Document:

exv10w3

 

Exhibit
10.3

U.S. SECURITY AGREEMENT

dated as of

February 14, 2006

among

NORTEL NETWORKS INC.

the SUBSIDIARY LIEN GRANTORS

from time to time party hereto,

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

and

EXPORT DEVELOPMENT CANADA,

as provider of the EDC Support Facility

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.
	 	DEFINITIONS	 	1
	SECTION 2.
	 	GRANT OF TRANSACTION LIENS	 	11
	SECTION 3.
	 	GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS	 	13
	SECTION 4.
	 	ADDITIONAL COVENANTS	 	16
	SECTION 5.
	 	RECORDABLE INTELLECTUAL PROPERTY	 	17
	SECTION 6.
	 	INVESTMENT PROPERTY	 	17
	SECTION 7.
	 	CONTROLLED DEPOSIT ACCOUNTS	 	19
	SECTION 8.
	 	CASH COLLATERAL ACCOUNTS	 	19
	SECTION 9.
	 	OPERATION OF COLLATERAL ACCOUNTS	 	20
	SECTION 10.
	 	TRANSFER OF RECORD OWNERSHIP	 	21
	SECTION 11.
	 	RIGHT TO VOTE SECURITIES	 	21
	SECTION 12.
	 	CERTAIN CASH DISTRIBUTIONS	 	21
	SECTION 13.
	 	REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT	 	22
	SECTION 14.
	 	APPLICATION OF PROCEEDS	 	22
	SECTION 15.
	 	FEES AND EXPENSES	 	24
	SECTION 16.
	 	AUTHORITY TO ADMINISTER COLLATERAL	 	25
	SECTION 17.
	 	LIMITATION ON DUTY IN RESPECT OF COLLATERAL	 	25
	SECTION 18.
	 	GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT	 	25
	SECTION 19.
	 	TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL	 	27
	SECTION 20.
	 	ADDITIONAL LIEN GRANTORS	 	28
	SECTION 21.
	 	ADDITIONAL SECURED OBLIGATIONS	 	28
	SECTION 22.
	 	NOTICES	 	29
	SECTION 23.
	 	NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE	 	30
	SECTION 24.
	 	SUCCESSORS AND ASSIGNS	 	30
	SECTION 25.
	 	AMENDMENTS AND WAIVERS	 	30
	SECTION 26.
	 	CHOICE OF LAW	 	30
	SECTION 27.
	 	WAIVER OF JURY TRIAL	 	30
	SECTION 28.
	 	SEVERABILITY	 	30

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	SCHEDULES:
	 	 
	 
	Schedule 1
	 	Pledged Equity Interests Owned Directly by Lien Grantors
	 
	 	 
	Schedule 2
	 	Other Pledged Securities Owned Directly by Lien Grantors
	 
	 	 
	Schedule 3
	 	Collateral Description
	 
	 	 
	Schedule 4
	 	Asset and Revenue Disclosure
	 
	 	 
	Schedule 5
	 	Principal U.S. Cash Management Accounts of Lien Grantors

	 	 	 
	EXHIBITS:
	 	 
	 
	 	 
	Exhibit A
	 	Security Agreement Supplement
	 
	 	 
	Exhibit B
	 	Copyright Security Agreement
	 
	 	 
	Exhibit C
	 	Patent Security Agreement
	 
	 	 
	Exhibit D
	 	Trademark Security Agreement
	 
	 	 
	Exhibit E
	 	Design Security Agreement
	 
	 	 
	Exhibit F
	 	Perfection Certificate
	 
	 	 
	Exhibit G
	 	Issuer Control Agreement
	 
	 	 
	Exhibit H
	 	Securities Account Control Agreement

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U.S. SECURITY AGREEMENT

     AGREEMENT dated as of February 14, 2006 (the “Effective Date”) among NORTEL NETWORKS INC.
(with its successors, “NNI”), the SUBSIDIARY LIEN GRANTORS from time to time party hereto, Export
Development Canada, as provider of the EDC Support Facility and JPMORGAN CHASE BANK, N.A., as
Collateral Agent.

     WHEREAS, NNI, as borrower, certain financial institutions, as lenders and agents, and JPMorgan
Chase Bank, N.A., as Administrative Agent, are parties to a Credit Agreement dated as of February
14, 2006 (as amended from time to time so long as the principal amount of loans thereunder does
not exceed US$1,300,000,000, the “2006 Credit Agreement”); and

     WHEREAS, pursuant to the 2006 Credit Agreement, NNI and its U.S. Subsidiaries (as defined
below) are required to enter into a U.S. Security Agreement in the form hereof;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Definitions.

     (a) Terms Defined in UCC. As used herein, each of the following terms has the meaning
specified in the UCC:

	 	 	 
	Term	 	UCC
	Account
	 	9-102
	Authenticate
	 	9-102
	Certificated Security
	 	8-102
	Chattel Paper
	 	9-102
	Commercial Tort Claim
	 	9-102
	Commodity Account
	 	9-102
	Commodity Contract
	 	9-102
	Commodity Customer
	 	9-102
	Commodity Intermediary
	 	9-102
	Deposit Account
	 	9-102
	Document
	 	9-102
	Electronic Chattel Paper
	 	9-102
	Entitlement Holder
	 	8-102
	Entitlement Order
	 	8-102
	Equipment
	 	9-102
	Financial Asset
	 	8-102 & 103
	General Intangibles
	 	9-102
	Goods
	 	9-102
	Instrument
	 	9-102
	Inventory
	 	9-102
	Investment Property
	 	9-102
	Issuer
	 	5-102
	Letter-of-Credit Right
	 	9-102
	Record
	 	9-102
	Securities Account
	 	8-501
	Securities Intermediary
	 	8-102
	Security
	 	8-102 & 103
	Security Entitlement
	 	8-102
	Supporting Obligations
	 	9-102
	Tangible Chattel Paper
	 	9-102
	Uncertificated Security
	 	8-102

 

     (b) Additional Definitions. The following additional terms, as used herein, have the
following meanings:

     “1988 Indenture” means the Indenture dated as of November 30, 1988 among NNL, the subsidiary
guarantors party thereto and The Bank of New York, as successor to The Toronto-Dominion Bank Trust
Company as trustee, as amended from time to time.

     “2023 Notes” means the 67/8% Notes due 2023 issued by NNL pursuant to the 1988 Indenture.

     “Additional Collateral Liens” means with respect to any item of Collateral, Liens on such
Collateral which are not in contravention of Section 5.09 of the 2006 Credit Agreement.

     “Bank Termination Date” means the first date on which all of the following conditions are
satisfied:

     (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” means all principal of and interest (including, without limitation, any
Post-Petition Interest) on and other amounts payable under the 2023 Notes.

     “Business Day” means a day on which chartered banks are open for over-the-counter business in
New York and excludes Saturdays, Sundays and statutory holidays therein.

     “Canadian Copyrights” means all the following:

     (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,

     (iv) all claims for, and rights to sue for, past or future infringements of any of the
foregoing, and

     (v) 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 Intellectual Property Filing” means (i) with respect to any Patent, Design,
Copyright or Trademark, the filing of the applicable Patent Security Agreement, Design Security
Agreement, Copyright Security Agreement or Trademark Security Agreement with the Canadian
Intellectual Property Office, together with an appropriately completed recordation form and (ii)
with respect to any copyright, the filing of the applicable

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Copyright Security Agreement with the Canadian Intellectual Property Office, together with an
appropriately completed recordation form, in each case sufficient to record the Transaction Lien
granted to the Collateral Agent in such Material Recordable Intellectual Property.

     “Canadian Patents” means:

     (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 Security Agreement” means the Canadian security agreement dated as of the date
hereof among NNC, NNL, the Subsidiaries from time to time party thereto, JPMorgan Chase Bank, N.A.,
as Collateral Agent, and EDC, as amended from time to time.

     “Canadian Subsidiary” means, with respect to any Person, any Subsidiary of such Person (which
may be a corporation, limited liability company, partnership or other legal entity) organized under
the laws of Canada or one of the Provinces or Territories of Canada.

     “Canadian Trademarks” means all of the following, whether registered or unregistered and
whether now owned, used or hereafter acquired or used by any Lien Grantor:

     (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;

     (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” has the meaning specified in Section 8(a).

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     “Cash Distributions” means dividends, interest and other distributions and payments (including
proceeds of liquidation, sale or other disposition) made or received in cash upon or with respect
to any Collateral.

     “Collateral” means all property of any Lien Grantor, whether now owned or hereafter acquired,
on which a Lien is granted or purports to be granted to the Collateral Agent pursuant to, and has
not been released in accordance with, the Security Documents. When used with respect to a specific
Lien Grantor, the term “Collateral” means any of the foregoing Collateral in which such a Lien is
so granted or purports to be so granted by such Lien Grantor and has not been so released.

     “Collateral Accounts” means the Cash Collateral Accounts, the Controlled Deposit Accounts and
the Controlled Securities Accounts.

     “Collateral Agent” means JPMorgan Chase Bank, N.A., in its capacity as Collateral Agent under
this Agreement and the other Security Documents, and its successors in such capacity.

     “Commodity Account Control Agreement” means, with respect to any Commodity Account as to which
a Lien Grantor is the Commodity Customer, an agreement by such Lien Grantor, the Collateral Agent
and the relevant Commodity Intermediary that the Commodity Intermediary will apply any value
distributed on account of the Commodity Contracts carried in such Commodity Account as directed by
the Collateral Agent without further consent by such Lien Grantor. Each such agreement must be
reasonably satisfactory in form and substance to the Collateral Agent.

     “Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of
which would be consolidated with those of NNC in accordance with GAAP in its consolidated financial
statements if such statements were prepared as of such date.

     “Contingent Secured Obligation” means, at any time, any Secured Obligation (or portion
thereof) that is contingent in nature at such time, including any Secured Obligation that is: (i)
an obligation under a Designated Hedging Agreement to make payments that cannot be quantified at
such time, (ii) any other obligation (including any guarantee) that is contingent in nature at such
time or (iii) an obligation to provide collateral to secure any of the foregoing types of
obligations.

     “Control” has the following meanings: (i) when used with respect to any Security or Security
Entitlement, the meaning specified in UCC Section 8-106, (ii) when used with respect to any Deposit
Account, the meaning specified in UCC Section 9-104, (iii) when used with respect to any Commodity
Account or Commodity Contract, the meaning specified in UCC Section 9-106(b) and (iv) when used
with respect to any right to payment or performance by the issuer or a Nominated Person in respect
of a letter of credit, the meaning specified in UCC Section 9-107.

     “Controlled Commodity Account” means a Commodity Account as to which (i) a Lien Grantor is the
Commodity Customer and (ii) a Commodity Account Control Agreement is in effect.

     “Controlled Deposit Account” means a Deposit Account (i) that is subject to a Deposit Account
Control Agreement or (ii) as to which the Collateral Agent is the Depositary Bank’s “customer” (as
defined in UCC Section 4-104).

     “Controlled Securities Account” means a Securities Account that (i) is maintained in the name
of a Lien Grantor at an office of a Securities Intermediary whose jurisdiction (within the meaning
of the UCC ) is in the United States and (ii) together with all Financial Assets credited thereto
and all related Security Entitlements, is subject to a Securities Account Control Agreement among
such Lien Grantor, the Collateral Agent and such Securities Intermediary.

     “Copyright License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use, copy,
reproduce, distribute, prepare

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derivative works, display or publish any records or other materials on which a Canadian
Copyright or U.S. Copyright is in existence or may come into existence.

     “Copyright Security Agreement” means a Copyright Security Agreement, substantially in the form
of Exhibit B, executed and delivered by a Lien Grantor in favor of the Collateral Agent for the
benefit of the Secured Parties.

     “Covered Canadian Asset” means accounts receivable, contract rights and intellectual property
that are “intangibles” as defined by the Ontario Personal Property Security Act and, for greater
certainty, that are not “goods”, “chattel paper”, “documents of title”, “instruments”, “money” or
“securities” as defined by the Ontario Personal Property Security Act.

     “Credit Agreements” means the EDC Support Facility, and the 2006 Credit Agreement; and any
reference to the “principal amount” of or outstanding under any Credit Agreement includes the
outstanding principal or face amount of obligations, contingent or otherwise, of NNL and its
Subsidiaries under the EDC Support Facility.

     “Deposit Account Control Agreement” means, with respect to any Deposit Account of any Lien
Grantor maintained with a Depositary Bank whose jurisdiction (within the meaning of the UCC ) is in
the United States of America, an agreement among such Lien Grantor, the Collateral Agent and the
relevant Depositary Bank, set forth in an Authenticated Record, (i) that such Depositary Bank will
comply with instructions originated by the Collateral Agent directing disposition of the funds in
such Deposit Account without further consent by such Lien Grantor and (ii) subordinating to the
relevant Transaction Lien all claims of the Depositary Bank to such Deposit Account (except its
right to deduct its normal operating charges and fees and any uncollected funds previously credited
thereto).

     “Depositary Bank” means a bank at which a Controlled Deposit Account is maintained.

     “Designated Hedging Agreement” has the meaning specified in Section 21.

     “Design License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right with respect
to any Design now or hereafter in existence, whether or not registered or recorded and whether or
not an application shall, or is intended to be filed in respect thereof.

     “Design Security Agreement” means a Design Security Agreement, substantially in the form of
Exhibit E, executed and delivered by a Lien Grantor in favor of the Collateral Agent for the
benefit of the Secured Parties.

     “Designs” means all industrial designs, design patents and other designs under the laws of
Canada that any Lien Grantor now or hereafter owns or uses, including:

     (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

     (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.

     “EDC” means Export Development Canada, in its capacity as provider of the EDC Support
Facility.

     “EDC Support Facility” means the facility made available by EDC to NNL pursuant to the Amended
and Restated Master Facility Agreement dated October 24, 2005, as such agreement may be amended or
supplemented

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from time to time, guaranteed by NNI and NNC pursuant to the Guarantee Agreement during the
period in which the Guarantee Agreement is effective; provided that the face amount of obligations
thereunder shall not exceed US$750,000,000.

     “EDC Support Facility Obligations” means all reimbursement and indemnity obligations,
contingent or otherwise, and obligations to repay interest and fees of NNL under the EDC Support
Facility.

     “Effective Date” has the meaning specified in the preamble.

     “Equity Interest” means (i) in the case of a corporation, any shares of its capital stock,
(ii) in the case of a limited liability company, any membership interest therein, (iii) in the case
of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case
of any other business entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described in this definition
or (vi) any Security Entitlement in respect of any Equity Interest described in this definition.

     “Event of Default” means the occurrence and continuance of any “Event of Default” as defined
in the 2006 Credit Agreement.

     “Financing Lease” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

     “Foreign Subsidiary” means a Subsidiary (which may be a corporation, limited liability
company, partnership or other legal entity) organized under the laws of a jurisdiction outside the
United States and Canada.

     “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States, applied on a basis consistent (except for changes concurred in by NNC’s independent
public accountants) with the most recent audited consolidated financial statements of NNC and its
Consolidated Subsidiaries delivered to the Collateral Agent.

     “Guarantee Agreement” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

     “Hedging Agreement” means (i) any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest rate, currency exchange
rate or commodity price hedging arrangement and (ii) any hedging agreement in respect of common
stock entered into in order to hedge exposure under stock option plans or other benefit plans for
employees, directors or consultants of NNC and its Subsidiaries, but in each case only if such
agreement or arrangement is entered into with a Lender or an affiliate thereof.

     “Illiquid Collateral” means Collateral other than the Liquid Collateral.

     “Indenture Trustee” means The Bank of New York, as successor to The Toronto-Dominion Bank
Trust Company, as trustee under the 1988 Indenture and its successors in such capacity.

     “Intellectual Property” means (i) Canadian Patents, (ii) Canadian Patent Licenses, (iii)
Canadian Trademarks, (iv) Designs, (v) Design Licenses (vi) Canadian Copyrights, (vii) U.S.
Patents, (viii) U.S. Trademarks, (ix) U.S. Copyrights, and all rights in or under any of the
foregoing.

     “Intellectual Property Filing” means any Canadian Intellectual Property Filing or U.S.
Intellectual Property Filing.

     “Intellectual Property Security Agreement” means a Copyright Security Agreement, a Design
Security Agreement, a Patent Security Agreement or a Trademark Security Agreement.

     “Issuer Control Agreement” means an Issuer Control Agreement substantially in the form of
Exhibit F (with any changes that the Collateral Agent shall have reasonably approved).

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     “Lender” means each Lender holding a Tranche A Commitment or a Tranche A Loan under the 2006
Credit Agreement.

     “Lien” means, with respect to any asset, (i) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, (ii) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

     “Lien Grantors” means NNL, NNI and the Subsidiary Lien Grantors.

     “Liquid Collateral” means (i) Pledged Accounts, (ii) Pledged Chattel Paper, (iii) Pledged
Instruments, (iv) the Cash Collateral Accounts, (v) the Controlled Deposit Accounts, (vi) the
Controlled Securities Accounts, (vii) Pledged Intellectual Property and (viii) any Pledged
Uncertificated Security evidencing money market funds.

     “Liquid Investment” means a Permitted Investment (other than commercial paper) that matures
within 30 days after it is first included in the Collateral.

     “LLC Interest” means a membership interest or similar interest in a limited liability company.

     “Loan”
has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

     “Loan Documents” means the Credit Agreements (including the notes thereunder) and the Security
Documents.

     “Material Commercial Tort Claim” means any Commercial Tort Claim with a fair market value (as
determined in good faith by the applicable Lien Grantor) in excess of $10,000,000.

     “Material Government Contract” means a contract, between a Lien Grantor and either (i) the
federal government of the United States or any agency or instrumentality thereof or (ii) a state or
local government or any agency or instrumentality thereof, that provides (or can reasonably be
expected to provide, based on orders received as of such time) for future payments to such Lien
Grantor in an aggregate amount exceeding (x) for the purpose of the first sentence of Section 3(n),
$50,000,000 and (y) for the purpose of the second sentence of Section 3(n), $10,000,000.

     “Material Intellectual Property” means, with respect to any Lien Grantor and at any time, any
Intellectual Property that is one of the 100 most valuable items of Intellectual Property owned by
the NNC Companies at such time to the business of the NNC Companies taken as a whole, as such
business is presently conducted or proposed to be conducted, as reasonably determined by the Lien
Grantors, acting in their reasonable discretion.

     “Material Recordable Intellectual Property” means, at any time, the Recordable Intellectual
Property that is Material Intellectual Property.

     “NGSH” means Nortel Government Solutions Holdings Corporation, a Delaware corporation, and its
successors.

     “NNC” means Nortel Networks Corporation, a Canadian corporation, and its successors.

     “NNC Companies” means, collectively, NNC and any of its Subsidiaries.

     “NNL” means Nortel Networks Limited, a Canadian corporation, and its successors.

     “Nominated Person” means a Person whom the issuer of a letter of credit (i) designates or
authorizes to pay, accept, negotiate or otherwise give value under such letter of credit and (ii)
undertakes by agreement or custom and practice to reimburse.

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     “Non-Contingent Secured Obligation” means at any time any Secured Obligation (or portion
thereof) that is not a Contingent Secured Obligation at such time.

     “own” refers to the possession of sufficient rights in property to grant a security interest
therein as contemplated by UCC Section 9-203, and “acquire” refers to the acquisition of any such
rights.

     “Partnership Interest” means a partnership interest, whether general or limited.

     “Patent License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right with respect
to any Canadian Patent or U.S. Patent or any invention now or hereafter in existence, whether
patentable or not, whether a patent or application for patent is in existence on such invention or
not, and whether a patent or application for patent on such invention may come into existence or
not.

     “Patent Security Agreement” means a Patent Security Agreement, substantially in the form of
Exhibit C, executed and delivered by a Lien Grantor in favor of the Collateral Agent for the
benefit of the Secured Parties.

     “Perfection Certificate” means, with respect to any Lien Grantor, a certificate substantially
in the form of Exhibit E, completed and supplemented with the schedules contemplated thereby to the
satisfaction of the Collateral Agent, and signed by an officer of such Lien Grantor.

     “Permitted Liens” means (i) the Transaction Liens and (ii) Additional Collateral Liens.

     “Permitted Receivables Financing” means (i) any Qualified Receivables Transaction and (ii) and
any Receivables Transaction after giving effect to which the mandatory prepayment provisions of the
Syndicated Credit Agreement are not contravened.

     “Person” means an individual, a corporation, a partnership, an association, a trust or any
other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.

     “Pledged,” when used in conjunction with any type of asset, means at any time an asset of such
type that is included (or that creates rights that are included) in the Collateral at such time
pursuant to the terms of this Agreement. For example, “Pledged Equity Interest” means an Equity
Interest that is included in the Collateral at such time and “Pledged letter of credit” means a
letter of credit that creates rights to payment or performance that are included in the Collateral
at such time.

     “Post-Petition Interest” means, with respect to any obligation of any Person, any interest
that accrues after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of such Person (or would accrue but for the operation of
applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable as
a claim in any such proceeding.

     “Proceeds” means all proceeds of, and all other profits, products, rents or receipts, in
whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, any Collateral, including all claims of the relevant
Lien Grantor against third parties for loss of, damage to or destruction of, or for proceeds
payable under, or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any Collateral.

     “Purchase Money Mortgage” means, with respect to any Lien Grantor, (i) a mortgage on or
security interest in property existing at the time of acquisition thereof by such Lien Grantor and
not incurred in contemplation of such acquisition and (ii) any mortgage on or security interest in
any property acquired, constructed or improved by such Lien Grantor incurred after the date hereof
which is related solely to, and is created or assumed contemporaneously with, or within 180 days
after, such acquisition, or completion of such construction or improvement, to secure or provide
for the payment of the purchase price thereof or the cost of construction or improvement thereon
incurred after the date hereof (including the cost of any underlying real property); provided that
in the case of any such acquisition, construction or improvement, the mortgage or security interest
shall not

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apply to any after acquired property of such Grantor (other than improvements thereon and
fixtures) or to any property previously owned by such Lien Grantor other than, in the case of any
such construction or improvement, any real property, theretofore substantially unimproved for the
purposes of such Lien Grantor, on which the property so constructed, or the improvement, is located
and other than a fixture on the real property on which the property so constructed, or the
improvement, is located; and provided further that the amount secured by the mortgage or security
interest shall not exceed the purchase price thereof or the cost of construction or improvement
thereon plus reasonable fees and expenses with respect thereto.

     “Qualified Receivables Transaction” has the meaning set forth in Section 1.01 of the 2006
Credit Agreement.

     “Ratio” means, at any time, the ratio of (i) the principal amount of the Bond Obligations to
(ii) the sum of (A) the Tranche A Obligations at such time and (B) the aggregate principal amount
of any “Support” (as defined in the EDC Support Facility) outstanding under the EDC Support
Facility.

     “Receivables Transaction” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement.

     “Recordable Intellectual Property” means (A) (i) U.S. Patents (other than U.S. Patents
described in clauses (iii) and (iv) of the definition thereof) registered with the United States
Patent and U.S. Trademarks (other than Trademarks described in clauses (v) and (vi) of the
definition thereof) registered with the United States Patent and Trademark Office, (ii) U.S.
Copyrights (other than U.S. Copyrights described in clauses (iii) and (iv) of the definition
thereof) registered with the United States Copyright Office and (iii) all rights in or under any of
the foregoing.

     (B) (i) Canadian Patents (other than Canadian Patents described in clauses (iii) and (iv) of
the definition thereof) registered with the Canadian Patent and Canadian Trademarks (other than
Trademarks described in clauses (v) and (vi) of the definition thereof) registered with the
Canadian Patent and Trademark Office, (ii) Canadian Copyrights (other than Canadian Copyrights
described in clauses (iii) and (iv) of the definition thereof) registered with the Canadian
Copyright Office and (iii) Designs (other than Designs described in clauses (iii) and (iv) of the
definition thereof) registered with the Canadian Intellectual Property Office, and all rights in or
under any of the foregoing.

     “Related Transferred Rights” means (i) Transferred Receivables, (ii) rights to payment and
collections in respect of such Transferred Receivables, (iii) Supporting Obligations in respect of
such Transferred Receivables, (iv) all invoices, documents, books, records and other information
with respect to such Transferred Receivables or the obligors thereon, (v) with respect to any such
Transferred Receivables, the transferee’s interest in the product (including returned product), the
sale of which by such transferee gave rise to such Transferred Receivables and (vi) all Proceeds of
the items described in the foregoing clauses.

     “Required Secured Lenders” means, with respect to any amendment or waiver hereunder (including
any release of Collateral pursuant to Section 19(g)) Lenders having the percentage of the Tranche A
Commitments and Tranche A Loans specified by Section 9.05 of the 2006 Credit Agreement in order to
approve such action; provided, that if any amendment or waiver hereunder that would (A) provide any
additional benefits to the Lenders which are not also provided to EDC, (B) alter the application of
proceeds of Collateral in any manner adverse to EDC or (C) increase the amount of obligations that
are permitted to be secured by the Collateral (except as expressly contemplated hereby), then the
consent of the “Required Secured Lenders” shall not be deemed to have been obtained unless EDC
shall have also consented to such amendment or waiver.

     “Secured Agreement,” when used with respect to any Secured Obligation of any Lien Grantor,
refers collectively to each instrument, agreement or other document that sets forth obligations of
such Lien Grantor and/or rights of the holder with respect to such Secured Obligation.

     “Secured Obligations” means (i) the Tranche A Obligations, (ii) the Bond Obligations, (iii)
the EDC Support Facility Obligations and (iv) any obligation of any Lien Grantor under a Designated
Hedging Agreement.

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     “Secured Parties” means the holders from time to time of the Secured Obligations.

     “Securities Account Control Agreement” means, when used with respect to a Securities Account,
a Securities Account Control Agreement substantially in the form of Exhibit G (with any changes
that the Collateral Agent shall have reasonably approved) among the relevant Securities
Intermediary, the relevant Lien Grantor and the Collateral Agent to the effect that such Securities
Intermediary will comply with Entitlement Orders originated by the Collateral Agent with respect to
such Securities Account without further consent by the relevant Lien Grantor.

     “Security Agreement Supplement” means a Security Agreement Supplement, substantially in the
form of Exhibit A, signed and delivered to the Collateral Agent for the purpose of adding a
Subsidiary as a party hereto pursuant to Section 20 and/or adding additional personal property to
the Collateral.

     “Security Documents” means this Agreement, the Canadian Security Agreement, the Security
Agreement Supplements, the Commodity Account Control Agreements, the Deposit Account Control
Agreements, the Issuer Control Agreements, the Securities Account Control Agreements, the
Intellectual Property Security Agreements and all other supplemental or additional security
agreements, control agreements or similar instruments delivered pursuant to any Credit Agreement or
any other Security Document.

     “Specified Canadian Assets” means all Chattel Paper, Goods, Equipment, Instruments, Inventory
(other than any Inventory in transit), Deposit Accounts and all money contained therein, Security
Accounts and all Investment Property contained therein, in each case, that are directly owned by
NNI and located in Canada or any province thereof.

     “Specified Event of Default” means an event described in Section 6.01(a)(including without
limitation as a result of the acceleration of the Loans prior to their stated maturity), (f), or
(g) of the 2006 Credit Agreement or any Event of Default caused by a breach of any financial
covenant contained in the 2006 Credit Agreement.

     “Subsidiary” means, as to any Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly or indirectly
owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of NNI.

     “Subsidiary Guarantor” means NNI and any “Subsidiary Guarantor” as defined in the Canadian
Security Agreement.

     “Subsidiary Lien Grantors” means each Subsidiary of NNC that shall, at any time after the date
hereof, become a “Subsidiary Lien Grantor” pursuant to Section 20.

     “Supporting Letter of Credit” means a letter of credit to the extent that it constitutes a
Supporting Obligation with respect to any Collateral.

     “Total Collateral” means all the “Collateral” as defined in any Security Document, taken as a
whole.

     “Trademark License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use any
U.S. Trademark or Canadian Trademark.

     “Trademark Security Agreement” means a Trademark Security Agreement, substantially in the form
of Exhibit D, executed and delivered by a Lien Grantor in favor of the Collateral Agent for the
benefit of the Secured Parties.

     “Tranche A Commitment” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

     “Tranche A Loan” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

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     “Tranche A Note” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

     “Tranche A Obligations” means (i) all principal of and interest (including, without
limitation, any Post-Petition Interest) on any Tranche A Loan and (ii) all other amounts payable by
NNL in connection with the Tranche A Loans under the 2006 Credit Agreement.

     “Transaction Liens” means the Liens granted by the Lien Grantors under the Security Documents.

     “Transferred Receivables” means any receivables that have been sold, pledged, contributed or
otherwise transferred in connection with a Permitted Receivables Financing.

     “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if perfection or the effect of perfection or non-perfection or the priority of
any Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

     “U.S. Copyrights” means all the following: (i) all copyrights under the laws of the United
States (whether or not the underlying works of authorship have been published), all registrations
and recordings thereof, all copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States, including registrations,
recordings and applications in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country or any political subdivision
thereof, including those described in Schedule 1 to any Copyright Security Agreement, (ii) all
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 (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.

     “U.S. Intellectual Property Filing” means (i) with respect to any Patent or Trademark, the
filing of the applicable Patent Security Agreement or Trademark Security Agreement with the United
States Patent and Trademark Office, together with an appropriately completed recordation form and
(ii) with respect to any Copyright, the filing of the applicable Copyright Security Agreement with
the United States Copyright Office, together with an appropriately completed recordation form, in
each case sufficient to record the Transaction Lien granted to the Collateral Agent in such
Material Recordable Intellectual Property.

     “U.S. Subsidiary” means, with respect to any Person, any Subsidiary (which may be a
corporation, limited liability company, partnership or other legal entity) organized under the laws
of the United States or any state thereof.

     “U.S. Patents” means (i) all letters patent and design letters patent issued by the United
States and all applications for letters patent or design letters patent pending before the United
States Patent and Trademark Office or in any similar office or agency of the United States or any
State thereof, including those described in Schedule 1 to any Patent Security Agreement, (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.

     “U.S. Trademarks” means: (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,
and the rights in any of the foregoing which arise under applicable law, (ii) the goodwill of the
business symbolized thereby or associated with each of them, (iii) all registrations and
applications in connection therewith, including registrations and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States or any State
thereof, including those described in Schedule 1 to any Trademark Security Agreement, (iv) all
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,

11

 

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.

     (c) Terms Generally. The definitions of terms herein (including those incorporated by
reference to the UCC or to another document) apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun includes the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition
of or reference to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), any reference herein to any Person shall be construed to include
such Person’s successors and assigns, the words “herein,” “hereof” and “hereunder,” and words of
similar import, shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, all references herein to Sections, Exhibits and Schedules shall be
construed to refer to Sections of, and Exhibits and Schedules to, this Agreement and the word
“property” shall be construed to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

     Section 2. Grant of Transaction Liens. (a) Each Lien Grantor, in order to secure the Secured
Obligations, grants to the Collateral Agent for the benefit of the Secured Parties a continuing
security interest in all the following personal property 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;

     (iii) all Deposit Accounts and all money contained therein;

     (iv) all Documents;

     (v) all Equipment;

     (vi) all Goods;

     (vii) all General Intangibles (including any Equity Interests in other Persons that do
not constitute Investment Property);

     (viii) all Instruments;

     (ix) all Inventory;

     (x) all Investment Property;

     (xi) all Letter-of-Credit Rights;

     (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 (1) its Collateral Accounts, (2) all
Financial Assets credited to its Collateral Accounts from time to time and all Security
Entitlements in respect thereof, (3) all cash held in its Collateral Accounts from time to
time and (4) all other money in the possession of the Collateral Agent; and

     (xiv) all Proceeds of the Collateral described in the foregoing clauses 3(a)(i) through
3(a)(xiii);

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     provided that, with respect to the security interests granted by each Lien Grantor, the
following property shall be excluded from the foregoing security interests: (A) rights of any Lien
Grantor under a lease, general intangible or other rights arising under any contract, instrument,
license or other document if (but only to the extent that) the grant of a Transaction Lien therein
would (i) violate any law applicable to such Lien Grantor, or (ii) violate any restriction that is
enforceable under applicable law in favor of any Person (other than any NNC Company), or result in
an enforceable right in any Person (other than any NNC Company) to declare a default or an
enforceable right to terminate or annul such lease, general intangible or other right but only for
so long as any of the foregoing circumstances described in this clause (A) exists with respect to
any such property (including after the application of Sections 9-406(d), 9-407(a), 9-408(a) and
9-409 of the UCC), (B) (i) the Equity Interests and debt of NGSH, any direct or indirect Subsidiary
of NGSH and, for so long as it is a tax exempt organization under Sec. 501(3) of the Internal
Revenue Code, Nortel LearnIT, a Virginia non-stock corporation and (ii) any Equity Interests in or
any debt of any Person, in each case, to the extent and only for so long as the grant of the
Transaction Liens therein would constitute a violation of any provision of any shareholder
agreement or other agreement with respect to such Equity Interests or debt among such Lien Grantors
and any other holders of Equity Interests or debt of such Person (other than any NNC Company), (C)
any assets of such Lien Grantor that constitute Transferred Receivables and Related Transferred
Rights on the date on which such Lien Grantor becomes a party to this Agreement, (D) any asset of
such Lien Grantor for so long as such asset is subject to a Purchase Money Mortgage that purports
to prohibit a grant of the Transaction Liens thereon, (E) any Equity Interests in any Person
organized under the laws of any jurisdiction outside of the United States or Canada, (F) any Equity
Interests in any Canadian Subsidiary, to the extent (but only to the extent) required to prevent
the Collateral from including more than 66% of all voting Equity Interests in such Subsidiary, (G)
any Equity Interests in any Person the grant of a Transaction Lien on which would require the
inclusion of separate financial statements of such Person in the filings by any NNC Company under
the Securities Exchange Act of 1934, as amended (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, (H) NNI’s securities account numbered 10-877864 with HSBC Bank USA National
Association or an affiliate thereof and the Investment Property contained therein, (I) Deposit
Accounts for which the relevant Depositary Bank’s jurisdiction is in Canada, (J) Securities
Accounts for which the relevant Securities Intermediary’s jurisdiction is in Canada, and (K) any
asset of NNI, other than any Covered Canadian Assets, for which the conflict of laws rules
applicable in Canada or any province or territory thereof (a “Canadian Jurisdiction”) provide that
(i) the validity, perfection or effect of perfection of the security interest purported to be
created hereby would be governed by the laws of a Canadian Jurisdiction (provided that this clause
(i) shall not apply as result of any change in the conflict of laws rules applicable to a Canadian
Jurisdiction which (X) becomes effective after the Effective Date and (Y) provides that the
validity, perfection or effect of perfection of the security interest purported to be created
hereby in Goods, Inventory or Equipment located in the United States of America would be governed
by the laws of a Canadian Jurisdiction) or (ii) the situs of the asset is a Canadian Jurisdiction.

     The security interests granted by each Lien Grantor pursuant to this Section 2 shall terminate
in accordance with Section 19.

     (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.

     Section 3. General Representations, Warranties and Covenants. Each Lien Grantor represents
and warrants, on the Effective Date, and covenants, where indicated below, as follows:

     (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

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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 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 to which Financial Assets are credited in respect of which such Lien Grantor
owns Security Entitlements, so long as Financial Assets with a fair market value in excess of
$5,000,000 are credited to such Securities Account 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 a Security Entitlement) 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, free and clear of any Lien other than Permitted Liens.

     (g) Each Lien Grantor represents and warrants that, on the Effective Date, no financing
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 the United States in which such filing or recording would be effective to perfect
or record a Lien on such Collateral, except financing 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, on the Effective Date, that, to the extent
attachment and creation of the Transaction Liens is governed by the laws of a jurisdiction in the
United States (including the UCC), the Transaction Liens on all Collateral owned by such Lien
Grantor at such time have been validly created, 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 when so attached, will secure all the Secured Obligations of such Lien Grantor.

     (i) 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 4 fairly presented the asset and revenue information set forth therein.

     (j) Each Lien Grantor represents and warrants, on the Effective Date, that when a UCC
financing statement describing the Collateral as set forth in Schedule 3 has been filed in the
offices specified in such Perfection Certificate (as amended pursuant to Section 3(a)) as being
such Lien Grantor’s jurisdiction of organization (if such Lien Grantor is a “registered
organization” within the meaning of the UCC) or chief executive office (if such Lien Grantor is not
a “registered organization” within the meaning of the UCC), the Transaction Liens will constitute
perfected security interests in the Collateral owned by such Lien Grantor to the extent that a

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security interest therein may be perfected by filing pursuant to the UCC, prior, in the case
of Collateral other than (x) fixtures, (y) Collateral with respect to which Intellectual Property
Filings must be made in order to perfect a Lien thereon and (z) unregistered Copyrights, to the
extent applicable law does not permit unregistered Copyrights to be perfected by the filing of a
UCC financing statement, to all Liens and rights of others therein except Permitted Liens. When, in
addition to the filing of such UCC financing statements, the applicable 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 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 UCC financing statements, (ii) such
Intellectual Property Filings and filings with respect to Intellectual Property (other than
Material Recordable Intellectual Property) to the extent applicable law does not permit a Lien
thereon to be perfected by the filing of a UCC financing statement and (iii) with respect to motor
vehicles, the delivery of the certificates of title with respect thereto, no registration,
recordation or filing with any U.S. 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 under the UCC or due recordation of the Transaction
Liens or for the enforcement of the Transaction Liens (it being understood that any disposition of
Collateral constituting Investment Property is subject to applicable securities laws).

     (k) Each Lien Grantor represents and warrants that, on the Effective Date, such Lien Grantor
has taken all actions necessary under the UCC 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 UCC 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.

     (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 documents required
to be filed with (x) any state or local government or agency or (y) the federal government of the
United States or any agency or instrumentality thereof in accordance with the Assignment of Claims
Act of 1940, as amended, 31 U.S.C. Section 3727 and 41 U.S.C. Section 15 (the “Assignment of Claims
Act”), in either case to insure compliance with the Assignment of Claims Act; provided that no such
execution and delivery shall be required with respect to any Material Government Contract if such
Material Government Contract is with the federal government of the United States or any agency or
instrumentality thereof and such assignment is not of a type meeting the requirements of 31 U.S.C.
Section 3727(c) of the Assignment of Claims Act, or a comparable provision if such Section is
amended.

     (o) NNI represents and warrants, on the Effective Date, that the aggregate book value of the
Specified Canadian Assets did not exceed $10,000,000 as of September 30, 2005. NNI covenants that
it will not permit the aggregate book value of the Specified Canadian Assets to exceed $10,000,000
at any time.

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     Section 4. Additional Covenants. Each Lien Grantor covenants as follows:

     (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 (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 19. 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 recording or filing of any UCC financing or continuation 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 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 attorney’s 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, such Lien Grantor will at all times cause such lockbox or similar
account to be a Controlled Deposit Account.

     (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 Tangible Chattel Paper and any Pledged Instruments owned by such Lien Grantor, indorsed
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 that no Lien Grantor shall be required to deliver any such Pledged
Tangible Chattel Paper to the extent that it was entered into or provided in connection with vendor
financing and any such Pledged Instrument or Pledged Tangible Chattel Paper to the extent the
aggregate principal or face amount of such Pledged Instrument or Pledged Tangible Chattel Paper, as
applicable, of such Lien Grantor does not exceed $10,000,000. Upon the delivery of any Pledged
Tangible 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 Tangible Chattel Paper or Pledged Instrument available to

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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.

     (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.

     Section 5. Recordable Intellectual Property. Each Lien Grantor covenants as follows:

     (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.

     Section 6. Investment Property. Each Lien Grantor represents and warrants, at the times set
forth below, and covenants, where indicated below, as follows:

     (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 Security of any Subsidiary and (ii) any
other Pledged Certificated Security 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 certificates
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 that such Lien Grantor shall not be required to
deliver any 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 that no
Event of Default shall have occurred and is continuing.

     (b) Uncertificated Securities. Each Lien Grantor covenants to enter into (and cause the
relevant issuer to 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
Pledged Uncertificated Security owned by such Lien Grantor as of such date and not credited to a
Securities Account evidencing any Pledged Uncertificated Security of a U.S. or Canadian issuer
owned by such Lien Grantor as of such date, not credited to a Securities Account and having a fair
market value in excess of $5,000,000 (except Securities evidencing Equity Interests in Subsidiaries
and Equity Interest constituting minority investments in privately held companies), and deliver
each such Issuer Control Agreement to the Collateral Agent (which shall enter into the same). Each
Lien Grantor represents and warrants

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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 Security meeting the
requirements set forth in the two immediately preceding sentences, such Lien Grantor will enter
into (and cause the relevant issuer to enter into), as promptly as practicable, an Issuer Control
Agreement in respect of such Pledged Uncertificated Security and deliver such Issuer Control
Agreement to the Collateral Agent (which shall enter into the same); 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
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 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 the Securities Account
to which such underlying Financial Asset is credited 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 that the Lien Grantors shall only be required to comply with this
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
Securities Entitlements out of any Controlled Securities Account for the principal purpose of
preventing the Collateral Agent from having a perfected lien in such Pledged Securities
Entitlements (it being understood that nothing herein shall prevent any Lien Grantor from
withdrawing cash from any Pledged Securities Entitlements for any other purpose). Such Lien
Grantor covenants that whenever such Lien Grantor acquires any other Pledged Security Entitlements
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 that the Lien Grantors shall not be so obligated if the
jurisdiction of the relevant Securities Intermediary is not in the United States.

     (d) Commodity Accounts. Each Lien Grantor covenants to enter into (and cause the relevant
Commodity Intermediary to enter into) on or prior to April 30, 2006 (or such later date as to which
the Collateral Agent may consent in its sole discretion) a Commodity Account Control Agreement in
respect of each Pledged Commodity Account owned by it at such time and will deliver such Commodity
Account Control Agreement to the Collateral Agent (which shall enter into the same) so long as
Pledged Commodity Contracts with a fair market value in excess of $3,000,000 are credited to such
account at such time 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 that the Lien Grantors shall
only be required to comply with this covenant with respect to Commodity Accounts for which the
relevant Commodity Intermediary’s jurisdiction is in the United States. Such Lien Grantor
covenants that such Lien Grantor will thereafter cause, as promptly as practicable, each Pledged
Commodity Contract owned by it with a fair market value in excess of $3,000,000 to be carried at
all times in a Controlled Commodity Account; provided that the Lien Grantors shall not be so
obligated if the jurisdiction of the Commodity Intermediary for the Commodity Account in which such
Commodities Contract is carried is not in the United States.

     (e) 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
Security owned by it to the Collateral Agent in the United States and complies with Section 6(j) in
connection with such delivery, (i) the Transaction Lien on such Pledged Certificated Security will
be perfected, subject to no prior Liens or rights of others, and (ii) the Collateral Agent will
have Control of such Pledged Certificated Security.

     (f) Perfection as to Uncertificated Securities. 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 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.

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     (g) 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; provided that NNI
shall be deemed to have made this representation and warranty only with respect to Securities
Accounts for which the relevant Securities Intermediary’s jurisdiction is in the United States.

     (h) 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 that the Lien Grantors shall be deemed to have made this representation and warranty only
with respect to Commodity Accounts for which the relevant Commodity Intermediary’s jurisdiction is
in the United States.

     (i) Agreement as to Applicable Jurisdiction. Each Lien Grantor covenants that in respect of
all Pledged Security Entitlements owned by such Lien Grantor, and all Securities Accounts to which
the related Financial Assets are credited, the Securities Intermediary’s jurisdiction (determined
as provided in UCC Section 8-110(e)) will at all times be located in the United States. In respect
of all Commodity Contracts owned by such Lien Grantor and all Commodity Accounts in which such
Commodity Contracts are carried, the Commodity Intermediary’s jurisdiction (determined as provided
in UCC Section 9-305(b)) will at all times be located in the United States.

     (j) 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.

     Section 7. Controlled Deposit Accounts. Each Lien Grantor covenants as follows:

     (a) 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 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.

     (b) Such Lien Grantor covenants that, in respect of each Controlled Deposit Account, the
Depositary Bank’s jurisdiction (determined as provided in UCC Section 9-304) will at all times be a
jurisdiction in which Article 9 of the Uniform Commercial Code (including without limitation the
UCC) is in effect.

     (c) 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.

     (d) 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

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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.

     (e) 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.

     (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 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 Collateral Accounts. (a) All Cash Distributions received with
respect to assets held in any 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 that (i) if 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.

20

 

     (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 Collateral Account to any other account owned by
an NNC Company unless such other account is a Collateral Account.

     (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 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 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 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 (i) (x) with respect to any Pledged
Security not credited to a Securities Account other than any Uncertificated Security 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 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 owned by it and the Financial Asset
underlying any Pledged 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 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 (i)(x) with respect to any
Pledged Security not credited to a Securities Account other than any Uncertificated Security
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 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 (i)(x) with respect to any Pledged Security not credited to a Securities Account other
than any Uncertificated Security representing shares in any 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

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underlying any Security Entitlement 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 Investment Property, the other Pledged Equity Interests (if any) and the Financial Assets
underlying the Pledged Security Entitlements, 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. Cash Distributions with respect to assets held in a
Collateral Account shall be deposited and held therein, or withdrawn therefrom, as provided in
Section 8 and Section 9. If a Specified Event of Default shall have occurred and is continuing,
Cash Distributions (other than in amounts less than $3,000,000) with respect to any Pledged Equity
Interest that is not held in a Collateral Account (whether held in the name of a Lien Grantor or in
the name of the Collateral Agent or its nominee) shall be deposited, as soon as practicable upon
receipt thereof, in a Controlled Deposit Account of the relevant Lien Grantor if such account
exists at such time and otherwise, turned over to the Collateral Agent.

     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 UCC (whether or not in effect in the jurisdiction where
such rights are exercised) 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 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, sell, lease, license or otherwise
dispose of (x) if a Event of Default has occurred and is continuing, the Illiquid Collateral or any
part thereof and (y) if 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: the Collateral Agent may 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 that the Collateral Agent shall notify the relevant Lien Grantor of
any license or sublicenses so granted (but failure to give such notice shall not effect the
validity of such license) and that such licenses or sublicenses do not conflict with any existing
license or applicable law; 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, 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 willful misconduct; and upon request by the Collateral Agent (which shall not be
construed as implying any limitation on 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

22

 

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.

     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:

     (1) to pay the expenses of such sale or other disposition,
including reasonable compensation to agents of and counsel for the
Collateral Agent, and all reasonable expenses, liabilities and
advances incurred or made by the Collateral Agent in connection with
the Security Documents, and any other amounts then due and payable to
the Collateral Agent pursuant to Section 15 or any amounts owing to
the Indenture Trustee under Section 5.05 of the 1988 Indenture, or
any amounts owing to EDC under the EDC Support Facility and
consisting of reimbursement obligations with respect to fees and
expenses incurred by EDC;

     (2) to pay the due and unpaid principal, face amount or
termination amount of the Secured Obligations ratably, on the basis
of the principal or face amount of such Secured Obligations (or, with
respect to Contingent Secured Obligations, provide for the payment
thereof pursuant to Section 14(b)), until payment in full of the
principal of all Secured Obligations shall have been made (or, with
respect to Contingent Secured Obligations, so provided for);

     (3) to pay ratably the due and unpaid interest accrued on the
Secured Obligations in accordance with the provisions of the
applicable Secured Agreement, as applicable;

     (4) to pay all other due and unpaid Secured Obligations and all
due and unpaid commitment fees and participation fees under each
Credit Agreement ratably (or, with respect to Contingent Secured
Obligations, provide for the payment thereof pursuant to Section
14(b)), until payment in full of all such other Secured Obligations
and fees shall have been made (or, with respect to Contingent Secured
Obligations, so provided for); and

     (5) to pay to the relevant Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining from
the proceeds of the Collateral owned by it;

provided that Collateral owned by any Subsidiary Lien Grantor and any proceeds thereof shall be
applied pursuant to the foregoing clauses (1), (2), (3) and (4) of this Section 14 to the Secured
Obligations of such Subsidiary Lien Grantor only up to an aggregate amount equal to the largest
amount that would not render such application of Collateral or proceeds subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of applicable law.
The Collateral Agent may make such distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.

     (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 in respect
of a Contingent Secured Obligation, the Collateral Agent shall not apply any monies to pay such
Contingent Secured Obligation but shall

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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, 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 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. Each Lien Grantor will forthwith upon demand pay to the
Collateral Agent: the amount of any taxes that the Collateral Agent may have been required to pay
by reason of the Transaction Liens or to free any Collateral from any other Lien thereon; the
amount of any and all reasonable

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out-of-pocket expenses, including transfer taxes and reasonable fees and expenses of outside
counsel and other experts, that the Collateral Agent may incur (except (x) so long as no Specified
Event of Default shall have occurred and is continuing, any filing fees with respect to
Intellectual Property Filings other than with respect to Material Recordable Intellectual Property
and (y) Intellectual Property Filings with respect to Trademarks which are not Material Recordable
Intellectual Property) in connection with (i) the administration or enforcement of the Security
Documents, including such reasonable out-of-pocket expenses as are incurred to preserve the value
of the Collateral or the validity, perfection, rank or value of any Transaction Lien, (ii) the
collection, sale or other disposition of any Collateral or (iii) the exercise by the Collateral
Agent of any of its rights or powers under the Security Documents; the amount of any fees that the
Borrower shall have agreed in writing to pay to the Collateral Agent and that shall have become due
and payable in accordance with such written agreement and the amount required to indemnify the
Collateral Agent for, or hold it harmless and defend it against, any loss, liability or expense
(including the reasonable fees and out-of-pocket expenses of its counsel and any experts or
sub-agents appointed by it hereunder) incurred or suffered by the Collateral Agent in connection
with the Security Documents (except (x) so long as no Specified Event of Default shall have
occurred and is continuing, any filing fees with respect to or arising in connection with
Intellectual Property Filings other than with respect to Material Recordable Intellectual Property
and (y) Intellectual Property Filings with respect to Trademarks which are not Material Recordable
Intellectual Property), except to the extent that such loss, liability or expense arises from the
Collateral Agent’s gross negligence or willful misconduct or a breach of any duty that the
Collateral Agent has under this Agreement (after giving effect to Sections 17 and 18). Any such
amount not paid to the Collateral Agent as soon as practicable will bear interest for each day
thereafter until paid at a rate per annum equal to the sum of 2% plus the highest rate applicable
to the base rate loans under the 2006 Credit Agreement, if it shall not have been terminated, or 2%
plus the overnight federal funds rate if the 2006 Credit Agreement shall have been terminated. If
any transfer tax, documentary stamp tax or other tax is payable in connection with any transfer or
other transaction provided for in the Security Documents, the Lien Grantors will pay such tax and
provide any required tax stamps to the Collateral Agent or as otherwise required by law.

     Section 16. Authority to Administer Collateral. Each Lien Grantor irrevocably appoints the
Collateral Agent its true and lawful attorney, with full power of substitution, in the name of such
Lien Grantor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties,
but at NNL’s expense, to the extent permitted by law to exercise, at any time and from time to time
while (x) an Event of Default with respect to Illiquid Collateral and (y) a Specified Event of
Default with respect to Liquid Collateral shall have occurred and is continuing, all or any of the
following powers with respect to all or any of such Lien Grantor’s 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, except in the case of Collateral that is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Collateral Agent will give
the relevant Lien Grantor at least ten days’ prior written notice of the time and place of any
public sale thereof or the time after which any private sale or other intended disposition thereof
will be made. Any such notice shall (i) contain the information specified in UCC Section 9-613,
(ii) be Authenticated and (iii) be sent to the parties required to be notified pursuant to UCC
Section 9-611(c); provided that, if the Collateral Agent fails to comply with this sentence in any
respect, its liability for such failure shall be limited to the liability (if any) imposed on it as
a matter of law under the UCC.

     Section 17. Limitation on Duty in Respect of Collateral. Beyond the exercise of reasonable
care in the custody and preservation thereof, the Collateral Agent will have no duty as to any
Collateral in its possession or control or in the possession or control of any sub-agent or bailee
selected by it in good faith or any income therefrom or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Collateral Agent

25

 

will be deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession or Control if such Collateral is accorded treatment substantially
equal to that which it accords its own property, and will not be liable or responsible for any loss
or damage to any Collateral, or for any diminution in the value thereof, by reason of any act or
omission of any sub-agent or bailee selected by the Collateral Agent in good faith, except to the
extent that such liability arises from the Collateral Agent’s gross negligence or willful
misconduct.

     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 UCC
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.

     (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 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 willful 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 willful 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 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,

26

 

employees and agents (the “Related Parties”). The exculpatory provisions of Section 17 and
this Section 18 shall apply to any such sub-agent and to 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 18(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
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 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 that no 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 that the 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

27

 

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 Investment Property 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 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 Investment 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; provided that 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).

     Section 20. Additional Lien Grantors. Any Person may become a party hereto by signing and
delivering to the Collateral Agent a Security Agreement Supplement, whereupon such Person shall
become a “Lien Grantor” as defined herein.

     Section 21. Additional Secured Obligations. Additional Secured Obligations. Each Lien
Grantor may from time to time designate its obligations under any Hedging Agreement (a “Designated
Hedging Agreement”) with any Lender or Affiliate of a Lender as an additional Secured Obligation
for purposes hereof by delivering to the Collateral Agent a certificate signed by a financial
officer that (i) identifies such Hedging Agreement, specifying the name and address of the other
party thereto, the notional principal amount thereof and the expiration date thereof and (ii)
states that such Lien Grantor’s obligations, as applicable, thereunder are designated as Secured
Obligations for purposes hereof; provided that the holder of such Designated Hedging Agreement
shall have provided a supplement to this Agreement agreeing to be bound by the terms hereof that
are applicable to it including, without limitation, Section 18.

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     Section 22. Notices. Each notice, request or other communication given to any party hereunder
shall be in writing (which term includes facsimile or other electronic transmission) and shall be
effective (a) when hand delivered or sent by courier to such party at its address specified below,
(b) when sent to such party by facsimile or other electronic transmission, addressed to it at its
facsimile number or electronic address specified below, and such party sends back an electronic
confirmation of receipt or (c) ten days after being sent to such party by certified or registered
United States mail, addressed to it at its address specified below, with first class or airmail
postage prepaid:

     (i) in the case of any Lien Grantor listed on the signature pages hereof:

Nortel Networks Inc.

c/o Nortel Networks Limited

8200 Dixie Road, Suite 100

MS: 036/NO/230

Brampton, On L6T 5P6

Attention: Corporate Secretary

Facsimile: 905-863-8386

     (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:

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, NY 10017

Attention: David M. Mallett

Facsimile: 212-270-5127

     (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.

Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section 22 by giving notice of such change to the Collateral Agent and the Lien Grantors in the
manner specified above.

     Section 23. No Implied Waivers; Remedies Not Exclusive. No failure by the Collateral Agent or
any Secured Party to exercise, and no delay in exercising and no course of dealing with respect to,
any right or remedy under any Security Document shall operate as a waiver thereof; nor shall any
single or partial exercise by the Collateral Agent or any Secured Party of any right or remedy
under any Loan Document preclude any other or further exercise thereof or the exercise of any other
right or remedy. The rights and remedies specified in the Loan Documents are cumulative and are
not exclusive of any other rights or remedies provided by law.

     Section 24. Successors and Assigns. This Agreement is for the benefit of the Collateral Agent
and the Secured Parties. If all or any part of any Secured Party’s interest in any Secured
Obligation is assigned or otherwise transferred in accordance with the transfer provisions
applicable thereto, the transferor’s rights hereunder, to the extent applicable to the obligation
so transferred, shall be automatically transferred with such obligation. This Agreement shall be
binding on the Lien Grantors and their respective successors and assigns.

     Section 25. Amendments and Waivers. Except as expressly provided herein, neither this
Agreement nor any provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing entered into by the parties hereto, with the consent of
the Required Secured Lenders.

     Section 26. Choice of Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of New York, except as otherwise required by mandatory provisions of law.
Each Lien Grantor

29

 

hereby submits to the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each Lien Grantor irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

     Section 27. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

     Section 28. Severability. If any provision of any Security Document is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions of the Security Documents shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Collateral Agent and the Secured Parties in order to
carry out the intentions of the parties thereto as nearly as may be possible and (b) the invalidity
or unenforceability of such provision in such jurisdiction shall not affect the validity or
enforceability thereof in any other jurisdiction.

30

 

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

	 	 	 	 	 
	 	NORTEL NETWORKS INC.

 	 
	 	By:  	/s/  Karen Sledge 	 
	 	 	Name:  	Karen Sledge 	 
	 	 	Title:  	President 	 
	 
	 	JPMORGAN CHASE BANK, N.A., 

     as Collateral Agent and Administrative Agent

 	 
	 	By:  	/s/  David
M. Mallett 	 
	 	 	Name:  	David M. Mallett 	 
	 	 	Title:  	Vice President 	 
	 
	 	EXPORT DEVELOPMENT CANADA,

     as provider of the EDC Support Facility

 	 
	 	By:  	/s/  David
B. Guy 	 
	 	 	Name:  	David B. Guy 	 
	 	 	Title:  	Director-Telecom 	 
	 
	 	 	 
	 	By:  	/s/  Michael
J. Fortner 	 
	 	 	Name:  	Michael J. Fortner 	 
	 	 	Title:  	Financial Services Manager 	 
	 

31

 

SCHEDULE 1

PLEDGED EQUITY INTERESTS DIRECTLY OWNED BY LIEN GRANTORS

(as of the date hereof)

S-1-1

 

SCHEDULE 2

PLEDGED SECURITIES

(other than Pledged Equity Interests)

OWNED DIRECTLY BY LIEN GRANTORS

(as of the date hereof)

S-2-1

 

SCHEDULE 3

COLLATERAL DESCRIPTION

[To come]

S-3-1

 

SCHEDULE 4

ASSET AND REVENUE DISCLOSURE

[To come]

S-4-1

 

S-5-1

 

SCHEDULE 5

PRINCIPAL U.S. CASH MANAGEMENT ACCOUNTS OF LIEN GRANTORS

[To come]

A-1

 

EXHIBIT A

to Security Agreement

SECURITY AGREEMENT SUPPLEMENT

     SECURITY AGREEMENT SUPPLEMENT dated as of [the date of execution] between [NAME OF LIEN
GRANTOR] (the “Lien Grantor”) and JPMORGAN CHASE BANK, N.A., as Collateral Agent.

     WHEREAS, Nortel Networks Inc., the Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as
Collateral Agent, and Export Development Canada are parties to a Security Agreement dated as of
February 14, 2006 (as heretofore amended and/or supplemented, the “Security Agreement”);

     WHEREAS, [name of Lien Grantor] [desires to become] [is] a party to the Security Agreement as
a Lien Grantor thereunder; and

     WHEREAS, terms defined in the Security Agreement and not otherwise defined herein have, as
used herein, the respective meanings provided for therein;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Grant of Transaction Liens. (a) In order to secure the Secured Obligations, the Lien
Grantor grants to the Collateral Agent for the benefit of the Secured Parties, effective on the
date hereof a continuing security interest in all the following property of the Lien Grantor,
whether now owned or existing or hereafter acquired or arising and regardless of where located (the
“New Collateral”):

     [describe property being added to the Collateral]1

     The security interests granted by the Lien Grantor pursuant hereto shall terminate in
accordance with Section 19 of the Security Agreement.

     (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 (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.

     (c) 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.

     2. Delivery of Collateral. On the date of execution hereof, the Lien Grantor has complied
with the provisions of Section 4 of the Security Agreement with respect to Chattel Paper and
Instruments, and either Section 6 or 10(a) (as applicable) of the Security Agreement with respect
to Investment Property, in each case if and to the extent included in the New Collateral at such
time.

 

			
	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.

A-2

 

     3. Party to Security Agreement. Upon delivering this Security Agreement Supplement to the
Collateral Agent, the Lien Grantor will become a party to the Security Agreement and will
thereafter have all the rights and obligations of a Lien Grantor thereunder and be bound by all the
provisions thereof as fully as if the Lien Grantor were one of the original parties
thereto.2

     4. 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]

     5. 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 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 execution hereof the Security
Agreement as supplemented hereby constitutes a valid and binding agreement of the Lien Grantor,
enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting creditors’ rights generally and general
principles of equity.

     (e) Each of the representations and warranties set forth in Sections 3 through 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 Security Agreement
Supplement, 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.

     6. Governing Law. This Security Agreement Supplement shall be construed in accordance with
and governed by the laws of the State of New York.

 

			
	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.

A-3

 

     IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement Supplement to be
duly executed by their respective authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	[NAME OF LIEN GRANTOR]  
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Collateral
	 	 	Agent	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

A-4

 

Schedule 1

to Security Agreement

Supplement

PLEDGED EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES

OWNED BY LIEN GRANTOR4

	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	Percentage	 	Number of
	Issuer	 	Organization	 	Owned	 	Shares or Units
	 
	 	 	 	 	 	 

 

			
	4	 	To be used only for a new Lien Grantor

A-5

 

Schedule 2

to Security Agreement

Supplement

INVESTMENT PROPERTY5

(other than Equity Interests in Subsidiaries and Affiliates)

OWNED BY LIEN GRANTOR

PART 1 Securities

	 	 	 	 	 	 	 
	Issuer	 	Jurisdiction of Organization	 	Amount Owned	 	Type of Security
	 
	 	 	 	 	 	 

PART 2 Securities Accounts

     The Lien Grantor owns Security Entitlements with respect to Financial Assets credited to the
following Securities Accounts:6

	 	 	 
	Securities Intermediary	 	Account Number
	 
	 	 

 

			
	5	 	To be used only for a new Lien Grantor
	 
	6	 	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.

A-6

 

PART 3 Commodity Accounts

The Lien Grantor is the Commodity Customer with respect to the following Commodity Accounts:

	 	 	 
	Commodity Intermediary	 	Account Number
	 
	 	 

A-7

 

Schedule 3

to Security Agreement

Supplement

Material Commercial Tort

Claims7

 

			
	7	 	To be used if applicable

A-8

 

EXHIBIT B

to Security Agreement

COPYRIGHT SECURITY AGREEMENT

(Copyright Registrations)

     WHEREAS, [name of Lien Grantor], a                      corporation8 (herein referred to
as the “Lien Grantor”) owns the Copyright Collateral (as defined below);

     WHEREAS,
pursuant to (i) a Security Agreement dated as of •, 2006 (as amended and/or
supplemented from time to time, the “Security Agreement”) among Nortel Networks Inc., the
Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as Collateral Agent for the Secured Parties
referred to therein (in such capacity, together with its successors in such capacity, the
“Grantee”), and the other parties named therein, and (ii) certain other Security Documents
(including this Copyright Security Agreement), the Lien Grantor has secured certain obligations
(the “Secured Obligations”) by granting to the Grantee for the benefit of such Secured Parties a
continuing security interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Copyright Collateral (as defined below);

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Copyright Collateral”), whether now owned or existing or hereafter acquired or
arising:

          (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).

     The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Copyright Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Copyright Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this Copyright Security
Agreement and to accomplish the purposes hereof.

     The foregoing security interest is granted in conjunction with the security interests granted
by the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

 

			
	8	 	Modify as needed if the Lien Grantor is not
a corporation.

B-1

 

     IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security Agreement to be duly
executed by its officer thereunto duly authorized as of the
___ day of ___, ___.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[NAME OF LIEN GRANTOR]  
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Acknowledged:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as Collateral	 	 	 	 	 	 
	Agent	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 

B-2

 

EXHIBIT C

to Security Agreement

PATENT SECURITY AGREEMENT

(Patents, Patent Applications)

     WHEREAS, [name of Lien Grantor], a                      corporation1 (herein referred to
as the “Lien Grantor”) owns the Patent Collateral (as defined below);

     WHEREAS, pursuant to (i) a Security Agreement dated as of February 14, 2006 (as amended
and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks Inc., the
Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as Collateral Agent for the Secured Parties
referred to therein (in such capacity, together with its successors in such capacity, the
“Grantee”), and the other parties named therein, and (ii) certain other Security Documents
(including this Patent Security Agreement), the Lien Grantor has secured certain obligations (the
“Secured Obligations”) by granting to the Grantee for the benefit of such Secured Parties a
continuing security interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Patent Collateral (as defined below);

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Patent Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(iii)	 	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
	 
	 	(iv)	 	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).

     The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Patent Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Patent Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.

     The foregoing security interest is granted in conjunction with the security interests granted
by the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

     IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security Agreement to be duly
executed by its officer thereunto duly authorized as of the                     day of                                         ,                     .

 

			
	1	 	Modify as needed if the Lien Grantor is not
a corporation.

C-1

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[NAME OF LIEN GRANTOR]  
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Acknowledged:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as Collateral	 	 	 	 	 	 
	Agent	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 

C-2

 

EXHIBIT D

to Security Agreement

TRADEMARK SECURITY AGREEMENT

(Trademark Registrations, Trademark

Applications)

     WHEREAS, [name of Lien Grantor], a                      corporation2 (herein referred to
as the “Lien Grantor”) owns the Trademark Collateral (as defined below);

     WHEREAS, pursuant to (i) a Security Agreement dated as of February 14, 2006 (as amended
and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks Inc., the
Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as Collateral Agent for the Secured Parties
referred to therein (in such capacity, together with its successors in such capacity, the
“Grantee”), and the other parties named therein, and (ii) certain other Security Documents
(including this Trademark Security Agreement), the Lien Grantor has secured certain obligations
(the “Secured Obligations”) by granting to the Grantee for the benefit of such Secured Parties a
continuing security interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Trademark Collateral (as defined below);

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Trademark Collateral”), whether now owned or existing or hereafter acquired or
arising:

          (v) 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

          (vi) 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).

     The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Trademark Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Trademark Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this Trademark Security
Agreement and to accomplish the purposes hereof.

     The foregoing security interest is granted in conjunction with the security interests granted
by the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledges and affirms that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

 

			
	2	 	Modify as needed if the Lien Grantor is not
a corporation.

D-1

 

     IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security Agreement to be duly
executed by its officer thereunto duly authorized as of the                      day of                                         ,                     .

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[NAME OF LIEN GRANTOR]  
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Acknowledged:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as Collateral	 	 	 	 	 	 
	Agent	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 

D-2

 

EXHIBIT E

to Security Agreement

CANADIAN INDUSTRIAL DESIGN SECURITY AGREEMENT

(Industrial Designs, Industrial Design Applications)

WHEREAS, [name of Lien Grantor], a                      corporation7 (herein referred to as
the “Lien Grantor”) owns the Design Collateral (as defined below);

WHEREAS, pursuant to (i) a Canadian Security Agreement dated as of February 14, 2006, (as amended
and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks Limited,
Nortel Networks Corporation, the Subsidiaries party thereto, JPMorgan Chase Bank, N.A. as
Collateral Agent for the Secured Parties referred to therein (in such capacity, together with its
successors in such capacity, the “Grantee”), and the other parties named therein, and (ii) certain
other Security Documents (including this Canadian Industrial Design Security Agreement), the Lien
Grantor has secured certain obligations (the “Secured Obligations”) by granting to the Grantee for
the benefit of such Secured Parties a continuing security interest in personal property of the Lien
Grantor, including all right, title and interest of the Lien Grantor in, to and under the Design
Collateral (as defined below);

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Design Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(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).

The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Design Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Design Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this Canadian Industrial
Design Security Agreement and to accomplish the purposes hereof.

The foregoing security interest is granted in conjunction with the security interests granted by
the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Design Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Industrial Design Security Agreement
to be duly executed by its officer thereunto duly authorized as of the                      day of
                                        ,                     .

 

			
	7	 	Modify as needed if the Lien Grantor is not a
corporation.

E-1

 

	 	 	 	 	 	 	 
	 	 	[NAME OF LIEN GRANTOR]  
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	     Name:	 	 
	 

	 	 	 	     Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	     Name:	 	 
	 

	 	 	 	     Title:	 	 

Acknowledged:

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,  
	 	 	as Collateral Agent
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	     Name:	 	 
	 

	 	 	 	     Title:	 	 

E-2

 

EXHIBIT F

to Security Agreement

PERFECTION CERTIFICATE

     The undersigned is a duly authorized officer of [Name of Lien Grantor] (the “Lien Grantor”).
With reference to the Security Agreement dated as of February 14, 2006 among Nortel Networks
Limited, Nortel Networks, Inc., each Subsidiary Party thereto, JPMORGAN CHASE BANK, N.A., as
Collateral Agent and the other parties named therein (terms defined therein being used herein as
therein defined), the undersigned certifies to the Collateral Agent and each other Secured Party as
follows:

     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
[certificate 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 years3.

          4. Extraordinary Transactions. Except for (i) those purchases or acquisitions of inventory,
equipment and receivables set forth below, (ii) any individual purchase or acquisition of
inventory, equipment or receivables the consideration for which was for less than $25,000,000,
(iii) any purchase or acquisition of inventory, equipment or receivables not made within the past
five years and (iv) any purchase or acquisition of inventory, equipment or receivables made
pursuant to a merger or consolidation described in Section 3(b) above, (X) all Inventory and
Equipment has been originated by the Lien Grantor in the ordinary course of business or has been
acquired by the Lien Grantor in the ordinary course of business and (Y) all accounts receivable
have been originated by the Lien Grantor in the ordinary course of business or have been acquired
by the Lien Grantor in the ordinary course of business.

     B. Additional Information Required for Searches for Prior Filings Under Old
Article 9.

          1. Current Locations. (a) The chief executive office of the Lien Grantor is located at the
following address:

	 	 	 	 	 
	Mailing Address	 	County	 	State
	 
	 	 	 	 

 

			
	3	 	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 US Lien Grantors.

F-1

 

The Lien Grantor [does] [does not] own or lease real property located in another county of the
State listed above.

	 	(b)	 	The following are all locations where there is real property owned or
leased in the United States by the Lien Grantor:

	 	 	 	 	 
	Mailing Address	 	County	 	State
	 
	 	 	 	 

	 	(c)	 	The following are all current locations in the United States 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	 	County	 	State
	 
	 	 	 	 

	 	(d)	 	The following are the principal locations in the United States of third
party logistics providers and third party marshalling and distribution centers
where Inventory owned directly by the Lien Grantor is currently maintained.

	 	 	 	 	 
	Mailing Address	 	County	 	State
	 
	 	 	 	 

          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 the United States by the Lien Grantor was located, at any time
during the past four months:

     IN
WITNESS WHEREOF, I have hereunto set my hand this
       day of       
January 15, 2002

	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

F-2

 

EXHIBIT G

to Security Agreement

ISSUER CONTROL AGREEMENT

     ISSUER CONTROL AGREEMENT dated as of [the date of execution hereof] among                                         (the
“Lien Grantor”), JPMORGAN CHASE BANK, N.A., as Collateral Agent (the “Secured Party”), and
                    (the “Issuer”). All references herein to the “UCC” refer to the Uniform Commercial Code
as in effect from time to time in [Issuer’s jurisdiction of incorporation].

W I T N E S S E T H :

     WHEREAS, the Lien Grantor is the registered holder of [specify Pledged Uncertificated
Securities issued by the Issuer] issued by the Issuer (the “Securities”);

     WHEREAS, pursuant to a Security Agreement dated as of February 14, 2006 (as such agreement
may be amended and/or supplemented from time to time, the “Security Agreement”), the Lien Grantor
has granted to the Secured Party a continuing security interest (the “Transaction Lien”) in all
right, title and interest of the Lien Grantor in, to and under the Securities, whether now existing
or hereafter arising; and

     WHEREAS, the parties hereto are entering into this Agreement in order to perfect the
Transaction Lien on the Securities;

     NOW, THEREFORE, the parties hereto agree as follows:

     Section 1. Nature of Securities. The Issuer confirms that (i) the Securities are
“uncertificated securities” (as defined in Section 8-102 of the UCC) and (ii) the Lien Grantor is
registered on the books of the Issuer as the registered holder of the Securities.

     Section 2. Instructions. The Issuer agrees to comply with any “instruction” (as
defined in Section 8-102 of the UCC) originated by the Secured Party and relating to the Securities
without further consent by the Lien Grantor or any other person. The Lien Grantor consents to the
foregoing agreement by the Issuer.

     Section 3. Waiver of Lien; Waiver of Set-off. The Issuer waives any security
interest, lien or right of setoff that it may now have or hereafter acquire in or with respect to
the Securities. The Issuer’s obligations in respect of the Securities will not be subject to
deduction, set-off or any other right in favor of any person other than the Secured Party.

     Section 4. Choice of Law. This Agreement shall be governed by the laws of [Issuer’s
jurisdiction of incorporation].

     Section 5. Conflict with Other Agreements. There is no agreement (except this
Agreement) between the Issuer and the Lien Grantor with respect to the Securities [except for
[identify any existing other agreements] (the “Existing Other Agreements”)]. In the event of any
conflict between this Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Issuer and the Lien Grantor with respect to the Securities,
whether now existing or hereafter entered into, the terms of this Agreement shall prevail.

     Section 6. Amendments. No amendment or modification of this Agreement or waiver of
any right hereunder shall be binding on any party hereto unless it is in writing and is signed by
all the parties hereto.

     Section 7. Notice of Adverse Claims. Except for the claims and interests of the
Secured Party and the Lien Grantor in the Securities, the Issuer does not know of any claim to, or
interest in, the Securities. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, attachment, execution or similar process) against the
Securities, the Issuer will promptly notify the Secured Party and the Lien Grantor thereof.

G-1

 

     Section 8. Maintenance of Securities. In addition to, and not in lieu of, the
obligation of the Issuer to honor instructions as agreed in Section 2 hereof, the Issuer agrees as
follows:

          (i) Lien Grantor Instructions; Notice of Exclusive Control. So long as the Issuer has
not received a Notice of Exclusive Control (as defined below), the Issuer shall comply with
instructions of the Lien Grantor or any duly authorized agent of the Lien Grantor in respect
of the Securities. After the Issuer receives a written notice from the Secured Party that
it is exercising exclusive control over the Securities (a “Notice of Exclusive Control”),
the Issuer will cease complying with instructions of the Lien Grantor or any of its agents.

          (ii) Non-Cash Dividends and Distributions. After the Issuer receives a Notice of
Exclusive Control, the Issuer shall deliver to the Secured Party all dividends, interest and
other distributions paid or made upon or with respect to the Securities.

          (iii) Voting Rights. Until the Issuer receives a Notice of Exclusive Control, the Lien
Grantor shall be entitled to direct the Issuer with respect to voting the Securities.

          (iv) Statements and Confirmations. The Issuer will promptly send copies of all
statements and other correspondence concerning the Securities simultaneously to each of the
Lien Grantor and the Secured Party at their respective addresses specified in Section 11
hereof.

          (v) Tax Reporting. All items of income, gain, expense and loss recognized in respect
of the Securities shall be reported to the Internal Revenue Service and all state and local
taxing authorities under the name and taxpayer identification number of the Lien Grantor.

     Section 9. Representations, Warranties and Covenants of the Issuer. The Issuer
makes the following representations, warranties and covenants:

          (i) This Agreement is a valid and binding agreement of the Issuer enforceable in
accordance with its terms.

          (ii) The Issuer has not entered into, and until the termination of this Agreement will
not without the consent of the Secured Party enter into, any agreement with any other person
relating to the Securities pursuant to which it has agreed, or will agree, to comply with
instructions (as defined in Section 8-102 of the UCC) of such person. The Issuer has not
entered into any other agreement with the Lien Grantor or the Secured Party purporting to
limit or condition the obligation of the Issuer to comply with instructions as agreed in
Section 2 hereof.

     Section 10. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

     Section 11. Notices. Each notice, request or other communication given to any party
hereunder shall be in writing (which term includes facsimile or other electronic transmission) and
shall be effective (i) when delivered to such party at its address specified below, (ii) when sent
to such party by facsimile or other electronic transmission, addressed to it at its facsimile
number or electronic address specified below, and such party sends back an electronic confirmation
of receipt or (iii) ten days after being sent to such party by certified or registered United
States mail, addressed to it at its address specified below, with first class or airmail postage
prepaid:

Lien Grantor:

Secured Party:

Issuer:

G-2

 

     Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section by giving notice of such change to the other parties in the manner specified above.

     Section 12. Termination. The rights and powers granted herein to the Secured Party
(i) have been granted in order to perfect the Transaction Lien, (ii) are powers coupled with an
interest and (iii) will not be affected by any bankruptcy of the Lien Grantor or any lapse of time.
The obligations of the Issuer hereunder shall continue in effect until the Secured Party has
notified the Issuer in writing that the Transaction Lien has been terminated pursuant to the
Security Agreement.

     Section 13. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any party hereto may
execute this Agreement by signing and delivering one or more counterparts.

	 	 	 	 	 	 	 
	 	 	[NAME OF LIEN GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Collateral
	 	 	          Agent	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ISSUER]
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

G-3

 

Exhibit A

[Letterhead of Secured Party]

[Date]

[Name and Address of Issuer]

Attention:                                         

Re:     Notice of Exclusive Control

Ladies and Gentlemen:

     As referenced in the Issuer Control Agreement dated as of                     ,                      among [name of Lien
Grantor], us and you (a copy of which is attached), we notify you that we will hereafter exercise
exclusive control over [specify Pledged Uncertificated Securities] registered in the name of [name
of Lien Grantor] (the “Securities”). You are instructed not to accept any directions or
instructions with respect to the Securities from any person other than the undersigned unless
otherwise ordered by a court of competent jurisdiction.

     You are instructed to deliver a copy of this notice by facsimile transmission to [name of Lien
Grantor].

	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as Collateral Agent
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Title:	 	 

cc: [name of Lien Grantor]

G-4

 

EXHIBIT H

to Security Agreement

SECURITIES ACCOUNT CONTROL AGREEMENT

     SECURITIES ACCOUNT CONTROL AGREEMENT dated as of                     ,                      among                                         (the “Lien
Grantor”), JPMORGAN CHASE BANK, N.A., as Collateral Agent (the “Secured Party”), and                      (the
“Securities Intermediary”). All references herein to the “UCC” refer to the Uniform Commercial
Code as in effect from time to time in the State of New York. Terms defined in the UCC have the
same meanings when used herein.

W I T N E S S E T H :

     WHEREAS, the Lien Grantor is the entitlement holder with respect to the Account (as defined
below);

     WHEREAS, pursuant to a Security Agreement dated as of February 14, 2006 (as such agreement
may be amended and/or supplemented from time to time, the “Security Agreement”), the Lien Grantor
has granted to the Secured Party a continuing security interest (the “Transaction Lien”) in all
right, title and interest of the Lien Grantor in, to and under the Account, all financial assets
credited thereto and all security entitlements in respect thereof, whether now owned or existing or
hereafter acquired or arising; and

     WHEREAS, the parties hereto are entering into this Agreement in order to perfect the
Transaction Lien on the Account, all financial assets from time to time credited thereto and all
security entitlements in respect thereof;

     NOW, THEREFORE, the parties hereto agree as follows:

     Section 1. Establishment of Account. The Securities Intermediary confirms that:

          (i) the Securities Intermediary has established account number [identify account
number] in the name of “[name of Lien Grantor]” (such account and any successor account, the
“Account”);

          (ii) the Account is a “securities account” as defined in Section 8-501 of the UCC;

          (iii) the Securities Intermediary is acting as a “securities intermediary” (as defined
in Section 8-102 of the UCC) in respect of the Account;

          (iv) the Securities Intermediary shall, subject to the terms of this Agreement, treat
the Lien Grantor as entitled to exercise the rights that comprise all financial assets from
time to time credited to the Account;

          (v) all property delivered to the Securities Intermediary by or on behalf of the Lien
Grantor will be promptly credited to the Account; and

          (vi) all financial assets (except cash) credited to the Account will be registered in
the name of the Securities Intermediary, indorsed to the Securities Intermediary or in blank
or credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Account be registered
in the name of the Lien Grantor, payable to the order of the Lien Grantor or specially
indorsed to the Lien Grantor unless such financial asset has been further indorsed to the
Securities Intermediary or in blank.

     Section 2. “Financial Assets” Election. The parties hereto agree that each item of
property (whether investment property, financial asset, security, instrument, cash or other
property) credited to the Account shall be treated as a “financial asset” within the meaning of
Sections 8-102(a)(9) and 8-103 of the UCC.

H-1

 

     Section 3. Entitlement Orders. The Securities Intermediary agrees to comply with
any “entitlement order” (as defined in Section 8-102 of the UCC) originated by the Secured Party
and relating to the Account or any financial asset credited thereto without further consent by the
Lien Grantor or any other person. The Lien Grantor consents to the foregoing agreement by the
Securities Intermediary.

     Section 4. Waiver of Lien; Waiver of Set-off. The Securities Intermediary waives
any security interest, lien or right to make deductions or setoffs that it may now have or
hereafter acquire in or with respect to the Account, any financial asset credited thereto or any
security entitlement in respect thereof except with respect to customary fees and commissions.
Neither the financial assets credited to the Account nor the security entitlements in respect
thereof will be subject to deduction, set-off, banker’s lien, or any other right in favor of any
person other than the Secured Party (except that the Securities Intermediary may set off all
amounts due to it in respect of its customary fees and expenses for the routine maintenance and
operation of the Account).

     Section 5. Choice of Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York. The State of New York shall be deemed to be the
Securities Intermediary’s jurisdiction for purposes of the UCC (including, without limitation,
Section 8-110 thereof).

     Section 6. Conflict with Other Agreements. There is no agreement (except this
Agreement) between the Securities Intermediary and the Lien Grantor with respect to the Account
[except for [identify any existing other agreements] (the “Existing Other Agreements”)]. In the
event of any conflict between this Agreement (or any portion hereof) and any other agreement
[(including any Existing Other Agreement)] between the Securities Intermediary and the Lien Grantor
with respect to the Account, whether now existing or hereafter entered into, the terms of this
Agreement shall prevail. [If any Existing Other Agreement does not specify that it is governed by
the laws of the State of New York, such Existing Other Agreement is hereby amended to specify that
it is governed by the laws of the State of New York.]

     Section 7. Amendments. No amendment or modification of this Agreement or waiver of
any right hereunder shall be binding on any party hereto unless it is in writing and is signed by
all the parties hereto.

     Section 8. Notice of Adverse Claims. Except for the claims and interests of the
Secured Party and the Lien Grantor, the Securities Intermediary does not know of any claim to, or
interest in, the Account, any financial asset credited thereto or any security entitlement in
respect thereof. If any person asserts any lien, encumbrance or adverse claim (including any writ,
garnishment, judgment, attachment, execution or similar process) against the Account, any financial
asset credited thereto or any security entitlement in respect thereof, the Securities Intermediary
will promptly notify the Secured Party and the Lien Grantor thereof.

     Section 9. Maintenance of Account. In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed in Section 3
hereof, the Securities Intermediary agrees to maintain the Account as follows:

          (vii) Lien Grantor Entitlement Orders; Notice of Exclusive Control. So long as the
Securities Intermediary has not received a Notice of Exclusive Control (as defined below),
the Securities Intermediary shall, subject to paragraph (iii) below, comply with entitlement
orders of the Lien Grantor or any duly authorized agent of the Lien Grantor in respect of
the Account and any or all financial assets credited thereto. After the Securities
Intermediary receives a written notice from the Secured Party that is exercising exclusive
control over the Account (a “Notice of Exclusive Control”), the Securities Intermediary will
cease complying with entitlement orders of the Lien Grantor or any of its agents.

          (viii) Voting Rights. Until the Securities Intermediary receives a Notice of Exclusive
Control, the Lien Grantor shall be entitled to direct the Securities Intermediary with
respect to the voting of any financial assets credited to the Account.

          (ix) Permitted Investments. Until the Securities Intermediary receives a Notice of
Exclusive Control, the Lien Grantor shall be entitled to direct the Securities Intermediary
with respect to the selection of investments to be made and credited to the Account.

H-2

 

          (x) Statements and Confirmations. The Securities Intermediary will promptly send
copies of all statements, confirmations and other correspondence concerning the Account
and/or any financial assets credited thereto simultaneously to each of the Lien Grantor and
the Secured Party at their respective addresses specified in Section 12 hereof.

          (xi) Tax Reporting. All items of income, gain, expense and loss recognized in the
Account or in respect of any financial assets credited thereto shall be reported to the
Internal Revenue Service and all state and local taxing authorities under the name and
taxpayer identification number of the Lien Grantor.

     Section 10. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary makes the following representations, warranties and
covenants:

          (xii) The Account has been established as set forth in Section 1 above and will be
maintained in the manner set forth herein until this Agreement is terminated. The
Securities Intermediary will not change the name or account number of the Account without
the prior written consent of the Secured Party.

          (xiii) No financial asset credited to the Account is or will be registered in the name
of the Lien Grantor, payable to the order of the Lien Grantor, or specially indorsed to the
Lien Grantor, unless such financial asset has been further indorsed by the Lien Grantor to
the Securities Intermediary or in blank.

          (xiv) This Agreement is a valid and binding agreement of the Securities Intermediary
enforceable in accordance with its terms.

          (xv) The Securities Intermediary has not entered into, and until the termination of
this Agreement will not enter into, any agreement with any person (other than the Secured
Party) relating to the Account and/or any financial asset credited thereto pursuant to which
it has agreed, or will agree, to comply with entitlement orders of such person. The
Securities Intermediary has not entered into any other agreement with the Lien Grantor or
the Secured Party purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as agreed in Section 3 hereof.

     Section 11. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

     Section 12. Notices. Each notice, request or other communication given to any party
hereunder shall be in writing (which term includes facsimile or other electronic transmission) and
shall be effective (i) when delivered to such party at its address specified below, (ii) when sent
to such party by facsimile or other electronic transmission, addressed to it at its facsimile
number or electronic address specified below, and such party sends back an electronic confirmation
of receipt or (iii) ten days after being sent to such party by certified or registered United
States mail, addressed to it at its address specified below, with first class or airmail postage
prepaid:

Lien Grantor:

Secured Party:

Securities Intermediary:

Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section by giving notice of such change to the other parties in the manner specified above.

H-3

 

     Section 13. Termination. The rights and powers granted herein to the Secured Party
(i) have been granted in order to perfect the Transaction Lien, (ii) are powers coupled with an
interest and (iii) will not be affected by any bankruptcy of the Lien Grantor or any lapse of time.
The obligations of the Securities Intermediary hereunder shall continue in effect until the
Secured Party has notified the Securities Intermediary in writing that the Transaction Lien has
been terminated pursuant to the terms of the Security Agreement.

	 	 	 	 	 	 	 
	 	 	[NAME OF LIEN GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Collateral
	 	 	          Agent	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF SECURITIES INTERMEDIARY]
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

H-4

 

Exhibit A

[Letterhead of Secured Party]

[Date]

[Name and Address of Securities Intermediary]

Attention:                                         

Re:     Notice of Exclusive Control

Ladies and Gentlemen:

     As referenced in the Securities Account Control Agreement dated as of                     ,                      among [name
of Lien Grantor], us and you (a copy of which is attached), we notify you that we will hereafter
exercise exclusive control over securities account number                                         (the “Account”), all financial
assets from time to time credited thereto and all security entitlements in respect thereof. You
are instructed not to accept any directions, instructions or entitlement orders with respect to the
Account or the financial assets credited thereto from any person other than the undersigned unless
otherwise ordered by a court of competent jurisdiction.

     You are instructed to deliver a copy of this notice by facsimile transmission to [name of Lien
Grantor].

	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as Collateral Agent
	 
	 	 	 	 	 	 
	 	 	By:	 	 
	 

	 	 	 	 

	 	 

cc: [name of Lien Grantor]

H-5

 

Schedule 2

PLEDGED INVESTMENT PROPERTY

(other than Pledged Equity Interests)

OWNED DIRECTLY BY LIEN GRANTORS

(as of the date hereof)

PART 1 Securities

	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 	 	 
	Issuer	 	Organization	 	Amount Owned	 	Type of Security
	The Reserve Fund

	 	NNI
	 	US$295,800,000
	 	Mutual Fund

PART 2 Securities Accounts

     The Lien Grantor owns Security Entitlements with respect to Financial Assets credited to
the following Securities Accounts:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Securities Intermediary	 	Account Number	 	US$ at 1/18/2006
	Banc of America Securities LLC
	 	NNI	 	 	224-53989-1-8 QBR	 	 	$	585,306,000	 
	J.P. Morgan Securities
	 	NNI	 	 	 	5015021	 	 	$	299,000,000	 
	Citigroup Asset Management
	 	NNI	 	 	 	104132	 	 	$	85,700,000	 
	JP Morgan
	 	NNI	 	 	 	30559371	 	 	$	1,059,316	 
	Morgan Stanley
	 	NNI	 	 	 	369-058697-0-502	 	 	$	339,544	 
	Deutsche Bank
	 	NNI	 	 	6TP-600519	 	 	$	0	 

 

 

	 	 	 
	Debtor:	 	Secured Party:
	Nortel Networks Inc.

	 	JPMorgan Chase Bank, N.A.
	c/o Nortel Networks Limited

	 	270 Park Avenue
	8200 Dixie Road, Suite 100

	 	New York, NY 10017
	MS: 036/NO/230
	 	 
	Brampton, Ontario L6T 5P6
	 	 
	Canada
	 	 

ATTACHMENT A TO UCC FINANCING STATEMENT

     The collateral covered by this financing statement is all of the Debtor’s right, title and
interest in, to and under the following property, whether now owned or existing, hereafter acquired
or arising, or in which the Debtor now or hereafter has any rights, and wheresoever located (the
“Collateral”):

     (i) all Accounts;

     (ii) all Chattel Paper;

     (iii) all Deposit Accounts and all money contained therein;

     (iv) all Documents;

     (v) all Equipment;

     (vi) all Goods;

     (vii) all General Intangibles (including any Equity Interests in other Persons
that do not constitute Investment Property);

     (viii) all Instruments;

     (ix) all Inventory;

     (x) all Investment Property;

     (xi) all Letter-of-Credit Rights;

     (xii) all books and records (including customer lists, credit files, computer
programs, printouts and other computer materials and records) of Debtor pertaining to any of
its Collateral;

     (xiii) Debtor’s ownership interest in (1) its Collateral Accounts, (2) all
Financial Assets credited to its Collateral Accounts from time to time and all Security
Entitlements in respect thereof, (3) all cash held in its Collateral Accounts from time to
time and (4) all other money in the possession of the Secured Party; and

1

 

     (xiv) all Proceeds of the Collateral described in the foregoing clauses (i)
through (xiii) ;

provided that, with respect to the security interests granted by Debtor, the following
property shall be excluded from the foregoing security interests: (A) rights of Debtor under a
lease, general intangible or other rights arising under any contract, instrument, license or other
document if (but only to the extent that) the grant of a Transaction Lien therein would (i) violate
any law applicable to Debtor, or (ii) violate any restriction that is enforceable under applicable
law in favor of any Person (other than any NNC Company), or result in an enforceable right in any
Person (other than any NNC Company) to declare a default or an enforceable right to terminate or
annul such lease, general intangible or other right but only for so long as any of the foregoing
circumstances described in this clause (A) exists with respect to any such property (including
after the application of Sections 9-406(d), 9-407(a), 9-408(a) and 9-409 of the UCC), (B) (i) the
Equity Interests and debt of NGSH, any direct or indirect Subsidiary of NGSH and, for so long as it
is a tax exempt organization under Sec. 501(3) of the Internal Revenue Code, Nortel LearnIT, a
Virginia non-stock corporation and (ii) any Equity Interests in or any debt of any Person, in each
case, to the extent and only for so long as the grant of the Transaction Liens therein would
constitute a violation of any provision of any shareholder agreement or other agreement with
respect to such Equity Interests or
debt among the Debtor and any other holders of Equity Interests or debt of such Person (other than
any NNC Company), (C) any assets of Debtor that constitute Transferred Receivables and Related
Transferred Rights on the date the Debtor executes the Security Agreement, (D) any asset of Debtor
for so long as such asset is subject to a Purchase Money Mortgage that purports to prohibit a grant
of the Transaction Liens thereon, (E) any Equity Interests in any Person organized under the laws
of any jurisdiction outside of the United States or Canada, (F) any Equity Interests in any
Canadian Subsidiary, to the extent (but only to the extent) required to prevent the Collateral from
including more than 66% of all voting Equity Interests in such Subsidiary, (G) any Equity Interests
in any Person the grant of a Transaction Lien on which would require the inclusion of separate
financial statements of such Person in the filings by any NNC Company under the Securities Exchange
Act of 1934, as amended (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), (H) NNI’s securities account numbered 10-877864 with HSBC Bank USA National
Association or an affiliate thereof and the Investment Property contained therein, (I) Deposit
Accounts for which the relevant Depositary Bank’s jurisdiction is in Canada, (J) Securities
Accounts for which the relevant Securities Intermediary’s jurisdiction is in Canada, and (K) any
asset of NNI, other than any Covered Canadian Assets, for which the conflict of laws rules
applicable in Canada or any province or territory thereof (a “Canadian Jurisdiction”)
provided that (i) the validity, perfection or effect of perfection of the security interest
purported to be created by the Security Agreement would be governed by the laws of a Canadian
Jurisdiction (provided that this clause (i) shall not apply as result of any change in the conflict
of laws rules applicable to a Canadian Jurisdiction which (X) becomes effective after the Effective
Date and (Y) provides that the validity, perfection or effect of perfection of the security
interest purported to be created by the Security Agreement in Goods, Inventory, or Equipment
located in the United States of America

2

 

would be governed by the laws of a Canadian Jurisdiction)
or (ii) the situs of the asset is a Canadian Jurisdiction.

     The following terms shall have the following meanings. Such definition shall be equally
applicable to the singular and plural forms of the terms defined.

     “2006 Credit Agreement” means that certain Credit Agreement dated as of February 14,
2006, among Nortel Networks Inc., as borrower, certain financial institutions, as lenders and
agents, and JPMorgan Chase Bank, N.A., as Administrative Agent, as the same may be amended,
restated or otherwise modified from time to time.

     “2023 Notes” means the 6?% Notes due 2023 issued by Nortel Networks Limited pursuant
to the Indenture dated as of November 30, 1988 among Nortel Networks Limited, the subsidiary
guarantors party thereto and The Bank of New York, as successor to The Toronto-Dominion Bank Trust
Company as trustee, as amended from time to time.

     “Account” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Authenticate” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Bond Obligations” means all principal of and interest (including, without limitation,
any Post-Petition Interest) on and other amounts payable under the 2023 Notes.

     “Canadian Security Agreement” means the Canadian security agreement dated as of
February 14, 2006, among Nortel Networks Corporation, Nortel Networks Limited, the Subsidiaries
from time to time party thereto, JPMorgan Chase Bank, N.A., as Collateral Agent, and Export
Development Canada, as amended from time to time.

     “Canadian Subsidiary” means, with respect to any Person, any Subsidiary of such Person
(which may be a corporation, limited liability company, partnership or other legal entity)
organized under the laws of Canada or one of the Provinces or Territories of Canada.

     “Cash Collateral Accounts” means any cash collateral account established pursuant to
Section 8(a) of the Security Agreement.

     “Chattel Paper” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Collateral Account” means the Cash Collateral Accounts, the Controlled Deposit
Accounts and the Controlled Securities Accounts.

     “Collateral Agent” means JPMorgan Chase Bank, N.A., in its capacity as collateral
agent under the Security Agreement and the other security documents, and its successors.

3

 

     “Commodity Account” has the meaning assigned to such term in Section 9-102 of the UCC.

     “Commodity Account Control Agreements” means, with respect to any Commodity Account as
to which Debtor is the Commodity Customer, an agreement by Debtor, the Collateral Agent and the
relevant Commodity Intermediary that the Commodity Intermediary will apply any value distributed on
account of the Commodity Contracts carried in such Commodity Account as directed by the Collateral
Agent without further consent by Debtor. Each such agreement must be reasonably satisfactory in
form and substance to the Collateral Agent.

     “Commodity Contract” has the meaning assigned to such term in Section 9-102 of the
UCC.

     “Commodity Customer” has the meaning assigned to such term in Section 9-102 of the
UCC.

     “Commodity Intermediary” has the meaning assigned to such term in Section 9-102 of the
UCC.

     “Controlled Deposit Accounts” means a Deposit Account (i) that is subject to a Deposit
Account Control Agreement or (ii) as to which the Collateral Agent is the Depositary Bank’s
“customer” (as defined in UCC Section 4-104).

     “Controlled Securities Accounts” means a Securities Account that (i) is maintained in
the name of Debtor at an office of a Securities Intermediary whose jurisdiction (within the meaning
of the UCC) is in the United States and (ii) together with all Financial Assets credited thereto
and all related Security Entitlements, is subject to a Securities Account Control Agreement among
Debtor, the Secured Party and such Securities Intermediary.

     “Copyright Security Agreement” means a Copyright Security Agreement, substantially in
the form of Exhibit B to the Security Agreement, executed and delivered by Debtor in favor of the
Collateral Agent for the benefit of the Secured Parties.

     “Covered Canadian Asset” means accounts receivable, contract rights and intellectual
property that are “intangibles” as defined by the Ontario Personal
Property Security Act and, for greater certainty, that are not “goods”, “chattel paper”, “documents
of title”, “instruments”, “money” or “securities” as defined by the Ontario Personal Property
Security Act.

     “Credit Agreement” means the EDC Support Facility, and the 2006 Credit Agreement; and
any reference to the “principal amount” of or outstanding under any Credit Agreement includes the
outstanding principal or face amount of obligations, contingent or otherwise, of Nortel Networks
Limited, a Canadian corporation, and its Subsidiaries under the EDC Support Facility.

4

 

     “Deposit Account” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Deposit Account Control Agreement” means, with respect to any Deposit Account of
Debtor maintained with a Depositary Bank whose jurisdiction (within the meaning of the UCC) is in
the United States of America, an agreement among Debtor, the Collateral Agent and the relevant
Depositary Bank, set forth in an Authenticated Record, (i) that such Depositary Bank will comply
with instructions originated by the Collateral Agent directing disposition of the funds in such
Deposit Account without further consent by Debtor and (ii) subordinating to the relevant
Transaction Lien all claims of the Depositary Bank to such Deposit Account (except its right to
deduct its normal operating charges and fees and any uncollected funds previously credited
thereto).

     “Depositary Bank” means a bank at which a Controlled Deposit Account is maintained.

     “Design Security Agreement” means a Design Security Agreement, substantially in the
form of Exhibit E to the Security Agreement (with any changes that the Collateral Agent shall have
reasonably approved).

     “Designated Hedging Agreement” obligations under any Hedging Agreement with any Lender
or affiliate of a Lender as an additional Secured Obligation, designated by Debtor by delivering to
the Collateral Agent a certificate signed by a financial officer that (i) identifies such Hedging
Agreement, specifying the name and address of the other party thereto, the notional principal
amount thereof and the expiration date thereof and (ii) states that Debtor’s obligations, as
applicable, thereunder are designated as Secured Obligations for purposes of the Security
Agreement; provided that the holder of such Designated Hedging Agreement shall
have provided a supplement to the Security Agreement agreeing to be bound by the terms of the
Security Agreement that are applicable to it including, without limitation, Section 18 of the
Security Agreement.

     “Documents” has the meaning assigned to such term in Article 9-102 of the UCC.

     “EDC Support Facility” means the facility made available by Export Development Canada
to Nortel Networks Limited pursuant to the Amended and Restated Master Facility Agreement dated
October 24, 2005, as such agreement may be amended or supplemented from time to time, guaranteed by
NNI and Nortel Networks Corporation pursuant to the Guarantee Agreement during the period in which
the Guarantee Agreement is in effect; provided that the face amount of obligations thereunder shall
not exceed US$750,000,000.

     “EDC Support Facility Obligations” means all reimbursement and indemnity obligations,
contingent or otherwise, and obligations to repay interest and fees of Nortel Networks Limited
under the EDC Support Facility.

     “Effective Date” means February 14, 2006.

5

 

     “Entitlement Orders” has the meaning assigned to such term in Section 8-102 of the
UCC.

     “Equipment” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Equity Interests” means (i) in the case of a corporation, any shares of its capital
stock, (ii) in the case of a limited liability company, any membership interest therein, (iii) in
the case of a partnership, any partnership interest (whether general or limited) therein, (iv) in
the case of any other business entity, any participation or other interest in the equity or profits
thereof, (v) any warrant, option or other right to acquire any Equity Interest described in this
definition or (vi) any Security Entitlement in respect of any Equity Interest described in this
definition.

     “Financial Assets” has the meaning assigned to such term in Article 8-102 and 103 of
the UCC.

     “Goods” has the meaning assigned to such term in Article 9-102 of the UCC.

     “General Intangibles” has the meaning assigned to such term in Article 9-102 of the
UCC.

     “Guarantee Agreement” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement, a copy of which may be obtained from the Secured Party.

     “Hedging Agreement” means (i) any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest rate, currency exchange
rate or commodity price hedging arrangement and (ii) any hedging agreement in respect of common
stock entered into in order to hedge exposure under stock option plans or other benefit plans for
employees, directors or consultants of Nortel Networks Corporation and its Subsidiaries, but in
each case only if such agreement or arrangement is entered into with a Lender or an affiliate
thereof.

     “Instruments” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Intellectual Property Security Agreement” means a Copyright Security Agreement, a
Design Security Agreement, a Patent Security Agreement or a Trademark Security Agreement.

     “Inventory” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Investment Property” has the meaning assigned to such term in Article 9-102 of the
UCC.

     “Issuer Control Agreement” means an Issuer Control Agreement substantially in the form
of Exhibit F to the Security Agreement (with any changes that the Collateral Agent shall have
reasonably approved).

6

 

     “Lender” means each Lender holding a Tranche A Commitment or a Tranche A Loan under
the 2006 Credit Agreement.

     “Letter-of-Credit Right” has the meaning assigned to such term in Article 9-102 of the
UCC.

     “Lien” means, with respect to any asset, (i) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (iii) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.

     “NGSH” means Nortel Government Solutions Holdings Corporation, a Delaware corporation,
and any successors.

     “NNC Company” means, collectively, Nortel Networks Corporation, a Canadian
corporation, and any of its Subsidiaries.

     “NNI” means Nortel Networks Inc., a Delaware corporation, and any successors.

     “Patent Security Agreement” means a Patent Security Agreement, substantially in the
form of Exhibit C to the Security Agreement, executed and delivered by Debtor in favor of the
Collateral Agent for the benefit of the Secured Parties.

     “Permitted Receivables Financing” means (i) any Qualified Receivables Transaction and
(ii) and any Receivables Transaction after giving effect to which the mandatory prepayment
provisions of the 2006 Credit Agreement are not contravened.

     “Person” means an individual, a corporation, a partnership, an association, a trust or
any other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.

     “Post-Petition Interest” means, with respect to any obligation of any Person, any
interest that accrues after the commencement of any case, proceeding or other action relating to
the bankruptcy, insolvency or reorganization of such Person (or would accrue but for the operation
of applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable
as a claim in any such proceeding.

     “Proceeds” means all proceeds of, and all other profits, products, rents or receipts,
in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or
other disposition of, or other realization upon, any Collateral, including all claims of the Debtor
against third parties for loss of, damage to or destruction of, or for proceeds payable under, or
unearned

7

 

premiums with respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral.

     “Purchase Money Mortgage” means, (i) a mortgage on or security interest in property
existing at the time of acquisition thereof by Debtor and not incurred in contemplation of such
acquisition and (ii) any mortgage on or security interest in any property acquired, constructed or
improved by Debtor incurred after the date hereof which is related solely to, and is created or
assumed contemporaneously with, or within 180 days after, such acquisition, or completion of such
construction or improvement, to secure or provide for the payment of the purchase price thereof or
the cost of construction or improvement thereon incurred after February 14, 2006 (including the
cost of any underlying real property); provided that in the case of any such acquisition,
construction or improvement, the mortgage or security interest shall not apply to any after
acquired property of Debtor (other than improvements thereon and fixtures) or to any property
previously owned by Debtor other than, in the case of any such construction or improvement, any
real property, theretofore substantially unimproved for the purposes of Debtor, on which the
property so constructed, or the improvement, is located and other than a fixture on the real
property on which the property so constructed, or the improvement, is located; and provided further
that the amount secured by the mortgage or security interest shall not exceed the purchase price
thereof or the cost of construction or improvement thereon plus reasonable fees and expenses with
respect thereto.

     “Qualified Receivables Transaction” has the meaning set forth in Section 1.01 of the
2006 Credit Agreement, a copy of which may be obtained from the Secured Party.

     “Receivables Transaction” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement, a copy of which may be obtained from the Secured Party.

     “Record” has the meaning assigned to such term in Article 9-102 of the UCC.

     “Related Transferred Rights” means (i) Transferred Receivables, (ii) rights to payment
and collections in respect of such Transferred Receivables, (iii) Supporting
Obligations in respect of such Transferred Receivables, (iv) all invoices, documents, books,
records and other information with respect to such Transferred Receivables or the obligors thereon,
(v) with respect to any such Transferred Receivables, the transferee’s interest in the product
(including returned product), the sale of which by such transferee gave rise to such Transferred
Receivables and (vi) all Proceeds of the items described in the foregoing clauses.

     “Secured Obligations” means (i) the Tranche A Obligations, (ii) the Bond Obligations,
(iii) the EDC Support Facility Obligations and (iv) any obligation of Debtor under a Designated
Hedging Agreement.

     “Secured Parties” means the holders from time to time of the Secured Obligations.

     “Securities Account” has the meaning assigned to such term in Article 8-501 of the
UCC.

8

 

     “Securities Account Control Agreement” means, when used with respect to a Securities
Account, a Securities Account Control Agreement substantially in the form of Exhibit G to the
Security Agreement (with any changes that the Collateral Agent shall have reasonably approved)
among the relevant Securities Intermediary, Debtor and the Collateral Agent to the effect that such
Securities Intermediary will comply with Entitlement Orders originated by the Collateral Agent with
respect to such Securities Account without further consent by the Debtor.

     “Securities Intermediary” has the meaning assigned to such term in Article 8-102 of
the UCC.

     “Security Agreement” means that certain U.S. Security Agreement, dated as of February
14, 2006, among Nortel Networks Inc., the subsidiary lien grantors from time to time party thereto,
JPMorgan Chase Bank, N.A. and Export Development Canada, as the same may be amended, restated or
otherwise modified from time to time.

     “Security Agreement Supplements” means a Security Agreement Supplement, substantially
in the form of Exhibit A to the Security Agreement, signed and delivered to the Collateral Agent
for the purpose of adding a Subsidiary as a party to the Security Agreement pursuant to Section 20
of the Security Agreement and/or adding additional personal property to the Collateral.

     “Security Documents” means the Security Agreement, the Canadian Security Agreement,
the Security Agreement Supplements, the Commodity Account Control Agreements, the Deposit Account
Control Agreements, the Issuer Control Agreements, the Securities Account Control Agreements, the
Intellectual Property Security Agreements and all other supplemental or additional security
agreements, control agreements or similar instruments delivered pursuant to any Credit Agreement or
any other Security Document.

     “Security Entitlements” has the meaning assigned to such term in Article 8-102 of the
UCC.

     “Subsidiary” means, as to any Person, any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of
NNI.

     “Supporting Obligations” has the meaning assigned to such term in Section 9-102 of the
UCC.

     “Trademark Security Agreement” means a Trademark Security Agreement, substantially in
the form of Exhibit D to the Security Agreement, executed and delivered by Debtor in favor of the
Collateral Agent for the benefit of the Secured Parties.

9

 

     “Tranche A Commitment” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement, a copy of which is available from the Secured Party.

     “Tranche A Loan” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement, a copy of which is available from the Secured Party.

     “Tranche A Obligations” means (i) all principal of and interest (including, without
limitation, any Post-Petition Interest) on any Tranche A Loan and (ii) all other amounts payable by
Nortel Networks Limited in connection with the Tranche A Loans under the 2006 Credit Agreement.

     “Transaction Lien” means the Liens granted by the Debtor under the Security Documents.

     “Transferred Receivables” means any receivables that have been sold, pledged,
contributed or otherwise transferred in connection with a Permitted Receivables Financing.

     “UCC” means the Uniform Commercial Code as in effect from time to time in the State of
New York; provided that, if perfection or the effect of perfection or non-perfection or the
priority of any Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.

10

 

SCHEDULE 4

ASSET AND REVENUE DISCLOSURE

 

(as of September 30, 2005)

Credit Party revenue as of September 30th, 2005

	 	 	 	 	 	 	 	 	 
	 
	 	ENTITY	 	 	REVENUE	 	 	ASSETS	 
	 	NNI
	 	 	$3.749B	 	 	$6.736B	 
	 	NNL
	 	 	$0.683B	 	 	$3.864B	 
	 	NNC
	 	 	$0B	 	 	$.091B	 
	 	TOTAL CREDIT PARTIES
	 	 	$4.432B	 	 	$10.691B	 
	 	TOTAL US/CDN
	 	 	$4.757B	 	 	$11.616B	 
	 	NNI/NNL/NNC COVERAGE
	 	 	93%	 	 	92%	 
	 

 

SCHEDULE 5

PRINCIPAL U.S. CASH MANAGEMENT ACCOUNTS OF LIEN GRANTORS

(as of January 18, 2006)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ACCOUNT	 	 
	BANK	 	ENTITY	 	NUMBER	 	US $ AT 1/18/2006
	Citibank NY
	 	NNI	 	 	30508403	 	 	$	769,742	 
	Citibank NY
	 	NNI	 	 	30463444	 	 	$	592,394exv10w4

 

Exhibit
10.4

CANADIAN SECURITY AGREEMENT

dated as of

February 14, 2006

among

NORTEL NETWORKS LIMITED,

NORTEL NETWORKS CORPORATION,

the SUBSIDIARY LIEN GRANTORS

from time to time party hereto,

and

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent and Administrative Agent

and

EXPORT DEVELOPMENT CANADA,

as provider of the EDC Support Facility

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	SECTION
  1.      DEFINITIONS

	 	 	1	 
	SECTION   2.      GRANT OF TRANSACTION LIENS

	 	 	16	 
	SECTION   3.      GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

	 	 	18	 
	SECTION   4.      ADDITIONAL COVENANTS

	 	 	22	 
	SECTION   5.      RECORDABLE INTELLECTUAL PROPERTY

	 	 	24	 
	SECTION   6.      SECURITIES AND OTHER INVESTMENTS

	 	 	25	 
	SECTION   7.      CONTROLLED DEPOSIT ACCOUNTS. EACH LIEN GRANTOR COVENANTS AS FOLLOWS:

	 	 	29	 
	SECTION   8.      CASH COLLATERAL ACCOUNTS

	 	 	30	 
	SECTION
  9.      OPERATION OF CASH COLLATERAL ACCOUNTS; CARE AND USE OF COLLATERAL

	 	 	31	 
	SECTION 10.      TRANSFER OF RECORD OWNERSHIP

	 	 	32	 
	SECTION 11.      RIGHT TO VOTE SECURITIES

	 	 	32	 
	SECTION 12.      CERTAIN CASH DISTRIBUTIONS

	 	 	33	 
	SECTION 13.      REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT

	 	 	34	 
	SECTION 14.      APPLICATION OF PROCEEDS

	 	 	35	 
	SECTION 15.      FEES AND EXPENSES

	 	 	38	 
	SECTION 16.      AUTHORITY TO ADMINISTER COLLATERAL

	 	 	39	 
	SECTION 17.      LIMITATION ON DUTY IN RESPECT OF COLLATERAL

	 	 	40	 
	SECTION 18.      GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT

	 	 	40	 
	SECTION 19.      TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL

	 	 	43	 
	SECTION 20.      ADDITIONAL LIEN GRANTORS

	 	 	45	 
	SECTION 21.      ADDITIONAL SECURED OBLIGATIONS

	 	 	45	 
	SECTION 22.      NOTICES

	 	 	45	 
	SECTION 23.      NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE

	 	 	46	 
	SECTION 24.      SUCCESSORS AND ASSIGNS

	 	 	46	 
	SECTION 25.      AMENDMENTS AND WAIVERS

	 	 	46	 
	SECTION 26.      CHOICE OF LAW

	 	 	46	 
	SECTION 27.      JUDGMENT CURRENCY

	 	 	46	 
	SECTION 28.      INTEREST ACT

	 	 	47	 
	SECTION 29.      WAIVER OF JURY TRIAL

	 	 	47	 
	SECTION 30.      SEVERABILITY

	 	 	47	 

 

 

	 	 	 
	SCHEDULES:
	 
	 	 
	Schedule 1

	 	Pledged Equity Interests Owned Directly by Lien Grantors
	 
	 	 
	Schedule 2

	 	Other Pledged Securities and Other Investments Owned Directly by Lien Grantors
	 
	 	 
	Schedule 3

	 	Principal U.S. Cash Management Accounts of Lien Grantors
	 
	 	 
	EXHIBITS:
	 
	 	 
	Exhibit A

	 	Security Agreement Supplement
	 
	 	 
	Exhibit B

	 	Copyright Security Agreement
	 
	 	 
	Exhibit C

	 	Patent Security Agreement
	 
	 	 
	Exhibit D

	 	Trademark Security Agreement
	 
	 	 
	Exhibit E

	 	Design Security Agreement
	 
	 	 
	Exhibit F

	 	Perfection Certificate
	 
	 	 
	Exhibit G

	 	Securities Account Control Agreement
	 
	 	 
	Exhibit H

	 	Issuer Control Account Agreement

ii

 

 

\

CANADIAN SECURITY AGREEMENT

                    AGREEMENT dated as of February 14, 2006 (the “Effective Date”), among NORTEL NETWORKS LIMITED
(with its successors, “NNL”), NORTEL NETWORKS CORPORATION (with its successors, “NNC”), the
SUBSIDIARY LIEN GRANTORS from time to time party hereto, EXPORT DEVELOPMENT CANADA, as provider of
the EDC Support Facility and JPMORGAN CHASE BANK, N.A., as Collateral Agent and Administrative
Agent.

                    WHEREAS, Nortel Networks Inc. (with its successors, “NNI”), as borrower, certain financial
institutions, as lenders and agents, and JPMorgan Chase Bank, N.A., as Administrative Agent, are
parties to a Credit Agreement dated as of February 14, 2006 (as amended from time to time so long
as the principal amount of loans thereunder does not exceed US$1,300,000,000, the “2006 Credit
Agreement”); and

                    WHEREAS, pursuant to the 2006 Credit Agreement, NNC and its Canadian Subsidiaries (as defined
below) are required to enter into a Canadian Security Agreement in the form hereof;

                    NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

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” means the Indenture dated as of November 30, 1988 among NNL, the subsidiary
guarantors party thereto and the Indenture Trustee.

                    “2023
Notes” means the
67/8% Notes due 2023 issued by NNL pursuant to the 1988 Indenture.

                    “Accounts” means all “accounts,” as such term is defined in the PPSA, now owned or hereafter
acquired by any Lien Grantor and, in any event, shall include all accounts due or accruing due and
all agreements, books, accounts receivable, other receivables, book debts, claims and demands of
every nature and kind and other forms of monetary obligations (other than forms of monetary
obligations evidenced by Chattel Paper, Securities or Instruments) now owned or hereafter received
or acquired by or belonging or owing to any Lien Grantor, whether

1

 

or not yet earned by performance on the part of such Lien Grantor and all invoices, letters,
documents and papers recording, evidencing or relating thereto.

                    “Additional Collateral Liens” means with respect to any item of Collateral, Liens on such
Collateral which are not in contravention of Section 5.09 of the 2006 Credit Agreement.

                    “Bank Termination Date” means the first date on which all of the following conditions are
satisfied:

	 	(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” means all principal of and interest (including, without limitation, any
Post-Petition Interest) on and other amounts payable under the 2023 Notes.

                    “Business Day” means a day on which chartered banks are open for over-the-counter business in
Toronto and excludes Saturdays, Sundays and statutory holidays therein.

                    “Canadian Copyrights” means all the following:

	 	(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,

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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” means (i) with respect to any Patent, Design,
Copyright or Trademark, the filing of the applicable Patent Security Agreement, Design Security
Agreement, Copyright Security Agreement or Trademark Security Agreement with the Canadian
Intellectual Property Office, together with an appropriately completed recordation form and (ii)
with respect to any copyright, the filing of the applicable Copyright Security Agreement with the
Canadian Intellectual Property Office, together with an appropriately completed recordation form,
in each case sufficient to record the Transaction Lien granted to the Collateral Agent in such
Material Recordable Intellectual Property.

                    “Canadian Patents” means:

	 	(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” means, with respect to any Person, any Subsidiary of such Person (which
may be a corporation, limited liability company, partnership or other legal entity) organized under
the laws of Canada or one of the Provinces or Territories of Canada.

                    “Canadian Trademarks” means all of the following, whether registered or unregistered and
whether now owned, used or hereafter acquired or used by any Lien Grantor:

	 	(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

 

	 	(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” has the meaning specified in Section 8;

                    “Cash Collateral Agreement” means an agreement that governs the operation of a Cash Collateral
Account as provided for in this Agreement, in form and substance satisfactory to the Collateral
Agent, acting reasonably, executed and delivered by the relevant Lien Grantor, the Collateral Agent
and the relevant Depositary Bank or securities intermediary.

                    “Cash Distributions” means dividends, interest and other distributions and payments (including
proceeds of liquidation, sale or other disposition) made or received in cash upon or with respect
to any Collateral.

                    “Collateral” means all property, including Canadian Copyrights, Canadian Patents, Canadian
Trademarks, U.S. Copyrights, U.S. Patents, U.S. Trademarks and Designs of any Lien Grantor, whether
now owned or hereafter acquired, on which a Lien is granted or purports to be granted to the
Collateral Agent pursuant to, and has not been released in accordance with, the Security Documents.
When used with respect to a specific Lien Grantor, the term “Collateral” means any of the
foregoing Collateral in which such a Lien is so granted or purports to be so granted by such Lien
Grantor and has not been so released.

                    “Collateral Accounts” means the Cash Collateral Accounts, the Controlled Deposit Accounts and
the Controlled Securities Accounts.

                    “Collateral Agent” means JPMorgan Chase Bank, N.A., in its capacity as Collateral Agent under
this Agreement and the other Security Documents, and its successors in such capacity.

                    “Commercial Tort Claim” has the meaning ascribed thereto in Section 9-102 of the UCC.

                    “Commodity Account” has the meaning ascribed thereto in Section 9-102 of the UCC.

4

 

                    “Commodity Account Control Agreement” means, with respect to any Commodity Account as to which
a Lien Grantor is the Commodity Customer, an agreement by such Lien Grantor, the Collateral Agent
and the relevant Commodity Intermediary that the Commodity Intermediary will apply any value
distributed on account of the Commodity Contracts carried in such Commodity Account as directed by
the Collateral Agent without further consent by such Lien Grantor. Each such agreement must be
reasonably satisfactory in form and substance to the Collateral Agent.

                    “Commodity Contract” has the meaning ascribed thereto in Section 9-102 of the UCC.

                    “Commodity Customer” has the meaning ascribed thereto in Section 9-102 of the UCC.

                    “Commodity Intermediary” has the meaning ascribed thereto in Section 9-102 of the UCC.

                    “Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of
which would be consolidated with those of NNC in accordance with GAAP in its consolidated financial
statements if such statements were prepared as of such date.

                    “Contingent Secured Obligation” means, at any time, any Secured Obligation (or portion
thereof) that is contingent in nature at such time, including any Secured Obligation that is: (i)
an obligation under a Designated Hedging Agreement to make payments that cannot be quantified at
such time, (ii) any other obligation (including any guarantee) that is contingent in nature at such
time, or (iii) an obligation to provide collateral to secure any of the foregoing types of
obligations.

                    “Control” has the following meanings: (i) when used with respect to any Security or Security
Entitlement, the meaning specified in UCC Section 8-106, (ii) when used with respect to any Deposit
Account, the meaning specified in UCC Section 9-104, (iii) when used with respect to any Commodity
Account or Commodity Contract, the meaning specified in UCC Section 9-106(b) and (iv) when used
with respect to any right to payment or performance by the issuer or a Nominated Person in respect
of a letter of credit, the meaning specified in UCC Section 9-107.

                    “Controlled Commodity Account” means a Commodity Account as to which (i) a Lien Grantor is the
Commodity Customer and (ii) a Commodity Account Control Agreement is in effect.

                    “Controlled Deposit Account” means a Deposit Account (i) that is subject to a Deposit Account
Control Agreement or (ii) as to which the Collateral Agent is the Depositary Bank’s “customer” (as
defined in UCC Section 4-104).

                    “Controlled Securities Account” means a Securities Account that (i) is maintained in the name
of a Lien Grantor at an office of a Securities Intermediary whose jurisdiction (within the meaning
of the UCC) is in the United States and together with all Financial Assets credited thereto and all
related Security Entitlements, is subject to a Securities Account Control Agreement among such Lien
Grantor, the Collateral Agent and such Securities

5

 

Intermediary or (ii) as to which the Collateral Agent is the “entitlement holder” (as defined
in UCC Section 8-102(7)).

                    “Copyright License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use, copy,
reproduce, distribute, prepare derivative works, display or publish any records or other materials
on which a Canadian Copyright or a U.S. Copyright is in existence or may come into existence.

                    “Copyright Security Agreement” means a Copyright Security Agreement, substantially in the form
of Exhibit B, executed and delivered by a Lien Grantor in favour of the Collateral Agent for the
benefit of the Secured Parties.

                    “Credit Agreements” means the EDC Support Facility, the 2006 Credit Agreement; and any
reference to the “principal amount” of or outstanding under any Credit Agreement includes the
outstanding principal or face amount of obligations, contingent or otherwise, of NNL and its
Subsidiaries under the EDC Support Facility.

                    “Deposit Account” means any bank deposit, demand, time, savings, passbook or similar account
maintained with a bank.

                    “Deposit Account Control Agreement” means, with respect to any Deposit Account of any Lien
Grantor maintained with a Depositary Bank whose jurisdiction (within the meaning of the UCC) is in
the United States of America, an agreement among such Lien Grantor, the Collateral Agent and the
relevant Depositary Bank, set forth in an Authenticated Record, (i) that such Depositary Bank will
comply with instructions originated by the Collateral Agent directing disposition of the funds in
such Deposit Account without further consent by such Lien Grantor and (ii) subordinating to the
relevant Transaction Lien all claims of the Depositary Bank to such Deposit Account (except its
right to deduct its normal operating charges and fees and any uncollected funds previously credited
thereto).

                    “Depositary Bank” means a bank or other financial or credit institution at which a Deposit
Account or Cash Collateral Account is maintained.

                    “Designated Hedging Agreement” has the meaning specified in Section 21.

                    “Designs” means all industrial designs, design patents and other designs under the laws of
Canada that any Lien Grantor now or hereafter owns or uses, including:

	 	(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

 

	 	(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” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right with respect
to any Design now or hereafter in existence, whether or not registered or recorded and whether or
not an application shall, or is intended to be filed in respect thereof.

                    “Design Security Agreement” means a Design Security Agreement, substantially in the form of
Exhibit E, executed and delivered by a Lien Grantor in favour of the Collateral Agent for the
benefit of the Secured Parties.

                    “EDC” means Export Development Canada, in its capacity as provider of the EDC Support
Facility.

                    “EDC Support Facility” means the facility made available by EDC to NNL pursuant to the Amended
and Restated Master Facility Agreement dated October 24, 2005, as such agreement may be amended or
supplemented from time to time, guaranteed by NNI and NNC pursuant to the Guarantee Agreement
during the period in which the Guarantee Agreement is effective; provided that the face amount of
obligations thereunder shall not exceed US$750,000,000.

                    “EDC Support Facility Obligations” means all reimbursement and indemnity obligations,
contingent or otherwise, and obligations to repay interest and fees of NNL under the EDC Support
Facility.

                    “Effective Date” has the meaning specified in the preamble.

                    “Equipment” means “equipment”, as such term is defined in the PPSA, whether now owned or
hereafter acquired by any Lien Grantor, wherever located and, in any event, includes all such Lien
Grantor’s machinery and equipment, processing equipment, conveyors, machine tools, data processing
and computer equipment with software and peripheral equipment, and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps,
motor vehicles, rolling stock, trade fixtures and fixtures together with all additions and
accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards and insurance
proceeds with respect thereto.

                    “Equity Interest” means (i) in the case of a corporation, any shares of its capital stock,
(ii) in the case of a limited liability company, any membership interest therein, (iii) in the case
of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case
of any other business entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described in this definition
or (vi) if held in a Securities Account for which the jurisdiction (within the meaning of the UCC)
of the relevant Securities Intermediary is in the United States of America, any Security
Entitlement in respect of any Equity Interest described in this definition.

7

 

                    “Event of Default” means the occurrence and continuance of any “Event of Default” as defined
in the 2006 Credit Agreement.

                    “Financing Lease” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

                    “Foreign Subsidiary” means a Subsidiary (which may be a corporation, limited liability
company, partnership or other legal entity) organized under the laws of a jurisdiction outside the
United States and Canada.

                    “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States, applied on a basis consistent (except for changes concurred in by NNC’s independent
public accountants) with the most recent audited consolidated financial statements of NNC and its
Consolidated Subsidiaries delivered to the Collateral Agent.

                    “Guarantee Agreement” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

                    “Hedging Agreement” means (i) any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest rate, currency exchange
rate or commodity price hedging arrangement and (ii) any hedging agreement in respect of common
stock entered into in order to hedge exposure under stock option plans or other benefit plans for
employees, directors or consultants of NNC and its Subsidiaries, but in each case only if such
agreement or arrangement is entered into with a Lender or an affiliate thereof.

                    “Hypothec” has the meaning specified in Section 16.

                    “Illiquid Collateral” means Collateral other than the Liquid Collateral.

                    “Indenture Trustee” means The Bank of New York, as successor to The Toronto-Dominion Bank
Trust Company, as trustee under the 1988 Indenture and its successors in such capacity.

                    “Intangibles” means all “intangibles”, as such term is defined in the PPSA, including all
security interests, goodwill, choses in action and other contractual benefits and all Intellectual
Property.

                    “Intellectual Property” means (i) Canadian Patents, (ii) Canadian Patent Licenses, (iii)
Canadian Trademarks, (iv) Designs, (v) Design Licenses (vi) Canadian Copyrights, (vii) U.S.
Patents, (viii) U.S. Trademarks, (ix) U.S. Copyrights, and all rights in or under any of the
foregoing.

                    “Intellectual Property Security Agreement” means a Copyright Security Agreement, a Design
Security Agreement, a Patent Security Agreement, or a Trademark Security Agreement.

                    “Inventory” means any “inventory”, as such term is defined in the PPSA, now or hereafter owned
or acquired by any Lien Grantor, wherever located, and in any event including

8

 

inventory, merchandise, Goods and other personal property which are held by or on behalf of
any Lien Grantor for sale or lease or are furnished or are to be furnished under a contract of
service, or which constitute raw materials, work in process or materials used or consumed or to be
used or consumed in such Lien Grantor’s business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.

                    “Issuer Control Agreement” means an Issuer Control Agreement substantially in the form of
Exhibit H (with any changes that the Collateral Agent shall have reasonably approved).

                    “Lender” means each Lender holding a Tranche A Commitment or a Tranche A Loan under the 2006
Credit Agreement.

                    “Lien” means, with respect to any asset, (i) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, (ii) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

                    “Lien Grantors” means NNL, NNC and the Subsidiary Lien Grantors.

                    “Liquid Collateral” means (i) Pledged Accounts, (ii) Pledged Chattel Paper, (iii) Pledged
Instruments, (iv) Pledged Cash Collateral Accounts, (v) Pledged Intellectual Property, (vi) any
Pledged Uncertificated Securities evidencing money market funds, (vii) Pledged Deposit Accounts and
(viii) Pledged Securities Accounts.

                    “Liquid Investment” means a Permitted Investment (other than commercial paper) that matures
within 30 days after it is first included in the Collateral.

                    “LLC Interest” means a membership interest or similar interest in a limited liability company.

                    “Loan” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

                    “Loan Documents” means the Credit Agreements (including the notes thereunder) and the Security
Documents.

                    “Material Commercial Tort Claim” means any Commercial Tort Claim with a fair market value (as
determined in good faith by the applicable Lien Grantor) in excess of $10,000,000.

                    “Material Government Contract” means a contract, between a Lien Grantor and either (i) the
federal government of Canada or any agency or instrumentality thereof or (ii) a provincial or local
government or any agency or instrumentality thereof, that provides (or can reasonably be expected
to provide, based on orders received as of such time) for future payments to such Lien Grantor in
an aggregate amount exceeding (x) for the purpose of the first sentence of Section 3(n),
$50,000,000 and (y) for the purpose of the second sentence of Section 3(n), $10,000,000.

9

 

                    “Material Intellectual Property” means, with respect to any Lien Grantor and at any time, any
Intellectual Property that is one of the 100 most valuable items of Intellectual Property owned by
the NNC Companies at such time to the business of the NNC Companies taken as a whole, as such
business is presently conducted or proposed to be conducted, as reasonably determined by the Lien
Grantors, acting in their reasonable discretion.

                    “Material Recordable Intellectual Property” means, at any time, the Recordable Intellectual
Property that is Material Intellectual Property.

                    “NNC” means Nortel Networks Corporation, a Canadian corporation, and its successors.

                    “NNC Companies” means, collectively, NNC and any of its Subsidiaries.

                    “NNC Secured Obligations” means the obligations of NNC under the Tranche A Guaranteed
Obligations (as defined in the Guarantee Agreement), the EDC Facility Guaranteed Obligations (as
defined in the Guarantee Agreement) and any obligation of any Lien Grantor under a Designated
Hedging Agreement.

                    “NNL” means Nortel Networks Limited, a Canadian corporation, and its successors.

                    “NNL Secured Obligations” means the obligations of NNL under the EDC Support Facility
Obligations, the Bond Obligations, the Tranche A Guaranteed Obligations (as defined in the
Guarantee Agreement) and any obligations of any Lien Grantor under a Designated Hedging Agreement.

                    “Nominated Person” means a Person whom the issuer of a letter of credit (i) designates or
authorizes to pay, accept, negotiate or otherwise give value under such letter of credit and (ii)
undertakes by agreement or custom and practice to reimburse.

                    “Non-Contingent Secured Obligation” means at any time any Secured Obligation (or portion
thereof) that is not a Contingent Secured Obligation at such time.

                    “Partnership Interest” means a partnership interest, whether general or limited.

                    “Patent License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right with respect
to any Canadian Patent or U.S. Patent or any invention now or hereafter in existence, whether
patentable or not, whether a patent or application for patent is in existence on such invention or
not, and whether a patent or application for patent on such invention may come into existence or
not.

                    “Patent Security Agreement” means a Canadian Patent Security Agreement, substantially in the
form of Exhibit C-1, executed and delivered by a Lien Grantor in favour of the Collateral Agent for
the benefit of the Secured Parties.

                    “Perfection Certificate” means with respect to any Lien Grantor, a certificate substantially
in the form of Exhibit E, completed and supplemented with the schedules

10

 

contemplated thereby to the satisfaction of the Collateral Agent, and signed by an officer of
such Lien Grantor.

                    “Permitted Liens” means (i) the Transaction Liens and (ii) Additional Collateral Liens.

                    “Permitted Receivables Financing” means (i) any Qualified Receivables Transaction and (ii) any
Receivables Transaction after giving effect to which the mandatory prepayment provisions of the
Syndicated Credit Agreement are not contravened.

                    “Person” means an individual, a corporation, a partnership, an association, a trust or any
other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.

                    “Pledged” when used in conjunction with any type of asset, means at any time an asset of such
type that is included (or that creates rights that are included) in the Collateral at such time
pursuant to the terms of this Agreement. For example, “Pledged Equity Interest” means an Equity
Interest that is included in the Collateral at such time and “Pledged letter of credit” means a
letter of credit that creates rights to payment or performance that are included in the Collateral
at such time.

                    “Post-Petition Interest” means, with respect to any obligation of any Person, any interest
that accrues after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of such Person (or would accrue but for the operation of
applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable as
a claim in any such proceeding.

                    “PPSA” means the Personal Property Security Act as in effect from time to time in the Province
of Ontario; provided that, if validity, perfection or the effect of perfection or non-perfection or
the priority of any Transaction Lien on any Collateral and the rights and remedies of secured
parties are governed by the PPSA or other similar legislation as in effect in a jurisdiction other
than Ontario, “PPSA” means the Personal Property Security Act or other similar legislation as in
effect from time to time in such other jurisdiction for purposes of the provisions hereof relating
to such validity, perfection, effect of perfection or non-perfection or priority and to such rights
and remedies.

                    “Proceeds” means all “proceeds”, as such term is defined in the PPSA and, in any event, shall
include all proceeds of, and all other profits, products, rents or receipts, in whatever form,
arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of,
or other realization upon, any Collateral, including all claims of the relevant Lien Grantor
against third parties for loss of, damage to, or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral.

                    “Purchase Money Mortgage” means, with respect to any Lien Grantor, (i) a mortgage on or
security interest in property existing at the time of acquisition thereof by such Lien Grantor and
not incurred in contemplation of such acquisition and (ii) any mortgage on or security interest in
any property acquired, constructed or improved by such Lien Grantor incurred after the date hereof
which is related solely to, and is created or assumed

11

 

contemporaneously with, or within 180 days after, such acquisition, or completion of such
construction or improvement, to secure or provide for the payment of the purchase price thereof or
the cost of construction or improvement thereon incurred after the date hereof (including the cost
of any underlying real property); provided that in the case of any such acquisition, construction
or improvement, the mortgage or security interest shall not apply to any after acquired property of
such Grantor (other than improvements thereon and fixtures) or to any property previously owned by
such Lien Grantor other than, in the case of any such construction or improvement, any real
property, theretofore substantially unimproved for the purposes of such Lien Grantor, on which the
property so constructed, or the improvement, is located and other than a fixture on the real
property on which the property so constructed, or the improvement, is located; and provided further
that the amount secured by the mortgage or security interest shall not exceed the purchase price
thereof or the cost of construction or improvement thereon plus reasonable fees and expenses with
respect thereto.

                    “Qualified Receivables Transaction” has the meaning set forth in Section 1.01 of the 2006
Credit Agreement.

                    “Ratio” means, at any time, the ratio of (i) the principal amount of the Bond Obligations to
(ii) the sum of (A) the Tranche A Obligations at such time and (B) the aggregate principal amount
of any “Support” (as defined in the EDC Support Facility) outstanding under the EDC Support
Facility.

                    “Receivables Transaction” has the meaning set forth in Section 1.01 of the 2006 Credit
Agreement.

                    “Receiver” means a receiver, a manager or a receiver and manager.

                    “Recordable Intellectual Property” means (A) (i) U.S. Patents (other than U.S. Patents
described in clauses (iii) and (iv) of the definition thereof) registered with the United States
Patent and U.S. Trademarks (other than Trademarks described in clauses (v) and (vi) of the
definition thereof) registered with the United States Patent and Trademark Office, (ii) U.S.
Copyrights (other than U.S. Copyrights described in clauses (iii) and (iv) of the definition
thereof) registered with the United States Copyright Office and (iii) all rights in or under any of
the foregoing.

                    (B) (i) Canadian Patents (other than Canadian Patents described in clauses (iii) and (iv) of
the definition thereof) registered with the Canadian Patent and Canadian Trademarks (other than
Trademarks described in clauses (v) and (vi) of the definition thereof) registered with the
Canadian Patent and Trademark Office, (ii) Canadian Copyrights (other than Canadian Copyrights
described in clauses (iii) and (iv) of the definition thereof) registered with the Canadian
Copyright Office and (iii) Designs (other than Designs described in clauses (iii) and (iv) of the
definition thereof) registered with the Canadian Intellectual Property Office, and all rights in or
under any of the foregoing.

                    “Related Transferred Rights” means (i) Transferred Receivables, (ii) rights to payment and
collections in respect of such Transferred Receivables, (iii) security interests or Liens and
property subject thereto purporting to secure or guarantee payment of such Transferred Receivables,
(iv) guarantees, letters of credit, acceptances, insurance and other arrangements from time to time
supporting or securing payment of such Transferred Receivables, (v) all

12

 

invoices, documents, books, records and other information with respect to such Transferred
Receivables or the obligors thereon, (vi) with respect to any such Transferred Receivables, the
transferee’s interest in the product (including returned product), the sale of which by such
transferee gave rise to such Transferred Receivables and (vii) all Proceeds of the items described
in the foregoing clauses.

                    “Required Secured Lenders” means, with respect to any amendment or waiver hereunder (including
any release of Collateral pursuant to Section 19(g), Lenders having the percentage of the Tranche A
Commitments and Tranche A Loans specified by Section 9.05 of the 2006 Credit Agreement in order to
approve such action; provided, that if any amendment or waiver hereunder that would (A) provide any
additional benefits to the Lenders which are not also provided to EDC, (B) alter the application of
proceeds of Collateral in any manner adverse to EDC or (C) increase the amount of obligations that
are permitted to be secured by the Collateral (except as expressly contemplated hereby), then the
consent of the “Required Secured Lenders” shall not be deemed to have been obtained unless EDC
shall have also consented to such amendment or waiver.

                    “Secured Agreement” when used with respect to any Secured Obligation of any Lien Grantor,
refers collectively to each instrument, agreement or other document that sets forth obligations of
such Lien Grantor and/or rights of the holder with respect to such Secured Obligation.

                    “Secured Obligations” means (i) with respect to NNL, the NNL Secured Obligations, (ii) with
respect to NNC, the NNC Secured Obligations and (iii) with respect to any Subsidiary Lien Grantor,
(a) the obligations of such Lien Grantor under any guarantee delivered by it pursuant to Section
5.7 of the EDC Support Facility, (b) the obligations of such Lien Grantor under any guarantee
delivered by it pursuant to Section 5.16 of the 2006 Credit Agreement, and (c) the obligations of
any Subsidiary Lien Grantor under any Designated Hedging Agreement.

                    “Secured Parties” means the holders from time to time of the Secured Obligations.

                    “Securities Account” means an account maintained on behalf of a Lien Grantor by a Securities
Intermediary whose jurisdiction (within the meaning of the UCC) is in the United States of America
in which securities or other financial assets are held for or on behalf of a Lien Grantor.

                    “Securities Account Control Agreement” means, when used with respect to a Securities Account,
a Securities Account Control Agreement substantially in the form of Exhibit G (with any changes
that the Collateral Agent shall have reasonably approved) among the relevant Securities
Intermediary, the relevant Lien Grantor and the Collateral Agent to the effect that such Securities
Intermediary will comply with Entitlement Orders originated by the Collateral Agent with respect to
such Securities Account without further consent by the relevant Lien Grantor.

                    “Securities Intermediary” has the meaning ascribed thereto in Section 8-102 of the UCC.

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                    “Security Entitlement” has the meaning ascribed thereto in Section 8-102 of the UCC.

                    “Security Agreement Supplement” means a Security Agreement Supplement, substantially in the
form of Exhibit A, signed and delivered to the Collateral Agent for the purpose of adding a
Subsidiary as a party hereto pursuant to Section 19 and/or adding additional personal property to
the Collateral.

                    “Security Documents” means this Agreement, the U.S. Security Agreement, the Security Agreement
Supplements, the Commodity Account Control Agreements, the Deposit Account Control Agreements, the
Issuer Control Agreements, the Cash Collateral Agreements, the Intellectual Property Security
Agreements, the Issuer Control Agreement, the Securities Account Control Agreements, the Hypothecs
and all other supplemental or additional security agreements or similar instruments delivered
pursuant to any Credit Agreement or any other Security Documents.

                    “Specified Event of Default” means an event described in Section 6.01(a)(including without
limitation as a result of the acceleration of the Loans prior to their stated maturity), (f), or
(g) of the 2006 Credit Agreement or any Event of Default caused by a breach of any financial
covenant contained in the 2006 Credit Agreement.

                    “Subsidiary” means, as to any Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly or indirectly
owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of NNC or a
Subsidiary of NNL.

                    “Subsidiary Lien Grantors” means each Subsidiary of NNC organized in any Province or Territory
of Canada that shall, at any time after the date hereof, become a “Subsidiary Lien Grantor”
pursuant to Section 20.

                    “Supporting Letter of Credit” means a letter of credit to the extent that it constitutes a
Supporting Obligation with respect to any Collateral.

                    “Supporting Obligation” has the meaning specified in UCC Section 9-102.

                    “Trademark License” means any agreement now or hereafter in existence granting to any Lien
Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use any
Canadian Trademark or U.S. Trademark.

                    “Trademark Security Agreement” means a Trademark Security Agreement, substantially in the form
of Exhibit D, executed and delivered by a Lien Grantor in favour of the Collateral Agent for the
benefit of the Secured Parties.

                    “Tranche A Commitment” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

                    “Tranche A Loan” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

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                    “Tranche A Note” has the meaning set forth in Section 1.01 of the 2006 Credit Agreement.

                    “Tranche A Obligations” means (i) all principal of and interest (including, without
limitation, any Post Petition Interest) on any Tranche A Loan and (ii) all other amounts payable by
NNL in connection with the Tranche A Loans under the 2006 Credit Agreement.

                    “Transaction Liens” means the Liens granted by the Lien Grantors under the Security Documents.

                    “Transferred Receivables” means any receivables that have been sold, pledged, contributed or
otherwise transferred in connection with a Permitted Receivables Financing.

                    “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if perfection or the effect of perfection or non-perfection or the priority of
any Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

                    “U.S. Copyrights” means all the following: (i) all copyrights under the laws of the United
States (whether or not the underlying works of authorship have been published), all registrations
and recordings thereof, all copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States, including registrations,
recordings and applications in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country or any political subdivision
thereof, including those described in Schedule I to any Copyright Security Agreement, (ii) all
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 (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.

                    “U.S. Patents” means (i) all letters patent and design letters patent issued by the United
States and all applications for letters patent or design letters patent pending before the United
States Patent and Trademark Office or in any similar office or agency of the United States, any
State thereof, including those described in Schedule I to any U.S. Patent Security Agreement, (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.

                    “U.S. Security Agreement” means the U.S. security agreement dated as of the date hereof among
NNI, the Subsidiaries from time to time party thereto and JPMorgan Chase Bank, N.A., as Collateral
Agent, and EDC, as amended from time to time.

                    “U.S. Subsidiary” means, with respect to any Person, any Subsidiary (which may be a
corporation, limited liability company, partnership or other legal entity) organized under the laws
of the United States or any state thereof.

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                    “U.S. Trademarks” means: (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,
and the rights in any of the foregoing which arise under applicable law, (ii) the goodwill of the
business symbolized thereby or associated with each of them, (iii) all registrations and
applications in connection therewith, including registrations and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State
thereof, including those described in Schedule 1 to any Trademark Security Agreement, (iv) all
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 due or future infringements thereof.

(c) Terms Generally. The definitions of terms herein (including those incorporated
by reference to the PPSA or to another document) apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
includes the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”. The word “will” shall be construed to have the same meaning
and effect as the word “shall”. Unless the context requires otherwise, (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein), (b)
any reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words
of similar import, shall be construed to refer to this Agreement in its entirety and
not to any particular provision hereof, (d) all references herein to Sections,
Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and
Schedules to, this Agreement and (e) the word “property” shall be construed to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

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;

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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, with respect to the security interests granted by each Lien Grantor, the following
property shall be excluded from the foregoing security interest: (A) any Equity Interests held by
such Lien Grantor in any Subsidiary that is not a Canadian Subsidiary or a U.S. Subsidiary, (B)
Equipment leased by any Lien Grantor under a lease that prohibits the granting of a Lien on such
Equipment if (but only to the extent that) the grant of the Transaction Liens would constitute a
violation of a valid and enforceable restriction in favour of a third party (other than any NNC
Company) or would result in an enforceable right in any Person (other than an NNC Company) to
declare a default under, or an enforceable right to terminate or annul, such lease and until all
required consents shall have been obtained, it being understood that no Lien Grantor is obliged to
obtain such consent, (C) any intangibles or other rights arising under any contract, instrument,
license or other document if (but only to the extent that) the grant of the Transaction Liens would
constitute a violation of a valid and enforceable restriction in favour of a third party (other
than an NNC Company) or would result in an enforceable right in any Person (other than an NNC
Company) to declare a default under, or an enforceable right to terminate or annul, such contract,
instrument, license or other document, unless and until all required consents shall have been
obtained, it being understood that no Lien Grantor is obliged to obtain such consent, (D) any

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Equity Interests in or any debt of any Person if the grant of the Transaction Liens therein would
constitute a violation of any provision of any shareholder agreement or other agreement with
respect to such Equity Interests or debt among such Lien Grantors and any other holders of Equity
Interests or debt of such Person (other than NNC Company), (E) any assets of such Lien Grantor
that constitute Transferred Receivables and Related Transferred Rights on the date on which such
Lien Grantor becomes a party to this Agreement, (F) any Equity Interest issued by NNI, (G) the last
day of the term of any lease or any extension or renewal thereof, oral or written, or agreement
therefor, now held or hereafter acquired by any Lien Grantor but upon the enforcement of the
security interest hereunder, the applicable Lien Grantor shall stand possessed of such last day in
trust to assign the same to any person acquiring such term, (H) any asset of such Lien Grantor for
so long as such asset is subject to a Purchase Money Mortgage, (I) the accounts titled “Nortel
Networks Ltd. Pledge Facility USD75M” and “Nortel Networks Ltd. Pledge Deposit” maintained by NNL
at ABN AMRO Bank N.V. Canada Branch and (J) any Equity Interests in any Person the grant of a
Transaction Lien on which would require the inclusion of separate financial statements of such
Person in the filings by any NNC Company under the Securities Exchange Act of 1934, as amended (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 security interests granted by each Lien Grantor pursuant to this Section 2 shall terminate
in accordance with Section 20.

	 	(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

                    Each Lien Grantor represents and warrants, on the Effective Date, and covenants, where
indicated below, as follows:

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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

 

	 	 	 	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

 

	 	 	 	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 Act or any similar applicable
legislation of any Province or Territory of Canada; provided that no 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
Act or any similar applicable legislation of any Province or Territory of Canada.

SECTION 4. ADDITIONAL COVENANTS.

                    Each Lien Grantor covenants as follows:

	 	(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 that no 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.

23

 

	 	(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

                    Each Lien Grantor covenants as follows:

	 	(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

                    Each Lien Grantor represents and warrants, at the times set forth below, and covenants, where
indicated below, as follows:

	 	(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 that such 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
that no 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); provided that 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 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 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 that the 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 that the
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 that the Lien Grantors shall be deemed to have made this representation and
warranty only with

27

 

	 	 	 	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

28

 

	 	 	 	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

29

 

	 	 	 	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 that if 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

32

 

	 	 	 	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

                    Cash Distributions with respect to assets held in a Controlled Deposit Account or Cash
Collateral Account shall be deposited and held therein, or withdrawn therefrom, as provided in
Section 8 and Section 10. If a Specified Event of Default shall have occurred and is

33

 

continuing, Cash Distributions (other than in amounts less than $3,000,000) with respect to
any Pledged Equity Interest that is not held in a Controlled Deposit Account or Cash Collateral
Account (whether held in the name of a Lien Grantor or in the name of the Collateral Agent or its
nominee) shall be deposited, as soon as practicable upon receipt thereof, in a Controlled Deposit
Account or Cash Collateral Account of the relevant Lien Grantor if such account exists at such time
and otherwise, turned over to the Collateral Agent.

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 that the 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,

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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:

(1) to pay the expenses of such sale or other disposition, including reasonable
compensation to agents of and counsel for the Collateral Agent, and all reasonable
expenses, liabilities and advances incurred or made by the Collateral Agent in
connection with the Security Documents, and any other amounts then due and payable to
the Collateral Agent pursuant to Section 15 or any amounts owing to the Indenture
Trustee under Section 5.05 of the 1988 Indenture, or any amounts owing to

35

 

EDC under the EDC Support Facility and consisting of reimbursement obligations with
respect to fees and expenses incurred by EDC;

(2) to pay the due and unpaid principal, face amount or termination amount of the
Secured Obligations ratably, on the basis of the principal or face amount of such
Secured Obligations (or, with respect to Contingent Secured Obligations, provide for the
payment thereof pursuant to Section 14(b)), until payment in full of the principal of
all Secured Obligations shall have been made (or, with respect to Contingent Secured
Obligations, so provided for); and

(3) to pay ratably the due and unpaid interest accrued on the Secured Obligations in
accordance with the provisions of the applicable Secured Agreement, as applicable;

(4) to pay all other due and unpaid Secured Obligations and all due and unpaid
commitment fees and participation fees under each Credit Agreement ratably (or, with
respect to Contingent Secured Obligations, provide for the payment thereof pursuant to
Section 14(b)), until payment in full of all such other Secured Obligations and fees
shall have been made (or, with respect to Contingent Secured Obligations, so provided
for);and

(5) to pay to the relevant Lien Grantor, or as a court of competent jurisdiction may
direct, any surplus then remaining from the proceeds of the Collateral owned by it.

provided that Collateral owned by any Subsidiary Lien Grantor and any proceeds thereof shall be
applied pursuant to the foregoing clauses (1), (2), (3) and (4) of this Section 14(a) to the
Secured Obligations of such Subsidiary Lien Grantor consisting of Secured Obligations of such
Subsidiary Lien Grantor. The Collateral Agent may make such distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof.

	 	(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

 

	 	 	 	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

 

	 	 	 	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

          Each Lien Grantor will forthwith upon demand pay to the Collateral Agent; the amount of any
taxes that the Collateral Agent may have been required to pay by reason of the Transaction Liens or
to free any Collateral from any other Lien thereon, the amount of any and all reasonable
out-of-pocket expenses, including transfer taxes and reasonable fees and expenses of outside
counsel and other experts, that the Collateral Agent may incur (except, so long as no Specified
Event of Default shall have occurred and is continuing, any filing fees with respect to
Intellectual Property Filings other than with respect to Material Recordable Intellectual Property)
and (y) Intellectual Property Filings with respect to Trademarks which are not Material Recordable
Intellectual Property) in connection with (i) the administration or enforcement of the Security
Documents, including such reasonable out-of-pocket expenses as are incurred to preserve the value
of the Collateral or the validity, perfection, rank or value of any Transaction Lien, (ii) the
collection, sale or other disposition of any Collateral or (iii) the exercise by the Collateral
Agent of any of its rights or powers under the Security Documents; (iii) the amount of any fees
that the Borrower shall have agreed in writing to pay to the Collateral Agent and that shall have
become due and payable in accordance with such written agreement; and (iv) the amount required to
indemnify the Collateral Agent for, or hold it harmless and defend it against, any loss, liability
or expense (including the reasonable fees and out-of-pocket expenses of its counsel and any experts
or sub-agents appointed by it hereunder) incurred or suffered by the Collateral Agent in connection
with the Security Documents, (except so long as no Specified Event of Default shall have occurred
and is continuing, any filing fees with respect to or arising in connection with Intellectual
Property Filings other than with respect to Material Recordable Intellectual Property and (y)
Intellectual Property Filings with respect to Trademarks which are not Material Recordable
Intellectual Property) except to the extent that such loss, liability or expense arises from the
Collateral Agent’s gross negligence or wilful misconduct or a breach of any duty that the
Collateral Agent has under this Agreement (after giving effect to Section 17 and Section 18). Any
such amount not paid to the Collateral Agent as soon as practicable will bear interest for each day
thereafter until paid at a rate per annum equal to the sum of 2% plus the highest rate applicable
to the base rate loans under the 2006 Credit Agreement, if it shall not have been terminated or 2%
plus the overnight federal funds rate if the 2006 Credit Agreement shall have been terminated. If
any transfer tax, documentary stamp tax, withholding tax or other tax is payable in connection with
any transfer or other transaction provided for in the Security
Documents, the Lien Grantors will pay such tax and provide any required tax stamps to the
Collateral Agent or as otherwise required by law.

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SECTION 16. AUTHORITY TO ADMINISTER COLLATERAL

          Each Lien Grantor irrevocably appoints the Collateral Agent its true and lawful attorney, with
full power of substitution, in the name of such Lien Grantor, any Secured Party or otherwise, for
the sole use and benefit of the Secured Parties, but at NNL’s expense, to the extent permitted by
law to exercise, at any time and from time to time while (x) an Event of Default with respect to
Illiquid Collateral and (y) a Specified Event of Default with respect to Liquid Collateral shall
have occurred and is continuing, all or any of the following powers with respect to all or any of
such Lien Grantor’s 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, except in the case of Collateral that is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the Collateral
Agent will give the relevant Lien Grantor at least ten days’ prior written notice of the
time and place of any public sale thereof or the time after which any private sale or other
intended disposition thereof will be made. Any such notice shall comply with the provisions
of the PPSA.

          For the purposes of holding any security granted by any Lien Grantors pursuant to the laws of
the Province of Quebec, each Secured Party hereby irrevocably appoints and authorizes JPMorgan
Chase Bank, N.A. to act as the person holding the power of attorney (in such capacity, the “fondé
de pouvoir”) of such Secured Parties and as contemplated under Article 2692 of the Civil Code of
Quebec, and to enter into, to take and to hold on their behalf, and for their benefit, each
hypothec granted by the Lien Grantors under the Civil Code of Quebec (a “Hypothec”), and to
exercise such powers and duties which are conferred upon the fondé de pouvoir under each Hypothec.
Moreover, without prejudice to such appointment and authorization to act as the Person holding the
power of attorney as aforesaid, each Secured Party hereby irrevocably appoints and authorizes
JPMorgan Chase Bank, N.A., as Collateral Agent (in such capacity, the “Custodian”) to act as agent
and custodian for and on behalf of such Secured Parties to hold and to be the sole registered
holder of any debenture or bond which may be issued under any Hypothec, the whole notwithstanding
Section 32 of the Act Respecting the Special Powers of Legal Persons (Quebec) or any other
applicable Law. In this respect, (i) records shall be kept indicating the names and addresses of,
and the pro rata portion of the obligations and
indebtedness secured by any pledge of any such debenture or bond and owing to, each Secured
Party, and (ii) each Secured Party will be entitled to the benefits of any Collateral covered by
any Hypothec and will participate in the proceeds of realization of any such Collateral, the whole
in accordance with the terms hereof. Each of the fondé de pouvoir and the Custodian shall (a)

39

 

exercise, in accordance with the terms hereof, all rights and remedies given to the fondé de
pouvoir and the Custodian (as applicable) with respect to the Collateral under any Hypothec, any
debenture or bond or pledge thereof relating to any Hypothec, applicable laws or otherwise, (b)
benefit from and be subject to all provisions hereof with respect to the Collateral Agent mutatis
mutandis, including, without limitation, all such provisions with respect to the liability or
responsibility to and indemnification by the Secured Parties, and (c) be entitled to delegate from
time to time any of its powers or duties under any Hypothec, any debenture or bond or pledge
thereof relating to any Hypothec, applicable laws or otherwise and on such terms and conditions as
it may determine from time to time. Any Person who becomes a Secured Party shall be deemed to have
consented to and confirmed: (i) the fondé de pouvoir as the Person holding the power of attorney
as aforesaid, and to have ratified, as of the date it acquired its Secured Obligations, all actions
taken by the fondé de pouvoir as the Person holding the power of attorney as aforesaid; and (ii)
the Custodian as the agent and custodian as aforesaid and to have ratified, as the date it acquired
its Secured Obligations, all actions taken by the Custodian in such capacity. JPMorgan Chase Bank,
N.A. accepts the foregoing appointments as fondé de pouvoir and Custodian and agrees to act in such
capacities.

          The execution by the fondé de pouvoir, as the person holding the power of attorney, prior to
the Canadian Security Agreement, of any deed of hypothec or other security document is hereby
ratified and confirmed.

SECTION 17. LIMITATION ON DUTY IN RESPECT OF COLLATERAL

          Beyond the exercise of reasonable care in the custody and preservation thereof, the Collateral
Agent will have no duty as to any Collateral in its possession or control or in the possession or
control of any sub-agent or bailee selected by it in good faith or any income therefrom or as to
the preservation of rights against prior parties or any other rights pertaining thereto. The
Collateral Agent will be deemed to have exercised reasonable care in the custody and preservation
of the Collateral in its possession or control if such Collateral is accorded treatment
substantially equal to that which it accords its own property, and will not be liable or
responsible for any loss or damage to any Collateral, or for any diminution in the value thereof,
by reason of any act or omission of any sub-agent or bailee selected by the Collateral Agent in
good faith, except to the extent that such liability arises from the Collateral Agent’s gross
negligence or wilful misconduct.

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

 

	 	(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

 

	 	 	 	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

 

	 	 	 	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 that no 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 that the
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

 

	 	 	 	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; provided that 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).

44

 

SECTION 20. ADDITIONAL LIEN GRANTORS

          Any Person may become a party hereto by signing and delivering to the Collateral Agent a
Security Agreement Supplement, whereupon such Person shall become a “Lien Grantor” as defined
herein.

SECTION 21. ADDITIONAL SECURED OBLIGATIONS

          Each Lien Grantor may from time to time designate its obligations under any Hedging Agreement
(a “Designated Hedging Agreement”) with any Lender or Affiliate of a Lender as an additional
Secured Obligation for purposes hereof by delivering to the Collateral Agent a certificate signed
by a financial officer that (i) identifies such Hedging Agreement, specifying the name and address
of the other party thereto, the notional principal amount thereof and the expiration date thereof
and (ii) states that such Lien Grantor’s obligations (as applicable) thereunder are designated as
Secured Obligations for purposes hereof; provided that the holder of such Designated Hedging
Agreement shall have provided a supplement to this Agreement agreeing to be bound by the terms
hereof that are applicable to it including, without limitation, Section 18.

SECTION 22. NOTICES

          Each notice, request or other communication given to any party hereunder shall be in writing
(which term includes facsimile or other electronic transmission) and shall be effective (a) when
hand delivered or sent by courier to such party at its address specified below, (b) when sent to
such party by facsimile or other electronic transmission, addressed to it at its facsimile number
or electronic address specified below, and such party sends back an electronic confirmation of
receipt or (c) ten days after being sent to such party by certified or registered Canada or United
States mail, addressed to it at its address specified below, with first class or airmail postage
prepaid:

	 	(i)	 	in the case of any Lien Grantor listed on the signature pages hereof:

C/O Nortel Networks Limited

8200 Dixie Road, Suite 100

MS: 036/NO/230

Brampton, Ontario

L6T 5P6

Attention: Corporate Secretary

Facsimile: 905-863-8386

	 	(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:

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, NY 10017

45

 

Attention: David M. Mallett

Facsimile: 212-270-5127

	 	(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.

          Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section 22 by giving notice of such change to the Collateral Agent and the Lien Grantors in the
manner specified above.

SECTION 23. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE

          No failure by the Collateral Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under any Security
Document shall operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent or any Secured Party of any right or remedy under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right or remedy. The rights and
remedies specified in the Loan Documents are cumulative and are not exclusive of any other rights
or remedies provided by law.

SECTION 24. SUCCESSORS AND ASSIGNS

          This Agreement is for the benefit of the Collateral Agent and the Secured Parties. If all or
any part of any Secured Party’s interest in any Secured Obligation is assigned or otherwise
transferred in accordance with the transfer provisions applicable thereto, the transferor’s rights
hereunder, to the extent applicable to the obligation so transferred, shall be automatically
transferred with such obligation. This Agreement shall be binding on the Lien Grantors and their
respective successors and assigns.

SECTION 25. AMENDMENTS AND WAIVERS

          Except as expressly provided herein, neither this Agreement nor any provision hereof may be
waived, amended, modified or terminated except pursuant to an agreement or agreements in writing
entered into by the parties hereto, with the consent of the Required Secured Lenders.

SECTION 26. CHOICE OF LAW

          This Agreement shall be construed in accordance with and governed by the laws of the Province
of Ontario and the federal laws of Canada applicable therein, except as otherwise required by
mandatory provisions of law.

SECTION 27. JUDGMENT CURRENCY

          If for the purpose of obtaining judgment in any court it is necessary to convert a sum due
from a Lien Grantor in the currency expressed to be payable in any Loan Document (the “specified
currency”) into another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in accordance

46

 

with normal banking procedures the Collateral Agent could purchase the specified currency with such other
currency at the Collateral Agent’s Toronto office on the domestic Business Day preceding that on
which final judgment is given. The obligations of the Lien Grantor in respect of any sum due to
the Collateral Agent hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the domestic Business Day following
receipt by the Collateral Agent of any sum adjudged to be so due in such other currency the
Collateral Agent may in accordance with normal banking procedures purchase the specified currency
with such other currency; if the amount of the specified currency so purchased is less than the sum
originally due to the Collateral Agent, in the specified currency, the Lien Grantor agrees, to the
fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify the Collateral Agent, against such loss, and if the amount of the specified
currency so purchased exceeds the sum originally due to the Collateral Agent, in the specified
currency, then the Collateral Agent agrees to remit such excess to the Lien Grantor.

SECTION 28. INTEREST ACT

          For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest
or fees to which the rates of interest or fees provided in any Credit Agreement and in this
Agreement (and stated herein as applicable to be computed on the basis of a 365 day year or any
other period of time less than a calendar year) are equivalent are the rates so determined
multiplied by the actual number of days in the applicable calendar year and divided by 365 or such
other period of time.

SECTION 29. WAIVER OF JURY TRIAL

          EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO ANY SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY AND FOR ANY
COUNTERCLAIM THEREIN (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR COUNSEL OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 30. SEVERABILITY

          If any provision of any Security Document is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (a) the other provisions of the Security Documents
shall remain in full force and effect in such jurisdiction and shall be liberally construed in
favour of the Collateral Agent and the Secured Parties in order to carry out the intentions of the
parties thereto as nearly as may be possible and (b) the invalidity or unenforceability of such
provision in such jurisdiction shall not affect the validity or enforceability thereof in any other
jurisdiction.

47

 

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

	 	 	 	 	 
	 	NORTEL NETWORKS LIMITED

 	 
	 	By:  	/s/  Katharine Stevenson 	 
	 	 	Katharine Stevenson 	 
	 	 	Treasurer 	 
	 
	 	 	 
	 	By:  	/s/  Gordon A. Davies 	 
	 	 	Gordon A. Davies 	 
	 	 	General Counsel-Corporate and Corporate Secretary 	 
	 

	 	 	 	 	 
	 	NORTEL NETWORKS CORPORATION

 	 
	 	By:  	/s/  Katharine Stevenson 	 
	 	 	Katharine Stevenson 	 
	 	 	Treasurer 	 
	 
	 	 	 
	 	By:  	/s/  Gordon A. Davies 	 
	 	 	Gordon A. Davies 	 
	 	 	General Counsel-Corporate and Corporate Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as

Collateral Agent and Administrative Agent

 	 
	 	By:  	/s/  David
M. Mallett 	 
	 	 	Name:  	David M. Mallett 	 
	 	 	Title:  	Vice President 	 
	 

 

 

	 	 	 	 	 
	 	EXPORT DEVELOPMENT CANADA, as 

provider of the EDC Support Facility

 	 
	 	By:  	/s/  David
B. Guy 	 
	 	 	Name:  	David B. Guy 	 
	 	 	Title:  	Director-Telecom 	 
	 
	 	 	 
	 	By:  	/s/  Michael
J. Fortner 	 
	 	 	Name:  	Michael J. Fortner 	 
	 	 	Title:  	Financial Services Manager 	 

 

 

	 	 	 	 	 

SCHEDULE 1

PLEDGED EQUITY INTERESTS DIRECTLY

OWNED BY LIEN GRANTORS

(as of the date hereof)

 

 

SCHEDULE 2

PLEDGED SECURITIES

(other than Pledged Equity Interests)

OWNED DIRECTLY BY LIEN GRANTORS

(as of the date hereof)

 

 

SCHEDULE 3

Principal U.S. Cash Management Accounts of Lien Grantors

 

 

Exhibit A

to Security Agreement

SECURITY AGREEMENT SUPPLEMENT

     SECURITY AGREEMENT SUPPLEMENT dated as of [the date of execution] between [NAME OF LIEN
GRANTOR] (the “Lien Grantor”) and JPMORGAN CHASE BANK, N.A., as Collateral Agent.

     WHEREAS, Nortel Networks Limited, Nortel Networks Corporation, the Subsidiaries party thereto,
JPMorgan Chase Bank, N.A., as Collateral Agent and Export Development Canada are parties to a
Canadian Security Agreement dated as of February 14, 2006 (as heretofore amended and/or
supplemented, the “Security Agreement”);

     WHEREAS, terms defined in the Security Agreement and not otherwise defined herein have, as
used herein, the respective meanings provided for therein;

     WHEREAS, [name of Lien Grantor] [desires to become] [is] a party to the Security Agreement as
a Lien Grantor thereunder; and

     NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt of which are hereby acknowledged, the parties hereto agree as follows:

	1.	 	Grant of Transaction Liens.

In order to secure the Secured Obligations, the Lien Grantor grants to the Collateral Agent
for the equal and ratable benefit of the Secured Parties, effective on the date hereof a
continuing security interest in all the following property of the Lien Grantor, whether now
owned or existing or hereafter acquired or arising and regardless of where located (the “New
Collateral”):

[describe property being added to the Collateral]1

The security interests granted by the Lien Grantor pursuant hereto shall terminate in
accordance with Section 19 of the Security Agreement.

	 	(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.

 

 

2. Delivery of Collateral. On the date of execution hereof, the Lien Grantor has complied with the
provisions of Section 4 of the Security Agreement with respect to Chattel Paper and Instruments,
and either Section 6 or 10(a) as applicable of the Security Agreement with respect to Securities,
in each case if and to the extent included in the New Collateral at such time.

3. Party to Security Agreement. Upon delivering this Security Agreement Supplement to the
Collateral Agent, the Lien Grantor will become a party to the Security Agreement and will
thereafter have all the rights and obligations of a Lien Grantor thereunder and be bound by all the
provisions thereof as fully as if the Lien Grantor were one of the original parties
thereto.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.

 

 

agreement of the Lien Grantor, enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, fraudulent conveyance or other similar
laws affecting creditors’ rights generally and general principles of equity.

	 	(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.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement Supplement to be duly
executed by their respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as

Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

Schedule 1

to Security Agreement

Supplement

PLEDGED EQUITY INTERESTS IN SUBSIDIARIES

AND AFFILIATES OWNED BY LIEN GRANTOR4

	 	 	 	 	 	 	 	 	Number of
	 	 	Jurisdiction of	 	 	 	 	 	Shares or
	Issuer	 	Organization	 	 	Percentage Owned	 	 	Units

 

			
	4	 	To be used only for new Lien Grantor

 

 

Schedule 2

to Security Agreement

Supplement

SECURITIES AND OTHER INVESTMENTS5

(other than Equity Interests in Subsidiaries and affiliates)

OWNED BY LIEN GRANTOR

PART 1 Securities

	 	 	Jurisdiction	 	 	 	 	 	 
	 	 	of	 	 	Amount	 	 	Type of
	Issuer	 	Organization	 	 	Owned	 	 	Security

PART 2 Securities Accounts

     The Lien Grantor owns Equity Interests with respect to financial assets credited to the
following Securities
Accounts:6
 

	Securities Intermediary	 	Account Number

PART 3 Commodity Accounts

     The Lien Grantor is the Commodity Customer with respect to the following Commodity Accounts:

	
 Commodity Intermediary	 	Account Number

 

			
	5	 	To be used only for a new Lien Grantor
	 
	6	 	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.

 

 

Exhibit B

to Security Agreement

COPYRIGHT SECURITY AGREEMENT

(Copyrights, Copyright Registrations)

WHEREAS, [name of Lien Grantor], a                      corporation7 (herein referred to as the
“Lien Grantor”) owns the Copyright Collateral (as defined below);

WHEREAS, pursuant to (i) a Canadian Security Agreement dated as of February, 2006 (as amended
and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks Limited,
Nortel Networks Corporation, the Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as
Collateral Agent for the Secured Parties referred to therein (in such capacity, together with its
successors in such capacity, the “Grantee”), and the other parties named therein, and (ii) certain
other Security Documents (including this Copyright Security Agreement), the Lien Grantor has
secured certain obligations (the “Secured Obligations”) by granting to the Grantee for the benefit
of such Secured Parties a continuing security interest in personal property of the Lien Grantor,
including all right, title and interest of the Lien Grantor in, to and under the Copyright
Collateral (as defined below);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Copyright Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(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.

The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Copyright Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Copyright Collateral and to execute any and all documents

 

			
	7	 	Modify as needed if the Lien Grantor is
not a corporation.

 

 

and instruments which may be necessary or desirable to carry out the terms of this Copyright
Security Agreement and to accomplish the purposes hereof.

The foregoing security interest is granted in conjunction with the security interests granted by
the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security Agreement to be duly
executed by its officer thereunto duly authorized as of the                      day of                     ,                     .

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledged:

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., 

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 

 

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

Exhibit C

to Security Agreement

PATENT SECURITY AGREEMENT

(Patents, Patent Applications)

WHEREAS, [name of Lien Grantor], a                      corporation (herein referred to as the “Lien
Grantor”) owns the Patent Collateral (as defined below);

WHEREAS, pursuant to (i) a Canadian Security Agreement dated as of February 14. 2006, 2006, (as
amended and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks
Limited, Nortel Networks Corporation, the Subsidiaries party thereto, JPMorgan Chase Bank, N.A., as
Collateral Agent for the Secured Parties referred to therein (in such capacity, together with its
successors in such capacity, the “Grantee”), and the other parties named therein and (ii) certain
other Security Documents (including this Patent Security Agreement), the Lien Grantor has secured
certain obligations (the “Secured Obligations”) by granting to the Grantee for the benefit of such
Secured Parties a continuing security interest in personal property of the Lien Grantor, including
all right, title and interest of the Lien Grantor in, to and under the Patent Collateral (as
defined below);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Patent Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(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).

The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Specified Event of Default shall have occurred and is
continuing, to take with respect to the Patent Collateral any and all appropriate action which the
Lien Grantor might take with respect to the Patent Collateral and to execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.

The foregoing security interest is granted in conjunction with the security interests granted by
the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the

 

 

Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security Agreement to be duly executed
by its officer thereunto duly authorized as of the                      day of                     ,                     .

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledged:

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., 

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT D

to Security Agreement

TRADEMARK SECURITY AGREEMENT

(Trademark Registrations, Trademark Applications)

WHEREAS,
[name of Lien Grantor], a                      corporation1 (herein referred to as
the “Lien Grantor”) owns the Trademark Collateral (as defined below);

WHEREAS, pursuant to (i) a Security Agreement dated as of February 14, 2006 (as amended and/or
supplemented from time to time, the “Security Agreement”) among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiaries party thereto, JPMorgan Chase Bank, N.A. as Collateral Agent for
the Secured Parties referred to therein (in such capacity, together with its successors in such
capacity, the “Grantee”) and the other parties named therein, and (ii) certain other Security
Documents (including this Trademark Security Agreement), the Lien Grantor has secured certain
obligations (the “Secured Obligations”) by granting to the Grantee for the benefit of such Secured
Parties a continuing security interest in personal property of the Lien Grantor, including all
right, title and interest of the Lien Grantor in, to and under the Trademark Collateral (as defined
below);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Trademark Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(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).

The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Trademark Collateral any and all appropriate action which the Lien

 

			
	1	 	Modify as needed if the Lien Grantor is not
a corporation.

 

 

Grantor might take with respect to the Trademark Collateral and to execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of this Trademark
Security Agreement and to accomplish the purposes hereof.

The foregoing security interest is granted in conjunction with the security interests granted by
the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security Agreement to be duly
executed by its officer thereunto duly authorized as of the                      day of                     ,                     .

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 

Acknowledged:

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., 

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT E

to Security Agreement

CANADIAN INDUSTRIAL DESIGN SECURITY AGREEMENT

(Industrial Designs, Industrial Design Applications)

WHEREAS,
[name of Lien Grantor], a                      corporation1 (herein referred to as
the “Lien Grantor”) owns the Design Collateral (as defined below);

WHEREAS, pursuant to (i) a Canadian Security Agreement dated as of February 14, 2006, (as amended
and/or supplemented from time to time, the “Security Agreement”) among Nortel Networks Limited,
Nortel Networks Corporation, the Subsidiaries party thereto, JPMorgan Chase Bank, N.A. as
Collateral Agent for the Secured Parties referred to therein (in such capacity, together with its
successors in such capacity, the “Grantee”), and the other parties named therein, and (ii) certain
other Security Documents (including this Canadian Industrial Design Security Agreement), the Lien
Grantor has secured certain obligations (the “Secured Obligations”) by granting to the Grantee for
the benefit of such Secured Parties a continuing security interest in personal property of the Lien
Grantor, including all right, title and interest of the Lien Grantor in, to and under the Design
Collateral (as defined below);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lien Grantor grants to the Grantee, to secure the Secured Obligations, a
continuing security interest in all of the Lien Grantor’s right, title and interest in, to and
under the following (all of the following items or types of property being herein collectively
referred to as the “Design Collateral”), whether now owned or existing or hereafter acquired or
arising:

	 	(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).

The Lien Grantor irrevocably constitutes and appoints the Grantee and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in the Grantee’s name, from time to time, in the
Grantee’s discretion, so long as any Event of Default shall have occurred and is continuing, to
take with respect to the Design Collateral any and all appropriate action which the Lien Grantor
might take with respect to the Design Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this Canadian Industrial
Design Security Agreement and to accomplish the purposes hereof.

 

			
	1	 	Modify as needed if the Lien Grantor is not
a corporation.

 

 

The foregoing security interest is granted in conjunction with the security interests granted by
the Lien Grantor to the Grantee pursuant to the Security Agreement. The Lien Grantor and the
Grantee acknowledge and affirm that the rights and remedies of the Grantee and the Lien Grantor
with respect to the security interest in the Design Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Industrial Design Security Agreement
to be duly executed by its officer thereunto duly authorized as of the                      day of
                    ,                     .

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Treasurer 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledged:

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., 

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT F

to Security Agreement

PERFECTION CERTIFICATE

The undersigned is a duly authorized officer of [Name of Lien Grantor] (the “Lien Grantor”). With
reference to the Canadian Security Agreement dated as of February 14, 2006, among Nortel Networks
Limited, Nortel Networks Corporation, each Subsidiary Party thereto, JPMORGAN CHASE BANK, N.A., as
Collateral Agent and the other parties named therein (terms defined therein being used herein as
therein defined), the undersigned certifies to the Collateral Agent and each other Secured Party as
follows:

	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

The Lien Grantor [does] [does not] own or lease real property located in another city of the
province listed above.

 

			
	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:

IN WITNESS WHEREOF, I have hereunto set my hand this day of l,                     .

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT G

to Security Agreement

SECURITIES ACCOUNT CONTROL AGREEMENT

     SECURITIES ACCOUNT CONTROL AGREEMENT dated as of ___, ___among ___(the “Lien
Grantor”), JPMORGAN CHASE BANK, N.A., as Collateral Agent (the “Secured Party”), and ___(the
“Securities Intermediary”). All references herein to the “UCC” refer to the Uniform Commercial
Code as in effect from time to time in the State of New York. Terms defined in the UCC have the
same meanings when used herein.

W I T N E S S E T H :

     WHEREAS, the Lien Grantor is the entitlement holder with respect to the Account (as defined
below);

     WHEREAS, pursuant to a Security Agreement dated as of February 14, 2006 (as such agreement
may be amended and/or supplemented from time to time, the “Security Agreement”), the Lien Grantor
has granted to the Secured Party a continuing security interest (the “Transaction Lien”) in all
right, title and interest of the Lien Grantor in, to and under the Account, all financial assets
credited thereto and all security entitlements in respect thereof, whether now owned or existing or
hereafter acquired or arising; and

     WHEREAS, the parties hereto are entering into this Agreement in order to perfect the
Transaction Lien on the Account, all financial assets from time to time credited thereto and all
security entitlements in respect thereof;

     NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Establishment of Account. The Securities Intermediary confirms that:

• the Securities Intermediary has established account number [identify account number] in
the name of “[name of Lien Grantor]” (such account and any successor account, the
“Account”);

     (i) the Account is a “securities account” as defined in Section 8 501 of the UCC;

     (ii) the Securities Intermediary is acting as a “securities intermediary” (as defined
in Section 8-102 of the UCC) in respect of the Account;

     (iii) the Securities Intermediary shall, subject to the terms of this Agreement, treat
the Lien Grantor as entitled to exercise the rights that comprise all financial assets from
time to time credited to the Account;

     (iv) all property delivered to the Securities Intermediary by or on behalf of the Lien
Grantor will be promptly credited to the Account; and

     (v) all financial assets (except cash) credited to the Account will be registered in
the name of the Securities Intermediary, indorsed to the Securities Intermediary or in

 

 

blank or credited to another securities account maintained in the name of the
Securities Intermediary and in no case will any financial asset credited to the Account be
registered in the name of the Lien Grantor, payable to the order of the Lien Grantor or
specially indorsed to the Lien Grantor unless such financial asset has been further indorsed
to the Securities Intermediary or in blank.

     SECTION 2. “Financial Assets” Election. The parties hereto agree that each item of property
(whether investment property, financial asset, security, instrument, cash or other property)
credited to the Account shall be treated as a “financial asset” within the meaning of Sections 8
102(a)(9) and 8 103 of the UCC.

     SECTION 3. Entitlement Orders. The Securities Intermediary agrees to comply with any
“entitlement order” (as defined in Section 8 102 of the UCC) originated by the Secured Party and
relating to the Account or any financial asset credited thereto without further consent by the Lien
Grantor or any other person. The Lien Grantor consents to the foregoing agreement by the
Securities Intermediary.

     SECTION 4. Waiver of Lien; Waiver of Set-off. The Securities Intermediary waives any
security interest, lien or right to make deductions or setoffs that it may now have or hereafter
acquire in or with respect to the Account, any financial asset credited thereto or any security
entitlement in respect thereof except with respect to customary fees and commissions. Neither the
financial assets credited to the Account nor the security entitlements in respect thereof will be
subject to deduction, set off, banker’s lien, or any other right in favour of any person other than
the Secured Party (except that the Securities Intermediary may set off all amounts due to it in
respect of its customary fees and expenses for the routine maintenance and operation of the
Account).

     SECTION 5. Choice of Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of New York. The State of New York shall be deemed to be the Securities
Intermediary’s jurisdiction for purposes of the UCC (including, without limitation, Section 8 110
thereof).

     SECTION 6. Conflict with Other Agreements. There is no agreement (except this Agreement)
between the Securities Intermediary and the Lien Grantor with respect to the Account [except for
[identify any existing other agreements] (the “Existing Other Agreements”)]. In the event of any
conflict between this Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Securities Intermediary and the Lien Grantor with respect to
the Account, whether now existing or hereafter entered into, the terms of this Agreement shall
prevail. [If any Existing Other Agreement does not specify that it is governed by the laws of the
State of New York, such Existing Other Agreement is hereby amended to specify that it is governed
by the laws of the State of New York.]

     SECTION 7. Amendments. No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is signed by all the
parties hereto.

     SECTION 8. Notice of Adverse Claims. Except for the claims and interests of the Secured
Party and the Lien Grantor, the Securities Intermediary does not know of any claim to,

 

 

or interest in, the Account, any financial asset credited thereto or any security entitlement
in respect thereof. If any person asserts any lien, encumbrance or adverse claim (including any
writ, garnishment, judgment, attachment, execution or similar process) against the Account, any
financial asset credited thereto or any security entitlement in respect thereof, the Securities
Intermediary will promptly notify the Secured Party and the Lien Grantor thereof.

     SECTION 9. Maintenance of Account. In addition to, and not in lieu of, the obligation of the
Securities Intermediary to honour entitlement orders as agreed in Section 3 hereof, the Securities
Intermediary agrees to maintain the Account as follows:

• Lien Grantor Entitlement Orders; Notice of Exclusive Control. So long as the Securities
Intermediary has not received a Notice of Exclusive Control (as defined below), the
Securities Intermediary shall, subject to paragraph (iii) below, comply with entitlement
orders of the Lien Grantor or any duly authorized agent of the Lien Grantor in respect of
the Account and any or all financial assets credited thereto. After the Securities
Intermediary receives a written notice from the Secured Party that is exercising exclusive
control over the Account (a “Notice of Exclusive Control”), the Securities Intermediary will
cease complying with entitlement orders of the Lien Grantor or any of its agents.

     (i) Voting Rights. Until the Securities Intermediary receives a Notice of Exclusive
Control, the Lien Grantor shall be entitled to direct the Securities Intermediary with
respect to the voting of any financial assets credited to the Account.

     (ii) Permitted Investments. Until the Securities Intermediary receives a Notice of
Exclusive Control, the Lien Grantor shall be entitled to direct the Securities Intermediary
with respect to the selection of investments to be made and credited to the Account.

     (iii) Statements and Confirmations. The Securities Intermediary will promptly send
copies of all statements, confirmations and other correspondence concerning the Account
and/or any financial assets credited thereto simultaneously to each of the Lien Grantor and
the Secured Party at their respective addresses specified in Section 12 hereof.

     (iv) Tax Reporting. All items of income, gain, expense and loss recognized in the
Account or in respect of any financial assets credited thereto shall be reported to the
Internal Revenue Service and all state and local taxing authorities under the name and
taxpayer identification number of the Lien Grantor.

     SECTION 10. Representations, Warranties and Covenants of the Securities Intermediary. The
Securities Intermediary makes the following representations, warranties and covenants:

• The Account has been established as set forth in Section 1 above and will be maintained in
the manner set forth herein until this Agreement is terminated. The Securities Intermediary
will not change the name or account number of the Account without the prior written consent
of the Secured Party.

 

 

     (i) No financial asset credited to the Account is or will be registered in the name of
the Lien Grantor, payable to the order of the Lien Grantor, or specially indorsed to the
Lien Grantor, unless such financial asset has been further indorsed by the Lien Grantor to
the Securities Intermediary or in blank.

     (ii) This Agreement is a valid and binding agreement of the Securities Intermediary
enforceable in accordance with its terms.

     (iii) The Securities Intermediary has not entered into, and until the termination of
this Agreement will not enter into, any agreement with any person (other than the Secured
Party) relating to the Account and/or any financial asset credited thereto pursuant to which
it has agreed, or will agree, to comply with entitlement orders of such person. The
Securities Intermediary has not entered into any other agreement with the Lien Grantor or
the Secured Party purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as agreed in Section 3 hereof.

     SECTION 11. Successors. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns.

     SECTION 12. Notices. Each notice, request or other communication given to any party
hereunder shall be in writing (which term includes facsimile or other electronic transmission) and
shall be effective (i) when delivered to such party at its address specified below, (ii) when sent
to such party by facsimile or other electronic transmission, addressed to it at its facsimile
number or electronic address specified below, and such party sends back an electronic confirmation
of receipt or (iii) ten days after being sent to such party by certified or registered United
States mail, addressed to it at its address specified below, with first class or airmail postage
prepaid:

     Lien Grantor:

     Secured Party:

     Securities Intermediary:

Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section by giving notice of such change to the other parties in the manner specified above.

SECTION 13. Termination. The rights and powers granted herein to the Secured Party (i) have been
granted in order to perfect the Transaction Lien, (ii) are powers coupled with an interest and
(iii) will not be affected by any bankruptcy of the Lien Grantor or any lapse of time. The
obligations of the Securities Intermediary hereunder shall continue in effect until the Secured

 

 

Party has notified the Securities Intermediary in writing that the Transaction Lien has been
terminated pursuant to the terms of the Security Agreement.

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as

Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[NAME OF SECURITIES

INTERMEDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Exhibit A

[Letterhead of Secured Party]

[Date]

[Name and Address of Securities Intermediary]

Attention:                                         

Re: Notice of Exclusive Control

     Ladies and Gentlemen:

     As referenced in the Securities Account Control Agreement dated as of ___, ___among [name
of Lien Grantor], us and you (a copy of which is attached), we notify you that we will hereafter
exercise exclusive control over securities account number ___(the “Account”), all financial
assets from time to time credited thereto and all security entitlements in respect thereof. You
are instructed not to accept any directions, instructions or entitlement orders with respect to the
Account or the financial assets credited thereto from any person other than the undersigned unless
otherwise ordered by a court of competent jurisdiction.

     You are instructed to deliver a copy of this notice by facsimile transmission to [name of Lien
Grantor].

Very truly yours,

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

cc: [name of Lien Grantor]

 

 

EXHIBIT H

to Security Agreement

ISSUER CONTROL AGREEMENT

     ISSUER CONTROL AGREEMENT dated as of [the date of execution hereof] among ___(the
“Lien Grantor”), JPMORGAN CHASE BANK, N.A., as Collateral Agent (the “Secured Party”), and
___(the “Issuer”). All references herein to the “UCC” refer to the Uniform Commercial Code
as in effect from time to time in [Issuer’s jurisdiction of incorporation].

W I T N E S S E T H :

     WHEREAS, the Lien Grantor is the registered holder of [specify Pledged Uncertificated
Securities issued by the Issuer] issued by the Issuer (the “Securities”);

     WHEREAS, pursuant to a Security Agreement dated as of February 14, 2006 (as such agreement
may be amended and/or supplemented from time to time, the “Security Agreement”), the Lien Grantor
has granted to the Secured Party a continuing security interest (the “Transaction Lien”) in all
right, title and interest of the Lien Grantor in, to and under the Securities, whether now existing
or hereafter arising; and

     WHEREAS, the parties hereto are entering into this Agreement in order to perfect the
Transaction Lien on the Securities;

     NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1. Nature of Securities. The Issuer confirms that (i) the Securities are
“uncertificated securities” (as defined in Section 8 102 of the UCC) and (ii) the Lien Grantor is
registered on the books of the Issuer as the registered holder of the Securities.

     SECTION 2. Instructions. The Issuer agrees to comply with any “instruction” (as defined in
Section 8 102 of the UCC) originated by the Secured Party and relating to the Securities without
further consent by the Lien Grantor or any other person. The Lien Grantor consents to the
foregoing agreement by the Issuer.

     SECTION 3. Waiver of Lien; Waiver of Set-off. The Issuer waives any security interest, lien
or right of setoff that it may now have or hereafter acquire in or with respect to the Securities.
The Issuer’s obligations in respect of the Securities will not be subject to deduction, set off or
any other right in favour of any person other than the Secured Party.

     SECTION 4. Choice of Law. This Agreement shall be governed by the laws of [Issuer’s
jurisdiction of incorporation].

     SECTION 5. Conflict with Other Agreements. There is no agreement (except this Agreement)
between the Issuer and the Lien Grantor with respect to the Securities [except for [identify any
existing other agreements] (the “Existing Other Agreements”)]. In the event of any conflict
between this Agreement (or any portion hereof) and any other agreement [(including any Existing
Other Agreement)] between the Issuer and the Lien Grantor with respect to the

 

 

Securities, whether now existing or hereafter entered into, the terms of this Agreement shall
prevail.

     SECTION 6. Amendments. No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is signed by all the
parties hereto.

     SECTION 7. Notice of Adverse Claims. Except for the claims and interests of the Secured
Party and the Lien Grantor in the Securities, the Issuer does not know of any claim to, or interest
in, the Securities. If any person asserts any lien, encumbrance or adverse claim (including any
writ, garnishment, judgment, attachment, execution or similar process) against the Securities, the
Issuer will promptly notify the Secured Party and the Lien Grantor thereof.

     SECTION 8. Maintenance of Securities. In addition to, and not in lieu of, the obligation of
the Issuer to honour instructions as agreed in Section 2 hereof, the Issuer agrees as follows:

     (i) Lien Grantor Instructions; Notice of Exclusive Control. So long as the Issuer has
not received a Notice of Exclusive Control (as defined below), the Issuer shall comply with
instructions of the Lien Grantor or any duly authorized agent of the Lien Grantor in respect
of the Securities. After the Issuer receives a written notice from the Secured Party that
it is exercising exclusive control over the Securities (a “Notice of Exclusive Control”),
the Issuer will cease complying with instructions of the Lien Grantor or any of its agents.

     (ii) Non Cash Dividends and Distributions. After the Issuer receives a Notice of
Exclusive Control, the Issuer shall deliver to the Secured Party all dividends, interest and
other distributions paid or made upon or with respect to the Securities.

     (iii) Voting Rights. Until the Issuer receives a Notice of Exclusive Control, the Lien
Grantor shall be entitled to direct the Issuer with respect to voting the Securities.

     (iv) Statements and Confirmations. The Issuer will promptly send copies of all
statements and other correspondence concerning the Securities simultaneously to each of the
Lien Grantor and the Secured Party at their respective addresses specified in Section 11
hereof.

     (v) Tax Reporting. All items of income, gain, expense and loss recognized in respect
of the Securities shall be reported to the Internal Revenue Service and all state and local
taxing authorities under the name and taxpayer identification number of the Lien Grantor.

SECTION 9. Representations, Warranties and Covenants of the Issuer. The Issuer makes the
following representations, warranties and covenants:

     (i) This Agreement is a valid and binding agreement of the Issuer enforceable in
accordance with its terms.

     (ii) The Issuer has not entered into, and until the termination of this Agreement will
not without the consent of the Secured Party enter into, any agreement

 

 

with any other person relating to the Securities pursuant to which it has agreed, or
will agree, to comply with instructions (as defined in Section 8 102 of the UCC) of such
person. The Issuer has not entered into any other agreement with the Lien Grantor or the
Secured Party purporting to limit or condition the obligation of the Issuer to comply with
instructions as agreed in Section 2 hereof.

SECTION 10. Successors. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and assigns.

SECTION 11. Notices. Each notice, request or other communication given to any party hereunder
shall be in writing (which term includes facsimile or other electronic transmission) and shall be
effective (i) when delivered to such party at its address specified below, (ii) when sent to such
party by facsimile or other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic confirmation of receipt
or (iii) ten days after being sent to such party by certified or registered United States mail,
addressed to it at its address specified below, with first class or airmail postage prepaid:

     Lien Grantor:

     Secured Party:

     Issuer:

     Any party may change its address, facsimile number and/or e-mail address for purposes of this
Section by giving notice of such change to the other parties in the manner specified above.

     SECTION 12. Termination. The rights and powers granted herein to the Secured Party (i) have
been granted in order to perfect the Transaction Lien, (ii) are powers coupled with an interest and
(iii) will not be affected by any bankruptcy of the Lien Grantor or any lapse of time. The
obligations of the Issuer hereunder shall continue in effect until the Secured Party has notified
the Issuer in writing that the Transaction Lien has been terminated pursuant to the Security
Agreement.

     SECTION 13. Counterparts. This Agreement may be executed in any number of counterparts, all
of which shall constitute one and the same instrument, and any party hereto may execute this
Agreement by signing and delivering one or more counterparts.

	 	 	 	 	 
	 	[NAME OF LIEN GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as

Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[NAME OF ISSUER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Exhibit A

[Letterhead of Secured Party]

[Date]

[Name and Address of Issuer]

Attention:                                        

Re: Notice of Exclusive Control

Ladies and Gentlemen:

     As referenced in the Issuer Control Agreement dated as of ___, ___among [name of
Lien Grantor], us and you (a copy of which is attached), we notify you that we will hereafter
exercise exclusive control over [specify Pledged Uncertificated Securities] registered in the name
of [name of Lien Grantor] (the “Securities”). You are instructed not to accept any directions or
instructions with respect to the Securities from any person other than the undersigned unless
otherwise ordered by a court of competent jurisdiction.

     You are instructed to deliver a copy of this notice by facsimile transmission to [name of Lien
Grantor].

	 	 	 	 	 
	 	Very truly yours, 

JPMORGAN CHASE BANK, N.A., 

as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

cc: [name of Lien Grantor]

 

 

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	 	 	Stock	 	 	 	 
	 	 	 	 	 	 	Juris-	 	Equity Interest	 	 	certificate	 	 	 	 
	 	 	 	 	 	 	diction	 	and %	 	 	number	 	 	Number of shares or units
	 	 	 	 	US ISSUERS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1	 	 	Alteon WebSystems, Inc.
	 	Delaware	 	NNC 100%	 	 	1	 	 	1 Preferred
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2	 	 	300,000 Preferred
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	1	 	 	44,696,306 Common
	 	2	 	 	CoreTek, Inc.
	 	Delaware	 	NNC 100%	 	 	1	 	 	1 Preferred
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	1	 	 	14,487,293 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2	 	 	7,573,728 Common
	 	3	 	 	Nortel Networks
Applications Management
Solutions Inc.
	 	Delaware	 	NNC  88.62%	 	 	CS-1	 	21,523,376 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	X-1	 	 	1 Series 1 Preferred
	 	4	 	 	Nortel Networks Optical
Components Inc.
	 	Delaware	 	NNL .07%	 	 	4	 	 	13,974 Class A Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	5	 	 	55,899 Class A Common
	 	5	 	 	Sonoma Systems
	 	California	 	NNC 100%	 	 	1	 	 	35,659,018 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	1	 	 	1 Preferred
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2	 	 	2 Common
	 	6	 	 	Xros, Inc.
	 	Delaware	 	NNC - 100%	 	 	A-1	 	 	1 Series A Preferred
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	C-1	 	 	52,953,008 Common
	 	 	 	 	CANADIAN ISSUERS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	7	 	 	1328556 Ontario Inc.
	 	Ontario	 	NNL  100%	 	 	 	 	 	 	 	 
	 	8	 	 	Architel Systems Corporation
	 	Canada	 	NNL  100%	 	 	C-1	 	 	6,028,277 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	P-1	 	 	1 Preferred Share, Series 1
	 	9	 	 	Capital Telecommunications
Funding Corporation
	 	Canada	 	NNL  100%	 	 	C-1	 	 	1,000 Common
	 	10	 	 	CTFC Canada Inc.
	 	Canada	 	NNL  100%	 	 	C-1	 	 	1,000 Common
	 	11	 	 	Nortel Communications Inc.
	 	Ontario	 	NNL  100%	 	     CL-1.6	 	100 Class One Common Shares
	 	12	 	 	Nortel Networks Electronics
Corporation
	 	Canada	 	NNL  100%	 	 	1	 	 	1 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2	 	 	1,000 Common Shares
	 	13	 	 	Nortel
Networks Global Corporation
	 	Canada	 	NNL  100%	 	 	2	 	 	5,060,201 Common Shares
	 	14	 	 	Nortel Networks
International Corporation
	 	Canada	 	NNL  100%	 	 	2	 	 	10,000 Common Shares
	 	15	 	 	Nortel Networks Technology
Corporation
	 	Nova Scotia	 	NNL  100%	 	 	C-1	 	 	170,000 Common

1

 

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	 	 	Stock	 	 	 
	 	 	 	 	 	 	Juris-	 	Equity Interest	 	 	certificate	 	 	 
	 	 	 	 	 	 	diction	 	and %	 	 	number	 	Number of shares or units
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	C-2	 	 	2 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	P1-4	 	 	142,698 Class I Preferred Shares
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	P1-6	 	 	738 Class I Preferred Shares
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	P1-7	 	 	7,970 Class I Preferred Shares
	 	16	 	 	Northern Telecom Canada
Limited
	 	Canada	 	NNL  100%	 	 	2	 	 	1 Common
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	3	 	 	39,999 Common Shares
	 	17	 	 	Regional Telecommunications
Funding Corporation
	 	Canada	 	NNL  100%	 	 	C-1	 	 	1,000 Common
	 	18	 	 	TSFC Canada Inc.
	 	Canada	 	NNL  100%	 	 	C-1	 	 	1,000 Common

2

 

Schedule 2

PLEDGED INVESTMENT PROPERTY

(other than Pledged Equity Interests)

OWNED DIRECTLY BY LIEN GRANTORS

(as of the date hereof)

PART 1 Securities

	 	 	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 	 	 	 	 
	Issuer	 	Organization	 	 	Amount Owned	 	 	Type of Security
	 	 	 
 
 
 
 
 	 	 	 	 	 	 

PART 2 Securities Accounts

     The Lien Grantor owns Security Entitlements with respect to Financial Assets credited to
the following Securities Accounts:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Securities Intermediary	 	Account Number	 	US$ at 1/18/2006
	JP Morgan
	 	NNL	 	NNL	 	$	146,162,775	 
	Deutsche Bank
	 	NNC	 	 	0435222	 	 	$	69,400,000	 
	JP Morgan
	 	NNL	 	NNL	 	$	15,200,000	 
	Deutsche Bank
	 	NNL	 	 	0405647	 	 	$	0	 
	JP Morgan
	 	NNC	 	NNC	 	$	0	 
	Societe Generale
	 	NNL	 	NNL	 	$	0	 
	Societe Generale
	 	NNC	 	NNC	 	$	0	 

 

 

SCHEDULE 3

PRINCIPAL CANADIAN CASH MANAGEMENT ACCOUNTS OF LIEN GRANTORS

(as of January 18, 2006)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ACCOUNT	 	 
	BANK	 	ENTITY	 	NUMBER	 	US $ AT 1/18/2006
	Citibank NY
	 	NNC	 	 	30428374	 	 	$	2,033,943	 
	Citibank NY
	 	NNL	 	 	38545364	 	 	$	392,597

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