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                                                                     EXHIBIT 2.7

                                                                  EXECUTION COPY

                           GENERAL SECURITY AGREEMENT

              THIS AGREEMENT made as of the 27th day of April, 2005.

BETWEEN:

                              HIGHBRIDGE INTERNATIONAL LLC, a limited liability
                              company formed under the laws of the Cayman
                              Islands, in its capacity as collateral agent for
                              itself as a holder and other holders of the Notes
                              (as defined herein),

                              (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 the senior secured convertible notes (as
amended, restated or supplemented from time to time the "NOTES"), issued by the
Debtor pursuant to a Securities Purchase Agreement dated the date hereof by and
among the Debtor and the buyers party thereto (the "SECURITIES PURCHASE
AGREEMENT"), the Debtor is indebted to the holders (the "HOLDERS") from time to
time of the Notes;

            AND WHEREAS as security for all amounts owing at any time and from
time to time by the Debtor pursuant to or by virtue of the Notes, the Debtor has
agreed to execute this Agreement in favour of the Secured Party.

            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:

                                    ARTICLE 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:

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                                      -2-

      (a)   "ACCOUNTS" means all 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 the Debtor
            to customers or other Persons 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 Export Development
            Canada;

      (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 maybe 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 or floating
            charge 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 but including,
            without in any way limiting the generality of the foregoing, all
            Equipment, fixtures, computer hardware and software, Inventory,
            Goods, Instruments, Negotiable Collateral, 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, including all
            intellectual property listed in Schedule "A" hereto 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)   "COLLATERAL AGENCY AGREEMENT" means the collateral agency agreement
            dated the date hereof between, among others, Highbridge
            International LLC and the Debtor;

      (f)   "CONTRACTUAL RIGHTS" has the meaning given to it in Section 2.4;

      (g)   "DEFICIENCY" means, at any time, the difference, if any, between:

            (i)   the aggregate of:

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

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

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            (ii)  the proceeds of disposition received by the Secured Party from
                  a disposition of the Collateral in accordance with Section 7.
                  1(g);

      (h)   "EVENT OF DEFAULT" has the meaning given to it in the Notes;

      (i)   "INTEREST RATE" has the meaning given to it in the Notes;

      (j)   "LIEN" has the meaning given to it in the Notes;

      (k)   "NEGOTIABLE COLLATERAL" all shares, shares, warrants, deeds,
            debentures, debenture stock, notes, bonds, bills of exchange and all
            other documents, whether now owned or hereafter acquired by the
            Debtor, certificated or uncertificated in form, which constitute
            evidence of a share, participation or other equity interest of the
            Debtor in property or in an enterprise, or which constitute evidence
            of an obligation of the issuer thereof;

      (l)   "OBLIGATIONS" means all indebtedness, liabilities and obligations
            (whether direct, indirect, absolute, contingent or otherwise and
            whether in respect of principal or interest thereon) of the Debtor
            to the Secured Party or the Holders existing, from time to time, and
            arising pursuant to the Notes, the Securities Purchase Agreement,
            the Collateral Agency Agreement, the Registration Rights Agreement
            and the Security Documents (each as defined in the Securities
            Purchase Agreement);

      (m)   "PERMITTED LIENS" has the meaning given to it in the Notes;

      (n)   "PERSON" has the meaning given to it in the Notes;

      (o)   "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;

      (p)   "REASONABLE EXPENSES" means any and all reasonable expenses incurred
            from time to time by the Secured Party, the Holders, or any Receiver
            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

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                                      -4-

            payment of taxes and other charges incurred in retaking, holding,
            repairing, processing and preparing for disposition and disposing of
            the Collateral;

      (q)   "RECEIVER" has the meaning attributed thereto in Section 7.1 (m);

      (r)   "SECURITY INTEREST" has the meaning given to it in Section 2.1; and

      (s)   "TECHNOLOGY PARTNERSHIP 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, as amended, restated, supplemented and modified
            from time to time.

      (t)   "TPCA INTELLECTUAL PROPERTY" means Intellectual Property (as defined
            in the Technology Partnership Canada Agreement).

1.2 NUMBER AND GENDER

            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.

1.3 CURRENCY

            All monetary amounts in this Agreement refer to the lawful currency
of Canada.

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

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                                      -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.

                                   ARTICLE 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 the Debtor of the Obligations, the Debtor
hereby grants to the Secured Party, as collateral agent for and on behalf of the
Holders, a security interest and floating charge (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 AND TPCA INTELLECTUAL PROPERTY

      (a)   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.

      (b)   The Security Interest hereby granted does not and shall not extend
            to, and Collateral shall not include TPCA Intellectual Property to
            the extent that the

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                                      -6-

            creation of the Security Interest herein would constitute a breach
            of the terms of or permit any Person to terminate the Technology
            Partnership Canada Agreement, but the Debtor shall hold its interest
            in such intellectual property in trust for the Secured Party.

      (c)   The Secured Party undertakes, that if required by Her Majesty the
            Queen in Right of Canada pursuant to the Technology Partnership
            Canada Agreement, the Secured Party shall promptly discharge any
            TPCA Intellectual Property registered with the Canadian Intellectual
            Property Office assigned to the Secured Party.

2.5 DELIVERY OF INSTRUMENTS, NEGOTIABLE COLLATERAL, ETC.

            Subject to section 4.3 in respect of Negotiable Collateral and
chattel paper, 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 Secured Party hereunder, Negotiable Collateral,
chattel paper, letters of credit and advances of credit 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 Negotiable Collateral, chattel paper 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 the Debtor 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 which shall nonetheless
be subject to the Security Interest) 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 the Notes and the
Securities Purchase Agreement, or, unless an Event of Default has occurred and
is continuing, 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.

                                    ARTICLE 3
                  REPRESENTATIONS AND WARRANTIES OF THE DEBTOR

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

3.1 FRENCH NAME

            The Debtor's French name is Corporation Mitel Networks.

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3.2 ADDRESS OF DEBTOR

            The Debtor's chief executive office and domicile (within the meaning
of the Civil Code of Quebec) is located at 350 Legget Drive, Ottawa, Ontario,
Canada K2K 2W7.

3.3 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.

3.4 INTELLECTUAL PROPERTY

            Schedule "A" to this Agreement lists all intellectual property owned
by or licensed (pursuant to a written license) by or to the Debtor that is
either registered or material to the business of the Debtor.

3.5 TECHNOLOGY PARTNERSHIP CANADA AGREEMENT

            No default or event of default has occurred and is continuing under
the terms of the Technology Partnership Canada Agreement. Debtor's obligations
thereunder are substantially complete, other than those obligations that survive
the expiration or termination of such agreement.

3.6 SURVIVAL

            The representations and warranties of the Debtor contained in this
Agreement shall survive until the termination of this Agreement in accordance
with Section 12.3 hereof and, notwithstanding any investigation made by or on
behalf of the Secured Party or the Holders, shall continue in full force and
effect for the benefit of the Secured Party until such date.

                                    ARTICLE 4
                            COVENANTS OF THE DEBTOR

            Until the termination of this Agreement in accordance with Section
12.3 hereof, 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 the 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.

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                                      -8-

4.3 DELIVERY OF DOCUMENTS

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

      (a)   any Negotiable Collateral 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.

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' prior written notice to the
Secured Party of such change or addition and taking all actions necessary or
advisable to maintain the continuous validity, perfection and the same or better
priority of the Collateral Agent's security interest in the Collateral granted
or intended to be granted and agreed to hereby. The Debtor shall not change its
business structure or identity except in accordance with the Notes.

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

      (a)   The Debtor agrees that it shall not, without the prior written
            consent of the Secured Party, change the location of its chief
            executive office or domicile.

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4.8 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.

                                    ARTICLE 5
                              NEGOTIABLE COLLATERAL

5.1 REGISTRATION IN SECURED PARTY'S NAME

      If the Collateral at any time includes Negotiable Collateral, 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 Negotiable Collateral; provided that no
                  such exercise, in the reasonable opinion of the Secured Party,
                  will have an adverse effect on the value of such Negotiable
                  Collateral 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 Negotiable Collateral resulting therefrom shall
                  be paid or delivered to the Secured Party; and

            (ii)  the Debtor shall be entitled to receive all dividends (whether
                  paid or distributed in cash, Negotiable Collateral or other
                  property) and interest declared and paid or distributed in
                  respect of the Negotiable Collateral, and such dividends and
                  interest as may be received by the Secured Party 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 Negotiable Collateral;

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

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

                                    ARTICLE 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 Notes 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 security granted
hereby will, at the option of the Secured Party, become immediately enforceable;
and (ii) in addition to any 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
            the Debtor and, in such event, such Obligations shall be due and
            payable forthwith by the Debtor to the Secured Party or Holders, as
            applicable;

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                                      -11-

      (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 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, insolvency,
            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;

      (1)   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

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                                      -12-

            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, interim 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, 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
            Interest Rate until payment thereof; and

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

7.2 ACTING IN A COMMERCIALLY REASONABLE MANNER

            In enforcing its rights hereunder, the Secured Party shall act in a
commercially reasonable manner.

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

<PAGE>

                                      -13-

other formality, except as required by law, all of which are hereby waived by
the Debtor to the extent permitted bylaw. 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 arty
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 and 7.2, 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 Interest Rate, and payment of such Reasonable
Expenses together with such interest shall be secured by the Security Interest.

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 Notes, together with interest thereon calculated from the date of such
demand at the Interest 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.

<PAGE>

                                      -14-

                                    ARTICLE 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.

                                    ARTICLE 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.

                                   ARTICLE 10
                              CONTINUING OBLIGATION

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 or the Holders 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 and the Holders from and
against any and all losses, liabilities (including liabilities for penalties),
costs and expenses which may be incurred by the Secured Party or the Holders
under the Collateral and from all claims, demands, actions, suits and judgments
which may be asserted against the Secured Party or the Holders by reason of any
alleged obligation or undertaking on their 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 or the Holders 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.

<PAGE>

                                      -15-

                                   ARTICLE 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)   subject to the provisions of the Notes, 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.

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

            (i)   if to the Secured Party:

                  Highbridge International LLC
                  c/o Highbridge Capital Management, LLC
                  9 West 57th  Street, 27th Floor
                  New York, New York 10019
                  USA

                  Attention:      Ari J. Storch / Adam J. Chill
                  Facsimile:      (212)751-0755

            (ii)  if to the Debtor:

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

                  Attention:       Treasurer
                  Facsimile:      (613) 591-2320

<PAGE>

                                      -16-

      (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., Ottawa time, 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)   Subject to the terms of the Notes, 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 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
            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 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 is a continuing agreement, and shall not terminate or
            be discharged until the earlier of (a) performance and indefeasible
            payment in full of all of the Obligations and (b) the date on which
            a Qualified IPO (as defined in the Notes) is consummated. 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

<PAGE>

                                      -17-

            the Debtor consider necessary or desirable to discharge the Security
            Interest, to release and discharge the Collateral therefrom and to
            record such release and discharge in 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;

      (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;

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

      (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;

      (e)   to extend me time of payment of any or all thereof and to make any
            allowance and other adjustments with reference thereto; and

      (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 fifteen (15) 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.

<PAGE>

                                      -18-

12.6 SPECIFIC 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 Notes, 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 SECURITIES PURCHASE AGREEMENT AND NOTES

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

12.9 CERTAIN PERMITTED LIENS

            As long as no Event of Default or no event which with the passage of
time or the giving of notice or both would become an Event of Default has
occurred and is continuing, the Collateral Agent, on its behalf and on behalf
of the Holders, hereby agrees to subordinate its security interest hereunder,
and under any other Security Document, to a Lien over cash collateral which is
permitted pursuant to part (18) of the definition of "Permitted Lien" in the
Notes with respect only to Indebtedness referred to in part (18) of the
definition of 'Permitted Indebtedness" in the Notes, as soon as practicable
after receipt from the Debtor of a request therefor together with an officer's
certificate stating that the Lien to be granted meets the requirements hereof,
together with such evidence supporting the officer's certificate as the
Collateral Agent may reasonably require.

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.

<PAGE>

                                      -19-

12.11 JURISDICTION; JURY TRIAL

            Each, party hereby irrevocably submits to the non-exclusive
jurisdiction of the courts sitting in each of the Province of Ontario and the
State of New York, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

12.12 DELIVERY BY FACSIMILE

            Any delivery of an executed copy of this Agreement by way of
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.

         [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

<PAGE>

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

                                     HIGHBRIDGE INTERNATIONAL LLC

                                     BY: HIGHBRIDGE CAPITAL
                                     MANAGEMENT, LLC

                                     By: /s/ Adam J. Chill
                                         -----------------------------
                                         Name: Adam J. Chill
                                         Title: Managing Director

                                     MITEL NETWORKS CORPORATION

                                     BY:
                                         -----------------------------
                                         Authorized Signing Officer

<PAGE>

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

                                     HIGHBRIDGE INTERNATIONAL LLC

                                     BY: HIGHBRIDGE CAPITAL
                                     MANAGEMENT, LLC

                                     By: _______________________________
                                         Name: Ari J. Storch
                                         Title: Managing Director

                                     MITEL NETWORKS CORPORATION

                                     BY: [ILLEGIBLE]
                                         -----------------------------
                                         Authorized Signing Officer

<PAGE>

                                  SCHEDULE "A"

                             INTELLECTUAL PROPERTY

Debtor shall provide a correct and complete list post-closing pursuant to an
undertaking in respect of certain transaction matters dated the date hereof.