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Exhibit
10.4
 CANADIAN SECURITY AGREEMENT
  February 14, 2006
  NORTEL NETWORKS LIMITED,
 NORTEL NETWORKS CORPORATION,
 SUBSIDIARY LIEN GRANTORS
  JPMORGAN CHASE BANK, N.A.,
  EXPORT DEVELOPMENT CANADA,




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TABLE OF CONTENTS
 PageSECTION
  1.      DEFINITIONS
    
    
    1SECTION   2.      GRANT OF TRANSACTION LIENS
    
    
    16SECTION   3.      GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
    
    
    18SECTION   4.      ADDITIONAL COVENANTS
    
    
    22SECTION   5.      RECORDABLE INTELLECTUAL PROPERTY
    
    
    24SECTION   6.      SECURITIES AND OTHER INVESTMENTS
    
    
    25SECTION   7.      CONTROLLED DEPOSIT ACCOUNTS. EACH LIEN GRANTOR COVENANTS AS FOLLOWS:
    
    
    29SECTION   8.      CASH COLLATERAL ACCOUNTS
    
    
    30SECTION
  9.      OPERATION OF CASH COLLATERAL ACCOUNTS; CARE AND USE OF COLLATERAL
    
    
    31SECTION 10.      TRANSFER OF RECORD OWNERSHIP
    
    
    32SECTION 11.      RIGHT TO VOTE SECURITIES
    
    
    32SECTION 12.      CERTAIN CASH DISTRIBUTIONS
    
    
    33SECTION 13.      REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT
    
    
    34SECTION 14.      APPLICATION OF PROCEEDS
    
    
    35SECTION 15.      FEES AND EXPENSES
    
    
    38SECTION 16.      AUTHORITY TO ADMINISTER COLLATERAL
    
    
    39SECTION 17.      LIMITATION ON DUTY IN RESPECT OF COLLATERAL
    
    
    40SECTION 18.      GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT
    
    
    40SECTION 19.      TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL
    
    
    43SECTION 20.      ADDITIONAL LIEN GRANTORS
    
    
    45SECTION 21.      ADDITIONAL SECURED OBLIGATIONS
    
    
    45SECTION 22.      NOTICES
    
    
    45SECTION 23.      NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE
    
    
    46SECTION 24.      SUCCESSORS AND ASSIGNS
    
    
    46SECTION 25.      AMENDMENTS AND WAIVERS
    
    
    46SECTION 26.      CHOICE OF LAW
    
    
    46SECTION 27.      JUDGMENT CURRENCY
    
    
    46SECTION 28.      INTEREST ACT
    
    
    47SECTION 29.      WAIVER OF JURY TRIAL
    
    
    47SECTION 30.      SEVERABILITY
    
    
    47




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SCHEDULES:Schedule 1
    
    Pledged Equity Interests Owned Directly by Lien GrantorsSchedule 2
    
    Other Pledged Securities and Other Investments Owned Directly by Lien GrantorsSchedule 3
    
    Principal U.S. Cash Management Accounts of Lien GrantorsEXHIBITS:Exhibit A
    
    Security Agreement SupplementExhibit B
    
    Copyright Security AgreementExhibit C
    
    Patent Security AgreementExhibit D
    
    Trademark Security AgreementExhibit E
    
    Design Security AgreementExhibit F
    
    Perfection CertificateExhibit G
    
    Securities Account Control AgreementExhibit H
    
    Issuer Control Account Agreement




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\

CANADIAN SECURITY AGREEMENT
 Effective Date NNL NNC
 NNI 2006 Credit
Agreement
   SECTION 1. DEFINITIONS.
 (a)
    
    Terms Defined in the PPSA. Terms defined in the PPSA and used herein shall,
unless otherwise defined herein, have the same meaning as ascribed to such term in the
PPSA, including Accessions, Chattel Paper, Document of Title, Goods,
Instruments, Money, Security, financing statement and financing change
statement. However, the term Goods when used herein shall not include consumer
goods as that term is defined in the PPSA.(b)
    
    Additional Definitions. The following additional terms, as used herein, have
the following meanings:
 1988 Indenture
 2023
Notes 7 8
 Accounts accounts
 1




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Additional Collateral Liens
 Bank Termination Date
 (i)
    
    all commitments to extend credit under the 2006 Credit
Agreement shall have expired or been terminated;(ii)
    
    all Tranche A Obligations that are Non-Contingent Obligations
(including without limitation principal of and interest on the Loans) shall
have been indefeasibly paid in full; and(iii)
    
    no Tranche A Obligation that is a Contingent Secured
Obligation shall remain outstanding, other than any Tranche A Obligation
arising under general indemnification provisions (such as those set forth in
Sections 8.03, 8.04 and 9.03 of the 2006 Credit Agreement) and the like, as to
which no claim has been asserted on or prior to such date.
 Bond Obligations
 Business Day
 Canadian Copyrights
 (i)
    
    all copyrights and intangibles of like nature under the laws of
Canada or any other country (other than the United States of America) (whether
or not the underlying works of authorship have been published) that any Lien
Grantor now or hereafter owns or uses, including:(ii)
    
    all registrations and recordings thereof, all copyrightable
works of authorship (whether or not published), and all applications for
copyrights under the laws of Canada or any other country, including all
registrations, recordings and applications in the Canadian Intellectual
Property Office or in any similar office or agency or in any other country or
any political subdivision thereof (other than the United States of America or
any political subdivision thereof), including those described in Schedule 1 to
any Copyright Security Agreement,(iii)
    
    all restorations, extensions or renewals of any of the
foregoing,
 2




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(iv)
    
    all claims for, and rights to sue for, past or future
infringements of any of the foregoing, and(v)
    
    income, royalties, damages and payments now or hereafter due or
payable with respect to any of the foregoing, including damages and payments
for past or future infringements thereof.
 Canadian Intellectual Property Filing
 Canadian Patents
 (i)
    
    all letters patent of invention issued by Canada or any other
country (other than the United States of America) and all applications for
letters patent and all registrations and recordings thereof pending before the
Canadian Intellectual Property Office including those described in Schedule 1
to any Patent Security Agreement or in any similar office or agency in any
other country,(ii)
    
    all reissues, divisions, continuations, continuations-in-part,
revisions and extensions of any of the foregoing,(iii)
    
    all claims for, and rights to sue for, past or future
infringements of any of the foregoing, and(iv)
    
    all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and
payments for past or future infringements thereof.
 Canadian Subsidiary
 Canadian Trademarks
 (i)
    
    all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos,
brand names, trade dress, prints and labels on which any of the foregoing have
appeared or appear, package and other designs, and all other source or business
identifiers, and all general intangibles of like nature, all registrations and
recordings thereof, and the rights in any of the foregoing which arise under
applicable law;
 3




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(ii)
    
    the goodwill of the business symbolized thereby or associated
with each of them;(iii)
    
    all registrations and applications in connection therewith,
including registrations, recordings and applications in the Canadian
Intellectual Property Office or in any similar office in any country (other
than the United States of America or any political subdivision thereof),
including those described in Schedule 1 to any Trademark Security Agreement;(iv)
    
    all extensions or renewals of any of the foregoing;(v)
    
    all claims for, and rights to sue for, past or future
infringements of any of the foregoing; and(vi)
    
    all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and
payments for past or future infringements thereof.
 Cash Collateral Accounts
 Cash Collateral Agreement
 Cash Distributions
 Collateral
 Collateral Accounts
 Collateral Agent
 Commercial Tort Claim
 Commodity Account
 4




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Commodity Account Control Agreement
 Commodity Contract
 Commodity Customer
 Commodity Intermediary
 Consolidated Subsidiary
 Contingent Secured Obligation
 Control
 Controlled Commodity Account
 Controlled Deposit Account
 Controlled Securities Account
 5




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Copyright License
 Copyright Security Agreement
 Credit Agreements
 Deposit Account
 Deposit Account Control Agreement
 Depositary Bank
 Designated Hedging Agreement
 Designs
 (i)
    
    all registrations and recordings thereof and all applications
in connection therewith including all registrations, recordings and
applications that have been or shall be made or filed in the Canadian
Intellectual Property Office,(ii)
    
    all records, reissues, extensions or renewals of any of the
foregoing,(iii)
    
    all claims for and rights to sue for, past or future
infringements of any of the foregoing, and
 6




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(iv)
    
    all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and
payments for past or future infringements thereof.
 Design License
 Design Security Agreement
 EDC
 EDC Support Facility provided that
 EDC Support Facility Obligations
 Effective Date
 Equipment
 Equity Interest
 7




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Event of Default
 Financing Lease
 Foreign Subsidiary
 GAAP
 Guarantee Agreement
 Hedging Agreement
 Hypothec
 Illiquid Collateral
 Indenture Trustee
 Intangibles
 Intellectual Property
 Intellectual Property Security Agreement
 Inventory
 8




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Issuer Control Agreement
 Lender
 Lien
 Lien Grantors
 Liquid Collateral
 Liquid Investment
 LLC Interest
 Loan
 Loan Documents
 Material Commercial Tort Claim
 Material Government Contract ,
 9




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Material Intellectual Property
 Material Recordable Intellectual Property
 NNC
 NNC Companies
 NNC Secured Obligations
 NNL
 NNL Secured Obligations
 Nominated Person
 Non-Contingent Secured Obligation
 Partnership Interest
 Patent License
 Patent Security Agreement
 Perfection Certificate
 10




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Permitted Liens
 Permitted Receivables Financing
 Person
 Pledged Pledged Equity Interest Pledged letter of credit
 Post-Petition Interest
 PPSA Personal Property Security Act Personal Property Security Act
 Proceeds
 Purchase Money Mortgage
 11




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provided that provided further
 Qualified Receivables Transaction
 Ratio
 Receivables Transaction
 Receiver
 Recordable Intellectual Property
  Related Transferred Rights
 12




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Required Secured Lenders provided
 Secured Agreement
 Secured Obligations
 Secured Parties
 Securities Account
 Securities Account Control Agreement
 Securities Intermediary
 13




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Security Entitlement
 Security Agreement Supplement
 Security Documents
 Specified Event of Default
 Subsidiary
 Subsidiary Lien Grantors
 Supporting Letter of Credit
 Supporting Obligation
 Trademark License
 Trademark Security Agreement
 Tranche A Commitment
 Tranche A Loan
 14




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Tranche A Note
 Tranche A Obligations
 Transaction Liens
 Transferred Receivables
 UCC provided that
 U.S. Copyrights
 U.S. Patents
 U.S. Security Agreement
 U.S. Subsidiary
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U.S. Trademarks
 Terms Generally. include includes including without limitation will shall herein hereof hereunder property
 SECTION 2. GRANT OF TRANSACTION LIENS.
 (a)
    
    Each Lien Grantor, in order to secure its Secured Obligations, grants to the
Collateral Agent for the equal and ratable benefit of the Secured Parties a continuing
security interest in all the following personal property,including all proceeds,
renewals, accretions and substitutions thereof, of such Lien Grantor, as the case may
be, whether now owned or existing or hereafter acquired or arising and regardless of
where located:
 (i) all Accounts;(ii) all Chattel Paper;
 16




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(iii)
    
    all deeds, documents, writings, papers, books of account and
other books relating to or being records of debts, Chattel Paper or Documents
of Title or by which such are or may hereafter be secured, evidenced,
acknowledged or made payable;(iv)
    
    all Documents of Title (whether negotiable or not);(v)
    
    all Equipment;(vi)
    
    all Goods (including all parts, accessories, attachments,
special tools, additions and accessions thereto);(vii)
    
    all Instruments;(viii)
    
    all Intangibles;(ix)
    
    all Inventory;(x)
    
    all Money;(xi)
    
    all Securities and other Equity Interests in other Persons;(xii)
    
    all books and records (including customer lists, credit files,
computer programs, printouts and other computer materials and records) of such
Lien Grantor pertaining to any of its Collateral;(xiii)
    
    such Lien Grantors ownership interest in and its cash, Securities and other
assets held in (1) its Cash Collateral Accounts and (2) its Deposit Accounts
from time to time; and(xiv)
    
    all Proceeds of the Collateral described in the foregoing
Section 2(a)(i) through Section 2(a)(xiii).
 provided that
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Exchange Act
  (b)
    
    With respect to each right to payment or performance included in the Collateral
from time to time, the Transaction Lien granted therein includes a continuing security
interest in any Supporting Obligation.(c)
    
    The Transaction Liens are granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of any Lien Grantor with respect to any of the
Collateral or any transaction in connection therewith.(d)
    
    If the Collateral is realized upon and the security interest in the Collateral
is not sufficient to satisfy all Secured Obligations, each Lien Grantor acknowledges
and agrees that, subject to the provisions of the PPSA, such Lien Grantor shall
continue to be liable for any Secured Obligations remaining outstanding and Collateral
Agent shall be entitled to pursue full payment thereof.(e)
    
    Each Lien Grantor and the Collateral Agent hereby acknowledge that value has
been given, such Lien Grantor has rights in the Collateral or, with respect to any
after acquired Collateral, will have rights in such Collateral when so acquired and
this Agreement constitutes a security agreement as that term is defined in the PPSA.
 SECTION 3. GENERAL REPRESENTATIONS WARRANTIES AND COVENANTS
  18




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(a)
    
    Each Lien Grantor represents and warrants that on the Effective Date, such Lien
Grantor is a corporation or other business organization duly organized, validly
existing and in good standing under the laws of the jurisdiction identified as its
jurisdiction of organization in its Perfection Certificate.(b)
    
    Each Lien Grantor represents and warrants, on the Effective Date, that Schedule
1 lists all Pledged Equity Interests (except Equity Interests constituting minority
investments in any Person other than an NNC Company) owned by such Lien Grantor and
held directly by such Lien Grantor (i.e., not through a Subsidiary, a Securities
Intermediary or any other Person).(c)
    
    Each Lien Grantor represents and warrants, on the Effective Date, that Schedule
2 lists all Pledged Securities not credited to a Securities Account or a similar
account maintained by a depository institution or Securities Intermediary whose
jurisdiction is in Canada and owned directly by such Lien Grantor on the date of
delivery of such Schedule 2 (except (i) Securities listed on Schedule 1 and (ii) Equity
Interests constituting minority investments in any Person other than an NNC Company),
each Securities Account maintained on behalf of a Lien Grantor to which financial
assets are credited with a fair market value in excess of $5,000,000 as of the date of
delivery of such Schedule 2 and all Commodity Accounts in respect of which such Lien
Grantor is the Commodity Customer on the date of delivery of such Schedule 2.(d)
    
    Each Lien Grantor represents and warrants, on the Effective Date that such Lien
Grantor has provided to the Collateral Agent a written notice setting forth a list of
the Material Intellectual Property at such time.(e)
    
    Each Lien Grantor represents and warrants, on the Effective Date, that all
Pledged Equity Interests owned by such Lien Grantor at such time are owned by it free
and clear of any Lien other than the Transaction Liens, and any tax liens, judgment
liens, put/call arrangements and Liens existing on the Effective Date. Each Lien
Grantor covenants that it will cause all Pledged Equity Interests owned by such Lien
Grantor from time to time to be owned by it free and clear of any Lien other than (i)
the Transaction Liens and (ii) any other Permitted Liens. Such Lien Grantor represents
and warrants, on the Effective Date, that all shares of capital stock included in such
Pledged Equity Interests at such time with respect to a Subsidiary of such Lien Grantor
(including shares of capital stock in respect of which such Lien Grantor owns an Equity
Interest) have been duly authorized and validly issued and are fully paid and
non-assessable. Such Lien Grantor covenants that it will ensure that none of the
Pledged Equity Interests with respect to a Subsidiary of such Lien Grantor are subject
to any option to purchase or similar right of any Person.(f)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, such
Lien Grantor owns or has rights in all of its Collateral (other than after-acquired
Collateral in which such Lien Grantor will own or have rights in such Collateral at the
time so acquired) free and clear of any Lien other than Permitted Liens.
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(g)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, no
financing statement, financing change statement, security agreement, mortgage or
similar or equivalent document or instrument covering all or part of the Collateral
owned by such Lien Grantor is on file or of record in any jurisdiction in Canada in
which such filing or recording would be effective to perfect or record a Lien on such
Collateral, except financing statements, financing change statements, mortgages or
other similar or equivalent documents with respect to Permitted Liens and no Collateral
owned by such Lien Grantor is in the possession or under the Control of any other
Person having a claim thereto or security interest therein, other than a Permitted
Lien.(h)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, such
Lien Grantor has taken all actions necessary under the PPSA to perfect its interest in
any Accounts or Chattel Paper in an amount in excess of $3,000,000 (per Account or
obligation evidenced by Chattel Paper) purchased or otherwise acquired by it, as
against its assignors and creditors of its assignors. Such Lien Grantor covenants that
it will take all actions necessary under the PPSA to perfect its interest in any
Accounts or Chattel Paper in an amount in excess of $3,000,000 (per Account or
obligation evidenced by Chattel Paper) purchased or otherwise acquired by it, as
against its assignors and creditors of its assignors.(i)
    
    Each Lien Grantor represents and warrants, on the Effective Date, that, to the
extent attachment and creation of the Transaction Liens is governed by the laws of a
jurisdiction in Canada, the Transaction Liens on all Collateral owned by such Lien
Grantor at such time (i) have been validly created, (ii) attach to each item of such
Collateral on the date hereof (or, if such Lien Grantor first obtains rights thereto on
a later date, on such later date) and (iii) when so attached, will secure all the
Secured Obligations of such Lien Grantor.(j)
    
    Each Lien Grantor represents and warrants that, on or prior to the Effective
Date, such Lien Grantor has delivered a Perfection Certificate to the Collateral Agent
and that the information set forth therein is correct and complete as of the date of
delivery thereof. Each Lien Grantor represents and warrants that, as of September 30,
2005, the financial information set forth on Schedule fairly presented the asset and
revenue information set forth therein.(k)
    
    Each Lien Grantor represents and warrants, on the Effective Date, that when a
PPSA financing statement or a financing change statement describing the Collateral has
been filed in the jurisdictions specified in such Perfection Certificate (as amended
pursuant to Section 3(a)) in each Province of Canada, and similar statements describing
the hypothec in the Collateral located in Quebec have been published in the Register of
Personal and Movable Real Rights (RPMRR), if applicable, the Transaction Liens will
constitute perfected security interests (and in the case of the Collateral located in
Quebec, will constitute hypothecs opposable to third parties) in the Collateral owned
by such Lien Grantor in favour of the Collateral Agent for the ratable benefit of the
Secured Parties to the extent that a security interest or a hypothec therein may be
perfected by filing pursuant to the UCC, PPSA or the Civil Code of Quebec, as
 20




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the case may be, prior, in the case of Collateral other than (x) fixtures and (y)
Collateral with respect to which Canadian Intellectual Property Filings must be made
in order to perfect a Lien thereon, to all other Liens and rights of others therein
except Permitted Liens. When, in addition to the filing of such PPSA financing
statements and financing change statements and the publication of the hypothecs in
Collateral located in Quebec in the RPMRR, if applicable, the applicable Canadian
Intellectual Property Filings have been made with respect to such Lien Grantors
Material Recordable Intellectual Property (including any future filings required
pursuant to Sections 4(a) and 5(a)), the Transaction Liens will constitute perfected
security interests in all right, title and interest of such Lien Grantor in its
Material Recordable Intellectual Property to the extent that security interests and
hypothecs therein may be perfected by such filings, prior to all Liens and rights of
others therein except Permitted Liens. Except for (i) the filing of such PPSA
financing statements and financing change statements and the publication of the
security interest and hypothecs in Collateral located in Quebec in the RPMRR, if
applicable, and (ii) such Canadian Intellectual Property Filings, no registration,
recordation or filing with any U.S., Canadian, Provincial or Territorial
governmental body, agency or official is required in connection with the execution
or delivery of the Security Documents or is necessary for the validity or
enforceability thereof or for the perfection or due recordation of the Transaction
Liens or for the enforcement of the Transaction Liens to the extent that a security
interest or a hypothec in the Collateral may be perfected therein by the filings
described in (i) and (ii) above (it being understood that any disposition of
Collateral constituting Securities is subject to applicable securities laws).(l)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, no Lien
Grantor is the claimant with respect to any Material Commercial Tort Claim; provided
that such representation is not made with respect to any Commercial Tort Claim arising
in a jurisdiction outside the United States. Such Lien Grantor covenants that if it
acquires a Material Commercial Tort Claim arising in the United States, such Lien
Grantor will promptly sign and deliver a Security Agreement Supplement granting a
Security Interest in such Commercial Tort Claim (which shall be described therein in
specificity required to satisfy Official Comment 5 to UCC Section 9 108) to the
Collateral Agent for the benefit of the Secured Parties.(m)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, no Lien
Grantor is the beneficiary under any letter of credit in a maximum face amount in
excess of $10,000,000 (other than a Supporting Letter of Credit) with respect to which
the Collateral Agent has not been granted Control.(n)
    
    Each Lien Grantor represents and warrants that, on the Effective Date, such
Lien Grantor is not a party to any Material Government Contract, except as disclosed in
writing to the Collateral Agent on or prior to such time. Each Lien Grantor covenants
that, if a Specified Event of Default shall have occurred and is continuing, such Lien
Grantor will, promptly at the request of the Collateral Agent, execute and deliver to
the Collateral Agent with respect to Pledged Material Government Contracts all
assignments, notices of assignment and other
 21




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documents required to be filed with (x) any Provincial or Territorial government or
agency or (y) the federal government of Canada in accordance with the Financial
Administration Act, as amended (the Financial Administration Act), in either case
to insure compliance with the Financial Administration Actor any similar applicable
legislation of any Province or Territory of Canada; provided thatno such execution
and delivery shall be required with respect to any Material Government Contract to
the extent such execution and delivery is contrary to the Financial Administration
Actor any similar applicable legislation of any Province or Territory of Canada.
 SECTION 4. ADDITIONAL COVENANTS.
  (a)
    
    Such Lien Grantor authorizes the Collateral Agent to file financing statements
or continuation statements with respect to the Collateral without any further consent
of such Lien Grantor. Such Lien Grantor agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement. Such Lien Grantor constitutes the Collateral
Agent its attorney-in-fact to execute and file all Intellectual Property Filings in
respect of Material Recordable Intellectual Property, so long as a Specified Event of
Default shall have occurred and is continuing, Intellectual Property Filings with
respect to other Recordable Intellectual Property (other than Trademarks) and other
filings in the United States and in Canada, including financing statements and
financing change statements (other than Intellectual Property Filings with respect to
Trademarks) required or requested for the purposes of creating, perfecting and
preserving the Transaction Liens, all acts of such attorney being hereby ratified and
confirmed; and such power, being coupled with an interest, shall be irrevocable until
all the Transaction Liens granted by such Lien Grantor terminate pursuant to Section
20. The relevant Lien Grantor will pay the reasonable costs of, or incidental to, (i)
any Intellectual Property Filings in respect of Material Recordable Intellectual
Property, (ii) so long as a Specified Event of Default shall have occurred and is
continuing, any Intellectual Property Filings with respect to other Recordable
Intellectual Property (other than Trademarks) and (iii) any other recording or filing
of any UCC financing or continuation statement or financing statement or financing
change statements or other documents recorded or filed pursuant hereto.(b)
    
    [intentionally omitted].(c)
    
    Such Lien Grantor will use commercially reasonable efforts consistent with its
customary commercial practice to cause to be collected from its account debtors, when
due, all amounts owing under its Pledged Accounts (including delinquent Accounts, which
will be collected in accordance with such Lien Grantors customary collection
procedures) and will apply all amounts collected thereon, forthwith upon receipt
thereof, to the outstanding balances of such Accounts. Subject to the rights the
Collateral Agent and the other Secured Parties may exercise hereunder if a Specified
Event of Default shall have occurred and is
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continuing, such Lien Grantor may allow in the ordinary course of business as
adjustments to amounts owing under its Accounts any extension or renewal of the time
or times for payment, or settlement for less than the total unpaid balance, that
such Lien Grantor finds appropriate in accordance with sound business judgment and
refunds or credits, all in the ordinary course of its business and consistent with
such Lien Grantors historical collection practices. The reasonable costs and
out-of-pocket expenses (including reasonable legal fees) of collection incurred by
such Lien Grantor and the reasonable costs and out-of-pocket expenses incurred by
the Collateral Agent, shall be paid by such Lien Grantor.(d)
    
    Upon the occurrence and during the continuance of a Specified Event of Default,
if payments with respect to any of such Lien Grantors Pledged Accounts are to be
received in a lockbox or similar account, and at such time such Lien Grantor and
Collateral Agent have established a Cash Collateral Account in respect of such account,
such Lien Grantor will at all times cause such lockbox or similar account to be subject
to a Cash Collateral Agreement.(e)
    
    If a Specified Event of Default shall have occurred and is continuing, such
Lien Grantor will, if requested to do so by the Collateral Agent, promptly notify (and
such Lien Grantor authorizes the Collateral Agent so to notify) each account debtor in
respect of any of its Pledged Accounts that such Accounts have been assigned to the
Collateral Agent hereunder, and that any payments due or to become due in respect of
such Accounts are to be made directly to the Collateral Agent or its designee.(f)
    
    Such Lien Grantor will promptly deliver to the Collateral Agent as Collateral
hereunder any Pledged Chattel Paper, negotiable Documents of Title and any Pledged
Instruments owned by such Lien Grantor, endorsed to the order of the Collateral Agent,
or accompanied by duly executed instruments of assignment, with signatures
appropriately guaranteed, all in form and substance reasonably satisfactory to the
Collateral Agent; provided thatno Lien Grantor shall be required to deliver (i) any
such Pledged Chattel Paper to the extent that it was entered into or provided in
connection with vendor financing and (ii) any such Pledged Instruments to the extent
the aggregate principal or face amount of such Pledged Instrument of such Lien Grantor
does not exceed $10,000,000. Upon the delivery of any Pledged Chattel Paper or Pledged
Instrument owned by such Lien Grantor to the Collateral Agent, the Transaction Lien on
such Collateral will be subject to no prior Liens or rights of others. So long as no
Specified Event of Default shall have occurred and is continuing, the Collateral Agent
will, promptly upon request by the relevant Lien Grantor, make appropriate arrangements
for making any Pledged Chattel Paper, negotiable Documents of Title or Pledged
Instrument available to the relevant Lien Grantor for purposes of presentation,
collection, cancellation, amendment, compromise, sale or renewal.(g)
    
    No Lien Grantor shall be required to deliver to the Collateral Agent any
certificate of title with respect to any motor vehicle constituting Collateral, or to
stamp or otherwise mark any such certificate of title to reflect the security interest
therein granted to the Collateral Agent pursuant to this Agreement.
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(h)
    
    Notwithstanding anything in this Agreement or any other Security Document to
the contrary, no Lien Grantor shall be required to take any action in order to perfect
the security interest of the Collateral Agent in any Collateral under the law of any
jurisdiction outside of the United States or Canada.(i)
    
    Each Subsidiary that becomes a Lien Grantor under Section 20 that owns movable
property situated in Quebec shall execute and deliver to the Collateral Agent (i) a
deed of Hypothec in respect of a universality of all movable property owned by such
Lien Grantor in Quebec and issue of bonds, bond certificate and pledge agreement (all
substantially in the same form as the Hypothecs previously delivered to the Collateral
Agent, with such amendments and modifications as are necessary to satisfy the intent of
this Agreement or which the Collateral Agent may reasonably request), and (ii) all
other ancillary and supplementary documents or documentation required for registration
with respect to any of the foregoing, in each case, within the time periods provided
under Section 20.
 SECTION 5. RECORDABLE INTELLECTUAL PROPERTY
  (a)
    
    On the date on which it becomes a party to this Agreement, such Lien Grantor
will sign and deliver to the Collateral Agent Intellectual Property Security Agreements
with respect to all Material Recordable Intellectual Property then owned by it. Within
30 days after each March 31, June 30, September 30 and December 31, such Lien Grantor
will sign and deliver to the Collateral Agent any Intellectual Property Security
Agreement provided by the Collateral Agent and necessary to grant Transaction Liens on
all Material Recordable Intellectual Property owned by it on such March 31, June 30,
September 30 and December 31 that is not covered by any previous Intellectual Property
Security Agreement so signed and delivered by it. In each case, it will, as soon as
practicable upon the request of the Collateral Agent, provide the Collateral Agent with
all documentation necessary in order to enable the Collateral Agent to make all
Intellectual Property Filings necessary to perfect the Transaction Liens on Material
Recordable Intellectual Property.(b)
    
    Such Lien Grantor will maintain its Material Intellectual Property in a
commercially reasonable, prudent manner consistent with its past practices and with
respect to any Material Intellectual Property which has been infringed, misappropriated
or diluted, in each case in a material respect, by a third party, the relevant Lien
Grantor will, unless such Lien Grantor shall reasonably determine that such action
would be of negligible value, economic or otherwise, take commercially reasonable steps
consistent with its past practices to sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement, misappropriation or
dilution, and/or take such other actions as such Lien Grantor shall reasonably deem
appropriate under the circumstances to protect such Material Intellectual Property.
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SECTION 6. SECURITIES AND OTHER INVESTMENTS
  (a)
    
    Certificated Securities.Such Lien Grantor represents and warrants that, as of
the Effective Date, such Lien Grantor has delivered to the Collateral Agent as
Collateral hereunder all certificates representing (i) any Pledged certificated
Securities of any Subsidiary (the Pledged Certificated Securities) and (ii) any
other Pledged Certificated Securities owned as of such date by such Lien Grantor and
not credited to a Securities Account having a fair market value in excess of $3,000,000
(other than Securities evidencing Equity Interests constituting minority investments in
privately held companies). Such Lien Grantor covenants that whenever such Lien Grantor
acquires any certificate representing a Pledged Certificated Security described in
clauses (i) or (ii) of the immediately preceding sentence, such Lien Grantor will as
promptly as practicable deliver such certificate to the Collateral Agent as Collateral
hereunder, provided thatsuch Lien Grantor shall not be required to deliver Pledged
Certificated Security which such Lien Grantor intends to sell within 90 days of its
acquisition thereof until the 91st day following such acquisition provided
thatno Event of Default shall have occurred and is continuing.(b)
    
    Uncertificated Securities. On or prior to April 30, 2006 (or such later date
as to which the Collateral Agent may consent in its sole discretion), in respect of
each pledged uncertificated Security owned by such Lien Grantor and not credited to a
Securities Account evidencing a Pledged uncertificated Security of such Lien Grantor,
such Lien Grantor shall (i) in the case of any Pledged uncertificated Security held at
a depository institution or securities intermediary whose jurisdiction is in Canada,
give written instructions to the relevant depository institution or other applicable
Person, together with a written copy thereof to the Collateral Agent, sufficient for
the depository institution or other applicable Person to record in its book entry
system that the Collateral Agent is the pledgee of such pledged uncertificated Security
(Pledged Uncertificated Securities) then owned by such Lien Grantor as of such date
and as of such date not being credited to a Securities Account having a fair market
value in excess of $5,000,000 as of such date, (ii) in the case of any Pledged
Uncertificated Security owned by such Lien Grantor as of such date and held at a
Securities Intermediary whose jurisdiction is in the United States of America and
having a fair market value in excess of $5,000,000, enter into a Securities Account
Control Agreement to the extent required by Section 6(c) and (iii) in the case of any
other Pledged Uncertificated Securities owned by such Lien Grantor as of such date and
issued by a person whose jurisdiction of formation or incorporation is in the United
States of America and having a fair market value in excess of $5,000,000, enter into an
Issuer Control Agreement on or prior to April 30, 2006 (or such later date as to which
the Collateral Agent may consent in its sole discretion) in respect of each such
Pledged Uncertificated Security, and deliver each such Issuer Control Agreement to the
Collateral Agent (which shall enter into the same); providedthat none of the
requirements set forth above shall apply to Securities evidencing
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Equity Interests in Subsidiaries and Equity Interests constituting minority
investments in privately held companies. Each Lien Grantor represents and warrants
that, as of the Effective Date, no Pledged Equity Interests of any U.S. Subsidiary
or any Canadian Subsidiary of any Lien Grantor is an Uncertificated Security. Such
Lien Grantor covenants that whenever such Lien Grantor acquires any other Pledged
Uncertificated Securities described in clauses (i) or (ii) of the immediately
preceding sentence, such Lien Grantor shall give written instructions to the
relevant depository institution or other applicable Person, together with a written
copy thereof to the Collateral Agent, sufficient for the depository institution or
other Person to record in its book entry system that the Collateral Agent is the
pledgee of such after-acquired Pledged Uncertificated Securities, provided thatsuch
Lien Grantor shall not be deemed in breach of this covenant if any such agreement
shall fail to be finalized solely other than as a result of any action or inaction
on the part of such Lien Grantor or, if the issuer under any such agreement is a
Subsidiary, the Issuer.(c)
    
    Security Entitlements. Each Lien Grantor covenants to enter into (and cause
the relevant Securities Intermediary to enter into) a Securities Account Control
Agreement on or prior to April 30, 2006 (or such later date as to which the Collateral
Agent may consent in its sole discretion) (the Required Securities Account Control
Agreement Date) in respect of any Pledged Security Entitlement that is credited to a
Securities Account and that is owned by it at such time with a fair market value
(together with all other Financial Assets credited to the same Securities Account) in
excess of $5,000,000 and will deliver such Securities Account Control Agreement to the
Collateral Agent (which shall enter into the same) unless such agreement has not been
entered into solely other than as a result of any action or inaction on the part of
such Lien Grantor; provided thatthe Lien Grantors shall only be required to comply
with the covenant with respect to Securities Accounts for which the relevant Securities
Intermediarys jurisdiction is in the United States. Except as permitted by Section
19, such Lien Grantor shall not, on or prior to the Required Securities Account Control
Agreement Date, transfer Pledged Security Entitlements out of any Securities Account
for the principal purpose of preventing the Collateral Agent from having a perfected
lien in such Pledged Security Entitlements (it being understood that nothing herein
shall prevent any Lien Grantor from withdrawing cash from any Securities Account for
any other purpose). Such Lien Grant covenants that whenever such Lien Grantor acquires
any other Pledged Security Entitlements that are credited to a Securities Account and
the underlying Financial Assets of which, together with all other Financial Assets
credited to the same Securities Account, have an aggregate fair market value in excess
of $5,000,000, such Lien Grantor will, as promptly as practicable, cause the underlying
Financial Asset to be credited to a Controlled Securities Account; provided thatthe
Lien Grantors shall not be so obligated if the jurisdiction of the relevant Securities
Intermediary is not in the United States.(d)
    
    Perfection as to Certificated Securities.Such Lien Grantor represents and
warrants that, at the time that such Lien Grantor delivers the certificate representing
any Pledged Certificated Securities owned by it to the Collateral
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Agent in Canada and complies with subsection 6(e) in connection with such delivery,
(i) the Transaction Lien on the Pledged Certificated Securities will be perfected by
possession, provided that the Collateral Agent takes possession of the Pledged
Certificated Securities and that possession thereof as collateral is retained by the
Collateral Agent or a person on its behalf other than such Lien Grantor or its
agent, and (ii) provided that the Collateral Agent is acting in good faith and has
no notice of any adverse claim affecting the Pledged Certificated Securities, the
Transaction Lien on the Pledged Certificated Securities has priority over any other
security interest in the Pledged Certificated Securities perfected by registration
or temporarily perfected under the PPSA.(e)
    
    Perfection as to Uncertificated Securities. Such Lien Grantor represents and
warrants that (i) the Transaction Lien on the Pledged Uncertificated Securities held at
a depository institution of Securities intermediary whose jurisdiction is in Canada has
been perfected by all necessary filings in Canada and (ii) provided that the Collateral
Agent is acting in good faith and has no notice of any adverse claim affecting the
Pledged Uncertificated Securities, the Transaction Lien on the Pledged Uncertificated
Securities has priority over any other security interest in the Pledged Uncertificated
Securities perfected by registration or temporarily perfected under the PPSA. Such
Lien Grantor represents and warrants that, at the time that such Lien Grantor, the
Collateral Agent and the U.S. issuer of any Pledged Uncertificated Security owned by
such Lien Grantor and of the type described in clause (iii) of Section 6(b) enter into
an Issuer Control Agreement with respect thereto, (i) the Transaction Lien on such
Pledged Uncertificated Security will be perfected, subject to no prior Liens or rights
of others and (ii) the Collateral Agent will have Control of such Pledged
Uncertificated Security.(f)
    
    Perfection as to Security Entitlements. Such Lien Grantor represents and
warrants that, at the time that the Financial Asset underlying any Pledged Security
Entitlement owned by such Lien Grantor is credited to the applicable Controlled
Securities Account, (i) the Transaction Lien on such Pledged Security Entitlement will
be perfected, subject to no prior Liens or rights of others (except Liens and rights of
the relevant Securities Intermediary that are Permitted Liens or rights of set-off)
other than Liens existing on the date of this Agreement that are Permitted Liens and
(ii) the Collateral Agent will have Control of such Pledged Security Entitlement.(g)
    
    Perfection as to Commodity Accounts. Each Lien Grantor covenants that so long
as any Commodity Account is subject to a Commodity Account Control Agreement (i) the
Transaction Liens on such Pledged Commodity Account and all Pledged Commodity Contracts
carried therein will be perfected, subject to no prior Liens or rights of others
(except Liens and rights of the relevant Commodity Intermediary permitted by such
Commodity Account Control Agreement) other than Liens existing on the date of this
Agreement that are Permitted Liens and the Collateral Agent will have Control of such
Commodity Account and all Commodity Contracts carried therein from time to time;
provided thatthe Lien Grantors shall be deemed to have made this representation and
warranty only with
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respect to Commodity Accounts for which the relevant Commodity Intermediarys
jurisdiction is in the United States.(h)
    
    Delivery of Pledged Certificates. Each Lien Grantor covenants that all Pledged
Certificates, when delivered to the Collateral Agent, will be in suitable form for
transfer by delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral Agent.(i)
    
    ULC Shares.
 (i)
    
    The parties hereto acknowledge that certain of the Pledged
Equity Interests may consist of shares of stock or other Pledged Equity
Interests (ULC Shares) of one or more unlimited liability companies (each, a
ULC) under the Companies Act(Nova Scotia) and/or the Business Corporations
Act(Alberta) and, to best ensure that neither the Collateral Agent nor any of
the Secured Parties could, under any circumstances prior to realization be held
to be a member or a shareholder, as applicable, of the ULC for the purposes
of the Companies Act(Nova Scotia) and/or the Business Corporations Act
(Alberta), certain provisions of this Agreement are to apply differently
insofar as any Pledged Equity Interests consists of ULC Shares.(ii)
    
    Notwithstanding any provisions to the contrary contained in
this Agreement, or any Credit Agreement, where a Lien Grantor is the sole
registered and beneficial owner of ULC Shares which are Pledged Equity
Interests, such Lien Grantor will remain the sole registered and beneficial
owner of such ULC Shares until such time as such ULC Shares are effectively
transferred into the name of the Collateral Agent, any Secured Party or any
other Person on the books and records of such ULC. Accordingly, such Lien
Grantor shall be entitled to receive and retain for its own account any
dividend on or other distribution, if any, in respect of such ULC Shares
(except insofar as such Lien Grantor has granted a security interest in such
dividend on or other distribution, and any shares which are Pledged Equity
Interests shall be delivered to the Collateral Agent to hold as Pledged Equity
Interests hereunder) and shall have the right to vote such ULC Shares and to
control the direction, management and policies of the ULC to the same extent as
the Lien Grantor would if such ULC Shares were not pledged to the Collateral
Agent (for its own benefit and for the benefit of the Secured Parties) pursuant
hereto. Nothing in this Agreement or any Credit Agreement is intended to, and
nothing in this Agreement or any Credit Agreement shall, constitute the
Collateral Agent, any of the Secured Parties or any Person other than the Lien
Grantor, a member of a ULC for the purposes of the Companies Act(Nova Scotia)
or a shareholder of a ULC for the purposes of the Business Corporations Act
(Alberta), as applicable (whether listed or unlisted, registered or
beneficial), until such time as notice is given to the Lien Grantor and further
steps are taken pursuant hereto or thereto so as to
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register the Collateral Agent or such other Person, as specified in such
notice, as the holder of the ULC Shares. To the extent any provision hereof
would have the effect of constituting the Collateral Agent or any of the
Secured Parties as a member or a shareholder, as applicable, of any ULC
prior to such time, such provision shall be severed herefrom and shall be
ineffective with respect to ULC Shares which are Pledged Equity Interests
without otherwise invalidating or rendering unenforceable this Agreement or
invalidating or rendering unenforceable such provision insofar as it relates
to Pledged Equity Interests which are not ULC Shares.(iii)
    
    Except upon the exercise of rights to sell, transfer or
otherwise dispose of the Pledged Equity Interests issued by a ULC following the
occurrence and during the continuance of an Event of Default or a Specified
Event of Default pursuant to Section 12, no Lien Grantor shall cause or permit,
or enable any ULC in which it holds ULC Shares which are Pledged Equity
Interests to cause or permit, the Collateral Agent or any other Secured Party
to: (a) be registered by the ULC as members or shareholders, as applicable, of
such ULC; (b) have any notation entered by the ULC in their favour in the share
register of such ULC; (c) be held out as members or shareholders, as
applicable, of such ULC; or (d) be paid, directly or indirectly, any dividends,
property or other distributions from the ULC by reason of the Collateral Agent
or the Secured Parties holding a security interest in the ULC Shares; or (e) to
act as a member or shareholder, as applicable, of the ULC, or exercise any
rights of a member or shareholder, as applicable, including the right to attend
a meeting of, or to vote the shares of, the ULC.
 SECTION 7. CONTROLLED DEPOSIT ACCOUNTS.
 (i)
    
    Such Lien Grantor covenants that, no later than April 30, 2006
(or such later date as to which the Collateral Agent may consent in its sole
discretion), it will deliver to the Collateral Agent duly executed Deposit
Account Control Agreements with respect to each account listed on Schedule 5,
each of which is held at a depository institution whose jurisdiction is in the
United States as determined pursuant to UCC Section 9-304. Each Lien Grantor
agrees that the Deposit Accounts listed on Schedule 5 are the principal cash
management Deposit Accounts of the Lien Grantors with Depositary Banks whose
jurisdictions are in the United States. Upon the occurrence and during the
continuance of a Specified Event of Default, all cash owned by such Lien
Grantor (other than cash which is subject to a Lien incurred in reliance on
Section 19(e)) will be deposited, upon or promptly after the receipt thereof,
in one or more Controlled Deposit Accounts. Each Controlled Deposit Account
will be operated as provided in Section 9.(ii)
    
    Such Lien Grantor covenants that, in respect of each Controlled
Deposit Account, the Depositary Banks jurisdiction (determined as provided in
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UCC Section 9-304) will at all times be a jurisdiction in which Article 9 of
the UCC is in effect.(iii)
    
    Such Lien Grantor covenants that, so long as the Collateral
Agent has Control of a Controlled Deposit Account, the Transaction Lien on such
Controlled Deposit Account will be perfected, subject to no prior Liens or
rights of others (except the Depositary Banks rights of set-off and right to
deduct its normal operating charges and fees and any uncollected funds
previously credited thereto) other than Liens existing on the date of this
Agreement that are Permitted Liens.(iv)
    
    Such Lien Grantor covenants that, if such Lien Grantor opens a
new Deposit Account with a Depositary Bank whose jurisdiction is in the United
States (determined as provided in UCC Section 9-304) that it intends to use as
a principal cash management account for the NNC Companies (taken as a whole) as
determined by such Lien Grantor in good faith, such Lien Grantor shall promptly
notify the Collateral Agent thereof and will deliver to the Collateral Agent a
duly executed Deposit Account Control Agreement with respect thereto; provided
that such Lien Grantor shall not be deemed in breach of this covenant if any
such agreement shall fail to be finalized solely other than as a result of any
action or inaction on the part of such Lien Grantor.(v)
    
    Except as permitted by Section 19, such Lien Grantor shall not
transfer cash out of any Controlled Deposit Account for the principal purpose
of preventing the Collateral Agent from having a perfected lien in such cash
(it being understood that nothing herein shall prevent any Lien Grantor from
withdrawing cash from any Controlled Deposit Account for any other purpose).
 SECTION 8. CASH COLLATERAL ACCOUNTS.
 (a)
    
    If an Event of Default shall have occurred and is continuing and the Required
Secured Lenders shall have so instructed the Collateral Agent, the Collateral Agent
will establish with respect to each Lien Grantor an account (its Cash Collateral
Account), in the name and under the exclusive control of the Collateral Agent, subject
to subsection 8(d). Each Cash Collateral Account will be operated as provided in this
Section 8 and Section 9.(b)
    
    The Collateral Agent shall deposit the following amounts, as and when received
by it, in each Lien Grantors Cash Collateral Account: each amount required to be
deposited therein by any provision of any Credit Agreement or other Loan Document
referred to therein, each Cash Distribution required by Section 12 to be deposited
therein; and each amount realized or otherwise received by the Collateral Agent with
respect to assets of such Lien Grantor upon any exercise of remedies pursuant to any
Security Document upon the occurrence and during the continuance of (x) with respect to
Illiquid Collateral, an Event of Default and (y) with respect to Liquid Collateral, a
Specified Event of Default.
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(c)
    
    The Collateral Agent shall maintain such records and/or establish such
sub-accounts as shall be required to enable it to identify the amounts held in each
Cash Collateral Account from time to time pursuant to Section 8(b).(d)
    
    Unless (x) an Event of Default shall have occurred and is continuing and the
Required Secured Lenders shall have instructed the Collateral Agent to stop withdrawing
amounts from the Cash Collateral Accounts pursuant to this subsection 8(d) any Cash
Distributions or other amounts deposited in the Cash Collateral Account shall, at the
relevant Lien Grantors request, be withdrawn and applied to pay Secured Obligations
that are then due and payable.
 SECTION 9. OPERATION OF CASH COLLATERAL ACCOUNTS; CARE AND USE OF COLLATERAL
 (a)
    
    All Cash Distributions received with respect to assets held in any Cash
Collateral Account shall be deposited therein promptly upon receipt thereof.(b)
    
    Funds held in any Controlled Securities Account may, until withdrawn, be
invested and reinvested as the relevant Lien Grantor shall determine from time to time;
provided that, if a Specified Event of Default shall have occurred and is continuing,
the Collateral Agent may select short term cash equivalents (and the Collateral Agent
shall not be liable to any Lien Grantor or any Secured Party for any loss as a result
of any disposition of any such short term cash equivalent prior to maturity).(c)
    
    So long as no Specified Event of Default shall have occurred and is continuing,
funds held in any Controlled Deposit Account or Cash Collateral Account may, until
withdrawn, be invested and reinvested as the relevant Lien Grantor shall determine from
time to time; provided thatif a Specified Event of Default shall have occurred and is
continuing, the Collateral Agent may select short term cash equivalents in which any
available funds may be invested and (ii) if such amounts are to be held in a Securities
Account, either (x) the Collateral Agent is the entitlement holder with respect to such
amounts or (y) the relevant entitlement holder and the relevant Securities Intermediary
shall have theretofore entered into a Securities Account Control Agreement with respect
to such Securities Account and delivered it to the Collateral Agent (which shall enter
into the same).(d)
    
    With respect to each Collateral Account (except a Cash Collateral Account, as
to which Section 8 applies), the Collateral Agent will, if requested by the applicable
Lien Grantor, instruct the relevant Securities Intermediary or Depositary Bank that the
relevant Lien Grantor may withdraw, or direct the disposition of, funds held therein
unless and until the Collateral Agent rescinds such instruction. The Collateral Agent
will not rescind such instructions unless a Specified Event of Default shall have
occurred and is continuing.(e)
    
    So long as a Specified Event of Default shall have occurred and is continuing,
no Lien Grantor will cause funds to be transferred from a Cash Collateral Account to
any other account owned by an NNC Company unless such other account is a Cash
Collateral Account.
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(f)
    
    If a Specified Event of Default shall have occurred and is continuing, the
Collateral Agent may (i) retain, or instruct the relevant Securities Intermediary or
Depositary Bank to retain, all cash and investments then held in any Cash Collateral
Account, (ii) liquidate, or instruct the relevant Securities Intermediary or Depositary
Bank to liquidate, any or all investments held therein and/or (iii) withdraw any
amounts held therein and apply such amounts as provided in Section 14.(g)
    
    If a Specified Event of Default shall have occurred and is continuing, and
immediately available cash on deposit in any Cash Collateral Account is not sufficient
to make any distribution or withdrawal to be made pursuant hereto, the Collateral Agent
will cause to be liquidated, as promptly as practicable, such investments held in or
credited to such Cash Collateral Account as shall be required to obtain sufficient cash
to make such distribution or withdrawal and, notwithstanding any other provision
hereof, such distribution or withdrawal shall not be made until such liquidation has
taken place.
 SECTION 10. TRANSFER OF RECORD OWNERSHIP
 (a)
    
    At any time when an Event of Default shall have occurred and is continuing, the
Collateral Agent may (and to the extent that action by it is required, the relevant
Lien Grantor, if directed to do so by the Collateral Agent, will as promptly as
practicable): cause each of the Pledged Certificated Securities (or any portion thereof
specified in such direction) to be transferred of record into the name of the
Collateral Agent or its nominee. Promptly upon receiving any such direction, the
Collateral Agent will notify each relevant Lien Grantor thereof, and from time to time
thereafter such Lien Grantor will take any and all actions reasonably requested by the
Collateral Agent to facilitate compliance with this subsection 10(a).(b)
    
    Communications after Transfer of Record Ownership. The Collateral Agent will
promptly give to the relevant Lien Grantor copies of any notices and other
communications received by the Collateral Agent with respect to Pledged Certificated
Securities registered in the name of the Collateral Agent or its nominee.
 SECTION 11. RIGHT TO VOTE SECURITIES
 (a)
    
    Unless (x) with respect to any Pledged Security not credited to a Securities
Account, other than any Uncertificated Securities representing shares in a money market
fund, an Event of Default shall have occurred and is continuing or (y) with respect to
any Pledged Security credited to a Securities Account and any financial asset
underlying any Pledged Security or Security Entitlement owned by it and any
Uncertificated Securities representing shares in a money market fund, a Specified Event
of Default shall have occurred and is continuing and (ii) the Collateral Agent shall
have provided notice to the Lien Grantor of the Collateral Agents election to
terminate the right of such Lien Grantor to exercise such rights, each Lien Grantor
will have the right, from time to time, to vote and to give consents, ratifications and
waivers with respect to any Pledged Security
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owned by it and the financial asset underlying any Pledged Security or Security
Entitlement, owned by it, and the Collateral Agent will, upon receiving a written
request from such Lien Grantor, promptly deliver to such Lien Grantor or as
specified in such request such proxies, powers of attorney, consents, ratifications
and waivers in respect of any such Pledged Security that is registered in the name
of the Collateral Agent or its nominee or any such Pledged Security or Security
Entitlement as to which the Collateral Agent or its nominee is the entitlement
holder, in each case as shall be specified in such request and be in form and
substance reasonably satisfactory to the Collateral Agent. Unless (x) with respect
to any Pledged Security not credited to a Securities Account other than any
Uncertificated Securities representing shares in a money market fund, an Event of
Default shall have occurred and is continuing or (y) with respect to any Pledged
Security credited to a Securities Account and any financial asset underlying any
Pledged Security or Security Entitlement owned by it and any Uncertificated
Securities representing shares in a money market fund, a Specified Event of Default
shall have occurred and is continuing and (ii) the Collateral Agent shall have
provided notice to the Lien Grantor of the Collateral Agents election to terminate
the right of such Lien Grantor to exercise such rights, the Collateral Agent will
have no right to take any action which the owner of a Pledged Security, Pledged
Partnership Interest or Pledged LLC Interest, is entitled to take with respect
thereto, except the right to receive payments and other distributions to the extent
provided herein.(b)
    
    If (x) with respect to any Pledged Security not credited to a Securities
Account other than any Uncertificated Securities representing shares in a money market
fund, an Event of Default shall have occurred and is continuing or (y) with respect to
any Pledged Security credited to a Securities Account and any financial asset
underlying any Security Interest owned by it and any Uncertificated Securities
consisting of shares in a money market fund, a Specified Event of Default shall have
occurred and is continuing and (ii) the Collateral Agent shall have provided notice to
the Lien Grantor of the Collateral Agents election to terminate the right of such Lien
Grantor to exercise such rights, the Collateral Agent will have the right to the extent
permitted by law (and, in the case of a Pledged Security, Pledged Partnership Interest
or Pledged LLC Interest, by the relevant partnership agreement, limited liability
company agreement, operating agreement or other governing document) to vote, to give
consents, ratifications and waivers and to take any other action with respect to the
Pledged Securities, the other Pledged Security or Security Entitlement (if any) and the
financial assets underlying the Pledged Security or Security Entitlement, with the same
force and effect as if the Collateral Agent were the absolute and sole owner thereof,
and each Lien Grantor will take all such action as the Collateral Agent may reasonably
request from time to time to give effect to such right.
 SECTION 12. CERTAIN CASH DISTRIBUTIONS
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SECTION 13. REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT.
 (a)
    
    If (x) with respect to Illiquid Collateral, an Event of Default shall have
occurred and is continuing, or (y) with respect to Liquid Collateral, a Specified Event
of Default shall have occurred and is continuing, the Collateral Agent may exercise (or
cause its sub-agents to exercise) any or all of the remedies available to it (or to
such sub-agents) under the Security Documents with respect to Illiquid Collateral or
Liquid Collateral, as applicable. Without limiting the generality of the foregoing, if
(x) with respect to Illiquid Collateral, an Event of Default shall have occurred and is
continuing, or (y) with respect to Liquid Collateral, a Specified Event of Default
shall have occurred and is continuing, the Collateral Agent may exercise on behalf of
the Secured Parties all the rights of a secured party under the PPSA with respect to
Illiquid Collateral or Liquid Collateral, as applicable, and, in addition, the
Collateral Agent may, if a Specified Event of Default shall have occurred and is
continuing, without being required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, withdraw all cash held in the Cash
Collateral Accounts and apply such cash as provided in Section 14 and, if there shall
be no such cash or if such cash shall be insufficient to pay all the Secured
Obligations in full, take possession of, sell, lease, license or otherwise dispose of
(x) if an Event of Default has occurred and is continuing, the Illiquid Collateral or
any part thereof and (y) if a Specified Event of Default shall have occurred and is
continuing, the Liquid Collateral or any part thereof. Notice of any such sale or
other disposition shall be given to the relevant Lien Grantor(s) as required by Section
16.(b)
    
    Without limiting the generality of the foregoing, if a Specified Event of
Default shall have occurred and is continuing: (i) the Collateral Agent may use,
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any Pledged Intellectual Property (including any
Pledged Recordable Intellectual Property) throughout the world for such term or terms,
on such conditions and in such manner as the Collateral Agent shall in its sole
discretion determine; provided thatthe Collateral Agent shall notify the relevant Lien
Grantor of any license or sublicenses so granted (but failure to give such notice shall
not affect the validity of such license) and that such licenses or sublicenses do not
conflict with any existing license or applicable law; (ii) the Collateral Agent may
(without assuming any obligation or liability thereunder), at any time and from time to
time, in its sole and reasonable discretion, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all rights and remedies of any
Lien Grantor in, to and under any of its Pledged Intellectual Property and take or
refrain from taking any action under any thereof,
 34




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and each Lien Grantor releases the Collateral Agent and each other Secured Party
from liability for, and agrees to hold the Collateral Agent and each other Secured
Party free and harmless from and against any claims and reasonable expenses arising
out of, any lawful action so taken or omitted to be taken with respect thereto,
except for claims and reasonable expenses arising from the Collateral Agents or
such Secured Partys gross negligence or wilful misconduct; and (iii) upon request
by the Collateral Agent (which shall not be construed as implying any limitation on
its rights or powers), each Lien Grantor will execute and deliver to the Collateral
Agent a power of attorney, in form and substance satisfactory to the Collateral
Agent, for the implementation of any sale, lease, license or other disposition of
any of such Lien Grantors Pledged Intellectual Property or any action related
thereto. In connection with any such disposition, but subject to any
confidentiality restrictions imposed on such Lien Grantor in any license or similar
agreement, such Lien Grantor will supply to the Collateral Agent its know-how and
expertise relating to the relevant Intellectual Property or the products or services
made or rendered in connection with such Intellectual Property, and its customer
lists and other records relating to such Intellectual Property and to the
distribution of said products or services.
 (c)
    
    If a Specified Event of Default shall have occurred and is continuing, the
Collateral Agent may appoint by instrument in writing one or more Receivers of any Lien
Grantor or any or all of the Collateral with such rights, powers and authority
(including any or all of the rights, powers and authority of the Collateral Agent under
this Agreement) as may be provided for in the instrument of appointment or any
supplemental instrument, and remove and replace any such Receiver from time to time.
To the extent permitted by applicable law, any Receiver appointed by the Collateral
Agent will (for purposes relating to responsibility for the Receivers acts or
omissions) be considered to be the agent of the applicable Lien Grantor and not of the
Collateral Agent or the Secured Parties.
 SECTION 14. APPLICATION OF PROCEEDS
 (a)
    
    The Collateral Agent may (i) if a Specified Event of Default shall have
occurred and is continuing, apply any cash held in the Collateral Accounts and (ii) if
(x) with respect to Illiquid Collateral, an Event of Default shall have occurred and is
continuing or (y) with respect to Liquid Collateral, a Specified Event of Default shall
have occurred and is continuing, apply the proceeds of any sale or other disposition of
all or any part of the Illiquid Collateral or Liquid Collateral, as applicable, in
either case in the following order of priorities:
  35




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provided that
 (b)
    
    If at any time any portion of any monies collected or received by the
Collateral Agent would, but for the provisions of this Section 14(b), be payable
pursuant to Section 14(a) in respect of a Contingent Secured Obligation, the Collateral
Agent shall not apply any monies to pay such Contingent Secured Obligation but instead
(x) notify the holder of such Contingent Secured Obligation and (y) with respect to the
holder of such Contingent Secured Obligations excluding the holder of any Bond
Obligation, request the holder thereof, at least 10 days before each proposed
distribution hereunder, to notify the Collateral Agent as to the maximum amount of such
Contingent Secured Obligation if then ascertainable (e.g., in the case of a letter of
credit, the maximum amount available for subsequent drawings thereunder). If the holder
of such Contingent Secured Obligation (excluding the holder of any Bond Obligation)
does not notify the Collateral Agent of the maximum ascertainable amount thereof at
least two Business Days before such distribution, such holder will not be entitled to
share in such distribution. If such holder does so notify the Collateral Agent as to
the maximum ascertainable amount thereof, or if such holder is the holder of any Bond
Obligation (regardless of whether such holder has provided any notice to the Collateral
Agent), the Collateral Agent will allocate to such holder a portion of the monies to be
distributed in such distribution, calculated as if such Contingent Secured
Obligation were outstanding in such maximum ascertainable amount. However,
 36




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the Collateral Agent will not apply such portion of such monies to pay such Contingent
Secured Obligation, but instead will hold such monies and invest such monies in
short term cash equivalents selected by the Collateral Agent. All such monies and
short term cash equivalents and all proceeds thereof will constitute Collateral
hereunder, but will be subject to distribution in accordance with this Section 14(b)
rather than Section 14(a). The Collateral Agent will hold all such monies and short
term cash equivalents and the net proceeds thereof in trust until all or part of
such Contingent Secured Obligation becomes a Non-Contingent Secured Obligation,
whereupon the Collateral Agent at the request of the relevant Secured Party will
apply the amount so held in trust to pay such Non-Contingent Secured Obligation;
provided that, if the other Secured Obligations theretofore paid pursuant to the
same clause of Section 14(a) (i.e., clause (2) or (3)) were not paid in full, the
Collateral Agent will apply the amount so held in trust to pay the same percentage
of such Non-Contingent Secured Obligation as the percentage of such other Secured
Obligations theretofore paid pursuant to the same clause of Section 14(a). If (i)
the holder of such Contingent Secured Obligation shall advise the Collateral Agent
that no portion thereof remains in the category of a Contingent Secured Obligation
and (ii) the Collateral Agent still holds any amount held in trust pursuant to this
Section 14(b) in respect of such Contingent Secured Obligation (after paying all
amounts payable pursuant to the preceding sentence with respect to any portions
thereof that became Non-Contingent Secured Obligations), such remaining amount will
be applied by the Collateral Agent in the order of priorities set forth in Section
14(a).
 (c)
    
    With respect to any Bond Obligation, whether or not a Contingent Secured
Obligation, including, without limitation, the principal outstanding of and interest on
such Bond Obligation, an amount (the Determined Amount) with respect to such Bond
Obligation shall be required to be paid or held by the Collateral Agent with respect to
each of Sections 14(a)(2), 14(a)(3) and 14(a)(4) (each, a Level) equal to (x) the
Ratio multiplied by (y) the sum of (A) the proceeds of any sale or other disposition of
Collateral that are, in fact, being applied by the Collateral Agent to amounts owed
under the Credit Agreements at the applicable Level, plus (B) the proceeds of such
Collateral proposed to be held by the Collateral Agent pursuant to Section 14(b) to
cover the Contingent Secured Obligations relating to the Credit Agreements at such
Level in accordance with Section 14(b). Notwithstanding the foregoing, if the amount
to be applied to the Bond Obligations at any Level would be greater if the Ratio were
calculated by reference to a Secured Obligation (other than the principal under the
Credit Agreements) that constitutes Funded Debt under the 1988 Indenture, such
Secured Obligation shall be used in order to determine the amount to be applied to the
Bond Obligations at such Level. Section 14 of this Agreement (including this Section
14(c)) is intended to comply with the equal and ratable negative pledge provisions of
the 1988 Indenture and shall be construed to give effect to such intention. The
Collateral Agent shall be obligated to offer to pay to the Indenture Trustee any
portion of the Determined Amounts that are, in fact, due and payable
at such time as such Determined Amounts are calculated, and the Collateral Agent
shall deposit any remaining portion of such Determined Amounts, and any amounts not
accepted by the Indenture Trustee, in a segregated account solely for
 37




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the benefit of the holders of the Bond Obligations (and all amounts on deposit in such account
shall be invested in short term cash equivalents.
 (d)
    
    In making the payments and allocations required by this Section 14, the
Collateral Agent may rely upon information supplied to it pursuant to Section 18(e).
All distributions made by the Collateral Agent pursuant to this Section 14 shall be
final (except in the event of manifest error) and the Collateral Agent shall have no
duty to inquire as to the application by any Secured Party of any amount distributed to
it.
 SECTION 15. FEES AND EXPENSES
  38




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SECTION 16. AUTHORITY TO ADMINISTER COLLATERAL
  (a)
    
    to demand, sue for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof,(b)
    
    to settle, compromise, compound, prosecute or defend any action or proceeding
with respect thereto,(c)
    
    to sell, lease, license or otherwise dispose of the same or the proceeds or
avails thereof, as fully and effectually as if the Collateral Agent were the absolute
owner thereof, and(d)
    
    to extend the time of payment of any or all thereof and to make any allowance
or other adjustment with reference thereto,
 provided that
 fondé
de pouvoir Hypothec fondé de pouvoir Custodian fondé de pouvoir
 39




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fondé de
pouvoir fondé de pouvoir fondé de pouvoir fondé de pouvoir
 fondé de pouvoir
 SECTION 17. LIMITATION ON DUTY IN RESPECT OF COLLATERAL
  SECTION 18. GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT
 (a)
    
    Authority. Each Secured Party hereby appoints JPMorgan Chase Bank, N.A. to
serve as Collateral Agent hereunder. The Collateral Agent is authorized to take such
actions and to exercise such powers as are delegated to the Collateral Agent by the
terms of the Security Documents, together with such actions and powers as are
reasonably incidental thereto. The Collateral Agent agrees to hold that part of the
Collateral that is in its possession or control (or in the possession or control of
its agents or bailees), to the extent that possession thereof is taken to perfect a
Lien thereon under the PPSA for the benefit of and on behalf of the Secured Parties
for the purpose of perfecting the security interest granted under the Security
Documents, subject to the terms of this Section 18.
 40




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(b)
    
    Rights and Powers as a Secured Party. The bank serving as the Collateral Agent
shall, in its capacity as a Secured Party, have the same rights and powers as any other
Secured Party and may exercise the same as though it were not the Collateral Agent.
Such bank and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with any NNC Company as if it were not the Collateral
Agent hereunder.(c)
    
    Limited Duties and Responsibilities. The Collateral Agent shall not have any
duties or obligations under the Security Documents except those expressly set forth
therein. Without limiting the generality of the foregoing, (i) the Collateral Agent
shall not be subject to any fiduciary or other implied duties, regardless of whether an
Event of Default has occurred and is continuing, (ii) the Collateral Agent shall not be
required to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers (x) which are expressly contemplated by the Security
Documents and (y) which it has been instructed to exercise by the Required Secured
Lenders and (iii) except as expressly set forth in the Loan Documents to which it is
party, the Collateral Agent shall not have any duty to disclose, and shall not be
liable for any failure to disclose, any information relating to any NNC Company that is
communicated to or obtained by the bank serving as Collateral Agent or any of its
affiliates in any capacity. The Collateral Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required Secured
Lenders or in the absence of its own gross negligence or wilful misconduct. The
Collateral Agent shall not be responsible for the existence, genuineness or value of
any Collateral or for the validity, perfection, priority or enforceability of any
Transaction Lien, whether impaired by operation of law or by reason of any action or
omission to act on its part under the Security Documents, in either case absent its own
gross negligence or wilful misconduct. The Collateral Agent shall be deemed not to have
knowledge of any Event of Default unless and until written notice thereof is given to
the Collateral Agent by any Lien Grantor or a Secured Party, and the Collateral Agent
shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Security
Document, (ii) the contents of any certificate, report or other document delivered
thereunder or in connection therewith other than by it, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth
in any Security Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Security Document or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in any Security Document.(d)
    
    Authority to Rely on Certain Writings, Statements and Advice. The Collateral
Agent shall be entitled to rely on, and shall not incur any liability for relying on,
any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper
Person. The Collateral Agent also may rely on any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not incur
any liability for relying thereon. The Collateral Agent may consult with legal
counsel (who may be counsel for any NNC Company), independent
 41




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accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by
it in accordance with the advice of any such counsel, accountant or expert. The
Collateral Agent may rely conclusively on advice from the Indenture Trustee as to
whether at any time the maturity of the 2023 Notes has been accelerated.
 (e)
    
    Sub-Agents and Related Parties. The Collateral Agent may perform any of its
duties and exercise any of its rights and powers through one or more sub-agents
appointed by it in good faith. The Collateral Agent and any such sub-agent may perform
any of its duties and exercise any of its rights and powers through its directors,
officers, employees and agents (the Related Parties). The exculpatory provisions of
Section 17 and this Section 18 shall apply to any such sub-agent, the Related Parties
of the Collateral Agent and any such sub-agent.(f)
    
    Information as to Secured Obligations and Actions by Secured Parties.For all
purposes of the Security Documents, including determining the amounts of the Secured
Obligations and whether a Secured Obligation is a Contingent Secured Obligation or not,
or whether any action has been taken under any Secured Agreement, the Collateral Agent
will be entitled to rely on information from (i) its own records for information as to
the Lenders, the Bank, Obligations and actions taken by the Lenders, (ii) the Indenture
Trustee for information as to the Bond Obligations and actions taken by the holders
thereof, (iii) EDC for information as to the EDC Support Facility Obligations and
actions taken by the holders thereof, (iv) any Secured Party for information as to its
Secured Obligations and actions taken by it, to the extent that the Collateral Agent
has not obtained such information from the foregoing sources, and (v) NNI, to the
extent that the Collateral Agent has not obtained information from the foregoing
sources.(g)
    
    The Collateral Agent may refuse to act on any notice, consent, direction or
instruction from any Secured Parties or any agent, trustee or similar representative
thereof that, in the Collateral Agents opinion, (i) is contrary to law or the
provisions of any Security Document or, (ii) may expose the Collateral Agent to
liability (unless the Collateral Agent shall have been indemnified, to its reasonable
satisfaction, for such liability by the Secured Parties that gave such notice, consent,
direction or instruction).(h)
    
    Resignation; Successor Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided in this subsection 17(h) the
Collateral Agent may resign at any time by notifying EDC, the Lenders and NNI. Upon
any such resignation, the Required Secured Lenders shall have the right to appoint a
successor Collateral Agent reasonably acceptable to NNI. If no
successor shall have been so appointed by the Required Secured Lenders and shall
have accepted such appointment within 30 days after the retiring Collateral Agent
gives notice of its resignation, then the retiring Collateral Agent may, on behalf
of the Secured Parties, appoint a successor Collateral Agent reasonably acceptable
to NNI which shall be a bank with an office in New York, New York or an affiliate of
any such bank. Upon acceptance of its appointment as Collateral Agent hereunder by
a successor, such successor shall succeed to and become vested with
 42




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all the rights,
powers, privileges and duties of the retiring Collateral Agent hereunder, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. The fees payable by NNI to a successor Collateral Agent shall be the
same as those payable to its predecessor unless otherwise agreed by NNI and such
successor. After the Collateral Agents resignation hereunder, the provisions of
this Section 18 and Section 17 shall continue in effect for the benefit of such
retiring Collateral Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Collateral Agent was acting as Collateral Agent.
 SECTION 19. TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL
 (a)
    
    The Transaction Liens granted by each Lien Grantor shall terminate on the Bank
Termination Date.(b)
    
    Concurrently with any sale, exchange, assignment, lease, Financing Lease or
other disposition of any item of Collateral by any Lien Grantor (except a lease or a
sale, exchange, assignment, Financing Lease or other disposition (x) to another Lien
Grantor whose Secured Obligations hereunder include Secured Obligations of the Lien
Grantor effecting such sale or other disposition not expressly prohibited by the 2006
Credit Agreement or by this Agreement, the Transaction Liens on the assets sold or
otherwise disposed of (but not in any Proceeds arising from such sale or other
disposition) will cease immediately without any action by the Collateral Agent or any
other Secured Party; provided thatno Specified Event of Default shall have occurred
and is continuing or would result therefrom.(c)
    
    Upon any Collateral of any Lien Grantor becoming Transferred Receivables or
Related Transferred Rights, the Transaction Lien thereon (but not in any Proceeds
thereof) shall cease, and shall be deemed to have ceased immediately prior to such
Collateral becoming Transferred Receivables or Related Transferred Rights, without any
action by the Collateral Agent or any other Secured Party; provided thatthe
Transaction Lien on any Transferred Receivable or Related Transferred Right shall not
be released if (i) a Specified Event of Default shall have occurred and is continuing
and (ii) the Required Secured Lenders have delivered a notice to the Collateral Agent
instructing that no Transferred Receivable or Related Transferred Right be released
from any Transaction Lien during the continuance of such Specified Event of Default.
The Collateral Agent shall be fully protected
in relying on a certificate of the relevant Lien Grantor stating that any Collateral
qualifies as Transferred Receivables or Related Transferred Rights.(d)
    
    Upon any Collateral of any Lien Grantor consisting of Securities subject to a
put/call arrangement not expressly prohibited by the terms of any Credit Agreement
being transferred to any Person other than another Lien Grantor as a result of the
exercise of such put/call arrangement, the Transaction Lien thereon (but not in any
Proceeds thereof) will cease immediately without any action by
 43




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the Collateral Agent or
any other Secured Party; provided that no Specified Event of Default shall have
occurred and is continuing or would result therefrom.
 (e)
    
    Upon any Collateral of any Lien Grantor consisting of cash or other investments
Property (any such Collateral, Released Cash Collateral) being deposited in a Deposit
Account or Securities Account which is not subject to the Control of the Collateral
Agent as security (a Third Party Lien) for the benefit of any Person other than a
Lien Grantor in a transaction that does not contravene Section 5.09 of the 2006 Credit
Agreement, the Transaction Lien thereon (but not any Proceeds thereof other than, to
the extent they might otherwise constitute Proceeds, any amounts constituting payment
on or with respect to any Released Cash Collateral, or any investments made with such
Released Cash Collateral, in each case (x) made after the release of the Transaction
Lien thereon in accordance with this paragraph (e) and (y) only to the extent that such
Released Cash Collateral (or investments made with such Released Cash Collateral)
remain subject to the Third Party Lien) will cease immediately without any action by
the Collateral Agent or any other Secured Party; providedthat no Specified Event of
Default shall have occurred and is continuing or would result therefrom.(f)
    
    If the continued pledge of any Pledged Equity Interests of any person results
in a requirement of the inclusion of separate financial statements of such Person in
the filings by any NNC Company under the Exchange Act (except to the extent such
financial statements are currently being provided in the Exchange Act filings of any
NNC Company on the Effective Date), the Transaction Lien thereon will cease immediately
without any action by the Collateral Agent or any other Secured Party; provided that no
Specified Event of Default shall have occurred and is continuing or would result
therefrom.(g)
    
    In addition to the foregoing, the Collateral Agent may release Collateral with
the prior written consent of the Required Secured Lenders.(h)
    
    Upon any termination of a Transaction Lien or release of Collateral, or change
in the Secured Obligations of any Lien Grantor, the Collateral Agent will promptly, at
the expense of the relevant Lien Grantor, execute and deliver to such Lien Grantor such
documents as such Lien Grantor shall reasonably request to evidence the termination of
such Transaction Lien or the release of such Collateral, or change in the Secured
Obligations, as the case may be, and shall deliver to such Lien Grantor any documents
or instruments, including without limitation stock certificates, evidencing any
Collateral no longer subject to any
Transaction Liens in each case subject only to (i) the delivery of the certificate
referred to in paragraph (c) above and (ii) evidence reasonably satisfactory to the
Collateral Agent that the Collateral purported to be released under any of
paragraphs (b) through (f) above in fact qualifies for such release (which evidence
may take the form of a certificate to that effect from NNL and NNI, and the
Collateral Agent shall be fully protected in relying on any such certificate).
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SECTION 20. ADDITIONAL LIEN GRANTORS
 Lien Grantor
 SECTION 21. ADDITIONAL SECURED OBLIGATIONS
 Designated Hedging Agreement
 SECTION 22. NOTICES
  (i)
    
    in the case of any Lien Grantor listed on the signature pages hereof:
 
 (ii)
    
    in the case of any other Lien Grantor, its address, facsimile number or
e-mail address set forth in its first Security Agreement Supplement;(iii)
    
    in the case of the Collateral Agent:
 
 45




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(iv)
    
    in the case of any other Secured Party, to the Collateral Agent to be
forwarded to such Secured Party at its address or facsimile number or e-mail
address, if any, specified in or pursuant to the relevant Secured Agreement.
  SECTION 23. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE
  SECTION 24. SUCCESSORS AND ASSIGNS
  SECTION 25. AMENDMENTS AND WAIVERS
  SECTION 26. CHOICE OF LAW
  SECTION 27. JUDGMENT CURRENCY
 specified
currency
 46




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##### 



SECTION 28. INTEREST ACT
 Interest Act
 SECTION 29. WAIVER OF JURY TRIAL
  SECTION 30. SEVERABILITY
  47




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NORTEL NETWORKS LIMITEDBy:

/s/  Katharine StevensonKatharine StevensonTreasurerBy:

/s/  Gordon A. DaviesGordon A. DaviesGeneral Counsel-Corporate and Corporate Secretary NORTEL NETWORKS CORPORATIONBy:

/s/  Katharine StevensonKatharine StevensonTreasurerBy:

/s/  Gordon A. DaviesGordon A. DaviesGeneral Counsel-Corporate and Corporate Secretary




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##### 



JPMORGAN CHASE BANK, N.A., as
Collateral Agent and Administrative AgentBy:

/s/  David
M. MallettName:
    David M. MallettTitle:
    Vice President




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EXPORT DEVELOPMENT CANADA, as 
provider of the EDC Support FacilityBy:

/s/  David
B. GuyName:
    David B. GuyTitle:
    Director-TelecomBy:

/s/  Michael
J. FortnerName:
    Michael J. FortnerTitle:
    Financial Services Manager




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##### 



SCHEDULE 1
 PLEDGED EQUITY INTERESTS DIRECTLY
OWNED BY LIEN GRANTORS
(as of the date hereof)




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##### 



SCHEDULE 2
 PLEDGED SECURITIES
(other than Pledged Equity Interests)
OWNED DIRECTLY BY LIEN GRANTORS
(as of the date hereof)




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SCHEDULE 3
 Principal U.S. Cash Management Accounts of Lien Grantors




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##### 



Exhibit A
to Security Agreement
 SECURITY AGREEMENT SUPPLEMENT
 Lien Grantor
 Security Agreement
    1.
    
    Grant of Transaction Liens.
 New
Collateral
 [describe property being added to the Collateral] 1
  (a)
    
    With respect to each right to payment or performance included in the Collateral
from time to time, the Transaction Lien granted therein includes a continuing security
interest in
 (i)
    
    any Supporting Obligation that supports such payment or
performance and(ii)
    
    any Lien that (x) secures such right to payment or performance
or (y) secures any such Supporting Obligation.
 (b)
    
    The foregoing Transaction Liens are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of the Lien Grantor with respect to any
of the New Collateral or any transaction in connection therewith.
 
 1
    
    If the Lien Grantor is not already a party
to the Security Agreement, clauses (i) through (xiv) of, and the proviso to,
Section 2 of the Security Agreement may be appropriate.




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Delivery of Collateral
 Party to Security Agreement 2
 (c)
    
    Address of Lien Grantor. The address, facsimile number and e-mail address of
the Lien Grantor for purposes of Section 22(b) of the Security Agreement are:
 [address, facsimile number and e-mail address of Lien Grantor]
 4.
    
    Representations and Warranties.3
 (a)
    
    The Lien Grantor represents and warrants, on the date of execution hereof, that
it is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction identified as its jurisdiction of organization, as the case
may be, in its Perfection Certificate or such other jurisdiction of which the Lien
Grantor gives prior written notice to the Collateral Agent.(b)
    
    The Lien Grantor represents and warrants, on the date of execution hereof that
it has delivered a Perfection Certificate to the Collateral Agent. The information set
forth therein is correct and complete as of the date of delivery thereof.(c)
    
    The Lien Grantor represents and warrants, on the date of execution hereof, that
the execution and delivery of this Security Agreement Supplement by the Lien Grantor
and the performance by it of its obligations under the Security Agreement as
supplemented hereby (i) are within its corporate or other powers, have been duly
authorized by all necessary corporate or other action, (ii) require no action by or in
respect of, or filing with, any governmental body, agency or official other than
filings for perfection of Transaction Liens on the New Collateral or filings by the
Lien Grantor with respect to copyrights and (iii) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of its organizational
documents, or of any agreement, judgment, injunction, order, decree or other instrument
binding upon it except, with respect to (ii) and (iii) above, any such action, filing
or contravention which would not have a material adverse affect on the ability of the
Lien Grantor to perform its obligations under this Security Agreement Supplement or the
Security Agreement.(d)
    
    The Lien Grantor represents and warrants that on the date of the execution
hereof, the Security Agreement as supplemented hereby constitutes a valid and binding
 
 2
    
    Delete Sections 3 and 4 if the Lien
Grantor is already a party to the Security Agreement.3
    
    Modify as needed if the Lien Grantor is
not a corporation.




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(e)
    
    Each of the representations and warranties set forth in Section 3 through to
Section 10 of the Security Agreement is true as applied to the Lien Grantor and the New
Collateral on the date specified therein. For purposes of the foregoing sentence,
references in said Sections to a Lien Grantor shall be deemed to refer to the Lien
Grantor, references to Schedules to the Security Agreement shall be deemed to refer
to the corresponding Schedules to this Canadian Security Agreement Supplement and
references to Collateral shall be deemed to refer to the New Collateral and
references to the Effective Date shall be deemed to refer to the date of this
Security Agreement Supplement.(f)
    
    Governing Law. This Security Agreement Supplement shall be construed in
accordance with and governed by the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
  [NAME OF LIEN GRANTOR]By:Name:Title: JPMORGAN CHASE BANK, N.A., as
Collateral AgentBy:Name:Title:




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##### 



Schedule 1
to Security Agreement
Supplement
 PLEDGED EQUITY INTERESTS IN SUBSIDIARIES
AND AFFILIATES OWNED BY LIEN GRANTOR 4
 Number ofJurisdiction of
    
    
    
    
    
    Shares orIssuer
    
    Organization
    
    
    Percentage Owned
    
    
    Units
 
 4
    
    To be used only for new Lien Grantor




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##### 



Schedule 2
to Security Agreement
Supplement
 SECURITIES AND OTHER INVESTMENTS 5  (other than Equity Interests in Subsidiaries and affiliates)
 OWNED BY LIEN GRANTOR
 PART 1 Securities
 Jurisdictionof
    
    
    Amount
    
    
    Type ofIssuer
    
    Organization
    
    
    Owned
    
    
    Security
 PART 2 Securities Accounts
 6
 Securities Intermediary
    
    Account Number
 PART 3 Commodity Accounts
  Commodity Intermediary
    
    Account Number
 
 5
    
    To be used only for a new Lien Grantor6
    
    If any such Securities Account holds
material long-term investments and is not a trading account, more detailed
information as to such investments could appropriately be required to be
disclosed in this Schedule.




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##### 



Exhibit B
to Security Agreement
 COPYRIGHT SECURITY AGREEMENT
 (Copyrights, Copyright Registrations)
 [name of Lien Grantor]  7 Lien Grantor
 Security Agreement Grantee Secured Obligations
 Copyright Collateral
 (i)
    
    each Copyright (as defined in the Security Agreement) owned by
the Lien Grantor, including, without limitation, each Copyright registration
referred to in Schedule 1 hereto; and(ii)
    
    all proceeds of, revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without limitation, all
proceeds of and revenues from any claim by the Lien Grantor against third
parties for past, present or future infringement of any Copyright (including,
without limitation, any Copyright owned by the Lien Grantor and identified in
Schedule 1.
  
 7
    
    Modify as needed if the Lien Grantor is
not a corporation.




---



##### 



[NAME OF LIEN GRANTOR]By:By:Name:Title: Acknowledged:
 JPMORGAN CHASE BANK, N.A., 
as Collateral AgentBy:Name:Title:




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##### 



Exhibit C
to Security Agreement
 PATENT SECURITY AGREEMENT
 (Patents, Patent Applications)
 [name of Lien Grantor]  Lien
Grantor
 Security Agreement Grantee Secured Obligations
 Patent Collateral
 (i)
    
    each Patent (as defined in the Security Agreement) owned by the
Lien Grantor, including, without limitation, each Patent referred to in
Schedule 1 hereto; and(ii)
    
    all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement of any
Patent owned by the Lien Grantor (including, without limitation, any Patent
identified in Schedule 1 hereto).




---



##### 



[NAME OF LIEN GRANTOR]By:Name:TitleBy:Name:Title: Acknowledged:
 JPMORGAN CHASE BANK, N.A., 
as Collateral AgentBy:Name:Title:




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##### 



EXHIBIT D
to Security Agreement
 TRADEMARK SECURITY AGREEMENT
 (Trademark Registrations, Trademark Applications)
 [name of Lien Grantor]  1 Lien Grantor
 Security Agreement Grantee Secured Obligations
 Trademark Collateral
 (i)
    
    each Trademark (as defined in the Security Agreement) owned by
the Lien Grantor, including, without limitation, each Trademark registration
referred to in Schedule 1 hereto, and all of the goodwill of the business
connected with the use of, or symbolized by, each Trademark; and(ii)
    
    all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future unfair competition
with, or violation of intellectual property rights in connection with or injury
to, or infringement or dilution of, any Trademark owned by the Lien Grantor
(including, without limitation, any Trademark identified in Schedule 1 hereto).
  
 1
    
    Modify as needed if the Lien Grantor is not
a corporation.




---



##### 



[NAME OF LIEN GRANTOR]By:Name:TitleBy:Name:Title Acknowledged:
 JPMORGAN CHASE BANK, N.A., 
as Collateral AgentBy:Name:Title:




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##### 



EXHIBIT E
to Security Agreement
 CANADIAN INDUSTRIAL DESIGN SECURITY AGREEMENT
 (Industrial Designs, Industrial Design Applications)
 [name of Lien Grantor]  1 Lien Grantor
 Security Agreement Grantee Secured Obligations
 Design Collateral
 (i)
    
    each Design (as defined in the Security Agreement) owned by the
Lien Grantor, including, without limitation, each Design referred to in
Schedule 1 hereto; and(ii)
    
    all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement of any
Design owned by the Lien Grantor (including, without limitation, any Design
identified in Schedule 1 hereto).
  
 1
    
    Modify as needed if the Lien Grantor is not
a corporation.




---



##### 



[NAME OF LIEN GRANTOR]By:Name:TreasurerBy:Name:Title: Acknowledged:
 JPMORGAN CHASE BANK, N.A., 
as Collateral AgentBy:Name:Title:




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##### 



EXHIBIT F
to Security Agreement
 PERFECTION CERTIFICATE
 [Name of Lien Grantor] Lien Grantor
 A.
    
    Information Required for Filings and Searches for Prior Filings.
 1.
    
    Jurisdiction of Organization. The Lien Grantor is a [corporation] organized under the laws of
.2.
    
    Name. The exact [corporate] name of the Lien Grantor as such name appears in its [articles
of incorporation] is as follows:3.
    
    Prior Names. (i) Set forth below is each other corporate name that the Lien Grantor has had
within the past five years, together with the date of the relevant change:
 (i)
    
    Except as set forth below, the Lien Grantor has not changed its corporate
structure in any way within the past five years1.
 B.
    
    Additional Information Required for Searches for Prior Filings.
 1.
    
    Current Locations. (a) The chief executive office and, [if different, the registered head
office,]of the Lien Grantor is located at the following address:
 Mailing Address
    
    City
    
    
    Province
 [does] [does not]
 
 2
    
    Changes in corporate structure need only
include mergers and consolidations, as well as any change in the Lien Grantor
Q2s form of organization from or to LLP, LLC or corporation. If any
such change has occurred, please include the information required by Part A of
this certificate (except that no response to paragraphs 3(a) or (b) is required
with respect to any period during which any predecessor entity acquired by
merger or consolidation was not an NNL Company) as to each constituent party to
a merger or consolidation. Restrict to Canadian Lien Grantors.




---



##### 



(b)
    
    The following are all locations where there is real property owned or leased
in Canada by the Lien Grantor:
 Mailing Address
    
    City
    
    
    Province
 (c)
    
    The following are all current locations in Canada not identified
above where the Lien Grantor maintains any Inventory which is other than inventory
in-transit and or with third party logistics providers, on consignment, on loan,
involved in the repair process, in third party marshalling and distribution
centers, on customer premises, with contract manufacturers or component level
providers or inventory that is not on the property at which a system house is
located:
 Mailing Address
    
    City
    Province
 2.
    
    Prior Locations. Set forth below is the information required by paragraphs (a) and (b) of
Part B-1 above with respect to the chief executive office maintained by the Lien Grantor, or
where any real property leased or owned in Canada by the Lien Grantor was located, at any time
during the past four months:
 l
 By:Name:Title:




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##### 



EXHIBIT G
to Security Agreement
 SECURITIES ACCOUNT CONTROL AGREEMENT
 Lien
Grantor Secured Party Securities Intermediary UCC
   Security Agreement Transaction Lien
   Establishment of Account
 Account




---



##### 



Financial Assets
 Entitlement Orders
 Waiver of Lien; Waiver of Set-off
 Choice of Law
 Conflict with Other Agreements Existing Other Agreements
 Amendments.
 Notice of Adverse Claims




---



##### 



Lien Grantor Entitlement Orders; Notice of Exclusive Control Notice of Exclusive Control
 Voting Rights
 Permitted Investments
 Statements and Confirmations
 Tax Reporting
 Representations, Warranties and Covenants of the Securities Intermediary




---



##### 



Successors
 Notices




---



##### 



[NAME OF LIEN GRANTOR]By:Name:Title:JPMORGAN CHASE BANK, N.A., as
Collateral AgentBy:Name:Title: [NAME OF SECURITIES
INTERMEDIARY]By:Name:Title:




---



##### 



Notice of Exclusive Control
  Account
   JPMORGAN CHASE BANK, N.A.,
as Collateral AgentBy:




---



##### 



EXHIBIT H
to Security Agreement
 ISSUER CONTROL AGREEMENT
 Lien Grantor Secured Party Issuer UCC [Issuers jurisdiction of incorporation].
  Securities
 Security Agreement Transaction Lien
   Nature of Securities
 Instructions
 Waiver of Lien; Waiver of Set-off
 Choice of Law
 Conflict with Other Agreements Existing Other Agreements




---



##### 



Amendments
 Notice of Adverse Claims
 Maintenance of Securities
      Representations, Warranties and Covenants of the Issuer




---



##### 



Successors
 Notices
       [NAME OF LIEN GRANTOR]By:Name:Title:




---



##### 



JPMORGAN CHASE BANK, N.A., as
Collateral AgentBy:Name:Title: [NAME OF ISSUER]By:Name:Title:




---



##### 



Exhibit A
    
 Notice of Exclusive Control
  Securities
  Very truly yours, 
JPMORGAN CHASE BANK, N.A., 
as Collateral AgentBy:Title:




---



##### 



SCHEDULE 1 to Canadian Security Agreement
 CERTAIN PLEDGED EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES
OWNED BY LIEN GRANTORS per Section 3(b)
(as of the date hereof)
 Owner of
    
    
    StockJuris-
    
    Equity Interest
    
    
    certificatediction
    
    and %
    
    
    number
    
    
    Number of shares or unitsUS ISSUERS1
    
    
    Alteon WebSystems, Inc.
    
    Delaware
    
    NNC 100%
    
    
    1
    
    
    1 Preferred2
    
    
    300,000 Preferred1
    
    
    44,696,306 Common2
    
    
    CoreTek, Inc.
    
    Delaware
    
    NNC 100%
    
    
    1
    
    
    1 Preferred1
    
    
    14,487,293 Common2
    
    
    7,573,728 Common3
    
    
    Nortel Networks
Applications Management
Solutions Inc.
    
    Delaware
    
    NNC  88.62%
    
    
    CS-1
    
    21,523,376 CommonX-1
    
    
    1 Series 1 Preferred4
    
    
    Nortel Networks Optical
Components Inc.
    
    Delaware
    
    NNL .07%
    
    
    4
    
    
    13,974 Class A Common5
    
    
    55,899 Class A Common5
    
    
    Sonoma Systems
    
    California
    
    NNC 100%
    
    
    1
    
    
    35,659,018 Common1
    
    
    1 Preferred2
    
    
    2 Common6
    
    
    Xros, Inc.
    
    Delaware
    
    NNC - 100%
    
    
    A-1
    
    
    1 Series A PreferredC-1
    
    
    52,953,008 CommonCANADIAN ISSUERS7
    
    
    1328556 Ontario Inc.
    
    Ontario
    
    NNL  100%8
    
    
    Architel Systems Corporation
    
    Canada
    
    NNL  100%
    
    
    C-1
    
    
    6,028,277 CommonP-1
    
    
    1 Preferred Share, Series 19
    
    
    Capital Telecommunications
Funding Corporation
    
    Canada
    
    NNL  100%
    
    
    C-1
    
    
    1,000 Common10
    
    
    CTFC Canada Inc.
    
    Canada
    
    NNL  100%
    
    
    C-1
    
    
    1,000 Common11
    
    
    Nortel Communications Inc.
    
    Ontario
    
    NNL  100%
    
    CL-1.6
    
    100 Class One Common Shares12
    
    
    Nortel Networks Electronics
Corporation
    
    Canada
    
    NNL  100%
    
    
    1
    
    
    1 Common2
    
    
    1,000 Common Shares13
    
    
    Nortel
Networks Global Corporation
    
    Canada
    
    NNL  100%
    
    
    2
    
    
    5,060,201 Common Shares14
    
    
    Nortel Networks
International Corporation
    
    Canada
    
    NNL  100%
    
    
    2
    
    
    10,000 Common Shares15
    
    
    Nortel Networks Technology
Corporation
    
    Nova Scotia
    
    NNL  100%
    
    
    C-1
    
    
    170,000 Common
 1




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##### 



SCHEDULE 1 to Canadian Security Agreement
 CERTAIN PLEDGED EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES
OWNED BY LIEN GRANTORS per Section 3(b)
(as of the date hereof)
 Owner of
    
    
    StockJuris-
    
    Equity Interest
    
    
    certificatediction
    
    and %
    
    
    number
    
    Number of shares or unitsC-2
    
    
    2 CommonP1-4
    
    
    142,698 Class I Preferred SharesP1-6
    
    
    738 Class I Preferred SharesP1-7
    
    
    7,970 Class I Preferred Shares16
    
    
    Northern Telecom Canada
Limited
    
    Canada
    
    NNL  100%
    
    
    2
    
    
    1 Common3
    
    
    39,999 Common Shares17
    
    
    Regional Telecommunications
Funding Corporation
    
    Canada
    
    NNL  100%
    
    
    C-1
    
    
    1,000 Common18
    
    
    TSFC Canada Inc.
    
    Canada
    
    NNL  100%
    
    
    C-1
    
    
    1,000 Common
 2




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##### 



Schedule 2
 PLEDGED INVESTMENT PROPERTY
(other than Pledged Equity Interests)
OWNED DIRECTLY BY LIEN GRANTORS
  PART 1 Securities
 Jurisdiction ofIssuer
    
    Organization
    
    
    Amount Owned
    
    
    Type of Security
 PART 2 Securities Accounts
  Securities Intermediary
    
    Account Number
    
    US$ at 1/18/2006JP Morgan
    
    NNL
    
    NNL
    
    $
    146,162,775Deutsche Bank
    
    NNC
    
    
    0435222
    
    
    $
    69,400,000JP Morgan
    
    NNL
    
    NNL
    
    $
    15,200,000Deutsche Bank
    
    NNL
    
    
    0405647
    
    
    $
    0JP Morgan
    
    NNC
    
    NNC
    
    $
    0Societe Generale
    
    NNL
    
    NNL
    
    $
    0Societe Generale
    
    NNC
    
    NNC
    
    $
    0




---



##### 



SCHEDULE 3
 PRINCIPAL CANADIAN CASH MANAGEMENT ACCOUNTS OF LIEN GRANTORS
 (as of January 18, 2006)
 ACCOUNTBANK
    
    ENTITY
    
    NUMBER
    
    US $ AT 1/18/2006Citibank NY
    
    NNC
    
    
    30428374
    
    
    $
    2,033,943Citibank NY
    
    NNL
    
    
    38545364
    
    
    $
    392,597