goods and  Services,  as amended
      from time to time with EDC's consent, if required hereunder;
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                                      -3-


      "Control"  means the ability,  direct or indirect,  to direct or cause the
      direction of management or policies of a corporation and "Controlling" and
      "Controlled" have correlative meanings;

      "Debt" of any Person  means,  at any date,  without  duplication,  (i) all
      obligations  of such Person for borrowed  money,  (ii) all  obligations of
      such Person evidenced by bonds,  debentures,  notes,  letters of credit or
      other similar instruments, (iii) all obligations of such Person to pay the
      deferred  purchase  price of property or services,  except trade  accounts
      payable arising in the ordinary  course of business,  (iv) all obligations
      of such Person as lessee which are  capitalized  in accordance  with GAAP,
      (v) all Debt secured by a Lien on any asset of such Person, whether or not
      such Debt is otherwise  an  obligation  of such  Person,  (vi) all Debt of
      others  which is,  directly or  indirectly,  guaranteed  by such Person or
      which such Person has agreed  (contingently  or  otherwise) to purchase or
      otherwise   acquire,   (vii)  all  liabilities  in  respect  of  financial
      instruments  which are  classified  as a liability on the balance sheet of
      such Person, and (viii) all obligations of such Person to otherwise assure
      a creditor against loss;

      "Default" means an Event of Default or an event that with notice, lapse of
      time,  determination  hereunder or any combination  thereof would,  unless
      cured, become an Event of Default;

      "Environmental   Laws"  means  all  requirements   under  any  law,  rule,
      regulation,  order,  or  judgment,  decree,  license,  agreement  or other
      restriction of any  Governmental  Authority  relating to the  environment,
      pollution,  contamination,  or the  disposal,  storage,  and  discharge of
      hazardous or toxic substances into the environment;

      "Equivalent  Amount"  on any  given  date  in  one  currency  (the  "first
      currency")  of any amount  denominated  in another  currency  (the "second
      currency"),  means  the  amount  of the  first  currency  which  could  be
      purchased with such amount of the second  currency at the rate of exchange
      quoted  by the  Bank at 11:00  a.m.  (Toronto  time) on such  date for the
      purchase of the first currency with the second currency;

      "Event of Default"  means any event or  circumstance  described in section
      10;

      "Exporter" means BreconRidge Manufacturing Solutions Corporation;

      "Facility Amount" has the meaning ascribed thereto at section 2.1;

      "GAAP" means, with respect to the Borrower,  generally accepted accounting
      principles as in effect from time to time in England, with respect to MNC,
      generally accepted accounting principles as in effect from time to time in
      Canada,  with  respect  to MNI and  MNSI,  generally  accepted  accounting
      principles  as in effect from time to time in the United  States and, when
      applied without specific reference to the Borrower, MNC, MNI or MNS, means
      generally accepted accounting principles as in effect from time to time in
      the relevant jurisdiction;
<PAGE>
                                      -4-


      "Goods"  means the  telephony  equipment  to be  provided  pursuant to the
      Contract and meeting the Canadian benefit requirements of EDC;

      "Governmental  Authority"  means  the  government  of  any  nation  or any
      political  subdivision  thereof,  whether state or local,  and any agency,
      authority, instrumentality,  regulatory body, court, central bank or other
      entity  (including  any federal or other  association of or with which any
      such  nation  may  be  a  member  or  associated)   exercising  executive,
      legislative,  judicial,  taxing,  regulatory or  administrative  powers or
      functions of or pertaining to government;

      "Guarantees"  means  the MNC  Guarantee,  the MNI  Guarantee  and the MNSI
      Guarantee, each in the form attached as schedule "B";

      "Guarantors" means each of MNC, MNI and MNSI;

      "Increased Costs" has the meaning given that term in section 5.1 hereof;

      "Initial  Public  Offering"  means any initial  offering  of newly  issued
      equity  securities  where such securities are (i) listed,  or to be listed
      following such offering, on any internationally recognized stock exchange,
      or (ii) sold pursuant to a prospectus  under Canadian  securities  laws or
      pursuant to a registration  statement  under the United States  Securities
      Act of 1933;

      "Intercreditor  Agreement" means the intercreditor  agreement among, inter
      alia,  the Bank  Facility  Lenders  and EDC,  pursuant  to which  the Bank
      Facility Lenders and EDC shall agree that,  notwithstanding the priorities
      of their respective  security  interests in the Collateral  represented by
      the Bank Facility Lenders' Security Documents and the Security  Documents,
      respectively,  such  security  interests  shall be treated as having equal
      priority and each of the Bank Facility  Lenders and EDC shall share in the
      proceeds thereof on a pari passu and pro rata basis;

      "Interest Payment Date" means:

      (a)   the  last  day of  the  third  month  after  the  date  of the  Loan
            Agreement; and

      (b)   the  dates  which  fall  every  three  (3)  months  after  the  date
            determined under (a) and each anniversary of those dates;

      "Interest Period" means:

      (a) for each Advance,  the period  commencing on and including the date on
      which that Advance is made and ending on and including the date before the
      next Interest Payment Date; or
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                                      -5-


      (b)   for those amounts in default  payable  pursuant to subsections  3.5,
            3.6 and section 5, the period  commencing  on and including the date
            of default  and  ending on and  including  the date  before the next
            Interest Payment Date;

      and thereafter, the period commencing on and including an Interest Payment
      Date and ending on and including the date before the next Interest Payment
      Date;

      "Libor" means for any Interest Period, the rate per annum appearing on the
      Telerate Page 3750 at approximately 11:00 a.m., London time, on the second
      Business  Day prior to the first day of such  Interest  Period,  for three
      month  deposits of Pounds  Sterling  calculated on the basis of the actual
      number of days elapsed divided by 365 or 366, as the case may be. If it is
      not possible to determine Libor in this way for any Interest Period,  then
      Libor for such Interest  Period means the rate per annum (as determined by
      EDC) which the Bank, on the date of calculation is prepared to accept as a
      rate of return for deposits of Pounds Sterling;

      "Liens" means mortgages,  pledges,  liens,  hypothecs,  charges,  security
      agreements or other  encumbrances or other  arrangements that in substance
      secure  payment  or  performance  of an  obligation,  statutory  and other
      non-consensual liens or encumbrances and includes the interest of a vendor
      or a lessor under any conditional  sale agreement,  capital lease or other
      title retention agreement;

      "Loan"  means  the  aggregate  principal  amount of  Advances  at any time
      outstanding hereunder;

      "Material  Adverse  Effect"  means (a) a  material  adverse  effect on the
      condition, financial or otherwise, or to the earnings, operations, assets,
      business affairs or business  prospects of the Borrower or the Guarantors;
      (b) a  material  adverse  effect on the  ability  of the  Borrower  or the
      Guarantors  to  perform  its  payment  or  other  obligations  under  this
      Agreement or the Guarantees, as the case may be; or (c) a material adverse
      effect on the rights and remedies available to EDC under this Agreement or
      the Guarantees, as the case may be;

      "MNC" means Mitel Networks Corporation;

      "MNC GSA" means a general  security  agreement  issued by MNC in favour of
      EDC, substantially in the form attached as schedule "E";

      "MNC  Guarantee"  means the  guarantee  of MNC,  in the form  attached  as
      schedule "B";

      "MNC  Receivables  Assignment"  means the general  assignment  of accounts
      receivable to be issued by MNC in favour of EDC pursuant to which MNC will
      grant  in  favour  of EDC a  security  interest  in  that  portion  of the
      Collateral as shall consist of accounts,  debts,  dues,  monetary demands,
      claims  and  choses  in  action  relating  thereto  howsoever  arising  in
      connection with the sale or lease of goods or services by MNC to customers
      located in
<PAGE>
                                      -6-


      Canada or the United States, and all proceeds thereof, as security for the
      obligations of the Borrower to EDC hereunder;

      "MNI" means Mitel Networks, Inc.;

      "MNI Guarantee" means the guarantee and general security agreement of MNI,
      substantially in the form attached as schedule "B";

      "MNSI" means Mitel Networks Solutions, Inc.;

      "MNSI  Guarantee"  means the guarantee and general  security  agreement of
      MNSI, substantially in the form attached as schedule "B";

      "Mortgages"  means (i) the chattel  mortgage over certain  property of the
      Borrower in favour of Barclays  Bank PLC  ("Barclays")  dated  October 31,
      2001 and (ii) the mortgage over the Borrower's  premises at Mitel Business
      Park, Portskewett,  Monmouthshire,  Wales, dated January 24, 2002, granted
      by the Borrower in favour of Barclays,  as the same may be amended  and/or
      supplemented from time to time;

      "New  Equity  Round"  means the  raising by MNC of equity of not less than
      CAD20,000,000 from third party investors;

      "Permitted Debt" means:

      (a)   Debt owing hereunder and under the Security Documents;

      (b)   Subordinated Debt;

      (c)   trade  debt  and  similar  unsecured  indebtedness  incurred  in the
            ordinary course of business (but excluding indebtedness for borrowed
            money);

      (d)   intercorporate  Debt owed by any Subsidiary to the Borrower,  MNC or
            any of the other Guarantors;

      (e)   intercorporate Debt between the Borrower and the Guarantors;

      (f)   intercorporate  Debt  owed  by any  wholly-owned  Subsidiary  of MNC
            (other  than the  Borrower,  MNI or MNSI)  to  another  wholly-owned
            Subsidiary of MNC;

      (g)   Debt in an  aggregate  amount not  exceeding  CAD15,000,000  (or its
            Equivalent Amount in another  currency)  incurred in connection with
            the  obligations  of a Person as lessee  which  are  capitalized  in
            accordance with GAAP;

      (h)   Debt incurred  pursuant to  performance  bonds,  bid bonds and other
            similar instruments entered into in the ordinary course of business;
<PAGE>
                                      -7-


      (i)   Debt  for  borrowed  money  in an  aggregate  amount  not  exceeding
            GBP20,000,000 incurred pursuant to overdraft, working capital credit
            facilities  and any other form of financing by  Subsidiaries  of MNC
            (including the Borrower)  carrying on business in the United Kingdom
            and  Europe  (including  the  Mortgages,  as  each  may be  amended,
            restated, supplemented or replaced from time to time);

      (j)   Debt incurred or assumed in connection with Permitted Purchase Money
            Security Interests;

      (k)   Debt secured by assets or properties at the time of entering into an
            agreement  with  respect  to  the  acquisition  of  such  assets  or
            properties and assumed in connection with such  acquisition and Debt
            of a  corporation  existing at the time such  corporation  becomes a
            Subsidiary of MNC provided,  in either case,  that such Debt was not
            incurred in anticipation  of such  acquisition or in anticipation of
            such corporation  becoming a Subsidiary and excluding any extensions
            or renewals of any such Debts;

      (l)   unsecured Debt incurred in connection with transactions entered into
            for the  purpose of  hedging  foreign  exchange  risk of MNC and its
            Subsidiaries or for the purpose of hedging interest rate exposure on
            Permitted Debt (but, in either case not for speculative purposes);

      (m)   unsecured  Debt in an aggregate  amount not exceeding  CAD15,000,000
            (or  its  Equivalent  Amount  in  another  currency)  pursuant  to a
            daylight loan facility incurred solely to facilitate the clearing of
            intercorporate Debt;

      (n)   Debt in an aggregate  principal  amount not exceeding  CAD60,000,000
            (or its  Equivalent  Amount  in  another  currency)  under  the Bank
            Facility  (including,   without  duplication,  Debt  represented  by
            guarantees  issued  by the  Borrower,  MNI  or  MNSI  in  connection
            therewith);

      (o)   Debt  represented  by  obligations of the Borrower in respect of its
            defined benefit pension plan;

      (p)   Debt in an aggregate  principal  amount not exceeding  CAD20,000,000
            (or its  Equivalent  Amount in  another  currency)  pursuant  to the
            convertible debenture issue completed by MNC in August 2002;

      (q)   Debt  not  included  in any  of  the  foregoing  and  not  exceeding
            CAD5,000,000 (or its Equivalent  Amount in another  currency) in the
            aggregate;
<PAGE>
                                      -8-


      "Permitted Encumbrances" means:

      (a)   Liens in respect of taxes,  assessments or  governmental  charges or
            claims the payment of which is not, at the time, overdue;

      (b)   statutory Liens of landlords, statutory Liens of banks and rights of
            set-off,  statutory  Liens  of  carriers,  warehousemen,  mechanics,
            repairmen,  workmen and materialmen, and other Liens imposed by law,
            in each case  incurred in the  ordinary  course of business  (a) for
            amounts not yet overdue or (b) for amounts that are overdue and that
            (in the case of any such  amounts  overdue for a period in excess of
            five (5) days)  are being  contested  in good  faith by  appropriate
            proceedings,  so long as (1)  such  reserves  or  other  appropriate
            provisions,  if any,  as shall be  required  by GAAP shall have been
            made for any such contested  amounts,  and (2) in the case of a lien
            with  respect  to  any  portion  of  the  Collateral,  such  contest
            proceedings  conclusively operate to stay the sale of any portion of
            the Collateral on account of such Lien;

      (c)   Liens  incurred or deposits made in the ordinary  course of business
            in connection with workers' compensation, unemployment insurance and
            other  types of social  security,  or to secure the  performance  of
            tenders,  statutory  obligations,  surety  and appeal  bonds,  bids,
            leases,  government  contracts,  trade  contracts,  performance  and
            return-of-money  bonds and other similar  obligations  (exclusive of
            obligations  for  the  payment  of  borrowed  money),  so long as no
            foreclosure,  sale or similar  proceedings  have been commenced with
            respect to any portion of the Collateral on account thereof;

      (d)   any  attachment or judgment Lien not involving (i) in any individual
            case an amount in excess of CAD1,000,000  (or its Equivalent  Amount
            in  another  currency),  or  (ii)  in  the  aggregate  at  any  time
            outstanding an amount in excess of  CAD2,500,000  (or its Equivalent
            Amount in  another  currency)  (in either  case to the  extent  such
            amount is not adequately  covered by insurance as to which a solvent
            and unaffiliated insurance company has acknowledged coverage) except
            if any such  attachment or judgment Lien shall remain  undischarged,
            undisputed (in the case of a writ in the United Kingdom), unvacated,
            unbonded  or  unstayed  for a period  of sixty  (60) days (or in any
            event  later  than five (5) days  prior to the date of any  proposed
            sale thereunder);

      (e)   leases or subleases  granted to third parties which do not interfere
            in any material respect with the ordinary conduct of the business of
            MNC or any of its subsidiaries or result in a material diminution in
            the value of any of the Collateral;

      (f)   easements,  rights-of-way,  restrictions,  encroachments,  and other
            minor defects or  irregularities in title, in each case which do not
            and will not  interfere  in any
<PAGE>
                                      -9-


            material respect with the ordinary conduct of the business of MNC or
            any of its  subsidiaries  or result in a material  diminution in the
            value of any of the Collateral;

      (g)   any (i)  interest  or title  of a  lessor  or  sublessor  under  any
            operating  lease in respect of which MNC or any of its  subsidiaries
            shall be, or become liable whether directly or by assignment or as a
            guarantor  or other surety for the  obligations  of the lessee under
            any such operating  lease,  to the extent that the aggregate  annual
            rental  payments of MNC and its  subsidiaries in respect of all such
            operating leases shall not exceed  CAD20,000,000  (or its Equivalent
            Amount in another  currency),  (ii)  restriction or encumbrance that
            the interest or title of such lessor or sublessor may be subject to,
            or (iii)  subordination  of the  interest of the lessee or sublessee
            under such lease to any  restriction or  encumbrance  referred to in
            the preceding clause (ii), so long as the holder of such restriction
            or  encumbrance  agrees to  recognize  the rights of such  lessee or
            sublessee under such lease;

      (h)   Liens arising from the filing of Personal  Property  Security Act or
            Uniform  Commercial  Code financing  statements,  relating solely to
            leases;

      (i)   Liens in favour of  customs  and  revenue  authorities  arising as a
            matter of law to secure payment of customs duties in connection with
            the importation of goods;

      (j)   any  zoning or  similar  law or right  reserved  to or vested in any
            governmental  office or agency to control or regulate the use of any
            real property;

      (k)   Liens  against  owners' or  sublessors'  interest  in any  leasehold
            property used or occupied by MNC or any of its Subsidiaries;

      (l)   Liens  securing  obligations  (other than  obligations  representing
            indebtedness  for  borrowed  money) under an  operating,  reciprocal
            easement or similar  agreements  entered into in the ordinary course
            of business of MNC or any of its Subsidiaries;

      (m)   licenses  of patents,  trademarks  and other  intellectual  property
            rights  granted by MNC or any of its  Subsidiaries  in the  ordinary
            course of business and not interfering in any material  respect with
            the ordinary conduct of the business of MNC or such Subsidiary;

      (n)   Liens  granted  to  evidence  the  security  interests  of the  Bank
            Facility Lenders or Bank of Montreal as agent on their behalf in the
            Collateral;

      (o)   certain  rights of the  Government  of  Canada  in the  intellectual
            property  of MNC  pursuant  to the  Technology  Partnerships  Canada
            Agreement;

      (p)   Permitted Purchase Money Security Interests;
<PAGE>
                                      -10-


      (q)   Liens granted in connection with  obligations  incurred  pursuant to
            clause (i) or (j) of the definition of Permitted Debt;

      (r)   Liens  granted to  evidence  the  security  interests  of EDC in the
            Collateral; and

      (s)   Liens not included in any of the foregoing in respect of obligations
            not  exceeding  CAD5,000,000  (or its  Equivalent  Amount in another
            currency) in the aggregate;

      "Permitted  Purchase  Money  Security  Interest"  means  any  Lien  of any
      property  or asset  created,  issued or assumed to secure  Debt  incurred,
      assumed or issued to satisfy,  in whole or in part,  the purchase price of
      such property or asset  (including  installation  costs) and  expenditures
      made  for  any  repairs,   alterations,   construction,   development   or
      improvements performed thereon or added thereto,  provided that such Lien,
      or any agreement or other instrument under which such Lien is constituted,
      is  limited to the  property  or asset  acquired  in  connection  with the
      assumption,  issuance or incurring of such Debt and is created,  issued or
      assumed concurrently with the acquisition of such property or assets;

      "Permitted Securitization Transaction" means any transaction providing for
      the sale, securitization or other asset-backed financing of trade accounts
      receivable  of or owing to the  Borrower,  MNC or a Subsidiary of MNC, but
      excluding any Canadian,  United  States or United  Kingdom trade  accounts
      receivable  of or  owing  to the  Borrower,  MNC or a  Subsidiary  of MNC,
      provided  that such  disposition  or accounts  receivable  pursuant to the
      securitization  transactions are without recourse to the Borrower,  MNC or
      such Subsidiary and provided further that the aggregate amount of accounts
      receivable sold does not exceed CAD 3,000,000 at any time;

      "Person"  means  any  individual,   corporation,   voluntary  association,
      partnership,  joint  venture,  trust  or  government  (or  any  agency  or
      political subdivision thereof);

      "Post-Default Rate" means the rate of interest payable pursuant to section
      3.2(a) hereof plus 2% per annum;

      "Pounds Sterling" and "GBP" each means the currency of England;

      "Repayment  Date" means March 4, 2004,  being the 364th day after the date
      of this Agreement;

      "Second  Ranking  Charge"  has the  meaning  ascribed  thereto  in Section
      6.1(e);

      "Security  Documents"  means  the  MNC  Guarantee,  the MNC  GSA,  the MNC
      Receivables  Assignment,  the MNI  Guarantee,  the MNSI  Guarantee and the
      Borrower's Charge;
<PAGE>
                                      -11-


      "Services" means the services to be provided  pursuant to the Contract and
      meeting the Canadian benefit requirements of EDC;

      "Subordinated  Debt" means Debt of the  Borrower,  MNC or any Guarantor or
      Subsidiary  subordinated  to all amounts at any time due and payable under
      this Agreement or the Security Documents in a manner and form satisfactory
      to EDC in its sole  discretion,  as to right and time of payment and as to
      any other rights and remedies thereunder;

      "Subsidiary"  means any corporation  more than 50% of the Voting Shares of
      which at the time of  determination  is  beneficially  owned,  directly or
      indirectly,  by the Borrower,  MNC or the  Guarantors or any  corporation,
      joint  venture,  partnership or other entity which is subject to direct or
      indirect control of the Borrower, MNC or the Guarantors;

      "Taxes" means all present or future taxes of any kind or nature whatsoever
      (other than taxes imposed in Canada) including, without limitation, income
      taxes,  sales or value-added taxes, goods and services taxes, stamp taxes,
      levies,  duties,  fees,  royalties  and all  deductions  and  withholdings
      therefrom together with any fines,  penalties and interest thereon and any
      restrictions  or conditions  resulting in an obligation to pay monies to a
      Governmental Authority;

      "Technology  Partnerships  Canada  Agreement" means the agreement  entered
      into in October,  2002 among the Her Majesty The Queen in right of Canada,
      represented by the Minister of Industry,  March Networks Corporation,  MNC
      and  Mitel  Knowledge  Corporation  pursuant  to which the  Government  of
      Canada,  under the Technology  Partnerships Canada Program,  has agreed to
      make  a  contribution  of  up  to  CAD  60,000,000  towards  the  cost  of
      development of certain technology by March Networks  Corporation,  MNC and
      Mitel Knowledge Corporation;

      "Telerate  Page 3750" means the display of interest  settlement  rates for
      Pounds  Sterling  deposits  in the London  Interbank  Eurocurrency  Market
      designated  as page 3750 on the service  provided by Bridge  Telerate  (or
      such other  display as may  replace it on that  service for the purpose of
      displaying Libor);

      "Transactions"  means the execution,  delivery and  performance (i) by the
      Borrower  of this  Agreement  and the  Borrower's  Charge  and (ii) by the
      Guarantors of the Guarantees  and, in the case of MNC, the MNC GSA and the
      MNC Receivables Assignment;

      "Transaction  Documents" means this Agreement,  the Security Documents and
      the Intercreditor Agreement;

      "Voting  Shares"  means  shares of any class of any  corporation  carrying
      voting rights under all  circumstances,  provided that, for the purpose of
      this definition,  shares which only carry the right to vote  conditionally
      on the happening of an event shall not be considered  Voting Shares unless
      such right has become exercisable;
<PAGE>
                                      -12-


      "Wesley Clover" means Wesley Clover  Corporation,  formerly known as 10750
      Newfoundland Limited.

1.2   Accounting Terms and Determinations  Except as specified herein, all terms
      of an accounting or financial nature shall be construed in accordance with
      GAAP.

1.3   Terms Generally
      Definitions  shall apply  equally to the  singular and plural forms of the
      terms defined. Whenever the context may require, any pronoun shall include
      the  corresponding  masculine,  feminine  and neuter  forms.  All forms of
      "include"   shall  be  deemed  to  be  followed  by  the  phrase  "without
      limitation".  The word  "will"  shall have the same  meaning and effect as
      "shall".  Unless the  context  requires  otherwise  (a)  reference  to any
      agreement or other document herein shall be construed as referring to such
      agreement or other  document as from time to time amended  (subject to any
      restrictions  on such  amendment set forth  herein);  (b) reference to any
      Person shall be construed to include such Person's successors and assigns;
      (c)  "herein",  "hereof"  and  "hereunder",  and  similar  words  shall be
      constructed  to refer to this  Agreement  in its  entirety  and not to any
      particular  provision hereof; (d) all references to sections and schedules
      shall  be  construed  to  refer  to  sections  of and  schedules  to  this
      Agreement;  and (e) "asset" and "property"  shall be construed to have the
      same  meaning  and  effect  and to  refer  to any  and  all  tangible  and
      intangible assets and properties, including cash, securities, accounts and
      contractual rights.

1.4   Business Day Adjustment
      Where the day on or by which a payment is due to be made is not a Business
      Day, that payment shall be made on or by the next succeeding Business Day.
      Interest,  fees and  charges  (if any)  shall  continue  to accrue for the
      period  from  the due  date  which  is not a  Business  Day to  that  next
      succeeding Business Day.

                  SECTION 2 - Loans, Records and Disbursements

2.1   Advances
      EDC agrees,  on the terms and subject to the conditions of this Agreement,
      in order to provide  financing in respect of Goods and  Services,  to make
      Advances to or for the account of the Borrower in respect of the Goods and
      Services, up to but not exceeding GBP4,100,000 (the "Facility Amount").

2.2   Loan Account
      EDC will  maintain  in  accordance  with its  usual  practice  one or more
      accounts  evidencing the Debt of the Borrower to EDC  hereunder.  The loan
      account(s)  will be  prima  facie  evidence  of the  obligations  recorded
      therein,  provided that any failure by EDC to maintain such account or any
      error therein shall not affect the obligation of the Borrower to repay the
      Loan in accordance with this Agreement.
<PAGE>
                                      -13-


2.3   Disbursements
      The Borrower requests EDC to make disbursements to the Borrower in respect
      of the Goods and Services.  Such requests shall be made at least three (3)
      Business Days prior to the requested  Advance date,  with the exception of
      the request for the first Advance hereunder,  which request may be made on
      the same day as the requested  Advance date.  All  disbursements  shall be
      made in accordance  with the terms of this Agreement and the  Disbursement
      Terms set out in  schedule  "A" and the  Borrower  confirms  that all such
      disbursements  will  constitute  Advances under this  Agreement.  EDC will
      advise the Borrower of the  particulars  of each  Advance,  including  the
      amount of Pounds  Sterling  charged to the  Borrower's  loan account,  the
      applicable  interest rate and Interest Period.  The Borrower  acknowledges
      that the  Disbursement  Terms set out herein and in the attached  schedule
      "A" may be different  from the terms of the  Contract.  All bank  transfer
      costs shall be payable by the party receiving the disbursement.

2.4   Disclaimer
      Notwithstanding  that  Advances  under  this  Agreement  are to be used to
      finance purchases  pursuant to the Contract,  the Borrower agrees that EDC
      is  under  no  obligation   to  determine   the   validity,   legality  or
      enforceability  of the  Contract.  If part or all of the  Contract  or any
      related document is repudiated or proves to be void,  invalid,  illegal or
      unenforceable,  or if there is any dispute relating to the Contract,  such
      event will not in any way affect or impair the rights of EDC  against  the
      Borrower under this Agreement or any related  document  executed or issued
      by the Borrower,  or change in any way the  obligations of the Borrower to
      repay its Debt to EDC hereunder.

2.5   Currency of Advances
      Each Advance under this Agreement in respect of Goods and Services will be
      disbursed to the Borrower by EDC in immediately  available Pounds Sterling
      to the  account  notified to EDC as  provided  for under the  Disbursement
      Terms set out in schedule "A".

       SECTION 3 - REPAYMENT OF PRINCIPAL AND PAYMENT OF INTEREST AND FEES

3.1   Principal
      Subject to the provisions of sections 3.3 and 3.4, the Borrower will repay
      the Loan to EDC on the Repayment Date.

3.2   Interest

      (a)   The Borrower will pay to EDC interest  accruing on the amount of the
            Loan not overdue  during each Interest  Period at a floating rate of
            interest equal to the sum of (i) Libor for such Interest  Period and
            (ii)  3.50% per  annum,  prior to the  completion  of the New Equity
            Round, or (iii) 2.5% per annum,  subsequent to the completion of the
            New Equity Round, calculated and payable in arrears on each Interest
            Payment Date. For the purposes hereof, the New Equity Round shall be
<PAGE>
                                      -14-


            deemed  to have been  completed  when MNC has (i)  received  the net
            proceeds of the New Equity Round  financing and (ii) notified EDC in
            writing to such effect.

      (b)   If an Advance is made  within  thirty (30) days prior to an Interest
            Payment Date,  interest  thereon will be calculated from the date of
            such  Advance  but be  paid  on the  second  Interest  Payment  Date
            occurring after the Advance was made.

      (c)   If the Borrower  fails to pay any amount due and payable  hereunder,
            the  Borrower   will  pay  to  EDC,  on  demand,   interest  at  the
            Post-Default  Rate,  for the period from the due date thereof to but
            excluding   the  date   the   same  is  paid  in  full,   compounded
            semi-annually, until payment has been made in full, as well after as
            before demand, default and judgment.

      (d)   Each  determination  of a rate of interest by EDC will be conclusive
            evidence  in the absence of  manifest  error of such rate.  Interest
            will be calculated on the basis of the actual number of days elapsed
            divided by 365 or 366, as the case may be.

3.3   Voluntary Prepayment
      The Borrower may, when not in default hereunder, prepay the Loan, in whole
      or from time to time in part at any time, provided that:

      (a)   each partial prepayment will be in a minimal amount of GBP500,000 or
            whole multiples thereof, and will be applied to the principal amount
            then outstanding;

      (b)   the Borrower pays interest  accrued on such  principal  amount being
            prepaid to the date of  prepayment  as well as all other amounts due
            and payable on the date of prepayment  in respect of such  principal
            amount being prepaid;

      (c)   the Borrower  gives five (5) days' notice to EDC of its intention to
            make any such prepayment,  which notice will be irrevocable and will
            constitute the Borrower's undertaking to prepay; and

      (d)   amounts  prepaid will be applied to principal,  then to interest due
            and owing.

      Subject  to the  following  sentence,  if  the  Borrower  repays  Advances
      outstanding  under this  Agreement  pursuant to section 3.3, the amount so
      repaid shall cease to constitute an Advance outstanding thereunder for the
      purposes  of  section  2.1,  such  that a  corresponding  amount  shall be
      available for further  Advances to the extent that the Facility  Amount is
      not  exceeded  and in  accordance  with the terms and  conditions  of this
      Agreement (the "Re-Borrowing Right"). The Re-Borrowing Right shall only be
      available  with  respect  to a  maximum  of four (4)  voluntary  payments.
      Thereafter, amounts prepaid may be not re-borrowed.
<PAGE>
                                      -15-


3.4   Mandatory Prepayments
      (a)   If the  Contract is  terminated  by the Borrower  before  completion
            (other than in accordance  with its provisions or applicable law and
            except to the extent that any contract so  terminated is replaced by
            one or more of similar  value and for  similar  Goods and  Services,
            which have been  approved by EDC,  acting  reasonably),  then on the
            next Interest  Payment Date  following  such event the Borrower will
            prepay to EDC,  the Loan,  accrued  interest  and all other  charges
            payable hereunder. The Borrower will also pay to EDC an amount equal
            to thirty (30) days' interest on the principal  amount being prepaid
            calculated at the rate per annum set out in section 3.2(a) hereof.

      (b)   At all  times,  the total  loan  amount  outstanding  under the Bank
            Facility shall be at least 2:1 to the total loan amount  outstanding
            under  this  Agreement.  If, at any  time,  the  total  loan  amount
            outstanding  under the Bank  Facility  is less than 2:1 to the total
            loan amount outstanding under this Agreement, then the Borrower will
            be  required  to prepay  promptly  an amount  under  this  Agreement
            sufficient to allow for the total loan amount  outstanding under the
            Bank  Facility to be equal to or greater  than 2:1 to the total loan
            amount outstanding under this Agreement.

      (c)   For the  purpose of  calculating  the ratio  referred  to at section
            3.4(b), the Borrower shall obtain the applicable  exchange rate from
            a financial institution reasonably acceptable to EDC as at the first
            day of each month (the "Applicable Rate"). The Applicable Rate shall
            be used to calculate the relevant ratio throughout such month.

      (d)   Any amount  outstanding  under this Agreement at the time of funding
            of any Initial  Public  Offering of MNC  yielding net proceeds of at
            least  CAD75,000,000  (or the Equivalent Amount in another currency)
            shall be immediately prepaid in full upon receipt of the proceeds of
            the  Initial  Public  Offering  and  this  facility  shall  then  be
            cancelled.

3.5   Administration Fee
      The Borrower  will pay to EDC an  administration  fee of  GBP30,750  which
      shall  either (i) be deducted  from the initial  Advance  hereunder if the
      initial  Advance  is made  within  thirty  (30)  days of the  date of this
      Agreement or (ii) be paid within thirty-five (35) days of the date of this
      Agreement if the initial  Advance  referred to at  subsection  (i) has not
      been made within 30 days of the date of this Agreement.

3.6   Risk Premium Fee
      In the event the New  Equity  Round has not been  completed  by August 31,
      2003,  the  Borrower  shall pay EDC a risk  premium fee of GBP41,000 by no
      later than October 1, 2003.
<PAGE>
                                      -16-


3.7   Commitment Fee
      The Borrower  will pay to EDC on each  Interest  Payment Date a commitment
      fee equal to 0.60% per annum of that portion of the  Commitment  remaining
      un-Advanced  from time to time,  computed  from and  including the date of
      this  Agreement up to and  including  the earlier of (a) the date on which
      the  Commitment  has been  fully  Advanced;  or (b) the date on which  the
      Borrower no longer requires the  un-Advanced  portion of the Commitment as
      indicated to EDC by written  notice (the  "Commitment  Fees").  Commitment
      Fees will be  calculated on the basis of the actual number of days elapsed
      divided by 365 or 366, as the case may be.  Notwithstanding the foregoing,
      Commitment  Fees  will be  payable  based on that  part of the  Commitment
      remaining  un-Advanced  as at  thirty  (30)  days  prior  to the  relevant
      Interest  Payment  Date  and  EDC  will  adjust  for any  underpayment  or
      overpayment,  as the case may be, on the next following  Interest  Payment
      Date.

3.8   Application of Payments
      (a)   All payments  (other than a prepayment  pursuant to sections 3.3 and
            3.4 and payments made pursuant to the Security Documents) made by or
            for the account of the Borrower under this Agreement will be applied
            first to all amounts then due and payable  other than  principal and
            interest  in such order as EDC may elect,  then in whole or in part,
            to interest due and payable and then to principal due and payable.

      (b)   All amounts received by EDC pursuant to the Security  Documents will
            be applied to any amounts then due and payable  hereunder  and as to
            any  excess  in  prepayment  of  principal  in  accordance  with the
            provisions set forth in subsection  3.7(a) above. For the purpose of
            this  section  and where  applicable,  EDC will  convert any amounts
            received  in  currencies  other than  Pounds  Sterling  into  Pounds
            Sterling  at the spot  rate at which  EDC may,  in  accordance  with
            normal  practice,  purchase Pounds Sterling with such other currency
            on the  date  of  each  application  of  payments  pursuant  to this
            section. Any amounts remaining after the Debt of the Borrower to EDC
            hereunder  has been  satisfied in full shall be paid to the Borrower
            by EDC in  accordance  with the  provisions  of  applicable  law but
            subject to any applicable provisions of the Intercreditor Agreement.

                     SECTION 4 - PLACE AND MANNER OF PAYMENT

4.1   Place and Manner of Payment
      Amounts  payable by the Borrower to EDC pursuant hereto in Pounds Sterling
      will be paid in Pounds Sterling  without set-off or counterclaim not later
      than 11:00 a.m.  (London time) on the day such payment is due and in funds
      which are for same day  settlement,  at Bank of  America,  London  Branch,
      London,  England, for the credit of Export Development Canada, London Sort
      Code 165050,  SWIFT BOFAGB22,  account number  45447019,  or at such other
      account or financial  institution  in England as EDC may from time to time
      notify the  Borrower  not less than ten (10) days prior to the due
<PAGE>
                                      -17-


      date of the  relevant  payment.  Any  payments  received  after 11:00 a.m.
      (London time) will be  considered  for all purposes as having been made on
      the next following Business Day.

                       SECTION 5 - YIELD PROTECTION, ETC.

5.1   Additional Costs
      In the event  that a law or  regulation  is  enacted  or  changed,  or the
      interpretation  or  administration  thereof is changed by any Governmental
      Authority, or in the event that a judgment is rendered which:

      (a)   subjects EDC to any Taxes with respect to payments to be made by the
            Borrower  to EDC  hereunder  (except  for Taxes on the  overall  net
            income of EDC and those taxes contemplated by section 5.5);

      (b)   imposes or  modifies  any  reserve or similar  requirements  against
            assets  held by, or  deposits in or for the account of, or loans by,
            EDC; or

      (c)   imposes on EDC any other condition with respect to this Agreement;

      with the result that the cost to EDC of making Advances or maintaining the
      Loan is increased or the income  receivable  by EDC in respect of the Loan
      hereunder is reduced,  the Borrower  will pay to EDC on demand that amount
      which will  compensate EDC for such additional cost or reduction in income
      (such  increase or deduction the "Increased  Costs").  EDC will notify the
      Borrower  that  EDC  is  entitled  to  Increased   Costs  by  providing  a
      certificate setting forth the amount of such Increased Costs and the basis
      therefor, which certificate will be conclusive evidence of such amount.

      In the event EDC issues a certificate under this section 5.1, the Borrower
      shall have the right,  upon written notice (which shall be irrevocable and
      shall  constitute  the  Borrower's   undertaking  to  prepay  accordingly)
      delivered  to,  to  prepay  in full,  by no later  than the next  Interest
      Payment  Date,  without  premium or penalty the Loan together with accrued
      interest thereon,  all other sums due hereunder and the increased costs to
      the date of prepayment. In the event of such prepayment, the obligation of
      EDC to make any further Advances under section 2.1 shall, at the option of
      EDC, thereupon terminate.

5.2   Change in Market
      Notwithstanding any other provision of this Agreement,  if, on or prior to
      the  determination  of  Libor  for any  Interest  Period,  EDC  reasonably
      determines  (which  determination  shall be conclusive  and binding on the
      Borrower absent manifest error) that:

      (a)   adequate and reasonable means do not exist for determining Libor for
            such Interest Period; or
<PAGE>
                                      -18-


      (b)   Libor for such Interest Period will not adequately  reflect the cost
            to EDC of making  Advances or maintaining the Loan for such Interest
            Period,

      then EDC will promptly so notify the Borrower and will,  within sixty (60)
      days after  giving such  notice,  deliver to the  Borrower  the terms of a
      substitute  basis  for  continuing  the  Loan  hereunder,  which  will  be
      retroactive  to the  beginning of the Interest  Period for which Libor was
      being  established.  The  provisions of this  Agreement will be amended to
      accord with the terms of such substitute  basis and the Borrower agrees to
      execute any instruments requested by EDC to reflect such amendment.

5.3   Illegality
      Notwithstanding  any  other  provision  of  this  Agreement,  if,  in  the
      reasonable opinion of EDC, it becomes unlawful for EDC to make Advances or
      maintain the Loan,  then EDC will  promptly so notify the Borrower and the
      Borrower  will promptly  prepay the Loan  together  with accrued  interest
      thereon  and all  other  amounts  then  due and EDC will  have no  further
      obligation to make any further Advances.

5.4   Broken Funding
      The  Borrower  will  indemnify  and hold  harmless  EDC  against  any loss
      (including loss of profit), costs, damage,  liability or expense which EDC
      will certify as having been  reasonably  sustained or incurred by EDC as a
      consequence  of: (i) any default in  repayment  of principal or payment of
      interest or any other amount due  hereunder;  (ii) the delay or failure of
      the  Borrower  to make  payment of or in  respect of any Taxes;  (iii) any
      payment or  prepayment  of principal  being made on other than an Interest
      Payment Date (other than a prepayment  pursuant to sections  3.4, 5.1, 5.2
      or 5.3); or (iv) the occurrence of a Default; including, in any such case,
      but not  limited  to,  any  loss,  cost,  damage,  liability  or  expenses
      reasonably  sustained or incurred by EDC in  liquidating  or  re-employing
      deposits  or funds from third  parties  acquired or to be acquired to make
      Advances or maintain or continue any amount  already  advanced or any part
      thereof.

5.5   Taxes

      (a)   The  Borrower  will pay or cause to be paid all  Taxes now or in the
            future  levied or imposed on or with  respect to payments to be made
            by the Borrower to EDC hereunder by (i) any Governmental  Authority;
            (ii) any  organization  of which the United Kingdom is a member;  or
            (iii)  any  jurisdiction  through  or out of which  any  payment  of
            amounts due under this Agreement is made.

      (b)   All payments of principal, interest and other amounts due under this
            Agreement  shall be made without  deduction for or on account of any
            Taxes as referred to in Section 5.5(a).

      (c)   If the Borrower is  prevented by operation of law or otherwise  from
            making or causing to be made such payments  without  deduction,  the
            principal  or (as the case may be)  interest  or other  amounts  due
            under this  Agreement  shall be  increased  to such amount as may be
            necessary  so that EDC  receives  the  full  amount  it  would
<PAGE>
                                      -19-


            have  received  (taking into account any such Taxes or other charges
            payable on amounts  payable by the Borrower  under this  subsection)
            had such payments been made without such deduction.

      (d)   If subsection  (c) above  applies and EDC so requires,  the Borrower
            will deliver to EDC official  tax  receipts  evidencing  payment (or
            certified  copies of them)  within  thirty  (30) days of the date of
            payment of such Taxes.

                        SECTION 6 - CONDITIONS PRECEDENT

6.1   Conditions Precedent to the Initial Advance
      EDC will  have no  obligation  to make the  initial  Advance  until it has
      received  each of the  following  documents  and  evidence  of each of the
      following  matters,  all of which must be  satisfactory to EDC in form and
      substance:

      (a)   Opinions of Counsel
            (i)   An  opinion  or  opinions,  dated on or about  the date of the
                  Advance,  of counsel to the Borrower in the United Kingdom and
                  in  Ontario  in  form  and  substance   satisfactory  to  EDC,
                  substantially  in form of schedule "C" and covering such other
                  matters as EDC may reasonably request.

            (ii)  An opinion,  of counsel to EDC, covering such other matters as
                  EDC may request.

            (iii) An  opinion,  dated on or about  the date of the  Advance,  of
                  counsel  to  the  Guarantors  substantially  in  the  form  of
                  schedule  "D"  and  covering  such  other  matters  as EDC may
                  reasonably request.

      (b)   Organizational Documents
            Certified  copy  of  such  documents  and  certificates  as EDC  may
            reasonably request relating to the organization and existence of the
            Borrower and the Guarantors and the authorization of the transaction
            contemplated  herein, all in form acceptable to EDC, certified by an
            officer of the Borrower and the Guarantors, as applicable.

      (c)   Officer's Certificate
            EDC has received a certificate of a duly authorized  signing officer
            of the  Borrower  dated on or about the date of the initial  Advance
            and to the effect that:

            (i)   the  representations  and  warranties  made by the Borrower in
                  this  Agreement  shall be true and complete on the date of the
                  initial  Advance  with the same force and effect as if made on
                  and as of  such  date  (or,  if  any  such  representation  or
                  warranty  is  expressly  stated  to  have  been  made  as of a
                  specific date, as of such specific date);
<PAGE>
                                      -20-


            (ii)  no Default shall have occurred and be continuing; and

           (iii)  there has been no change in the business,  assets,  operations
                  or financial  condition  of the Borrower  since April 28, 2002
                  that has had or is likely to have a Material Adverse Effect.

      (d)   Documents
            Each  of the  following  agreements  have  been  duly  executed  and
            delivered  by the parties  thereto and remain  unconditional  and in
            full effect:  the Contract,  the Guarantees,  the Borrower's Charge,
            the MNC  GSA,  the MNC  Receivables  Assignment,  the  Intercreditor
            Agreement and the Bank Facility.

      (e)   Second Ranking Charge
            The second ranking charge over the assets of MNC, the Borrower,  MNI
            and MNSI as provided  for in the  Security  Documents  (the  "Second
            Ranking Charge") have been (i) recorded and filed in,  respectively,
            Ontario with respect to MNC, and (ii) submitted for  registration in
            the United Kingdom with respect to the Borrower,  and (iii) recorded
            and filed in the United  States,  with  respect to MNI and MNSI,  as
            well as any other  jurisdictions  wherein such  recording and filing
            are  necessary to create and perfect the Second  Ranking  Charge and
            EDC  will  have  received,  as soon as  available,  an  original  or
            certified  copy of such  document,  together  with  evidence  of all
            necessary filings or submissions for  registration,  as the case may
            be, and that all recording and stamp taxes, if applicable, have been
            paid in full.

      (f)   Process Agent
            EDC has received  evidence of the  appointment of the Process Agent,
            as described in section 10.7(c), with respect to the Borrower.

      (g)   Authorized Signatories
            EDC will have received a  certificate  of an officer of the Borrower
            and of each of the Guarantors certifying the authority of the person
            or persons who will,  on behalf of the Borrower and the  Guarantors,
            sign the requests and certifications  provided for in this Agreement
            the Guarantees and the other Security  Documents,  or take any other
            action or execute any other  document  required or  permitted  to be
            taken or  executed by the  Borrower  and the  Guarantors  under this
            Agreement,  the Guarantees and/or the other Security Documents,  and
            the  authenticated  specimen  signature  of each  such  person.  The
            Borrower  agrees that EDC may rely on the  authority of such persons
            until EDC's receipt of notification in writing to the contrary,  and
            further that any  documents  signed by such persons shall be binding
            upon the Borrower and the Guarantors, as the case may be.
<PAGE>
                                      -21-


      (h)   Fees and Expenses
            The  Borrower  has paid to EDC all fees and expenses as the Borrower
            will  have  agreed  to pay  to  EDC  hereunder  to  the  extent  due
            (including,  without limitation, the reasonable fees and expenses of
            counsel to EDC).

      (i)   Officer's Certificate from MNC
            A certificate of the Chief  Financial  Officer of MNC (x) confirming
            that MNC has  received  by no  later  that  October  31,  2002,  net
            proceeds  from  the  issuance  of  common   shares  or   convertible
            debentures  or in the form of  Subordinated  Debt, of not less than:

                  (i)   CAD30,000,000 by July 31 2002; and
                  (ii)  CAD10,000,000 by October 31,2002;

            and (y)  confirming  that MNC has  amended,  amended  and  restated,
            extended or replaced the Bank  Facility for a period of at least 364
            days and that such Bank Facility is in substantial  conformity  with
            the terms and conditions in the Term Sheet of Bank of Montreal dated
            February  14, 2003 and that there is a minimum of  CAD20,000,000  of
            available  credit under such facility and (z) that there has been no
            change in the business or operations  or financial  condition of MNC
            since  April 28,  2002 that has had or is likely to have a  Material
            Adverse Effect.

      (j)   Confirmation of injection of patient capital
            Certificate of the Chief  Financial  Officer of MNC confirming  that
            CAD10,000,000 of patient capital has been injected into MNC.

      (k)   Subordination and Postponement
            EDC will have received a subordination  and  postponement  agreement
            from Wesley Clover  pertaining to the principal of all  indebtedness
            owing or  which  may in the  future  become  owing by MNC to  Wesley
            Clover  in  excess  of  the  CAD  5,000,000  amount  referred  to in
            subsection  (q) of the  definition  of Permitted  Debt,  in form and
            content acceptable to EDC.

6.2   Conditions Precedent to all Advances
      The  obligation  of EDC to make any  Advance is subject to the  conditions
      that:

      (a)   all of the  Disbursement  Terms  have been met or  complied  with to
            EDC's satisfaction with respect to each Advance;

      (b)   the  representations  and  warranties  made by the  Borrower in this
            Agreement shall be true and correct in all material  respects on and
            as of the date of the making of each Advance;

      (c)   both  immediately  prior  to and upon  receipt  of any  Advance,  no
            Default shall have occurred and be continuing;
<PAGE>
                                      -22-


      (d)   both immediately prior to and upon receipt of any Advance,  no event
            or circumstance  shall have occurred which has resulted in, or would
            reasonably be expected to result in, a Material Adverse Effect;

      (e)   the  Borrower  has paid to EDC all fees and expenses as the Borrower
            will have agreed to pay to EDC hereunder  and under the  Transaction
            Documents  to the extent due  (including,  without  limitation,  the
            reasonable fees and expenses of counsel to EDC);

      (f)   the  Contract  relating  to  purchase  price,  terms  and  manner of
            payment,  time,  manner and place of  delivery  of any Goods  and/or
            Services has not been amended nor has the  Contract  been  cancelled
            (except to the extent the Contract  shall have been  replaced by one
            or more  contracts  of  similar  value  and for  similar  goods  and
            services which replacement contracts shall have been approved by EDC
            in accordance with the provisions of section 3.4(a)); and

      (g)   EDC shall have received a certificate of the Chief Financial Officer
            of MNC  confirming  that prior to and  subsequent  to the  requested
            Advance,  the total loan amount  outstanding under the Bank Facility
            is at least twice the total amount outstanding under this Agreement.

      The  Borrower  shall be  deemed  to  certify  to the  effect  set forth in
      subsections 6.2(b), (c), (d) and (f) as at the date of each Advance.

6.3   Waiver
      The  conditions  set forth in sections 6.1 and 6.2,  with the exception of
      6.2 (a), are inserted for the sole benefit of EDC and may be waived by EDC
      in whole or in part (with or without terms or  conditions),  in respect of
      any  Advance  without  prejudicing  the right of EDC at any time to assert
      such conditions in respect of any subsequent Advance.

                   SECTION 7 - REPRESENTATIONS AND WARRANTIES

7.1   Representations and Warranties
      The Borrower represents and warrants to EDC that:

      (a)   Corporate Existence; Power; Share Capital
            The Borrower is a company duly organized and validly  existing under
            the  laws  of its  jurisdiction  of  incorporation,  and has all the
            corporate  power  and  authority  to own  its  assets,  conduct  its
            business as and where presently conducted.

      (b)   Authorization; Binding Effect
            The  execution,  delivery and  performance  of this Agreement by the
            Borrower is within the Borrower's corporate powers and has been duly
            authorized by all necessary corporate and, if required,  shareholder
            action.  This  Agreement has been
<PAGE>
                                      -23-


            duly executed and delivered by the Borrower and constitutes a legal,
            valid  and  binding  agreement  of  the  Borrower,   enforceable  in
            accordance with its terms,  subject only to bankruptcy,  insolvency,
            and other  laws  relating  to  creditors'  rights  generally  and to
            general principles of equity.

      (c)   Governmental Authorization; No Conflict
            All  Authorizations  and other  actions by or with any  Governmental
            Authority  necessary to authorize the  Transactions  or required for
            the  validity  or  enforceability   against  the  Borrower  of  this
            Agreement,  have  been  obtained  or  performed  and are  valid  and
            subsisting  and in full force and effect.  The entering into of this
            Agreement does not (i) violate any law or regulation, organizational
            documents or any writ, order,  judgment of any court or Governmental
            Authority;  (ii)  violate  or  result  in a breach  of any  material
            agreement or instrument  to which the Borrower is a party;  nor does
            it (iii)  result  in the  creation  of any Lien on any  asset of the
            Borrower other than Permitted Encumbrances.

      (d)   Financial Information
            The Borrower's company prepared financial statements dated April 28,
            2002, a copy of which has been delivered to EDC, fairly present,  in
            conformity  with GAAP, the financial  position of the Borrower as of
            such  date and its  results  of  operations  and cash  flows for the
            Fiscal Year then ended and have been  certified as such by a firm of
            independent  accountants.  Since April 28,  2002,  there has been no
            Material Adverse Effect.

      (e)   Litigation
            There is no action or proceeding pending, or to the knowledge of the
            Borrower,  threatened  against or affecting the Borrower  before any
            court or  arbitrator  or any  Governmental  Authority  in respect of
            which there is a reasonable  likelihood of an adverse decision which
            would reasonably be expected to have a Material Adverse Effect.

      (f)   Taxes
            (i)   The  Borrower  has  timely  filed  all Tax  returns  which are
                  required to be filed by it and has paid all Taxes due pursuant
                  to such returns or pursuant to any assessment  received by the
                  Borrower other than any such Taxes that are being contested in
                  good faith by an appropriate proceeding and for which reserves
                  have been established in accordance with GAAP.

            (ii)  Under  the  laws  of  England,  the  execution,  delivery  and
                  enforcement and admissibility into evidence of this Agreement,
                  and  the  performance  by  the  Borrower  of  its  obligations
                  thereunder,   are   exempt   from  all  Taxes,   charges   and
                  withholdings  imposed  by any  Governmental  Authority  of the
                  United Kingdom.
<PAGE>
                                      -24-


      (g)   Rank of Obligations
            The  obligations  of the Borrower  under this  Agreement  constitute
            direct and  unconditional  obligations  of the Borrower and rank and
            will at all times rank at least  pari passu in right of payment  and
            otherwise  with  all  other  unsecured,  unsubordinated  Debt of the
            Borrower at any time outstanding.

      (h)   Compliance with Laws and Agreements
            The Borrower is in compliance with all applicable laws,  regulations
            and    requirements   of   Governmental    Authorities    (including
            Environmental  Laws)  applicable  to it or its  properties  and  all
            material  agreements,  charges and other instruments binding upon it
            or its  property,  noncompliance  with  which  would  reasonably  be
            expected to have a Material Adverse Effect.

      (i)   Choice of Law; Submission to Jurisdiction
            The choice of Ontario law as  governing  law of this  Agreement is a
            valid and binding  choice of law and the  irrevocable  submission by
            the Borrower to the non-exclusive  jurisdiction of the Courts of the
            Province of Ontario is legal,  valid,  binding and enforceable.  Any
            final judgment  properly  obtained in proceedings in the Province of
            Ontario  for a debt or a  definite  sum of  money  (not  being a sum
            payable in respect of Taxes) and  arising  out of or related to this
            Agreement may be registered,  upon  application to the High Court of
            England  and Wales by the courts of England  and Wales  against  the
            Borrower,  without  re-arguing the  substantive  merits of the case.
            Following such  registration,  the judgment could be enforced by the
            courts in England and Wales.

      (j)   Full Disclosure
            All information  furnished by the Borrower to EDC in connection with
            this Agreement or any  transaction  contemplated  hereby is, and all
            such information hereafter furnished by the Borrower to EDC will be,
            true,  complete and accurate in all respects on the date as of which
            such  information  is stated or  certified  and will not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary  in order to make the  statements  contained  therein  not
            misleading in light of the circumstances under which such statements
            are made.

                              SECTION 8 - COVENANTS

8.1   Covenants
      The Borrower  covenants and agrees with EDC that,  unless  compliance  has
      been waived in writing by EDC:

      (a)   Authorizations; Compliance with Laws

            The   Borrower   will  obtain  and   maintain  in  force  (or  where
            appropriate,   promptly  renew)  all  Authorizations  necessary  for
            carrying out the Borrower's business and operations  generally,  and
            at all  times  comply  with  all  applicable  laws  and
<PAGE>
                                      -25-


            regulations  relating to the Borrower and its  business,  other than
            (except in the case of laws  relating  to  corruption  and  bribery)
            where such non-compliance would not reasonably be expected to have a
            Material Adverse Effect.

      (b)   Maintenance of Existence; Conduct of Business
            The  Borrower  will do or cause to be done all things  necessary  to
            preserve,  renew  and  keep in  full  force  and  effect  its  legal
            existence and all rights, licenses,  permits and franchises material
            to the conduct of its business.

      (c)   Financial Statements
            (i)   The Borrower  will furnish to EDC as soon as available  and in
                  any event  within one hundred and twenty  (120) days after the
                  end of each Fiscal Year,  annual  reports,  which will include
                  annual  audited  financial  statements  prepared in conformity
                  with GAAP, together with a report of its independent  auditors
                  thereon acceptable to EDC. From time to time the Borrower will
                  furnish to EDC such other information  regarding the financial
                  condition,  operations,  business or prospects of the Borrower
                  as EDC may reasonably request.

            (ii)  The Borrower  will furnish to EDC as soon as available  and in
                  any event within forty-five (45) days after the end of each of
                  the first three (3) Fiscal Quarters of each Fiscal Year of the
                  Borrower the balance sheet and related statement of operations
                  as of the end of and for  such  Fiscal  Quarter  and the  then
                  elapsed  portion of the  Fiscal  Year  certified  by the Chief
                  Financial  Officer of the Borrower,  acting  without  personal
                  liability,  as presenting  fairly in all material respects the
                  financial  condition  and results of operation of the Borrower
                  in accordance with GAAP consistently applied.

      (d)   Notices
            (i)   Promptly after the Borrower becomes aware that any Default has
                  occurred  (including any Default which occurs after requesting
                  an Advance but prior to the Advance, other than a Default that
                  has  ceased to  exist),  the  Borrower  will  deliver to EDC a
                  notice describing the Default and the action that the Borrower
                  has taken or proposes to take with respect thereto.

            (ii)  As  soon  as  the  Borrower  obtains  knowledge  thereof,  the
                  Borrower  will notify EDC in writing of any event or condition
                  which  has had,  or would  reasonably  be  expected  to have a
                  Material Adverse Effect.

      (e)   Further Assurances
            The Borrower will, at its own cost and expense,  execute and deliver
            to EDC all such  documents,  instruments  and  agreements and do all
            such  other acts and things as may be  required,  in the  reasonable
            opinion of EDC,  to enable EDC to  exercise  and  enforce its rights
            under this Agreement, subject to the provisions of the Intercreditor
            Agreement.
<PAGE>
                                      -26-


      (f)   Payment of Obligations
            The Borrower will pay its  obligations,  including  Taxes before the
            same shall  become  delinquent  or in default,  except where (i) the
            validity  or amount  thereof  is being  contested  in good  faith by
            appropriate  proceedings;  (ii) the  Borrower  has set  aside on its
            books  adequate  reserves with respect  thereto in  accordance  with
            GAAP;  and (iii) the failure to make  payment  pending  such contest
            could not  reasonably  be expected  to result in a Material  Adverse
            Effect.

      (g)   No Liens
            The  Borrower  will ensure that no Lien will be created or permitted
            to exist  over all or any of the  present  and  future  revenues  or
            assets of the Borrower or the Guarantors other than:

            (i)   Permitted Encumbrances;

            (ii)  Those contained in the Bank Facility.

      (h)   Other Debt
            The Borrower  will not at any time  directly or  indirectly  create,
            incur,  assume or otherwise be or become  liable with respect to any
            Debt  other than  Permitted  Debt;  however,  for  purposes  of this
            Section   8.1(h),   Permitted   Debt  shall  be  deemed  to  exclude
            subsections (g), (m), and (q) of the definition of Permitted Debt.

      (i)   Repayment of Subordinated Debt
            The  payment  of all or any part of the  Subordinated  Debt shall be
            postponed  and  subordinated  to the  payment  in full  of the  Debt
            incurred   hereunder   and  no  payments   or  other   distributions
            whatsoever,  other than interest and reasonable fees (in the opinion
            of EDC, acting reasonably) associated with such Subordinated Debt in
            accordance with the following sentence,  shall be made in respect of
            any part of the Subordinated Debt until the Debt incurred  hereunder
            has been paid in full. Payments of interest and fees with respect to
            Subordinated  Debt  shall  be made  only so  long as  there  has not
            occurred a Default or Event of Default under this Agreement.

      (j)   Environmental Issues
            The Borrower will (i) comply with all applicable Environmental Laws,
            including  obtaining  and  maintaining  all  relevant  environmental
            permits  necessary  to  ensure  that  there is no  Material  Adverse
            Effect;  and (ii) promptly  notify EDC of any  environmental  claim,
            notice or order against it.

      (k)   Fundamental Changes
            The  Borrower  will not  merge  into or  consolidate  with any other
            Person  (each a  "Merger")  except  where  (i) the  Borrower  is the
            surviving  entity  or  the  surviving  entity  assumes  all  of  the
            obligations  of  the  Borrower  under  this   Agreement;   and
<PAGE>
                                      -27-


            (ii) immediately after giving effect to such Merger, no Default will
            exist; and (iii) immediately after giving effect to such Merger, the
            obligations of the Borrower  hereunder will rank at least pari passu
            with all other senior  unsecured  Debt of the  surviving  entity and
            will  continue  to so rank;  and (iv) such  merger  would not have a
            Material Adverse Effect on it or its successor.

      (l)   No Disposition of Assets
            The Borrower will not sell, transfer,  lease or otherwise dispose of
            (in  one  transaction  or a  series  of  transactions)  all  or  any
            substantial part of its assets now owned or hereafter  acquired,  or
            liquidate or  dissolve,  without the prior  written  consent of EDC,
            provided  that the  Borrower  may (i) enter  into  bona fide  sales,
            exchanges,  leases, releases,  abandonments or other dispositions in
            the  ordinary  course of business for the purpose of carrying on the
            same,  including,  without limitation,  the sale of inventory in the
            ordinary   course   of   business,   (ii)   enter   into   Permitted
            Securitization  Transactions,  (iii)  enter into sale and  leaseback
            transactions in an aggregate  amount, in respect of the Borrower and
            the  Guarantors,  not exceeding CAD 15,000,000 (or its equivalent in
            other currencies), and (iv) dispose of its managed service contracts
            portion of its  business  for gross  proceeds of  approximately  GBP
            8,400,000.

      (m)   Maintenance of Properties; Insurance
            The Borrower will (i) keep and maintain all property material to the
            conduct  of its  business  in  good  working  order  and  condition,
            ordinary wear and tear excepted; and (ii) maintain, with financially
            sound and reputable insurance  companies,  insurance in such amounts
            and with such  deductibles and against such risks as are customarily
            maintained  by companies  engaged in the same or similar  businesses
            operating in the same or similar locations.

      (n)   Collateral
            The  Borrower  will  take  all  steps  and  all  actions  as  may be
            reasonably  required or deemed  advisable  by EDC to perfect or more
            fully  evidence  EDC's  rights and interest in the  Collateral  over
            which a security  interest  has been  granted by the Borrower to EDC
            under the Security Documents.

      (o)   Transactions with Affiliates
            The Borrower will not sell, lease or otherwise  transfer property or
            assets to, or  purchase,  lease or  otherwise  acquire  property  or
            assets from any of its Affiliates, except transactions at prices and
            terms not less  favourable to the Borrower than could be obtained on
            an arm's length basis from third parties, and transactions expressly
            permitted herein.

      (p)   Officer's Certificate
            The  Borrower  will cause to be  furnished  to EDC  within  five (5)
            Business  Days of the end of each  month,  a  certificate  of a duly
            authorized signing officer of the Borrower describing (i) the source
            of and exchange rate used for the purposes of
<PAGE>
                                      -28-


            Section 3.4(b), (ii) the method of calculation of the ratio referred
            to in Section 3.4(b) and (iii)  confirming  that at all times during
            such month the ratio provided for in Section 3.4(b) was met.

                          SECTION 9 - EVENTS OF DEFAULT

9.1   Events of Default
      The occurrence of any one or more of the following events (each such event
      called  an "Event of  Default")  shall  constitute  a default  under  this
      Agreement:

      (a)   Repayment
            If the Borrower  defaults in payment hereunder of: (i) any principal
            amount of the Loan when due; (ii) any interest on the Loan when due;
            or (iii) any fee or any other  amount  payable by it  hereunder  and
            such default is not cured within three (3) Business Days of the date
            upon which the  relevant  amount  shall have  become due and payable
            hereunder.

      (b)   Representations and Warranties
            If any representation,  warranty or certification made herein by the
            Borrower or any certificate or opinion  furnished to EDC pursuant to
            the provisions  hereof proves to have been incorrect,  incomplete or
            misleading  in any material  respect as of the time made or repeated
            or deemed made or repeated.

      (c)   Ownership of the Borrower
            The Borrower ceases to be a wholly-owned subsidiary,  whether direct
            or indirect, of MNC.

      (d)   Control of the Guarantors
            Dr. Terrence H. Matthews ceases to control  (directly or indirectly)
            MNC.

      (e)   Failure to Perform
            If the Borrower  defaults in the performance of any of its covenants
            or other obligations under this Agreement or any Guarantor  defaults
            in the  performance  of any of its  covenants  or other  obligations
            under the  Guarantees  and such default shall remain  unremedied for
            fifteen (15) days  following  notice in writing  given by EDC to the
            Borrower or the Guarantor, as the case may be.

      (f)   Illegality
            If it  becomes  unlawful  for the  Borrower  to  perform  any of its
            obligations  under this  Agreement or any of its  obligations  under
            this Agreement,  cease to be valid,  binding or enforceable or if it
            becomes  unlawful  for  the  Guarantors  to  perform  any  of  their
            obligations  under the Guarantees or any of their  obligations under
            the Guarantees, cease to be valid, binding or enforceable.
<PAGE>
                                      -29-


      (g)   Insolvency
            If the  Borrower or any of the  Guarantors  is, or is deemed for the
            purposes  of law to be,  unable to pay its debts as they fall due or
            suspends  making  payments  on all  or any  class  of its  debts  or
            announces an intention  to do so or begins  negotiating  with one or
            more  creditors with a view to  rescheduling  any of its Debt in the
            case  of  the  Guarantors  or any of its  Debt  in the  case  of the
            Borrower.

      (h)   Involuntary Insolvency Proceedings
            If a proceeding or case shall be commenced,  without the application
            or  consent  of the  Borrower  in the  case  of  the  Borrower  or a
            Guarantor  in the case of the  Guarantors  in any court of competent
            jurisdiction,   seeking:   (i)  their   respective   reorganization,
            liquidation,   dissolution,   arrangement  or  winding-up,   or  the
            composition or readjustment of its debts;  (ii) the appointment of a
            receiver,  custodian,  trustee, examiner,  liquidator or the like of
            the  Borrower or a Guarantor  or of all or any  substantial  part of
            their  respective  property;  (iii) similar relief in respect of the
            Borrower  or a  Guarantor  under  any law  relating  to  bankruptcy,
            insolvency, reorganization, winding-up, or composition or adjustment
            of debts, and such proceeding or case shall continue undismissed, or
            an  order,  judgment  or decree  approving  or  ordering  any of the
            foregoing shall be entered and continue unstayed and in effect,  for
            a period of sixty (60) or more days;  or (iv) the  equivalent of any
            of the foregoing under applicable laws.

      (i)   Voluntary Insolvency Proceedings
            If the  Borrower or a Guarantor  shall:  (i) apply for or consent to
            the  appointment  of, or the taking of  possession  by, a  receiver,
            custodian,  trustee, examiner or liquidator of itself or of all or a
            substantial part of its property; (ii) make a general assignment for
            the benefit of its creditors;  (iii) file a petition seeking to take
            advantage  of any  other law  relating  to  bankruptcy,  insolvency,
            reorganization, liquidation, dissolution, arrangement or winding-up,
            or composition  or  readjustment  of debts;  (iv) take any corporate
            action for the purpose of effecting any of the foregoing;  or (v) do
            the equivalent of any of the foregoing under applicable laws.

      (j)   Material Adverse Effect
            If an event or series of events occur which has or is likely to have
            a Material Adverse Effect.

      (k)   Judgment
            If a final  judgment  or order  for the  payment  of money  shall be
            entered against the Borrower or a Guarantor (i) which,  within sixty
            (60) days  after  the  entry  thereof,  has not been  discharged  or
            execution  thereof has not been stayed pending appeal or as to which
            any  enforcement  proceeding  shall  have  been  commenced  (and not
            stayed) by any creditor  thereon;  and (ii) the aggregate  amount of
            all such final judgments or orders meeting the criteria set forth in
            clause  (i)  of  this  subsection   exceeds   CAD1,000,000  (or  its
            Equivalent Amount in another currency).
<PAGE>
                                      -30-


      (l)   Cross-Default
            If the Borrower or a Guarantor (i) is in default under any agreement
            evidencing  Debt for  borrowed  money  where the  amount in  default
            exceeds CAD1,000,000 (or its Equivalent Amount in another currency);
            or (ii) fails to perform or observe any  covenant or agreement to be
            performed or observed by it  contained in any other  agreement or in
            any  instrument  evidencing any of its Debt and, as a result of that
            failure, any other party to that agreement or instrument is entitled
            to exercise,  and has not irrevocably  waived,  the right to declare
            amounts  owing  thereunder  due and payable and such amounts  exceed
            CAD1,000,000 (or its Equivalent Amount in another currency).

      (m)   Authorizations
            If any  Authorization by a Governmental  Authority  necessary to the
            performance  of any  obligation of the Borrower under this Agreement
            fails to become or to remain valid and  subsisting in full force and
            effect.

      (n)   Fundamental Change
            The  Borrower  sells or otherwise  disposes of all or a  substantial
            part of its assets or ceases to conduct all or a substantial part of
            its business as now conducted,  or merges or  consolidates  with any
            other  company,  in either case other than as  permitted  under this
            Agreement, without the prior consent of EDC.

      (o)   Loss of Priority
            If (i) the  Second  Ranking  Charge  ceases to  constitute  a second
            priority security interest in the Collateral, (ii) the Intercreditor
            Agreement  ceases  to be in full  force  and  effect  or  (iii)  the
            Borrower's  obligations  under this  Agreement  do not rank at least
            equally  with all other  unsecured  and  unsubordinated  Debt of the
            Borrower.

      (p)   Default of MNC
            If at any time the financial  covenants on the part of MNC contained
            in section 4.04 (a) of the MNC Guarantee is not met.

      (q)   Bank Facility
            If at any time MNC ceases to have access to  available  bank credits
            in a  total  aggregate  amount  of at  least  CAD20,000,000  (or its
            Equivalent Amount in another currency).

9.2   Default Remedies
      (a)   If an Event of Default occurs and is  continuing,  EDC may by one or
            more notices to the Borrower do one or more of the following:

            (i)   declare  that  EDC is  under  no  further  obligation  to make
                  Advances, whereupon such obligation will cease;
<PAGE>
                                      -31-


            (ii)  declare  all or part of the Debt of the  Borrower  under  this
                  Agreement to be payable on demand  whereupon the same together
                  with all accrued  interest and any other amounts payable under
                  this Agreement will immediately become payable on demand;

            (iii) declare  all or part of the Debt of the  Borrower  under  this
                  Agreement to be  immediately  due and payable,  whereupon  the
                  same will become  immediately  due and payable,  together with
                  all accrued  interest and any other amounts payable under this
                  Agreement  without any  further  demand or notice of any kind;
                  and

            (iv)  exercise all other  rights and remedies  available to it under
                  the   Security   Documents,   subject  to  the  terms  of  the
                  Intercreditor Agreement.

      (b)   If,  at any time,  a Default  occurs  and is  continuing,  or in the
            reasonable  judgment of EDC, an event or  circumstance  occurs which
            makes it  unlikely  that the  Borrower  will be able to perform  its
            obligations under this Agreement or any other  Transaction  Document
            on a timely basis, EDC may, without  prejudice to the obligations of
            the  Borrower  or  thereunder  including,  without  limitation,  the
            obligation to pay interest and to repay principal,  by notice to the
            Borrower,   suspend  EDC's   obligation  to  make  Advances,   which
            suspension  will  continue  until EDC notifies the Borrower that the
            suspension is removed.

                           SECTION 10 - MISCELLANEOUS

10.1  No Waiver
      No failure on the part of EDC to exercise and no delay in exercising,  and
      no course of dealing with respect to, any right,  power or privilege under
      this Agreement shall operate as a waiver thereof,  nor shall any single or
      partial  exercise of any right,  power or privilege  under this  Agreement
      preclude  any other or further  exercise  thereof or the  exercise  of any
      other  right,  power  or  privilege.  The  remedies  provided  herein  are
      cumulative  and not exclusive of any remedies  provided by law. Any waiver
      by EDC of the strict  compliance  with any term of this  Agreement  or any
      related  document  will not be  deemed  to be a waiver  of any  subsequent
      Default.

10.2  Notices
      Any notice, demand, waiver, consent, or any other communication under this
      Agreement must be in writing to be effective and will be hand-delivered or
      sent by registered mail or by fax to the following addresses:
<PAGE>
                                      -32-


      for the Borrower,

            Mitel Networks Limited
            Mitel Business Park
            Portskewett
            Caldicott
            Gwent NP2G 5YR
            Wales

            Attention:       Tim Johnston

            Fax:             01291 430 400

            With a copy to:

            Mitel Networks Corporation
            350 Legget Drive
            Ottawa, Ontario, Canada K2K 2W7

            Attention:       Sharron McIntyre, Treasurer

            Fax:             (613) 591-2320

      for EDC,

            EXPORT DEVELOPMENT CANADA
            151 O'Connor Street
            Ottawa, Ontario, Canada K1A 1K3

            Attention:       Loans Services

            Fax:             (613) 598-2514

            AND TO:

            Attention:       Asset Management

            Fax:             (613) 597-8857

      or such other  address or numbers which either party may from time to time
      notify the other in writing. Any notice delivered by hand or by registered
      mail will be deemed to have been given when  received,  and if transmitted
      by fax, on the day of transmission  unless such day is not a Business Day,
      in which case the Business Day following. In this Agreement,  "in writing"
      includes printing, typewriting, or any electronic transmission that can be
      reproduced as printed text, on paper,  at the point of reception.  In this
<PAGE>
                                      -33-


      subsection "Business Day" means a day in the recipient's jurisdiction when
      banks are generally open for public business.

10.3  Expenses
      (a)   In respect of the preparation,  negotiation,  execution,  amendment,
            operation,  enforcement of, or the preservation of rights under this
            Agreement,  the Borrower will pay to EDC, within thirty (30) days of
            EDC's billing  therefor,  all costs and expenses  incurred by EDC in
            connection with this Agreement,  including without  limitation,  the
            reasonable  fees and expenses of  independent  legal counsel for EDC
            (except that with respect to the enforcement of or the  preservation
            of rights under this  Agreement,  the Borrower  shall be responsible
            for all fees and expenses of independent  legal counsel for EDC) and
            all  reasonable  travel  costs  of EDC  and  its  independent  legal
            counsel.  Internal EDC  documentation  costs in connection with this
            Loan Agreement will not exceed GBP5,500. Travel expenses in relation
            to an initial EDC  monitoring  visit to the Borrower  will be to the
            account of EDC.

      (b)   All documents or  information to be furnished to EDC by the Borrower
            will be supplied at the Borrower's expense.

10.4  Successors and Assigns
      This  Agreement  shall be  binding  upon and enure to the  benefit  of the
      parties hereto and their respective  successors and permitted assigns. The
      Borrower  may not  transfer  or assign  any of its  rights or  obligations
      hereunder  without the prior written  consent of EDC. EDC may at any time,
      assign  its rights and  obligations  hereunder  in whole or in part to any
      Person  with  the  prior  consent  of the  Borrower,  which  shall  not be
      unreasonably  withheld.  Any  such  assignment  by EDC of its  rights  and
      obligations  hereunder shall not result in the Borrower being  responsible
      for any costs or expenses  above what it would have been  responsible  for
      had such assignment not been made.

10.5  Headings
      The table of contents and section  headings in this Agreement are for ease
      of  reference  only  and  shall  not  affect  the  interpretation  of this
      Agreement.

10.6  Counterparts
      This Agreement may be executed in any number of counterparts each of which
      shall be an original, and all of which taken together shall constitute one
      and the  same  instrument,  and the  parties  agree  that  receipt  by fax
      transmission  of an executed copy of this Agreement  shall be deemed to be
      receipt of an original.

10.7  Governing Law; Submission to Jurisdiction

      (a)   This Agreement shall be governed by and construed in accordance with
            the laws of the  Province of Ontario and the federal  laws of Canada
            applicable in such Province.
<PAGE>
                                      -34-


      (b)   Any legal  proceeding  with respect to this  Agreement or to enforce
            any  judgment  obtained  against  the  Borrower or its assets may be
            brought by EDC in the Courts of the Province of Ontario,  Canada, in
            the Courts of England and Wales,  in the courts of any  jurisdiction
            where the  Borrower  may have assets or carries on business  and the
            Borrower   hereby   irrevocably   submits   to   the   non-exclusive
            jurisdiction of each such court and acknowledges its competence. The
            Borrower  agrees that a final judgment  against it in any such legal
            proceeding  will be  conclusive  and may be  enforced  in any  other
            jurisdiction  by suit on the judgment (a  certified  or  exemplified
            copy of which  judgment will be conclusive  evidence of the fact and
            of the amount of the  Borrower's  Debt  hereunder)  or by such other
            means provided by law.

      (c)   The Borrower  hereby  agrees that service of all writs,  process and
            summonses  in any such  suit,  action or  proceeding  brought in the
            courts of the  Province  of  Ontario  may be made upon it by service
            upon Mitel Networks  Corporation  (the "Process  Agent"),  presently
            having an office  at 350  Legget  Drive,  Ottawa,  Ontario  K2K 2W7,
            Canada  telephone no. (613) 592-2122,  ext. 4431,  telefax no. (613)
            591-2320,  and the  Borrower  hereby  confirms  and agrees  that the
            Process Agent is its true and lawful agent and  attorney-in-fact  in
            its name, place and stead to accept such service of any and all such
            writs,  process  and  summonses,  and agrees that the failure of the
            Process  Agent to give any notice of any such  service of process to
            the Borrower  will not impair or affect the validity of such service
            or of any judgment based  thereon.  If for any reason Mitel Networks
            Corporation  ceases to act, or to be able to act, as a Process Agent
            as  contemplated  hereby,  the  Borrower  will  appoint a substitute
            therefor  acceptable  to EDC and agrees to  maintain at all times an
            agent in Canada to act as its Process  Agent.  The  Borrower  hereby
            further irrevocably consents to the service of process in any action
            or  proceeding  by the mailing  thereof,  by EDC, by  registered  or
            certified  mail,  postage  prepaid,  to the  Borrower at the address
            given herein or for the purposes of this Agreement.

      (d)   Nothing  herein  shall in any way be deemed to limit the  ability of
            EDC to serve  any such  writs,  process  or  summonses  in any other
            manner  permitted by applicable law or to obtain  jurisdiction  over
            the Borrower in such other jurisdictions, and in such manner, as may
            be permitted by applicable law.

      (e)   To the extent  that the  Borrower  may be entitled to the benefit of
            any  provision  of law  requiring  EDC, in any action or  proceeding
            brought in a court of England or other  jurisdiction  in  connection
            with  this  Agreement,  to post  security  for  litigation  costs or
            otherwise post a performance bond or similar security,  the Borrower
            hereby irrevocably waives such benefit,  in each case to the fullest
            extent now or hereafter  permitted  under the laws of England or, as
            the case may be, such other jurisdiction.
<PAGE>
                                      -35-


10.8  Treatment of Certain Information; Confidentiality
      EDC agrees with the Borrower to use its best efforts to keep  confidential
      and not to disclose any non-public  information  supplied to it and marked
      as such by the Borrower or a Guarantor in connection  with this Agreement,
      provided  that  nothing  herein  shall  limit the  disclosure  of any such
      information  (a) to the extent  required by statute,  rule,  regulation or
      judicial  process  or of  Canada's  international  commitments,  including
      without  limitation in relation to the WTO  Subsidies  and  Countervailing
      Measures  Agreement;  (b) to  counsel  for  EDC;  (c) to  bank  examiners,
      auditors,  consultants  or  accountants;  or (d) in  connection  with  any
      litigation  relating to this  Agreement or the  transactions  contemplated
      hereby to which EDC is a party.

10.9  Disclosure
      Notwithstanding  anything to the contrary  herein,  the Borrower agrees to
      EDC's disclosure,  following the date of this Agreement,  of the following
      information: the name of the Borrower, the name of the Guarantors, the EDC
      financial  service  provided  and date of  related  agreement,  a  general
      description of the  Transactions  (including  country),  the amount of EDC
      support in an approximate dollar range, and the name of the Exporter.

10.10 Judgment Currency
      The  obligation of the Borrower  under this  Agreement to make payments in
      Pounds  Sterling  will not be  discharged  or  satisfied by any payment or
      recovery,  whether pursuant to any judgment or otherwise,  expressed in or
      converted  into any other  currency  except to the extent of the amount of
      Pounds  Sterling  that is  actually  received  by EDC as a result  of such
      payment or recovery. Accordingly, the obligation of the Borrower to pay in
      Pounds Sterling will be enforceable as an alternative or additional  cause
      of action for the purpose of recovery in such other currency of the amount
      by which  such  actual  receipt by EDC falls  short of the full  amount of
      Pounds Sterling  payable under this Agreement and such obligation will not
      be affected by judgment  being  obtained for any other sums due under this
      Agreement.

10.11 Currency of Account and Payment
      In this Agreement, each specification of Pounds Sterling is of the essence
      and Pounds Sterling is both the currency of account and of payment.

10.12 Severability of Provisions
      Any provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to that jurisdiction,  be ineffective to the extent
      of that prohibition or unenforceability without invalidating the remaining
      provisions  hereof or  affecting  the validity or  enforceability  of that
      provision in any other jurisdiction.
<PAGE>
                                      -36-


IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be duly
executed and delivered as of the day and year first above written.

MITEL NETWORKS LIMITED

By:
Name:
Title:


By:
Name:
Title:

EXPORT DEVELOPMENT CANADA

By:
Name:
Title:

By:
Name:
Title:
<PAGE>


                                     Sch A-1

Schedule "A" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMTED and EXPORT DEVELOPMENT CANADA.

                               DISBURSEMENT TERMS

Re:   Loan  Agreement   ("Loan   Agreement")   between  Mitel  Networks  Limited
      ("Borrower")  and  Export  Development  Canada  ("EDC")  EDC Loan File No.
      880-UK-24189

These terms may be different from the terms of the agreement  ("Contract") dated
August 31, 2001  between the Borrower and  BreconRidge  Manufacturing  Solutions
Corporation ("Exporter"). These terms are in addition to any condition precedent
to disbursement  set out in the Loan Agreement.  Defined terms used herein shall
have the respective meanings set out in the Loan Agreement.

1.    Each amount  charged to the  account of the  Borrower by EDC in respect of
      amounts  Advanced  pursuant  to  section  2.1 of  the  Agreement  will  be
      disbursed in Pounds Sterling by deposit to the account and bank designated
      in writing to EDC by the Borrower. Any wire transfer costs with respect to
      such Advances to the Borrower shall be payable by the Borrower.

2.    EDC is hereby  authorized to make Advances for the account of the Borrower
      up to  the  amount  being  financed  by  EDC  upon  receipt  by EDC of the
      following:

      2.1   Prior to the first Advance hereunder:

            (a)   a  statement   from  the  Borrower   naming  the   individuals
                  authorized to sign documents relating to the Loan Agreement on
                  its behalf, with specimen signatures of such individuals; and

            (b)   the Borrower's  banking  instructions  signed by an authorized
                  officer of the Borrower.

      2.2   Prior to each Advance hereunder: for Goods and Services:

            (a)   a Request for Drawdown  specifying,  inter alia, the amount of
                  the requested  drawdown in Pounds  Sterling  together with the
                  foreign  exchange  rate used by the  Borrower  to convert  the
                  currency of the  Contract to Pounds  Sterling  for purposes of
                  the requested drawdown;

            (b)   a copy of the  relevant  Purchase  Order in respect of which a
                  disbursement is requested, if so requested by EDC;
<PAGE>
                                    Sch A-2


            (c)   an estimated  schedule for  deliveries  for the subsequent six
                  (6)  months  according  to  the  Contract   confirmed  by  the
                  Borrower, if so requested by EDC;

            (d)   a certificate of the Chief Financial Officer of MNC confirming
                  that prior to and  subsequent  to the requested  Advance,  the
                  total loan amount  outstanding  under the Bank  Facility is at
                  least twice the total amount outstanding under this Agreement,
                  and  that,  concurrently  with  delivery  of the  request  for
                  Drawdown  to EDC  hereunder,  MNC  has  caused  a copy of such
                  request for Drawdown to be  delivered to Bank of Montreal,  as
                  administrative  agent  under the Bank  Facility as required by
                  the Bank Facility; and

            (e)   such additional documentation that EDC may require.
<PAGE>


Schedule "B" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                                   GUARANTEES
<PAGE>

                                                       EDC LOAN NO. 880-UK-24189

                               DATED MARCH 4, 2003

                           MITEL NETWORKS CORPORATION

                                       AND

                            EXPORT DEVELOPMENT CANADA

                                    GUARANTEE

Doc #16228
<PAGE>

                                                       EDC LOAN NO. 880-UK-24189

This Guarantee dated March 4, 2003 is made

BY

      Mitel Networks Corporation,
      a company having its registered office at Ottawa, Ontario
      (hereinafter called the "Guarantor")

IN FAVOUR OF

      Export Development Canada,
      a corporation established by an Act of the
      Parliament of Canada, having its head office
      at Ottawa, Canada
      (hereinafter called "EDC")

WHEREAS by an agreement dated March 4, 2003, between Mitel Networks Limited (the
"Borrower")  and EDC,  in effect  and as  amended  from time to time (the  "Loan
Agreement"),  EDC has agreed to lend to the Borrower up to  GBP4,100,000  on the
condition  (among  others)  that the  Guarantor  agrees to  guarantee to EDC the
obligations  of, and  indemnify EDC against any loss in respect of, the Borrower
under the Loan Agreement; and

WHEREAS the Guarantor,  in  consideration of EDC agreeing to enter into the Loan
Agreement,  has agreed to guarantee to EDC the obligations of, and indemnify EDC
against any loss in respect of, the Borrower under the Loan Agreement;

THEREFORE the Guarantor agrees as follows:

                                    ARTICLE I
                                   DEFINITIONS

Section 1.01 - General

In this Guarantee and the recitals, unless the context otherwise requires:

"Guaranteed   Indebtedness"  means  all  indebtedness,   liabilities  and  other
obligations,  present and future,  of the  Borrower  outstanding  and  remaining
unpaid  from  time to time  under  or in  connection  with  the  Loan  Agreement
including,  without  limitation,  for principal,  interest,  administration fee,
commitment fee, expenses and any other amounts, and the ultimate balance thereof
whether or not the  Borrower at any time ceases to be legally  liable to perform
any such  obligations  by  reason  of  bankruptcy,  insolvency,  liquidation  or
otherwise.
<PAGE>
                                       2


Except as otherwise expressly defined in this Guarantee,  words used herein that
are defined in the Loan  Agreement have the same meaning in this Guarantee as in
the Loan Agreement.

Section 1.02 - Financial Definitions

All terms of an accounting or financing  nature shall be construed in accordance
with GAAP. In addition,  the following  financial  terms have the meanings given
them below when used in this Agreement:

"EBITDA"  means,  for any  Person on a  consolidated  basis and for any  period,
without duplication, the amount equal to net income less interest income, income
tax  recoveries  and any non-cash  income  included in net income,  plus, to the
extent  deducted  from  net  income,  interest  expense,  depreciation  expense,
amortization expense, other non-cash expenses and income tax expenses;  provided
that foreign  exchange  gains or losses and  extraordinary  or unusual  gains or
losses,  including  gains or losses on the  disposition  of assets  outside  the
ordinary course of business and restructuring  changes, shall not be included in
EBITDA;

"Chief  Financial  Officer"  means  the  chief  financial   officer,   principal
accounting officer, treasurer or controller of a Person;

"Fiscal  Quarter"  means  each of the four  (4)  consecutive  quarterly  periods
collectively forming a Fiscal Year;

"Fiscal Year" means any period of four (4) consecutive Fiscal Quarters ending on
the last Sunday in April of each year.

Section 1.03 - Rules of Interpretation

In this Guarantee:

(a)   the singular shall include the plural and vice versa;

(b)   references  to a "person"  shall be construed to refer to any  individual,
      firm, company,  corporation or unincorporated  association of persons, any
      state or any political subdivision thereof or any government or any agency
      thereof;

(c)   whenever any person is referred to, such  reference  shall be construed to
      include the permitted  assigns and  successors of such person,  whether by
      operation of law, consolidation, merger, sale, amalgamation or otherwise;

(d)   any  reference  to a specified  Article or Section is a reference  to that
      article or section of this Guarantee;
<PAGE>
                                       3


(e)   references to any agreement or instrument (including,  without limitation,
      the Loan  Agreement)  shall be  construed  to include  such  agreement  or
      instrument  as it may from time to time be modified or otherwise  amended,
      supplemented, restated, renewed, extended, novated or replaced;

(f)   the terms "hereof", "herein" and "hereunder" refer to this Guarantee; and

(g)   the headings of the Articles and Sections are inserted for  convenience of
      reference only and shall not affect the construction or  interpretation of
      this Guarantee.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

Section 2.01 - Representations and Warranties

The Guarantor  represents  and warrants to EDC as of the date of this  Guarantee
and, except as otherwise  expressly  permitted or required  hereunder,  shall be
deemed to represent  and warrant to EDC as of the date of each Advance under the
Loan Agreement, that:

(a)   Corporate Existence; Power; Share Capital
      The Guarantor is a company duly organized and validly existing and in good
      standing under the laws of its jurisdiction of incorporation,  and has all
      the  corporate  power and  authority  to own its  assets and  conduct  its
      business as and where presently conducted.

(b)   Authorization; Binding Effect
      The entering into and the  performance  of this Guarantee by the Guarantor
      are  within its  corporate  powers  and have been duly  authorized  by all
      necessary  corporate and, if required,  shareholder action. This Guarantee
      has been duly executed and  delivered by the  Guarantor and  constitutes a
      legal, valid and binding agreement of the Guarantor,  enforceable  against
      the Guarantor in accordance  with its terms,  subject only to  bankruptcy,
      insolvency,  and other laws relating to creditors' rights generally and to
      general principles of equity.

(c)   Governmental Authorization; No Conflict
      All Authorizations and other actions by or with any Governmental Authority
      necessary to authorize the Guarantee,  for the  performance  hereof by the
      Guarantor  or  required  for  the  legality,   validity,  binding  nature,
      admissibility in evidence hereof or  enforceability  against the Guarantor
      of this  Guarantee  have  been  obtained  or  performed  and are valid and
      subsisting in full force. The execution,  delivery and performance of this
      Guarantee  does  not (i)  violate  any law or  regulation,  organizational
      documents  or any  writ,  order,  judgment  of any  court or  Governmental
      Authority; (ii) violate or result in a breach of any material agreement or
      instrument  to which the  Guarantor is a party or which is binding upon it
      or its property.
<PAGE>
                                       4


(d)   Financial Information
      The  Guarantor's  audited and  consolidated  financial  statements for the
      financial year ended April 28, 2002, a copy of which has been delivered to
      EDC,  fairly present,  in conformity with GAAP, the financial  position of
      the Guarantor as of such date and its results of operations and cash flows
      for the Fiscal Year and Fiscal  Quarter then ended and have been  reported
      upon by a firm of independent accountants. Since April 28, 2002, there has
      been no  event  or  circumstance  that  has had or is  expected  to have a
      Material Adverse Effect.

(e)   Litigation
      Except as disclosed in the financial  statements  referred to above, there
      is no action or proceeding  pending or, to the knowledge of the Guarantor,
      threatened  against  or  affecting  the  Guarantor  before  any  court  or
      arbitrator or any Governmental Authority in respect of which, individually
      or in the  aggregate,  there  is a  reasonable  likelihood  of an  adverse
      decision which would  reasonably be expected to have a Materially  Adverse
      Effect.

(f)   Environmental Matters
      Except  as  disclosed  in  writing  to EDC  after  diligent  inquiry,  the
      Guarantor  is not  aware  of any  failure  on its  part to  comply  in all
      material respects with all applicable Environmental Laws.

(g)   Taxes
      The  Guarantor  has timely filed all Tax returns  which are required to be
      filed  by it and has  paid all  Taxes  due  pursuant  to such  returns  or
      pursuant to any assessment  received by the Guarantor  other than any such
      Taxes that are being contested in good faith by an appropriate  proceeding
      and for which reserves have been established in accordance with GAAP.

(h)   Rank of Obligations
      The  obligations of the Guarantor under this Guarantee  constitute  direct
      and  unconditional  obligations  of the Guarantor and rank and will at all
      times rank at least pari passu in right of payment and otherwise  with all
      other  unsecured  and  unsubordinated   Debt,   including   guarantees  or
      indemnities, of the Guarantor.

(i)   Compliance with Laws and Agreements
      The  Guarantor is in compliance  with all  applicable  laws  (including in
      respect of anti-corruption  and bribery),  regulations and requirements of
      Governmental  Authorities  applicable  to it or  its  properties  and  all
      material  agreements and  instruments to which the Guarantor is a party or
      which are binding upon it or its property,  other than (except in the case
      of laws  relating to  corruption  and bribery)  where such  non-compliance
      would not reasonably be expected to have a Material Adverse Effect.

(j)   Full Disclosure
      All information  furnished by the Guarantor to EDC in connection with this
      Guarantee  or  any  transaction  contemplated  hereby  is,  and  all  such
      information  hereafter  furnished  by
<PAGE>
                                       5


      the Guarantor to EDC will be, true,  complete and accurate in all material
      respects on the date as of which such  information  is stated or certified
      and does not and will not contain any untrue  statement of a material fact
      or omit to state a material fact necessary in order to make the statements
      contained therein not misleading in light of the circumstances under which
      such statements are made.

                                   ARTICLE III
                             GUARANTEE AND INDEMNITY

Section 3.02 - Guarantee and Indemnity

(a)   The Guarantor  absolutely,  unconditionally and irrevocably  guarantees to
      EDC,  as primary  obligor and not merely as surety,  the due and  punctual
      payment  and  performance  of,  and the  receipt  by EDC in full  of,  the
      Guaranteed   Indebtedness,   and  hereby   absolutely,   irrevocably   and
      unconditionally  promises  to pay to EDC,  immediately  upon  the  written
      demand of EDC, any and all of the Guaranteed  Indebtedness as and when the
      same,  whether by maturity,  by required  prepayment,  by  acceleration or
      otherwise, becomes due, without set-off,  counterclaim or deduction of any
      kind and without  limiting the  generality of the remaining  provisions of
      this Article  III,  without any  requirement  that EDC has  exhausted  any
      recourses it may have against the Borrower to obtain payment of any or all
      of the Guaranteed Indebtedness.

(b)   The Guarantor  unconditionally  and irrevocably  agrees,  as an obligation
      separate  from  and in  addition  to its  obligation  as a  guarantor,  to
      indemnify EDC,  immediately  upon the written demand of EDC therefor,  for
      and against any and all losses, damages, costs or expenses that EDC may at
      any time suffer or incur in connection with any failure by the Borrower to
      duly and  punctually  pay and perform its  obligations  to EDC under or in
      connection with the Loan Agreement in full or any loss or impairment,  for
      any reason or cause whatsoever,  of any right or remedy of EDC against the
      Borrower or the  Guarantor in respect  thereof,  and without  limiting the
      foregoing,  the Guarantor agrees that if any obligation of the Borrower to
      EDC under or in  connection  with the Loan  Agreement is or becomes  void,
      voidable, unenforceable,  ineffective or stayed the Guarantor shall pay to
      EDC an  amount  equal to any sums that  would  have  been  payable  by the
      Borrower to EDC if such obligation had not been or become void,  voidable,
      unenforceable, ineffective or stayed.

(c)   The  Guarantor  agrees to pay or reimburse EDC for,  immediately  upon the
      written  demand of EDC, all costs and expenses  (including  legal fees and
      disbursements)  paid or incurred by or on behalf of EDC in  enforcing  the
      obligations  of the Borrower  under the Loan Agreement or of the Guarantor
      under the Guarantee.

(d)   The  Guarantor  agrees to pay interest on each and every  amount  demanded
      under this  Guarantee  from the date of demand until payment in full,  and
      after as well as before  judgment,  at the rate per annum that is equal to
      the rate of interest  per annum that would
<PAGE>
                                       6


      during that time be payable on (and  calculated and compounded on the same
      basis as would apply to interest  payable  during that time on) an Advance
      outstanding under the Loan Agreement.

(e)   In the event that the Borrower is prevented by any applicable law, rule or
      regulation in England or otherwise, from making any payment under the Loan
      Agreement  at the place and time,  and in the  currency,  funds and manner
      provided  for therein,  or if the Borrower is required or permitted  under
      any applicable law to discharge its  obligations  under the Loan Agreement
      in any  currency  other  than  freely  transferable  GBP or  otherwise  as
      specified  in the Loan  Agreement,  the  Guarantor  shall  nonetheless  be
      obligated to pay and perform all such  Guaranteed  Indebtedness in GBP and
      otherwise at the time and place, and in the funds and manner,  provided in
      the Loan  Agreement,  as the case may be, as if no such prevention were in
      effect and as if the purported payment or discharge in such other currency
      or manner had not been required, permitted or made, but only to the extent
      payment by the Borrower in such other currency has not resulted in receipt
      by EDC of the full amount of the GBP it is  entitled to receive  under the
      Loan Agreement.

(f)   In the  event  that EDC  shall be  entitled,  under  the terms of the Loan
      Agreement  to   accelerate   the   maturity  of  any  of  the   Guaranteed
      Indebtedness,  but EDC is  prevented  by law or court order from doing so,
      the  Guarantor  agrees that the  maturity of the  Guaranteed  Indebtedness
      shall  nonetheless  be deemed to be  accelerated  for the purposes of this
      Guarantee.

(g)   EDC  may,  in its  sole  discretion,  make  multiple  demands  under  this
      Guarantee for any part of the Guaranteed Indebtedness.

Section 3.03 - Guarantor Bound

The Guarantor  agrees that its  obligations  under this  Guarantee  shall not be
lessened, discharged or released, in whole or in part, or terminated except only
by the  permanent  and  irrevocable  payment  and  performance  in  full  of the
Guaranteed Indebtedness, and the Guarantor irrevocably waives the benefit of all
privileges  and defences that are or may  hereafter be available to  guarantors,
indemnitors  or  sureties,   including,  without  limitation,  the  benefits  of
discussion and division, diligence,  presentment,  demand, protest and notice of
every kind in respect of the obligations of the Borrower.  Nothing contained in,
and no omission  from,  the other  provisions  of this  Guarantee is intended or
shall be construed or interpreted so as to limit or otherwise  derogate from the
generality of this Section 3.03.

Section 3.04 - Obligations not Affected and Waiver of Notice

(a)   The  obligations  of  the  Guarantor  hereunder  shall  not  be  lessened,
      discharged, released, or otherwise impaired or varied in whole or in part,
      or terminated by:

      (i)   any voluntary or involuntary  bankruptcy,  insolvency,  liquidation,
            winding-up or  dissolution  of, any proposal to  creditors,  plan of
            compromise  or  arrangement  or other  reorganization  of all or any
            indebtedness  affecting, or any receivership of,
<PAGE>
                                       7


            the Borrower or any other person (other than the Guarantor), whether
            judicial or extra-judicial;

      (ii)  any judgment against the Borrower or any other person;

     (iii)  any extension, forbearance, concession or waiver whatsoever, whether
            as to time of payment or  performance  or otherwise,  respecting the
            Guaranteed  Indebtedness owing to EDC by the Borrower, the Guarantor
            or any other person;

      (iv)  any assertion of,  failure to assert or delay in asserting any right
            or remedy against the Borrower, the Guarantor or any other person or
            with  respect to the  Guaranteed  Indebtedness  or any  guarantee or
            security therefor;

       (v)  any   modification  or  other   amendment  to,   supplement  to,  or
            restatement,  renewal, extension,  novation, exchange,  replacement,
            postponement  or  subordination  of, the Loan Agreement or any other
            Transaction  Documents,  any of the obligations of the Borrower, any
            guarantee or indemnity or security at any time held by EDC or any of
            the rights and  remedies of EDC  against any person or any  property
            whether or not made with the knowledge or consent of the Guarantor;

      (vi)  any failure of the Borrower to comply with any  franchise,  licence,
            judgment, law, statute, regulation, ordinance or decree;

     (vii)  the  making of any  Advance  by EDC where an Event of  Default  or a
            Default is continuing;

    (viii)  any  direction  of  application  of payment by the  Borrower  or any
            other person;

      (ix)  any   lack   of   genuineness   or   any   invalidity,   illegality,
            unenforceability,  voidness,  stay or  ineffectiveness  of the  Loan
            Agreement  or any  of  the  other  Transaction  Documents  or of the
            obligations of the Borrower or any part thereof;

       (x)  any change of the name, business, membership,  directorate,  powers,
            objects,  organization or management of the Borrower,  the Guarantor
            or any other person;

      (xi)  any  reorganization,  amalgamation  or merger of the Borrower or any
            other person or any sale or other disposition,  in whole or in part,
            of the assets or businesses of the Borrower or any other person;

     (xii)  any failure, refusal or neglect of any other person to, or of EDC to
            cause any other person to, at any time guarantee,  provide indemnity
            or otherwise  become liable to EDC, or having done so to continue to
            be  liable  to EDC,  for or in  respect  of the  obligations  of the
            Borrower or any part thereof;
<PAGE>
                                       8


    (xiii)  any  discharge  or  release,  in whole or in  part,  or  compromise,
            whether by operation of law,  agreement of EDC or  otherwise,  of or
            with the  Borrower or any other person who is or at any time becomes
            liable, as a guarantor or indemnitor or otherwise,  to EDC for or in
            respect of the obligations of the Borrower or any part thereof;

     (xiv)  any  refusal,  failure  or  neglect  by EDC or any  other  person to
            perfect, or keep perfected,  any security for the obligations of the
            Borrower or any other person or any part thereof;

      (xv)  any refusal,  failure or neglect by EDC to make, or any delay on the
            part of EDC in making, any particular Advance, either in whole or in
            part;

     (xvi)  any  challenge  to  or   deficiency   in  the  value,   sufficiency,
            authorization  or amount  of the Loan  Agreement  or the  Guaranteed
            Indebtedness;

    (xvii)  any set-off,  counterclaim or other defense that the Borrower or the
            Guarantor may have against EDC or any other person.

(b)   The Guarantor  waives any right it might  otherwise have to receive notice
      of, or to withhold  approval  of or consent  to, any  action,  omission or
      other matter  described in or contemplated by this Section 3.04 or Section
      3.06.

(c)   The  Guarantor  agrees that this  Guarantee  shall extend and apply to the
      Guaranteed Indebtedness at any time owing by any person for the time being
      and at any time carrying on the business of the Borrower in consequence of
      any  reorganization  of the  Borrower,  its  amalgamation  or merger  with
      another or any sale or other disposal of its assets or business,  in whole
      or in part, to another.

Section 3.05 - Continuing Guarantee and Indemnity

The  Guarantor  agrees  that  this  Guarantee  is  a  continuing  guarantee  and
indemnity,  unlimited  as to  duration  and  amount,  for all of the  Guaranteed
Indebtedness,  and a fresh cause of action hereunder shall be deemed to arise in
respect of each Default of the Borrower.

Section 3.06 - Further Security

This Guarantee is in addition to and not in substitution for any other guarantee
or  indemnity  or  security  at any time  held by EDC for or in  respect  of the
Guaranteed Indebtedness or any part thereof, and shall be effective irrespective
of whether  any other  person is or becomes,  or remains,  at any time liable to
EDC,  as a  guarantor  or  indemnitor  or  otherwise,  for or in  respect of the
Guaranteed  Indebtedness or any part thereof.  EDC shall be at liberty from time
to time to  accept  or  receive  further  or other  guarantees,  indemnities  or
security for the Guaranteed Indebtedness or any part thereof, to refuse, fail or
neglect to do so, to  compromise  with or  discharge  or  release  any person or
abandon any and all such guarantees, indemnities or security, either in whole or
in
<PAGE>
                                       9


part, to refuse,  fail or neglect to deal with the Guarantor or any other person
or any guarantee or indemnity or security or any part  thereof,  or to deal with
or allow  the  Guarantor  or others to deal  with the  property  covered  by any
security,  all to the extent and in such manner as EDC considers  expedient from
time to time.

Section 3.07 - Waivers by Guarantor

(a)   The Guarantor irrevocably waives any requirement that EDC, in the event of
      default by the Borrower,  make demand upon or seek to enforce any remedies
      against the  Borrower or its  property or any other person or its property
      or security before  demanding  payment under, or seeking to enforce,  this
      Guarantee,  and EDC shall not be bound to exhaust its recourse against the
      Borrower or any other person or under any security it may at any time hold
      for or in respect of the  obligations of the Borrower or to value any such
      security before demanding or being entitled to payment from the Guarantor.

(b)   The  Guarantor  irrevocably  waives  diligence,  presentment,  protest and
      notice of every kind in respect of its obligations hereunder.

Section 3.08 - No Benefit to Guarantor

(a)   Until all sums  owing to EDC by the  Borrower,  and any  ultimate  balance
      thereof, have been paid in full, the Guarantor:

      (i)   shall not be  entitled  and shall not claim to rank as a creditor in
            the bankruptcy, insolvency,  liquidation,  winding-up or dissolution
            of, any proposal to creditors,  plan of compromise or arrangement or
            reorganization  of  all  or  any  indebtedness   affecting,  or  any
            receivership of, the Borrower,  whether judicial or  extra-judicial,
            in competition with EDC; and

      (ii)  shall not be subrogated to or entitled to receive any  assignment of
            any right or remedy of EDC and  shall not be  entitled  to  receive,
            claim or have the benefit of any payment or distribution  from or on
            account of the  Borrower or to claim the benefit of any  security or
            monies held by or for the account of EDC,  and EDC shall be entitled
            to apply and re-apply any such security or monies as it sees fit.

(b)   Any settlement or discharge or release between EDC and the Guarantor shall
      be  conditional  upon no  security or payment to or recovery by EDC or any
      other  person  being  avoided or set aside or ordered  to be  refunded  or
      reduced  by  operation  of laws  relating  to  bankruptcy,  insolvency  or
      liquidation  for the time  being in force  and EDC  shall be  entitled  to
      recover  from the  Guarantor  the value that EDC has placed  upon any such
      security  or the  amount  of any  such  payment  or  recovery  as if  such
      settlement or discharge or release had not occurred. In the event that any
      payment  received by EDC from the Borrower or the  Guarantor is so avoided
      or set aside or refunded or  reduced,  such amount  shall be deemed not to
      have been received by EDC and shall remain Guaranteed Indebtedness subject
      to the guarantee, indemnities and other provisions of this Guarantee.
<PAGE>
                                       10


Section 3.09 - Proof in Bankruptcy

Upon  any  voluntary  or  involuntary   bankruptcy,   insolvency,   liquidation,
winding-up or dissolution  of, or any proposal to creditors,  plan of compromise
or arrangement or reorganization affecting, or any receivership of, the Borrower
or any other person, whether judicial or extra-judicial,  the obligations of the
Guarantor shall not be lessened or discharged or released,  in whole or in part,
by any  failure  or neglect of EDC to prove its claim or to prove its full claim
and EDC may prove such claim or refrain from proving any claim, and may value or
refrain from valuing any security  held by it, as EDC considers  expedient  from
time to time,  without  lessening or  discharging  or releasing,  in whole or in
part, the  obligations of the Guarantor,  and until all sums owing to EDC by the
Borrower,  and any ultimate balance  thereof,  have been paid in full, EDC shall
have the right to  include in its claim the amount of all sums paid to EDC under
this  Guarantee  and to  prove  and  rank  for and  receive  dividends  or other
distributions in respect thereof.

Section 3.10 - No Evidence of Power

EDC shall have no  obligation  to procure  evidence of or to  otherwise  satisfy
itself with  respect to the powers of the Borrower or its  directors,  officers,
servants or agents acting or  purporting  to act on behalf of the Borrower,  and
all Advances in fact made under the Loan Agreement  shall be deemed to form part
of  the  Guaranteed   Indebtedness   even  if  such  Advances  were  informally,
irregularly,  defectively or fraudulently obtained or were obtained in excess of
the powers of the  Borrower or of the  directors,  officers,  servants or agents
thereof,  notwithstanding  any notice that EDC may have of the actual  powers of
the Borrower or the directors, officers, servants or agents thereof.

                                   ARTICLE IV
                             COVENANTS OF GUARANTOR

Section 4.01 - Covenants of Guarantor

The Guarantor agrees as follows, unless compliance has been waived by EDC:

(a)   Payment of Obligations
      The Guarantor will  punctually pay and perform its  obligations  hereunder
      without  regard to any equities  between the  Guarantor,  the Borrower and
      EDC,  or any of them,  or any  privilege,  defence,  right of  set-off  or
      counterclaim that the Borrower or the Guarantor otherwise may have.

(b)   Authorizations; Compliance with Laws
      The  Guarantor  will obtain and  maintain in force (or where  appropriate,
      promptly  renew)  all  Authorizations   necessary  for  carrying  out  the
      Guarantor's   business  and  operations   generally,   including   without
      limitation, those Authorizations required under this
<PAGE>
                                       11


      Guarantee,   and  at  all  times  comply  with  all  applicable  laws  and
      regulations  relating to the Guarantor and its business and provide proper
      evidence thereof promptly to EDC if so requested in writing by EDC.

(c)   Maintenance of Existence; Conduct of Business
      The  Guarantor  will  do or  cause  to be done  all  things  necessary  to
      preserve,  renew and keep in full force and effect its legal existence and
      all rights,  licenses,  permits and franchises  material to the conduct of
      its business.

(d)   Financial Statements
      (i)   The  Guarantor  will furnish to EDC as soon as available  and in any
            event within one hundred and twenty (120) days after the end of each
            Fiscal  Year,  annual  reports,  which will include  annual  audited
            consolidated  statements  prepared in conformity with GAAP, together
            with a report of its independent  auditors thereon acceptable to EDC
            and a certificate  of the Chief  Financial  Officer of the Guarantor
            confirming  that the financial  covenants  described at Section 4.04
            have  been  met  and  showing  the  manner  of  calculation  of such
            financial covenants. From time to time the Guarantor will furnish to
            EDC  such  other  information  regarding  the  financial  condition,
            operations,  business  or  prospects  of the  Borrower  as  EDC  may
            reasonably request.

      (ii)  The  Guarantor  will furnish to EDC as soon as available  and in any
            event within forty-five (45) days after the end of each of the first
            three (3) Fiscal  Quarters of each Fiscal Year of the  Guarantor the
            consolidated balance sheet and related statement of operations as of
            the end of and for such Fiscal Quarter and the then elapsed  portion
            of the Fiscal Year certified by the Chief  Financial  Officer of the
            Guarantor,  acting without personal liability,  as presenting fairly
            in all material  respects  the  financial  condition  and results of
            operation of the  Guarantor  in  accordance  with GAAP  consistently
            applied,  together with a Certificate of the Chief Financial Officer
            of the Guarantor  confirming that the financial  covenants described
            at Section 4.04 have been met and showing the manner of  calculation
            of such financial covenants.

(e)   Officer's Certificate
      (i)   The Guarantor  will furnish to EDC,  within five (5) days of the end
            of each calendar month during the term of the Loan, a certificate of
            the Chief Financial Officer certifying that (i) during the preceding
            month, the total amount  outstanding  under the Bank Facility was at
            least twice the total amount  outstanding  under the Loan  Agreement
            and (ii) there is no requirement for a mandatory prepayment pursuant
            to Section 3.4(b) of the Loan Agreement.

      (ii)  For the purpose of making the  calculation  required  by  subsection
            (i), the Guarantor shall obtain the applicable  exchange rate from a
            financial  institution  reasonably acceptable to EDC as at the first
            day of each month (the "Applicable Rate"). The Applicable Rate shall
            be used to calculate the relevant ratio
<PAGE>
                                       12


            throughout  such  month.  The  certificate   delivered  pursuant  to
            subsection  (i) shall also  describe  (A) the source of and exchange
            rate used and (B) the method of calculation of the ratio referred to
            in subsection (i).

(f)   Notices
      (i)   Promptly  after the  Guarantor  becomes  aware that any  Default has
            occurred  (including  any Default  which occurs after  requesting an
            Advance  but prior to the  Advance,  other  than a Default  that has
            ceased  to  exist),  the  Guarantor  will  deliver  to EDC a  notice
            describing  the  Default  and the action  that the  Borrower  and/or
            Guarantor have taken or propose to take with respect thereto.

      (ii)  As soon as the Guarantor  obtains knowledge  thereof,  the Guarantor
            will notify EDC in writing of any event or condition  which has had,
            or would reasonably be expected to have a Material Adverse Effect.

(g)   Further Assurances
      The Guarantor  will,  at its own cost and expense,  execute and deliver to
      EDC all such  documents,  instruments and agreements and do all such other
      acts and things as may be required,  in the reasonable  opinion of EDC, to
      enable EDC to exercise and enforce its rights under this Guarantee subject
      to the Intercreditor Agreement.

(h)   No Liens
      The  Guarantor  will ensure that no Lien will be created or  permitted  to
      exist  over all or any of the  present or future  assets of the  Guarantor
      unless the benefit of such security  shall,  at the same time, be extended
      equally and  rateably to secure the  obligations  of the  Guarantor to EDC
      under this Guarantee other than Permitted Encumbrances.

(i)   Other Indebtedness
      The Guarantor will not at any time directly or indirectly  create,  incur,
      assume or  otherwise  be or become  liable with respect to any Debt except
      Permitted Debt.

(j)   Environmental Issues
      The  Guarantor  will (i) comply with all  applicable  Environmental  Laws,
      including  obtaining and  maintaining all relevant  environmental  permits
      necessary  to ensure that there is no Material  Adverse  Effect;  and (ii)
      promptly notify EDC of any  environmental  claim,  notice or order against
      it.

(k)   Fundamental Changes
      The Guarantor will maintain its corporate existence in good standing,  and
      not merge, amalgamate or effect any reorganization with any person without
      the  prior  written  consent  of EDC  subject  to the  right  to  merge or
      amalgamate  or  effect  any  reorganization   which  does  not,  in  EDC's
      reasonable  opinion,  result in any  deterioration  of the  position of or
      detriment to any of its creditors, and provided that any successor company
      executes,  prior to or  contemporaneously  with the  consummation  of such
      transaction,  such
<PAGE>
                                       13


      instruments  as are  satisfactory  to EDC evidencing the agreement of such
      successor  company  to pay  and  perform  all of  the  obligations  of the
      Guarantor hereunder.

(l)   No Disposition of Assets
      The Guarantor will not sell,  transfer,  lease or otherwise dispose of (in
      one transaction or a series of  transactions)  all or any substantial part
      of its assets now owned or hereafter  acquired,  or liquidate or dissolve,
      without the prior written consent of EDC,  provided that the Guarantor may
      enter into bona fide sales, exchanges,  leases, releases,  abandonments or
      other  dispositions  in the ordinary course of business for the purpose of
      carrying on the same including,  without limitation, the sale of inventory
      in  the  ordinary  course  and  the  Guarantor  may  engage  in  Permitted
      Securitization  Transactions  and sale and leaseback  transactions  to the
      extent the Borrower is permitted to engage in such transactions  under the
      provisions of the Loan Agreement.

(m)   Maintenance of Properties; Insurance
      The  Guarantor  will (i) keep and maintain  all  property  material to the
      conduct of its business in good working order and condition, ordinary wear
      and tear excepted; and (ii) maintain, with financially sound and reputable
      insurance  companies,  insurance in such amounts and with such deductibles
      and against such risks as are customarily  maintained by companies engaged
      in the  same or  similar  businesses  operating  in the  same  or  similar
      locations.

(n)   Rank of Obligations
      The  Guarantor  will ensure that at all times its  obligations  under this
      Guarantee  rank at  least  pari  passu  with  all  other  non-subordinated
      unsecured obligations, including guarantees, of the Guarantor.

(o)   Actions Affecting Loan Agreement
      The Guarantor  will not take or suffer to be taken any action  whereby the
      interests of EDC under the Loan Agreement may be jeopardized.
<PAGE>
                                       14


Section 4.04      Financial Covenants

(a)   EBITDA
      The Guarantor  will not permit its EBITDA  (determined  on a  consolidated
      basis in accordance  with GAAP as in effect on the date of this  Guarantee
      and  measured as at the last day of each fiscal  quarter of the  Guarantor
      for such  fiscal  quarter  then  ending,  commencing  with the first  such
      quarter to end following  the date of this  Guarantee) to be less than 80%
      of the following amounts:

      (i)   CAD 5.6 million for the Fiscal Quarter ending April 27, 2003;

      (ii)  CAD 6.7 million for the Fiscal Quarter ending July 27, 2003;

      (iii) CAD8.3 million for the Fiscal Quarter ending October 27, 2003; and

      (iv)  CAD 10.3 million for each Fiscal  Quarter ending on or after January
            25, 2004.

(b)   Access to Funds
      The  Guarantor  shall ensure that at all times during the term of the Loan
      Agreement  it has access to available  bank  credits in a total  aggregate
      amount of at least CAD20,000,000.

                                    ARTICLE V
                                    PAYMENTS

Section 5.01 - Place and Manner of Payment

The Guarantor agrees to make any payment required of it hereunder forthwith upon
the written demand of EDC without  set-off or  counterclaim  at Bank of America,
London Branch,  London,  England,  for the credit of Export Development  Canada,
London Sort Code 165050,  SWIFT  BOFAGB22,  account  number  45447019 or to such
other  account  or at such  other  place in England as EDC may from time to time
notify  the  Guarantor  in  writing  not less  then ten (10)  days  prior to the
relevant  date.  The  Guarantor  agrees to instruct its bank to provide to EDC a
copy of its payment  instructions  (including  its transfer  reference  number),
showing how funds are being transferred, by telefax at number (613) 598-2514.

Section 5.02 - No Deduction for Taxes

All payments to be made to EDC  pursuant  hereto shall be made free and clear of
and without  deduction  for or on account of Taxes (other than Taxes  imposed in
Canada)  unless the Guarantor is required by law to make such a payment  subject
to the deduction or withholding  of such Taxes,  in which case (a) the Guarantor
shall make such deduction or withholding and shall pay the amount so deducted or
withheld to the appropriate taxation authority when due, and (b) the sum payable
by the Guarantor in respect of which such  deduction or  withholding is required
to be made  shall be  increased  to the  extent  necessary  to  ensure  that EDC
receives and retains (free from any  liability in respect of any such  deduction
or  withholding)  a net sum equal to the sum which it would  have  received  and
retained had no such deduction or withholding  been made or
<PAGE>
                                       15


required to be made.  The  Guarantor  shall  indemnify  EDC for any loss,  cost,
penalty or other damage that EDC may suffer or incur by reason of the failure of
the Guarantor to pay any such Taxes when due.  Promptly after the payment of any
Taxes,  the Guarantor  shall furnish to EDC original tax receipts and such other
evidence  of such  payment  of  Taxes  as EDC may  reasonably  request.  Without
limiting the survival of any other provisions of this Guarantee,  the provisions
of this section shall survive the repayment of the Guaranteed  Indebtedness  and
the termination of this Guarantee.

Section 5.03 - Application of Payments

EDC shall have the right, without reference or notice to the Guarantor, to apply
and re-apply monies received from the Borrower, the Guarantor,  any other person
or any security in the manner  determined by EDC (acting in its sole discretion)
in reduction of the  Guaranteed  Indebtedness  in such order and priority as EDC
may choose in its sole discretion.

                                   ARTICLE VI
                                     NOTICE

Section 6.01 - Notice

Every notice, demand, request, consent, waiver or agreement under this Guarantee
shall be in  writing.  All such  documents  shall be hand  delivered  or sent by
prepaid airmail, or telefax to the following addresses:

for the Guarantor:

      Mitel Networks Corporation
      350 Legget Drive
      Ottawa, Ontario, Canada K2K 2W7

      Attention:        Sharron McIntyre, Treasurer
      Telefax:          (613) 591-2320

for EDC:

      Export Development Canada
      151 O'Connor Street
      Ottawa, Ontario, Canada K1A 1K3

      Attention:        Loans Services
      Telefax:          (613) 598-2514

or to such other  address or  numbers as the  Guarantor  or EDC may from time to
time notify the other.  Any notice delivered by hand or by registered mail, will
be deemed to have been given
<PAGE>
                                       16


when received and if transmitted by fax on the day of  transmission  unless such
day is not a Business  Day, in which case the  Business Day  following.  In this
Guarantee,  "in  writing"  includes  printing,  typewriting  or  any  electronic
transmission  that can be reproduced as printed text, on paper,  at the point of
reception.  In this Section 6.01,  "Business Day" means a day in the addressee's
jurisdiction when banks are generally open for public business.

                                   ARTICLE VII
                           PROPER LAW AND JURISDICTION

Section 7.01 - Proper Law

This  Guarantee  is made  under  and  shall  be  governed  by and  construed  in
accordance  with the laws of the  Province  of  Ontario  and the laws of  Canada
applicable therein and shall not be governed by public  international law or the
laws of any other jurisdiction.

Section 7.02 - Jurisdiction

Any legal proceeding with respect to this Guarantee may be brought by EDC in the
courts of the Province of Ontario,  Canada or in the courts of any  jurisdiction
where the Guarantor may have assets or carries on business,  as EDC may elect in
its sole discretion,  and the Guarantor irrevocably submits to the non-exclusive
jurisdiction of each such court and acknowledges  its competence.  The Guarantor
hereby  irrevocably waives any objection that it may have to the laying of venue
of any such legal proceeding in any of the aforesaid courts, and, to the fullest
extent  permitted by applicable law, any defense that such legal  proceeding has
been  brought  in an  inconvenient  forum.  The  Guarantor  agrees  that a final
judgment  against it in any such legal proceeding shall be conclusive and may be
enforced  in any other  jurisdiction  by suit on the  judgment (a  certified  or
exemplified copy of which judgment shall be conclusive  evidence of the fact and
of the amount of the  Guarantor's  obligation)  or by such other means as may be
provided by law.

Section 7.03 - Judgment Currency

In this Guarantee,  each  specification of Pounds Sterling is of the essence and
Pounds  Sterling  are both the  currency of account and the currency of payment.
The obligation of the Guarantor  under this Guarantee to make payments in Pounds
Sterling shall not be discharged or satisfied by any payment or other  recovery,
whether  pursuant to judgment or otherwise,  expressed in or converted  into any
other  currency,  except to the extent of the amount of Pounds  Sterling that is
actually  obtainable by EDC as a result of such payment or other recovery at the
exchange rate for Pounds  Sterling  available to EDC at the principal  office of
Bank of  Montreal,  in  Toronto on the date of such  payment or other  recovery.
Accordingly,  as a separate and independent liability,  which shall not merge in
any judgment or with any partial payment or other recovery,  the Guarantor shall
be obliged to pay to EDC all such  additional  amounts  as may be  necessary  to
ensure that the amount  received by EDC will enable it to obtain the full amount
due to it in Canadian  Dollars at
<PAGE>
                                       17


the  exchange  rate  available  to EDC. In this Section  7.03,  "exchange  rate"
includes  any  premiums  or  costs  payable  in  connection  with  the  currency
conversion.

                                  ARTICLE VIII
                           SEVERABILITY OF PROVISIONS

Section 8.01 - Severability of Provisions

Any  provision of this  Guarantee  that is prohibited  or  unenforceable  in any
jurisdiction  shall,  as to that  jurisdiction,  be ineffective to the extent of
that  prohibition  or  unenforceability,   without  invalidating  the  remaining
provisions hereof or affecting the validity, binding nature or enforceability of
that provision in any other jurisdiction.

                                   ARTICLE IX
                             SUCCESSORS AND ASSIGNS

Section 9.01 - Successors and Assigns

This  Guarantee  shall be binding  upon the  Guarantor  and its  successors  and
permitted assigns, and the benefit hereof shall extend to EDC and its successors
and  assigns.  The  Guarantor  may not assign or transfer all or any part of its
rights,  if any, or obligations  hereunder  without the prior written consent of
EDC and any purported  transfer of such rights or  obligations  made without the
prior written consent of EDC shall be void.

                                    ARTICLE X
                                  MISCELLANEOUS

Section 10.01 - Waiver of Rights

No waiver of, or consent to depart from, any requirement of this Guarantee shall
be binding on EDC unless contained in a written  instrument signed and delivered
by EDC.  Any such  waiver or consent  shall be  effective  only in the  specific
instance and for the specific  purpose for which it is given.  No failure on the
part of EDC to exercise,  and no delay on its part in  exercising,  any right or
remedy  shall  operate  as a waiver of such  right or  remedy,  and no single or
partial  exercise  of any right or remedy by or on behalf of EDC shall  preclude
any other or further  exercise  of the same or any other  right or  remedy.  The
remedies provided in this Guarantee are cumulative, and in addition to any other
remedies available to EDC, whether by contract or applicable law.

Section 10.02 - Entire Agreement

This Guarantee  constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes any and all prior agreements
or  understandings,  written or
<PAGE>
                                       18


oral, with respect thereto.  Except if expressly stated herein this Guarantee is
not  subject  to,  and the  Guarantor  acknowledges  that its  entry  into  this
Guarantee has not been induced by, any condition,  representation or warranty or
collateral agreement or understanding, written or oral.

Section 10.03 - Disclosure

Notwithstanding  anything to the contrary herein,  the Guarantor agrees to EDC's
disclosure,  following the date of this Guarantee, of the following information:
the name of the Borrower,  the name of the Guarantor,  the EDC financial service
provided and the date of the related  agreement,  a general  description  of the
transaction  (including  country),  the amount of EDC support in an  approximate
dollar range and the name of the Exporter.

IN WITNESS WHEREOF the Guarantor has signed and delivered this Guarantee.

Mitel Networks Corporation

Signature:
(Print Name):
<PAGE>

                        GUARANTEE AND SECURITY AGREEMENT

      GUARANTEE AND SECURITY AGREEMENT (this "Agreement"),  dated as of March 4,
2003 by and between  MITEL  NETWORKS  SOLUTIONS,  INC., a Delaware  corporation,
having  its  principal  office  at Suite  400,  205 Van Buren  Street,  Herndon,
Virginia,  USA 20170-5336 (the  "Guarantor")  and EXPORT  DEVELOPMENT  CANADA, a
corporation  created  by an Act of the  Parliament  of  Canada,  having its head
office at 151  O'Connor  Street,  Ottawa  K1A 1K3 (the  "Secured  Party") as the
lender under the loan agreement dated as of March 4, 2003 (as amended,  restated
or supplemented from time to time, the "Loan Agreement")  between Mitel Networks
Limited,  a private company limited by shares  incorporated in England and Wales
(the "Borrower") and the Secured Party.

                               W I T N E S E T H:

      WHEREAS, Guarantor is a wholly-owned subsidiary of the Borrower;

      WHEREAS,  EDC has agreed to lend the Borrower up to GBP4,100,000 under the
Loan  Agreement to finance the  acquisition by the Borrower of certain Goods and
Services (as such term is defined in the Loan Agreement);

      WHEREAS,  Guarantor  will benefit from the credit  extended under the Loan
Agreement,  if any  (collectively,  the  "Loans")  in  the  form  of  Borrower's
on-lending  or capital  contributions  of a  significant  amount of the Loans in
support of the business of Guarantor and the continued  liquidity made available
to Borrower and, indirectly, to Guarantor; and

      WHEREAS,  the Secured  Party's  willingness and agreement to make the Loan
available  to  Borrower  under  the  Loan  Agreement  was  conditioned  upon the
execution  and delivery by the  Guarantor in favour of the Secured Party of this
Agreement to secure the due and punctual payment by Borrower of the principal of
and  interest  on the Loan  from time to time when and as the same is due and of
all  other  amounts  payable  by  Borrower  under  the  Loan  Agreement,  if any
(collectively, the "Liabilities").

      NOW,  THEREFORE,  in consideration of the covenants  contained herein, and
other good and valuable  consideration  the receipt of which is  acknowledged by
each party hereto, the Guarantor and the Secured Party hereby agree as follows:

1.    Guarantee.

      FOR VALUE  RECEIVED,  and in order to induce the  Secured  Party to grant,
extend or continue credit or other  financial  accommodations  to Borrower,  the
Guarantor  unconditionally  and irrevocably  guarantees to the Secured Party and
its successors  and assigns the complete and punctual  payment when due (whether
at  the  stated  maturity  or  earlier  by  acceleration  or  otherwise)  of all
Liabilities,  whether characterized as principal,  premium, interest, additional
interest, fees, expenses or otherwise.
<PAGE>
                                       2


2.    Certain Rights of Secured Party.

      At any time and from time to time (and  whether  once or more than  once),
without the  necessity of any  reservation  of rights  against the Guarantor and
without  notice to,  demand on or further  assent by the  Guarantor or any other
person:  (a) any of the Liabilities or the obligations of any other guarantor of
the  Liabilities  may be changed,  renewed,  extended,  continued,  accelerated,
surrendered, compromised, subordinated, waived or released, in whole or in part,
or any  default  with  respect  thereto  waived or any demand for  payment  with
respect  thereto  rescinded;  (b) the Secured  Party may set off,  refrain  from
setting off or release,  in whole or in part, may take or refrain from taking or
perfecting any security interest in any collateral  security and may exercise or
refrain from exercising any right against Borrower or any other person;  (c) the
Secured Party may extend or refrain from  extending  further credit or financial
accommodations in any manner whatsoever to, may accept compositions from and may
otherwise  generally  deal  with  Borrower  and any  other  person  and with any
collateral  security as the Secured Party may see fit; and (d) the Secured Party
may apply all moneys at any time  received  from Borrower or any other person or
from any  collateral  security in such manner,  in such amounts and against such
part of the  Liabilities as the Secured Party considers best and change any such
application  in whole or in part as the Secured  Party may see fit. All of these
actions may be taken without in any way limiting,  diminishing  or affecting the
Guarantor's  liability under this Agreement and without  imposing any obligation
of trust on the Secured  Party,  and no loss of or in respect of any  collateral
security,  whether caused by the fault of the Secured Party or otherwise,  shall
in any way  limit,  diminish  or affect  the  Guarantor's  liability  under this
Agreement.

3.    Liability of Guarantor Unconditional.

      This Agreement is a guaranty of payment and not merely of collection.  The
Guarantor's  liability  under  this  Agreement  and the  grant  of the  security
interest in the  Collateral  (as defined in Section 11 hereof) are  absolute and
unconditional and shall not be limited,  diminished or affected by the happening
from  time to time of any  event,  including  (but  not  limited  to) any  event
described in Section 2 of this Agreement or any of the following events, whether
or not any such event occurs with notice to or with the consent of the Guarantor
or once or more than once:

      (a)   the waiver, surrender, compromise, settlement, discharge, release or
            termination of any or all of the Liabilities;

      (b)   the failure to give any notice to Borrower;

      (c)   the extension of the time for payment or  performance  of any of the
            Liabilities;

      (d)   the  change  (whether  or not  material)  of the  terms  of the Loan
            Agreement  or any  other  document  or  instrument  relating  to the
            Liabilities (a "Document");

      (e)   the  taking of or  failure  to take any  action  referred  to in any
            Document;
<PAGE>
                                       3


      (f)   the illegality,  invalidity,  unenforceability  (including,  but not
            limited to, by reason of any  statute of  limitations  or  automatic
            stay) or irregularity of any of the Liabilities or any Document;

      (g)   any failure, omission, delay or lack of diligence on the part of the
            Secured  Party in the  enforcement,  assertion  or  exercise  of any
            right,  power or remedy  conferred  on the  Secured  Party under any
            Document,  or the  inability  of the  Secured  Party to enforce  any
            provision  of any  Document  for any  reason,  or any  other  act or
            omission  on the part of the  Secured  Party  (other than any act or
            omission  involving the gross negligence or wilful misconduct of the
            Secured  Party),  including  (but not  limited  to)  failure  by the
            Secured  Party to perfect or protect any lien or  security  interest
            granted to the Secured  Party,  to commence and prosecute any action
            to collect the  Liabilities  or to enforce or collect  any  judgment
            obtained by the Secured Party;

      (h)   the  dissolution  or  liquidation  of  Borrower,  the  sale or other
            disposition of all or  substantially  all of the assets of Borrower,
            the  marshalling  of  assets  and  liabilities  of  Borrower  or the
            existence of receivership, insolvency, assignment for the benefit of
            creditors,  bankruptcy,  reorganization,   arrangement,  adjustment,
            composition or other similar proceedings affecting Borrower; and

      (i)   any other event,  action or circumstance that could otherwise result
            in the release or discharge of the Guarantor from the performance or
            observance  of any  obligation,  covenant or agreement  contained in
            this Agreement.

4.    Waiver of Notice.

      The Guarantor  waives all notices of the creation,  renewal,  extension or
accrual of any of the Liabilities and notice or proof of reliance by the Secured
Party on this Agreement or acceptance of this Agreement.  The Liabilities  shall
conclusively  be  considered  to have been  created,  contracted  or incurred in
reliance on this Agreement,  and all dealings  between  Borrower and the Secured
Party shall likewise be conclusively presumed to have been had or consummated in
reliance  on this  Agreement.  Except as  otherwise  provided  herein and in the
Documents, the Guarantor also waives (to the extent permitted by applicable law)
all  requirements of notice,  presentment,  protest or demand on it, Borrower or
any other  person,  all other  notices  and demands  whatsoever  relating to the
Liabilities and any requirement that the Secured Party file a claim with a court
in any bankruptcy or similar  proceedings  of Borrower or first proceed  against
Borrower or any other person or first realize on any collateral security held by
it or otherwise exhaust any right, power or remedy under any Document or against
Borrower or any other person before proceeding  against the Guarantor under this
Agreement.  The  Secured  Party  shall  have no  responsibility  to  notify  the
Guarantor  of  Borrower's  financial  condition  or  Borrower's   incurrence  or
performance of the Liabilities.
<PAGE>
                                       4


5.    Continuing Agreement.

      This  Agreement is a continuing  agreement,  and shall not terminate or be
discharged until the performance and indefeasible  payment in full of all of the
Liabilities. If demand for, or acceleration of the time for, payment by Borrower
to the Secured Party of any of the  Liabilities  is stayed upon the  insolvency,
bankruptcy,  reorganization or proposed compromise or arrangement with creditors
of Borrower,  all  Liabilities  of which payment or  performance  is stayed that
would  otherwise  be subject to the demand  for  payment or  acceleration  shall
nonetheless  be payable by the  Guarantor  immediately  on demand by the Secured
Party. Upon termination of this Agreement,  the Secured Party shall reassign and
deliver to the  Guarantor,  or to such person or persons as the Guarantor  shall
designate,  against  receipt,  such of the Collateral (if any) as shall not have
been sold or otherwise applied by the Secured Party pursuant to the terms hereof
and shall still be held by it hereunder,  together with appropriate  instruments
of reassignment and release.  Any such reassignment shall be without recourse to
or warranty by the Secured Party and at the expense of the Guarantor.

6.    Reinstatement.

      This Agreement shall continue to be effective, or shall be reinstated,  if
at any time payment, or any part thereof, of any of the Liabilities is rescinded
or must  otherwise  be returned by the Secured  Party for any reason  whatsoever
(including,  but  not  limited  to,  the  bankruptcy,  insolvency,  dissolution,
liquidation or  reorganization  of Borrower or any other person),  all as though
such payment had not been received by the Secured Party.

7.    Subordination.

      All  indebtedness,  obligations,  liabilities  and other  amounts  due, of
whatever nature, of Borrower to the Guarantor (the "Subordinated Debt"), whether
now existing or hereafter incurred,  whether created directly or acquired by the
Guarantor by  assignment  or otherwise,  whether  matured or unmatured,  whether
absolute or contingent,  whether characterized as principal,  premium, interest,
additional  interest,  fees, expenses or otherwise and whether Borrower is bound
alone or with any  others or as  principal  or as surety,  shall be subject  and
subordinate to the Liabilities, and, upon the occurrence of an Event of Default,
all moneys received by the Guarantor in respect of the  Subordinated  Debt shall
immediately  on the Secured  Party's  demand be paid over to the Secured  Party.
This subordination is independent of the guaranty provided in this Agreement and
shall  remain in full  force and  effect  notwithstanding  any  decrease  in the
Guarantor's  liability under this Agreement.  The Guarantor hereby undertakes to
execute such additional documents and instruments and to do such additional acts
as may be necessary or desirable  (in the sole  discretion  of the Secured Party
reasonably   exercised)  in  order  to  carry  out,  complete  or  perfect  this
subordination.

8.    Limit on Subrogation.

      Until the Secured Party has received and retained  indefeasible payment in
full of all Liabilities,  no payment by the Guarantor  pursuant to any provision
of this Agreement or other satisfaction of the Guarantor's  liability under this
Agreement shall entitle the Guarantor, by
<PAGE>
                                       5


subrogation  or  otherwise,  to any right or  remedy  against  Borrower  and the
Guarantor waives any such right it may have.

9.    Costs, Expenses, Etc.

      The  Guarantor  agrees  to pay  on  demand  all  losses,  costs,  expenses
(including, but not limited to, reasonable attorneys' fees) and damages incurred
by the Secured Party in connection with the preparation of this Agreement or any
amendment,  waiver or consent with respect to this Agreement, in connection with
any  rescission,  reinstatement  or  return  referred  to in  Section  6 of this
Agreement,  in enforcing or  attempting  to enforce this  Agreement or any other
guaranty of the  Liabilities or in protecting  the Secured  Party's rights under
this Agreement or any other guaranty of the Liabilities following any default by
the  Guarantor  under this  Agreement,  whether the Secured  Party's  rights are
enforced by suit or otherwise.

9.1   Taxes.

      (a) Taxes Payable by the Guarantor.  If any tax is required to be withheld
or deducted from, or is otherwise  payable by the Guarantor in connection  with,
any  payment to the  Secured  Party  hereunder,  the  Guarantor  (i)  shall,  if
required,  withhold or deduct the amount of such tax from such  payment  and, in
any case, pay such tax to the  appropriate  taxing  authority in accordance with
the tax law and (ii) shall pay to the Secured Party such  additional  amounts as
may be  necessary  so that the net amount  received  by the  Secured  Party with
respect to such payment,  after  withholding  or deducting all taxes (other than
any net income,  net profits,  gross  receipts or franchise tax imposed upon the
Secured Party in Canada, hereinafter referred to as "Bank Taxes") required to be
withheld or deducted, is equal to the full amount payable hereunder.  If any tax
is  withheld or deducted  from,  or is  otherwise  payable by the  Guarantor  in
connection  with,  any  payment  payable to the  Secured  Party  hereunder,  the
Guarantor shall, as soon as possible after the date of such payment,  furnish to
the Secured Party, as applicable,  the original or a certified copy of a receipt
for such tax from the applicable taxing authority.

      (b) Taxes Payable by the Secured Party. The Guarantor shall, promptly upon
request by the Secured Party for the payment thereof,  pay to the Secured Party,
as the case may be (i) all taxes (other than Bank Taxes)  payable by the Secured
Party with respect to any payment due to the Secured  Party,  and (ii) all taxes
(including Bank Taxes) payable by the Secured Party as a result of payments made
by the Guarantor  (whether made to a taxing  authority or to the Secured  Party,
pursuant to this Section 9.1).

      (c)  Credits  and  Deductions.  If the  Secured  Party  is,  in  its  sole
discretion,  able to apply for any credit,  deduction or other reduction in Bank
Taxes by reason of any payment made by the  Guarantor  under  Section  9.1(a) or
(b),  the Secured  Party  shall use  reasonable  efforts to obtain such  credit,
deduction  or  other  reduction  and,  upon  receipt  thereof,  will  pay to the
Guarantor such amount, not exceeding the increased amount paid by the Guarantor,
as is  equal  to the net  after-tax  value  to the  Secured  Party  in its  sole
discretion,  of such part of such  credit,  deduction  or other  reduction as it
considers to be allocable to such payment by the Guarantor, having regard to all
of the Secured Party's  dealings giving rise to similar  credits,  deductions or
other reductions in relation to the same tax period and to the cost of obtaining
the same;
<PAGE>
                                       6


provided, however, that (i) the Secured Party shall not be obligated to disclose
to the Guarantor any information  regarding its tax affairs or computations  and
(ii)  nothing  in this  Section  9.1(c)  shall  interfere  with the right of the
Secured Party to arrange its tax affairs as it deems appropriate.

10.   Liabilities Additional.

      This Agreement and the  Guarantor's  liability under this Agreement are in
addition to and not in substitution  for (a) any other collateral  security,  by
whomsoever  given,  at any time held by the Secured Party and (b) any present or
future  obligation  of the  Guarantor or any other  obligor to the Secured Party
incurred  otherwise  than under this  Agreement,  whether the  Guarantor or such
other obligor is bound with or apart from Borrower.

11.   Place and Manner of Payment.

      The  Guarantor  agrees  to  make  any  payment  required  of it  hereunder
forthwith  upon the  written  demand of the  Secured  Party  without  set-off or
counterclaim at Bank of America,  London Branch, London, England, for the credit
of Export Development Canada,  London Sort Code 165050, SWIFT BOFAGB22,  account
number  45447019  or to such other  account or at such other place in England as
the Secured Party may from time to time notify the Guarantor in writing not less
then ten (10) days prior to the relevant date. The Guarantor  agrees to instruct
its bank to  provide to the  Secured  Party a copy of its  payment  instructions
(including  its  transfer  reference  number),   showing  how  funds  are  being
transferred, by telefax at number (613) 598-2514. 12. Security Interest.

      As security from the Guarantor for the payment and  performance in full of
the Liabilities,  the Guarantor hereby  transfers,  grants,  bargains,  conveys,
hypothecates,  pledges, sets over, delivers and confirms unto the Secured Party,
and grants to the  Secured  Party a security  interest  in its right,  title and
interest in the following (the  "Collateral"),  whether now owned or hereinafter
acquired:

       (i)  Accounts  (including  Health-Care-Insurance   Receivables,  if  any)
            howsoever  arising in connection  with the sale or lease of goods or
            services by the Guarantor to customers  located in the United States
            or Canada;

      (ii)  Chattel Paper;

     (iii)  Instruments (including Promissory Notes);

      (iv)  Documents;

       (v)  General   Intangibles    (including   without   limitation   Payment
            Intangibles,  Software,  contract rights, credits,  claims, demands,
            debts,  choses  in  action,  trade-marks,  patents,  and  all  other
            intellectual property);
<PAGE>
                                       7


      (vi)  Letter-of-Credit Rights;

     (vii)  Supporting Obligations;

    (viii)  Deposit Accounts;

      (ix)  Investment Property  (including without limitation  certificated and
            uncertificated    Securities),    Securities   Accounts,    Security
            Entitlements, Commodity Accounts, and Commodity Contracts);

       (x)  Inventory;

      (xi)  Equipment   (including  all  software,   whether  or  not  the  same
            constitutes embedded software, used in the operation thereof);

     (xii)  Money, including without limitation amounts deposited into escrow or
            with third parties;

    (xiii)  Fixtures;

     (xiv)  All  rights to  merchandise  and other  goods  (including  rights to
            returned  or  repossessed  Goods and rights of  stoppage in transit)
            which is  represented  by,  arises  from,  or  relates to any of the
            foregoing;

      (xv)  All  personal  property and  interests  in personal  property of the
            Debtor of any kind or  description  now held by Secured  Party or at
            any time  hereafter  transferred or delivered to, or coming into the
            possession,  custody,  or control of, Secured Party, or any agent or
            affiliate of Secured Party, whether expressly as collateral security
            or  for  any  other  purpose  (whether  for  safekeeping,   custody,
            collection or otherwise),  and all dividends and distributions on or
            other rights in connection with any such property;

     (xvi)  All  supporting  evidence  and  documents  relating  to  any  of the
            above-described property,  including,  without limitation,  computer
            programs, disks, tapes and related electronic data processing media,
            and all  rights  of the  Debtor  to  retrieve  the same  from  third
            parties,  written applications,  credit information,  account cards,
            payment   records,   correspondence,   delivery   and   installation
            certificates,  invoice copies,  delivery receipts,  notes, and other
            evidences  of  indebtedness,  insurance  certificates  and the like,
            together with all books of account,  ledgers,  and cabinets in which
            the same are reflected or maintained;

    (xvii)  All Accessions and additions to, and  substitutions and replacements
            of, any and all of the foregoing; and

   (xviii)  All Proceeds and products of the  foregoing,  and all insurance of
            the foregoing and proceeds thereof;
<PAGE>
                                       8


all of the foregoing being herein sometimes referred to as the "Collateral". All
terms capitalized in this Section 12 that are defined in the Uniform  Commercial
Code as enacted in the State of New York effective July 1, 2001 (as the same may
be amended from time to time, the "UCC") shall have the same meanings  herein as
such terms are defined in the UCC. Where the context  permits,  any reference to
"Collateral"  shall be  deemed  to be a  reference  to  "Collateral  or any part
thereof."


13.   Representations, Warranties and Covenants.

      The Guarantor  represents,  warrants and covenants to and with the Secured
Party that:

      (a)   except  for the  security  interest  granted  to the  Secured  Party
            hereunder and except for Permitted Encumbrances, Guarantor (i) holds
            and will at all times continue to hold the Collateral free and clear
            of  any  and  all  liens,  pledges,  licenses,  mortgages,  security
            interests,  claims,  leases,  charges,   conditions,   restrictions,
            assessments,   conditional   sales   agreements,   title   retention
            agreements,  options or any other  encumbrance  whatsoever,  whether
            direct or  indirect,  contingent,  accrued,  absolute  or  otherwise
            (collectively, "Liens"), and (ii) without in any way diminishing the
            foregoing,  will neither cause,  permit or suffer to exist any other
            Lien on the Collateral;

      (b)   the Guarantor (i) has good right and legal authority to encumber the
            Collateral  as  provided   herein,   guaranty  the  Liabilities  and
            otherwise enter into and perform its obligations hereunder, and (ii)
            will defend its title or interest thereto or therein against any and
            all other Liens  (providing that nothing in this paragraph (b) shall
            be deemed to authorize or permit any Liens, as further  described in
            paragraph (a) above);

      (c)   no consent or approval of any third party, of any governmental  body
            or  regulatory  authority or of any  securities  exchange was, is or
            shall be  necessary  to the  validity  of the Lien  effected  hereby
            (other  than any such  consent  or  approval  that  shall  have been
            obtained as required);

      (d)   subject to the Bank Facility Lenders' Security  Documents,  the Lien
            created  hereby is effective to vest in the Secured Party the rights
            of the Guarantor in the Collateral as set forth herein;

      (e)   the execution,  delivery and/or performance hereof by Guarantor will
            not (i) cause  Guarantor  to be in  violation  of, or  constitute  a
            material  default  under,  the  provisions of any agreement to which
            Guarantor is a party or by which  Guarantor or its assets are bound,
            (ii) conflict with, or result in the breach of, any court  judgment,
            decree or order of any  governmental  body to which Guarantor or its
            assets are subject,  (iii) result in the creation or  imposition  of
            any Lien of any
<PAGE>
                                       9


            nature  whatsoever  upon  any  of  the  property  or  assets  of the
            Guarantor, except as specifically contemplated by this Agreement;

      (f)   all  representations  and  warranties of the Guarantor  contained in
            this Agreement shall survive the execution, delivery and performance
            of this Agreement  until all applicable  statutes of limitation have
            expired; and

      (g)   without the prior written  consent of the Secured  Party,  Guarantor
            shall not

            (i)   maintain  any of its books and  records  with  respect  to the
                  Collateral at any location other than either the office listed
                  in  the  first  paragraph  hereof  or at its  offices,  or the
                  offices of Mitel Networks Corporation, in Ottawa;

            (ii)  maintain  its  principal  place of business (or if it has more
                  than one place of business, its chief executive office) at any
                  place  other  than  at the  address  set  forth  in the  first
                  paragraph hereof;

            (iii) (A) acquire any assets  outside of the United  States  (which,
                  for greater  certainty,  consists of the  District of Columbia
                  and  the 50  states  and  does  not  include  territories  and
                  possessions  of the United  States),  or (B) cause,  suffer or
                  permit the movement or relocation of any Collateral  currently
                  located  in the  United  States to a  location  outside of the
                  United  States,  other than bona fide sales of  inventory,  if
                  any,  in  the  ordinary  course  of  business;  provided  that
                  (subject to the provisions of the Credit Agreement)  Guarantor
                  shall deposit the proceeds of all of its sales into an account
                  described in paragraph (v) below;

            (iv)  maintain any Securities Accounts; or

            (v)   open, establish or maintain any deposit or other bank accounts
                  except for those

                  (A)   at financial institutions other than the Secured Party's
                        home office or branches (foreign or domestic), or

                  (B)   in the existing  deposit  account at Bank One located in
                        Detroit, Michigan;

                  (C)   at a deposit account at Harris Bank that is subject to a
                        "control"  agreement in all material respects  identical
                        to that previously entered into with Bank One;

                            provided that, with respect to the deposit  accounts
                            listed in (B) and (C) above, if at any time (1) Bank
                            of  Montreal,  as agent for and on behalf of (i) the
                            lenders  under the Bank Facility  Lenders'  Security
                            Documents,  and  (ii)  EDC,  does  not  have a first
                            priority   perfected   security   interest  in,  and
<PAGE>
                                       10


                            "control"  (as defined in Section  9-104 of the UCC)
                            of, such  account and the contents  thereof,  or (2)
                            either  depository  institution gives notice that it
                            is terminating its "control  agreement" with Bank of
                            Montreal,  then Guarantor  shall promptly close such
                            account  and  deliver  the  contents  thereof to the
                            Secured  Party  for  holding  in a  cash  collateral
                            account (or other form  reasonably  satisfactory  to
                            the Secured Party). For greater  certainty,  nothing
                            set forth in the preceding  proviso shall prohibit a
                            transfer by Bank One of all,  but not less than all,
                            of the funds in the deposit account described in (B)
                            above to a deposit  account  described in (C) above;
                            or

                  (vi)  change  its  name,  or the  name  under  which  it  does
                        business,   or  its   organizational   structure  (i.e.,
                        Delaware  corporation)  from the name and form indicated
                        in the first paragraph of this Agreement; and

            (h)   all of the  accounts  receivable  included  in the  Collateral
                  represent  proceeds of transactions  conducted in the ordinary
                  course of Guarantor's  business for which  Guarantor  received
                  reasonable consideration for the goods and services including,
                  without  limitation,  all payments  from Borrower to Guarantor
                  with respect to goods and/or services  provided to Borrower by
                  Guarantor.

14.   Proceeds of Collateral; Delivery of Collateral.

      (a) Guarantor shall,  upon the request of the Secured Party made after the
occurrence  of any Event of  Default,  instruct  all  account  debtors and other
Persons  obligated in respect of all applicable  Collateral  (including  without
limitation Accounts,  Instruments,  Investment Property, General Intangibles and
Payment  Intangibles)  to make all payments in respect  thereof  directly to the
Secured  Party (by  instructing  that such  payments be remitted to such address
specified by the Secured  Party which shall be in the name and under the control
of the Secured Party).  In addition to the foregoing,  Guarantor  agrees that if
the proceeds of any Collateral hereunder (including the payments made in respect
of any of the  foregoing  collateral  types)  shall be  received by it after the
occurrence  of any Event of  Default,  Guarantor  shall as  promptly as possible
deliver  such  proceeds  to the  Secured  Party.  Until so  delivered,  all such
proceeds  shall be held in trust by  Guarantor  for and as the  property  of the
Secured  Party and shall not be  commingled  with any other funds or property of
Guarantor.  Upon any delivery of proceeds of Collateral  hereunder,  the Secured
Party, in its sole discretion,  may apply such proceeds (but is not so obligated
to do so) against the amount outstanding under the Loans.

      (b)  Guarantor  shall  cause  the  delivery  to the  Secured  Party of any
Collateral  that is  certificated  Investment  Property  or is  evidenced  by an
Instrument or Chattel Paper,  with  appropriate  transfer powers or endorsements
(as applicable).

15.   In  addition  to,  and not in  diminution  of, the  immediately  preceding
      Section 14, after the occurrence of an Event of Default:
<PAGE>
                                       11


(a)   Guarantor  shall,  at the  request  of the  Secured  Party,  assemble  the
      Collateral  owned,  possessed or controlled by it at such place or places,
      reasonably convenient to the Secured Party, designated in its request;

(b)   The Secured Party may make any reasonable  compromise or settlement deemed
      desirable with respect to any of the Collateral and may extend the time of
      payment,  arrange for payment in  installments,  or  otherwise  modify the
      terms of, any of the Collateral;

(c)   The Secured  Party shall have all of the rights and remedies  with respect
      to the  Collateral  of a secured  party under the UCC (whether or not said
      Code is in effect in the  jurisdiction  where the rights and  remedies are
      asserted) and such additional rights and remedies to which a secured party
      is entitled under the laws in effect in any jurisdiction  where any rights
      and remedies hereunder may be asserted;

(d)   The  Secured  Party in its  discretion  may, in its name or in the name of
      Guarantor or otherwise,  demand,  sue for, collect or receive any money or
      property at any time  payable or  receivable  on account of or in exchange
      for any of the Collateral, but shall be under no obligation to do so; and

(e)   (1) The Secured Party may, upon ten business days' prior written notice to
      Guarantor  (or upon such  shorter  notice,  or without  notice,  as may be
      permitted  under  the UCC) of the  time and  place,  with  respect  to the
      Collateral or any part thereof that shall then be or shall thereafter come
      into the possession, custody or control of the Secured Party or its agent,
      sell,  lease,  assign  or  otherwise  dispose  of all or any  part of such
      Collateral,  at such place or places as the Secured Party deems best,  and
      for cash or for credit or for future delivery  (without  thereby  assuming
      any credit risk), at public or private sale, without demand of performance
      or notice of  intention to effect any such  disposition  or of the time or
      place  thereof  (except such notice as is required  above or by applicable
      statute and cannot be waived), and the Secured Party or anyone else may be
      the  purchaser,  lessee,  assignee  or  recipient  of  any  or  all of the
      Collateral so disposed of at any public sale (or, to the extent  permitted
      by law, at any private sale) and thereafter hold the same absolutely, free
      from any claim or right of whatsoever kind,  including any right or equity
      of redemption  (statutory or  otherwise),  of Guarantor,  any such demand,
      notice and right or equity being hereby expressly waived and released. The
      Secured Party may,  without notice or  publication,  adjourn any public or
      private  sale or  cause  the  same to be  adjourned  from  time to time by
      announcement  at the time and place fixed for the sale,  and such sale may
      be made at any time or place to which the sale may be so adjourned.

      (2) The Secured  Party shall incur no liability as a result of the sale of
      the Collateral,  or any part thereof,  at any private sale pursuant to the
      immediately  preceding  paragraph  conducted in a commercially  reasonable
      manner.  Guarantor  hereby  waives any claims  against the  Secured  Party
      arising by reason of the fact that the price at which the  Collateral  may
      have been sold at such a private  sale
<PAGE>
                                       12


      was less than the price that might have been  obtained at a public sale or
      was less than the aggregate amount of the Liabilities.

16.   Application of Proceeds of Sale.

      The proceeds of any sale of Collateral  pursuant to Section 14 hereof,  as
well as any  Collateral  consisting  of cash,  shall be promptly  applied by the
Secured Party as follows:

      (a)   FIRST, to payment of all reasonable  costs and expenses  incurred by
            the  Secured  Party in  connection  with such sale or  otherwise  in
            connection with this Agreement or any of the Liabilities, including,
            but not  limited  to, all court  costs and the  reasonable  fees and
            expenses  of its  agents and legal  counsel,  the  repayment  of all
            advances  made by the  Secured  Party  hereunder  on  behalf  of the
            Guarantor  and any other  costs or expenses  incurred in  connection
            with the exercise of any right or remedy hereunder;

      (b)   SECOND,  to the  payment in full of the  Liabilities  to the Secured
            Party in accordance with the Loan Agreement; and

      (c)   THIRD, to the Guarantor,  its successors and assigns,  or as a court
            of competent jurisdiction may otherwise direct.

If the  proceeds  of  sale,  collection  or  other  realization  of or upon  the
Collateral  pursuant  to this  Section are  insufficient  to cover the costs and
expenses  of such  realization  and  the  payment  in  full of the  Liabilities,
Guarantor shall remain liable for any deficiency.

17.   Secured Party Appointed Attorney-in-Fact.

      Effective only after an Event of Default,  Guarantor  hereby  appoints the
Secured Party the  attorney-in-fact of the Guarantor for the purpose of carrying
out the  provisions  of this  Agreement  and taking any action and executing any
instrument which the Secured Party may deem necessary or advisable to accomplish
the  purposes  hereof,  which  appointment  is  irrevocable  and coupled with an
interest.  Without  limiting the generality of the foregoing,  the Secured Party
shall have the right,  upon the  occurrence  of an Event of  Default,  with full
power of  substitution  either in the Secured Party's name or in the name of the
Guarantor,  to ask for,  demand,  sue for,  collect,  receive,  receipt and give
acquittance  for any and all moneys due or to become due and under and by virtue
of any Collateral,  to endorse checks,  drafts, orders and other instruments for
the  payment of money  payable to the  Guarantor  representing  any  interest or
dividend, or other distribution payable in respect of the Collateral or any part
thereof for or on account  thereof and to give full  discharge  for the same, to
settle,  compromise,  prosecute or defend any action,  claim or  preceding  with
respect thereto,  and to sell, assign,  endorse,  pledge,  transfer and make any
agreement respecting, or otherwise deal with, the same: provided,  however, that
nothing  herein  contained  shall be construed as  requiring or  obligating  the
Secured Party to make any  commitment or to make any inquiry as to the nature or
sufficiency of any payment  received by the Secured Party, or to present or file
any claim or notice, or to take any action with respect to the Collateral or any
part  thereof  or the  moneys  due or to become  due in
<PAGE>
                                       13


respect  thereof or any  property  covered  thereby,  and no action taken by the
Secured Party or omitted to be taken with respect to the  Collateral  shall give
rise to any cause of action against the Secured Party, except in the case of the
gross negligence or willful misconduct of the Secured Party.

18.   No Waiver.

      No failure on the part of the Secured  Party to exercise,  and no delay in
exercising,  any  right,  power or remedy  hereunder  shall  operate as a waiver
thereof,  nor shall any single or partial  exercise of any such right,  power or
remedy by the Secured Party  preclude any other or further  exercise  thereof or
the exercise of any other right,  power or remedy.  All remedies  hereunder  are
cumulative  and are not  exclusive  of any other  remedies  provided by law. The
Secured  Party shall not be deemed to have waived any rights  hereunder or under
any other  agreement  or  instrument  unless such waiver shall be in writing and
signed by it.

19.   Notices.

      Any notices, demands, certifications, requests, communications or the like
required to be given  hereunder  shall be in writing and shall be deemed to have
been validly  served,  given or delivered upon delivery  thereof by messenger or
courier service to the respective  party at the address first set forth above or
at such other  address as such  party may for itself  designate  in writing in a
like manner for the purpose of receiving notices hereunder.

20.   Further Assurances.

      Guarantor  agrees to execute  and  deliver to  Secured  Party (and  hereby
authorizes  Secured Party to file, in the case of (i) below,  as described below
in  this  paragraph)  such  further  agreements,  assignments,  instruments  and
documents, and to do all such other things, as Secured Party may reasonably deem
necessary or  appropriate to assure  Secured Party of the  effectiveness  of its
Lien hereunder,  including  without  limitation,  (i) such financing  statements
(including   amendments  to  financing  statements)  or  other  instruments  and
documents as Secured  Party may from time to time  reasonably  require to comply
with the UCC and any other applicable law, and (ii) such patent,  trademark, and
copyright  assignment  agreements  as  Secured  Party  may  from  time  to  time
reasonably  require to comply with the filing  requirements of the United States
Patent and Trademark  Office and the United States Copyright  Office,  and (iii)
such  agreements  with  respect to all Deposit  Accounts,  Securities  Accounts,
Letter-of-Credit  Rights,  and  electronic  Chattel  Paper,  as are  required to
perfect  security  interests  and  maintain  priority  under the UCC, and to use
commercially  reasonable efforts to cause the relevant depository  institutions,
financial  intermediaries,  and letter of credit  issuers to execute and deliver
such  control  agreements,  as  Secured  Party may from time to time  reasonably
require.   Guarantor  hereby  agrees  that  a  carbon,   photographic  or  other
reproduction  of this  Agreement  or any such  financing  statement or amendment
thereto is  sufficient  for filing as a  financing  statement  by Secured  Party
without notice thereof to Guarantor  wherever  Guarantor in its sole  discretion
desires to file the same.  Guarantor hereby authorizes Secured Party to file any
and all  financing  statements  covering the  Collateral  or any part thereof as
Secured  Party  may  require,  including  financing  statements  describing  the
Collateral as "all assets" or "all personal  property" or words of like meaning.
<PAGE>
                                       14


Secured  Party may order lien  searches  from time to time against any Guarantor
and the Collateral, and Guarantor shall promptly reimburse Secured Party for all
reasonable costs and expenses incurred in connection with such lien searches. In
the event for any reason the law of any jurisdiction other than New York becomes
or is applicable to the  Collateral or any part thereof  (including  pursuant to
Section 9-301 of the UCC), or the respective rights and/or  priorities  therein,
Guarantor  agrees to execute and deliver all such  instruments and documents and
to do all such other things as Secured Party deems  necessary or  appropriate to
preserve,  protect and enforce the security  interest of Secured Party under the
laws of such other jurisdiction.

21.   Binding Agreement; Assignments.

      This Agreement,  and the terms,  covenants and conditions hereof, shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and  assigns,  except that the  Guarantor  shall not be permitted to
assign this Agreement or any interests herein or in the Collateral,  or any part
thereof,  or any cash or property held by the Secured Party as Collateral  under
this Agreement without the prior written consent of the Secured Party, which may
be withheld in the sole discretion of the Secured Party.

22.   Modification.

      No  modification,  amendment or waiver of any provision of this  Agreement
nor any consent to any  departure by the  Guarantor or Secured  Party  herefrom,
shall in any event be  effective  unless the same shall be in writing and signed
by the Secured Party and the Guarantor  and then such  modification,  amendment,
waiver or consent shall be effective  only in the specific  instance and for the
purpose for which it is given.

23.   Governing Law.

      This Agreement  shall be construed in accordance  with the governed by the
laws of the State of New York.

24.   Jurisdiction

      (a)   Any legal  proceeding  with respect to this Guarantee may be brought
            by the Secured  Party in the federal  courts of the United States of
            America or the state  courts of New York  sitting in the District of
            Manhattan,  the courts of the Province of Ontario,  Canada or in the
            courts of any  jurisdiction  where the  Guarantor may have assets or
            carries on business or where payments are to be made  hereunder,  as
            the  Secured  Party  may  elect  in its  sole  discretion,  and  the
            Guarantor  irrevocably submits to the non-exclusive  jurisdiction of
            each such  court and  acknowledges  its  competence.  The  Guarantor
            hereby  irrevocably  waives  any  objection  that it may have to the
            laying of venue of any such legal proceeding in any of the aforesaid
            courts,  and, to the fullest extent permitted by applicable law, any
            defense  that  such  legal   proceeding   has  been  brought  in  an
            inconvenient  forum.  The  Guarantor  agrees  that a final  judgment
            against it in any such legal  proceeding shall be
<PAGE>
                                       15


            conclusive and may be enforced in any other  jurisdiction by suit on
            the  judgment (a  certified or  exemplified  copy of which  judgment
            shall be  conclusive  evidence  of the fact and of the amount of the
            Guarantor's obligation) or by such other means as may be provided by
            law.

      (b)   The Guarantor  hereby agrees that service of all writs,  process and
            summonses  in any such  suit,  action or  proceeding  brought in the
            courts of the  Province  of  Ontario  may be made upon it by service
            upon Mitel Networks  Corporation  (the "Process  Agent"),  presently
            having an office  at 350  Legget  Drive,  Ottawa,  Ontario  K2K 2W7,
            Canada  telephone no. (613) 592-2122,  ext. 4431,  telefax no. (613)
            591-2320,  and the  Guarantor  hereby  confirms  and agrees that the
            Process Agent is its true and lawful agent and  attorney-in-fact  in
            its name, place and stead to accept such service of any and all such
            writs,  process  and  summonses,  and agrees that the failure of the
            Process  Agent to give any notice of any such  service of process to
            the Guarantor will not impair or affect the validity of such service
            or of any judgment based  thereon.  If for any reason Mitel Networks
            Corporation  ceases to act, or to be able to act, as a Process Agent
            as  contemplated  hereby,  the  Guarantor  will appoint a substitute
            therefor  acceptable  to the Secured Party and agrees to maintain at
            all  times an agent  in  Canada  to act as its  Process  Agent.  The
            Guarantor  hereby  further  irrevocably  consents  to the service of
            process in any action or proceeding by the mailing  thereof,  by the
            Secured Party, by registered or certified mail, postage prepaid,  to
            the  Guarantor  at the address  given  herein or for the purposes of
            this Agreement.

      (c)   Nothing  herein  shall in any way be deemed to limit the  ability of
            the Secured  Party to serve any such writs,  process or summonses in
            any  other  manner   permitted  by  applicable   law  or  to  obtain
            jurisdiction over the Guarantor in such other jurisdictions,  and in
            such manner, as may be permitted by applicable law.

      To the extent  that the  Guarantor  may be  entitled to the benefit of any
      provision of law requiring the Secured Party,  in any action or proceeding
      brought  in a  court  of  the  United  States  or  other  jurisdiction  in
      connection with this Agreement,  to post security for litigation  costs or
      otherwise  post a  performance  bond or similar  security,  the  Guarantor
      hereby irrevocably waives such benefit, in each case to the fullest extent
      now or hereafter  permitted under the laws of the United States or, as the
      case may be, such other jurisdiction.

      25.   Severability.

      In case  any one or more of the  provisions  contained  in this  Agreement
should be  invalid,  illegal or  unenforceable  in any  respect,  the  validity,
legality and enforceability of the remaining  provisions  contained herein shall
not in any way be affected or impaired.
<PAGE>
                                       16


26.   Counterparts.

      This Agreement may be executed in two or more counterparts,  each of which
shall  constitute  an original,  but all of which,  when taken  together,  shall
constitute but one instrument.

27.   Section Headings.

      Section  headings  used  herein  are for  convenience  only and are not to
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

28.   Definitions Generally.

      Unless otherwise  defined herein,  each terms  capitalized  herein but not
defined  herein  shall  have the  meaning  set  forth  for such term in the Loan
Agreement.

29.   Recitals.

      The recitals hereto are  incorporated  herein by reference as if set forth
at length herein.

30.   Disclosure.

      Notwithstanding  anything to the contrary herein,  the Guarantor agrees to
EDC's  disclosure,  following  the  date of  this  Guarantee,  of the  following
information:  the  name of the  Borrower,  the  name of the  Guarantor,  the EDC
financial  service  provided  and the date of the related  agreement,  a general
description of the transaction (including country), the amount of EDC support in
an approximate dollar range and the name of the Exporter.

IN WITNESS  WHEREOF,  the parties hereto have duly executed this Agreement as of
the day and year first above written.

                                        MITEL NETWORKS SOLUTIONS, INC.
                                        by
                                           -------------------------------------
                                           Name:    Ed Silberhorn
                                           Title:   Corporate Secretary

                                        EXPORT DEVELOPMENT CANADA
                                        by
                                           -------------------------------------
                                           Name:
                                           Title:

                                        by:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>

                        GUARANTEE AND SECURITY AGREEMENT

      GUARANTEE AND SECURITY AGREEMENT (this "Agreement"),  dated as of March 4,
2003 by and between MITEL  NETWORKS,  INC., a Delaware  corporation,  having its
principal  office at Suite 400, 205 Van Buren  Street,  Herndon,  Virginia,  USA
20170-5336  (the  "Guarantor")  and EXPORT  DEVELOPMENT  CANADA,  a  corporation
created by an Act of the  Parliament  of Canada,  having its head  office at 151
O'Connor  Street,  Ottawa K1A 1K3 (the "Secured  Party") as the lender under the
loan agreement  dated as of March 4, 2003 (as amended,  restated or supplemented
from time to time,  the "Loan  Agreement")  between Mitel  Networks  Limited,  a
private  company  limited  by shares  incorporated  in  England  and Wales  (the
"Borrower") and the Secured Party.

                               W I T N E S E T H:

      WHEREAS, Guarantor is a wholly-owned subsidiary of the Borrower;

      WHEREAS,  EDC has agreed to lend the Borrower up to GBP4,100,000 under the
Loan  Agreement to finance the  acquisition by the Borrower of certain Goods and
Services (as such term is defined in the Loan Agreement);

      WHEREAS,  Guarantor  will benefit from the credit  extended under the Loan
Agreement,  if any  (collectively,  the  "Loans")  in  the  form  of  Borrower's
on-lending  or capital  contributions  of a  significant  amount of the Loans in
support of the business of Guarantor and the continued  liquidity made available
to Borrower and, indirectly, to Guarantor; and

      WHEREAS,  the Secured  Party's  willingness and agreement to make the Loan
available  to  Borrower  under  the  Loan  Agreement  was  conditioned  upon the
execution  and delivery by the  Guarantor in favour of the Secured Party of this
Agreement to secure the due and punctual payment by Borrower of the principal of
and  interest  on the Loan  from time to time when and as the same is due and of
all  other  amounts  payable  by  Borrower  under  the  Loan  Agreement,  if any
(collectively, the "Liabilities").

      NOW,  THEREFORE,  in consideration of the covenants  contained herein, and
other good and valuable  consideration  the receipt of which is  acknowledged by
each party hereto, the Guarantor and the Secured Party hereby agree as follows:

1.    Guarantee.

      FOR VALUE  RECEIVED,  and in order to induce the  Secured  Party to grant,
extend or continue credit or other  financial  accommodations  to Borrower,  the
Guarantor  unconditionally  and irrevocably  guarantees to the Secured Party and
its successors  and assigns the complete and punctual  payment when due (whether
at  the  stated  maturity  or  earlier  by  acceleration  or  otherwise)  of all
Liabilities,  whether characterized as principal,  premium, interest, additional
interest, fees, expenses or otherwise.
<PAGE>
                                      -2-


2.    Certain Rights of Secured Party.

      At any time and from time to time (and  whether  once or more than  once),
without the  necessity of any  reservation  of rights  against the Guarantor and
without  notice to,  demand on or further  assent by the  Guarantor or any other
person:  (a) any of the Liabilities or the obligations of any other guarantor of
the  Liabilities  may be changed,  renewed,  extended,  continued,  accelerated,
surrendered, compromised, subordinated, waived or released, in whole or in part,
or any  default  with  respect  thereto  waived or any demand for  payment  with
respect  thereto  rescinded;  (b) the Secured  Party may set off,  refrain  from
setting off or release,  in whole or in part, may take or refrain from taking or
perfecting any security interest in any collateral  security and may exercise or
refrain from exercising any right against Borrower or any other person;  (c) the
Secured Party may extend or refrain from  extending  further credit or financial
accommodations in any manner whatsoever to, may accept compositions from and may
otherwise  generally  deal  with  Borrower  and any  other  person  and with any
collateral  security as the Secured Party may see fit; and (d) the Secured Party
may apply all moneys at any time  received  from Borrower or any other person or
from any  collateral  security in such manner,  in such amounts and against such
part of the  Liabilities as the Secured Party considers best and change any such
application  in whole or in part as the Secured  Party may see fit. All of these
actions may be taken without in any way limiting,  diminishing  or affecting the
Guarantor's  liability under this Agreement and without  imposing any obligation
of trust on the Secured  Party,  and no loss of or in respect of any  collateral
security,  whether caused by the fault of the Secured Party or otherwise,  shall
in any way  limit,  diminish  or affect  the  Guarantor's  liability  under this
Agreement.

3.    Liability of Guarantor Unconditional.

      This Agreement is a guaranty of payment and not merely of collection.  The
Guarantor's  liability  under  this  Agreement  and the  grant  of the  security
interest in the  Collateral  (as defined in Section 11 hereof) are  absolute and
unconditional and shall not be limited,  diminished or affected by the happening
from  time to time of any  event,  including  (but  not  limited  to) any  event
described in Section 2 of this Agreement or any of the following events, whether
or not any such event occurs with notice to or with the consent of the Guarantor
or once or more than once:

      (a)   the waiver, surrender, compromise, settlement, discharge, release or
            termination of any or all of the Liabilities;

      (b)   the failure to give any notice to Borrower;

      (c)   the extension of the time for payment or  performance  of any of the
            Liabilities;

      (d)   the  change  (whether  or not  material)  of the  terms  of the Loan
            Agreement  or any  other  document  or  instrument  relating  to the
            Liabilities (a "Document");

      (e)   the  taking of or  failure  to take any  action  referred  to in any
            Document;
<PAGE>
                                      -3-


      (f)   the illegality,  invalidity,  unenforceability  (including,  but not
            limited to, by reason of any  statute of  limitations  or  automatic
            stay) or irregularity of any of the Liabilities or any Document;

      (g)   any failure, omission, delay or lack of diligence on the part of the
            Secured  Party in the  enforcement,  assertion  or  exercise  of any
            right,  power or remedy  conferred  on the  Secured  Party under any
            Document,  or the  inability  of the  Secured  Party to enforce  any
            provision  of any  Document  for any  reason,  or any  other  act or
            omission  on the part of the  Secured  Party  (other than any act or
            omission  involving the gross negligence or wilful misconduct of the
            Secured  Party),  including  (but not  limited  to)  failure  by the
            Secured  Party to perfect or protect any lien or  security  interest
            granted to the Secured  Party,  to commence and prosecute any action
            to collect the  Liabilities  or to enforce or collect  any  judgment
            obtained by the Secured Party;

      (h)   the  dissolution  or  liquidation  of  Borrower,  the  sale or other
            disposition of all or  substantially  all of the assets of Borrower,
            the  marshalling  of  assets  and  liabilities  of  Borrower  or the
            existence of receivership, insolvency, assignment for the benefit of
            creditors,  bankruptcy,  reorganization,   arrangement,  adjustment,
            composition or other similar proceedings affecting Borrower; and

      (i)   any other event,  action or circumstance that could otherwise result
            in the release or discharge of the Guarantor from the performance or
            observance  of any  obligation,  covenant or agreement  contained in
            this Agreement.

4.    Waiver of Notice.

      The Guarantor  waives all notices of the creation,  renewal,  extension or
accrual of any of the Liabilities and notice or proof of reliance by the Secured
Party on this Agreement or acceptance of this Agreement.  The Liabilities  shall
conclusively  be  considered  to have been  created,  contracted  or incurred in
reliance on this Agreement,  and all dealings  between  Borrower and the Secured
Party shall likewise be conclusively presumed to have been had or consummated in
reliance  on this  Agreement.  Except as  otherwise  provided  herein and in the
Documents, the Guarantor also waives (to the extent permitted by applicable law)
all  requirements of notice,  presentment,  protest or demand on it, Borrower or
any other  person,  all other  notices  and demands  whatsoever  relating to the
Liabilities and any requirement that the Secured Party file a claim with a court
in any bankruptcy or similar  proceedings  of Borrower or first proceed  against
Borrower or any other person or first realize on any collateral security held by
it or otherwise exhaust any right, power or remedy under any Document or against
Borrower or any other person before proceeding  against the Guarantor under this
Agreement.  The  Secured  Party  shall  have no  responsibility  to  notify  the
Guarantor  of  Borrower's  financial  condition  or  Borrower's   incurrence  or
performance of the Liabilities.
<PAGE>
                                      -4-


5.    Continuing Agreement.

      This  Agreement is a continuing  agreement,  and shall not terminate or be
discharged until the performance and indefeasible  payment in full of all of the
Liabilities. If demand for, or acceleration of the time for, payment by Borrower
to the Secured Party of any of the  Liabilities  is stayed upon the  insolvency,
bankruptcy,  reorganization or proposed compromise or arrangement with creditors
of Borrower,  all  Liabilities  of which payment or  performance  is stayed that
would  otherwise  be subject to the demand  for  payment or  acceleration  shall
nonetheless  be payable by the  Guarantor  immediately  on demand by the Secured
Party. Upon termination of this Agreement,  the Secured Party shall reassign and
deliver to the  Guarantor,  or to such person or persons as the Guarantor  shall
designate,  against  receipt,  such of the Collateral (if any) as shall not have
been sold or otherwise applied by the Secured Party pursuant to the terms hereof
and shall still be held by it hereunder,  together with appropriate  instruments
of reassignment and release.  Any such reassignment shall be without recourse to
or warranty by the Secured Party and at the expense of the Guarantor.

6.    Reinstatement.

      This Agreement shall continue to be effective, or shall be reinstated,  if
at any time payment, or any part thereof, of any of the Liabilities is rescinded
or must  otherwise  be returned by the Secured  Party for any reason  whatsoever
(including,  but  not  limited  to,  the  bankruptcy,  insolvency,  dissolution,
liquidation or  reorganization  of Borrower or any other person),  all as though
such payment had not been received by the Secured Party.

7.    Subordination.

      All  indebtedness,  obligations,  liabilities  and other  amounts  due, of
whatever nature, of Borrower to the Guarantor (the "Subordinated Debt"), whether
now existing or hereafter incurred,  whether created directly or acquired by the
Guarantor by  assignment  or otherwise,  whether  matured or unmatured,  whether
absolute or contingent,  whether characterized as principal,  premium, interest,
additional  interest,  fees, expenses or otherwise and whether Borrower is bound
alone or with any  others or as  principal  or as surety,  shall be subject  and
subordinate to the Liabilities, and, upon the occurrence of an Event of Default,
all moneys received by the Guarantor in respect of the  Subordinated  Debt shall
immediately  on the Secured  Party's  demand be paid over to the Secured  Party.
This subordination is independent of the guaranty provided in this Agreement and
shall  remain in full  force and  effect  notwithstanding  any  decrease  in the
Guarantor's  liability under this Agreement.  The Guarantor hereby undertakes to
execute such additional documents and instruments and to do such additional acts
as may be necessary or desirable (in the sole discretion  opinion of the Secured
Party  reasonably  exercised)  in order to carry out,  complete or perfect  this
subordination.

8.    Limit on Subrogation.

      Until the Secured Party has received and retained  indefeasible payment in
full of all Liabilities,  no payment by the Guarantor  pursuant to any provision
of this Agreement or other satisfaction of the Guarantor's  liability under this
Agreement shall entitle the Guarantor, by
<PAGE>
                                      -5-


subrogation  or  otherwise,  to any right or  remedy  against  Borrower  and the
Guarantor waives any such right it may have.

9.    Costs, Expenses, Etc.

      The  Guarantor  agrees  to pay  on  demand  all  losses,  costs,  expenses
(including, but not limited to, reasonable attorneys' fees) and damages incurred
by the Secured Party in connection with the preparation of this Agreement or any
amendment,  waiver or consent with respect to this Agreement, in connection with
any  rescission,  reinstatement  or  return  referred  to in  Section  6 of this
Agreement,  in enforcing or  attempting  to enforce this  Agreement or any other
guaranty of the  Liabilities or in protecting  the Secured  Party's rights under
this Agreement or any other guaranty of the Liabilities following any default by
the  Guarantor  under this  Agreement,  whether the Secured  Party's  rights are
enforced by suit or otherwise.

9.1   Taxes.

      (a) Taxes Payable by the Guarantor.  If any tax is required to be withheld
or deducted from, or is otherwise  payable by the Guarantor in connection  with,
any  payment to the  Secured  Party  hereunder,  the  Guarantor  (i)  shall,  if
required,  withhold or deduct the amount of such tax from such  payment  and, in
any case, pay such tax to the  appropriate  taxing  authority in accordance with
the tax law and (ii) shall pay to the Secured Party such  additional  amounts as
may be  necessary  so that the net amount  received  by the  Secured  Party with
respect to such payment,  after  withholding  or deducting all taxes (other than
any net income,  net profits,  gross  receipts or franchise tax imposed upon the
Secured Party in Canada, hereinafter referred to as "Bank Taxes") required to be
withheld or deducted, is equal to the full amount payable hereunder.  If any tax
is  withheld or deducted  from,  or is  otherwise  payable by the  Guarantor  in
connection  with,  any  payment  payable to the  Secured  Party  hereunder,  the
Guarantor shall, as soon as possible after the date of such payment,  furnish to
the Secured Party, as applicable,  the original or a certified copy of a receipt
for such tax from the applicable taxing authority.

      (b) Taxes Payable by the Secured Party. The Guarantor shall, promptly upon
request by the Secured Party for the payment thereof,  pay to the Secured Party,
as the case may be (i) all taxes (other than Bank Taxes)  payable by the Secured
Party with respect to any payment due to the Secured  Party,  and (ii) all taxes
(including Bank Taxes) payable by the Secured Party as a result of payments made
by the Guarantor  (whether made to a taxing  authority or to the Secured  Party,
pursuant to this Section 9.1).

      (c)  Credits  and  Deductions.  If the  Secured  Party  is,  in  its  sole
discretion,  able to apply for any credit,  deduction or other reduction in Bank
Taxes by reason of any payment made by the  Guarantor  under  Section  9.1(a) or
(b),  the Secured  Party  shall use  reasonable  efforts to obtain such  credit,
deduction  or  other  reduction  and,  upon  receipt  thereof,  will  pay to the
Guarantor such amount, not exceeding the increased amount paid by the Guarantor,
as is  equal  to the net  after-tax  value  to the  Secured  Party  in its  sole
discretion,  of such part of such  credit,  deduction  or other  reduction as it
considers to be allocable to such payment by the Guarantor, having regard to all
of the Secured Party's  dealings giving rise to similar  credits,  deductions or
other reductions in relation to the same tax period and to the cost of obtaining
the same;
<PAGE>
                                      -6-


provided, however, that (i) the Secured Party shall not be obligated to disclose
to the Guarantor any information  regarding its tax affairs or computations  and
(ii)  nothing  in this  Section  9.1(c)  shall  interfere  with the right of the
Secured Party to arrange its tax affairs as it deems appropriate.

10.   Liabilities Additional.

      This Agreement and the  Guarantor's  liability under this Agreement are in
addition to and not in substitution  for (a) any other collateral  security,  by
whomsoever  given,  at any time held by the Secured Party and (b) any present or
future  obligation  of the  Guarantor or any other  obligor to the Secured Party
incurred  otherwise  than under this  Agreement,  whether the  Guarantor or such
other obligor is bound with or apart from Borrower.

11.   Place and Manner of Payment.

      The  Guarantor  agrees  to  make  any  payment  required  of it  hereunder
forthwith  upon the  written  demand of the  Secured  Party  without  set-off or
counterclaim at Bank of America,  London Branch, London, England, for the credit
of Export Development Canada,  London Sort Code 165050, SWIFT BOFAGB22,  account
number  45447019  or to such other  account or at such other place in England as
the Secured Party may from time to time notify the Guarantor in writing not less
then ten (10) days prior to the relevant date. The Guarantor  agrees to instruct
its bank to  provide to the  Secured  Party a copy of its  payment  instructions
(including  its  transfer  reference  number),   showing  how  funds  are  being
transferred, by telefax at number (613) 598-2514.

12.   Security Interest.

      As security from the Guarantor for the payment and  performance in full of
the Liabilities,  the Guarantor hereby  transfers,  grants,  bargains,  conveys,
hypothecates,  pledges, sets over, delivers and confirms unto the Secured Party,
and grants to the  Secured  Party a security  interest  in its right,  title and
interest in the following (the  "Collateral"),  whether now owned or hereinafter
acquired:

       (i)  Accounts  (including  Health-Care-Insurance   Receivables,  if  any)
            howsoever  arising in connection  with the sale or lease of goods or
            services by the Guarantor to customers  located in the United States
            or Canada;

      (ii)  Chattel Paper;

     (iii)  Instruments (including Promissory Notes);

      (iv)  Documents;

       (v)  General   Intangibles    (including   without   limitation   Payment
            Intangibles,  Software,  contract rights, credits,  claims, demands,
            debts,  choses  in  action,  trade-marks,  patents,  and  all  other
            intellectual property);
<PAGE>
                                      -7-


      (vi)  Letter-of-Credit Rights;

     (vii)  Supporting Obligations;

    (viii)  Deposit Accounts;

      (ix)  Investment Property  (including without limitation  certificated and
            uncertificated    Securities),    Securities   Accounts,    Security
            Entitlements, Commodity Accounts, and Commodity Contracts);

       (x)  Inventory;

      (xi)  Equipment   (including  all  software,   whether  or  not  the  same
            constitutes embedded software, used in the operation thereof);

     (xii)  Money, including without limitation amounts deposited into escrow or
            with third parties;

    (xiii)  Fixtures;

     (xiv)  All  rights to  merchandise  and other  goods  (including  rights to
            returned  or  repossessed  Goods and rights of  stoppage in transit)
            which is  represented  by,  arises  from,  or  relates to any of the
            foregoing;

      (xv)  All  personal  property and  interests  in personal  property of the
            Debtor of any kind or  description  now held by Secured  Party or at
            any time  hereafter  transferred or delivered to, or coming into the
            possession,  custody,  or control of, Secured Party, or any agent or
            affiliate of Secured Party, whether expressly as collateral security
            or  for  any  other  purpose  (whether  for  safekeeping,   custody,
            collection or otherwise),  and all dividends and distributions on or
            other rights in connection with any such property;

     (xvi)  All  supporting  evidence  and  documents  relating  to  any  of the
            above-described property,  including,  without limitation,  computer
            programs, disks, tapes and related electronic data processing media,
            and all  rights  of the  Debtor  to  retrieve  the same  from  third
            parties,  written applications,  credit information,  account cards,
            payment   records,   correspondence,   delivery   and   installation
            certificates,  invoice copies,  delivery receipts,  notes, and other
            evidences  of  indebtedness,  insurance  certificates  and the like,
            together with all books of account,  ledgers,  and cabinets in which
            the same are reflected or maintained;

    (xvii)  All Accessions and additions to, and  substitutions and replacements
            of, any and all of the foregoing; and

   (xviii)  All Proceeds and products of the  foregoing,  and all insurance of
            the foregoing and proceeds thereof;
<PAGE>
                                      -8-


all of the foregoing being herein sometimes referred to as the "Collateral". All
terms capitalized in this Section 12 that are defined in the Uniform  Commercial
Code as enacted in the State of New York effective July 1, 2001 (as the same may
be amended from time to time, the "UCC") shall have the same meanings  herein as
such terms are defined in the UCC. Where the context  permits,  any reference to
"Collateral"  shall be  deemed  to be a  reference  to  "Collateral  or any part
thereof."

13.   Representations, Warranties and Covenants.

      The Guarantor  represents,  warrants and covenants to and with the Secured
Party that:

      (a)   except  for the  security  interest  granted  to the  Secured  Party
            hereunder and except for Permitted Encumbrances, Guarantor (i) holds
            and will at all times continue to hold the Collateral free and clear
            of  any  and  all  liens,  pledges,  licenses,  mortgages,  security
            interests,  claims,  leases,  charges,   conditions,   restrictions,
            assessments,   conditional   sales   agreements,   title   retention
            agreements,  options or any other  encumbrance  whatsoever,  whether
            direct or  indirect,  contingent,  accrued,  absolute  or  otherwise
            (collectively, "Liens"), and (ii) without in any way diminishing the
            foregoing,  will neither cause,  permit or suffer to exist any other
            Lien on the Collateral;

      (b)   the Guarantor (i) has good right and legal authority to encumber the
            Collateral  as  provided   herein,   guaranty  the  Liabilities  and
            otherwise enter into and perform its obligations hereunder, and (ii)
            will defend its title or interest thereto or therein against any and
            all other Liens  (providing that nothing in this paragraph (b) shall
            be deemed to authorize or permit any Liens, as further  described in
            paragraph (a) above);

      (c)   no consent or approval of any third party, of any governmental  body
            or  regulatory  authority or of any  securities  exchange was, is or
            shall be  necessary  to the  validity  of the Lien  effected  hereby
            (other  than any such  consent  or  approval  that  shall  have been
            obtained as required);

      (d)   subject to the Bank Facility Lenders' Security  Documents,  the Lien
            created  hereby is effective to vest in the Secured Party the rights
            of the Guarantor in the Collateral as set forth herein;

      (e)   the execution,  delivery and/or performance hereof by Guarantor will
            not (i) cause  Guarantor  to be in  violation  of, or  constitute  a
            material  default  under,  the  provisions of any agreement to which
            Guarantor is a party or by which  Guarantor or its assets are bound,
            (ii) conflict with, or result in the breach of, any court  judgment,
            decree or order of any  governmental  body to which Guarantor or its
            assets are subject,  (iii) result in the creation or  imposition  of
            any Lien of any
<PAGE>
                                      -9-


            nature  whatsoever  upon  any  of  the  property  or  assets  of the
            Guarantor, except as specifically contemplated by this Agreement;

      (f)   all  representations  and  warranties of the Guarantor  contained in
            this Agreement shall survive the execution, delivery and performance
            of this Agreement  until all applicable  statutes of limitation have
            expired; and

      (g)   without the prior written  consent of the Secured  Party,  Guarantor
            shall not

             (i)  maintain  any of its books and  records  with  respect  to the
                  Collateral at any location other than either the office listed
                  in  the  first  paragraph  hereof  or at its  offices,  or the
                  offices of Mitel Networks Corporation, in Ottawa;

            (ii)  maintain  its  principal  place of business (or if it has more
                  than one place of business, its chief executive office) at any
                  place  other  than  at the  address  set  forth  in the  first
                  paragraph hereof;

           (iii)  (A) acquire any assets  outside of the United  States  (which,
                  for greater  certainty,  consists of the  District of Columbia
                  and  the 50  states  and  does  not  include  territories  and
                  possessions  of the United  States),  or (B) cause,  suffer or
                  permit the movement or relocation of any Collateral  currently
                  located  in the  United  States to a  location  outside of the
                  United  States,  other than bona fide sales of  inventory,  if
                  any,  in  the  ordinary  course  of  business;  provided  that
                  (subject to the provisions of the Credit Agreement)  Guarantor
                  shall deposit the proceeds of all of its sales into an account
                  described in paragraph (v) below;

            (iv)  maintain any Securities Accounts; or

             (v)  open, establish or maintain any deposit or other bank accounts
                  except for those

                  (A)   at financial institutions other than the Secured Party's
                        home office or branches (foreign or domestic), or

                  (B)   in the existing  deposit  account at Bank One located in
                        Detroit, Michigan;

                  (C)   at a deposit account at Harris Bank that is subject to a
                        "control"  agreement in all material respects  identical
                        to that previously entered into with Bank One;

                              provided   that,   with  respect  to  the  deposit
                              accounts  listed in (B) and (C)  above,  if at any
                              time (1)  Bank of  Montreal,  as agent  for and on
                              behalf of (i) the lenders  under the Bank Facility
                              Lenders'  Security  Documents,  and (ii) EDC, does
                              not  have  a  first  priority  perfected  security
                              interest in, and
<PAGE>
                                      -10-


                              "control" (as defined in Section 9-104 of the UCC)
                              of, such account and the contents thereof,  or (2)
                              either depository institution gives notice that it
                              is terminating  its "control  agreement" with Bank
                              of Montreal,  then Guarantor  shall promptly close
                              such account and deliver the  contents  thereof to
                              the Secured Party for holding in a cash collateral
                              account (or other form reasonably  satisfactory to
                              the Secured Party). For greater certainty, nothing
                              set forth in the preceding proviso shall prohinbit
                              a transfer  by Bank One of all,  but not less than
                              all, of the funds in the deposit account described
                              in (B) above to a deposit account described in (C)
                              above; or

            (vi)  change its name, or the name under which it does business,  or
                  its organizational structure (i.e., Delaware corporation) from
                  the name and form  indicated  in the first  paragraph  of this
                  Agreement; and

      (h)   all of the accounts receivable included in the Collateral  represent
            proceeds  of  transactions  conducted  in  the  ordinary  course  of
            Guarantor's   business  for  which  Guarantor  received   reasonable
            consideration  for  the  goods  and  services   including,   without
            limitation,  all payments from Borrower to Guarantor with respect to
            goods and/or services provided to Borrower by Guarantor.

14.   Proceeds of Collateral; Delivery of Collateral.

      (a) Guarantor shall,  upon the request of the Secured Party made after the
occurrence  of any Event of  Default,  instruct  all  account  debtors and other
Persons  obligated in respect of all applicable  Collateral  (including  without
limitation Accounts,  Instruments,  Investment Property, General Intangibles and
Payment  Intangibles)  to make all payments in respect  thereof  directly to the
Secured  Party (by  instructing  that such  payments be remitted to such address
specified by the Secured  Party which shall be in the name and under the control
of the Secured Party).  In addition to the foregoing,  Guarantor  agrees that if
the proceeds of any Collateral hereunder (including the payments made in respect
of any of the  foregoing  collateral  types)  shall be  received by it after the
occurrence  of any Event of  Default,  Guarantor  shall as  promptly as possible
deliver  such  proceeds  to the  Secured  Party.  Until so  delivered,  all such
proceeds  shall be held in trust by  Guarantor  for and as the  property  of the
Secured  Party and shall not be  commingled  with any other funds or property of
Guarantor.  Upon any delivery of proceeds of Collateral  hereunder,  the Secured
Party, in its sole discretion,  may apply such proceeds (but is not so obligated
to do so) against the amount outstanding under the Loans.

      (b)  Guarantor  shall  cause  the  delivery  to the  Secured  Party of any
Collateral  that is  certificated  Investment  Property  or is  evidenced  by an
Instrument or Chattel Paper,  with  appropriate  transfer powers or endorsements
(as applicable).

15.   In  addition  to,  and not in  diminution  of, the  immediately  preceding
      Section 14, after the occurrence of an Event of Default:
<PAGE>
                                      -11-


      (a)   Guarantor  shall, at the request of the Secured Party,  assemble the
            Collateral  owned,  possessed or  controlled  by it at such place or
            places,  reasonably  convenient to the Secured Party,  designated in
            its request;

      (b)   The Secured Party may make any  reasonable  compromise or settlement
            deemed  desirable  with  respect  to any of the  Collateral  and may
            extend the time of payment, arrange for payment in installments,  or
            otherwise modify the terms of, any of the Collateral;

      (c)   The  Secured  Party shall have all of the rights and  remedies  with
            respect to the  Collateral of a secured party under the UCC (whether
            or not said Code is in effect in the  jurisdiction  where the rights
            and remedies are asserted) and such  additional  rights and remedies
            to which a secured party is entitled under the laws in effect in any
            jurisdiction   where  any  rights  and  remedies  hereunder  may  be
            asserted;

      (d)   The Secured Party in its discretion  may, in its name or in the name
            of Guarantor or otherwise,  demand,  sue for, collect or receive any
            money or property at any time payable or receivable on account of or
            in  exchange  for any of the  Collateral,  but  shall  be  under  no
            obligation to do so; and

      (e)   (1) The Secured  Party may,  upon ten business  days' prior  written
            notice to Guarantor (or upon such shorter notice, or without notice,
            as may be  permitted  under  the UCC) of the time  and  place,  with
            respect to the  Collateral or any part thereof that shall then be or
            shall thereafter come into the possession, custody or control of the
            Secured Party or its agent, sell, lease, assign or otherwise dispose
            of all or any part of such  Collateral,  at such  place or places as
            the  Secured  Party  deems  best,  and for cash or for credit or for
            future  delivery  (without  thereby  assuming any credit  risk),  at
            public or private sale,  without  demand of performance or notice of
            intention  to effect  any such  disposition  or of the time or place
            thereof  (except such notice as is required  above or by  applicable
            statute and cannot be waived),  and the Secured Party or anyone else
            may be the purchaser, lessee, assignee or recipient of any or all of
            the  Collateral so disposed of at any public sale (or, to the extent
            permitted by law, at any private sale) and thereafter  hold the same
            absolutely,  free  from  any  claim or  right  of  whatsoever  kind,
            including   any  right  or  equity  of   redemption   (statutory  or
            otherwise),  of  Guarantor,  any such  demand,  notice  and right or
            equity being hereby expressly waived and released. The Secured Party
            may,  without notice or  publication,  adjourn any public or private
            sale  or  cause  the  same  to be  adjourned  from  time  to time by
            announcement at the time and place fixed for the sale, and such sale
            may be made  at any  time or  place  to  which  the  sale  may be so
            adjourned.

            (2) The Secured  Party shall incur no  liability  as a result of the
            sale of the  Collateral,  or any part  thereof,  at any private sale
            pursuant  to the  immediately  preceding  paragraph  conducted  in a
            commercially  reasonable manner.  Guarantor hereby waives any claims
            against  the  Secured  Party  arising by reason of the fact that the
            price at which the  Collateral  may have been sold at such a private
            sale
<PAGE>
                                      -12-


            was less than the price that might  have been  obtained  at a public
            sale or was less than the aggregate amount of the Liabilities.

16.   Application of Proceeds of Sale.

      The proceeds of any sale of Collateral  pursuant to Section 14 hereof,  as
well as any  Collateral  consisting  of cash,  shall be promptly  applied by the
Secured Party as follows:

      (a)   FIRST, to payment of all reasonable  costs and expenses  incurred by
            the  Secured  Party in  connection  with such sale or  otherwise  in
            connection with this Agreement or any of the Liabilities, including,
            but not  limited  to, all court  costs and the  reasonable  fees and
            expenses  of its  agents and legal  counsel,  the  repayment  of all
            advances  made by the  Secured  Party  hereunder  on  behalf  of the
            Guarantor  and any other  costs or expenses  incurred in  connection
            with the exercise of any right or remedy hereunder;

      (b)   SECOND,  to the  payment in full of the  Liabilities  to the Secured
            Party in accordance with the Loan Agreement; and

      (c)   THIRD, to the Guarantor,  its successors and assigns,  or as a court
            of competent jurisdiction may otherwise direct.

If the  proceeds  of  sale,  collection  or  other  realization  of or upon  the
Collateral  pursuant  to this  Section are  insufficient  to cover the costs and
expenses  of such  realization  and  the  payment  in  full of the  Liabilities,
Guarantor shall remain liable for any deficiency.

17.   Secured Party Appointed Attorney-in-Fact.

      Effective only after an Event of Default,  Guarantor  hereby  appoints the
Secured Party the  attorney-in-fact of the Guarantor for the purpose of carrying
out the  provisions  of this  Agreement  and taking any action and executing any
instrument which the Secured Party may deem necessary or advisable to accomplish
the  purposes  hereof,  which  appointment  is  irrevocable  and coupled with an
interest.  Without  limiting the generality of the foregoing,  the Secured Party
shall have the right,  upon the  occurrence  of an Event of  Default,  with full
power of  substitution  either in the Secured Party's name or in the name of the
Guarantor,  to ask for,  demand,  sue for,  collect,  receive,  receipt and give
acquittance  for any and all moneys due or to become due and under and by virtue
of any Collateral,  to endorse checks,  drafts, orders and other instruments for
the  payment of money  payable to the  Guarantor  representing  any  interest or
dividend, or other distribution payable in respect of the Collateral or any part
thereof for or on account  thereof and to give full  discharge  for the same, to
settle,  compromise,  prosecute or defend any action,  claim or  preceding  with
respect thereto,  and to sell, assign,  endorse,  pledge,  transfer and make any
agreement respecting, or otherwise deal with, the same: provided,  however, that
nothing  herein  contained  shall be construed as  requiring or  obligating  the
Secured Party to make any  commitment or to make any inquiry as to the nature or
sufficiency of any payment  received by the Secured Party, or to present or file
any claim or notice, or to take any action with respect to the Collateral or any
part  thereof  or the  moneys  due or to become  due in
<PAGE>
                                      -13-


respect  thereof or any  property  covered  thereby,  and no action taken by the
Secured Party or omitted to be taken with respect to the  Collateral  shall give
rise to any cause of action against the Secured Party, except in the case of the
gross negligence or willful misconduct of the Secured Party.

18.   No Waiver.

      No failure on the part of the Secured  Party to exercise,  and no delay in
exercising,  any  right,  power or remedy  hereunder  shall  operate as a waiver
thereof,  nor shall any single or partial  exercise of any such right,  power or
remedy by the Secured Party  preclude any other or further  exercise  thereof or
the exercise of any other right,  power or remedy.  All remedies  hereunder  are
cumulative  and are not  exclusive  of any other  remedies  provided by law. The
Secured  Party shall not be deemed to have waived any rights  hereunder or under
any other  agreement  or  instrument  unless such waiver shall be in writing and
signed by it.

19.   Notices.

      Any notices, demands, certifications, requests, communications or the like
required to be given  hereunder  shall be in writing and shall be deemed to have
been validly  served,  given or delivered upon delivery  thereof by messenger or
courier service to the respective  party at the address first set forth above or
at such other  address as such  party may for itself  designate  in writing in a
like manner for the purpose of receiving notices hereunder.

20.   Further Assurances.

      Guarantor  agrees to execute  and  deliver to  Secured  Party (and  hereby
authorizes  Secured Party to file, in the case of (i) below,  as described below
in  this  paragraph)  such  further  agreements,  assignments,  instruments  and
documents, and to do all such other things, as Secured Party may reasonably deem
necessary or  appropriate to assure  Secured Party of the  effectiveness  of its
Lien hereunder,  including  without  limitation,  (i) such financing  statements
(including   amendments  to  financing  statements)  or  other  instruments  and
documents as Secured  Party may from time to time  reasonably  require to comply
with the UCC and any other applicable law, and (ii) such patent,  trademark, and
copyright  assignment  agreements  as  Secured  Party  may  from  time  to  time
reasonably  require to comply with the filing  requirements of the United States
Patent and Trademark  Office and the United States Copyright  Office,  and (iii)
such  agreements  with  respect to all Deposit  Accounts,  Securities  Accounts,
Letter-of-Credit  Rights,  and  electronic  Chattel  Paper,  as are  required to
perfect  security  interests  and  maintain  priority  under the UCC, and to use
commercially  reasonable efforts to cause the relevant depository  institutions,
financial  intermediaries,  and letter of credit  issuers to execute and deliver
such  control  agreements,  as  Secured  Party may from time to time  reasonably
require.   Guarantor  hereby  agrees  that  a  carbon,   photographic  or  other
reproduction  of this  Agreement  or any such  financing  statement or amendment
thereto is  sufficient  for filing as a  financing  statement  by Secured  Party
without notice thereof to Guarantor  wherever  Guarantor in its sole  discretion
desires to file the same.  Guarantor hereby authorizes Secured Party to file any
and all  financing  statements  covering the  Collateral  or any part thereof as
Secured  Party  may  require,  including  financing  statements  describing  the
Collateral as "all assets" or "all personal  property" or words of like meaning.
<PAGE>
                                      -14-


Secured  Party may order lien  searches  from time to time against any Guarantor
and the Collateral, and Guarantor shall promptly reimburse Secured Party for all
reasonable costs and expenses incurred in connection with such lien searches. In
the event for any reason the law of any jurisdiction other than New York becomes
or is applicable to the  Collateral or any part thereof  (including  pursuant to
Section 9-301 of the UCC), or the respective rights and/or  priorities  therein,
Guarantor  agrees to execute and deliver all such  instruments and documents and
to do all such other things as Secured Party deems  necessary or  appropriate to
preserve,  protect and enforce the security  interest of Secured Party under the
laws of such other jurisdiction.

21.   Binding Agreement; Assignments.

      This Agreement,  and the terms,  covenants and conditions hereof, shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and  assigns,  except that the  Guarantor  shall not be permitted to
assign this Agreement or any interests herein or in the Collateral,  or any part
thereof,  or any cash or property held by the Secured Party as Collateral  under
this Agreement without the prior written consent of the Secured Party, which may
be withheld in the sole discretion of the Secured Party.

22.   Modification.

      No  modification,  amendment or waiver of any provision of this  Agreement
nor any consent to any  departure by the  Guarantor or Secured  Party  herefrom,
shall in any event be  effective  unless the same shall be in writing and signed
by the Secured Party and the Guarantor  and then such  modification,  amendment,
waiver or consent shall be effective  only in the specific  instance and for the
purpose for which it is given.

23.   Governing Law.

      This Agreement  shall be construed in accordance  with the governed by the
laws of the State of New York.

24.   Jurisdiction

      (d)   Any legal  proceeding  with respect to this Guarantee may be brought
            by the Secured  Party in the federal  courts of the United States of
            America or the state  courts of New York  sitting in the District of
            Manhattan,  the courts of the Province of Ontario,  Canada or in the
            courts of any  jurisdiction  where the  Guarantor may have assets or
            carries on business or where payments are to be made  hereunder,  as
            the  Secured  Party  may  elect  in its  sole  discretion,  and  the
            Guarantor  irrevocably submits to the non-exclusive  jurisdiction of
            each such  court and  acknowledges  its  competence.  The  Guarantor
            hereby  irrevocably  waives  any  objection  that it may have to the
            laying of venue of any such legal proceeding in any of the aforesaid
            courts,  and, to the fullest extent permitted by applicable law, any
            defense  that  such  legal   proceeding   has  been  brought  in  an
            inconvenient  forum.  The  Guarantor  agrees  that a final  judgment
            against it in any such legal  proceeding shall be

<PAGE>
                                      -15-


            conclusive and may be enforced in any other  jurisdiction by suit on
            the  judgment (a  certified or  exemplified  copy of which  judgment
            shall be  conclusive  evidence  of the fact and of the amount of the
            Guarantor's obligation) or by such other means as may be provided by
            law.

      (e)   The Guarantor  hereby agrees that service of all writs,  process and
            summonses  in any such  suit,  action or  proceeding  brought in the
            courts of the  Province  of  Ontario  may be made upon it by service
            upon Mitel Networks  Corporation  (the "Process  Agent"),  presently
            having an office  at 350  Legget  Drive,  Ottawa,  Ontario  K2K 2W7,
            Canada  telephone no. (613) 592-2122,  ext. 4431,  telefax no. (613)
            591-2320,  and the  Guarantor  hereby  confirms  and agrees that the
            Process Agent is its true and lawful agent and  attorney-in-fact  in
            its name, place and stead to accept such service of any and all such
            writs,  process  and  summonses,  and agrees that the failure of the
            Process  Agent to give any notice of any such  service of process to
            the Guarantor will not impair or affect the validity of such service
            or of any judgment based  thereon.  If for any reason Mitel Networks
            Corporation  ceases to act, or to be able to act, as a Process Agent
            as  contemplated  hereby,  the  Guarantor  will appoint a substitute
            therefor  acceptable  to the Secured Party and agrees to maintain at
            all  times an agent  in  Canada  to act as its  Process  Agent.  The
            Guarantor  hereby  further  irrevocably  consents  to the service of
            process in any action or proceeding by the mailing  thereof,  by the
            Secured Party, by registered or certified mail, postage prepaid,  to
            the  Guarantor  at the address  given  herein or for the purposes of
            this Agreement.

      (f)   Nothing  herein  shall in any way be deemed to limit the  ability of
            the Secured  Party to serve any such writs,  process or summonses in
            any  other  manner   permitted  by  applicable   law  or  to  obtain
            jurisdiction over the Guarantor in such other jurisdictions,  and in
            such manner, as may be permitted by applicable law.

      To the extent  that the  Guarantor  may be  entitled to the benefit of any
      provision of law requiring the Secured Party,  in any action or proceeding
      brought  in a  court  of  the  United  States  or  other  jurisdiction  in
      connection with this Agreement,  to post security for litigation  costs or
      otherwise  post a  performance  bond or similar  security,  the  Guarantor
      hereby irrevocably waives such benefit, in each case to the fullest extent
      now or hereafter  permitted under the laws of the United States or, as the
      case may be, such other jurisdiction.

25.   Severability.

      In case  any one or more of the  provisions  contained  in this  Agreement
should be  invalid,  illegal or  unenforceable  in any  respect,  the  validity,
legality and enforceability of the remaining  provisions  contained herein shall
not in any way be affected or impaired.
<PAGE>
                                      -16-


26.   Counterparts.

      This Agreement may be executed in two or more counterparts,  each of which
shall  constitute  an original,  but all of which,  when taken  together,  shall
constitute but one instrument.

27.   Section Headings.

      Section  headings  used  herein  are for  convenience  only and are not to
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
<PAGE>
                                      -17-


28.   Definitions Generally.

      Unless otherwise  defined herein,  each terms  capitalized  herein but not
defined  herein  shall  have the  meaning  set  forth  for such term in the Loan
Agreement.

29.   Recitals.

      The recitals hereto are  incorporated  herein by reference as if set forth
at length herein.

30.   Disclosure.

      Notwithstanding  anything to the contrary herein,  the Guarantor agrees to
EDC's  disclosure,  following  the  date of  this  Guarantee,  of the  following
information:  the  name of the  Borrower,  the  name of the  Guarantor,  the EDC
financial  service  provided  and the date of the related  agreement,  a general
description of the transaction (including country), the amount of EDC support in
an approximate dollar range and the name of the Exporter.

IN WITNESS  WHEREOF,  the parties hereto have duly executed this Agreement as of
the day and year first above written.

                                      MITEL NETWORKS, INC.

                                      by
                                            ------------------------------------
                                            Name:  Ed Silberhorn
                                            Title: Corporate Secretary

                                      EXPORT DEVELOPMENT CANADA

                                      by
                                            ------------------------------------
                                            Name:
                                            Title:

                                      by:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                     Sch C-1


Schedule "C" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                          OPINION OF BORROWER'S COUNSEL

Form agreed to and delivered under separate cover.
<PAGE>
                                     Sch D-1

Schedule "D" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                         OPINION OF GUARANTOR'S COUNSEL
                          (Mitel Networks Corporation)

Form agreed to and delivered under separate cover.
<PAGE>
                                     Sch D-1


Schedule "D" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                         OPINION OF GUARANTOR'S COUNSEL
                              (Mitel Networks Inc.)

Form agreed to and delivered under separate cover.
<PAGE>

                                     Sch D-1

Schedule "D" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                         OPINION OF GUARANTOR'S COUNSEL
                        (Mitel Networks Solutions, Inc.)

Form agreed to and delivered under separate cover.
<PAGE>

Schedule "E" to the Loan Agreement No.  880-UK-24189 made between MITEL NETWORKS
LIMITED and EXPORT DEVELOPMENT CANADA.

                           GENERAL SECURITY AGREEMENT

      THIS AGREEMENT made as of the 4th day of March, 2003,

B E T W E E N:
                        EXPORT DEVELOPMENT CANADA,
                        a corporation  established by an Act
                        of the Parliament of Canada,

                        (hereinafter   referred  to  as  the
                        "Secured Party"),

                                                              OF THE FIRST PART,

                                     - and -

                        MITEL NETWORKS CORPORATION,
                        a corporation incorporated under the
                        laws of Canada,

                        (hereinafter   referred  to  as  the
                        "Debtor"),

                                                             OF THE SECOND PART.

      WHEREAS pursuant to a loan agreement (as amended, restated or supplemented
from time to time,  the "Loan  Agreement")  dated  March 4, 2003  between  Mitel
Networks  Limited  ("MNL") and the Secured  Party,  the Secured  Party agreed to
advance monies to MNL;

      AND WHEREAS as security for all amounts owing at any time and from time to
time by MNL  pursuant  to or by virtue of the Loan  Agreement,  the  Debtor  has
executed and delivered to the Secured Party a guarantee  dated March 4, 2003 (as
amended,  restated or supplemented from time to time, the "Guarantee")  pursuant
to which  the  Debtor  has  guaranteed  to the  Secured  Party the  payment  and
performance  by MNL of its  obligations  pursuant  to or by  virtue  of the Loan
Agreement;

      THIS  AGREEMENT   WITNESSES  THAT  in   consideration  of  the  respective
covenants,  agreements,  representations  and  warranties of the parties  herein
contained,  the  amount of Cdn.  $10.00  now paid by each party to the other and
other good and valuable  consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties), the parties agree as follows:
<PAGE>
                                      -2-


1.    Interpretation

1.1   Defined Terms.

      For the purpose of this Agreement,  unless the context otherwise requires,
the  following  terms  shall  have the  respective  meanings  set out  below and
grammatical variations of such terms shall have corresponding meanings:

      (a)   "Accounts" means all accounts, debts, dues, monetary demands, claims
            and  choses  in  action  relating  thereto   howsoever   arising  in
            connection  with sale or lease of goods or services by the Debtor to
            customers  located in the United  States or Canada that are now due,
            owing or accruing  due or that may  hereafter  become due,  owing or
            accruing  due to the Debtor and all claims of  whatsoever  nature or
            kind that the Debtor now or may hereafter  have in  connection  with
            any such accounts,  debts, dues, monetary demands, claims and choses
            in action,  including  claims against the Crown and claims under any
            and all  insurance  policies of the Debtor with respect to insurance
            on its accounts receivable, including, without limitation, insurance
            in respect  of such  accounts  receivable  provided  by the  Secured
            Party;

      (b)   "Act" means the Personal Property Security Act (Ontario), as amended
            from  time to  time,  or any  legislation  that  may be  substituted
            therefor (as any such  substituted  legislation  may be amended from
            time to time);

      (c)   "Business Day" means a day other than a Saturday,  Sunday or a civic
            or statutory holiday in the Province of Ontario;

      (d)   "Collateral"  means,  subject to Sections  2.3 and 2.4,  any and all
            real and  personal  property  in which a  security  interest  can be
            taken,  reserved,  created  or  granted  whether  under  the  Act or
            otherwise,  and which is now or hereafter  owned by the Debtor or in
            which the Debtor now has or  hereafter  acquires any interest of any
            nature   whatsoever,   excluding  Consumer  Goods  and  Intellectual
            Property  (as such term is  defined in the  Technology  Partnerships
            Canada  Agreement)  but  including,  without in any way limiting the
            generality  of the  foregoing,  all  Equipment,  fixtures,  computer
            hardware and software,  Inventory,  Goods, Instruments,  Securities,
            Documents of Title, Chattel Paper, Accounts, Money, contract rights,
            Intangibles,  credits,  claims,  demands,  debts,  choses in action,
            trade-marks,  patents,  and all other intellectual  property and all
            Proceeds,  products and accessions from, of and to any thereof, and,
            where the context  permits,  any reference to "Collateral"  shall be
            deemed to be a reference to "Collateral or any part thereof";

      (e)   "Contractual Rights" has the meaning given to it in Section 2.4;

      (f)   "Deficiency" means, at any time, the difference, if any, between:

            (i)   the aggregate of:
<PAGE>
                                      -3-


                  (A)   the amount of the Obligations at that time, and

                  (B)   the Reasonable Expenses incurred prior to that time; and

            (ii)  the proceeds of disposition received by the Secured Party from
                  a disposition  of the  Collateral  in accordance  with Section
                  7.1(g);

      (g)   "Event  of  Default"  has  the  meaning  given  to  it in  the  Loan
            Agreement;

      (h)   "Liens" has the meaning given to it in the Loan Agreement;

      (i)   "Loan Agreement" has the meaning given to it in the first recital to
            this Agreement;

      (j)   "Obligations"  means all  indebtedness,  liabilities and obligations
            (whether  direct,  indirect,  absolute,  contingent or otherwise and
            whether in respect of principal  or interest  thereon) of MNL to the
            Secured Party existing,  from time to time, and arising  pursuant to
            the Loan Agreement or arising pursuant hereto;

      (k)   "Permitted  Encumbrances"  has the  meaning  given to it in the Loan
            Agreement;

      (l)   "Proceeds"   means  property  in  any  form  derived,   directly  or
            indirectly,  from any dealing with the  Collateral or other Proceeds
            and includes any Accounts  arising from any sale,  transfer or other
            dealing  in any of  the  Collateral  and  any  payment  representing
            indemnity or  compensation  for loss or damage to the  Collateral or
            other Proceeds, including, without limitation, insurance proceeds;

      (m)   "Rate"  shall mean a rate per annum  equal to 1.75% in excess of the
            rate  quoted  or  published  at the  relevant  time  by the  Bank of
            Montreal as its prime rate of interest  for  Canadian  dollar  loans
            made in Canada, such rate to be calculated daily;

      (n)   "Reasonable Expenses" means any and all reasonable expenses incurred
            from time to time by the  Secured  Party,  or any  Receiver,  in the
            preparation of this Agreement,  in the perfection or preservation of
            the Security  Interest,  in enforcing  payment or performance of the
            Obligations  or any part thereof or in locating,  taking  possession
            of, transporting,  holding, repairing, processing, preparing for and
            arranging for the disposition of and/or  disposing of the Collateral
            and any and all other  reasonable  expenses  incurred by the Secured
            Party,  or any  Receiver,  as a result of the Secured  Party or such
            Receiver exercising any of its rights or remedies hereunder or under
            the Act including, without in any way limiting the generality of the
            foregoing,  any and all reasonable  legal expenses  including  those
            incurred  in any legal  action  or  proceeding  or appeal  therefrom
            commenced  or taken in good faith by the  Secured  Party and any and
            all reasonable fees and  disbursements of any solicitor,  accountant
            or evaluator or a similar  person  employed by the Secured  Party in
            connection  with any of the foregoing and the costs of insurance and
            payment of taxes and other  charges  incurred in retaking,

<PAGE>
                                      -4-


            holding,  repairing,  processing and preparing for  disposition  and
            disposing of the Collateral;

      (o)   "Receiver" has the meaning attributed thereto in Section 7.1(m);

      (p)   "Security Interest" has the meaning given to it in Section 2.1; and

      (q)   "Technology  Partnerships  Canada  Agreement"  means the  Technology
            Partnerships Canada Agreement,  executed by the parties on the ninth
            and tenth of  October,  2002  between  the  Debtor,  March  Networks
            Corporation,  Mitel Knowledge  Corporation and Her Majesty the Queen
            in Right of Canada.

1.2   Number, Gender and Persons.

      In this Agreement,  words importing the singular number only shall include
the plural and vice versa,  words importing gender shall include all genders and
words importing persons shall include individuals,  corporations,  partnerships,
associations,  trusts,  unincorporated  organizations,  governmental  bodies and
other legal or business entities of any kind whatsoever.

1.3   Currency.

      All monetary amounts in this Agreement refer to Canadian currency,  unless
otherwise stated.

1.4   Sections and Headings.

      The division of this Agreement into Sections and the insertion of headings
are for convenience of reference only and shall not affect the interpretation of
this Agreement.

1.5   Applicable Law.

      This Agreement shall be construed,  interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by,  the laws of the  Province  of  Ontario,  and  each  party  irrevocably  and
unconditionally submits to the non-exclusive  jurisdiction of the courts of such
province and all courts competent to hear appeals therefrom.

1.6   Successors and Assigns.

      This  Agreement  shall enure to the benefit of and be  enforceable  by the
Secured  Party and its  successors  and  assigns  and shall be binding  upon the
Debtor and its successors and permitted  assigns.  The Debtor may not assign any
of its  obligations  hereunder  without the prior written consent of the Secured
Party.

1.7   Severability.

      To the extent  permitted by law, if any provision  herein is determined to
be void,  voidable or  unenforceable,  in whole or in part,  such  determination
shall not affect or impair or be

<PAGE>
                                      -5-


deemed to affect or impair the  validity of any other  provision  hereof and all
the  provisions  hereof  are  hereby  declared  to be  separate,  severable  and
distinct.

1.8   Meanings under the Act.

      All capitalized  terms used herein and not otherwise  defined herein shall
have the respective meanings assigned to them in the Act.

2.    Security Interest

2.1   Creation of Security Interest.

      Subject to Sections  2.3 and 2.4, as  continuing  security for the due and
timely  payment and  performance  by MNL of the  Obligations,  the Debtor hereby
grants to the Secured Party a security interest (the "Security Interest") in the
Collateral.

2.2   Attachment.

      The Debtor and the Secured Party acknowledge and agree that value has been
given for the granting of the Security Interest and that they have not agreed to
postpone the time for attachment,  except for  after-acquired  property  forming
part of the  Collateral  the  attachment to which will occur  forthwith upon the
Debtor acquiring rights thereto.

2.3   Exception for Last Day of Leases.

      The Security Interest granted hereby does not and shall not extend to, and
Collateral  shall  not  include,  the  last  day of the  term  of any  lease  or
sub-lease,  oral or written,  or any agreement  therefor,  now held or hereafter
acquired by the Debtor,  but upon the sale of the leasehold interest or any part
thereof the Debtor shall stand possessed of such last day in trust to assign the
same as the Secured Party shall direct.

2.4   Exception for Contractual Rights.

      The Security Interest hereby granted does not and shall not extend to, and
Collateral shall not include, any agreement, right, franchise, licence or permit
(the "Contractual Rights") to which the Debtor is a party or of which the Debtor
has the benefit, to the extent that the creation of the Security Interest herein
would  constitute a breach of the terms of or permit any person to terminate the
Contractual  Rights, but the Debtor shall hold its interest therein in trust for
the Secured Party and shall assign such Contractual  Rights to the Secured Party
forthwith  upon  obtaining  the consent of the other party  thereto.  The Debtor
agrees  that  it  shall,  upon  the  request  of  the  Secured  Party,  use  all
commercially  reasonable  efforts to obtain any  consent  required to permit any
Contractual Rights to be subjected to the Security Interest.

2.5   Delivery of Instruments, Securities, Etc.

      The Debtor shall, upon reasonable request from the Secured Party following
the occurrence of an Event of Default,  forthwith  deliver to the Secured Party,
to be held by the

<PAGE>
                                      -6-


Secured  Party  hereunder,  all  instruments,  securities,  letters  of  credit,
advances  of credit  and  negotiable  documents  of title in its  possession  or
control  which  pertain  to or form part of the  Collateral,  and  shall,  where
appropriate, duly endorse the same for transfer in blank or as the Secured Party
may direct and shall make all reasonable efforts to deliver to the Secured Party
any and all consents or other instruments or documents  necessary to comply with
any  restrictions  on the transfer  thereof in order to transfer the same to the
Secured Party. The Debtor agrees to denote the Secured Party's security interest
on any chattel  paper,  documents  of title,  securities,  instruments  or other
collateral in the possession of the Debtor.

2.6   Transfer of Title.

      As  further  continuing  security  for  the  due and  timely  payment  and
performance by MNL of the Obligations,  the Debtor,  subject to Sections 2.3 and
2.4, hereby grants, bargains,  sells, assigns and transfers to the Secured Party
all Collateral  (specifically excluding trade-marks) such that title thereto and
ownership  therein shall belong to and be vested in the Secured Party,  provided
that the Secured Party shall not thereby assume or be liable for any obligations
or payments in respect of any of the Collateral and provided  further that, upon
the sale of any Collateral by the Debtor in accordance with Section 4.8, or upon
the receipt of dividends  or interest in  accordance  with  Section  5.2(a)(ii),
title thereto and ownership  therein  shall be divested  automatically  from the
Secured Party and provided  further that, upon the termination of this Agreement
in accordance  with Section  12.3(b),  title to and ownership in the  Collateral
shall be  revested  automatically  in the Debtor  without any further act of the
Secured Party or the Debtor.

3.    Representations and Warranties of the Debtor

      The Debtor  represents  and  warrants to the Secured  Party that as at the
date hereof:

3.1   Representations and Warranties in the Credit Agreement.

      The  representations  and  warranties  of  the  Debtor  set  forth  in the
Guarantee are true and correct in all material respects.

3.2   French Name.

      The Debtor's French name is Corporation  Mitel  Networks;  the Debtor does
not have or use a combined French and English name.

3.3   Address of Debtor.

      The Debtor's chief executive  office located at 350 Legget Drive,  Ottawa,
Ontario, K2K 2W7.

3.4   Location of Collateral.

      With the  exception of  inventory in transit,  at least 95% (on a net book
value basis) of all tangible assets comprising the Collateral are situate in the
Province of Ontario.
<PAGE>
                                      -7-


3.5   Survival.

      The  representations  and  warranties  of the  Debtor  contained  in  this
Agreement  shall  survive  for so long as any of the  Obligations  shall  remain
unpaid  and,  notwithstanding  any  investigation  made by or on  behalf  of the
Secured  Party,  shall  continue in full force and effect for the benefit of the
Secured Party during such period.

4.    Covenants of the Debtor

      So  long  as  any of the  Obligations  shall  remain  unpaid,  the  Debtor
covenants and agrees as follows:

4.1   Maintain Collateral.

      The Debtor  shall keep all  Equipment  comprising  part of the  Collateral
(other than obsolete Equipment) in good order and repair, subject to normal wear
and tear,  and shall not use such  Equipment in violation of the  provisions  of
this Agreement or any other  agreement  between the Debtor and the Secured Party
relating to the Collateral or any policy  insuring  Collateral or any applicable
statute, law, by-law, rule, regulation or ordinance.

4.2   No Accessions.

      The Debtor shall prevent any  Collateral,  except  Inventory of the Debtor
sold or leased as  permitted  hereby,  from being or  becoming an  accession  to
property not covered by this Agreement.

4.3   Delivery of Documents.

      The Debtor shall  deliver to the Secured  Party from time to time promptly
upon request:

      (a)   any Documents of Title,  Instruments,  Securities  and Chattel Paper
            constituting, representing or relating to Collateral;

      (b)   all  statements  of account,  bills,  invoices  and books of account
            relating   to   Accounts   and  all   records,   ledgers,   reports,
            correspondence,  schedules,  documents,  statements, lists and other
            writings  relating to the  Collateral for the purpose of inspecting,
            auditing or copying the same;

      (c)   all policies and  certificates of insurance  relating to Collateral;
            and

      (d)   such  information  concerning  the  Collateral,  the  Debtor and its
            business and affairs as the Secured Party may reasonably request.
<PAGE>
                                      -8-


4.4   Security in the Premises.

      The  Debtor  agrees  to do all such  acts  and  things  as are  reasonably
necessary to mortgage and sublet the Debtor's  interest in any location at which
any  Collateral  is  situate  and/or  its  lease of any  location  at which  the
Collateral is situate, as applicable, to the Secured Party.

4.5   Change of Name.

      The  Debtor  shall  not  change  its name or add any new  fictitious  name
without  providing  at least ten business  days' notice to the Secured  Party of
such change or addition.  The Debtor shall not change its business  structure or
identity except in accordance with the Loan Agreement and/or the Guarantee.

4.6   Creating and Preserving the Security Interest.

      The Debtor shall,  from time to time at the request of the Secured  Party,
make  and do all  such  acts  and  things  and  execute  and  deliver  all  such
instruments, agreements, financing statements and documents as the Secured Party
reasonably requests by notice in writing given to the Debtor in order to create,
preserve,  perfect,  validate or  otherwise  protect the Security  Interest,  to
enable the  Secured  Party to  exercise  and  enforce  its  rights and  remedies
hereunder  and  generally  to carry  out the  provisions  and  purposes  of this
Agreement and, for greater certainty, the Debtor shall, from time to time at the
request of the Secured Party, execute a power of attorney in such form as may be
reasonably  satisfactory  to the Secured  Party and as  contemplated  in Section
12.4.

4.7   Restrictions on Dealings with Collateral.

      Except as provided in Section  4.8,  the Debtor  agrees that it shall not,
without the prior written consent of the Secured Party:

      (a)   sell,  assign,  transfer,  exchange,  lease,  consign  or  otherwise
            dispose of any Collateral;

      (b)   locate any Collateral in any province not set out in Section 3.3 if,
            as a result,  the  statement  made in Section 3.4 would no longer be
            true; or

      (c)   create,  assume or suffer  to exist  any Liens  upon the  Collateral
            ranking or  purporting to rank in priority to or pari passu with the
            Security Interest other than Permitted Encumbrances;

provided  that no provision  hereof shall be  construed  as a  subordination  or
postponement of the Security Interest to or in favour of any other Lien, whether
or not  such  Lien is a  Permitted  Encumbrance.

<PAGE>
                                      -9-


4.8   Permitted Dealings with Collateral.

      Except as provided in the Loan Agreement and/or the Guarantee,  unless and
until an Event of Default  has  occurred  and is  continuing,  the  Debtor  may,
without the consent of the Secured Party:

      (a)   sell,  assign,  transfer,  exchange,  lease,  consign  or  otherwise
            dispose of Inventory in the ordinary course of its business;

      (b)   sell or otherwise  dispose of such part of its Equipment which is no
            longer  necessary or useful in connection with its business or which
            has become worn out or obsolete  or  unsuitable  for the purpose for
            which it was intended;

      (c)   subject to Section 6.1,  collect  accounts in the ordinary course of
            its business; and

      (d)   commit any other acts  permitted  by the Loan  Agreement  and/or the
            Guarantee.

4.9   Verification of Collateral.

      The  Secured  Party shall have the right at any time and from time to time
to verify the existence and state of the Collateral in any reasonable manner the
Secured  Party may consider  appropriate,  and the Debtor  agrees to furnish all
assistance and information and to perform all such acts as the Secured Party may
reasonably request in connection  therewith and for such purpose to grant to the
Secured Party or its agents access to all places where Collateral may be located
and to all premises occupied by the Debtor.

5.    Securities

5.1   Registration in Secured Party's Name.

      If the Collateral at any time includes Securities, upon the occurrence and
during the continuance of an Event of Default, the Debtor authorizes the Secured
Party to transfer  the same or any part thereof into its own name or that of its
nominee so that the Secured Party or its nominee may appear as the sole owner of
record thereof.

5.2   Voting and Other Rights.

      (a)   So long as no Event of Default has occurred and is continuing:

            (i)   the Debtor may exercise all rights to vote and to exercise all
                  rights of conversion  or  retraction  or other similar  rights
                  with  respect  to  any  Securities;   provided  that  no  such
                  exercise, in the reasonable opinion of the Secured Party, will
                  have an adverse effect on the value of such Securities and all
                  expenses of the Secured  Party in  connection  therewith  have
                  been paid in full and provided further that, upon the exercise
                  of the conversion  right or retraction  right,  the additional
                  Securities  resulting  therefrom shall be paid or delivered to
                  the Secured Party; and
<PAGE>
                                      -10-


            (ii)  the Debtor shall be entitled to receive all dividends (whether
                  paid or distributed in cash, securities or other property) and
                  interest  declared and paid or  distributed  in respect of the
                  Securities, and such dividends and interest as may be received
                  by the Secured Party shall be applied  against the Obligations
                  or, at the Debtor's request  (provided no Event of Default has
                  occurred and is continuing) shall be paid to the Debtor.  Such
                  dividends  and  interest  shall  cease  to be  subject  to the
                  Security  Interest if paid or  distributed to the Debtor prior
                  to the occurrence of an Event of Default but not otherwise.

      (b)   Upon  the   occurrence  of  an  Event  of  Default  and  during  the
            continuance thereof:

            (i)   no proxy  granted by the  Secured  Party or its nominee to the
                  Debtor or its nominee pursuant to Section 5.2 shall thereafter
                  be effective;

            (ii)  the  Debtor  shall  have no  rights  to vote or take any other
                  action with respect to any Securities;

            (iii) the Secured Party may, but shall not be obligated to, vote and
                  take all other action with respect to any Securities; and

            (iv)  the Debtor shall cease to be entitled to receive any dividends
                  or interest,  whether  declared or payable before or after the
                  occurrence  of  an  Event  of  Default,   in  respect  of  the
                  Securities.

6.    Collection of Proceeds and Accounts

6.1   Control of Proceeds and Accounts.

      After the  occurrence  of an Event of Default  and during the  continuance
thereof,  the Secured Party may, acting reasonably,  at any time take control of
any Proceeds and Accounts,  and the Secured Party may notify, acting reasonably,
any account debtor of the Debtor or any obligor under any instrument held by the
Debtor  or the  Secured  Party in  satisfaction  pro  tanto  of the  Obligations
hereunder  to make  payment  directly  to the Secured  Party  whether or not the
Debtor has theretofore been making  collections on the Collateral.  From time to
time  after the  occurrence  of an Event of Default  and during the  continuance
thereof and upon the  reasonable  request in writing of the Secured  Party,  the
Debtor shall also so notify such persons to make payment directly to the Secured
Party and the Secured Party may, in its  discretion,  apply such in satisfaction
pro  tanto of the  Obligations  or hold  such  payments  as  further  Collateral
hereunder.

6.2   Proceeds and Accounts Received in Trust.

      After the  occurrence  of an Event of Default  and during the  continuance
thereof,  if the Debtor  shall  collect or receive any Accounts or shall be paid
for any of the other  Collateral  or shall  receive any  Proceeds,  all money so
collected  or received by the Debtor  shall be received by the Debtor as trustee
for the Secured  Party and shall be paid to the  Secured  Party  forthwith  upon

<PAGE>
                                      -11-


reasonable  demand and the Secured Party may, in its  discretion,  apply such in
satisfaction  pro tanto of the  Obligations  or hold such  payments  as  further
Collateral hereunder.

7.    Default and the Secured Party's Remedies

7.1   Remedies Upon Default.

      Upon and after the  occurrence  of an Event of  Default  that has not been
either cured or waived in accordance  with the  provisions of the Loan Agreement
prior to the  exercise  by the Secured  Party of any of its rights and  remedies
hereinafter  set  forth  in this  Section  7.1,  (i) any or all of the  security
granted  hereby  will,  at the option of the Secured  Party  become  immediately
enforceable  and (ii) in addition to any other right or remedy  provided by law,
the Secured Party will have the rights and remedies set out below,  all of which
rights and remedies will be enforceable successively, concurrently or both::

      (a)   declare any or all of the Obligations not then due and payable to be
            immediately  due and payable by giving notice in writing  thereof to
            MNL and, in such event,  such  Obligations  shall be due and payable
            forthwith by MNL to the Secured Party;

      (b)   commence  legal  action to  enforce  payment or  performance  of the
            Obligations;

      (c)   require  the  Debtor,  at the  Debtor's  expense,  to  assemble  the
            Collateral  at a place or places  designated  by  notice in  writing
            given by the Secured  Party to the Debtor,  and the Debtor agrees to
            so assemble the Collateral;

      (d)   require the Debtor,  by notice in writing given by the Secured Party
            to the Debtor,  to disclose  to the  Secured  Party the  location or
            locations  of the  Collateral  and the  Debtor  agrees  to make such
            disclosure when so required by the Secured Party;

      (e)   without legal  process,  enter any premises where the Collateral may
            be situated  and take  possession  of the  Collateral  by any method
            permitted by law;

      (f)   repair,  process,  complete,  modify  or  otherwise  deal  with  the
            Collateral  and  prepare  for  the  disposition  of the  Collateral,
            whether on the premises of the Debtor or otherwise and in connection
            with any such action  utilize any of the Debtor's  property  without
            charge;

      (g)   dispose  of the  Collateral  by  private  or public  sale,  lease or
            otherwise  upon such terms and  conditions  as the Secured Party may
            determine and whether or not the Secured Party has taken  possession
            of the Collateral;

      (h)   carry on all or any part of the business or businesses of the Debtor
            and, to the  exclusion  of all others  including  the Debtor,  enter
            upon,  occupy and, subject to any requirements of law and subject to
            any  leases  or  agreements  then  in  place,  use all or any of the
            premises,  buildings,  plant,  undertaking and other property of, or
            used by, the Debtor for such time and in such  manner as the Secured
            Party sees fit, free of charge, and except to the extent required by
            law,  the  Secured  Party  shall

<PAGE>
                                      -12-


            not be liable to the Debtor for any act,  omission or  negligence in
            so doing or for any rent, charges,  depreciation or damages or other
            amount incurred in connection therewith or resulting therefrom;

      (i)   file such proofs of claim or other  documents as may be necessary or
            desirable  to have its claim lodged in any  bankruptcy,  winding-up,
            liquidation,   dissolution  or  other   proceedings   (voluntary  or
            otherwise) relating to the Debtor;

      (j)   borrow  money for the  purpose of  carrying  on the  business of the
            Debtor or for the  maintenance,  preservation  or  protection of the
            Collateral and mortgage, charge, pledge or grant a security interest
            in  the  Collateral,  whether  or not in  priority  to the  Security
            Interest  hereby  created and  granted,  to secure  repayment of any
            money so borrowed;

      (k)   where the  Collateral  has been  disposed of by the Secured Party as
            provided in Section 7.1(g), commence legal action against the Debtor
            for the Deficiency, if any;

      (l)   where the Secured Party has taken  possession  of the  Collateral as
            herein provided,  retain the Collateral  irrevocably,  to the extent
            not prohibited by law, by giving notice thereof to the Debtor and to
            any other  persons  required  by law in the manner  provided  by law
            provided that such retention  reduces the amount of the  Obligations
            by  an  amount  equal  to  the  fair  market  value,  as  reasonably
            determined by the Secured Party of the Collateral so retained;

      (m)   appoint,  by an  instrument  in writing  delivered to the Debtor,  a
            receiver,  manager  or a receiver  and  manager  (a  "Receiver")  to
            collect  the  Proceeds,  and remove any  Receiver so  appointed  and
            appoint another or others in its stead, or institute  proceedings in
            any  court  of  competent  jurisdiction  for  the  appointment  of a
            Receiver, it being understood and agreed that:

            (i)   the  Secured   Party  may  appoint  any  person  as  Receiver,
                  including an officer or employee of the Secured Party;

            (ii)  such  appointment  may be made at any  time  after an Event of
                  Default  either  before or after the Secured  Party shall have
                  taken possession of the Collateral;

            (iii) the  Secured  Party may from  time to time fix the  reasonable
                  remuneration  of the Receiver  and direct the payment  thereof
                  out of the Collateral or Proceeds; and

            (iv)  the Receiver shall be deemed to be the agent of the Debtor for
                  all purposes  and, for greater  certainty,  the Secured  Party
                  shall not be, in any way, responsible for any actions, whether
                  wilful,  negligent  or  otherwise,  of any  Receiver,  and the
                  Debtor  hereby  agrees  to  indemnify  and save  harmless  the
                  Secured  Party from and against  any and all claims,  demands,
                  actions,

<PAGE>
                                      -13-


                  costs,  damages,  expenses or payments which the Secured Party
                  may hereafter suffer,  incur or be required to pay as a result
                  of, in whole or in part,  any action  taken by the Receiver or
                  any failure of the Receiver to do any act or thing;

      (n)   pay or  discharge  any Lien  claimed by any  person  and  reasonably
            established  to  the  satisfaction  of  the  Secured  Party  in  the
            Collateral and the amount so paid shall be added to the  Obligations
            and shall bear interest  calculated  from the date of payment at the
            Rate until payment thereof; and

      (o)   take any other  action,  suit,  remedy or  proceeding  authorized or
            permitted by this Agreement, the Act or by law or equity.

7.2   Acting in Accordance with Commercial Practice.

      In enforcing its rights hereunder,  the Secured Party shall be required to
act at least to the standards which are consistent with the commercial practices
of a person  carrying  on a  business  in a  distress,  default  or  liquidation
situation.

7.3   Sale of Collateral.

      The  Debtor  and the  Secured  Party  acknowledge  and agree that any sale
referred to in Section  7.1(g) may be either a sale of all or any portion of the
Collateral and may be by way of public auction,  public tender, private contract
or otherwise  without notice,  advertisement or any other  formality,  except as
required  by law,  all of which are  hereby  waived by the  Debtor to the extent
permitted by law. To the extent not prohibited by law, any such sale may be made
with or without any special condition as to the upset price,  reserve bid, title
or evidence of title or other matter and from time to time as the Secured  Party
in its sole discretion thinks fit with power to vary or rescind any such sale or
buy in at any public sale and resell.  The Secured Party may sell the Collateral
for a  consideration  payable  by  instalments  either  with or  without  taking
security  for the  payment of such  instalments  and may make and deliver to any
purchaser thereof good and sufficient  deeds,  assurances and conveyances of the
Collateral and give receipts for the purchase money,  and any such sale shall be
a  perpetual  bar,  both at law and in equity,  against the Debtor and all those
claiming an interest in the Collateral by, from, through or under the Debtor.

7.4   Reference to Secured Party Includes Receiver.

      For the purposes of Sections 7.1, 7.2 and 7.3, a reference to "the Secured
Party" shall, where the context permits, include any Receiver.

7.5   Payment of Expenses.

      The amount of the  Reasonable  Expenses shall be paid by the Debtor to the
Secured Party from time to time forthwith  after demand therefor is given by the
Secured Party to the Debtor,  together with interest thereon calculated from the
date of such  demand  at the  Rate,  and  payment  of such  Reasonable  Expenses
together with such interest shall be secured by the Security Interest.
<PAGE>
                                      -14-


7.6   Payment of Deficiency.

      Where the Collateral has been disposed of by the Secured Party as provided
herein, the Deficiency, if any, shall be paid by the Debtor to the Secured Party
in  accordance  with,  and upon the  terms  and  conditions  contained  in,  the
Guarantee,  together  with  interest  thereon  calculated  from the date of such
demand  at the  Rate,  and the  payment  of the  Deficiency  together  with such
interest shall be secured by the Security Interest.

7.7   Rights and Remedies are Not Mutually Exclusive.

      To the fullest  extent  permitted by law, the Secured  Party's  rights and
remedies,  whether provided for in this Agreement or otherwise, are not mutually
exclusive  and  are  cumulative  and  not   alternative  and  may  be  exercised
independently or in any combination.

7.8   No Obligation to Enforce.

      The  Secured  Party  shall  not be under any  obligation  to, or liable or
accountable   for  any  failure  to,  enforce  payment  or  performance  of  the
Obligations  or to  seize,  realize,  take  possession  of  or  dispose  of  the
Collateral  and shall not be under any obligation to institute  proceedings  for
any such purpose.

8.    Possession of Collateral by the Secured Party

8.1   Possession of Collateral.

      Where any Collateral is in the possession of the Secured Party:

      (a)   the Secured Party may, at any time  following  the  occurrence of an
            Event of Default which is  continuing,  grant or otherwise  create a
            security interest in such Collateral upon any terms,  whether or not
            such terms impair the Debtor's right to redeem such Collateral; and

      (b)   the Secured Party may, at any time  following  the  occurrence of an
            Event of Default  which is  continuing,  use such  Collateral in any
            manner and to such extent as it deems necessary or desirable.

9.    Fixtures

9.1   Fixtures.

      The Debtor  acknowledges  and agrees  that no  Collateral  acquired by the
Debtor after the date hereof shall become  affixed to any real  property  except
with the prior written consent of the Secured Party.
<PAGE>
                                      -15-


10.   Continuing Obligations

10.1  Continuing Obligations.

      Notwithstanding  any  other  term or  condition  of this  Agreement,  this
Agreement  shall  not  relieve  the  Debtor  or any  other  party  to any of the
Collateral from the observance or performance of any term,  covenant,  condition
or  agreement  on its part to be observed or  performed  thereunder  or from any
liability to any other party or parties  thereto or impose any obligation on the
Secured  Party to observe  or perform  any such  term,  covenant,  condition  or
agreement  to be so  observed  or  performed,  and the Debtor  hereby  agrees to
indemnify  and hold  harmless  the  Secured  Party from and  against any and all
losses,  liabilities (including  liabilities for penalties),  costs and expenses
which may be  incurred by the Secured  Party under the  Collateral  and from all
claims, demands,  actions, suits and judgments which may be asserted against the
Secured Party by reason of any alleged  obligation or undertaking on its part to
observe,  perform  or  discharge  any of the  terms,  covenants  and  agreements
contained in the Collateral.  The Secured Party may, at its option,  perform any
term, covenant, condition or agreement on the part of the Debtor to be performed
under or in respect of the Collateral  (and/or  enforce any of the rights of the
Debtor thereunder) without thereby waiving any rights to enforce this Agreement.
Nothing contained in this Section 10.1 shall be deemed to constitute the Secured
Party the  mortgagee in  possession  of the  Collateral  or the lessee under any
lease or agreement  to lease unless the Secured  Party has agreed to become such
mortgagee in possession or to be a lessee.

11.   Acknowledgement by the Debtor

11.1  Acknowledgements.

      The Debtor:

      (a)   acknowledges receipt of a true copy of this Agreement;

      (b)   acknowledges receipt of a copy of the financing statement registered
            under the Act evidencing the Security Interest; and

      (c)   acknowledges  and agrees that this  Agreement may be assigned by the
            Secured Party to any person, as the Secured Party may determine and,
            in such event,  such  person  shall be entitled to all of the rights
            and remedies of the Secured Party as set forth in this  Agreement or
            otherwise  and the Secured  Party shall be released  and  discharged
            from its further  obligations  hereunder upon the assumption of same
            by the assignee.

12.   Miscellaneous

12.1  Notice.

      (a)   Any  notice,  demand,  direction  or other  instrument  required  or
            permitted to be given hereunder or under the Act shall be in writing
            and shall be given by

<PAGE>
                                      -16-


            overnight  delivery service,  by hand delivery or by telecopy to the
            addressee as follows:

            (i)   if to the Secured Party:

                  Export Development Canada
                  151 O'Connor Street
                  Ottawa, Ontario K1A 1K3

                  Attention: Loans Services
                  Facsimile: (613) 598-2514

            (ii)  if to the Debtor:

                  Mitel Networks Corporation
                  350 Legget Drive
                  Ottawa, ON  K2K 2W7

                  Attention: Treasurer
                  Facsimile: (613) 591-2320

      (b)   If any  such  notice,  demand,  direction  or  other  instrument  is
            delivered or transmitted on a day other than a Business Day or after
            3:00 p.m. on any Business Day, the same shall be deemed to have been
            effectively given and received on the next following Business Day.

      (c)   Either party may change its address for service from time to time by
            notice given in accordance with the foregoing.

12.2  Waiver.

      (a) The Secured  Party may waive,  in whole or in part,  any breach by the
Debtor of any of the provisions of this Agreement, any default by MNL and/or the
Debtor in the payment or  performance  of any of the  Obligations  or any of its
rights and remedies, whether provided for herein or otherwise,  provided that no
such waiver shall be effective  unless given by the Secured  Party to the Debtor
in writing.

      (b) No waiver given in accordance  with Section  12.2(a) shall be a waiver
of any other or subsequent breach by the Debtor of any of the provisions of this
Agreement,  of any other or  subsequent  default by MNL and/or the Debtor in the
payment  or  performance  of any of the  Obligations  or any of the  rights  and
remedies of the Secured Party, whether provided for herein or otherwise.

      (c) The Secured Party may, at any time,  grant extensions of time or other
indulgences to, accept compositions from or grant releases and discharges to the
Debtor in respect of the  Collateral  or otherwise  deal with the Debtor or with
the Collateral and other security held by the Secured Party,  all as the Secured
Party may see fit, and the Debtor agrees that any such act or any failure by the
Secured  Party to exercise any of its rights or remedies,  whether  provided for
herein

<PAGE>
                                      -17-


or  otherwise,  shall in no way affect or impair the  Security  Interest  or the
rights and remedies of the Secured Party, whether provided for in this Agreement
or otherwise.

12.3  Effective Date and Termination.

      (a)  This  Agreement  shall  become  effective   according  to  its  terms
immediately upon the execution hereof by the Secured Party and the Debtor.  This
Agreement and the Security  Interest are in addition to and not in  substitution
for any other  agreement  made  between the Secured  Party and the Debtor or any
other  security  granted by the Debtor to the Secured  Party,  whether before or
after the execution of this Agreement.

      (b) This Agreement may be terminated by written agreement made between the
Secured  Party and the Debtor or by notice in writing given by the Debtor to the
Secured Party at any time when all of the Obligations  have been fully satisfied
and performed by the Debtor.  Upon  termination  of this Agreement in accordance
with the  provisions of this Section  12.3(b),  the Secured Party shall,  at the
request  and  expense  of the  Debtor,  make and do all such acts and things and
execute and deliver all such financing statements,  instruments,  agreements and
documents as the Debtor  considers  necessary  or  desirable  to  discharge  the
Security  Interest,  to release and  discharge the  Collateral  therefrom and to
record such release and discharge in all appropriate offices of public record.

12.4  Power of Attorney.

      The Debtor  hereby  irrevocably  appoints  the Secured  Party the true and
lawful attorney for the Debtor, with full power of substitution,  in the name of
the Debtor, the Secured Party or otherwise, for the purposes of carrying out the
terms of this Agreement,  but at such Debtor's expense,  to the extent permitted
by law to  exercise,  at any time after any Event of Default has occurred and is
continuing, any or all of the following powers with respect to any or all of the
Collateral  (which powers shall be in addition and  supplemental  to any powers,
rights and remedies of the Secured Party described herein):

      (a)   to demand,  sue for and  collect any and all moneys due or to become
            due upon or by virtue thereof; and

      (b)   to receive,  take, endorse,  assign and deliver any and all cheques,
            notes,  drafts,  documents and other  negotiable and  non-negotiable
            instruments and chattel paper taken or received by the Secured Party
            in connection therewith; and

      (c)   to settle,  compromise,  discharge,  extend, compound,  prosecute or
            defend any action or proceeding with respect thereto; and

      (d)   to sell, transfer,  assign or otherwise deal in or with same, or the
            proceeds thereof,  or the related goods securing the Collateral,  as
            fully and  effectually  as if the  Secured  Party were the  absolute
            owner thereof; and

      (e)   to extend the time of payment of any or all  thereof and to make any
            allowance and other adjustments with reference thereto; and
<PAGE>
                                      -18-


      (f)   to  discharge  any  taxes,   liens,   security  interests  or  other
            encumbrances at any time placed thereon;  provided, that the Secured
            Party  shall  give the  Debtor  not less than ten (10)  days'  prior
            written  notice of the time and place of any sale or other  intended
            disposition of any of the Collateral, except any Collateral which is
            perishable or threatens to decline speedily in value or is of a type
            customarily sold on a recognized market.

12.5  Registrations.

      The Debtor  will,  from time to time at the request of the Secured  Party,
promptly effect all registrations, filings, recordings and all re-registrations,
re-filings and re-recordings of or in respect of this Agreement and the Security
Interest in such offices of public  record and at such times as may be necessary
or  of  advantage  in  perfecting,  maintaining  and  protecting  the  validity,
effectiveness and priority hereof and/or of the Security Interest.

12.6  Power of Attorney.

      The Debtor hereby  irrevocably  constitutes and appoints the Secured Party
and each of its officers holding office from time to time as the true and lawful
attorney of the Debtor with power of  substitution  in the name of the Debtor to
do any and all such  acts and  things  or  execute  and  deliver  all  documents
described in Section 12.5 in the event the Debtor refuses to, or fails timely to
execute and deliver any of the  documents  described  in Section  12.5,  and the
Debtor hereby  ratifies and agrees to ratify all acts of any such attorney taken
or done in accordance  with this Section 12.6.  This power of attorney shall not
be revoked or terminated by any act or thing other than the  termination of this
Agreement in accordance with Section 12.3(b).

12.7  Application of Payments.

      Subject to the provisions of the Loan Agreement and the Guarantee, any and
all  payments  made  by the  Debtor  to the  Secured  Party  in  respect  of the
Obligations  from time to time and any and all moneys  realized  by the  Secured
Party whether hereunder or otherwise may be applied by the Secured Party to such
part or  parts  of the  Obligations  as the  Secured  Party  shall  in its  sole
discretion determine. The Secured Party shall at all times and from time to time
have the right to change any application so made.

12.8  Notice of Loan Agreement.

      This Agreement has been executed and delivered  pursuant to the provisions
of the Loan  Agreement,  and  notice  of the terms  and  conditions  of the Loan
Agreement,  including,  respectively,  the  covenants of MNL therein,  is hereby
acknowledged by the Debtor.

12.9  Conflict between Documents.

      This  Agreement  is  subject  to  terms  of the  Loan  Agreement  and  the
Guarantee.  In the event of any conflict between the terms of this Agreement and
the Loan Agreement or the Guarantee,  the applicable terms of the Loan Agreement
and the Guarantee shall govern.
<PAGE>
                                      -19-


12.10 Execution in Counterparts.

      This Agreement may be executed in counterparts and by each party hereto in
separate  documents,  each of which  when so  executed  shall be deemed to be an
original and all of which when taken together shall  constitute one and the same
agreement.

12.11 Delivery by Facsimile.

      Any delivery of an executed  copy of this  Agreement by way of telecopy or
facsimile shall constitute  delivery hereof,  provided that any party delivering
by way of telecopier  or facsimile  shall,  as soon as  reasonably  practicable,
deliver the original executed copy to the other party.

      IN WITNESS WHEREOF the parties have executed this Agreement.

                                       EXPORT DEVELOPMENT CANADA

                                       by
                                              ----------------------------------
                                              Name:
                                              Title:

                                              ----------------------------------
                                              Name:
                                              Title:

                                       MITEL NETWORKS CORPORATION

                                       by
                                              ----------------------------------
                                              Name:
                                              Title:

                                              ----------------------------------
                                              Name:
                                              Title: