Document:

exv10w1

 

U.S.$1,300,000,000

 

CREDIT AGREEMENT

 

dated as of

 

February 14, 2006

 

among

 

Nortel Networks Inc.,

as Borrower,

 

The Lenders Party Hereto,

 

JPMorgan Chase Bank, N.A.,

as Administrative Agent,

 

J.P. Morgan Securities Inc.

and

Citigroup Global Markets Inc.,

as Joint Bookrunners and Joint Lead Arrangers,

 

Citicorp USA, Inc.,

as Syndication Agent,

 

and

 

Royal Bank of Canada,

as Documentation Agent

 

and

 

Export Development Canada,

as Managing Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	ARTICLE I	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01.

	 	Definitions
	 	 	1	 
	Section 1.02.

	 	Accounting Terms and Determinations
	 	 	27	 
	Section 1.03.

	 	Types of Borrowings
	 	 	27	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE II	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	THE CREDITS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01.

	 	Commitments to Lend
	 	 	28	 
	Section 2.02.

	 	Notice of Borrowing
	 	 	28	 
	Section 2.03.

	 	Notice to Lenders; Funding of Loans
	 	 	29	 
	Section 2.04.

	 	Repayment of Loans; Evidence of Debt
	 	 	29	 
	Section 2.05.

	 	Maturity of Loans
	 	 	30	 
	Section 2.06.

	 	Interest Rates
	 	 	30	 
	Section 2.07.

	 	Fees
	 	 	31	 
	Section 2.08.

	 	Termination or Reduction of Commitments
	 	 	31	 
	Section 2.09.

	 	Method of Electing Interest Rates
	 	 	31	 
	Section 2.10.

	 	Prepayments
	 	 	32	 
	Section 2.11.

	 	General Provisions as to Payments; Pro Rata Treatment
	 	 	33	 
	Section 2.12.

	 	Funding Losses
	 	 	33	 
	Section 2.13.

	 	Computation of Interest and Fees
	 	 	34	 
	Section 2.14.

	 	Interest Act Equivalency
	 	 	34	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE III	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CONDITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01.

	 	Corporate Existence and Power
	 	 	36	 
	Section 4.02.

	 	Corporate and Governmental Authorization; No Contravention
	 	 	36	 
	Section 4.03.

	 	Binding Effect
	 	 	36	 
	Section 4.04.

	 	Financial Information
	 	 	37	 
	Section 4.05.

	 	Litigation
	 	 	37	 
	Section 4.06.

	 	Taxes
	 	 	37	 
	Section 4.07.

	 	Solvency
	 	 	37	 
	Section 4.08.

	 	ERISA; Canadian Plans
	 	 	38	 

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	 	 	 	 	Page
	Section 4.09.

	 	Security Agreement Representations and Warranties
	 	 	38	 
	Section 4.10.

	 	Disclosure
	 	 	38	 
	Section 4.11.

	 	Investment Company Status
	 	 	39	 
	Section 4.12.

	 	No Unlawful Payments
	 	 	39	 
	Section 4.13.

	 	Compliance with Laws and Agreements
	 	 	39	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE V	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01.

	 	Information
	 	 	40	 
	Section 5.02.

	 	Notice of Material Events
	 	 	41	 
	Section 5.03.

	 	Information Regarding Collateral
	 	 	41	 
	Section 5.04.

	 	Existence; Conduct of Business
	 	 	42	 
	Section 5.05.

	 	Use of Proceeds
	 	 	42	 
	Section 5.06.

	 	Maintenance of Properties; Payment of Obligations
	 	 	42	 
	Section 5.07.

	 	Insurance
	 	 	42	 
	Section 5.08.

	 	Proper Records; Rights to Inspect
	 	 	43	 
	Section 5.09.

	 	Liens
	 	 	43	 
	Section 5.10.

	 	[Omitted]
	 	 	44	 
	Section 5.11.

	 	Fundamental Changes
	 	 	44	 
	Section 5.12.

	 	Restricted Payments
	 	 	45	 
	Section 5.13.

	 	Minimum Adjusted EBITDA
	 	 	46	 
	Section 5.14.

	 	Minimum Cash and Cash Equivalents
	 	 	46	 
	Section 5.15.

	 	Restricted Asset Transfers by Credit Parties
	 	 	46	 
	Section 5.16.

	 	Future Guarantors
	 	 	47	 
	Section 5.17.

	 	Further Assurances
	 	 	47	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VI	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	DEFAULTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01.

	 	Tranche A Events of Default
	 	 	47	 
	Section 6.02.

	 	Tranche B Events of Default
	 	 	49	 
	Section 6.03.

	 	Notice of Default
	 	 	51	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	AGENCY	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VIII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CHANGE IN CIRCUMSTANCES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01.

	 	Basis for Determining Interest Rate Inadequate or Unfair
	 	 	54	 
	Section 8.02.

	 	Illegality
	 	 	55	 

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	 	 	 	 	Page
	Section 8.03.

	 	Increased Cost and Reduced Return
	 	 	55	 
	Section 8.04.

	 	Taxes
	 	 	56	 
	Section 8.05.

	 	Base Rate Loans Substituted for Affected Euro-Dollar Loans
	 	 	58	 
	Section 8.06.

	 	Mitigation Obligations; Replacement of Lenders
	 	 	59	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE IX	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01.

	 	Notices
	 	 	59	 
	Section 9.02.

	 	No Waivers
	 	 	60	 
	Section 9.03.

	 	Expenses; Indemnification
	 	 	60	 
	Section 9.04.

	 	Sharing of Set-offs
	 	 	61	 
	Section 9.05.

	 	Amendments and Waivers
	 	 	62	 
	Section 9.06.

	 	Successors and Assigns
	 	 	63	 
	Section 9.07.

	 	Collateral
	 	 	65	 
	Section 9.08.

	 	Governing Law; Submission to Jurisdiction
	 	 	65	 
	Section 9.09.

	 	Counterparts; Integration; Effectiveness
	 	 	66	 
	Section 9.10.

	 	WAIVER OF JURY TRIAL
	 	 	66	 
	Section 9.11.

	 	Confidentiality
	 	 	66	 
	Section 9.12.

	 	USA PATRIOT Act
	 	 	67	 
	 
	 	 	 	 	 	 
	Schedule 1.01

	 	Existing Funded Debt	 	 	 	 
	Schedule 2.01

	 	Commitments	 	 	 	 
	Schedule 5.09

	 	Existing Liens	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A

	 	— Tranche A Note	 	 	 	 
	EXHIBIT B

	 	— Tranche B Note	 	 	 	 
	EXHIBIT C

	 	— Opinion of Special U.S. Counsel for the Credit Parties	 	 	 	 
	EXHIBIT D

	 	— Opinion of General Counsel-Corporate and Corporate
Secretary of NNC	 	 	 	 
	EXHIBIT E-1

	 	— Opinion of Special Canadian Counsel for the Credit Parties	 	 	 	 
	EXHIBIT E-2

	 	— Opinion of Special Quebec Counsel for the Credit Parties	 	 	 	 
	EXHIBIT F

	 	— Assignment and Assumption Agreement	 	 	 	 
	EXHIBIT G

	 	— Form of Perfection Certificate	 	 	 	 
	EXHIBIT H

	 	— Form of Guarantee Agreement	 	 	 	 
	EXHIBIT I

	 	— Form of U.S. Security Agreement	 	 	 	 
	EXHIBIT J

	 	— Form of Canadian Security Agreement	 	 	 	 

-iii-

 

     CREDIT AGREEMENT dated as of February 14, 2006 among NORTEL NETWORKS INC., as Borrower, the
Lenders party hereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.

     The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01.   Definitions. The following terms, as used herein, have the following
meanings:

     “1988 Indenture” means the Indenture dated as of November 30, 1988 between NNL and The Bank of
New York, as successor to The Toronto-Dominion Bank Trust Company, as trustee, as the same may be
amended from time to time.

     “1996 Indenture” means the Indenture dated as of February 15, 1996 among NNCC, as issuer, NNL,
as guarantor, and The Bank of New York, as trustee, as the same may be amended from time to time.

     “2001 Indenture” means the Indenture dated as of August 15, 2001 among NNC, as issuer, NNL, as
guarantor, and Deutsche Bank Trust Company Americas, as successor to The Bankers Trust Company, as
trustee, as the same may be amended from time to time.

     “Adjusted EBITDA” means, with respect to NNC, for any period, the sum, all as determined on a
consolidated basis for NNC and its Subsidiaries in accordance with GAAP (without duplication), of:

     (1)   Consolidated Net Income; plus

     (2)   to the extent Consolidated Net Income has been reduced thereby (without
duplication):

     (a)   all income taxes and related interest and penalties of NNC and its
Subsidiaries paid or accrued (net of any income tax credits or gains) in accordance
with GAAP for such period;

     (b)   Consolidated Fixed Charges;

     (c)   any non-cash expenses, charges or losses that decreased Consolidated Net
Income during such period;

     (d)   any loss, charge or cost attributable to exit or disposal activities
approved by the board of directors of NNC as part of a restructuring plan;

     (e)   any loss, charge or cost attributable to the restatements described in the
Disclosure Schedule;

1

 

     (f)   any loss, charge or cost attributable to the actual and contemplated
transactions with Flextronics described in the Disclosure Schedule; and

     (g)   any loss, charge or cost attributable to the contracts existing on the
Effective Date with Bharat Sanchar Nigam Limited described in the Disclosure
Schedule but not any expansion option, extension, renewal or replacement thereof;
minus

     (3)   any non-cash credits and gains that increased Consolidated Net Income during such
period, including any reversal of a charge referred to in clauses (2)(c) or (g) above; minus

     (4)   to the extent Consolidated Net Income has been increased thereby:

     (a)   any gains attributable to reversals prior to the Effective Date of
provisions relating to a certain customer bankruptcy settlement during the year
ended December 31, 2003 as disclosed in note 4 “Consolidated financial statement
details — Cost of revenue” to NNC’s consolidated financial statements contained in
NNC’s 2004 Form 10-K; and

     (b)   any credits and gains attributable to the restructuring of customer
financing receivables prior to the Effective Date.

Furthermore, the determination of the amount of Adjusted EBITDA for any four full fiscal quarter
period (the “Four Quarter Period”) shall be made on a pro forma basis (as reasonably estimated by
the Borrower in detail reasonably satisfactory to the Agent) for:

(x)   any asset sale involving the sale of a Subsidiary or line of business by NNC or any of
its Subsidiaries, in each case, that accounted for $150,000,000 of NNC’s consolidated
revenues for the most recently ended period of four fiscal quarters of NNC for which
financial statements are available; and

(y)   any Asset Acquisition by NNC or any of its Subsidiaries which would have accounted for
at least $150,000,000 of NNC’s consolidated revenue for the most recently ended period of
four fiscal quarters of NNC for which financial statements are available,

in each case, occurring (A) following the Effective Date and (B) during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period and on or prior to the date of
determination, so as to exclude or include, as the case may be, the Borrower’s good faith estimate
of any Adjusted EBITDA (including any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Exchange Act) attributable to the assets which are the
subject of such asset sale or Asset Acquisition, as if such asset sale or Asset Acquisition
occurred on the first day of the Four Quarter Period.

     “Adjusted LIBO Rate” means, with respect to any Euro-Dollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.

2

 

     “Administrative Questionnaire” means an administrative questionnaire in a form supplied by the
Agent.

     “Affiliate” means, as to any Person, (i) any other Person (a “Controlling Person”) that
directly, or indirectly through one or more intermediaries, controls such Person or (ii) any Person
(other than such Person and its Subsidiaries) which is controlled by or is under common control
with a Controlling Person. As used herein, the term “control” means possession, directly or
indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or otherwise.

     “Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the
Lenders hereunder, and its successors in such capacity.

     “Agreement” means this Credit Agreement and any Annexes, Appendices, Exhibits and Schedules
attached hereto, each of which is hereby incorporated in the terms of this Agreement, as amended
from time to time.

     “Applicable Margin” means, with respect to any Borrowing consisting of Tranche A Loans or
Tranche B Loans, the rate per annum set forth below opposite the applicable tranche of Loans for
such type of Borrowing:

	 	 	 	 	 
	 	 	Euro-Dollar Borrowings	 	Base Rate Borrowings
	Tranche A Loans

	 	2.25%
	 	1.25%
	Tranche B Loans

	 	3.00%
	 	2.00%

     “Applicable Percentage” means, with respect to any Lender, the percentage of the total
Commitments and Loans, taken as a single class, represented by such Lender’s Commitments and Loans.

     “Approved Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary
course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

     “Asset Acquisition” means (1) an investment by NNC or any Subsidiary of NNC in any other
Person pursuant to which such Person shall become a Subsidiary of NNC or shall be merged,
consolidated or amalgamated with or into NNC or any Subsidiary of NNC, or (2) the acquisition by
NNC or any Subsidiary of NNC of the assets of any Person (other than a Subsidiary of NNC) which
constitute all or substantially all of the assets of such Person or comprise any division or line
of business of such Person or any other properties or assets of such Person other than in the
ordinary course of business.

     “Assignment and Assumption Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit F or such other form as may be provided by the Agent
from time to time.

3

 

     “Attributable Debt” in respect of a Financing Lease means the present value of the obligations
of the lessee thereunder for rental payments during the remaining term of such lease.

     “Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

     “Base Rate Borrowing” has the meaning specified in Section 1.03.

     “Base Rate Loan” means a Loan to be made by a Lender as a Base Rate Loan or converted to a
Base Rate Loan in accordance with the applicable Notice of Borrowing or Notice of Interest Rate
Election or pursuant to Section 2.09 or Article VIII.

     “Board” means the Board of Governors of the Federal Reserve System of the United States of
America.

     “Borrower” means Nortel Networks Inc., a Delaware corporation.

     “Borrowing” has the meaning set forth in Section 1.03.

     “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed; provided that, when used
in connection with a Euro-Dollar Loan, the term “Business Day” shall also exclude any day
on which banks are not open for dealings in dollar deposits in the London interbank market.

     “Canadian Benefit Plans” means all material employee benefit plans of any nature or kind
whatsoever that are not Canadian Pension Plans and are maintained or contributed to by NNC or any
Subsidiary having employees in Canada.

     “Canadian Credit Parties” means NNC and the Canadian Subsidiary Guarantors.

     “Canadian Custodian” has the meaning set forth in Article VII.

     “Canadian Dollars” means lawful money of Canada.

     “Canadian Hypothec” has the meaning set forth in Article VII.

     “Canadian fondé de pouvoir” has the meaning set forth in Article VII.

     “Canadian Pension Plans” means each plan which is considered to be a pension plan for the
purposes of any applicable pension benefits standards statute and/or regulation in Canada
established, maintained or contributed to by NNC or any Subsidiary for its employees or former
employees.

4

 

     “Canadian Security Agreement” means the Canadian Security and Pledge Agreement, dated as of
the Closing Date, by and among the Canadian Credit Parties, the Collateral Agent and the other
parties named therein in the form of Exhibit J.

     “Canadian Subsidiary” means any Restricted Subsidiary organized under the laws of Canada or
any province or territory therein.

     “Canadian Subsidiary Guarantors” means NNL and each other Canadian Subsidiary that becomes a
Canadian Subsidiary Guarantor pursuant to Section 5.16.

     “Capital Lease Obligations” of any Person means obligations of such Person to pay rent or
other amounts under any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required under GAAP to be classified and
accounted for as capital leases on a balance sheet of such Person. The amount of such obligations
will be the capitalized amount thereof determined in accordance with GAAP.

     “Capital Stock” means:

     (1)   with respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not voting) of
corporate stock, including each class of Common Stock and Preferred Stock of such Person;
and

     (2)   with respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.

     “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any
Lender (or, for purposes of Section 8.03(b), by any lending office of such Lender or by such
Lender’s holding company, if any) with any request, guideline or directive (whether or not having
the force of law, but if not having the force of law, the compliance with which is in accordance
with the general practice of Persons to whom such request or directive is addressed) of any
Governmental Authority made or issued after the date of this Agreement.

     “Change of Control” means the occurrence of one or more of the following events:

     (1)   any “person,” including its affiliates and associates, other than NNC, any one or
more Subsidiaries of NNC or NNC’s or such Subsidiaries’ employee benefit plans, or any
“group,” files a Schedule 13D or Schedule TO (or any successor schedule, form or
report under the Exchange Act) disclosing that such person or group has become the
“beneficial owner” of 50% or more of the combined voting power of NNC’s Capital Stock having
ordinary power to elect directors, or has the power to, directly or indirectly, elect a
majority of the members of NNC’s Board of Directors;

5

 

     (2)   NNC (or any successor to NNC in a transaction that does not contravene the terms of
Section 5.11) ceases to, directly or indirectly, be the “beneficial owner” of 100% of the
voting power of the Common Stock of NNL or the Borrower (or any successor to NNL in a
transaction that does not contravene the terms of Section 5.11), except as permitted by the
last paragraph of this definition;

     (3)   there shall be consummated any share exchange, consolidation or merger of NNC
pursuant to which NNC’s Common Stock would be converted into cash, securities or other
property, or NNL or NNC sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets, in each case other than pursuant to a share
exchange, consolidation or merger of NNL or NNC in which the holders of NNL’s or NNC’s
Common Stock immediately prior to the share exchange, consolidation or merger have, directly
or indirectly, at least a majority of the total voting power in the aggregate of all classes
of Capital Stock of the continuing or surviving corporation immediately after the share
exchange, consolidation or merger; or

     (4)   NNL, NNC or the Borrower is dissolved or liquidated, except as permitted by the
last paragraph of this definition.

	 	 	For purposes of this “Change of Control” definition:

     (1)   “person” or “group” has the meaning given to it for purposes of Sections 13(d) and
14(d) of the Exchange Act or any successor provisions, and the term “group” includes any
group acting for the purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision;

     (2)   a “beneficial owner” will be determined in accordance with Rule 13d-3 under the
Exchange Act, as in effect on the Closing Date; and

     (3)   the number of shares of NNL’s voting stock outstanding will be deemed to include,
in addition to all outstanding shares of NNL’s voting stock and unissued shares deemed to be
held by the “person” or “group” or other person with respect to which the Change of Control
determination is being made, all unissued shares deemed to be held by all other persons.

     Notwithstanding the foregoing, any (i) amalgamation, consolidation or merger of NNC with or
into NNL (whether directly or indirectly by merger with or into an entity with only nominal assets
and liabilities created in anticipation or contemplation of such amalgamation, consolidation or
merger), (ii) transfer of assets solely between and among NNC, NNL and any successor entity to NNC
or NNL or (iii) liquidation or dissolution of NNL resulting in the transfer of all of the assets of
NNL to NNC shall not constitute a Change of Control.

     “Closing Date” means the date on or after the Effective Date on which the conditions set forth
in Article III have been satisfied.

6

 

     “Collateral” means any and all “Collateral” as defined in any Security Document, and all other
property in which the Collateral Agent purportedly acquires a security interest pursuant to any
Security Document.

     “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 in such capacity.

     “Commission” means the United States Securities and Exchange Commission.

     “Commitment” means, with respect to each Lender, the aggregate of its Tranche A Commitment and
Tranche B Commitment.

     “Commitment Termination Date” means the earliest of (i) a date on which any Borrowing has
occurred, (ii) the date on which all of the Commitments have been terminated pursuant to Section
2.08 and (iii) February 15, 2006.

     “Common Stock” of any Person means any and all shares, interests or other participations in,
and other equivalents (however designated and whether voting or non-voting) of, such Person’s
common equity interests, whether outstanding on the Effective Date or issued after the Effective
Date, and includes, without limitation, all series and classes of such equity interests.

     “Consolidated Fixed Charges” means, for any period, the sum, without duplication, of:

     (1)   Consolidated Interest Expense for such period; plus

     (2)   the amount of all dividends on the Existing Preferred Stock paid, declared or
accrued during such period.

     “Consolidated Interest Expense” means, for any period, total interest expense (including that
portion attributable to Capital Lease Obligations in accordance with GAAP) of NNC and its
Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (without
duplication).

     “Consolidated Net Income” means for any period, the aggregate net income (or loss) of NNC and
its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (without duplication):

     (1)   net after-tax gains or losses classified in NNC’s consolidated statement of
operations as gains or losses on the sale of businesses or assets;

     (2)   net after-tax items classified as extraordinary gains or losses;

     (3)   the net after-tax expense resulting from any payment or distribution in connection
with the settlement of, or satisfaction of a judgment resulting from, any shareholder
litigation or regulatory or law enforcement investigation, in each case, relating to the
circumstances described in the Disclosure Schedule;

7

 

     (4)   the net income (but not loss) of any Subsidiary (other than any Credit Party) to
the extent that (a) the declaration of dividends by such Subsidiary of that income is
prohibited by a contract, operation of law (other than as a result of any solvency or
minimum capital requirement) or applicable judgment and (b) such net income cannot otherwise
be distributed or transferred to NNC;

     (5)   the net income or loss of any Person that is not a Subsidiary of NNC, and any Joint
Ventures in which NNC or any Subsidiary is a party, except to the extent of cash dividends
or distributions paid to NNC or to a Subsidiary of NNC by such Person;

     (6)   after-tax income or loss attributable to discontinued operations; and

     (7)   the cumulative effect of changes in accounting principles.

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

     “Credit Enhanced Foreign Subsidiary Debt” means any Funded Debt of a Foreign Subsidiary
payable to a financial institution that has (i) sold a participation for cash consideration in the
full principal amount of such Funded Debt to NNC or any Subsidiary or (ii) a Lien on or right of
set-off against deposits of cash, cash equivalents or investment securities of NNC or any
Subsidiary; provided, in the case of clause (ii) above, that the principal amount of such Funded
Debt does not exceed the amount of cash, cash equivalents or investment securities so deposited.

     “Credit Parties” means the Borrower and the Guarantors.

     “Debt Rating” means the NNL Corporate Credit Rating, the NNL Corporate Family Rating and any
rating by Moody’s or S&P with respect to the Loans or the Guarantees of the Loans.

     “Default” means any condition or event which constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless cured or waived, become an Event of
Default.

     “Disbursement Period” means the period from and including the Closing Date to but excluding
the Commitment Termination Date.

     “Disclosure Schedule” means the written materials delivered by the Borrower to the Lenders on
the Effective Date labeled as “Disclosure Schedule.”

     “Disqualified Capital Stock” means that portion of any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is exchangeable at the
option of the holder thereof), or upon the happening of any event (other than an event which would
constitute an asset sale or Change of Control), matures or is mandatorily redeemable (other than
such Capital Stock that will be redeemed with Qualified Capital Stock), pursuant

8

 

to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each
case, upon the occurrence of an asset sale or Change of Control) on or prior to the final maturity
date of the Loans.

     “Dollars” and “$” refer to lawful money of the United States of America.

     “Effective Date” means the date this Agreement becomes effective in accordance with Section
9.09.

     “Equity Interests” means (i) Capital Stock in a Person or (ii) any warrants, options or other
rights to acquire such Capital Stock.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together
with the Borrower or any Subsidiary, is treated as a single employer under Section 414(b) or (c) of
the Internal Revenue Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Internal Revenue Code, is treated as a single employer under Section 414 of the Internal Revenue
Code.

     “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (except an event for which the 30-day notice
period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Internal Revenue Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect
to any Plan; (d) the incurrence by the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Borrower or any ERISA Affiliate of any liability with respect to withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that
a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning
of Title IV of ERISA.

     “Euro-Dollar Borrowing” has the meaning specified in Section 1.03.

     “Euro-Dollar Loan” means a Loan to be made by a Lender as a Euro-Dollar Loan in accordance
with the applicable Notice of Borrowing or Notice of Interest Rate Election.

     “Event of Default” means a Tranche A Event of Default or a Tranche B Event of Default.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

9

 

     “Excluded Taxes” means, with respect to the Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes (imposed in lieu of net income taxes) imposed on (or measured by) its net income by
a taxing jurisdiction as a result of such recipient being organized or having its principal office
or, in the case of any Lender, having its applicable lending office in such jurisdiction or having
any other connection to such jurisdiction other than a connection arising out of this Agreement or
the transactions contemplated hereby, (b) any branch profits taxes or any similar tax imposed by a
jurisdiction described in clause (a) above and (c) in the case of a Non-U.S. Lender (other than an
assignee pursuant to a request by the Borrower under Section 8.06(b)), any U.S. federal withholding
tax to the extent that such tax is imposed on amounts payable to such Non-U.S. Lender as of the
time such Non-U.S. Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Non-U.S. Lender’s failure to comply with Section 8.04(e), except to the
extent that such Non-U.S. Lender (or its assignor, if any) was entitled, immediately prior to such
designation of a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 8.04(a).

     “Executive Officer” means any of the Chairman of the Board of Directors, the President and
Chief Executive Officer, the Chief Financial Officer, the Treasurer, the Assistant Treasurer or the
Controller of NNC.

     “Existing NNC Convertible Notes” means the 4.25% Convertible Senior Notes Due 2008 issued by
NNC and guaranteed by NNL pursuant to the 2001 Indenture, as the same may be amended from time to
time.

     “Existing NNCC 2006 Notes” means the 7.40% Notes due 2006 issued by NNCC and guaranteed by NNL
pursuant to the 1996 Indenture, as the same may be amended from time to time.

     “Existing NNCC 2026 Notes” means the 7.875% Notes due 2006 issued by NNCC and guaranteed by
NNL pursuant to the 1996 Indenture, as the same may be amended from time to time.

     “Existing NNL 2023 Notes” means the 6.875% Notes due 2023 issued by NNL pursuant to the 1988
Indenture, as the same may be amended from time to time.

     “Existing Notes” means the Existing NNC Convertible Notes, the Existing NNCC 2006 Notes, the
Existing NNCC 2026 Notes and the Existing NNL 2023 Notes.

     “Existing Preferred Stock” means NNL’s Redeemable Class A Preferred Shares Series 5, of which
approximately 16,000,000 shares are outstanding on the Effective Date (and NNL’s Redeemable Class A
Preferred Shares Series 6 into which such shares are convertible),
and Non-cumulative Redeemable Class A Preferred Shares Series 7, of which approximately
14,000,000 shares are outstanding on the Effective Date (and NNL’s Redeemable Class A Preferred
Shares Series 8 into which such shares are convertible), in each case as the same may be amended
from time to time.

10

 

     “fair market value” means with respect to any asset, the price that could be obtained on an
arm’s-length basis from an unrelated third party for such asset as determined in good faith by NNC
(it being understood that any price which is intended to represent fair market value of an asset as
determined in accordance with NNC’s policies and relevant tax or regulatory requirements as
customarily applied by NNC will be deemed to be on an arms’ length basis).

     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the quotations for such day for such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.

     “Financing Leases” means sale and leaseback transactions.

     “Foreign Subsidiary” means a Restricted Subsidiary that is not a Canadian Subsidiary or a U.S.
Subsidiary.

     “Funded Debt” means with respect to any Person, without duplication:

     (1)   all indebtedness of such Person for borrowed money;

     (2)   all indebtedness of such Person evidenced by bonds, debentures, notes or other
similar instruments;

     (3)   all Capital Lease Obligations of such Person;

     (4)   all Guarantees of indebtedness of another Person of the type referred to in clauses
(1) through (3) above and clause (5) below (each such guarantee to constitute Funded Debt in
an amount equal to the maximum amount of such other Person’s Funded Debt guaranteed
thereby);

     (5)   all indebtedness of any other Person of the type referred to in clauses (1) through
(4) which is secured by any Lien on any property or asset of such Person, the amount of such
indebtedness being deemed to be the lesser of the fair market value of such property or
asset or the amount of the indebtedness so secured; and

     (6)   all Disqualified Capital Stock (including the Existing Preferred Stock) issued by
such Person with the amount of Funded Debt thereby being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase price, if
any, but excluding accrued dividends, if any.

     For greater certainty (i) proceeds received in respect of any Receivables Transaction, (ii)
obligations in respect of the performance of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and obligations of a like nature, (iii) guarantees of,
and indemnity arrangements with respect to, obligations described in clauses (i) and

11

 

(ii) of this
paragraph, or (iv) obligations under letters of credit and letters of guarantee issued to support
(A) trade or performance obligations or (B) obligations under operating leases will not be
considered Funded Debt.

     For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on
which Funded Debt shall be required to be determined pursuant to this Agreement, and if such price
is based upon, or measured by, the fair market value of such Disqualified Capital Stock shall be
determined in accordance with the definition thereof.

     Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of
interest in the form of additional Funded Debt and the payment of dividends in the form of
additional shares of Preferred Stock will not be deemed to be an incurrence of Funded Debt. The
amount of any Funded Debt outstanding as of any date shall be (i) the accreted value of the Funded
Debt, in the case of any Funded Debt issued with original issue discount or (ii) the principal
amount or liquidation preference of the Funded Debt, in any other case.

     “Funding Failure” has the meaning specified in Section 5.02.

     “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 Agent. It is understood that the application of GAAP to
the operation of the covenants in Article V is subject to
Section 1.02.

     “Governmental Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state, provincial or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

     “Group of Loans” means at any time a group of Loans consisting of (i) all Loans of the same
tranche which are Base Rate Loans at such time or (ii) all Loans of the same tranche which are
Euro-Dollar Loans having the same Interest Period at such time.

     “Guarantee” by any Person (the “guarantor”) means any obligation, contingent or otherwise, of
the guarantor guaranteeing or having the economic effect of guaranteeing any debt or other
obligation of any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such debt or other obligation or to
purchase (or advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such debt or other obligation of the payment thereof, (c) to maintain working
capital, equity capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such debt or other obligation or (d) as an
account party in

12

 

respect of any letter of credit or letter of guaranty issued to support such debt
or other obligation; provided that the term “Guarantee” shall not include endorsements for
collection or deposit in the ordinary course of business.

     “Guarantee Agreement” means the guarantee agreement, substantially in the form of Exhibit H
hereto among NNC, the Subsidiary Guarantors and the Agent.

     “Guarantors” means NNC and the Subsidiary Guarantors.

     “Hedging Agreement” means (a) 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 (b) any hedging agreement in respect of NNC’s
common stock entered into in order to hedge NNC’s or NNL’s exposure under its stock option plans or
other benefit plans for employees, directors or consultants of NNC, NNL and their Subsidiaries.

     “Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.

     “Indemnitee” has the meaning specified in Section 9.03(b).

     “Interest Period” means with respect to each Euro-Dollar Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or Notice of Interest Rate
Election and ending one or three months thereafter, as the Borrower may elect in the applicable
notice; provided that:

     (a)   any Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next preceding
Business Day;

     (b)   any Interest Period which begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to clause (c) below, end on the last Business
Day of a calendar month; and

     (c)   any Interest Period beginning prior to the Maturity Date which would otherwise end
after the Maturity Date shall end on the Maturity Date.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Joint Venture” means a corporation, partnership, limited liability company, joint venture or
other similar legal arrangement (whether created by contract or conducted
through a separate legal entity) now or hereafter formed by NNC or any Restricted Subsidiary
with one or more Persons in order to conduct a common venture or enterprise with such Person(s);
provided that no Subsidiary shall be considered to be a Joint Venture.

13

 

     “Lenders” means the Persons listed on the signature page hereto as Lenders and any other
Person that shall have become a party hereto pursuant to an Assignment and Assumption Agreement,
other than any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption Agreement.

     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) 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 (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

     “LIBO Rate” means, with respect to any Euro-Dollar Borrowing for any Interest Period, the rate
appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the Agent from time to
time for purposes of providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time for any reason,
then the “LIBO Rate” with respect to such Euro-Dollar Borrowing for such Interest Period shall be
the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Agent in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period.

     “Loan” means a Tranche A Loan or a Tranche B Loan and “Loans” means Tranche A Loans or Tranche
B Loans or any combination of the foregoing.

     “Loan Documents” means this Agreement, the Notes, the Guarantee Agreement and the Security
Documents.

     “Managed Service Contract Liens” means any Lien in favor of a customer of NNC or any
Subsidiary and/or a third party financing company relating to equipment owned by NNC or any
Subsidiary that is (i) used by such customer in the conduct of its business and (ii) managed by NNC
or any Subsidiary under a managed services or hosting services contract between Nortel, such
customer and/or such third party financing company.

     “Material Adverse Effect” means a material adverse effect on the business, properties, senior
management, financial condition, stockholders’ equity or results of operations of NNC and its
Subsidiaries, taken as a whole. It is understood that a change in Debt Rating shall not, in
itself, constitute a Material Adverse Effect.

     “Material Debt” means Funded Debt (other than obligations in respect of the Loans), or
obligations in respect of one or more Hedging Agreements, of the Borrower, NNC and/or one or more
of its Restricted Subsidiaries in an individual principal amount of at least $10,000,000 and which
in aggregate principal amount exceeds $100,000,000. For purposes of

14

 

determining Material Debt, the
“principal amount” of the obligations of the Borrower, NNC and/or one or more of its Restricted
Subsidiaries in respect of any Hedging Agreement at any time will be the maximum aggregate amount
(after giving effect to any netting provisions or agreements) that such Person would be required to
pay if such Hedging Agreement were terminated at such time.

     “Maturity Date” means February 15, 2007, or, if such day is not a Business Day, the next
preceding Business Day.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

     “Net Cash Proceeds” means:

     (i)   with respect to any Prepayment Event of the type specified in clause (A) of the
definition thereof, the cash proceeds received by NNC, the Borrower or any Restricted
Subsidiary as a result of any Prepayment Event, net of reasonable attorneys’ fees,
investment banking fees, accountants’ fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith;

     (ii)   with respect to any Prepayment Event of the type specified in clause (B) of the
definition thereof, the principal amount of Funded Debt incurred by NNC or the applicable
Restricted Subsidiary, net of reasonable attorneys’ fees, investment banking fees,
accountants’ fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith;

     (iii)   with respect to any Prepayment Event of the type specified in clause (C) of the
definition thereof, the excess, if any, of (i) the fair market value of all consideration
received by a Credit Party in connection with such Specified Asset Sale (other than
Restricted Assets) over (ii) the sum of (A) the principal amount and premium, if any, of any
indebtedness that is secured by a Lien permitted by Section 5.09 (other than any Lien
created by the Security Documents) that is required to be repaid in connection with such
Specified Asset Sale, (B) the out-of-pocket expenses incurred by the applicable Credit Party
in connection with such Specified Asset Sale, (C) taxes paid or reasonably estimated to be
actually payable in connection therewith, and (D) any reserve for adjustment in respect of
(x) the sale price of such asset or assets established in accordance with GAAP and (y) any
liabilities associated with such asset or assets and retained by such Credit Party after
such Specified Asset Sale;

     (iv)   with respect to any Prepayment Event of the type described in clause (D) of the
definition thereof, the fair market value of the Restricted Assets so transferred
(whether or not any amounts received by the Credit Parties in connection therewith is
in the form of cash), net of the amount of liabilities secured by a Lien on the Restricted
Assets so transferred which are (x) transferred to or assumed by any Non-Credit Party
Subsidiary or Joint Venture in connection therewith, but only to the extent that there has
been

15

 

   a novation of such Credit Party’s obligations with respect to such liabilities or (y)
required to be repaid in connection therewith.

     “Net Transferred Amount” shall mean the excess, if any, of (A) the excess of (i) the fair
market value of all Restricted Assets sold, transferred or otherwise disposed of by any Credit
Party to any Non-Credit Party Subsidiary or Joint Venture (other than pursuant to clauses (1), (2),
(3) or (4) of the definition of Permitted Asset Transfer) subsequent to September 30, 2005 over
(ii) the stated amount of any liabilities which are secured by a Lien on such Restricted Assets
which are transferred to or assumed by any Non-Credit Party Subsidiary or Joint Venture in
connection therewith, but only to the extent that there has been a novation of such Credit Party’s
obligations with respect to such liabilities over (B) the excess of (i) the aggregate fair market
value of all Restricted Assets sold, transferred or otherwise disposed of by any Joint Venture or
Non-Credit Party to any Credit Party subsequent to September 30, 2005 over (ii) the stated amount
of any liabilities which are secured by a Lien on such Restricted Assets which are transferred to
or assumed by any Credit Party in connection therewith.

     “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’s 2004 Form 10-K” means NNC’s annual report on Form 10-K for the year ended December 31,
2004, as filed with the Commission pursuant to the Exchange Act.

     “NNC’s 2005 Q3 Form 10-Q” means NNC’s quarterly report on Form 10-Q for the period ended
September 30, 2005, as filed with the Commission pursuant to the Exchange Act.

     “NNCC” means Nortel Networks Capital Corporation, a Delaware corporation, and its successors.

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

     “NNL Corporate Credit Rating” means the credit rating applied by S&P to NNL’s outstanding
senior long-term debt.

     “NNL Corporate Family Rating” means the credit rating applied by Moody’s to NNL’s outstanding
senior long-term debt.

     “Non-Credit Party Subsidiary” means any Subsidiary of NNC that is not a Credit Party.

     “Non-U.S. Lender” means any Lender that is organized under the laws of a jurisdiction other
than the United States of America. For purposes of this definition, the United

16

 

States of America,
each State thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

     “Notes” means the Tranche A Notes and the Tranche B Notes, and “Note” means any one of such
Tranche A Notes or Tranche B Notes issued hereunder.

     “Notice of Borrowing” has the meaning set forth in Section 2.02.

     “Notice of Interest Rate Election” has the meaning set forth in Section 2.09(a).

     “Other Taxes” means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

     “PPSA” means an applicable personal property security legislation in each province and
territory of Canada.

     “Participant” has the meaning set forth in Section 9.06(c).

     “Perfection Certificate” means, collectively, certificates in the form of Exhibit G to each of
the agreements referred to in the definition of “Security Agreement” or any other form approved by
the Collateral Agent.

     “Permitted Asset Transfer” shall mean:

     (1)   any sale, transfer or other disposition of equipment or inventory in the ordinary
course of business on terms determined in accordance with NNC’s policies and relevant tax or
regulatory requirements as customarily applied by NNC and its Subsidiaries to such
transfers;

     (2)   non-exclusive licenses of intellectual property or technology;

     (3)   exclusive licenses of intellectual property or technology granted by NNL in the
ordinary course of its business to its direct or indirect Subsidiaries for use solely within
their respective regions;

     (4)   any other contemplated sale, transfer or other disposition of a Restricted Asset
described in the Disclosure Schedule; and

     (5)   any other sale, transfer or disposition of a Restricted Asset, provided that, after
giving effect thereto, the Net Transferred Amount does not exceed $250,000,000.

     “Permitted Capital Stock” means, without duplication, each of the following:

     (a)   the issuance or sale of Capital Stock of NNC to the Borrower or any Subsidiary;

17

 

     (b)   the issuance or sale of Capital Stock of NNC (or any warrants, rights or options to
purchase or acquire shares of any such Capital Stock or securities convertible into Capital
Stock of NNC) to current or former employees, directors, consultants or contractors of NNC
or any Subsidiary (or permitted transferees of such current or former employees, directors,
consultants or contractors), in their capacities as such, pursuant to the terms of the
agreements (including employment or severance agreements) or plans (or amendments thereto)
under which such individuals purchase or sell, or are granted the option to purchase or
sell, shares of such Capital Stock;

     (c)   the issuance of any rights to purchase shares of Common Stock of NNC outstanding
from time to time under the amended and restated shareholder rights plan agreement between
NNC and Computershare Trust Company of Canada, as rights agent, dated as of February 14,
2003, as the same may be further amended and restated from time to time, in accordance with
the terms thereof;

     (d)   the issuance of Capital Stock of NNC to the holders of Existing NNC Convertible
Notes upon conversion of such Existing NNC Convertible Notes in accordance with the terms
thereof;

     (e)   any issuance or distribution of Capital Stock in connection with the settlement of,
or satisfaction of a judgment resulting from, any shareholder litigation or regulatory or
enforcement proceeding; and

     (f)   any issuance of Capital Stock of NNC (i) as a portion of the consideration for any
acquisition or other investment or (ii) for which NNC and its Subsidiaries receive no Net
Cash Proceeds.

     “Permitted Financing Leases” means Financing Leases consisting of (a) temporary leases for a
term, including any renewal thereof, of no more than three years and (b) leases for properties
executed within 365 days of the latest of acquisition, completion of construction and commencement
of commercial operation thereof.

     “Permitted Funded Debt” means, without duplication, each of the following:

     (a)   Funded Debt of NNC and/or any Subsidiary outstanding on the Effective Date (other
than the Loans and any Existing Notes) and listed on Schedule 1.01;

     (b)   Funded Debt of NNC and/or any Subsidiary to NNC, the Borrower and/or any Restricted
Subsidiary;

     (c)   Qualified Subordinated Debt of NNC and/or any Restricted Subsidiary owing to any
Joint Venture in which NNC or such Subsidiary has a minority holding;

     (d)   any guarantee of Funded Debt of NNC or a Restricted Subsidiary by NNC or any
Subsidiary so long as the incurrence of such Funded Debt would otherwise be permitted or is
otherwise not restricted under this Agreement;

18

 

     (e)   Funded Debt of NNC or any Subsidiary for which NNC and its Subsidiaries receive Net
Cash Proceeds not in excess of $50,000,000, including, without limitation, any such issuance
(i) that finances any acquisition or other investment or (ii) for which NNC and its
Subsidiaries receive no Net Cash Proceeds;

     (f)   Refinancing Funded Debt;

     (g)   any Credit Enhanced Foreign Subsidiary Debt and any Funded Debt arising out of the
deposit of cash or cash equivalents to secure any Credit Enhanced Foreign Subsidiary Debt;

     (h)   additional Funded Debt of any Foreign Subsidiary of NNC under any working capital
facilities in an aggregate outstanding principal amount not to exceed $250,000,000 at any
time outstanding;

     (i)   any other Funded Debt of any Foreign Subsidiary; provided that the aggregate
outstanding principal amount of Funded Debt issued or assumed pursuant to this clause (i) by
any individual Foreign Subsidiary would not, after giving effect to the relevant
transaction, exceed $5,000,000; and

     (j)   Funded Debt incurred to finance the acquisition, improvement or construction of
assets that is secured by a Purchase Money Mortgage on the assets so acquired, improved or
constructed.

     “Permitted Liens” means:

     (a)   Liens imposed by law for taxes, assessments, governmental charges or levies (and
related interest and penalties), in each case that are not yet delinquent or in default or
are being contested in good faith by appropriate proceeding;

     (b)   carriers’, warehousemen’s, mechanics’, materialmen’s, landlord’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 90 days or are being contested in good faith
by appropriate proceeding;

     (c)   pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations;

     (d)   Liens in favor of the United States of America or any State thereof, Canada or any
Province or territory thereof, or any department, agency or instrumentality or political
subdivision thereof, or in favor of any other country or political subdivision, to secure
partial, progress, advance or other payments pursuant to any contract or statute or
to secure any indebtedness incurred or guaranteed for the purpose of financing or
refinancing all or any part of the purchase price of the property, shares of capital stock
or indebtedness subject to such Liens, or the cost of constructing or improving the property
subject to such Liens (including, without limitation, Liens incurred in connection with

19

 

pollution control, industrial revenue or similar financings or relating to the development,
restoration, demolition or remediation of property);

     (e)   easements, zoning restrictions, rights-of-way, servitudes and similar encumbrances
on real property imposed by law or arising in the ordinary course of business that do not
secure any monetary obligation and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of NNC or any Subsidiary;

     (f)   Liens of a bank, broker or securities intermediary on whose records a deposit
account or a securities account of NNC or any Subsidiary is maintained securing the payment
of customary fees and commissions to the bank, broker or securities intermediary or, with
respect to a deposit account, items deposited but returned unpaid and other unexercised
bankers’ Liens;

     (g)   Liens of any third party logistics providers on inventory or equipment in
transit;

     (h)   Liens of any customer, contract manufacturer, component level producer,
contract research and development lab, Joint Venture or any co-investor in such a Joint
Venture, in each case, on any equipment, inventory or software (or intellectual property
rights related thereto) of NNC or any Subsidiary that is on the premises of such Person in
the ordinary course of business of NNC, any Subsidiary or such other Person;

     (i)   Liens on any property of NNC or any Subsidiary under any purchase agreement
or similar document, pursuant to which a third-party has agreed to acquire such property
from NNC or its Subsidiaries, to secure representations, warranties and indemnities
thereunder;

     (j)   judgment liens, and Liens securing appeal bonds (or letters of credit or other
similar instruments issued in support of or in lieu of appeal bonds) in respect of
judgments, in each case, that do not constitute an Event of Default;

     (k)   any interest or title of a lessor or sublessor of any lease of real estate;

     (l)   purported Liens evidenced by the filing of precautionary UCC financing statements
relating solely to operating leases of personal property;

     (m)   Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties;

     (n)   any license of a patent, trademark or other intellectual property rights granted by
NNC or any Subsidiary; provided such license does not contravene this Agreement; and

     (o)   Liens securing obligations in an aggregate amount which shall not at any time
exceed $25,000,000.

20

 

     “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.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Plan” means any employee pension benefit plan (except a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Internal Revenue Code or Section 302 of
ERISA, and in respect of which NNC or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) a “contributing sponsor” as defined in Section
4001(a)(13) of ERISA.

     “Preferred Stock” of any Person means any Capital Stock of such Person that has preferential
rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon
liquidation.

     “Prepayment Event” means (A) the issuance or incurrence by NNC or any of its Restricted
Subsidiaries of any Qualified Capital Stock other than Permitted Capital Stock, (B) the issuance or
incurrence by NNC or any of its Restricted Subsidiaries of any Funded Debt other than Permitted
Funded Debt, (C) the consummation by any Credit Party of any Specified Asset Sale and (D) a
transfer of any Restricted Assets of a Credit Party to a Non-Credit Party Subsidiary or Joint
Venture that is not permitted by Section 5.15(a).

     “Prime Rate” means the rate of interest per annum publicly announced from time to time by
JPMorgan Chase Bank, N.A. as its prime rate in effect for dollars at its principal office in New
York City.

     “Purchase Money Mortgage” means, with respect to NNC or any Restricted Subsidiary, (i) a
mortgage on or security interest in property existing at the time of acquisition thereof by such
Person 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 Person 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 apply to any after acquired property of such Person (other than
improvements thereon and fixtures) or to any property previously owned by such Person other than,
in the case of any such construction or improvement, any real property, theretofore substantially
unimproved for the purposes of such Person, 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.

21

 

     “Qualified Capital Stock” means any Capital Stock of NNC that is not Disqualified Capital
Stock.

     “Qualified Receivables Transaction” means any Receivables Transaction designated as such by
the Borrower; provided that the aggregate outstanding amount of advances in respect of receivables
transferred by the Credit Parties pursuant to all Qualified Receivables Transactions which have not
been collected by the applicable Person or Securitization Subsidiary to which such receivables were
transferred shall not exceed $100,000,000 at any time outstanding.

     “Qualified Subordinated Debt” means Funded Debt of NNC or any of its Restricted Subsidiaries
that is subordinated to the prior payment in full of the obligations of the Credit Parties under
the Loan Documents following an Event of Default and which does not permit the repayment of such
Funded Debt by NNC or such Restricted Subsidiaries during the continuance of an Event of Default.

     “Quebec Hypothec” has the meaning set forth in subparagraph (f) of Article III.

     “Receivables Transaction” means any financing transaction in which NNC, the Borrower or a
Restricted Subsidiary transfers receivables and related assets to either (x) a Person other than
NNC or a Subsidiary for cash or (y) a Securitization Subsidiary in a transaction where (i) such
transfer is in exchange for an equity interest or intercompany obligation of such Securitization
Subsidiary, (ii) such Securitization Subsidiary may but shall not be required to pledge its assets
to secure advances from a third party, (iii) such third party advances amounts to such
Securitization Subsidiary in anticipation of collection of the receivables held by such
Securitization Subsidiary and (iv) any amounts collected in respect of such receivables in excess
of the amount of advances to such Securitization Subsidiary from such third party are retained by
such Securitization Subsidiary or distributed to NNC or a Restricted Subsidiary.

     “Refinance” means, in respect of any security or Funded Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or any Funded Debt in
exchange or replacement for, such security or Funded Debt in whole or in part. “Refinanced” and
“Refinancing” shall have correlative meanings.

     “Refinancing Funded Debt” means any Refinancing by NNC or any Subsidiary of Permitted Funded
Debt (other than any Funded Debt described in (b), (c), (d), (g), (h), (i) or (j) of the definition
of Permitted Funded Debt), in each case that does not:

     (1)   result in an increase in the aggregate principal amount of Funded Debt of such
Person as of the date of such proposed Refinancing (plus the amount of any premium required
to be paid under the terms of the instrument governing such Funded Debt
and plus the amount of reasonable expenses incurred by NNC or any Subsidiary in
connection with such Refinancing); or

     (2)   create Funded Debt with (a) a Weighted Average Life to Maturity that is less than
the Weighted Average Life to Maturity of the Funded Debt being Refinanced;

22

 

or (b) a final
maturity earlier than the final maturity of the Funded Debt being Refinanced.

     “Register” has the meaning specified in Section 9.06(b).

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

     “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and
the respective directors, officers, employees, agents and advisors of such Person and such Person’s
Affiliates.

     “Required Lenders” means, at any time, Lenders having more than 50% of the aggregate amount of
the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the
aggregate unpaid principal amount of the Loans.

     “Required Tranche A Lenders” means, at any time, Lenders having more than 50% of the aggregate
amount of the Tranche A Commitments or, if the Tranche A Commitments shall have been terminated,
holding more than 50% of the aggregate unpaid principal amount of the Tranche A Loans.

     “Required Tranche B Lenders” means, at any time, Lenders having more than 50% of the aggregate
amount of the Tranche B Commitments or, if the Tranche B Commitments shall have been terminated,
holding more than 50% of the aggregate unpaid principal amount of the Tranche B Loans.

     “Restricted Assets” shall mean any asset used or useful in the business of NNC or its
Restricted Subsidiaries other than (i) cash and cash equivalents, (ii) assets (other than
intellectual property) that would be shown as intangible assets in NNC’s consolidated balance
sheet, (iii) Funded Debt, accounts payable or Equity Interests, in each case, issued by a
Non-Credit Party Subsidiary, Joint Venture or other Person that is not a Subsidiary and (iv) with
respect to any transfer between a Credit Party and a Non-Credit Party Subsidiary, Funded Debt or
accounts payable issued by a Credit Party.

     “Restricted Payment” shall have the meaning specified in Section 5.12.

     “Restricted Subsidiary” means any Subsidiary of NNC other than (i) the Borrower, (ii) NGSH and
any direct or indirect Subsidiary of NGSH, (iii) for so long as it is a tax exempt organization
under Section 501(3) of the Internal Revenue Code, Nortel LearnIT, a Delaware corporation and (iv)
any Securitization Subsidiary.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

     “Secured Obligations” has the meaning specified in Section 1 of the Security Agreement.

23

 

     “Secured Parties” has the meaning specified in Section 1 of the Security Agreement.

     “Securitization Subsidiary” means any Subsidiary of NNC created solely for the purpose of
engaging only in activities reasonably related to or in connection with Receivables Transactions
and for which neither NNC nor any of its other Subsidiaries provides credit support.

     “Security Agreement” means, collectively, the U.S. Security Agreement, the Canadian Security
Agreement and the Quebec Hypothec.

     “Security Documents” means the Security Agreement and each other security agreement,
instrument or document executed and delivered pursuant to the Security Agreement or Section 5.17 to
secure any of the Secured Obligations.

     “Specified Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of business), assignment or
other transfer (or series of related transfers) for value by any Credit Party to any Person other
than another Credit Party of:

     (i)   any Capital Stock of any Restricted Subsidiary (other than (x) directors’
qualifying shares, (y) shares required by applicable law to be held by a Person other than a
Credit Party and (z) shares of any Foreign Subsidiary); or

     (ii)   any other property or assets (other than (x) cash or cash equivalents or (y)
property listed in the Disclosure Schedule) of any Credit Party other than in the ordinary
course of business;

in each case, which results in the receipt by the Credit Parties of Net Cash Proceeds of at least
$5,000,000; provided, however, that “Specified Asset Sale” shall not include any such sale or
disposition until the aggregate fair market value of all property disposed of by the Credit Parties
in all such transactions (excluding any transaction which is excluded from the definition of
“Specified Asset Sale” by the following proviso) exceeds $250,000,000; provided, further, that
“Specified Asset Sale” shall not include: (a) any Restricted Payment permitted by Section 5.12; (b)
any transfer of assets to a Non-Credit Party Subsidiary or Joint Venture that does not contravene
Section 5.15; (c) a disposition of inventory, equipment or other property that is no longer useful
in the conduct of the business of a Credit Party, in each case, in the ordinary course of business;
(d) the disposition by a Credit Party for less than the face value thereof of notes or accounts
receivable arising in the ordinary course of business that are overdue, but only in connection with
the compromise or collection thereof; (e) easements or other similar covenant agreements that
relate to and/or benefit the operation of the property of a Credit Party, do not materially or adversely affect the use and operation of the same and are granted in the ordinary course
of business within reasonable commercial standards; (f) with respect to intellectual property,
non-exclusive assignments or licenses or abandonments of such intellectual property, in each case,
in the ordinary course of business; and (g) sales and dispositions constituting Qualified
Receivables Transactions.

24

 

     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Agent is subject for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. Euro-Dollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available from time to time
to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in any reserve
percentage.

     “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.

     “Subsidiary Guarantors” means, collectively, the U.S. Subsidiary Guarantors and the Canadian
Subsidiary Guarantors.

     “Synthetic Purchase Agreement” means any derivative or similar agreement pursuant to which NNC
or any of its Subsidiaries is or may become obligated to make any payment the amount of which is
determined by reference to the price or value at any time of any Capital Stock of NNC; provided
that no phantom stock or similar plan providing for payments only to current or former directors,
officers, employees, consultants or contractors of NNC or any Subsidiary of NNC (or to their heirs
or estates or successors or assigns) shall be deemed to be a Synthetic Purchase Agreement.

     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.

     “Tranche A Borrowing” has the meaning specified in Section 1.03.

     “Tranche A Commitment” means, with respect to each Lender, the amount designated as its
“Tranche A Commitment” opposite the name of such Lender on Schedule 2.01, as such amount may be
reduced from time to time pursuant to Section 2.08.

     “Tranche A Event of Default” has the meaning specified in Section 6.01.

     “Tranche A Loan” means a Loan advanced pursuant to Section 2.01(a).

     “Tranche A Notes” means promissory notes of the Borrower, substantially in the form of Exhibit
A hereto, as it may be amended, supplemented or otherwise modified from time to time, and “Tranche
A Note” means any of such promissory notes issued hereunder.

     “Tranche B Borrowing” has the meaning specified in Section 1.03.

25

 

     “Tranche B Commitment” means, with respect to each Lender, the amount designated as its
“Tranche B Commitment” opposite the name of such Lender on Schedule 2.01, as such amount may be
reduced from time to time pursuant to Section 2.08.

     “Tranche B Documents” means this Agreement (other than Section 5.13, Section 5.15 (including
any related Prepayment Event), Section 5.17, Section 6.01, any Prepayment Event arising from a
Specified Asset Sale or any provision of this Agreement which relates to any representation,
warranty or covenant relating to the Collateral or the Security Documents) and the Guarantee
Agreement.

     “Tranche B Event of Default” has the meaning specified in Section 6.02.

     “Tranche B Loan” means a Loan advanced pursuant to Section 2.01(b).

     “Tranche B Notes” means promissory notes of the Borrower, substantially in the form of Exhibit
B hereto, as it may be amended, supplemented or otherwise modified from time to time, and “Tranche
B Note” means any of such promissory notes issued hereunder.

     “Transaction Liens” means the Liens on Collateral granted by the Credit Parties under the
Security Documents.

     “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.

     “United States” means the United States of America, including the States and the District of
Columbia, but excluding its territories and possessions.

     “Unrestricted Cash” means, at any time, the excess of (x) the amount that would, in accordance
with GAAP, be reflected on a consolidated balance sheet of NNC as “Cash and cash equivalents” as of
such time other than any such amount that would be classified as “Restricted Cash” (as determined
in accordance with GAAP) over (y) to the extent not otherwise reflected as a reduction of the
amount determined in accordance with clause (x), the amount of cash and cash equivalents of NNC and
its Consolidated Subsidiaries (other than any cash or cash equivalents pledged under the Security
Documents) which have been deposited as security for any obligations under a pledge agreement that
prohibits NNC or such Consolidated Subsidiaries from withdrawing such cash or cash equivalents at
such time.

     “U.S. Credit Party” means each of the Borrower and each U.S. Subsidiary Guarantor.

     “U.S. Security Agreement” means the U.S. Security and Pledge Agreement, dated as of the
Closing Date, by and among the U.S. Credit Parties, the Collateral Agent and the other parties
named therein, in the form of Exhibit I.

26

 

     “U.S. Subsidiary” means any Restricted Subsidiary organized under the laws of the United
States or any state therein.

     “U.S. Subsidiary Guarantors” means each U.S. Subsidiary that becomes a U.S. Subsidiary
Guarantor pursuant to Section 5.16.

     “Weighted Average Life to Maturity” means, when applied to any Funded Debt at any date, the
number of years obtained by dividing (a) the then outstanding aggregate principal amount of such
Funded Debt into (b) the sum of the products obtained by multiplying (i) the amount of each
then-remaining installment, sinking fund, serial maturity or other required payment of principal,
including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) which will elapse between such date and the making of such payment.

     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.

     Section 1.02.   Accounting Terms and Determinations. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder shall be prepared in
accordance with 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 Lenders; provided that, if the Borrower notifies the
Agent that the Borrower wishes to amend any covenant in Article V to eliminate the effect of any
change in such generally accepted accounting principles on the operation of such covenant (or if
the Agent notifies the Borrower that the Required Lenders wish to amend Article V for such
purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in effect in the United States immediately before the
relevant change in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the
Required Lenders.

     Section 1.03.   Types of Borrowings. The term “Borrowing” denotes the aggregation of
Loans of one or more Lenders to be made to the Borrower pursuant to Article II on a single date,
all of which Loans are of the same type (subject to Article VIII) and, except in the case of Base
Rate Loans, have the same
Interest Period or initial Interest Period. Borrowings are classified for purposes of this
Agreement either by reference to the tranche of Loans comprising such Borrowing (e.g., a “Tranche A
Borrowing” is a Borrowing comprised of Tranche A Loans, and a “Tranche B Borrowing” is a Borrowing
comprised of Tranche B Loans) or by reference to the pricing of Loans comprising such Borrowing
(e.g., a “Euro-Dollar Borrowing” is a Borrowing comprised of Euro-Dollar Loans and a “Base Rate
Borrowing” is a Borrowing comprised of Base Rate Loans).

27

 

ARTICLE II

 

THE CREDITS

     Section 2.01.   Commitments to Lend.

     (a)   Tranche A Loans. During the Disbursement Period, each Lender with a Tranche A
Commitment severally agrees, on the terms and conditions set forth in this Agreement, to make a
Tranche A Loan to the Borrower pursuant to this subsection (a) in an amount up to such Lender’s
Tranche A Commitment. The Borrower may make only one Tranche A Borrowing pursuant to this
subsection (a). Such Tranche A Borrowing shall be made from the several Lenders ratably in
proportion to their respective Tranche A Commitments. Any amount borrowed under this subsection
(a) and subsequently repaid or prepaid may not be reborrowed. Unless previously borrowed under
this subsection (a), the Tranche A Commitments shall terminate at the close of business on the
Commitment Termination Date.

     (b)   Tranche B Loans. During the Disbursement Period, each Lender with a Tranche B
Commitment severally agrees, on the terms and conditions set forth in this Agreement, to make a
Tranche B Loan to the Borrower pursuant to this subsection (b) in an amount up to such Lender’s
Tranche B Commitment. The Borrower may make only one Tranche B Borrowing pursuant to this
subsection (b). Such Tranche B Borrowing shall be made from the several Lenders ratably in
proportion to their respective Tranche B Commitments, shall be made on the same date as the Tranche
A Borrowing; provided that no Tranche B Borrowing shall be made on any date unless Tranche A Loans
have been made in an amount equal to the full amount of the Tranche A Commitments on such date.
Any amount borrowed under this subsection (b) and subsequently repaid or prepaid may not be
reborrowed. Unless previously borrowed under this subsection (b), the Tranche B Commitments shall
terminate at the close of business on the Commitment Termination Date.

     Section 2.02.   Notice of Borrowing. The Borrower shall give the Agent notice (a
“Notice of Borrowing”) not later than (a) 11:00 A.M. (New York time) one day prior to the
Borrowing, in the case of Base Rate Borrowings and (b) 1:00 P.M. (New York time) on the third
Business Day before a Borrowing (or, in the case of the Borrowings to be made on the Closing Date,
two Business Days before such Borrowings), in the case of Euro-Dollar Borrowings, specifying:

     (i)   the date of such Borrowing, which shall be a Business Day;

     (ii)   the aggregate amount of such Borrowing;

     (iii)   whether the Loans comprising such Borrowing bear interest initially at the Base
Rate or by reference to the Adjusted LIBO Rate; and

     (iv)   in the case of a Euro-Dollar Borrowing, the duration of the initial Interest
Period applicable thereto, subject to the provisions of the definition of Interest Period.

28

 

Notwithstanding the foregoing, at no time shall there be more than five (5) Interest Periods
applicable to all outstanding Euro-Dollar Loans.

     Section 2.03.   Notice to Lenders; Funding of Loans.

     (a)   Promptly upon receipt of a Notice of Borrowing submitted in accordance with the terms of
this Agreement, the Agent shall notify each Lender of the contents thereof and of such Lender’s
share (if any) of such Borrowing and (except as provided in Section 8.01) such Notice of Borrowing
shall not thereafter be revocable by the Borrower.

     (b)   Not later than 10:00 A.M. (New York time) on the date of each Borrowing, each Lender
participating therein shall make available its share of such Borrowing, in funds in U.S. Dollars
immediately available in New York to the Agent at its address referred to in Section 9.01. Unless
the Agent determines that any applicable condition specified in Article III has not been satisfied,
when each Lender has funded the amount required to be funded by it to the Agent, the Agent will
promptly make the funds so received from the Lenders available to the Borrower in like funds, by
crediting an account of the Borrower designated by the Borrower in the Notice of Borrowing.

     (c)   Unless the Agent shall have received notice from a Lender prior to the date of any
Borrowing that such Lender will not make available to the Agent such Lender’s share of such
Borrowing, the Agent may assume that such Lender has made such share available to the Agent on the
date of such Borrowing in accordance with subsection (b) of this Section and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such share available to the Agent,
such Lender and the Borrower severally agree to repay to the Agent promptly on demand (and in any
event within three Business Days) such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the interest
rate applicable thereto pursuant to Section 2.06 and (ii) in the case of such Lender, the greater
of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking
industry rules on interbank compensation. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender’s Loan included in such
Borrowing for purposes of this Agreement.

     Section 2.04.   Repayment of Loans; Evidence of Debt.

     (a)   The Borrower hereby unconditionally promises to pay (i) to the Agent for the account of
each Lender holding Tranche A Loans the then unpaid principal amount of each Tranche A Loan on the
Maturity Date, and (ii) to the Agent for the account of each Lender holding Tranche B Loans the
then unpaid principal amount of each Tranche B Loan on the Maturity Date.

     (b)   Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

29

 

     (c)   The Agent shall maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the tranche and type thereof and the Interest Period, if any, applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

     (d)   The entries made in the accounts maintained pursuant to subsection (b) or (c) of this
Section shall be prima facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

     (e)   Any Lender may request that Tranche A Loans made by it be evidenced by a Tranche A Note
and any Lender may request that Tranche B Loans made by it be evidenced by a Tranche B Note. In
the event that any Lender requests a Note be issued to represent its Loans, the Borrower shall
promptly prepare, execute and deliver to such Lender a Note. Thereafter, the Loans evidenced by
such Note and interest thereon shall at all times (including after assignment pursuant to Section
9.06) be represented by one or more Notes in such form payable to the order of the payee named
therein (or, if such Note is a registered note, to such payee and its registered assigns).

     Section 2.05.   Maturity of Loans. Each Loan included in any Borrowing made pursuant to
Section 2.01(a) or (b) shall mature, and the principal amount thereof shall be due and payable,
together with accrued interest thereon, on the Maturity Date.

     Section 2.06.   Interest Rates.

     (a)   Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for
each day from the date such Loan is made until it becomes due (or prepaid), at a rate per annum
equal to the Base Rate for such day plus the Applicable Margin for Base Rate
Loans of such tranche. Such interest shall be payable quarterly in arrears on the last day of
each quarter and, with respect to the principal amount of any Base Rate Loan converted to a
Euro-Dollar Loan, on the date of such conversion.

     (b)   Each Euro-Dollar Loan of any tranche shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto (or portion of the
Interest Period, in the case of a prepayment made on a date other than the last day of an Interest
Period), at a rate per annum equal to the sum of (X) the Adjusted LIBO Rate applicable to such
Interest Period plus (Y) the Applicable Margin for Euro-Dollar Loans of such tranche. Such
interest shall be payable for each Interest Period on the last day thereof.

     (c)   Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or
other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of or interest on any
Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding subparagraphs
of this Section 2.06 or (ii) in the case of any other amount, 2% plus the

30

 

rate applicable to Base
Rate Loans of the applicable tranche as provided in subsection (a) of this Section 2.06.

     (d)   The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent
shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of manifest error.

     Section 2.07.   Fees. The Borrower shall pay to the Agent for the Agent’s account the
administrative fee separately agreed to by the Borrower and the Agent.

     Section 2.08.   Termination or Reduction of Commitments. During the Disbursement
Period, the Borrower may, upon at least three Business Days’ notice to the Agent, (i) terminate the
Commitments at any time or (ii) ratably reduce from time to time by an aggregate amount of
$25,000,000 or a larger multiple of $5,000,000, the aggregate amount of the Commitments.

     Section 2.09.   Method of Electing Interest Rates.

     (a)   The Loans included in each Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may from
time to time elect to change or continue the type of interest rate borne by each Group of Loans
(subject in each case to the provisions of Article VIII), as follows: (i) if such Loans are Base
Rate Loans, the Borrower may elect to convert such Base Rate Loans to Euro-Dollar Loans as of any
Business Day, or (ii) if such Loans are Euro-Dollar Loans, the Bor
rower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such Euro-Dollar Loans. Each such election shall be
made by delivering a notice (a “Notice of Interest Rate Election”) to the Agent at least three
Business Days before the conversion or continuation selected in such notice is to be effective. A
Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion is allocated
ratably among the Loans comprising such Group, (ii) the portion to which such Notice applies, and
the remaining portion to which it does not apply, are each $25,000,000 or any larger multiple of
$5,000,000 and (iii) at no time shall there be more than five (5) Interest Periods in effect for
all Euro-Dollar Loans.

     (b)   Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion
thereof) to which such notice applies; (ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply with the applicable clause of
subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of
Loans and, if such new Loans are Euro-Dollar Loans, the duration of the initial Interest Period
applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest Period. Each Interest Period
specified in a Notice of Interest Rate Election shall comply with the provisions of the definition
of Interest Period.

31

 

     (c)   Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to
subsection (a) above, the Agent shall promptly notify each Lender of the contents thereof and such
notice shall not thereafter be revocable by the Borrower. If the Borrower fails to deliver a
timely Notice of Interest Rate Election with respect to any Group of Euro-Dollar Loans prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to a Base Rate
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and
is continuing and the Agent, at the request of the Required Tranche A Lenders (in the case of the
Tranche A Loans) or the Required Tranche B Lenders (in the case of the Tranche B Loans), so
notifies the Borrower, then, so long as such Event of Default is continuing (i) no outstanding
Loans under the applicable tranche may be converted to or continued as a Euro-Dollar Borrowing and
(ii) unless repaid, each Euro-Dollar Borrowing under the applicable tranche shall be converted to a
Base Rate Borrowing at the end of the Interest Period applicable thereto.

     Section 2.10.   Prepayments.

     (a)   The Borrower may, upon at least one Business Day’s notice to the Agent, prepay any Group
of Base Rate Loans or, subject to Section 2.12, upon at least three Business Days’ notice to the
Agent, prepay any Group of Euro-Dollar Loans, in each case, in whole at any time, or from time to
time in part in amounts aggregating $5,000,000 or any larger multiple of $5,000,000, as the case
may be, by paying the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment.

     (b)   Within three Business Days after any Net Cash Proceeds are received by or on behalf of
NNC, the Borrower or any Restricted Subsidiary in respect of any Prepayment Event, the Borrower
shall ratably prepay the Loans in an aggregate principal amount equal to such Net Cash Proceeds in
accordance with subsection (e) below.

     (c)   The Borrower shall notify the Agent of any prepayment pursuant to subsection (b) above of
any Borrowing hereunder (i) in the case of Base Rate Loans, not later than 1:00 p.m. (New York
time), one Business Day before the date of prepayment and (ii) in the case of Euro-Dollar Loans,
not later than 1:00 p.m. (New York time), three Business Days before the date of prepayment. Each
such notice shall specify the prepayment date, the principal amount of Loans to be prepaid and a
reasonably detailed calculation of the amount of such prepayment.

     (d)   Upon receipt of a notice of prepayment pursuant to this Section 2.10, the Agent shall
promptly notify each Lender of the contents thereof and of such Lender’s ratable share of such
prepayment and such notice shall not thereafter be revocable by the Borrower; provided, that any
notice of a prepayment of all then outstanding Loans may be conditioned upon the consummation of a
contemplated issuance or incurrence of Funded Debt or Qualified Capital Stock or the consummation
of any Specified Asset Sale or transfer of Restricted Assets, in each case, by NNC or its
Subsidiaries.

     (e)   Any prepayment pursuant to this Section 2.10 arising from a Prepayment Event of the type
described in clauses (A) or (B) of the definition thereof shall be applied ratably to all Loans in
proportion to the outstanding amount thereof. Any prepayment pursuant to sub-

32

 

section (b) above
relating to a Prepayment Event of the type described in clauses (C) or (D) of the definition
thereof shall be applied ratably to all Tranche A Loans.

     Section 2.11.   General Provisions as to Payments; Pro Rata Treatment.

     (a)   Each Borrowing shall be repaid or prepaid in Dollars and interest payable thereon shall be
paid in Dollars.

     (b)   The Borrower shall make each payment of principal of, and interest on, the Loans and of
fees hereunder, not later than 12:00 P.M. (New York time) on the date when due, in funds
immediately available in New York, to the Agent at its address referred to in Section 9.01. The
Agent will promptly distribute to each Lender its ratable share of each such payment received by
the Agent for the account of the Lenders. Whenever any payment of principal of, or interest on,
the Base Rate Loans or of fees shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case the date for payment thereof shall be
the next preceding Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.

     (c)   Unless the Agent shall have received notice from the Borrower prior to the date on which
any payment is due from the Borrower to the Lenders hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent
on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender. If and to the extent
that the Borrower shall not have so made such payment, each Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Base Rate.

     (d)   If at any time insufficient funds are received by and available to the Agent to pay fully
all amounts of principal and interest then due hereunder, such funds (other than any funds
received on account of the Collateral, which shall be applied as set forth in the Security
Agreement) shall be applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of interest and fees then
due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal then due to such
parties.

     Section 2.12.   Funding Losses. If the Borrower makes any payment of principal with
respect to any Euro-Dollar Loan (pursuant to Article II, VI or VIII or otherwise) on any day other
than the last day of the Interest Period applicable thereto, or if the Borrower fails to borrow or
prepay any Euro-Dollar Loans after notice has been given to any Lender in accordance with Section
2.03(a) or 2.10(a) (except as a result of a default by the Agent or any Lender in observing the
terms of this Agreement), the Borrower shall reimburse each Lender within 15 days after

33

 

demand for
any resulting loss or expense directly incurred by it, including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but excluding
consequential and incidental damages, any administrative expenses and loss of margin or loss of
anticipated profits for the period after any such payment or failure to borrow or prepay; provided
that such Lender (x) shall have delivered to the Borrower a certificate as to the amount of such
loss or expense and a reasonably detailed calculation of such amount, and (y) shall use all
reasonable efforts to mitigate the amount payable by the Borrower under this Section 2.12.

     Section 2.13.   Computation of Interest and Fees. All interest hereunder shall be
computed on the basis of a year of 360 days, except that interest computed by reference to the Base
Rate at times when the Base Rate is based on the Prime Rate shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

     Section 2.14.   Interest Act Equivalency. For purposes of disclosure pursuant to the
Interest Act (Canada), the yearly rate of interest to which any rate of interest is equivalent
(other than the interest rate on Base Rate
Loans determined by reference to the Prime Rate), may be determined by multiplying the
applicable rate by a fraction, the numerator of which is the number of days in the calendar year in
which the period for which such interest payable occurs and the denominator of which is 360.

ARTICLE III

 

CONDITIONS

     The obligations of the Lenders to make Loans pursuant to Section 2.01 are subject to the
satisfaction of the following conditions on or prior to February 15, 2006:

     (a)   the Agent shall have received a duly executed Tranche A Note of the Borrower for
the account of each Lender with a Tranche A Commitment that has requested a Tranche A Note
at least two Business Days prior to the Closing Date and a duly executed Tranche B Note for
the account of each Lender with a Tranche B Commitment that has requested a Tranche B Note
at least two Business Days prior to the Closing Date, each dated the Closing Date and
complying with the provisions of Section 2.04;

     (b)   the Agent shall have received a duly executed Guarantee Agreement, dated the
Closing Date;

     (c)   the Agent shall have received a duly executed U.S. Security Agreement, dated the
Closing Date;

     (d)   the Agent shall have received a duly executed Canadian Security Agreement dated the
Closing Date;

     (e)   The Collateral Agent shall have received (i) a duly completed Perfection
Certificate for the Borrower, (ii) a duly executed Patent Security Agreement and Trademark
Security Agreement of the Borrower, each as defined in and to the extent required

34

 

by the
U.S. Security Agreement, (iii) certificates or other instruments representing Equity
Interests and all other Pledged Securities (as defined in the U.S. Security Agreement) held
by any U.S. Credit Party as of the Closing Date, together with stock powers or other
instruments of transfer with respect thereto endorsed in blank, in each case, to the extent
required by the U.S. Security Agreement, and (iv) a UCC-1 financing statement in appropriate
form for filing in the jurisdiction of incorporation of the Borrower.

     (f)   the Collateral Agent shall have received (i) a duly completed Perfection
Certificate for NNC and NNL, (ii) duly executed Patent Security Agreements and Trademark
Security Agreements, each as defined in and to the extent required by the Canadian Security
Agreement, of the Canadian Credit Parties, (iii) certificates or other instruments
representing Equity Interests and all other Pledged Securities (as defined in the Canadian
Security Agreement) held by any Canadian Credit Party as of the Closing Date, together with
stock powers or other instruments of transfer with respect thereto endorsed in blank, in
each case, to the extent required by the Canadian Security Agreement, (iv) with respect to
all moveable property of the Canadian Credit Parties located in Quebec, a duly executed deed
of hypothec, bond, delivery order, bond pledge agreement and receipt
(collectively the “Quebec Hypothec”) substantially in the form contemplated by the
Canadian Security Agreement, and (v) all PPSA financing statements requested by the
Collateral Agent to perfect its security interests in the Collateral purported to be granted
under the Security Agreement.

     (g)   the Collateral Agent shall have received such closing documents with respect to the
Credit Parties (including secretary’s certificates, certificates of good standing and
insurance certificates complying with Section 5.07(b)) as it shall have reasonably
requested;

     (h)   the Agent shall have received an opinion of Cleary Gottlieb Steen & Hamilton LLP,
special U.S. counsel for the Credit Parties, substantially in the form of Exhibit C hereto;

     (i)   the Agent shall have received an opinion of Gordon A. Davies, General
Counsel-Corporate and Corporate Secretary of NNC, substantially in the form of Exhibit D
hereto;

     (j)   the Agent shall have received an opinion of Ogilvy Renault LLP, as (x) special
Canadian counsel for the Credit Parties (other than with respect to matters relating to the
laws of Quebec), substantially in the form of Exhibit E-1 hereto and (y) special Quebec
counsel for the Credit Parties substantially in the form of Exhibit E-2;

     (k)   the Agent shall have received a duly completed Notice of Borrowing complying with
Section 2.02; and

     (l)   the Agent shall have received an officer’s certificate of NNC to the effect that:

35

 

	 	(i)	 	immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
	 
	 	(ii)	 	the representations and warranties of the
Credit Parties contained in the Loan Documents shall be true in all
material respects on and as of the date of such Borrowing; and
	 
	 	(iii)	 	since September 30, 2005, except as set forth
in the Disclosure Schedule, there has been no Material Adverse Effect.

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants that:

     Section 4.01.   Corporate Existence and Power. Each Credit Party
is a corporation duly incorporated and validly existing under the laws of
the jurisdiction of its incorporation, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now conducted, the
absence of which would have a Material Adverse Effect or a material adverse effect on the ability
of such Credit Party to perform its obligations under the Loan Documents or on the rights and
remedies of the Lenders under the Loan Documents.

     Section 4.02.   Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by each Credit Party of the Loan Documents to which it is a
party (i) are within such Credit Party’s corporate powers and have been duly authorized by all
necessary corporate action, (ii) require no action by or in respect of, or filing with, any
governmental body, agency or official and (iii) do not contravene any provision of applicable law
or regulation or any provision of the certificate of incorporation or by-laws of such Credit Party
or any contractual restriction, order, decree or other instrument binding upon such Credit Party or
any of its Subsidiaries, except, in the case of clauses (ii) and (iii) above, any such action,
filing or contravention which would not have a Material Adverse Effect or a material adverse effect
on the ability of such Credit Party to perform its obligations under the Loan Documents or on the
rights and remedies of the Lenders under the Loan Documents.

     Section 4.03.   Binding Effect. The Loan Documents constitute or, when executed, will
constitute valid and binding agreements of the Credit Parties that are parties to them, in each
case enforceable in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and by general principles of
equity (it being understood that the enforceability thereof in Canada may be limited by the
Currency Act (Canada), which precludes Canadian courts from awarding a judgment for an amount
expressed in a currency other than Canadian Dollars and to the extent that any requirement to pay
interest at a greater rate after than before default may not be enforceable in Canada if the same
is construed by a Canadian court to constitute a penalty).

36

 

     Section 4.04.   Financial Information.

     (a)   The (i) consolidated balance sheet of NNC and its Consolidated Subsidiaries as of December
31, 2004 and the related consolidated statements of operations, cash flows and retained earnings
for the fiscal year then ended, reported on by Deloitte & Touche LLP and set forth in NNC’s 2004
Form 10-K, and (ii) unaudited consolidated balance sheet of NNC and its Consolidated Subsidiaries
as of September 30, 2005 and the related consolidated statements of operations, cash flows and
retained earnings for the three quarters then ended, and set forth in NNC’s 2005 Q3 Form 10-Q,
fairly present, in conformity with GAAP, the consolidated financial position of NNC and its
Consolidated Subsidiaries as of such date and their consolidated results of operations and cash
flows for such fiscal year or such portion of such fiscal year, as applicable, subject, in the case
of the statements as of and for the period ended September 30, 2005, to normal year-end
adjustments.

     (b)   Since September 30, 2005, except as set forth in the Disclosure Schedule, there has been
no material adverse change in the business, financial position or results of operations of NNC and
its Consolidated Subsidiaries, taken as a whole.

     Section 4.05.   Litigation. There is no action, suit or proceeding pending against, or
to the knowledge of NNC, NNL or the Borrower threatened against or affecting, NNC or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or official (i) in
which there is a reasonable possibility of an adverse decision which could have a material adverse
effect on the ability of a Credit Party to perform its obligations under the Loan Documents to
which it is party, except as disclosed in NNC’s Exchange Act reports filed prior to the Effective
Date or as set forth in the Disclosure Schedule, or (ii) which in any manner draws into question
the validity of the Loan Documents.

     Section 4.06.   Taxes. Each of NNC and its Consolidated Subsidiaries has timely filed
or caused to be filed all tax returns and reports required to have been filed by it and has timely
paid or caused to be paid all taxes required to have been paid by it, except (a) any taxes that are
being contested in good faith by appropriate proceedings and for which the relevant obligor has set
aside on its books adequate reserves or (b) to the extent that failures to do so, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

     Section 4.07.   Solvency.

     (a)   As of the Effective Date, the Borrower reasonably believes that (i) the fair value of the
assets of the Borrower, at a fair valuation viewing the Borrower as a going concern, will exceed
its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable
value of the property of the Borrower will exceed the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (iii) the Borrower will be able to
pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (iv) the Borrower will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now conducted and proposed
to be conducted after the Effective Date; in each case, it being understood that the Bor-

37

 

rower
cannot be certain as to how a court would apply the foregoing standards to any contingent
liabilities in determining whether the Borrower was solvent at the relevant time.

     (b)   As of the Effective Date, with respect to NNC and NNL, the Borrower reasonably believes
that (i) the aggregate property of such Person at fair valuation, or if disposed of at a fairly
conducted sale under legal process, is sufficient to enable payment of all its obligations, due and
accruing due; (ii) the property of such Person is, at a fair valuation, greater than the total
amount of liabilities, including contingent liabilities, of such Person; (iii) such Person has not
ceased paying its current obligations in the ordinary course of business as they generally
become due; and (iv) such Person is not for any reason unable to meet its obligations as they
generally become due; in each case, it being understood that the Borrower cannot be certain as to
how a court would apply the foregoing standards to any contingent liabilities in determining
whether NNC or NNL was solvent at the relevant time.

     Section 4.08.   ERISA; Canadian Plans.

     (a)   No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other ERISA Events for which liability is reasonably expected to occur, could reasonably
be expected to result in a Material Adverse Effect.

     (b)   The Canadian Pension Plans are duly registered under all applicable laws which require
registration and no event has occurred which is reasonably likely to cause the loss of such
registered status. All material obligations of each Credit Party (including fiduciary, funding,
investment and administration obligations) required to be performed in connection with the Canadian
Pension Plans and the funding agreements therefor have been performed in a timely fashion. There
are no outstanding disputes concerning the assets of the Canadian Pension Plans or the Canadian
Benefit Plans that could reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Disclosure Schedule, there have been no improper withdrawals or applications of the
assets of the Canadian Pension Plans or the Canadian Benefit Plans. Each Credit Party
has made all required contributions to each Canadian Pension Plan in accordance with applicable
law. With respect to each Canadian Pension Plan that provides defined benefits, all contributions
required to the date hereof in order for such Canadian Pension Plan to comply with the minimum
funding standards imposed by applicable federal or provincial statutory and regulatory requirements
have been made or properly accrued, and the funding of each of such Canadian Pension Plans is
properly disclosed in the most recent actuarial valuation reports filed with (and accepted for
filing by) the applicable Governmental Authorities in respect of each such Canadian Pension Plan,
as at the date of such reports and subject to the actuarial assumptions and methods disclosed in
such reports.

     Section 4.09.   Security Agreement Representations and Warranties.

     Each of the representations and warranties of the Credit Parties contained in the Security
Agreement is true and correct.

     Section 4.10.   Disclosure.

     On the Effective Date, the Borrower has disclosed to the Lenders all matters known to it,
that, individually or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. The information, taken as a whole, furnished by or on behalf of the

38

 

Borrower to
the Agent and each Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished) does not contain any
material misstatement of fact or omit to state any fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to be reasonable
at the time, it being understood that actual results may materially vary from such projections and
such forward-looking information must be read in the context of cautionary language including,
without limitation, the risk factors contained in NNC’s filings made pursuant to the Exchange Act.
Except for the Liens securing Funded Debt of Foreign Subsidiaries that are specifically disclosed
on Schedule 5.09, after reasonable inquiry, the Borrower is not aware of any Liens on any property
of any Foreign Subsidiary securing Funded Debt.

     Section 4.11.   Investment Company Status.

     None of the Credit Parties is an “investment company” or an entity “controlled” by an
“investment company”, in each case, as defined in the Investment Company Act of 1940.

     Section 4.12.   No Unlawful Payments.

     NNC has policies and procedures in effect that prohibit the following activities by any
director, officer, agent, employee or other person associated with or acting on behalf of NNC or
any of its Subsidiaries: (i) the use of corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii) any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate funds;
(iii) the violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) any
bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment.

     Section 4.13.   Compliance with Laws and Agreements.

     None of the Credit Parties is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Credit Party is bound or to which any of
the property or assets of such Credit Party is subject; or (iii) in violation of any applicable law
or statute or any applicable judgment, order, rule or regulation of any Governmental Authority,
except, in each case as otherwise disclosed in NNC’s Exchange Act reports filed prior to the
Effective Date, and except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material Adverse Effect.

39

 

ARTICLE V

 

COVENANTS

     The Borrower agrees, and will cause NNC and each Restricted Subsidiary to agree, that, so long
as any Lender has any Commitment hereunder or any amount payable under any Loan remains unpaid:

     Section 5.01.   Information.   The Borrower will deliver to the Agent on behalf of each of
the Lenders:

     (a)   as soon as available and in any event on or prior to March 16, 2006, NNC’s annual report
on Form 10-K for the year ended December 31, 2005 as filed with the Commission, including a
consolidated balance sheet of NNC and its Consolidated Subsidiaries as of the end of such fiscal
year and the related consolidated statements of operations, cash flows and retained earnings for
such fiscal year, setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on without any “going concern” qualification or qualification as to the
scope of the audit procedures performed by Deloitte & Touche LLP or other independent public
accountants of nationally recognized standing;

     (b)   as soon as available and in any event within 45 days after the end of each of the first
three quarters of 2006, NNC’s quarterly report on Form 10-Q as filed with the Commission, including
a consolidated balance sheet of NNC and its Consolidated Subsidiaries as of the end of such quarter
and the related consolidated statements of operations, cash flows and retained earnings for such
quarter and for the portion of NNC’s fiscal year ended at the end of such quarter, setting forth in
the case of such statements of operations, cash flows and retained earnings, in comparative form
the figures for the corresponding quarter and the corresponding portion of NNC’s previous fiscal
year;

     (c)   within seven (7) days after delivery of each set of financial statements referred to in
subsections (a) and (b) above, a copy of a certificate of the Treasurer or Assistant Treasurer of
NNC (i) stating whether to the best of such Person’s knowledge, after having conducted a reasonable
investigation, any Default exists on the date of such certificate and, if any Default then exists,
setting forth reasonable details thereof, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 5.13 for the twelve-month period ending on the last day of
the most recent financial statements delivered pursuant to subsection (a) or (b) above, as the case
may be, and Section 5.15 as of the date of the most recent balance sheet included in the financial
statements delivered pursuant to subsection (a) or (b) above, as the case may be;

     (d)   promptly after the mailing thereof to the shareholders of NNC or NNL generally, copies of
all other reports and proxy statements so mailed;

     (e)   promptly after the filing thereof, copies of all registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or its equiva-

40

 

lent) and reports on Form 8-K (or its equivalent) which NNC or NNL shall have filed with the Commission;

     (f)   from time to time such additional information regarding the financial position or business
of NNC and its Restricted Subsidiaries as any Lender may reasonably request through the Agent as
being desirable to enable such Lender to protect its rights under this Agreement; provided that the
Borrower shall not be under any obligation to supply any information the supply of which would be
contrary to any confidentiality obligation binding on NNC or any of its Restricted Subsidiaries or
which, in the Borrower’s opinion, is unpublished price sensitive information or the supply of which
would, in the Borrower’s opinion, be contrary to any applicable securities laws or the regulations
of any relevant stock exchange;

     (g)   within five Business Days after the end of each calendar month, a certificate of the
Treasurer or Assistant Treasurer of NNC stating that NNC was in compliance with Section 5.14 as of
the last Business Day in such calendar month.

     Section 5.02.   Notice of Material Events.   As soon as practicable, and in any event
within five days after an Executive Officer acquires knowledge thereof, the Borrower will furnish
to the Agent and each Lender prompt written notice of the following:

     (a)   the occurrence of any Default;

     (b)   the filing or commencement of any action, suit or proceeding by or before any arbitrator
or governmental authority against or affecting NNC or any Subsidiary that has a reasonable
possibility of being adversely determined and, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;

     (c)   any change in any Debt Rating with negative implications;

     (d)   the occurrence of any ERISA Event or any failure to make all required contributions in
accordance with applicable law under any Canadian Pension Plan or Canadian Benefit Plan (such
failure, a “Funding Failure”) that, alone or together with any other ERISA Events or Funding
Failures that have occurred and are continuing at such time, could reasonably be expected to result
in liabilities of NNC and its Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect; and

     (e)   the occurrence of a Material Adverse Effect.

Each notice delivered under this Section (other than clause (c) above) shall be accompanied by a
statement of an Executive Officer setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.

     Section 5.03.   Information Regarding Collateral.   The Borrower will furnish to the
Collateral Agent prompt written notice of any change in (i) any Credit Party’s corporate name or
any trade name used to identify it in the conduct of its business or any Credit Party’s chief
executive office or its principal place of business, (ii) any Credit Party’s identity or corpo-

41

 

rate structure (including, without limitation, its jurisdiction of organization) or (iii) any Credit
Party’s Federal Taxpayer Identification Number.

     Section 5.04.   Existence; Conduct of Business.   The Borrower will, and will cause NNC
and each Credit Party to, preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade
names, in each case as necessary or desirable to the normal conduct of the business of NNC and its
Subsidiaries, taken as a whole; provided that the foregoing shall not prohibit any amalgamation,
merger, consolidation, liquidation or dissolution permitted under Section 5.11.

     Section 5.05.   Use of Proceeds.   The proceeds of the Loans made under this Agreement
will be used by NNC and its Restricted Subsidiaries to repay NNL’s 6.125% Notes due February 15,
2006 and related fees and expenses. None of such proceeds will be used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of buying or carrying any “margin
stock” within the meaning of Regulation U.

     Section 5.06.   Maintenance of Properties; Payment of Obligations.   The Borrower will,
and will cause each Credit Party to, maintain all property material to the conduct of the business
of NNC and its Restricted Subsidiaries, taken as a whole, in good working order and condition,
ordinary wear and tear excepted. The Borrower will, and will cause NNC and each of its Restricted
Subsidiaries to, pay its obligations, including tax obligations, that, if not paid, could result in
a Material Adverse Effect, before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate proceedings, (b)
NNC, the Borrower or the Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect.

     Section 5.07.   Insurance.

     (a)   The Borrower will, and will cause each Credit Party to,
maintain, with reputable insurance carriers, insurance in such amounts and against such risks as
are customarily maintained by companies engaged in the same or similar business, owning similar
properties and located in the same general areas in which NNC, the Borrower or such Credit Party,
as the case may be, operates; provided that insurance coverage against terrorist acts shall be
required only so long as such coverage is available on commercially reasonable terms. It is
understood that the insurance policies maintained by NNC, the Borrower and the Credit Parties on
the date hereof shall be deemed adequate for purposes of this subsection.

     (b)   In addition, the insurers or their representative under any casualty insurance covering
the Collateral shall deliver a certificate to the Collateral Agent which (i) provides that no
cancellation, material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Collateral Agent of written notice thereof,
(ii) names the Collateral Agent as insured party or loss payee with respect to its interest, as
applicable (provided that so long as no Event of Default has occurred and is continuing the
Collateral Agent shall make such proceeds available to the Borrower for the repair, reconstruction
or replacement of the damaged property), (iii) if reasonably requested by the Collateral Agent,
in-

42

 

cludes a breach of warranty clause and (iv) is reasonably satisfactory in all other respects to
the Collateral Agent.

     Section 5.08.   Proper Records; Rights to Inspect.   The Borrower will cause NNC and NNL
to, record, summarize and report all financial information in accordance with GAAP, which
information will include information on such Person’s Subsidiaries prepared on a consolidated
basis; provided that NNC and NNL shall not be under any obligation to record, summarize or report
any information to the extent contrary to any confidentiality obligation binding on NNC or any of
its Subsidiaries or which, in the Borrower’s opinion, is unpublished price sensitive information or
the report of which would, in the Borrower’s opinion, be contrary to any applicable securities laws
or the regulations of any relevant stock exchange. Each Credit Party will permit any
representatives designated by the Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties (including, without limitation, the Collateral), to examine and make
extracts from its books and records, and to discuss its affairs, finances and condition and the
Collateral with any officers designated for such purpose by an Executive Officer and (after
reasonable prior notice to the Borrower and subject to the right of such designated officers to be
present during such discussions) independent accountants, all at such reasonable times during
normal business hours and as often as reasonably requested; provided that unless an Event of
Default has occurred and is continuing, each of the Agent and the Lenders may take such actions
only once during each fiscal quarter of NNC.

     Section 5.09.   Liens.   Subject to the second succeeding sentence, the Borrower will
not, and will not permit any other Credit Party to create, incur or suffer to exist any Lien upon
any property of any Credit Party (whether now owned or hereinafter acquired). Subject to the
succeeding sentence, the Borrower will not permit any Non-Credit Party Subsidiary that is a
Restricted Subsidiary to create, incur or suffer to exist any Lien upon any property of such
Non-Credit Party Subsidiary (whether now owned or hereafter acquired) which secures Funded Debt.
The restrictions contained in the two preceding sentences shall not apply to:

     (i)   the Transaction Liens;

     (ii)   any Lien on assets of NNC and its Subsidiaries securing any Refinancing Funded
Debt but only to the extent that the Funded Debt that is refinanced was secured thereby;

     (iii)   any Permitted Lien;

     (iv)   Liens under any Purchase Money Mortgage incurred after the Effective Date;

     (v)   any Lien on property of a Person or group of Persons existing at the time that such
Person or group of Persons is merged into, or amalgamated or consolidated with NNC, the
Borrower or any Restricted Subsidiary, or at the time the properties of or equity interests
in the Person are sold, leased or otherwise transferred to NNC, the Borrower or any
Restricted Subsidiary which Lien does not extend to any other property of NNC or any other
Subsidiary (other than improvements or construction on such acquired property or
properties);

43

 

     (vi)   any Lien securing intercompany Funded Debt (x) among or between Credit Parties,
(y) among or between Non-Credit Party Subsidiaries or (z) owed to a Credit Party by a
Non-Credit Party Subsidiary;

     (vii)   deposits of cash, cash equivalents or investment securities against which the
lender of any Credit Enhanced Foreign Subsidiary Debt has a Lien or right of set-off;

     (viii)   any Lien on property of a Foreign Subsidiary securing any Funded Debt incurred
pursuant to clause (h) of the definition of Permitted Funded Debt;

     (ix)   any Lien created by or resulting from litigation or other proceeding against, or
upon property of, NNC, the Borrower or any Restricted Subsidiary, or any Lien for workmen’s
compensation awards or similar awards, so long as the finality of such judgment or award is
being contested and execution thereon is stayed or such Lien relates to a final unappealable
judgment which is satisfied within 30 days of such judgment or any Lien incurred by NNC, the
Borrower or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in
the course of any litigation or other proceeding;

     (x)   any other Liens securing Funded Debt of any Foreign Subsidiary; provided that the
aggregate outstanding principal amount of Funded Debt secured pursuant to this clause (x) by
any individual Foreign Subsidiary would not, after giving effect to the relevant
transaction, exceed $5,000,000;

     (xi)   Liens existing on the Effective Date (x) on any assets of any Non-Credit Party
Subsidiary and (y) on any assets of any Credit Party (but in the case of this clause (y),
only to the extent such Liens are disclosed on Schedule 5.09) and any extension, renewal or
replacement in whole or in part of any Lien permitted by this clause (xi) or referred to in
clauses (i) through (x) above, so long as the total amount of obligations secured thereby
does not increase, and the property securing such obligations is not expanded, as a result
of the extension, renewal or replacement;

     (xii)   Liens securing Permitted Financing Leases;

     (xiii)   Liens securing other Financing Leases and Capital Lease Obligations; provided
that the aggregate Attributable Debt under such Financing Leases together with the aggregate
amount of such Capital Lease Obligations shall not exceed $100,000,000 at any time; and

     (xiv)   Managed Service Contract Liens.

     Section 5.10.   [Omitted].

     Section 5.11.   Fundamental Changes.

     (a)   The Borrower will not, and will not permit NNC or any Restricted Subsidiary to,
amalgamate, merge or consolidate with or into any other Person, or liquidate or dissolve, or permit
any other Person to amalgamate, merge or consolidate with or into it; provided

44

 

that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be
continuing, (i) any Restricted Subsidiary may amalgamate, merge or consolidate
with or into or be liquidated or dissolved into any Credit Party in a transaction in which
such Credit Party is the surviving or resulting corporation, (ii) any Restricted Subsidiary may
amalgamate, merge or consolidate with or into or liquidate or dissolve into any Person that is not
a Credit Party in a transaction which does not contravene Section 5.15; provided that to the extent
such transaction constitutes a Prepayment Event, the Borrower shall comply with Section 2.10, and
(iii) NNL may be liquidated or dissolved if, as a result of such liquidation or dissolution, all of
the assets of NNL are transferred to NNC or any other Credit Party.

     (b)   Neither NNC, the Borrower nor any Restricted Subsidiary will engage to any material extent
in any business except businesses of the types conducted by NNC, the Borrower and the Restricted
Subsidiaries on the date of this Agreement and businesses reasonably related thereto.

     Section 5.12.   Restricted Payments.   The Borrower will not, and will not permit NNC or
any Restricted Subsidiary to, directly or indirectly:

     (a)   declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock) on or in respect of shares of NNC’s Capital Stock
or NNL’s Preferred Stock to holders of such Capital Stock or Preferred Stock, as the case may be,
in their capacity as such; or

     (b)   purchase, redeem or otherwise acquire or retire for value any Equity Interests of NNC or
any Preferred Stock of NNL or any warrants, options or other rights to acquire such Preferred Stock
or make any payments with respect to Synthetic Purchase Agreements,

(each of the foregoing actions set forth in subsections (a) and (b) being referred to as a
"Restricted Payment”), other than:

     (i)   the repurchase or other acquisition of Capital Stock of NNC or any warrants, rights
or options to purchase or acquire shares of any such Capital Stock or securities convertible
into Capital Stock of NNC, from or on behalf of current or former employees, directors,
consultants, or contractors of NNC or any of its Subsidiaries (or permitted transferees of
such current or former employees, directors, consultants, or contractors), pursuant to the
terms of the agreements (including employment or severance agreements) or plans (or
amendments thereto) under which such individuals purchase or sell, or are granted the option
to purchase or sell, shares of such Capital Stock;

     (ii)   the redemption by NNC of any rights to purchase shares of Common Stock of NNC
outstanding from time to time under the amended and restated shareholder rights plan
agreement between NNC and Computershare Trust Company of Canada, as rights agent, dated as
of February 14, 2003, as the same may be further amended and restated from time to time, in
accordance with the terms thereof; provided that such rights are redeemed for nominal
consideration;

45

 

     (iii)   payments to holders or former holders of Capital Stock of NNC or NNL pursuant to
a statutory dissent right or appraisal remedy;

     (iv)   payments to holders of Capital Stock (or to the holders of Funded Debt or
Disqualified Capital Stock that is convertible into or exchangeable for Capital Stock upon
such conversion or exchange) in lieu of the issuance of fractional shares;

     (v)   payments to holders of Capital Stock of NNC under any stock purchase plan or
similar employee or director benefit plan in settlement of fractional shares issued under
such plan;

     (vi)   so long as no Event of Default has occurred and is continuing on the date of
declaration, the declaration and payment by NNL of regularly scheduled cash dividends with
respect to the Existing Preferred Stock; and

     (vii)   any payment or distribution to holders or former holders of Capital Stock of NNC
in connection with the settlement of, or satisfaction of a judgment resulting from, any
shareholder litigation or regulatory or enforcement proceeding (including, without
limitation, any dividend on Preferred Stock issued in connection therewith); provided that
Section 5.14 is not contravened thereby.

     Section 5.13.   Minimum Adjusted EBITDA.   The Borrower shall not permit Adjusted EBITDA
for any twelve month period ending on each date set forth below (tested only at the time of
delivery of the certificate required by Section 5.01(c)) to be less than the amount set forth below
opposite such date:

	 	 	 	 	 
	Last Day of Twelve-Month Period	 	Minimum
Adjusted

EBITDA	 
	March 31, 2006
	 	$	850,000,000	 
	June 30, 2006
	 	$	750,000,000	 
	September 30, 2006
	 	$	850,000,000	 
	December 31, 2006
	 	$	900,000,000	 

     Section 5.14.   Minimum Cash and Cash Equivalents.   The Borrower will not permit the
amount of Unrestricted Cash at any time to be less than $1,000,000,000.

     Section 5.15.   Restricted Asset Transfers by Credit Parties.

     (a)   No Credit Party will, directly or indirectly, sell, transfer or otherwise dispose of
(including through any merger or amalgamation) any Restricted Asset to any Non-Credit Party
Subsidiary or Joint Venture other than pursuant to a Permitted Asset Transfer.

     (b)   Notwithstanding subsection (a) of this Section 5.15, the Credit Parties may transfer
(including through any merger or amalgamation) Restricted Assets to Non-Credit Party Subsidiaries
and Joint Ventures, provided that the Borrower applies the Net Cash Proceeds (as defined in clause
(iv) of such definition) from such transfer within five Business Days to a prepayment of the
Tranche A Loans in accordance with Section 2.10(b).

46

 

     Section 5.16.   Future Guarantors.   In the event that (i) as of the date of the most
recent financial statements delivered pursuant to Section 5.01 or (ii) after giving effect to any
sale or disposition of a Subsidiary or line of business by any Credit Party, determined as of
the last day of the period covered by the most recent financial statements delivered pursuant to
Section 5.01 on a pro forma basis as though such sale or disposition had occurred on such date, the
Credit Parties would have accounted for less than 90% of the consolidated revenues of NNC and its
Restricted Subsidiaries that are U.S. Subsidiaries or Canadian Subsidiaries, then NNC shall, within
20 days after the date of delivery of such financial statements (in the case of clause (i) above)
or 20 days after the date of such sale or disposition (in the case of clause (ii) above), cause
other U.S. Subsidiaries and/or Canadian Subsidiaries to execute supplements to the Guarantee
Agreement and the applicable Security Agreement in order to become a Canadian Subsidiary Guarantor
or U.S. Subsidiary Guarantor, as the case may be such that such 90% condition would have been
satisfied as of such date or as of such date on a pro forma basis for such sale or disposition, as
the case may be had such Subsidiaries been Guarantors as of such date.

     Section 5.17.   Further Assurances.

     (a)   The Borrower hereby authorizes the Collateral Agent, without further action on the part of
the Borrower or any other Credit Party or any other Person to file, register or record any Security
Documents or notices thereof in order to effect the execution and delivery thereof or the
perfection, registration or recordation of any Liens created under any Security Document.

     (b)   Each Credit Party will execute and deliver any and all further documents, financing
statements, agreements and instruments, and take all such further actions (including the filing and
recording of financing statements and other documents), that may be required under any applicable
law, or that the Collateral Agent or the Required Tranche A Lenders may reasonably request, to (i)
create, preserve, perfect, confirm or validate the Transaction Liens with respect to such Credit
Party’s Collateral, (ii) enable the Collateral Agent to obtain the full benefits of the Security
Documents or (iii) enable the Collateral Agent to exercise and enforce any of its rights, powers
and remedies with respect to any of such Credit Party’s Collateral. The Borrower will provide to
the Agent and the Collateral Agent, from time to time upon request, evidence reasonably
satisfactory to the Agent and the Collateral Agent as to the perfection and priority of the
Transaction Liens created or intended to be created by the Security Documents.

ARTICLE VI

 

DEFAULTS

     Section 6.01.   Tranche A Events of Default.   If one or more of the following events
(“Tranche A Events of Default”) shall have occurred and be continuing:

     (a)   the Borrower shall (i) fail to pay when due any principal of any Tranche A Loan or (ii)
fail to pay any interest on any Tranche A Loan or any fees or any other amount under the Loan
Documents (other than principal of or interest on any Tranche B Loan) within five days of the due
date thereof;

47

 

     (b)   the Borrower shall fail to observe or perform any covenant contained in Sections 5.01,
5.02, 5.04 (with respect to the existence of NNC, the Borrower or NNL), 5.05 or 5.09 through 5.17;

     (c)   any Credit Party shall fail to observe or perform any covenant or agreement contained in
the Loan Documents (other than those covered by subsection (a) or (b) above) and does not remedy
the failure on or before thirty days after notice thereof has been given to the Borrower by the
Agent at the request of any Lender;

     (d)   any representation or warranty made by any Credit Party in the Loan Documents or in any
certificate delivered pursuant to the Loan Documents shall prove to have been incorrect in any
material respect when made (or deemed made);

     (e)   (i) NNC, the Borrower or any Restricted Subsidiary shall fail to make a payment or
payments (whether of principal or interest and regardless of amount) in respect of Material Debt or
any Tranche B Loan when the same shall become due, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise and such failure shall continue beyond any applicable
grace period; or (ii) except for any Prepayment Event, any event or condition occurs that results
in Material Debt or any Tranche B Loan becoming due before its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or both) the holder or holders
of Material Debt or any Tranche B Loan or any trustee or agent on its or their behalf to cause
Material Debt or Tranche B Loan to become due, or to require the prepayment, repurchase, redemption
or any defeasance thereof, before its scheduled maturity; provided that this clause (ii) shall not
apply to secured Funded Debt that becomes due as a result of a voluntary sale or transfer of the
property securing such Funded Debt (so long as such Funded Debt is repaid in accordance with its
terms);

     (f)   NNC, the Borrower or any Restricted Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize any of the foregoing;

     (g)   an involuntary case or other proceeding shall be commenced against NNC, the Borrower or
any Restricted Subsidiary seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered
against NNC, the Borrower or any Restricted Subsidiary under the bankruptcy or insolvency laws as
now or hereafter in effect in Canada or the United States;

48

 

     (h)   one or more judgments or orders for the payment of money in excess of $100,000,000 shall
be rendered against NNC, the Borrower or any Restricted Subsidiary and such judgments or orders
shall continue undischarged, unpaid in accordance with its terms or unstayed for a period of 30
days after such judgment or judgments become final and non-appealable, or a judgment creditor shall
attach or levy upon any assets of NNC, the Borrower or any Restricted Subsidiary to enforce any
such judgment;

     (i)   a Change of Control shall occur;

     (j)   any Lien purported to be created under any Security Document relating to one or more items
of Collateral with an aggregate value determined by the Collateral Agent in its sole discretion
(which determination may be based solely upon information furnished by the Borrower or the
Collateral Agent) to exceed $5,000,000 shall cease to be, or shall be asserted by any Secured Party
not to be, a valid and perfected Lien on such Collateral, with the priority required by the
applicable Security Document, except (i) as a result of a sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan Documents or (ii) as a result of
the Collateral Agent’s failure to maintain possession of any stock certificates, promissory notes
or other documents delivered to it under the Security Agreement;

     (k)   any Guarantor’s Guarantee under the Guarantee Agreement shall at any time fail to
constitute a valid and binding agreement of such Guarantor (except as expressly permitted by any
Security Document) or any Guarantor, or any Person acting on behalf of any Guarantor, shall so
assert in writing; or

     (l)   an ERISA Event or a Funding Failure shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events and Funding Failures that have
occurred, could reasonably be expected to result in a Material Adverse Effect;

then, and in every such event, the Agent shall if requested by Lenders having more than 50% in
aggregate amount of the Tranche A Loans, by notice to the Borrower declare the Tranche A Loans
(together with accrued interest thereon) to be, and the Tranche A Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in subsection (f) or (g) above with respect to the Borrower, without any notice
to the Borrower or any other act by the Agent or the Lenders, the Tranche A Loans (together with
accrued interest thereon) shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the Borrower.

     Section 6.02.   Tranche B Events of Default.   If one or more of the following events
(“Tranche B Events of Default”) shall have occurred and be continuing:

     (a)   the Borrower shall fail to pay when due any principal of any Tranche B Loan or shall fail
to pay any interest, or any Tranche B Loan or any fees or any other

49

 

amount under the Loan Documents (other than principal of or interest on any Tranche A Loan) within five days of the due date
thereof;

     (b)   the Borrower shall fail to observe or perform any covenant contained in Sections 5.01,
5.02, 5.04 (with respect to the existence of NNC, the Borrower or NNL), 5.05, 5.09 through 5.12,
5.14 or 5.16;

     (c)   any Credit Party shall fail to observe or perform any covenant or agreement contained in
the Tranche B Documents (other than those covered by subsection (a) or (b) above) and does not
remedy the failure on or before thirty days after notice thereof has been given to the Borrower by
the Agent at the request of any Lender;

     (d)   any representation or warranty made by any Credit Party in the Tranche B Documents or in
any certificate delivered pursuant to the Tranche B Documents shall prove to have been incorrect in
any material respect when made (or deemed made);

     (e)   (i) NNC, the Borrower or any Restricted Subsidiary shall fail to make a payment or
payments (whether of principal or interest and regardless of amount) in respect of Material Debt or
any Tranche A Loan when the same shall become due, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise and such failure shall continue beyond any applicable
grace period; or (ii) except for any Prepayment Event, any event or condition occurs that results
in Material Debt or any Tranche A Loan becoming due before its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or both) the holder or holders
of such Material Debt or Tranche A Loan or any trustee or agent on its or their behalf to cause
such Material Debt or Tranche A Loan to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, before its scheduled maturity; provided that this clause (ii)
shall not apply to secured Funded Debt that becomes due as a result of a voluntary sale or transfer
of the property securing such Funded Debt (so long as such Funded Debt is repaid in accordance with
its terms);

     (f)   NNC, the Borrower or any Restricted Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize any of the foregoing;

     (g)   an involuntary case or other proceeding shall be commenced against NNC, the Borrower or
any Restricted Subsidiary seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of

50

 

60 days; or an order for relief shall be entered
against NNC, the Borrower or any Restricted Subsidiary under the bankruptcy or insolvency laws as
now or hereafter in effect in Canada or the United States;

     (h)   one or more judgments or orders for the payment of money in excess of $100,000,000 shall
be rendered against NNC, the Borrower or any Restricted Subsidiary and such judgments or orders
shall continue undischarged, unpaid in accordance with its terms or unstayed for a period of 30
days after such judgment or judgments become final and non-appealable, or a judgment creditor shall
attach or levy upon any assets of the Borrower or any Restricted Subsidiary to enforce any such
judgment;

     (i)   a Change of Control shall occur;

     (j)   any Guarantor’s Guarantee under the Guarantee Agreement shall at any time fail to
constitute a valid and binding agreement of such Guarantor (except as expressly permitted by any
Security Document) or any Guarantor, or any Person acting on behalf of any Guarantor, shall so
assert in writing; or

     (k)   an ERISA Event or a Funding Failure shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events and Funding Failures that have
occurred, could reasonably be expected to result in a Material Adverse Effect;

then, and in every such event, the Agent shall (i) if requested by Lenders having more than 50% in
aggregate amount of the Tranche B Loans, by notice to the Borrower declare the Tranche B Loans
(together with accrued interest thereon) to be, and the Tranche B Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in Section 6.02(f) or (g) with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Lenders, the Tranche B Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

     Section 6.03.   Notice of Default.   The Agent shall give notice to the Borrower under
Section 6.01(c) or 6.02(c) promptly upon being requested to do so by any Lender and shall thereupon
notify all the Lenders thereof.

ARTICLE VII

 

AGENCY

     Each of the Lenders hereby irrevocably appoints the Agent as its agent and authorizes the
Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent
by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

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     The bank serving as the Agent hereunder shall have the same rights and powers in its capacity
as a Lender as any other Lender and may exercise the same as though it were not the Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with NNC or any Subsidiary or other Affiliate thereof as if it
were not the Agent hereunder.

     The Agent shall not have any duties or obligations except those expressly set forth herein.
Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby that the
Agent is required to exercise in writing as directed by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as provided in Section
9.05), and (c) except as expressly set forth herein, the Agent shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving as Agent or any of
its Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in Section 9.05) or in the
absence of its own gross negligence or willful misconduct. The Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the Agent by the
Borrower or a Lender, and the 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 this
Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Agent.

     The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon,
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 Agent also
may rely upon 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 Agent may consult with
legal counsel (who may be counsel for NNC or its Subsidiaries), 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, accountants or experts.

     The Agent may perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform
any and all its duties and exercise its rights and powers through their respective Related Parties.
The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided for herein as well
as activities as Agent. Without limitation of the foregoing, the Agent may, in its

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sole discretion, appoint a Lender holding Tranche B Loans or other Person to act as the representative
of all Lenders holding Tranche B Loans in connection with any amendment, waiver or enforcement
action under the Loan Documents.

     Subject to the appointment and acceptance of a successor Agent as provided in this paragraph,
the Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent’s
resignation hereunder, the provisions of this Article VII and Section 9.03 shall continue in effect
for the benefit of such retiring 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 it was acting as Agent.

     Each Lender acknowledges that it has, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Agreement, any related agreement
or any document furnished hereunder or thereunder.

     Each Lender holding any Tranche A Loan hereby appoints the Collateral Agent to act as
Collateral Agent under the Security Documents and agrees that the Collateral Agent and its Related
Parties shall, in acting in such capacity, be entitled to the protections set forth above to the
same extent as if it was the Agent acting under this Agreement. Furthermore, each Lender holding
any Tranche A Loan agrees that the Collateral Agent may release the Liens of the Security Documents
on any Collateral under the conditions set forth in the Security Agreement and take the other
actions contemplated by the Security Documents on the terms set forth therein without the consent
of any Tranche A Lender except as expressly set forth therein. Without prejudice to the foregoing,
each Lender holding any Tranche A Loan hereby irrevocably appoints and authorizes the Collateral
Agent (and any successor acting as the Collateral Agent) to act as the person holding the power of
attorney (in such capacity, the “Canadian fondé de pouvoir”) of such Lender 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 Canadian Credit Parties under the Civil
Code of Quebec (a “Canadian Hypothec”), and to exercise such powers and duties which are conferred
upon the Canadian fondé de pouvoir under each Canadian Hypothec. Moreover, without prejudice to
such appointment and authorization to act as the Person holding the power of attorney as aforesaid,
each Lender holding any Tranche A Loan, hereby irrevocably appoints and authorizes the Collateral
Agent (in such capacity, the “Canadian Custodian”) to act as agent and custodian for and on behalf
of such Lender to hold and to

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be the sole registered holder of any debenture or bond which may be
issued under any Canadian 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) (as
specified in Section 9.06) 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 Lender, and (ii) each Lender holding any Tranche A Loan will be entitled to the benefits of
any Collateral covered by any Canadian Hypothec and will participate in the proceeds of realization
of any such Collateral, the whole in accordance with the terms hereof. Each of the Canadian fondé
de pouvoir and the Canadian Custodian shall (a) exercise, in accordance with the terms hereof, all
rights and remedies given to the Canadian fondé de pouvoir and the Canadian Custodian (as
applicable) with respect to the Collateral under any Canadian Hypothec, any debenture or bond or
pledge thereof relating to any Canadian 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 Lenders holding Tranche A Loans, and (c) be entitled to delegate from
time to time any of its powers or duties under any Canadian Hypothec, any debenture or bond or
pledge thereof relating to any Canadian Hypothec, applicable laws or otherwise and on such terms
and conditions as it may determine from time to time. Any Person who becomes a Lender with a
Tranche A Loan shall be deemed to have consented to and confirmed: (i) the Canadian fondé de
pouvoir as the Person holding the power of attorney as aforesaid, and to have ratified, as of the
date it acquired its Tranche A Loan, all actions taken by the Canadian fondé de pouvoir as the
Person holding the power of attorney as aforesaid; and (ii) the Canadian Custodian as the agent and
custodian as aforesaid and to have ratified, as the date it acquired its Tranche A Loan, all
actions taken by the Canadian Custodian in such capacity. The Collateral Agent accepts the
foregoing appointments as Canadian fondé de pouvoir and Canadian Custodian and agrees to act in
such capacities.

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

     The Persons named as “Joint Lead Arrangers,” “Joint Bookrunners,” “Syndication Agent,”
“Documentation Agent” and “Managing Agent” shall have no responsibilities or obligations under this
Agreement in their capacities as such.

ARTICLE VIII

 

CHANGE IN CIRCUMSTANCES

     Section 8.01.   Basis for Determining Interest Rate Inadequate or Unfair.   If on or
prior to the first day of any Interest Period for any Euro-Dollar Loan:

     (a)   the Agent determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period; or

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     (b)   the Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate,
as applicable, for such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;

then the Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy
as promptly as practicable thereafter and, until the Agent notifies the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any Notice of Interest Rate
Election that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a
Euro-Dollar Borrowing shall be ineffective, and (ii) if any Notice of Borrowing requests a
Euro-Dollar Borrowing, such Borrowing shall be made as a Base Rate Borrowing.

     Section 8.02.   Illegality.   If, on or after the date of this Agreement, any Change in
Law shall make it unlawful or impossible for any Lender (or its applicable lending office) to make,
maintain or fund its Euro-Dollar Loans to the Borrower and such Lender shall so notify the Agent,
the Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon
until such Lender notifies the Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make Euro-Dollar Loans to the
Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Agent pursuant to this Section 8.02, such Lender shall designate a
different lending office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Lender, be otherwise materially disadvantageous to such Lender. If
such notice is given, each Euro-Dollar Loan of such Lender then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such
Euro-Dollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or
(b) immediately if such Lender shall determine that it may not lawfully continue to maintain and
fund such Loan to such day.

     Section 8.03.   Increased Cost and Reduced Return.

     (a)   If any Change in Law shall:

     (i)   impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

     (ii)   impose on any Lender or the London interbank market any other condition affecting
this Agreement or Euro-Dollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Euro-Dollar Loan (or of maintaining its obligation to make any such Loan) or to
reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the Borrower will within 15 days after demand by such Lender pay to
such Lender such additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.

55

 

     (b)   If any Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender’s capital or on the capital of
such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lender’s holding company could have achieved
but for such Change in Law (taking into consideration such Lender’s policies and the policies of
such Lender’s holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender within 15 days after
receipt by the Borrower of the information required by paragraph (c) below such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for any such reduction
suffered.

     (c)   A certificate of a Lender setting forth a reasonably detailed calculation (which shall not
be required to include any information which such Lender considers to be confidential so long as
such Lender certifies that such calculation is in accordance with this Section 8.03) of the amount
or amounts necessary to compensate such Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section 8.03 shall be delivered to the Borrower and shall
be conclusive absent manifest error. If any element of any such calculation subsequently changes,
so as to change materially such amount or amounts, such Lender will submit a revised certificate
promptly to the Borrower.

     (d)   Failure or delay on the part of any Lender to demand compensation pursuant to this Section
8.03 shall not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this Section 8.03 for
any increased costs or reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s intention to claim compensation therefor; provided, further that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect thereof.

     Section 8.04.   Taxes.

     (a)   Any and all payments by or on account of any obligation of the
Borrower hereunder, including for the avoidance of doubt any payments made on behalf of any Credit
Party under the Guarantee Agreement, shall be made without withholding or deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent or Lender (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

     (b)   In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.

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     (c)   The Borrower shall indemnify the Agent and each Lender, within 15 days after written
demand therefor, (i) for the full amount of any Indemnified Taxes payable by the Agent or such
Lender, as the case may be, on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including for the avoidance of doubt any payments made on behalf of any
Credit Party under the Guarantee Agreement) and (ii) for the full amount of any Other Taxes payable
by the Agent or such Lender. Such indemnification shall include Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section 8.04 and,
in each case, any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or
by the Agent on its own behalf or on behalf of a Lender containing a reasonably detailed
calculation of the amount claimed under this Section 8.04 (which shall not be required to include
any information which such Lender considers to be confidential so long as the Agent or such Lender
certifies that such calculation is in accordance with this Section 8.04), shall be conclusive
absent manifest error.

     (d)   As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Agent.

     (e)   Each Non-U.S. Lender shall, to the extent it may lawfully do so, deliver to the Borrower
and the Administrative Agent (in such number of original copies as shall be requested by the
recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), whichever of the following is applicable:

     (i)   duly completed and executed original copies of Internal Revenue Service Form W-8BEN
(or any successor thereto) claiming eligibility for benefits of an income tax treaty to
which the United States is a party and entitlement to exemption from (or reduction in) U.S.
federal withholding tax on interest payable hereunder to or for the account of such Non-U.S.
Lender,

     (ii)   duly completed and executed original copies of Internal Revenue Service Form
W-8ECI (or any successor thereto),

     (iii)   in the case of a Non-U.S. Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that
such Non-U.S. Lender or beneficial owner is not (A) a “bank” within the meaning of Section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrowers within the meaning
of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code and (y) duly completed and executed original copies of
Internal Revenue Service Form W-8BEN (or any successor thereto), or

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     (iv)   in the case of a Non-U.S. Lender that is a pass-through entity or a non-U.S.
intermediary for U.S. federal income tax purposes, duly completed and executed original
copies of Internal Revenue Service W-8IMY (or any successor thereto) with duly completed and
executed original copies of any applicable forms (and, if applicable, certificates)
described in clause (i), (ii) or (iii) of this Section 8.04(e).

Each Non-U.S. Lender further agrees to complete and deliver to the Borrower from time to time, to
the extent it may lawfully do so, any additional form required by the Internal Revenue Service that
is reasonably requested by the Borrower in order to secure an exemption from, or reduction in the
rate of, U.S. federal withholding tax. Each Lender further agrees to complete and deliver to any
Guarantor from time to time, to the extent it may lawfully do so, any additional form required by
any Canadian taxing authority that is reasonably requested by such Guarantor in order to secure an
exemption from, or reduction in the rate of, Canadian withholding tax; provided, that no Lender
shall be required to provide any such form if in such Lender’s reasonable discretion, providing
such form would subject it to unreimbursed expense or would otherwise be disadvantageous to such
Lender.

     (f)   If the Agent or a Lender determines, in its sole discretion, that it has received a refund
of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower have paid additional amounts pursuant to this Section 8.04, it shall
pay over the portion of such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 8.04 with respect to the Taxes
or Other Taxes giving rise to such refund), that will leave it (taking into account of all
out-of-pocket expenses of the Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund)) in no better or worse
condition after tax financial position than if the Indemnified Taxes or other Taxes giving rise to
such payments had never been imposed in the first instance; provided, that the Borrower, upon the
request of the Agent or such Lender, agrees to repay the amount paid over to the Credit Parties
(plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to
the Agent or such Lender in the event the Agent or such Lender is required to repay such refund to
such Governmental Authority. This Section 8.04 shall not be construed to require the Agent or any
Lender to make available its tax returns (or any other information relating to its taxes which it
deems confidential) to the Borrower or any other Person.

     Section 8.05.   Base Rate Loans Substituted for Affected Euro-Dollar Loans.   If (i) the
obligation of any Lender to make Euro-Dollar Loans to the Borrower has been suspended pursuant to
Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 or 8.04 with respect
to its Euro-Dollar Loans and the Borrower shall, by at least five Business Days’ prior notice to
such Lender through the Agent, have elected that the provisions of this Section 8.05 shall apply to
such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist:

     (a)   all Loans to the Borrower which would otherwise be made by such Lender as (or continued as
or converted into) Euro-Dollar Loans shall instead be Base Rate

58

 

Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other
Lenders); and

     (b)   after each of its Euro-Dollar Loans to the Borrower has been repaid (or converted to a
Base Rate Loan), all payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.

     Section 8.06.   Mitigation Obligations; Replacement of Lenders.

     (a)   If any Lender requests compensation under Section 8.03, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 8.04, then such Lender shall use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 8.03 or
8.04, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

     (b)   If any Lender requests compensation under Section 8.03, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 8.04, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.06), all its interests,
rights and obligations under this Agreement to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest) or
the Borrower (in the case of all other amounts) and (iii) such assignment will result in a
reduction in such compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise,
the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

ARTICLE IX

 

MISCELLANEOUS

     Section 9.01.   Notices.   Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to the following paragraph), all notices
and other communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

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     (i)   if to the Borrower, to it at Nortel Networks Inc. c/o Nortel Networks Limited,
8200 Dixie Road, Suite 100, MS: 036/NO/230, Brampton, On L6T 5P6, Attention of
Corporate Secretary (Facsimile: 905-863-8386);

     (ii)   if to the Agent, to JPMorgan Chase Bank, Loan and Agency Services Group, 1111
Fannin, 10th Floor, Houston, Texas 77002, Attention of Maryann Bui (Facsimile No. (713)
750-2358), with a copy to JPMorgan Chase Bank, 270 Park Avenue, New York 10017,
Attention of David M. Mallett (Facsimile No. (212) 270-5127); and

     (iii)   if to any other Lender, to it at its address (or telecopy number) set forth in
its Administrative Questionnaire.

Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Agent; provided that the foregoing
shall not apply to notices pursuant to Article II unless otherwise agreed by the Agent and the
applicable Lender. The Agent or the Borrower may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to procedures approved
by it; provided that approval of such procedures may be limited to particular notices or
communications.

     Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.

     Section 9.02.   No Waivers.   No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder or under any Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies provided by law.

     Section 9.03.   Expenses; Indemnification.

     (a)   The Borrower shall pay (i) all reasonable
out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel
for the Agent, in connection with the preparation of any amendment or waiver and administration of
this Agreement, (ii) any waiver or consent hereunder or any amendment hereof (whether or not such
waiver, consent or amendment becomes effective) and (iii) if an Event of Default occurs, all
reasonable out-of-pocket expenses incurred by the Agent and each Lender, including (without
duplication) the fees and disbursements of outside counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.

     (b)   The Borrower agrees to indemnify the Agent and each Lender, their respective affiliates
and the respective directors, officers, agents and employees of the foregoing (each an
"Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities (including
environmental liabilities), losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be in-

60

 

curred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or
not such Indemnitee shall be designated a party thereto) brought or threatened by a Person which is
not a party hereto or an Affiliate of a party hereto relating to any actual, proposed or potential
use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee’s own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.

     (c)   To the extent that the Borrower fails to pay any amount required to be paid by it to the
Agent or the Collateral Agent under subsection (a) or (b) of this Section 9.03, each
Lender severally agrees to pay to the Agent or the Collateral Agent, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent or the Collateral Agent in its capacity as such.

     (d)   To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, any Loan or the use of the proceeds thereof.

     (e)   All amounts due under this Section 9.03 shall be payable promptly after written demand
therefor.

     Section 9.04.   Set-offs; Sharing of Set-offs.

     (a)   If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by applicable law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final, in whatever currency)
at any time held and other obligations (in whatever currency) at any time owing by such Lender or
any such Affiliate to or for the credit or the account of the Credit Parties against any and all of
the obligations of any Credit Party now or hereafter existing under this Agreement or any other
Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations of the Credit Parties
may be contingent or unmatured or are owed to a branch or office of such Lender different from the
branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender
and its Affiliates under this Section 9.04(a) are in addition to other rights and remedies
(including other rights of setoff) that such Lender or its respective Affiliates may have. Each
Lender agrees to notify the Borrower and the Agent promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of such setoff and
application.

     (b)   If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued
interest thereon than the proportion received by any other Lender, then the Lender

61

 

receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 9.04 shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in
any of its Loans to any assignee or Participant, other than to the Borrower or any Subsidiary
or Affiliate thereof (as to which the provisions of this Section 9.04 shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so under applicable law,
that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such participation as fully
as if such Lender were a direct creditor of the Borrower in the amount of such participation.

     Section 9.05.   Amendments and Waivers.   Any provision of this Agreement (other than
Section 5.13, Section 5.15 (including any related Prepayment Event), Section 5.17, 6.01, 6.02, any
Prepayment Event arising from a Specified Asset Sale or any provision of this Agreement which
relates to any representation, warranty or covenant relating to the Collateral or the Security
Documents) may be amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Required Lenders (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase or decrease the Commitment of any Lender (except for a ratable
decrease in the Commitments of all Lenders) or subject any Lender to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan, or any fees hereunder, (iii) postpone
the date fixed for any payment of principal of or interest on any Loan, or any fees hereunder or
for any scheduled reduction or termination of any Commitment, (iv) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action under this Section or any
other provision of this Agreement, (v) release all or substantially all of the value of the
Guarantees from the Guarantee Agreement or (vi) alter the provisions of Section 9.04 in a manner
adverse to such Lender; provided further, that, (x) without the consent of the Required Tranche A
Lenders or the Required Tranche B Lenders, as the case may be, no such amendment or waiver may
alter the provisions of Section 2.11(d) in a manner that would reduce the amount of any prepayment
applied to Loans under such tranche, (y) without the consent of the Required Tranche B Lenders, no
amendment hereto shall increase the amount of Funded Debt that is permitted to be secured by a Lien
on any assets of NNC or any of its Subsidiaries unless effective action is taken to secure the
Tranche B Loans on a pari passu basis with such other Funded Debt and (z) without the consent of
each Tranche A Lender (which consents shall be sufficient without the consent of any other Lender),
no such amendment or waiver may release all or substantially all of the Collateral from the
Security Documents. Any provision of Section 5.13, Section 5.15 (including any related Prepayment
Event), Section 5.17, 6.01, any Prepayment Event arising from a Specified Asset Sale or any
provision of this Agreement which relates to any representation, warranty or covenant relating to
the Collateral or the Security Documents may be amended or waived if, but only if, such amendment
or waiver is in writing

62

 

and is signed by the Borrower and the Required Tranche A Lenders. Any
provision of Section 6.02 may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Tranche B Lenders. Notwithstanding the
foregoing provisions of this Section 9.05, no amendment or waiver to any Loan Document that affects
the rights or duties of the Agent shall be permitted unless the Agent shall have consented thereto.

     Section 9.06.   Successors and Assigns.

     (a)   The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 9.06. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants (to the extent provided in subsection (c) of this Section
9.06) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent
and the Lenders) any legal or equitable right, remedy or claim under or by reason of this
Agreement.

     (b)   (i) Subject to the conditions set forth in subsection (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

     (A)   the Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other assignee;

     (B)   the Agent, provided that no consent of the Agent shall be required for an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund.

     (ii)   Assignments shall be subject to the following additional conditions:

     (A)   except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of
any tranche, the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption Agreement with
respect to such assignment is delivered to the Agent) shall not be less than $1,000,000
unless each of the Borrower and the Agent otherwise consent, provided that no such consent
of the Borrower shall be required if an Event of Default has occurred and is continuing;

     (B)   each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement, provided that this
clause shall not be construed to prohibit the assignment of a proportionate part of

63

 

all the assigning Lender’s rights and obligations in respect of one tranche of Commitments or
Loans;

     (C)   the parties to each assignment shall execute and deliver to the Agent an Assignment
and Assumption Agreement, together with a processing and recordation fee of $3,500; and

     (D) the assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire.

     (iii)   Subject to acceptance and recording thereof pursuant to subsection (b)(iv) of this
Section 9.06, from and after the effective date specified in each Assignment and Assumption
Agreement the assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption Agreement, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption Agreement covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.12, 8.03, 8.04 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.06 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with subsection (c) of this
Section.

     (iv)   The Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of
its offices a copy of each Assignment and Assumption Agreement delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register”). The entries in the Register shall be conclusive, and the Borrower, the Agent and the
Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.
The Register shall be available for inspection by the Borrower and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

     (v)   Upon its receipt of a duly completed Assignment and Assumption Agreement executed by an
assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee referred to in
subsection (b) of this Section 9.06 and any written consent to such assignment required by
subsection (b) of this Section 9.06, the Agent shall accept such Assignment and Assumption
Agreement and record the information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment required to be made by it
pursuant to Section 9.03(c), the Agent shall have no obligation to accept such Assignment and
Assumption Agreement and record the information therein in the Register unless and until such
payment shall have been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in the Register as
provided in this subsection.

64

 

     (c)   (i) Any Lender may, without the consent of the Borrower or the Agent, sell participations
to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations and (C) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that requires the
consent of each Lender or each Lender of the applicable tranche of Loans that affects such
Participant. Subject to subsection (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 8.03 and 8.04 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this
Section 9.03. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject
to Section 9.08 as though it were a Lender.

     (ii)   A Participant shall not be entitled to receive any greater payment under Section 8.03 or
8.04 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant shall be subject to the requirements
and limitations of Section 8.04 to the same extent as though it were a Lender.

     (d)   Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 9.06
shall not apply to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

     Section 9.07.   Collateral.   Each of the Lenders represents to the Agent and each of the
other Lenders that it in good faith is not relying upon any “margin stock” (as defined in
Regulation U) as collateral in the extension or maintenance of the credit provided for in this
Agreement.

     Section 9.08.   Governing Law; Submission to Jurisdiction.   This Agreement and each Note
shall be governed by and construed in accordance with the laws of the State of New York. The
Borrower 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. The Borrower 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

65

 

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 9.09.   Counterparts; Integration; Effectiveness.   This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement (together with the
Security Documents any other agreements entered into in connection herewith) constitute the entire
agreement and understanding among the parties hereto and supersede any
and all prior agreements and understandings, oral or written, relating to the subject matter
hereof except as may be expressly set forth or referred to herein or the Security Documents or any
other written agreement entered into in connection herewith between any of the parties hereto which
contemplates actions to be taken at or following the time of effectiveness of this Agreement (which
shall continue to be binding among the parties thereto). This Agreement shall become effective
upon receipt by the Agent of counterparts hereof signed by each of the Borrower, the Lenders set
forth on the signature pages herein and the Agent (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it
of telegraphic, telex, facsimile or other written confirmation from such party of execution of a
counterpart hereof by such party).

     Section 9.10.   WAIVER OF JURY TRIAL.   EACH OF THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 9.11.   Confidentiality.   The Agent and each Lender agree to keep confidential
any information obtained by the Agent or such Lender from the Borrower to the extent such
information has been stated by the Borrower to be confidential; provided that nothing herein shall
prevent the Agent or any Lender from disclosing such information (i) to the Agent or any other
Lender in connection with the transactions contemplated by this Agreement, (ii) to its officers,
directors, employees, Affiliates, agents, attorneys and accountants who are involved in evaluating
the transactions contemplated by this Agreement and who receive such information having been made
aware of the restrictions set forth in this Section 9.11, (iii) upon the order of any court or
administrative agency or as otherwise required by law or upon request of any regulatory authority
having jurisdiction over such Lender (in which case such Agent or Lender will inform the Borrower
promptly thereof unless prohibited by law), (iv) upon the request or demand of any regulatory
agency or authority having jurisdiction over such party, (v) which has been publicly disclosed,
(vi) which has been obtained from any Person other than the Borrower and its Affiliates, provided
that such Person is not known to it to be bound by a confidentiality agreement with the Borrower or
its Affiliates or known to it to be otherwise prohibited from transmitting the information to it by
a contractual, legal or fiduciary obligation, (vii) in connection with the exercise of any remedy
hereunder in any judicial proceeding or (viii) to the extent such Agent or such Lender is otherwise
subject to an effective confidentiality agreement with NNC entered into in connection with the
transactions contemplated by this Agreement and such disclosure would be permitted under the terms
of such confidentiality agreement.

66

 

     Section 9.12.   USA PATRIOT Act.   Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain,
verify and record information that identifies the Borrower, which information includes the name and
address of the Borrower and other information that will allow such Lender to identify the Borrower
in accordance with the Act.

67

 

     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.,

     as Borrower

 

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

     as Administrative Agent

 

 	 
	 	By:  	/s/  David
M. Mallett 	 
	 	 	Name: 	David M. Mallett 	 
	 	 	Title: 	Vice President 	 
	 
	 	JPMORGAN CHASE BANK, N.A.,

     as a Lender

 

 	 
	 	By:  	/s/  David
M. Mallett 	 
	 	 	Name: 	David M. Mallett 	 
	 	 	Title: 	Vice President 	 
	 
	 	CITICORP USA, INC.,

     as a Lender

 

 	 
	 	By:  	/s/  Tim
Dilworth 	 
	 	 	Name: 	Tim Dilworth 	 
	 	 	Title: 	Vice President 	 
	 
	 
	 	ROYAL BANK OF CANADA,

     as a Lender

 

 	 
	 	By:  	/s/  Suzanne
Kaicher 	 
	 	 	Name: 	Suzanne Kaicher 	 
	 	 	Title: 	Attorney-in-Fact 	 

68

 

	 	 	 	 	 
	 	EXPORT DEVELOPMENT CANADA,

     as a Lender

 

 	 
	 	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 	 
	 

69

 

SCHEDULE 1.01

FUNDED DEBT

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Description / Lender	 	 	 	 	 	 
	Party	 	Capital Leases	 	Commitment US$ ’000	 	Drawn Amount US$ ’000	 	Maturity
	NNL

	 	101 — 16 Assets — CSC
	 	 	 	 	486	 	 	Dec-06

	NNL

	 	145 — Sanmina
	 	 	 	 	1,748	 	 	Mar-07

	NNL

	 	107 — Calgary SH
	 	 	 	 	234	 	 	Jun-06

	NNL

	 	108 — EITF 01-08
	 	 	 	 	836	 	 	Jun-07

	NNL

	 	167 — EITF 01-08
	 	 	 	 	328	 	 	Jun-07

	NNI

	 	598 — Energy Management System Johnson
Control
	 	 	 	 	230	 	 	Mar-07

	NNI

	 	598 — GE SL 100 Switches — GE Capital
	 	 	 	 	3,442	 	 	Jun-08

	NNI

	 	540 — Selectron — Tooling & Test Equip
— Selectron
	 	 	 	 	33	 	 	 	2007	 
	NNI

	 	540 — CSC Computer Devices — CSC
	 	 	 	 	806	 	 	Mar-06

	NNI

	 	540 — Motorola
	 	 	 	 	205	 	 	Oct-06

	NNI

	 	540 — JCI/SBC
	 	 	 	 	299	 	 	Jun-07

	NNI

	 	540 — JCI/NTFC (GE Capital)
	 	 	 	 	95	 	 	Oct-06

	NNI

	 	620 — EITF 01-08
	 	 	 	 	387	 	 	Jul-07

	NN ASIA

	 	460 — Pakistan — Motor Vehicles
	 	 	 	 	157	 	 	 	2008	 
	NN UK

	 	710 — Motorola
	 	 	 	 	32	 	 	 	 	 
	NN UK

	 	710 — EITF 01-08 Flex, Cel, Sol
	 	 	 	 	236	 	 	Jun-06

	 

	 	Capital Leases (Sale Leasebacks)	 	 	 	 	 	 	 	 	 	 
	NNL

	 	101 — Belleville — Sidney Street Valley
	 	 	 	 	501	 	 	Dec-06

	NNL

	 	051 — Palladium — Canada H&R REIT
	 	 	 	 	19,037	 	 	Dec-15

	NN CALA

	 	313 — Sunrise — 1500 Concord Terrace LP
	 	 	 	 	21,526	 	 	Feb-13

	NNI

	 	540 — RTP Gateway Centre — Wachovia Bank
	 	 	 	 	114,978	 	 	Jun-16

	NN SA

	 	814 — Chateaufort — GIE les jeunes
	 	 	 	 	82,806	 	 	May-13

	NN CHINA

	 	342 — STG-NCL Wangjing Project
	 	 	 	 	20,995	 	 	 	 	 
	 

	 	Operating Leases (Sale Leasebacks)	 	 	 	 	 	 	 	 	 	 
	NNI

	 	Santa Clara — Prudential
	 	 	 	 	146,738	 	 	Dec-16

	NNI

	 	Rochester — Harris Corp
	 	 	 	 	1,354	 	 	May-08

	NNI

	 	McLean, VA — Teachers REA
	 	 	 	 	1,431	 	 	Aug-06

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Party	 	Description / Lender	 	Commitment US$ ’000	 	Drawn Amount US$ ’000	 	Maturity
	NNI

	 	Galatyn III, Richardson, TX — Wireless
(TX) LP
	 	 	 	 	 	 	45,082	 	 	Nov-06

	NNI

	 	880 Technology Park, Billerica
—
Technology Park VLP
	 	 	 	 	 	 	17,851	 	 	Mar-15

	NN UK

	 	Harlow — Goldacres Offices Ltd
	 	 	 	 	 	 	116,000	 	 	Jul-2022

	NNL

	 	Brampton — Rogers
	 	 	 	 	 	 	1,821	 	 	Dec-10

	NN SA

	 	Chateaudun — Flextronics
	 	 	 	 	 	 	653	 	 	Aug-12

	NNL

	 	Montreal
	 	 	 	 	 	 	7,600	 	 	 	2011	 
	NN IRELAND

	 	Galway	 	 	 	 	 	 	 	 	 	 	 	 
	NN CALA

	 	Campinas	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Long Term Debt (other than Existing

Notes)	 	 	 	 	 	 	 	 	 	 	 	 
	NNL

	 	Marked to Market IR Swap
	 	 	 	 	 	 	2,800	 	 	Feb-06

	NN UK

	 	Italy R&D costs — Ministro
	 	 	 	 	 	 	263	 	 	Sep-10

	NN UK

	 	710 — IDB NITEC Loan — Invest NI
	 	 	 	 	 	 	892	 	 	Sep-09

	 

	 	Other Debt	 	 	 	 	 	 	 	 	 	 	 	 
	NN ARGENTINA

	 	CITIBANK
	 	 	 	 	 	 	1,000	 	 	6 months

	NN CHINA

	 	342 — China — Bank of China
	 	 	6,201	 	 	 	0	 	 	Nov-06

	NN CHINA

	 	342 — China — China Minisheng
	 	 	12,403	 	 	 	0	 	 	Dec-06

	NN CHINA

	 	342 — China — CITIC Industrial
	 	 	37,210	 	 	 	0	 	 	Dec-06

	NN CHINA

	 	342 — China — Bank of Communications
	 	 	12,403	 	 	 	0	 	 	Jun-07

	NN CHINA

	 	342 — China — Industrial & Commercial
Bank of China
	 	 	6,201	 	 	 	0	 	 	Dec-06

	NN ASIA

	 	468 — LG JV
	 	 	2,177	 	 	 	2,177	 	 	Mar-15

 

 

Schedule 2.01

Commitments

	 	 	 	 	 	 	 	 	 
	Lender	 	Tranche A Commitment	 	Tranche B Commitment
	JPMorgan Chase Bank, N.A.
	 	$	326,923,076.92	 	 	$	173,076,923.08	 
	Citicorp USA, Inc.
	 	 	261,538,461.54	 	 	 	138,461,538.46	 
	Royal Bank of Canada
	 	 	130,769,230.77	 	 	 	69,230,769.23	 
	Export Development Canada
	 	 	130,769,230.77	 	 	 	69,230,769.23	 
	Total
	 	$	850,000,000.00	 	 	$	450,000,000.00	 

 

 

SCHEDULE 5.09

LIENS EXISTING ON EFFECTIVE DATE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Description / Lender	 	 	 	 	 	 	 	 
	Party	 	Non-Credit Parties-Liens Securing Debt	 	Commitment US$ ’000	 	Drawn Amount US$ ’000	 	Maturity	 	Security
	 

	 	Capital Leases	 	 	 	 	 	 	 	 	 	 	 	 
	NN ASIA

	 	460 — Pakistan — Motor Vehicles
	 	 
	 	 	157	 	 	 	2008	 	 	Motor Vehicles
	NN UK

	 	710 — Motorola
	 	 	 	 	32	 	 	 	 	 	 	Equipment
	NN UK

	 	710 — EITF 01-08 Flex, Cel, Sol
	 	 	 	 	236	 	 	 	Jun-06
	 	 	Equipment
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Capital Leases (Sale Leasebacks)	 	 	 	 	 	 	 	 	 	 	 	 
	NN CALA

	 	313 — Sunrise — 1500 Concord Terrace LP
	 	 	 	 	21,526	 	 	 	Feb-13
	 	 	Real Estate
	NN SA

	 	814 — Chateaufort — GIE les jeunes
	 	 	 	 	82,806	 	 	 	May-13
	 	 	Real Estate
	NN CHINA

	 	342 — STG-NCL Wangjing Project
	 	 	 	 	20,995	 	 	 	 	 	 	Real Estate
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Operating Leases (Sale Leasebacks)	 	 	 	 	 	 	 	 	 	 	 	 
	NN UK

	 	Harlow — Goldacres Offices Ltd
	 	 	 	 	116,000	 	 	 	Jul-2022
	 	 	Real Estate
	NN SA

	 	Chateaudun — Flextronics
	 	 	 	 	653	 	 	 	Aug-12
	 	 	Real Estate
	NN IRELAND

	 	Galway
	 	 	 	 	 	 	 	 	 	 	 	Real Estate
	NN CALA

	 	Campinas
	 	 	 	 	 	 	 	 	 	 	 	Real Estate
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Credit Parties —
Secured
Debt 
Operating Leases (Sale Leasebacks)	 	 	 	 	 	 	 	 	 	 	 	 
	NNI

	 	Santa Clara — Prudential
	 	 	 	 	146,738	 	 	 	Dec-16
	 	 	Real Estate
	NNI

	 	Galatyn III, Richardson, TX — Wireless
(TX) LP
	 	 	 	 	45,082	 	 	 	Nov-06
	 	 	Real Estate

 

 

EXHIBIT A — Tranche A Note

February 14 , 2006

          For value received, NORTEL NETWORKS INC., a Delaware corporation (the “Borrower”), promises to
pay to the order of _________________ (the “Lender”) in the manner specified in Article II
of the Credit Agreement referred to below, the unpaid principal amount of each Tranche A Loan made
by the Lender to the Borrower pursuant to the Credit Agreement on the maturity date specified
therefor in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Tranche A Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in funds immediately
available in New York at the office of the Agent specified in the Credit Agreement.

          All Tranche A Loans made by the Lender, the respective types and maturities thereof and all
repayments of the principal thereof shall be recorded by the Lender and, if the Lender so elects in
connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Tranche A Loan then outstanding may be endorsed by the Lender
on the schedule attached hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Credit Agreement.

          This note is one of the Tranche A Notes referred to in the Credit Agreement dated as of
February 14, 2006 among Nortel Networks Inc., the Lenders party thereto and JPMorgan Chase Bank,
N.A., as Agent (as the same may be amended from time to time, the “Credit Agreement”). Terms
defined in the Credit Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity
hereof.

	 	 	 	 	 
	 	 
NORTEL NETWORKS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	LOANS AND PAYMENTS OF PRINCIPAL
	 	 	Principal	 	Type	 	Amount of	 	 	 	 
	 	 	Amount of	 	of	 	Principal	 	 	 	Notation
	Date	 	Loan	 	Loan	 	Repaid	 	Maturity Date	 	Made by
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 

 

 

EXHIBIT B — Tranche B Note

February 14, 2006

          For value received, NORTEL NETWORKS INC., a Delaware corporation (the “Borrower”), promises to
pay to the order of _________________ (the “Lender”) in the manner specified in Article II
of the Credit Agreement referred to below, the unpaid principal amount of each Tranche B Loan made
by the Lender to the Borrower pursuant to the Credit Agreement on the maturity date specified
therefor in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Tranche B Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in funds immediately
available in New York at the office of the Agent specified in the Credit Agreement.

          All Tranche B Loans made by the Lender, the respective types and maturities thereof and all
repayments of the principal thereof shall be recorded by the Lender and, if the Lender so elects in
connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Tranche B Loan then outstanding may be endorsed by the Lender
on the schedule attached hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Credit Agreement.

          This note is one of the Tranche B Notes referred to in the Credit Agreement dated as of
February 14, 2006 among Nortel Networks Inc., the Lenders party thereto and JPMorgan Chase Bank,
N.A., as Agent (as the same may be amended from time to time, the “Credit Agreement”). Terms
defined in the Credit Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity
hereof.

	 	 	 	 	 
	 	 
NORTEL NETWORKS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	LOANS AND PAYMENTS OF PRINCIPAL
	 	 	Principal	 	Type	 	Amount of	 	 	 	 
	 	 	Amount of	 	of	 	Principal	 	 	 	Notation
	Date	 	Loan	 	Loan	 	Repaid	 	Maturity Date	 	Made by
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 

 

 

Exhibit C—Opinion of Special U.S. Counsel for the Credit Parties

Writer’s Direct Dial: (212) 225-2730

E-Mail: wolson@cgsh.com

February 14, 2006

To each of the Lenders, the Administrative Agent and

the Collateral Agent referred to below

c/o JPMorgan Chase Bank, N.A.

as Administrative Agent and Collateral Agent

270 Park Avenue

New York, NY 10017

To Export Development Canada,

as provider of the EDC Support Facility (as defined in

the U.S. Security Agreement)

151 O’Connor

Ottawa, Ontario K1A 1K3

Canada

Ladies and Gentlemen:

          We have acted as special United States counsel to Nortel Networks Inc., a Delaware corporation
(the “Corporation”), Nortel Networks Limited, a Canadian corporation (“NNL”), and Nortel Networks
Corporation, a Canadian corporation (“NNC” and together with the Corporation and NNL, the “Covered
Companies”), in connection with the Credit Agreement dated as of February 14, 2006 (the “Credit
Agreement”) among the Corporation, as Borrower, the Lenders party thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, J.P. Morgan Securities Inc. and Citigroup Global Markets, Inc., as
Joint Bookrunners and Joint Lead Arrangers, Citicorp USA, Inc., as Syndication Agent, Royal Bank of
Canada, as Documentation Agent, and Export Development Canada (“EDC”), as Managing Agent. This
opinion is furnished to you pursuant to Section 3.01(h) of the Credit Agreement.

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 2

          Unless otherwise defined herein, capitalized terms defined in the Credit Agreement or the U.S.
Security Agreement are used herein as defined therein.

          In arriving at the opinions expressed below, we have reviewed the following documents:

	 	(a)	 	an executed copy of the Credit Agreement;
	 
	 	(b)	 	an executed copy of the U.S. Security Agreement dated as of
February 14, 2006 (the “U.S. Security Agreement”) among the Corporation,
JPMorgan Chase Bank, N.A., as Collateral Agent, and EDC;
	 
	 	(c)	 	an executed copy of the Guarantee Agreement dated as of
February 14, 2006 (the “Guarantee Agreement”) among the Corporation, NNC, NNL,
JPMorgan Chase Bank, N.A., as Administrative Agent, and EDC;
	 
	 	(d)	 	an executed copy of the Canadian Security Agreement dated as of
February 14, 2006 (the “Canadian Security Agreement”) among NNC, NNL, JPMorgan
Chase Bank, N.A., as Collateral Agent, and EDC;
	 
	 	(e)	 	copies of the indentures identified by the Corporation pursuant
to which certain debt securities of NNL, NNC and Nortel Networks Capital
Corporation (“NNCC”), a Delaware corporation, are outstanding, each of which
are stated to be governed by New York law and which are listed on Schedule I
hereto (the “Existing Indentures,” including as defined in Schedule I, the 1996
Indenture and the 2001 Indenture); and
	 
	 	(f)	 	the other documents delivered by the Covered Companies at the
closing pursuant to the Covered Documents, including copies of the
Corporation’s Certificate of Incorporation, as amended, and By-Laws, certified
by the Secretary of State of the State of Delaware and the corporate secretary
of the Corporation, respectively.

          The documents referenced in clauses (a) through (c) above are collectively referred to herein
as the “Covered Documents.”

          In addition, we have reviewed the originals or copies certified or otherwise identified to our
satisfaction of all such corporate records of the Corporation and such other instruments and other
certificates of public officials, officers and representatives of the Corporation and such other
persons, and we have made such investigations of law, as we have deemed appropriate as a basis for
the opinions expressed below.

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 3

          In rendering the opinions expressed below, we have assumed the authenticity of all documents
submitted to us as originals and the conformity to the originals of all documents submitted to us
as copies. In addition, we have assumed and have not verified the accuracy as to factual matters
of each document we have reviewed (including, without limitation, the accuracy of the
representations and warranties of each Covered Company in the Covered Documents).

          Based on the foregoing, and subject to the further assumptions and qualifications set forth
below, it is our opinion that:

          1. The Corporation is validly existing as a corporation in good standing under the laws of the
State of Delaware.

          2. The Corporation has corporate power to enter into each Covered Document to which it is a
party and to perform its obligations thereunder.

          3. The execution and delivery of each Covered Document to which it is a party have been duly
authorized by all necessary corporate action of the Corporation, and each Covered Document has been
duly executed and delivered under the law of the State of New York by each Covered Company party
thereto. Each Covered Document is a valid and binding obligation of each Covered Company party
thereto, enforceable in accordance with its terms.

          4. The execution and delivery of each Covered Document by each Covered Company party thereto
do not, and the performance by each such Covered Company of its obligations under each Covered
Document (a) will not require any consent, approval, authorization, registration or qualification
of or with any governmental authority of the United States of America or the State of New York that
in our experience normally would be applicable to general business entities with respect to such
execution, delivery or performance, except (i) such filings and other actions as may be required to
perfect the security interest in favor of the Collateral Agent which the U.S. Security Agreement
purports to create, (ii) intellectual property filings, (iii) any other filings required after the
date hereof pursuant to Section 5.17 of the Credit Agreement, when required, and (iv) such other
consents, authorizations, approvals or filings, if any, as may be required in connection with the
performance of the Covered Documents due to the specific nature or scope of any particular business
or activity conducted, or asset held, by a Covered Company, or (b) result in a breach of any of the
terms and provisions of, or constitute a default under, any of the Existing Indentures.

          5. The U.S. Security Agreement creates a security interest, in favor of the Collateral Agent
for the benefit of the Secured Parties, in the Corporation’s rights in the items of collateral
pledged by it and listed (and not excluded) in Section 2 of the U.S. Security Agreement, to the
extent Article 9 of the Uniform Commercial Code as in effect in the State of New York (the “UCC”)
is applicable thereto (the “Collateral”), to secure the Secured

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 4

Obligations, except that the U.S. Security Agreement will create a security interest in any
such portion of the Collateral pledged by the Corporation in which the Corporation has no present
rights only when the Corporation acquires rights therein.

          6. With respect to that portion of the Collateral that consists of instruments (within the
meaning of Section 9-102 of the UCC) or certificated securities (within the meaning of Section
8-102(a)(4) of the UCC), the Collateral Agent will have a perfected security interest in each such
instrument or certificated security from time to time delivered, duly indorsed in the name of the
Collateral Agent or in blank, to the Collateral Agent in the State of New York, which security
interest will have priority over the claims of other creditors to the extent such priority is
determined pursuant to the UCC and which security interest will remain a perfected security
interest for as long as possession thereof is continuously maintained in the State of New York by
the Collateral Agent.

          7. The security interest in the Collateral will continue in any “identifiable proceeds”
(within the meaning of the UCC) of such Collateral to the extent and subject to the limitations
provided in Section 9-315 of the UCC.

          8. The making of the Loans as contemplated by the Credit Agreement does not violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System (the “Board”).

          In rendering the opinions set forth above, we express no opinion with respect to:

          (i) the validity, binding effect or enforceability of any provision in any Covered Document
that purports to (a) impose on the Collateral Agent or any other person standards for the care of
Collateral in its possession other than as provided for in Section 9-207 of the UCC, (b) permit the
Collateral Agent or any other person to vote or otherwise exercise any rights with respect to any
Collateral absent compliance with the requirements of applicable laws and regulations as to the
voting of or other exercise of rights with respect to such Collateral, (c) waive, or consent to the
absence of compliance with, any rights of any Covered Company, or duties owing to it as a matter of
law, except to the extent that the Covered Company may so waive or consent under applicable law, or
(d) provide indemnification of any person to the extent such provision covers or could be construed
to cover losses or claims under federal or state securities laws or to the extent inconsistent with
public policy; and

          (ii) the priority of any security interest in or to any of the Collateral or the perfection
of any security interest in or to any of the Collateral, other than as specifically expressed in
such opinions.

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 5

          In addition, we have assumed that:

          (i) the Corporation has rights in the Collateral pledged by it (and we express no opinion with
respect thereto);

          (ii) in rendering the opinion in paragraph 6 above, we have assumed that as of the date hereof
and at any time an instrument or a certificated security is delivered to the Collateral Agent for
the benefit of the Secured Parties, the Collateral Agent takes delivery (x) in the case of any
instrument, in good faith and without knowledge that the Collateral Agent’s interest violates the
rights of any other secured party, (y) in the case of any certificated securities, without notice
of any adverse claim, within the meaning of the UCC and (z) each signature on any indorsement or
power is genuine and duly authorized and there has been compliance with any restrictive
indorsements or other restrictions on or procedures required for transfer of interests in such
Collateral. We express no opinion with respect to the priority of the security interest of the
Collateral Agent for the benefit of the Secured Parties against (a) any lien, claim or other
interest that arises by operation of law and is given priority over perfected security interests,
(b) any lien or claim in favor of the United States or any agency or instrumentality thereof
(including without limitation liens arising under the federal or state tax laws or ERISA), and (c)
any claim given priority pursuant to 31 U.S.C. §3713. We have also assumed that any certificated
securities of any Person organized in a jurisdiction other than a State of the United States
constitute “securities” within the meaning of the UCC. In addition, insofar as the security
interest granted to the Collateral Agent in the U.S. Security Agreement secures “future advances”
within the meaning of the UCC, the priority of such security interest will be subject to the
limitations set forth in Section 9-323 of the UCC;

          (iii) we have assumed that the Canadian Security Agreement would be enforced as written;

          (iv) in rendering the opinion in paragraph 4(b) above, we have assumed that, as of the date
hereof, (a) the aggregate amount of (1) all indebtedness for borrowed money secured by a Lien upon
any property of the Corporation, NNL or NNCC and (2) all Attributable Debt (as defined in the 1996
Indenture) in respect of all Financing Leases (as defined in the 1996 Indenture) entered into on or
after February 15, 1996 does not exceed 15% of NNL’s Consolidated Net Tangible Assets (as defined
in the 1996 Indenture) as of September 30, 2005 and (b) the aggregate amount of all indebtedness
for borrowed money secured by a Lien upon any property of the Corporation, NNC, NNL or NNCC does
not exceed 15% of NNL’s Consolidated Net Tangible Assets (as defined in the 2001 Indenture) as of
September 30, 2005; and

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 6

          (v) in rendering the opinion in paragraph 8 above, we have assumed that none of the Lenders is
a “creditor” within the meaning of Regulation T of the Board or a “foreign branch of a
broker-dealer” within the meaning of Regulation X of the Board.

          Insofar as the foregoing opinions relate to the valid existence and good standing of the
Corporation, they are based solely on a certificate of good standing received from the Secretary of
State of the State of Delaware and on a telephonic confirmation from such Secretary of State.

          Insofar as the foregoing opinions relate to the validity, binding effect or enforceability of
any agreement or obligation of any Covered Company or the creation or perfection of any security
interest, we have assumed that (a) each Covered Company and each other party to such agreement or
obligation has satisfied those legal requirements that are applicable to it to the extent necessary
to make such agreement or obligation enforceable against it (except that no such assumption is made
as to any Covered Company regarding matters of the federal law of the United States of America, the
General Corporation Law of the State of Delaware or the law of the State of New York that in our
experience normally would be applicable to general business entities with respect to such Covered
Document), (b) such opinions are subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity and (c) with regard to
NNC and NNL, such opinions are subject to the effect of judicial application of foreign laws or
foreign governmental actions affecting creditor’s rights. In addition, certain of the remedial
provisions of the Security Agreement may be further limited or rendered unenforceable by other
applicable laws or judicially adopted principles which, however, in our judgment do not make the
remedies provided for therein (taken as a whole) inadequate for the practical realization of the
principal benefits purported to be afforded thereby (except for the economic consequence of
procedural or other delay).

          The opinions set forth above are subject to the following qualifications:

          (a) We express no opinion as to (i) Section 9.04 of the Credit Agreement or Section 4.07 of
the Guarantee Agreement insofar as it provides that any Person may exercise set-off or similar
rights and (ii) the effect of the law of any jurisdiction other than the State of New York wherein
any Lender may be located or wherein enforcement of any Covered Document may be sought that limits
the rates of interest legally chargeable or collectible.

          (b) With respect to the submission in any Covered Document to the jurisdiction of a United
States federal court sitting in the State of New York, we express no opinion as to the subject
matter jurisdiction of any such court to adjudicate any action relating to such Covered Document
where jurisdiction based on diversity of citizenship under 28 U.S.C. §1332 does not exist.

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 7

          (c) We have assumed that any assignments made by or among the Lenders of their rights and
obligations under the Credit Agreement will not contravene New York Judiciary Law Section 489
(which makes it a criminal offense to take an assignment of a debt obligation with the intent of
and for the purpose of bringing an action or proceeding thereon).

          (d) We express no opinion with respect to the enforceability of the restriction on assignment
contained in Section 9.06(a) of the Credit Agreement.

          (e) We express no opinion with respect to the enforceability of Section 2.01 of the Guarantee
Agreement to the effect the guarantors are liable as primary rather than secondary obligors.

          (f) The waiver of defenses contained in Section 2.02 of the Guarantee Agreement may be
ineffective to the extent that any such defense involves a matter of public policy in New York.

          The foregoing opinions are limited to the federal law of the United States of America, the
General Corporation Law of the State of Delaware and the law of the State of New York.

 

 

JPMorgan Chase Bank, N.A.

As Administrative Agent and Collateral Agent, et. al.

February 14, 2006

p. 8

          We are furnishing this opinion letter to each of you, as a Lender, and in the case of JPMorgan
Chase Bank, N.A., as Administrative Agent and Collateral Agent, solely for your benefit in your
capacity as such in connection with the transactions contemplated by the Covered Documents. This
opinion letter is not to be relied on by or furnished to any other person or used, circulated,
quoted or otherwise referred to for any other purpose. Notwithstanding the foregoing, a copy of
this opinion may be furnished to, and relied upon by, any transferee of a Lender’s rights and
obligations under the Credit Agreement properly transferred in accordance with the Credit
Agreement, and you or any such transferee may show this opinion to any governmental authority
pursuant to requirements of applicable law or regulations. The opinions expressed herein are
rendered on and as of the date hereof, and we assume no obligation to advise you or any such
transferee or governmental authority or any other person, or to make any investigations, as to any
legal developments or factual matters arising subsequent to the date hereof that might affect the
opinions expressed herein.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	CLEARY GOTTLIEB STEEN & HAMILTON LLP
	 
	 	 	 	 
	 

	 	By	 	/s/  Wanda J. Olson 
	 

	 	 	 	 
	 

	 	 	 	Wanda J. Olson, a Partner

 

 

SCHEDULE I

1. The Indenture, dated as of November 30, 1988, between NNL and The Toronto-Dominion Bank Trust
Company, as trustee, as amended from time to time.

2. The Indenture, dated as of February 15, 1996 (the “1996 Indenture”), among NNL, as guarantor,
the NNCC, as issuer, and The Bank of New York, as trustee, as amended from time to time.

3. The Indenture, dated as of December 15, 2000, among NNL, NNC and Deutsche Bank Trust Company
Americas, as successor to Citibank, N.A., as trustee, as amended from time to time.

4. The Indenture, dated as of August 15, 2001 (the “2001 Indenture”), among NNC, as issuer, NNL,
as guarantor, and Deutsche Bank Trust Company Americas, as successor to The Bankers Trust Company,
as trustee, as amended from time to time.

 

 

Exhibit D—Opinion of General Counsel-Corporate and Corporate Secretary of NNC

February 14, 2006

	 	 	 
	JPMorgan Chase Bank, N.A.

	 	JPMorgan Chase Bank, N.A.
	as Collateral Agent for the Secured Parties

	 	as Administrative Agent for the Lenders
	270 Park Avenue

	 	270 Park Avenue
	New York, NY 10017

	 	New York, NY 10017
	 
	 	 
	The Secured Parties under the Security

	 	The Lenders under the Credit Agreement
	Agreements referred to below

	 	referred to below

Ladies and Gentlemen:

          I am the General Counsel – Corporate and Corporate Secretary of Nortel Networks Corporation
(the “NNC”) and give this opinion pursuant to Article III, clause (i) of the Credit Agreement dated
as of February 14, 2006 (the “Credit Agreement”) among Nortel Networks Inc. (“NNI”), as Borrower,
the Lenders party thereto, JPMorgan Chase Bank, N.A., (“JPMorgan”) as Administrative Agent, J.P.
Morgan Securities Inc. and Citigroup Global Markets, Inc., as Joint Bookrunners and Joint Lead
Arrangers, Citicorp USA, Inc., as Syndication Agent, Royal Bank of Canada, as Documentation Agent,
and Export Development Canada, as Managing Agent.

          I have examined executed copies of:

	 	(a)	 	the Credit Agreement;

1

 

	 	(b)	 	the U.S. Security Agreement dated as of February 14, 2006 (the “U.S.
Security Agreement”) among NNI, JPMorgan Chase Bank, N.A., as Collateral Agent and
Export Development Canada (“EDC”), as provider of the EDC support facility;
	 
	 	(c)	 	the Guarantee Agreement dated as of February 14, 2006 among NNI, as
borrower and guarantor, Nortel Networks Limited (“NNL”), as guarantor, NNC, as
guarantor, and JPMorgan Chase Bank, N.A., as administrative agent;
	 
	 	(d)	 	the Canadian Security Agreement dated as of February 14, 2006 (together
with the U.S. Security Agreement, the “Security Agreements”) among NNC, NNL,
JPMorgan Chase Bank, N.A., as Collateral Agent and EDC, as provider of the EDC
support facility;
	 
	 	(e)	 	Deed of hypothec and issue of bonds entered into on February 14, 2006
before a notary by NNL in favour of JPMorgan Chase Bank, N.A., as fonde de pouvoir
for the holders of the bonds issued thereunder (the “NNL Hypothec”);
	 
	 	(f)	 	Deed of hypothec and issue of bonds entered into on February 14, 2006
before a notary by NNC in favour of JPMorgan Chase Bank, N.A., as fonde de pouvoir
for the holders of the bonds issued thereunder (the “NNC Hypothec”, and together
with the NNL Hypothec, the “Hypothecs” and individually a “Hypothec”);
	 
	 	(g)	 	Pledge agreement dated as of February 14, 2006 executed by and between
NNL and the Collateral Agent, in respect of the bond issued under the NNL Hypothec;
	 
	 	(h)	 	Pledge agreement dated as of February 14, 2006 executed by and between
NNC and the Collateral Agent , in respect of the bond issued under the NNC
Hypothec;
	 
	 	(i)	 	A $5,000,000,000 25% demand bond dated February 14, 2006 issued by NNL
in favour of the Collateral Agent (the “NNL Bond”);
	 
	 	(j)	 	A $5,000,000,000 25% demand bond dated February 14, 2006 issued by NNC
in favour of the Collateral Agent (the “NNC Bond”);
	 
	 	(k)	 	Delivery order dated February 14, 2006 executed by NNL in respect of
the NNL Bond; and
	 
	 	(l)	 	Delivery order dated February 14, 2006 executed by NNC in respect of
the NNC Bond.

     The documents referenced in clauses (a) through (l) above are collectively referred to herein
as the “Covered Documents.”

          I have also examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and considered such questions of
law as I have deemed necessary or advisable for purposes of this opinion.

2

 

          I am qualified to practice law solely in the Province of Ontario, Canada and accordingly
express no opinion as to any laws or matters governed by any laws other than the laws of the
Province of Ontario and the federal laws of Canada applicable therein (collectively, “Ontario
Law”).

          In rendering this opinion, I have assumed:

	 	(a)	 	the genuineness of all signatures (other than mine) whether on
originals or copies of the documents I have examined and the legal capacity at all
relevant times of all natural persons signing any such documents;
	 
	 	(b)	 	that all original documents reviewed by me are authentic;
	 
	 	(c)	 	that all copies of documents reviewed by me conform to the originals of
such documents;
	 
	 	(d)	 	that all certificates of public officials are accurate; and
	 
	 	(e)	 	that all information provided to me by all federal and provincial
government agencies and departments was correct on the currency dates thereof, and
that such information remains correct to the date hereof.

          No opinion is given with respect to (i) the enforceability of the Covered Documents and (ii)
whether the formal requirements of execution applicable in the Province of Quebec have been met
with respect to the execution of the Covered Documents listed in paragraphs (e) to (l) inclusively
above, to the extent that such requirements may be applicable.

          With respect to the opinion in paragraph 1 below, I have relied exclusively as to certain
matters of fact upon a certificate of compliance for each of NNC and NNL (collectively, the
“Corporations”) each dated February 14, 2006, issued by Industry Canada, a copy of which is
attached.

          Upon the basis of the foregoing, I am of the opinion that:

1. Each Corporation is a corporation validly existing under the Canada Business Corporations Act
and has not been dissolved.

2. Each Corporation has the corporate power and capacity to own or lease its properties and assets,
to carry on its business as it is currently being conducted and to authorize, execute and deliver
the Covered Documents to which it is a party and to exercise its rights and perform its obligations
thereunder.

3. Each Corporation has taken all necessary corporate action to authorize the execution, delivery
and performance by it of the Covered Documents.

4. The Covered Documents have been duly executed by each Corporation party thereto.

3

 

5. To the extent Ontario Law applies, the Covered Documents have been duly delivered by each
Corporation party thereto.

6. The execution and delivery of each of the Covered Documents by each Corporation party thereto
and the performance by such Corporation of its obligations thereunder do not and will not result in
any breach or default by such Corporation under:

	 	(a)	 	any provision of the constating documents or by-laws of such
Corporation; or
	 
	 	(b)	 	any statute or regulation of the Province of Ontario, or of Canada
applicable in Ontario, to which such Corporation is subject.

4

 

          I am furnishing this opinion letter to you, as a Lender and as a Secured Party, and in the
case of JPMorgan Chase Bank, N.A. as Administrative Agent and Collateral Agent, solely for your
benefit in your capacity as such in connection with the transactions contemplated by the Covered
Documents. This opinion letter is not to be relied on by or furnished to any other person or used,
circulated, quoted or otherwise referred to for any other purpose. Notwithstanding the foregoing,
a copy of this opinion may be furnished to, and relied upon by, any transferee of a Lender’s rights
and obligations under the Credit Agreement properly transferred in accordance with the Credit
Agreement, and you or any such transferee may show this opinion to any governmental authority
pursuant to requirements of applicable law or regulations. The opinions expressed herein are
rendered on and as of the date hereof, and I assume no obligation to advise you or any such
transferee or governmental authority or any other person, or to make any investigations, as to any
legal developments or factual matters arising subsequent to the date hereof that might affect the
opinions expressed herein.

	 	 	 
	 

	 	Very truly,
	 
	 	 
	 

	 	/s/  Gordon A. Davies 
	 

	 	 
	 

	 	Gordon A. Davies
	 

	 	General Counsel — Corporate and Corporate
Secretary

5

 

Exhibit E-1—Opinion of Special Canadian Counsel for the Credit Parties

February 14, 2006

JPMorgan Chase Bank, N.A

as Administrative Agent

under the Credit Agreement and the Lenders

from time to time party to the Credit Agreement

as each such term is hereinafter defined

270 Park Avenue

New York, NY 10017

Export Development Canada

as provider of the EDC Support Facility

referred to in the Canadian Security Agreement

as each such term is hereinafter defined

50 O’Connor Street, Suite 1100

Ottawa, ON K1A 0S6

Ladies and Gentlemen:

			
	Re:	 	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 thereto and
JPMorgan Chase Bank, N.A., as collateral agent, and Export Development Canada as provider of
the EDC Support Facility

        We have acted as special counsel to each of Nortel Networks Corporation and Nortel Networks
Inc. (collectively, the “Financing Parties” and individually, a “Financing Party”) in connection
with a Canadian Security Agreement dated as of February 14, 2006 (the “Canadian Security
Agreement”) among Nortel Networks Limited (“NNL”), Nortel Networks Corporation. (“NNC”) and
JPMorgan Chase Bank, as Collateral Agent for the Secured Parties (in such capacity, the “Collateral
Agent”) and Export Development Canada (“EDC”) as provider of the EDC Support Facility.

        This opinion is being delivered to you pursuant to section 3.01(j) of the Credit Agreement
dated as of February 14, 2006 among Nortel Networks Inc. (“NNI”), the lenders party thereto, and
JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). Unless otherwise
defined herein, all capitalized terms used herein have the respective meanings ascribed to them in
the Canadian Security Agreement.

 

 

	1.	 	Documentation

          In acting as such counsel, we have participated in the preparation of the Canadian Security
Agreement.

          In addition, we have reviewed the Credit Agreement, the Guarantee Agreement dated as of
February 14, 2006 (the “Guarantee Agreement”) among NNI, as borrower and guarantor, NNL, as
guarantor, NNC, as guarantor, JPMorgan Chase Bank, N.A., as administrative agent, and EDC, as
provider of the EDC Support Facility and the U.S. Security Agreement dated as of February 14, 2006
(the “U.S. Security Agreement”) among NNI, the subsidiary lien grantors from time to time party
thereto, JPMorgan Chase Bank, N.A., as collateral agent and EDC, as provider of the EDC Support
Facility. The Credit Agreement, the Guarantee Agreement and the U.S. Security Agreement are
referred to collectively as the “Foreign Law Agreements” and the Foreign Law Agreements and the
Canadian Security Agreement are referred to collectively as the “Credit Documents”.

	2.	 	Jurisdiction and Effective Date

          We are qualified to practice law only in the Province of Ontario. We express no opinion
herein as to any laws, or any other matters governed by any laws, other than the laws of the
Province of Ontario and the federal laws of Canada applicable therein in force on the date hereof
(“Ontario Law”). Without limiting the generality of the immediately preceding sentence, we express
no opinion with respect to the laws of any other jurisdiction to the extent that those laws may
govern the validity, perfection, effect of perfection or non-perfection or enforcement of the
security interest created by the Canadian Security Agreement as a result of the application of
Ontario conflict of laws rules, including, without limitation, sections 5 to 8 of the Personal
Property Security Act (Ontario) (“PPSA”).

	3.	 	Scope of Examinations

          We have considered such questions of law and examined such public and corporate records,
certificates and other documents and conducted such other examinations as we have considered
necessary, or appropriate to enable us to express the opinions expressed herein.

          We have also relied upon searches that we conducted, or caused to be conducted, in the
Province of Ontario as of the dates specified in Schedule “A” hereto, for registrations, filings or
recordings made in offices of public record listed in Schedule “A” (the “Searches”). The searches
were conducted against the current names of each of the Financing Parties (including, in each case,
both the English and French versions, if any) specified in Schedule “A”. Our searches revealed
that none of the Financing Parties had names other than their current names since May 1, 2000. The
results of the Searches are set out in Schedule “A”.

          We have registered financing statements under the PPSA in connection with the Canadian
Security Agreement. A summary of the information contained in the verification statements issued
in respect of such registrations is set out in Schedule “B” hereto.

2

 

	4.	 	Assumptions and Reliances

          For the purposes of the opinions herein expressed, we have, with your permission and without
independent investigation or verification:

	 	(a)	 	assumed the genuineness of all signatures (whether on originals or copies of
documents) and the authority of all persons signing documents examined by us, the legal
capacity at all relevant times of any natural persons signing any documents, the
authenticity of all documents and instruments submitted to us as originals, the
conformity to authentic originals of all documents submitted to us as notarial,
certified, conformed, photostatic, facsimile or electronically reproduced copies
thereof, the authenticity of the originals of such copies and facsimiles and the
accuracy of all certificates of public officials and corporate officers;
	 
	 	(b)	 	assumed the accuracy and completeness of and have assumed the continued
accuracy on the date hereof, and have relied on the indices and filing system
maintained at the public offices where the public searches referred to in Schedule “A”
were conducted;
	 
	 	(c)	 	assumed the accuracy as to factual matters of each document we have reviewed
(including, without limitation, the accuracy of the representations and warranties in
the Canadian Security Agreement and the Credit Agreement);
	 
	 	(d)	 	assumed that each of the Financing Parties is a corporation validly existing
under the laws of its jurisdiction of incorporation, amalgamation, merger or
continuance, as applicable, and has the corporate power and authority to authorize,
execute and deliver the Canadian Security Agreement and to exercise its rights and
perform its obligations thereunder;
	 
	 	(e)	 	assumed that the Canadian Security Agreement has been duly authorized, executed
and delivered by the parties or signatories thereto;
	 
	 	(f)	 	assumed that the Canadian Security Agreement is a legal, valid and binding
obligation of the Collateral Agent, EDC and each of the Secured Parties enforceable
against such persons in accordance with its terms;
	 
	 	(g)	 	assumed that each of the Secured Obligations (as that term is defined in the
Canadian Security Agreement) constitutes a legal, valid and binding obligation of each
of the parties thereto, enforceable against such parties in accordance with their
terms;
	 
	 	(h)	 	assumed that value has been given by the Collateral Agent or one or more
Secured Parties to the Financing Parties and that the Financing Parties have rights in
the personal property described in the Canadian Security Agreement (the “Collateral”);

3

 

	 	(i)	 	assumed that the execution and delivery of the Canadian Security Agreement by
each of the Financing Parties and the performance by each of the Financing Parties of
its obligations thereunder does not constitute or result in a violation or a breach of
or a default under (a) its articles or by-laws or (b) any law, rule or regulation
having force of law applicable in the Province of Ontario; and
	 
	 	(j)	 	assumed, for the purposes of the opinion expressed in paragraph 5(h), to the
extent such opinion relates to the Foreign Law Agreements, that the laws of the State
of New York are identical to Ontario Law.

	5.	 	Opinions

       Based on the foregoing and subject to the qualifications hereinafter set forth, we are of the
opinion that:

	 	(a)	 	The Canadian Security Agreement constitutes a legal, valid and binding
obligation of each Financing Party, enforceable against such Financing Party in
accordance with its terms.
	 
	 	(b)	 	The Canadian Security Agreement creates a security interest in favour of the
Collateral Agent for its benefit and the benefit of the Secured Parties in the
Collateral to which the PPSA applies to secure the payment and performance of the
obligations described therein as being secured thereby.
	 
	 	(c)	 	Registration has been made in all public offices provided for under the laws of
the Province of Ontario or the federal laws of Canada applicable therein where such
registrations are necessary to protect, preserve or perfect the security interest
created by the Canadian Security Agreement in the Collateral in favour of the
Collateral Agent for the benefit of the Secured Parties.
	 
	 	(d)	 	Assuming possession by the Collateral Agent of the Pledged Certificated
Securities and the Pledged Uncertificated Securities listed on Schedule “C” hereto
(collectively, the “Pledged Securities”) in the Province of Ontario on the date hereof
the PPSA provides that the laws of the Province of Ontario will govern the perfection
and effect of perfection or non-perfection of the security interest therein in favour
of the Collateral Agent.
	 
	 	(e)	 	Assuming possession by the Collateral Agent of the Pledged Securities in the
Province of Ontario on the date hereof the Collateral Agent has a security interest in
the Pledged Securities that is perfected by possession, provided that possession of the
Pledged Securities as collateral is retained by the Collateral Agent or a person on its
behalf other than the Financing Parties or their agent.
	 
	 	(f)	 	Provided that the Collateral Agent (i) has acted in good faith, (ii) has had
no notice of any adverse claim affecting the Pledged Securities and (iii) has
possession of the Pledged Securities in the Province of Ontario, the security interest
created by the Canadian Security Agreement in the Pledged Securities in favour of the
Collateral Agent for its benefit and the benefit of the Secured

4

 

	 	 	 	Parties has priority over any other security interest in the Pledged Securities
perfected by registration or temporarily perfected under the PPSA.
	 
	 	(g)	 	The Searches disclosed no registration which is sufficient to perfect a
security interest in the Collateral under the PPSA other than the registrations
identified in Schedule “A”.
	 
	 	(h)	 	The execution, delivery and performance by each of NNL, NNI and NNC of each of
the Credit Documents to which it is a party do not breach the Amended and Restated
Master Facility Agreement dated October 24, 2005 between NNL and EDC (the “EDC
Agreement”). The review undertaken for the purposes of providing this opinion has been
limited to identifying breaches of the EDC Agreement that would be apparent to us as
legal professionals and no further steps, such as the making of calculations or the
testing of financial or other covenants, have been taken.
	 
	 	(i)	 	The choice of the State of New York law (the “Foreign Law”) as the governing
law of each of the Foreign Law Agreements will be upheld as a valid choice of law by
courts of competent jurisdiction in the Province of Ontario (“Ontario Courts”),
provided that such choice of law is bona fide (in the sense that it was not made with a
view to avoiding the consequences of the law of any other jurisdiction) and further
provided that it is not contrary to public policy, as that term is understood under
Ontario Law (“Public Policy”). We have no reason to believe that the choice of Foreign
Law in this context would not be bona fide or would be contrary to Public Policy.
	 
	 	(j)	 	In a proceeding brought before an Ontario Court for the enforcement of any of
the Foreign Law Agreements, the Ontario Court would apply the Foreign Law, in
accordance with the parties’ choice of the Foreign Law as the governing law of the
Guarantee Agreement, to all issues which, under Ontario Law, are to be determined in
accordance with the chosen law of the contract, provided that:

	 	(i)	 	the parties’ choice of the Foreign Law is bona fide and
is not contrary to Public Policy; and
	 
	 	(ii)	 	in any such proceeding, and notwithstanding the parties’
choice of law, the Ontario Court:

	 	(1)	 	will not take judicial notice of the provisions
of the Foreign Law but will only apply such provisions if they are
pleaded and proven by expert testimony;
	 
	 	(2)	 	will apply Ontario Law that under such law
would be characterized as procedural and will not apply any Foreign Law
that under Ontario Law would be characterized as procedural;

5

 

	 	(3)	 	will apply provisions of Ontario Law that have
overriding effect;
	 
	 	(4)	 	will not apply the Foreign Law if such
application would be characterized under Ontario Law as the direct or
indirect enforcement of a foreign revenue, expropriatory or penal law
or if its application would be contrary to Public Policy; and
	 
	 	(5)	 	will not enforce the performance of any
obligation that is illegal under the laws of any jurisdiction in which
the obligation is to be performed.

	 	(k)	 	An Ontario Court would give a judgment based upon a final and conclusive in
personam judgment of a United States District Court for the Southern District of New
York and of any New York State Court sitting in New York City (collectively, “Foreign
Court”) for a sum certain, obtained against NNC or NNL with respect to a claim arising
out of the any of the Foreign Law Agreements (a “Foreign Judgment”), without
reconsideration of the merits:

	 	(i)	 	provided that:

	 	(1)	 	the Foreign Court had jurisdiction over the
subject matter and the parties to the applicable Foreign Law Agreement
as recognized by the Ontario Court and the Foreign Court;
	 
	 	(2)	 	no new admissible evidence, right or defence
relevant to the action accrues or is discovered prior to the rendering
of a judgment by the Ontario Court;
	 
	 	(3)	 	an action to enforce the Foreign Judgment is
commenced in the Ontario Court within any applicable limitation period;
	 
	 	(4)	 	the Ontario Court has discretion to stay or
decline to hear an action on the Foreign Judgment if the Foreign
Judgment is under appeal, or there is another subsisting judgment in
any jurisdiction relating to the same cause of action; and
	 
	 	(5)	 	the Ontario Court will render judgment only in
Canadian dollars.

	 	(ii)	 	subject to the following defences:

	 	(1)	 	the Foreign Judgment was obtained by fraud or
in a manner contrary to the principles of natural justice;
	 
	 	(2)	 	the Foreign Judgment is for a claim which under
Ontario Law would be characterized as based on a foreign revenue,
expropriatory or penal law;

6

 

	 	(3)	 	the Foreign Judgment is contrary to Public
Policy or to an order made by the Attorney General of Canada under the
Foreign Extraterritorial Measures Act (Canada) or by the Competition
Tribunal under the Competition Act (Canada) in respect of certain
judgments referred to therein; or
	 
	 	(4)	 	the Foreign Judgment has been satisfied or is
void or voidable under Foreign Law.

	 	(l)	 	The submission to the non-exclusive jurisdiction of the Foreign Court pursuant
to the Foreign Law Agreements would be recognized by an Ontario Court as conferring
jurisdiction on the Foreign Court.

	6.	 	Qualifications

      The opinions herein set forth are subject to the following qualifications:

	 	(a)	 	The enforceability of the Canadian Security Agreement is subject to or may be
limited by bankruptcy, insolvency, arrangement, reorganization, winding-up, moratorium
or other similar laws of general application relating to or affecting the enforcement
of creditors’ rights generally.
	 
	 	(b)	 	The enforceability of the Canadian Security Agreement is subject to general
equitable principles, including the fact that the availability of equitable remedies,
such as injunctive relief and specific performance, are in the discretion of the court.
	 
	 	(c)	 	No opinion is expressed regarding the enforceability of any provision contained
in the Canadian Security Agreement which purports to provide that any portion thereof
which is unenforceable may be severed without affecting the enforceability of the
remaining provisions.
	 
	 	(d)	 	The Currency Act (Canada) precludes the courts in Canada from awarding a
monetary judgment in any currency other than Canadian dollars.
	 
	 	(e)	 	The recoverability of costs and expenses may be limited to those a court
considers to be reasonably incurred and the court has the discretion to determine by
whom and to what extent costs and expenses incidental to court proceedings shall be
paid.
	 
	 	(f)	 	Rights of indemnification may be limited by applicable law.
	 
	 	(g)	 	Any requirement to pay interest at a greater rate after than before default may
not be enforceable if it is construed by a court to constitute a penalty or is contrary
to the Interest Act (Canada).
	 
	 	(h)	 	The Collateral Agent and the Secured Parties may be required to demand payment
of the applicable Financing Party and to give a reasonable time to repay following a
demand for payment prior to taking any action to enforce

7

 

	 	 	 	rights of repayment or before exercising any of the rights and remedies expressed to
be exercisable by the Collateral Agent and the Secured Parties in the Canadian
Security Agreement.
	 
	 	(i)	 	We express no opinion as to the enforceability of any provision of the Canadian
Security Agreement:

	 	(i)	 	which purports to waive any statutory rights;
	 
	 	(ii)	 	which purports to waive any or all defences which might
be available to, or constitute a discharge of the liability of, any
Financing Party;
	 
	 	(iii)	 	to the extent it purports to exculpate the Collateral
Agent or any Secured Party from liability in respect of acts or omissions
which may be illegal, fraudulent or involve gross negligence or wilful
misconduct; and
	 
	 	(iv)	 	which states that modifications, amendments or waivers
are not binding unless in writing.

	 	(j)	 	The PPSA imposes certain obligations on secured creditors which cannot be
varied by contract. The PPSA may also affect the enforcement of certain rights and
remedies under the Canadian Security Agreement to the extent that those rights and
remedies are inconsistent with or contrary to certain provisions of the PPSA including,
without limitation, Sections 16, 17 and 39 and Part V of the PPSA.
	 
	 	(k)	 	Changes in a debtor’s name or the transfer by it to a third party of any of its
personal property would require timely registration of a financing change statement
properly completed in the manner prescribed under the PPSA to preserve perfection of
the security interests therein.
	 
	 	(l)	 	Any security interests hereafter arising in proceeds of collateral that are
motor vehicles or that may hereafter be or become a fixture or an accession or that may
be commingled with the other goods will be subject to the rights of certain claimants
in the circumstances prescribed in the PPSA, unless specific notifications or
registrations are made.
	 
	 	(m)	 	With respect to the opinions expressed in paragraphs 5(d) to 5(f) hereof,
possession of an uncertificated security is taken only where the pledge and security
interest are effected by the making of an appropriate entry in the records of the
clearing agency or custodian of such uncertificated securities.
	 
	 	(n)	 	No opinion is expressed with respect to the existence of, or right, title or
interest of the Financing Parties, to any property.
	 
	 	(o)	 	Except as specifically expressed in paragraph 5(f) hereof, we express no
opinion regarding the priority of the security interest created by the Canadian
Security Agreement.

8

 

	 	(p)	 	No opinion is expressed regarding the creation, validity, enforceability or
perfection of any security interests or other interest expressed to be created by or
under the Canadian Security Agreement in any property of the Financing Parties or any
proceeds of such property that are not identifiable or traceable or in any property to
which the PPSA does not apply.
	 
	 	(q)	 	A mortgage, charge, assignment or security interest in any property which is in
the nature of a trade-mark, copyright, patent, licence, approval, privilege, franchise,
permit, lease, instrument, contract or agreement, or in any property subject to the
Financial Administration Act (Canada), (“Special Property”) may not be valid, binding
or enforceable because of the terms of the Special Property or any statute, rule or
regulation requiring a consent, approval or other authorization or registration which
has not been given or made.
	 
	 	(r)	 	Enforceability of the Canadian Security Agreement will be subject to the
limitations contained in the Limitations Act, 2002 (Ontario) and we express no opinion
as to whether a court may find any provision of the Canadian Security Agreement to be
enforceable on the basis that it is an attempt to vary or exclude a limitation under
that Act.
	 
	 	(s)	 	We express no opinion as to whether it may be necessary, in connection with the
enforcement of the Canadian Security Agreement, for any person proposing to take
possession of, acquire, own or operate all or any part of the Collateral, to obtain any
licence, franchise, permit, consent, approval, registration or other authorization or
exemption.
	 
	 	(t)	 	A receiver, a manager or a receiver and manager appointed pursuant to the
Canadian Security Agreement may, for certain purposes, be treated as the agent of the
creditor and not solely as the agent of the debtor and the creditor may not be deemed
to be acting as the agent and attorney of the debtor in making such appointment,
notwithstanding any provision in the Canadian Security Agreement to the contrary.

       This opinion is provided solely for the benefit of the parties to whom it is addressed and
their respective successors and assigns, relates exclusively to the transactions outlined above and
may not be used or relied upon by any such party for any other purpose or relied upon by any other
person for any purpose whatsoever without our prior written consent.

Yours truly,

9

 

SCHEDULE “A”

PERSONAL PROPERTY SEARCH RESULTS

The following sets forth the searches made in the records of the central office of the Ontario
Personal Property Security Registration System.

	1.	 	NORTEL NETWORKS LIMITED/CORPORATION NORTEL NETWORKS LIMITEE
	 
	A.	 	PPSA Searches

The registrations annexed hereto as Appendix B-1 were found in searches, current as at February 9,
2006, of the names “NORTEL NETWORKS LIMITED”, “CORPORATION NORTEL NETWORKS LIMITEE”, “NORTEL
NETWORKS LIMITED/CORPORATION NORTEL NETWORKS LIMITEE” and “CORPORATION NORTEL NETWORKS
LIMITEE/NORTEL NETWORKS LIMITED”.

	B.	 	Bankruptcy Searches
	 
	(a)	 	Our search of the records for the Superintendent of Bankruptcy (Official Receiver) for all
districts and divisions in Canada disclosed no record involving the name “NORTEL NETWORKS
LIMITED”, “NORTEL NETWORKS LIMITED/CORPORATION NORTEL NETWORKS LIMITEE”, “CORPORATION NORTEL
NETWORKS LIMITEE” and “CORPORATION NORTEL NETWORKS LIMITEE/NORTEL NETWORKS LIMITED” as of
January 27, 2006.
	 
	(b)	 	Bankruptcy search at the office of the Registrar in Bankruptcy of the Bankruptcy/Commercial
Courts (Toronto Office) (current to January 31, 2006)*:

	 	 	 
	File Number:

	 	01-CL-004013
	 
	 	 
	Date Filed:

	 	02/06/2001
	 
	 	 
	Bankrupt/Applicant/Petitioner:

	 	Nortel Networks Ltd.
	Type:

	 	Applicant
	 
	 	 
	Respondents:

	 	Connect Communications Inc.
	 

	 	(Plus Group Respondents)
	Type:

	 	Respondents
	 
	 	 
	Case Type:

	 	Civil — Bankruptcy Act

	C.	 	Bank Act

Notice of Intention to Give Security Under The Bank Act (current to February 1, 2006):

Nil.

 

 

	D.	 	Execution Searches

Search for registrations under the Executions Act (Sheriff: Land Titles, 66 Toronto, LRO #43
Brampton, LRO#4 Ottawa, LRO #33 Middlesex and LRO #21 Hastings) with a Certificate date of February
1, 2006:

Nil.

	2.	 	NORTEL NETWORKS CORPORATION/CORPORATION NORTEL NETWORKS
	 
	A.	 	PPSA Searches

The registrations annexed hereto as Appendix B-2 were found in searches, current as at February 9,
2006, of the names “NORTEL NETWORKS CORPORATION”, “CORPORATION NORTEL NETWORKS”, “NORTEL NETWORKS
CORPORATION/CORPORATION NORTEL NETWORKS” and “CORPORATION NORTEL NETWORKS/NORTEL NETWORKS
CORPORATION”.

	B.	 	Bankruptcy Searches
	 
	(a)	 	Our search of the records for the Superintendent of Bankruptcy (Official Receiver) for all
districts and divisions in Canada disclosed no record involving the name “NORTEL NETWORKS
CORPORATION”, “NORTEL NETWORKS CORPORATION/CORPORATION NORTEL NETWORKS”, “CORPORATION NORTEL
NETWORKS” and “CORPORATION NORTEL NETWORKS/NORTEL NETWORKS CORPORATION” as of January 27,
2006.
	 
	(b)	 	Bankruptcy search at the office of the Registrar in Bankruptcy of the Bankruptcy/Commercial
Courts (Toronto Office) (current to January 31, 2006)*:

	 	 	 
	File Number:

	 	00-CL-003687
	 
	 	 
	Date Filed:

	 	03/13/2000
	 
	 	 
	Bankrupt/Applicant/Petitioner:

	 	Nortel Networks Corporation
	 

	 	BCE Inc.
	Type:

	 	Applicants
	 
	 	 
	Case Type:

	 	Civil — Bankruptcy or Insolvency
	 
	 	 
	 
	 	 
	File Number:

	 	00-CL-003757
	 
	 	 
	Date Filed:

	 	03/23/2000
	 
	 	 
	Bankrupt/Applicant/Petitioner:

	 	Nortel Networks Corp. (Plus Group
	 

	 	Applicants)
	Type:

	 	Applicants
	 
	 	 
	Case Type:

	 	Civil — Bankruptcy or Insolvency
	 
	 	 

2

 

	C.	 	Bank Act

Notice of Intention to Give Security Under The Bank Act (current to February 1, 2006):

Nil.

	D.	 	Execution Searches

Search for registrations under the Executions Act (Sheriff: Land Titles, 66 Toronto and LRO #43
Brampton) with a Certificate date of February 1, 2006:

Nil.

	3.	 	NORTEL NETWORKS INC.
	 
	A.	 	PPSA Searches

The registrations annexed hereto as Appendix B-3 were found in searches, current as at February 9,
2006, of the name “NORTEL NETWORKS INC.”.

	B.	 	Bankruptcy Searches
	 
	(a)	 	Our search of the records for the Superintendent of Bankruptcy (Official Receiver) for all
districts and divisions in Canada disclosed no record involving the name “NORTEL NETWORKS
INC.” as of January 27, 2006.
	 
	(b)	 	Bankruptcy search at the office of the Registrar in Bankruptcy of the Bankruptcy/Commercial
Courts (Toronto Office) (current to January 31, 2006)*:
	 
	 	 	Nil.
	 
	C.	 	Bank Act

Notice of Intention to Give Security Under The Bank Act (current to February 1, 2006):

Nil.

	D.	 	Execution Searches

Search for registrations under the Executions Act (Sheriff: Land Titles, 66 Toronto, and LRO#4
Ottawa) with a Certificate date of February 1, 2006:

Nil.

*Note: Due to processing delays at the Superior Court of Justice (Toronto), search results
are not current to the date the search was conducted and may be 3-6 weeks behind.

3

 

APPENDIX B-1

NORTEL NETWORKS LIMITED/CORPORATION NORTEL NETWORKS LIMITEE

NORTEL NETWORKS LIMITED

CORPORATION NORTEL NETWORKS LIMITEE

CORPORATION NORTEL NETWORKS LIMITEE/NORTEL NETWORKS LIMITED/

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	(1)

	 	Nortel

Networks

Limited/Corporation

Nortel Networks

Limitee Nortel Networks Limited

Corporation Nortel

Networks Limitee

Corporation Nortel Networks

Limitee/Nortel

Networks Limited
	 	JPMorgan Chase
Bank, N.A., as
Collateral Agent
	 	Inventory,
Equipment,
Accounts, Other and
Motor Vehicle
Included
	 	 	 	622623879
20060209
1226 1862
5243
(3 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(2)

	 	Nortel Networks

Corporation/Corporation Nortel Networks

Nortel Networks Corporation

Corporation Nortel Networks

Corporation Nortel Networks/Nortel Networks Corporation
	 	JPMorgan Chase
Bank, N.A., as
Collateral Agent
	 	Inventory,
Equipment,
Accounts, Other and
Motor Vehicle
Included
	 	 	 	622623888
20060209
1226 1862
5244
(3 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(3)

	 	Nortel Networks Limited

Nortel Networks

Limited/Corporation

Nortel Networks Limitee

Corporation Nortel

	 	GE Capital Canada
Leasing Services
Inc.
	 	Inventory,
Equipment, Accounts
and Other
	 	Without limitation,
one (1) 1996
Canadian Challenger
604 aircraft
bearing Canadian
registration mark
C-FNNT and airframe
manufacturer??s
[sic] serial number
5317, together with
two (2) general
	 	621765072
20060105
1032
5064 0901
(5 years)

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	Networks Limitee

	 	 	 	 	 	 	 	electric model
CF34-3B engines
bearing
manufacturer??s[sic]
serial numbers
872050 and 872048,
and any airframe
replacing the
foregoing aircraft,
or any other engine
from time to time
attached to such
airframe (including
any engine
replacing the
foregoing engines),
and all parts,
accessories,
appliances,
appurtenances,
components,
furnishings,
instruments,
modules,
navigational and
communications
equipment and all
other goods,
tangible personal
property and other
equipment of
whatever nature
(the ??Parts??)
[sic] that may from
time to time be
incorporated or
installed in or
attached to the
foregoing airframe
or engines, and any
and all parts
removed from the
foregoing airframe
or engines
(collectively, the
??Aircraft??) [sic]
and all records,
logs, maintenance
records, manuals,
technical data,
training aids,
computer software
and other materials
relating to the
aircraft, and any
property
substituted for any
of the foregoing.
This registration,
and this note,
refer to original
file number
866304369 which was
discharged in
error. File Number
866304369 consisted
of?[sic] initial
registration number
20001003 1644 9065
2669, amended by
registration number
20020626 1132 1862
4427, (further
amended by 20041126
1559 1862 8241,)
and accidentally
discharged by
registration number
20051129 1513 5064
0440	 	 

2

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	(4)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel Networks

Limitee
	 	General Electric
Canada Equipment
Finance G.P.
	 	Inventory,
Equipment, Accounts
and Other
	 	One (1) 1990
Canadair Challenger
601-3A/ER bearing
Canadian
registration mark
C-FNNS and airframe
manufacturer??s
[sic] serial number
5068 together with
two engines model
general electric
CF-34-3A bearing
manufacturer??s[sic]
serial numbers
350381 and 350384
and any engine
replacing any of
the foregoing
engines and
together with all
parts, accessories,
appliances,
appurtenances,
components,
furnishings,
instruments,
modules,
navigational and
communications
equipment and other
equipment
incorporated or
installed in or
attached to the
foregoing airframe
or engines, and all
records, logs,
manuals, technical
data, computer
software and other
materials relating
to the aircraft,
airframe or any
engine, and any
property
substituted for any
of the foregoing.
This registration,
and this note,
refer to original
file number
833549544 which was
discharged in
error. File Number
833549544 consisted
of — initial
registration 970818
1459 1081 2363,
amended by
registration number
990512 1641 9065
9168, (further
amended by 20041119
1005 1862 7733,
20000718 1433 9065
0219,) and
accidentally
discharged by
registration number
20051129 1517 5064
0443
	 	621765117
20060105
1036
5064 0902
(4 years)

3

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	(5)

	 	Nortel Networks

Corporation
	 	GE Canada Leasing

Services Company
	 	Equipment and Other
	 	Furniture and
Equipment as
described in Lease
Schedule #03001903
together with all
proceeds thereof.
This registration,
and this note,
refer to original
file number
868869972 which was
discharged in
error. File Number
868869972 consisted
of – initial
registration
20010108 1044 7029
4128, amended by
registration number
20020307 1220 5064
2320 and
accidentally
discharged by
registration number
20051129 1524 5064
0449
	 	621765153
20060105
1038
5064 0903
(2 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(6)

	 	Nortel Networks

Corporation
	 	GE Canada Leasing

Services Company
	 	Equipment and Other
	 	Furniture and
Equipment as
described in Lease
Schedule #00135867
together with all
proceeds thereof.
This registration,
and this note,
refer to original
file number
867325014 which was
discharged in
error. File Number
867325014 consisted
of – initial
registration
20001107 1057 7029
2770, amended by
registration number
20020307 1451 5064
2345 and
accidentally
discharged by
registration number
20051129 1525 5064
0450
	 	621765207
20060105
1043
5064 0904
(2 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(7)

	 	Nortel Networks Corporation

Nortel Networks

Corporation/Corporation Nortel Networks

	 	GE Capital
Technology Services
Inc.
GE Capital Services
Technologiques Inc.
	 	Equipment and Other
	 	All property leased
by Secured Party to
Debtor from time to
time. This
registration, and
this note, refer to
original file
number 822334581
which was
	 	621747648
20060104
1716
5064 0899
(1 year)

4

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 
	 	Corporation Nortel

Networks
 	 	 	 	 	 	discharged on error. File Number
822334581 consisted of?[sic] initial registration number 960531 1902
1529 0956, amended by registration number 19990714 1039 1529 3522,
(further amended by 19990719 1750 1531 8399), and accidentally
discharged by registration number 20051129 1510 5064 0438 	 	 
	 
	(8)

	 	Nortel

Networks

Limited/Corporation

Nortel Networks

Limitee
	 	GE Capital Leasing
Services Inc.
	 	Inventory,
Equipment,
Accounts, Other and
Motor Vehicle
Included
	 	All items set forth
in Mellon Bank of
Canada Master Lease
Agreement and Lease
Schedules,
discharge in
eror[sic] on
December 13, 2005,
by Registration
number 20051213
1708 5064 0642
original file
number 894233151
was registered on
May 12, 2003 as
registration number
20030512 1035 9065
7664
	 	621670779
20051230
1416
5064 0875
(1 year)
	 
	 	 	 	 	 	 	 	 	 	 
	(9)

	 	Nortel

Networks

Corporation
	 	GE Canada Leasing

Services Company
	 	Equipment and Other
	 	Furniture and
Equipment as
described in Lease
Schedule #00135570
together with all
proceeds thereof.
Discharged in error
on November 29,
2005 by
registration number
20051129 1520 6054
0445, original file
number 610462944
was registered on
November 9, 2004 as
registration number
20041109 1241 5064
7125
	 	621670896
20051230
1428
5064 0877
(2 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(10)

	 	Nortel

Networks Limited
	 	Hewlett-Packard

Financial Services

Canada Company
	 	Equipment and Other
	 	Master Lease. Any
and all Equipment,
tangible and
intangible, leased
pursuant to
schedules under
Master Lease
Agreement No.
100691 dated and
any proceeds
therefrom.
	 	621392193
20051216
1433
8077 7775
(5 years)
as amended by
20051229 1156
8077 8794 to add general

5

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	(11)

	 	Nortel
Networks
Corporation
	 	GE Capital Canada
Leasing Services
Inc.
	 	Equipment and Other
	 	Furniture and
equipment ad
described in
equipment schedule
#03002385 together
with all proceeds
thereof. Original
file number
870423318 was
discharged in error
on September 28,
2005
	 	619269174
20050928 1633 5064
9500
(5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(12)

	 	Nortel
Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel Networks

Limitee
Corporation Nortel
Networks
Limitee/Nortel

Networks Limited
	 	Fortress Credit
Corp.
	 	Equipment, Accounts
and Other
	 	All of the goods,
furniture,
fixtures, software,
equipment, and
other tangible and
intangible personal
property now or
hereafter leased by
Insight
Investments, Corp.,
as lessor, to
Nortel Networks
Limited, as lessee,
wherever located,
under master lease
agreement no.
04-139, lease order
no. 5, including,
but not limited to
software,
maintenance and
support, together
with all repairs,
replacements,
substitutions,
additions,
attachments,
accessions,
modifications,
updates, revisions,
new versions,
enhancements, and
accessories, all
documentation and
records relating
thereto, and all
proceeds thereof.
	 	611591247
20041223 1118 1590
2103
(3 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(13)

	 	Nortel
Networks

Corporation
	 	ARI Financial
Services Inc.
	 	Equipment, Other
and Motor Vehicle
Included
	 	This is a
re-registration of
registration number
19990721182515310696, reference file
number 853259346,
made pursuant to
section 30(6) of
the Personal
Property Security
Act
	 	608419467
20040824 1951 1531
7185 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(14)

	 	Nortel
Networks

Limited/Corporation

Nortel Networks
Limitee
	 	IKON Office
Solutions Inc.
	 	Equipment and Other
	 	 	 	DISCHARGED

607867974

20040804 1453 1530 2954 (4

6

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	 	 	 	 	 	 	years)

as discharged by

20051222 1455 1530 7573
	 
	 	 	 	 	 	 	 	 	 	 
	(15)

	 	Nortel

Networks Limited
	 	Insight
Investments, Corp.
Fortress Credit
Corp.
	 	Inventory,
Equipment, Accounts
and Other
	 	Master Lease
Agreement No.
04-139 Lease Order
No. 2
	 	607115907
20040708 1317 5061
4429 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(16)

	 	Nortel

Networks Limited

Nortel Networks

Limited/Corporation

Nortel Networks

Limitee

Corporation Nortel

Networks

Limitee/Nortel

Networks Limited
	 	Drawbridge Special

Opportunities Fund

LP
	 	Inventory,
Equipment, Accounts
and Other
	 	All of the goods,
furniture,
fixtures,
equipment, and
other tangible and
intangible and
other personal
property now or
hereafter leased by
lessor to lessee,
wherever located,
under Master Lease
Agreement No.
04-139, Lease Order
No.4, plus all
replacement parts,
substitutions,
additions,
attachments,
modifications,
updates, revisions,
new versions,
enhancements,
accessories and the
proceeds thereof.
	 	607064328
20040707 0912 5061
4422 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040714 1734 5061 4438
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040820 1706 1862 1309
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040903 1642 1862 2625
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040920 1149 1590 7415
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040922 1502 1590 7537

7

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	(17)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel Networks

Limitee

Corporation Nortel

Networks

Limitee/Nortel

Networks Limited
	 	Fortress Credit
Corp.
	 	Inventory,
Equipment, Accounts
and Other
	 	All of the goods,
furniture,
fixtures,
equipment, and
other tangible and
intangible and
other personal
property now or
hereafter leased by
Lessor to Lessee,
wherever located,
under Master Lease
Agreement No.
04-139, Lease Order
No. 1, plus all
replacement parts,
substitutions,
additions,
attachments,
modifications,
updates, revisions,
new versions,
enhancements,
accessories and the
proceeds thereof.
	 	607064742
20040707 1019 5061
4423 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040714 1728 5061 4437
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040916 1559 1590 7337
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040920 1147 1590 7413
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040922 1500 1590 7532
	 
	 	 	 	 	 	 	 	 	 	 
	(18)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel Networks

Limitee

Corporation Nortel

Networks

Limitee/Nortel

Networks Limited
	 	Fortress Credit
Corp.
Drawbridge Special
Opportunities Fund,
LP
	 	Inventory,
Equipment, Accounts
and Other
	 	All of the goods,
furniture,
fixtures,
equipment, and
other tangible and
intangible and
other personal
property now or
hereafter leased by
Lessor to Lessee,
wherever located,
under Master Lease
Agreement No.
04-139, Lease Order
No. 2, plus all
replacement parts,
substitutions,
additions,
attachments,
modifications,
updates, revisions,
new versions,
enhancements,
	 	607086972
20040707 1534 5061
4424 (5 years)

8

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	 	 	 	 	accessories and the
proceeds thereof.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040714 1721 5061 4436
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040916 1600 1590 7338
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040920 1148 1590 7414
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	as amended by

20040922 1501 1590 7533
	 
	 	 	 	 	 	 	 	 	 	 
	(19)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee
	 	ABN AMRO Bank N.V.
Canada Branch
	 	Accounts and Other
	 	 	 	602995239
20040210 1159 1862
0353 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(20)

	 	Nortel

Networks

Limited/Corporation

Nortel Networks

Limitee
	 	GE Capital Leasing
Services Inc.
	 	Inventory,

Equipment,

Accounts, Other,

Motor Vehicle

Included
	 	All items set forth
in Mellon Bank of
Canada Master Lease
Agreement and Lease
Schedules
	 	DISCHARGED
894233151
20030512 1035 9065
7664 (3 years)
as amended by
20051213 1708 5064
0642
	 
	 	 	 	 	 	 	 	 	 	 
	(21)

	 	Nortel
Networks Limited
	 	Dell Financial

Services Canada

Limited	 	Equipment, Other
	 	All Dell and non
Dell computer
equipment and
peripherals
wherever located
heretofore or
hereafter leased to
debtor by secured
party pursuant to
an equipment lease#
519421-001 together
with all
substitutions,
additions,
accessions [sic] and
replacements
thereto and thereof
now and hereafter
installed in,
affixed to, or used
in conjunction with
such equipment and
proceeds	 	891979101
20030226 1454
80770490
(3 years)

9

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	 	 	 	 	thereof
together with all
rental or
installment
payments, insurance
proceeds, other
proceeds and
payments due or to
become due and
arising from or
relating to such
equipment.
Proceeds all
present and
after-acquired
personal property.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(22)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel

Networks Limitee
	 	Sun Microcsystems

Finance
	 	Equipment, Other
	 	 	 	DISCHARGED
891452709 -
20030205 1442 1530
9458 (4 years)
as amended by
20030227 1038 1529
6633
as discharged by
20051230 1046 1529
9973
	 
	 	 	 	 	 	 	 	 	 	 
	(23)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel

Networks Limitee

Corporation Nortel

Networks Limitee/Nortel

Networks

Limited
	 	The

Toronto-Dominion

Bank, Singapore

Branch
	 	Accounts, Other
	 	Absolute sale and
assignment pursuant
to an amended and
restated
receivables
purchase agreement
among the secured
party,
Toronto-Dominion
(South East Asia) Limited, The
Toronto Dominion
Bank, Taipei
branch, the debtor,
The Toronto
Dominion Bank,
Nortel Networks
(Asia) Limited and
each additional
seller, as amended
and as the same may
be further amended,
supplemented or
modified from time
to time.
	 	DISCHARGED
891292248 -
20030130 0954 1590
0925 (15 years)
as discharged by
20051215 1939 1531
2040
	 
	 	 	 	 	 	 	 	 	 	 
	(24)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee
	 	ABN AMRO Bank N.V.,
Banque ABN AMRO
N.V.
	 	Accounts, Other
	 	 	 	891079047 -
20030122 1430 1862
9004 (5 years)
	 
	 	 	 	 	 	 	 	 	 	 
	(25)

	 	Nortel

Networks Limited
	 	Sun Microsystems

Finance
	 	Equipment, Other
	 	 	 	DISCHARGED

881443908 –

20020510 0937

10

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	 	 	 	 	 	 	1530
9831 (4 years)
as discharged by
20051230 1452 1530
4812
	 
	 	 	 	 	 	 	 	 	 	 
	(26)

	 	Nortel

Networks Limited
	 	Nexcap Finance
Corporation

The Bank of Nova
Scotia
	 	Equipment,

Accounts, Other
	 	Lease Agreements

(Operating)
	 	DISCHARGED
879081309 –
20011221 1458 1530
7923 (7 years)
amended by: 20020130 1758 1531
7181
renewed for 4 years
by
20041129 1944 1531
1390
as discharged by
20051214 1948 1531
0719
	 
	 	 	 	 	 	 	 	 	 	 
	(27)

	 	Nortel

Networks Limited
	 	Nexcap Finance
Corporation

The Bank of Nova
Scotia
	 	Equipment,

Accounts, Other
	 	Lease Agreements

(Operating)
	 	DISCHARGED
879081318 –
20011221 1458 1530
7924 (7 years)
renewed for 4 years
by
20041129 1944 1531
1391
as discharged by
20051214 1948 1531
0718
	 
	 	 	 	 	 	 	 	 	 	 
	(28)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited/Corporation

Nortel

Networks Limitee
	 	The

Toronto-Dominion

Bank
	 	Accounts, Other
	 	Please note that
the complete
address of the
secured party is 77
King Street West,
TD Centre,
19th
Floor, Royal Trust
Tower, Toronto,
Ontario, M5K 1A2.
	 	DISCHARGED
878948217 –
20011218 1451 1530
1852 (5 years)
as discharged by
20051228 1455 1530
0489

11

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	Corporation Nortel

Networks Limitee/Nortel

Networks

Limited	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(29)

	 	Nortel

Networks Limited

Corporation Nortel

Networks Limitee

Nortel Networks

Limited /Corporation

Nortel Networks Limitee

Corporation Nortel

Networks Limitee /Nortel

Networks

Limited

	 	Comdisco Canada Ltd.	 	Equipment,

Accounts, Other	 	All present and
after acquired
computers,
peripherals,
telecommunications
devices, cables,
routers,
accessories,
attachments,
hardware, software,
maintenance
agreements,
licences, and
related goods, now
or hereafter
supplied by the
secured party, and
all proceeds
thereof in any
form, including
money, chattel
paper, intangibles,
goods, documents of
title, instruments,
securities,
substitutions,
accounts
receivable, rental
and loan contracts,
all personal
property returned,
	 	DISCHARGED

875344824-20010814 1453 1530
2510 (5 years)
as discharged by
20060103 1942 1531
	 

	 	 
	 	 
	 	 
	 	traded-in or
repossessed and all
insurance proceeds
and any other form
of proceeds
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(30)

	 	Nortel

Networks Limited	 	Onmark Inc.	 	Equipment, Other	 	All personal
property now and
hereafter leased by
secured party to
debtor and
documented with a
schedule pursuant
to Master Lease
Agreement dated
July 6, 2000
between secured
party (Lessor) and
debtor (Lessee).
This filing is for
precautionary
purpose in
connection with an
equipment leasing
transaction and is
	 	DISCHARGED

871589601-20010418 1816 1531
0764 (5 years)
as discharged by
20051215 1939 1531
1279
	 

	 	 
	 	 
	 	 
	 	not to be construed
as indicating that
the transaction is
other than a true
lease.
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(31)

	 	Nortel

Networks Limited
	 	Onmark Inc.
	 	Equipment, Other
	 	All personal
property now and
hereafter leased by
secured party to
debtor and
	 	DISCHARGED

871546698-

20010417 1758

12

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	 	 	 	 	documented with a
schedule pursuant
to Master Lease
Agreement dated
July 6, 2000
between secured
party (Lessor) and
debtor (Lessee).
This filing is for
precautionary
purpose in
connection with an
equipment leasing
transaction and is
not to be construed
as indicating that
the transaction is
other than a true
lease.
	 	1531
9061 (5 years)

as discharged by
20051215 1939 1531
1278
	 
	 	 	 	 	 	 	 	 	 	 
	(32)

	 	Nortel

Networks Limited	 	Nexcap Finance

Corporation	 	Other	 	All personal
property now and
hereafter leased by
secured party to
debtor and
documented with a
schedule pursuant
to Master Lease
Agreement dated
July 6, 2000
between secured
party (Lessor) and
debtor (Lessee).
This filing is for
precautionary
purpose in
connection with an
	 	870293853-
20010301 1802 1531
2533 (5 years)

amended by: 20010402 1750 1531

3347

renewed by: 20040206 1947 1531

0304

for an additional 2

years
	 

	 	 	 	 	 	 	 	equipment leasing
transaction and is
not to be construed as indicating that
the transaction is
other than a true
lease.
	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	(33)

	 	Nortel

Networks Limited	 	Nexcap Finance

Corporation	 	Other	 	All personal
property now and
hereafter leased by
secured party ot
[sic] debtor and
documented with a
schedule pursuant
to Master Lease
Agreement dated
July 6, 2000
between secured
party (Lessor) and
debtor (Lessee). This filing is for
precautionary
purpose in connection with an
equipment lease
transaction and is
not to be construed
as indicated that
the transaction is
other than a true
lease.
	 	870293862-
20010301 1802 1531
2534 (2 years)

amended by: 20010402 1750 1531

3346

amended by: 20020130 1758 1531
7180

as renewed by
20030205 1812 1531
1170 (2 years)

as renewed by
20050222 1951
	 

	 	 	 	 	 	 	 	 
	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 

13

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	 	Number(s)
	 

	 	 	 	 	 	 	 	 	 	1531
1859 (1 year)
	 
	 	 	 	 	 	 	 	 	 	 
	(34)

	 	Nortel
Networks

Limited/Corporation

Nortel Networks

Limitee

Corporation Nortel

Networks Limitee/Nortel

Networks Limited
	 	The

Toronto-Dominion

Bank	 	Accounts, Other	 	The complete
address of the
secured party is
“77 King Street
West, TD Centre,
19th
Floor, Royal Trust Tower, Toronto,
Ontario M5K 1A2
Attention-Wolfgang
Mersch, Charles
Attard”.
	 	DISCHARGED

868330593-20001213 1440 1530
0784 (10 years)

as discharged by
20051228 1455 1530
0490
	 

	 	
Nortel Networks
Limited

Corporation Nortel

Networks Limitee
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(35)

	 	Nortel

Networks Limited	 	STMicroelectronics
(Canada), Inc.	 	Equipment,

Accounts, Other	 	Full transfer and
assignment of all
right, title and
interest in and to
equipment leases
from Nortel
Networks Limited to
STMicroelectronics
(Canada), Inc.
whose full address
is c/o
STMicroelectronics
(Canada), Inc.,
1310 Electronics
	 	084073464-20000619 1245 0028
3040 (15 years)
	 

	 	 
	 	 
	 	 
	 	Drive, Carrollton,

Texas, 75006
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(36)

	 	Nortel
Networks
Corporation

Nortel Networks Corporation/Corporation

Nortel
Networks Corporation
Nortel
Networks
	 	Steelcase Financial
Services Ltd.	 	Equipment, Other
	 	All furniture and
equipment leased or
financed from
Steelcase Financial
Services, Ltd.
including but not
limited to the
items set forth in
Master Lease No. 10068 and any
master lease
equipment schedules,
including proceeds.
	 	828900684-
19970306 0946 1560
1816 (5 years)

amended by: 19990514 1328 7029

1126

renewed by: 20020104 1401 7029
1991 (5 years)
	 

	 	 
	 	 	 	 	 	 
	 	 
	 

	 	 
	 	 
	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(37)

	 	Nortel
Networks

Corporation /Corporation

Nortel
Networks
	 	GE Capital

Information

Technology

Solutions Inc

GE Capital

Solutions
	 	Equipment, Other
	 	All property leased
by secured party to
debtor from time to
time.
	 	DISCHARGED
853164027-
19990719 1750 1531
7390 (10 years)

as discharged by

14

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Reference File
	 	 	 	 	 	 	 	 	 	 	No. &
	 	 	 	 	Secured	 	Collateral	 	General Collateral	 	Registration
	 	 	Debtor(s)	 	Party(ies)	 	Classification	 	Description	 	Number(s)
	 

	 	 	 	Technologiques
Inc.
	 	 	 	 	 	20051212 1619 6086 5739
	 
	 	 	 	 	 	 	 	 	 	 
	(38)

	 	Nortel
Networks Limited/Corporation

Nortel
Networks Limitee	 	Bank of America
Canada	 	Equipment, Other
	 	 	 	DISCHARGED
076268223-
19961127 1546 0043
6045 (13 years)
amended by:
	 

	 	 
	 	 
	 	 	 	 	 	20000613 1033 9065 9256

as amended by

20041007 1556 1902 4636

as discharged by

20051215 1939 1531 1277

15

 

APPENDIX B-2

NORTEL NETWORKS CORPORATION/CORPORATION NORTEL NETWORKS

NORTEL NETWORKS CORPORATION

CORPORATION NORTEL NETWORKS

CORPORATION NORTEL NETWORKS/NORTEL NETWORKS CORPORATION

See Appendix B-1 for registration particulars found in PPSA searches against these names.

 

 

APPENDIX B-3

NORTEL NETWORKS INC.

See Appendix B-1 for registration particulars found in PPSA searches against this name

 

 

SCHEDULE “B”

PPSA Registrations in favour of

JPMorgan Chase Bank, N.A., as Collateral Agent

Financing statement filed for a term of three (3) years against Nortel Networks Limited/Corporation
Nortel Networks Limitee, Nortel Networks Limited, Corporation Nortel Networks Limitee, Corporation
Nortel Networks Limitee/Nortel Networks Limited, claiming a security interest in collateral
described as “Inventory”, “Equipment”, “Accounts”, “Other”, and “Motor Vehicles Included”,
registered pursuant to the PPSA on February 9, 2006 as Registration No. 20060209 1226 1862 5243 and
Reference File No. 622623879.

Financing statement filed for a term of three (3) years against Nortel Networks
Corporation/Corporation Nortel Networks, Nortel Networks Corporation, Corporation Nortel Networks,
Corporation Nortel Networks/Nortel Networks Corporation, claiming a security interest in collateral
described as “Inventory”, “Equipment”, “Accounts”, “Other”, and “Motor Vehicles Included”,
registered pursuant to the PPSA on February 9, 2006 as Registration No. 20060209 1226 1862 5244 and
Reference File No. 622623888

 

 

SCHEDULE “C”

PLEDGED SECURITIES

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Stock certificate	 	
	 

	 	US ISSUERS	 	 	number	 	 	Number of shares or units
	1

	 	Alteon WebSystems, Inc.
	 	 	1	 	 	1 Preferred
	 

	 	 	 	 	2	 	 	300,000 Preferred
	 

	 	 	 	 	1	 	 	44,696,306 Common
	2

	 	CoreTek, Inc.
	 	 	1	 	 	1 Preferred
	 

	 	 	 	 	1	 	 	14,487,293 Common
	 

	 	 	 	 	2	 	 	7,573,728 Common
	3

	 	Nortel Networks Applications Management
Solutions Inc.
	 	CS-1
	 	21,523,376 Common
	 

	 	 	 	 	X-1	 	 	1 Series 1 Preferred
	 

	 	 	 	 	Y-1	 	 	2,762,972 Series 2
	 

	 	 	 	 	 	 	 	Convertible Preferred
	4

	 	Nortel Networks Optical Components Inc.
	 	 	4	 	 	13,974 Class A Common
	 

	 	 	 	 	5	 	 	55,899 Class A Common
	 

	 	 	 	 	1	 	 	85,106,799 Class B Common
	 

	 	 	 	 	2	 	 	21,276,699 Class B Common
	5

	 	Sonoma Systems
	 	 	1	 	 	35,659,018 Common
	 

	 	 	 	 	1	 	 	1 Preferred
	 

	 	 	 	 	2	 	 	2 Common
	6

	 	Xros, Inc.
	 	 	A-1	 	 	1 Series A Preferred
	 

	 	 	 	 	C-1	 	 	52,953,008 Common
	 

	 	CANADIAN ISSUERS	 	 	 	 	 	 
	7

	 	1328556 Ontario Inc.
	 	 	 	 	 	19,074,418 Common Shares
	8

	 	Architel Systems Corporation
	 	 	C-1	 	 	6,028,277 Common
	 

	 	 	 	P-1	 	1 Preferred Share, Series 1
	9

	 	Capital Telecommunications Funding
Corporation
	 	 	C-1	 	 	1,000 Common
	10

	 	CTFC Canada Inc.
	 	 	C-1	 	 	1,000 Common
	11

	 	Nortel Communications Inc.
	 	CL-1.6
	 	100 Class One Common Shares

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Stock certificate	 	 
	 	 	 	 	number	 	Number of shares or units
	12

	 	Nortel Networks Electronics Corporation
	 	 	1	 	 	1 Common
	 

	 	 	 	 	2	 	 	1,000 Common Shares
	13

	 	Nortel Networks Global Corporation
	 	 	2	 	 	5,060,201 Common Shares
	14

	 	Nortel Networks International Corporation
	 	 	2	 	 	10,000 Common Shares
	15

	 	Nortel Networks Technology Corporation
	 	 	C-1	 	 	170,000 Common
	 

	 	 	 	 	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
	 	 	2	 	 	1 Common
	 

	 	 	 	 	3	 	 	39,999 Common Shares
	17

	 	Regional Telecommunications Funding
Corporation
	 	 	C-1	 	 	1,000 Common
	18

	 	TSFC Canada Inc.
	 	 	C-1	 	 	1,000 Common

2

 

Exhibit E-2—Opinion of Special Quebec Counsel for the Credit Parties

Direct Dial: (514) 847-4533

jbogaty@ogilvyrenault.com

Montréal, February 14, 2006

JPMORGAN CHASE BANK, N.A.

as Administrative Agent, Collateral Agent (as defined in the

Canadian Security Agreement defined below) and fondé de pouvoir

270 Park Avenue

New York, N.Y. 10017

U.S.A.

— and —

TO THE SECURED PARTIES (as defined in the

Canadian Security Agreement defined below)

— and —

BLAKE, CASSELS & GRAYDON LLP

KPMG Tower

Suite 2200

600 de Maisonneuve Blvd. West

Montréal, Quebec H3A 3J2

Dear Sirs:

RE: Nortel Networks Limited/Corporation Nortel Networks Limitée (“NNL”)

This opinion is furnished to you pursuant to the Credit Agreements, as such term is defined in that
certain Canadian Security Agreement by and among NNL, Nortel Networks Corporation (“NNC”), the
Subsidiary Lien Grantors (as such term is defined therein) party thereto, JPMorgan Chase Bank,
N.A., as Collateral Agent and Administrative Agent (as such terms are defined therein) and as fondé
de pouvoir and Export Development Canada, as provider of the EDC Facility (as such term is defined
therein) (the “Canadian Security Agreement”).

We have acted as Quebec counsel to NNL and NNC (being hereinafter collectively referred to
sometimes as the “Grantors”, and individually as a “Grantor”) in connection with the

 

 

 Page 2

execution and delivery of the Credit Documents (as hereinafter defined). As used herein, the term
“Credit Documents” means each of the documents listed on Schedule 1 hereto. The capitalized terms
used in this opinion which are defined in the Canadian Security Agreement have the respective
meanings therein specified unless such terms are otherwise defined in this opinion or its
schedules.

In such capacity we have examined originals or copies of executed copies of each of the Credit
Documents.

We are qualified to practice law only in the Province of Quebec. We express no opinion herein as
to any laws, or any other matters governed by any laws, other than the laws of the Province of
Quebec and the federal laws of Canada applicable therein in force on the date hereof and we give no
undertaking to update our opinion in the event of a change in applicable law after the date hereof.

We have examined such statutes, public records, certificates (including officers’ certificates) and
other documents and have considered such questions of law and made such searches as we have deemed
necessary for the purposes of the opinions hereinafter expressed. We have relied, without
independent verification or investigation, on all statements as to matters of fact contained in
such documents.

In rendering this opinion, we have assumed the genuineness of all signatures and the authenticity
of all documents and papers submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as copies. We have also assumed, without independent
verification or investigation, that each of the parties to the Credit Documents (i) is validly
constituted, organized and existing under its governing laws and (ii) has full capacity, power and
authority to enter into and has duly authorized, executed and delivered the Credit Documents, to
the extent it is a party thereto and (iii) has not contravened and will not contravene any laws
applicable to it by negotiating, executing, delivering and performing its obligations under, the
Credit Documents to which it is a party. Finally, we have assumed the legal capacity of all
individuals and that the domiciles of NNC and NNL are located respectively in the Provinces of
Ontario and Québec.

Based on the foregoing but subject to the qualifications hereinafter set forth, we are of the
opinion that:

	1.	 	Each of the Grantors has been duly registered under An Act Respecting the Legal Publicity of
Sole Proprietorships, Partnerships and Legal Persons (Quebec) (the “Publicity Act”), is not in
default to file an annual declaration and is not in default to comply with a request made to
it under Section 38 of the Publicity Act;

 

 

 Page 3

	2.	 	Each of the Credit Documents to which NNL or NNC is a party constitutes a legal, valid and
binding obligation of NNL or NNC party thereto enforceable against such party in accordance
with its terms;

	3.	 	Neither the execution of the Credit Documents nor the performance by NNL and NNC of the
obligations set out therein contravene or constitute a breach under any applicable laws of the
Province of Québec or any applicable regulation thereunder;

	4.	 	Subject to due registration of the Hypothecs in the Register of Personal and Movable Real
Rights, the Hypothecs constitute valid hypothecs up to the amounts thereof, in favour of the
fondé de pouvoir on the property (including incorporeal movable property established by title
in bearer form) described therein located in the Province of Quebec as well as on any
incorporeal property of NNL and property of NNL ordinarily used in more than one jurisdiction.
As instructed, we are attending to the registration of the Hypothecs;

	5.	 	The delivery and continued possession in the Province of Quebec by the Collateral Agent of
each Bond pursuant to the applicable Bond Pledge Agreement creates a valid and enforceable
pledge of such Bond under the laws of the Province of Quebec;

	6.	 	To the extent Quebec law applies, the Credit Documents have been duly delivered by each of
NNC and NNL to the extent that each is a party thereto;

	7.	 	The formal requirements of execution applicable in the Province of Quebec have been met with
respect to the execution of the Credit Documents to the extent that such requirements may be
applicable; and

	8.	 	No authorizations, approvals or consents of, or filings or registrations with any
governmental or regulatory authority or agency of or in the Province of Quebec are necessary
for the execution, delivery or performance by NNL and NNC of the Credit Documents or for the
validity or enforceability thereof as against the Collateral Agent and the fondé de pouvoir
under the Hypothecs (the Collateral Agent and the fondé de pouvoir are hereinafter
collectively referred to as the “Agent”), except for (i) registrations that are referred to in
paragraph 4 above and the renewals thereof upon their respective expiry date (ii) such
filings, registrations and notices which may be required in the future as set forth in our
qualifications herein and (iii) court filings which may be required to enforce the Credit
Documents.

The opinions expressed above are subject to the following qualifications:

	(i)	 	The rights and remedies of the Agent under or in respect of the Credit Documents are subject
to applicable bankruptcy, insolvency, moratorium, reorganization,

 

 

 Page 4

	 	 	prescription, statutes of limitation or other similar laws affecting creditors’ rights
generally;
	 
	(ii)	 	No opinion is expressed herein with respect to the effectiveness of any provision of the
Credit Documents providing for cash to be held in the circumstances stated therein by the
Agent as collateral security;
	 
	(iii)	 	No opinion is herein expressed on the ranking or priority of the Hypothecs or the Bond
Pledge Agreements;
	 
	(iv)	 	The opinions expressed herein as to the validity of any charge, hypothec and security created
under any of the Credit Documents are limited to the extent that the Grantors have or will
have good and valid title to their respective movable properties, rights and assets charged
thereunder and we express herein no opinion as to such title;
	 
	(v)	 	Pursuant to Article 2959 of the Civil Code of Quebec (the “Civil Code”), the registration of
the Hypothecs preserves the same rank for interest due for the current year and the three
preceding years as for the capital;
	 
	(vi)	 	The preservation of the Hypothecs registered under the name of the Grantors on movable
property that is not alienated in the ordinary course of business is subject to the filing of
a notice of preservation of hypothec in the Register of Personal and Movable Real Rights
within 15 days after the creditors have been informed in writing of the transfer of the
property and the name of the purchaser, or after the creditors have consented in writing to
the transfer, all as provided for in Article 2700 of the Civil Code;
	 
	(vii)	 	The hypothecs created by the Hypothecs on claims held by a Grantor against third parties
must, where the claims are themselves secured by a registered hypothec, be published by
registration and a copy of a certified statement of registration of the hypothecated claim
must be remitted to the debtor of such hypothecated claim, all as provided for in Article 2712
of the Civil Code;
	 
	(viii)	 	The hypothecs created pursuant to the Hypothecs on property alienated in the ordinary course
of business will cease to apply to such properties but will extend to the properties of the
same nature which replace the properties so alienated; if no property replaces the alienated
property, the hypothecs shall subsist nonetheless but extend only to the proceeds of the
alienation, provided such proceeds may be identified, the whole in accordance with Article
2674 of the Civil Code;

 

 

 Page 5

	(ix)	 	The enforceability of the Hypothecs against the debtors of the Grantors under any claims
charged thereunder, if any, is subject to the said debtors receiving evidence of such
hypothec as required by Articles 2710 and 1641 of the Civil Code;
	 
	(x)	 	To withdraw at any time the authority given to the Grantors pursuant to the Hypothecs to
collect claims hypothecated thereby, the fondé de pouvoir thereunder must serve notice to such
grantor and the debtors of the hypothecated claims and the withdrawal of such authority must
be registered, all as provided for in Article 2745 of the Civil Code;
	 
	(xi)	 	The hypothecs created by the Hypothecs on movables that are subsequently transformed, mixed
or combined to form new movables belonging to third parties should be renewed against such new
movables so as to preserve their enforceability and ranking as provided for in Article 2953 of
the Civil Code;
	 
	(xii)	 	The enforceability against third parties of the Hypothecs on movable properties subsequently
incorporated into immovable property is subject to the registration of the Hypothecs in the
applicable land register as set forth in Articles 2796 and 2951 of the Civil Code;
	 
	(xiii)	 	The enforceability of the Hypothecs on rights resulting from insurance contracts is subject
to the insurers receiving notice thereof as required by Articles 2461 and 2497 of the Civil
Code;
	 
	(xiv)	 	The enforceability of certain provisions of the Hypothecs relating to enforcement and
realization proceedings and remedies, may be limited by the provisions of the Civil Code.
However, such limitations should not make the remedies intended to be provided by the
Hypothecs inadequate for the practical realization of the benefits intended to be provided
thereby if the Agent acts in good faith and in a commercially reasonable manner;
	 
	(xv)	 	The exercise of a hypothecary right pursuant to the Hypothecs is subject to the filing of a
prior notice at the registry office together with evidence of said notice having been served
on the grantor of such Hypothec, as the case may be, and on any other person against whom the
beneficiaries of the hypothecs intend to exercise their rights, all as provided for in Article
2757 et seq. of the Civil Code;
	 
	(xvi)	 	To the extent that any of the parties thereto now or at any time in the future becomes a
creditor of a debt of the Crown in Right of Canada, the charges created by the Credit
Documents with respect to such debt or other rights of action (to the extent same is
assignable or may be hypothecated) may not be opposable to the Crown

 

 

 Page 6

	 	 	unless the provisions of the Financial Administration Act (Canada) are complied with;
	 
	(xvii)	 	No opinion is expressed herein regarding the validity of the charges, if any, created by the
Credit Documents with respect to (a) any amount owing by Her Majesty in right of Quebec in
respect of a fiscal law as a refund or (b) debts, claims, demands, shares, permits, licenses
and other rights, which by their terms or by law are not assignable or which may not be
hypothecated or which require the consent of a third party to be assigned or hypothecated
where such consent has not been obtained;
	 
	(xviii)	 	To the extent that the rights or properties subject to the Hypothecs include patents,
trade-marks or copyrights, registration thereof may not be effective to fully preserve,
perfect or protect the security constituted thereby unless the relevant documents or a proper
notice thereof is duly filed with the appropriate patent, trade-mark or copyright registrars,
as the case may be;
	 
	(xix)	 	The question of whether or not any of the provisions of the Credit Documents which may be
rendered invalid on account of illegality may be severed from the other provisions thereof in
order to save those other provisions would be determined by a Quebec court in its discretion;
	 
	(xx)	 	We express no opinion herein with respect to any provisions of the Credit Documents which
purport (a) to enable the Agent to recover from a party any costs in excess of the legal
tariff or any fines, penalties or costs levied against or imposed upon such other party by
applicable law or by order of court or (b) to waive the rights of any party under any
legislation which preclude such waiver. Pursuant to Articles 2667 and 2762 of the Civil Code,
notwithstanding any stipulation to the contrary, the costs secured by the Hypothecs and the
Bond Pledge Agreements exclude extra-judicial professional fees payable by the Agent and/or
the other Secured Parties or any other person for services required by the Agent and/or the
other Secured Parties in order to recover the capital and interest secured by the Hypothecs or
the Bond Pledge Agreements or to conserve the charged property mentioned therein;
	 
	(xxi)	 	The provisions of the Credit Documents which entitle the Agent to accelerate the
indebtedness of the Grantors following the occurrence of an Event of Default may be limited by
the provisions of Article 2761 of the Civil Code which permit the debtor or other interested
persons to defeat the exercise of a creditor’s hypothecary rights by remedying the omission or
breach set forth in the prior notice relating to the exercise of such creditor’s hypothecary
rights;
	 
	(xxii)	 	A receiver or receiver and manager appointed pursuant to the provisions of the Credit
Documents may for certain purposes be treated by a court as the agent of the Agent

 

 

 Page 7

	 	 	and not solely the agent of the Grantors notwithstanding any agreement to the contrary;
	 
	(xxiii)	 	We express no opinion as to the effectiveness of any provision of the Credit Documents
which purport to allow for the compensation or set-off of unmatured or unliquidated claims;
	 
	(xxiv)	 	In the event that litigation should ensue outside Quebec, such litigation may be subject to
Section 2 of the Business Concerns Records Act (Quebec) which provides that “Subject to
section 3, no person shall, pursuant to or under any requirement issued by any legislative,
judicial or administrative authority outside Quebec, remove or cause to be removed, or send or
cause to be sent, from any place in Quebec to a place outside Quebec, any document or résumé
or digest of any document relating to any concern”; for the purposes of the Business Concerns
Records Act (Quebec), “document” means any account, balance sheet, statement of receipts and
expenditure, profit and loss statement, statement of assets and liabilities, inventory, report
and any other writing or material forming part of the records or archives of a business
concern;
	 
	(xxv)	 	With respect to (a) any corporeal movable property of any of the Grantors situated outside
the Province of Québec (other than, in the case of NNL, such property ordinarily used in more
than one jurisdiction), any incorporeal movable property of NNC, and any incorporeal movable
property of NNL established by title in bearer form located outside the Province of Québec at
the time of creation of the security constituted pursuant to the Hypothecs or the Bond Pledge
Agreements or thereafter, or (b) a security published by the holding of the title exercised by
the creditor outside the Province of Québec, we express no opinion herein as to the validity
of the charges created thereon under the Hypothecs or the Bond Pledge Agreements or as to the
enforceability of the Hypothecs or the Bond Pledge Agreements against such property; no
opinion is expressed herein either as to the additional registrations that may be required to
be made outside the Province of Québec to maintain the enforceability of the charges created
pursuant to the NNL Hypothec on corporeal movables ordinarily used in more than one
jurisdiction or incorporeal movables should the domicile of NNL be moved to a location outside
the Province of Québec;
	 
	(xxvi)	 	We express no opinion on any provision of the Credit Documents to the extent it purports to
waive or renounce to the application of any prescription or limitation statute prior to the
expiry of the relevant prescription or limitation period;
	 
	(xxvii)	 	No opinion is herein expressed on the benefit which the Collateral Agent may derive from
the Bonds should bonds be issued in the future under the Hypothecs to a party other than the
Collateral Agent in light of Section 32 of the Special Corporate Powers

 

 

 Page 8

	 	 	Act (Quebec) which stipulates that “the person holding the power of attorney of the
creditors in whose favour a hypothec is granted to secure payment of bonds or other
titles of indebtedness cannot purchase from the company the first issue, by
underwriting, purchase, subscription or otherwise, of the bonds or other titles of
indebtedness secured by hypothec ...”;
	 
	(xxviii)	 	No opinion is expressed herein as to the validity or enforceability of any provision of
the Credit Documents providing for the creation of an irrevocable mandate;
	 
	(xxix)	 	The obligation of the parties to the Credit Documents and the enforceability thereof are
subject to all qualifications which, by law, equity or usage, are incidental thereto by their
nature, including without limitation:

	 	(A)	 	the parties must have exercised and must continue to exercise good
faith in the negotiation, implementation and enforcement of the Credit Documents;
	 
	 	(B)	 	any realization upon the security forming part of the Credit Documents
should be made upon commercially reasonable terms in the circumstances;
	 
	 	(C)	 	equitable remedies such as specific performance and injunctive relief
which may be ordered by a court in its discretion and accordingly may not be
available as a remedy in an action brought to enforce such documents;
	 
	 	(D)	 	the powers of the courts to stay proceedings before them and to stay
the execution of judgments;
	 
	 	(E)	 	the Currency Act (Canada) precludes a Canadian court from rendering a
judgment for an amount expressed in a currency other than Canadian currency. In
addition, Article 3161 of the Civil Code provides, inter alia, that, where a
foreign decision orders a debtor to pay a sum of money expressed in foreign
currency, a Quebec authority (for example, a Quebec court) converts the sum into
Canadian currency at the rate of exchange prevailing on the day the decision became
enforceable at the place where it was rendered;
	 
	 	(F)	 	the discretion that a Court may reserve to itself to decline to hear an
action if it is contrary to public policy for it to do so or if it is not the
proper forum to hear such action;
	 
	 	(G)	 	court decisions which may limit the rights of secured creditors to
forcibly realize on their security without appropriate judicial proceedings;

 

 

 Page 9

	 	(H)	 	limitations which may be imposed by law on the effectiveness of terms
exculpating a party from a liability resulting from gross negligence or wilful
misconduct;
	 
	 	(I)	 	the discretion that a court may reserve to itself to impose
restrictions on the rights of creditors to enforce immediate payment of amounts
stated to be payable on demand and to decline to be bound by determinations of fact
stated to be conclusive by the contracting parties;
	 
	 	(J)	 	limitations upon the right of a party to the Credit Documents to
enforce such documents on the basis of a purely technical default, such as the
failure to timely produce a document;
	 
	 	(K)	 	any requirements that interest (including all fees and costs of
borrowing) be paid at a rate in excess of 60% per annum may contravene Section 347
of the Criminal Code (Canada) and may not be enforceable;
	 
	 	(L)	 	in accordance with Article 2332 of the Civil Code, the possibility of
cancellation or reduction by a court of the obligations arising from the Credit
Documents or, the revision by a court of the terms and conditions of the
performance of these obligations to the extent that if it finds that, having regard
to the risk and to all the circumstances, one of the parties has suffered lesion;
and
	 
	 	(M)	 	the provisions of the said documents that certain calculations or
certificates will be conclusive and binding will not be effective if such
calculations or certificates are fraudulent or erroneous on their face and will not
necessarily prevent judicial enquiry into the merits of any claim by an aggrieved
party.

We draw to your attention that we assume no responsibility for any registrations, filings, notices,
recordings or renewals that may be required as set forth hereinabove, except with respect to the
registration provided in paragraph 4, and that you should therefore make appropriate diary entries
to ensure the timely effecting of any such registrations, filings, notices, recordings or renewals
thereof.

This opinion may only be relied upon by the persons to whom it is addressed and their successors
and assigns and for the purposes of the transactions contemplated in the Credit Documents.

Yours truly,

 

 

SCHEDULE 1

CREDIT DOCUMENTS

	1.	 	Deed of hypothec and issue of bonds entered into on February 14, 2006 before a notary by NNL
in favour of JPMorgan Chase Bank, N.A., as fondé de pouvoir for the holders of the bonds
issued thereunder (the “NNL Hypothec”);
	 
	2.	 	Deed of hypothec and issue of bonds entered into on February 14, 2006 before a notary by NNC
in favour of JPMorgan Chase Bank, N.A., as fondé de pouvoir for the holders of the bonds
issued thereunder (the “NNC Hypothec”) and together with the NNL Hypothec, the “Hypothecs” and
individually a “Hypothec”;
	 
	3.	 	Pledge agreement dated as of February 14, 2006 executed by and between NNL and the Collateral
Agent, in respect of the bond issued under the NNL Hypothec;
	 
	4.	 	Pledge agreement dated as of February 14, 2006 executed by and between NNC and the Collateral
Agent , in respect of the bond issued under the NNC Hypothec;
	 
	 	 	(Items 3 and 4 being individually referred to as a “Bond Pledge Agreement” and collectively
as the “Bond Pledge Agreements”)
	 
	5.	 	A $5,000,000,000 25% demand bond dated February 14, 2006 issued by NNL in favour of the
Collateral Agent (the “NNL Bond”);
	 
	6.	 	A $5,000,000,000 25% demand bond dated February 14, 2006 issued by NNC in favour of the
Collateral Agent (the “NNC Bond”);
	 
	 	 	(Items 5 and 6 being individually referred to as a “Bond” and collectively as the “Bonds”)
	 
	7.	 	Delivery order dated February 14, 2006 executed by NNL in respect of the NNL Bond;
	 
	8.	 	Delivery order dated February 14, 2006 executed by NNC in respect of the NNC Bond.

 

 

EXHIBIT F—ASSIGNMENT AND ASSUMPTION

          This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.

          For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

	 	 	 	 	 
	1.

	 	Assignor:
	 	                                                            
	 
	 	 	 	 
	2.

	 	Assignee:
	 	                                                            
	 

	 	 	 	[and is an Affiliate/Approved Fund of [identify Lender]2]
	 
	 	 	 	 
	3.

	 	Borrower:
	 	Nortel Networks Inc., a Delaware corporation
	 
	 	 	 	 
	4.

	 	Agent:
	 	JPMorgan Chase Bank, N.A., as the Agent under the Credit Agreement
	 
	 	 	 	 
	5.

	 	Credit Agreement:
	 	The $1,300,000,000 Credit Agreement dated as of February 14, 2006 among Nortel Networks Inc., the
Lenders parties thereto, JPMorgan Chase Bank, N.A., as Agent, and the other agents named therein

 

			
	2	 	Select as applicable.

 

 

	6.	 	Assigned Interest:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	 	Amount of	 	 	Percentage Assigned of	 
	 	 	[Tranche A] [Tranche B]	 	 	[Tranche A][Tranche B]	 	[Tranche A][Tranche B]	 
	Loans Assigned3	 	Loans for all Lenders	 	 	Loans Assigned	 	 	Loans4	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 

Effective
Date:
                     ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE
EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

	 	 	 	 	 
	 	 	ASSIGNOR
	 
	 	 	 	 
	 	 	[NAME OF ASSIGNOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	     Title:
	 
	 	 	 	 
	 	 	ASSIGNEE
	 
	 	 	 	 
	 	 	[NAME OF ASSIGNEE]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	     Title:

 

			
	3	 	Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (i.e., “Tranche A Loan” “Tranche B
Loan”)
	 
	4	 	Set forth, to at least 9 decimals, as a
percentage of the Tranche A Loans or Tranche B Loans, as applicable, of all
Lenders.

2

 

	 	 	 	 	 
	[Consented to and]5 Accepted:	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as	 	 
	Agent	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	     Title:	 	 
	 
	 	 	 	 
	[Consented to:]6	 	 
	 
	 	 	 	 
	NORTEL NETWORKS INC.	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	     Title:	 	 

 

			
	5	 	To be added only if the consent of the Agent
is required by the terms of the Credit Agreement.
	 
	6	 	To be added only if the consent of the
Borrower is required by the terms of the Credit Agreement.

3

 

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

          1. Representations and Warranties.

          1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.

          1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof (or,
if no such financial statements have been delivered, referred to in Section 4.04 thereof), as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Agent or any other Lender, and (v) if it is a Non-U.S. Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i)
it will, independently and without reliance on the Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will
perform in accordance with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.

          2. Payments. From and after the Effective Date, the Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest and other amounts)
to the Assignor for amounts which have accrued to but excluding the Effective Date and to the
Assignee for amounts which have accrued from and after the Effective Date.

          3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and

 

 

Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

2

 

Exhibit G—Form of Perfection Certificate

[See Exhibit F to each of the U.S. Security Agreement and the Canadian Security Agreement]

 

 

Exhibit H—Form of Guarantee Agreement

Filed as Exhibit 10.2.

 

 

Exhibit I—Form of U.S. Security Agreement

Filed as Exhibit 10.3.

 

 

Exhibit J—Form of Canadian Security Agreement

Filed as Exhibit 10.4.exv10w2

 

Exhibit
10.2

GUARANTEE AGREEMENT

dated as of

February 14, 2006,

among

NORTEL NETWORKS INC.,

as Borrower and Guarantor,

NORTEL NETWORKS LIMITED,

as Guarantor,

NORTEL NETWORKS CORPORATION

as Guarantor,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

and

EXPORT DEVELOPMENT CANADA,

as provider of the EDC Support Facility

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	Definitions	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 1.01.
	 	Defined Terms	 	 	1	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE II	 	 	 	 
	 
	 	Guarantee	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 2.01.
	 	Guarantee	 	 	4	 
	SECTION 2.02.
	 	No Limitations	 	 	4	 
	SECTION 2.03.
	 	Reinstatement	 	 	5	 
	SECTION 2.04.
	 	Agreement To Pay; Subrogation	 	 	5	 
	SECTION 2.05.
	 	Information	 	 	5	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE III	 	 	 	 
	 
	 	Indemnity, Subrogation and Subordination	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 3.01.
	 	Indemnity and Subrogation	 	 	6	 
	SECTION 3.02.
	 	Subordination	 	 	6	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IV	 	 	 	 
	 
	 	Miscellaneous	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 4.01.
	 	Notices	 	 	6	 
	SECTION 4.02.
	 	Waivers; Amendment	 	 	7	 
	SECTION 4.03.
	 	Administrative Agent's Fees and Expenses; Indemnification	 	 	8	 
	SECTION 4.04.
	 	Successors and Assigns	 	 	8	 
	SECTION 4.05.
	 	Counterparts; Effectiveness; Several Agreement	 	 	8	 
	SECTION 4.06.
	 	Severability	 	 	9	 
	SECTION 4.07.
	 	Right of Set-Off	 	 	9	 
	SECTION 4.08.
	 	Governing Law; Jurisdiction; Consent to Service of Process	 	 	9	 
	SECTION 4.09.
	 	WAIVER OF JURY TRIAL	 	 	10	 
	SECTION 4.10.
	 	Headings	 	 	10	 
	SECTION 4.11.
	 	Taxes	 	 	11	 
	SECTION 4.12.
	 	Guarantee Absolute	 	 	12	 
	SECTION 4.13.
	 	Termination or Release	 	 	12	 

 i

 

 

          GUARANTEE AGREEMENT dated as of February 14, 2006, among NORTEL NETWORKS INC., a company
organized and existing under the laws of Delaware (“NNI” or the “Borrower”), NORTEL NETWORKS
CORPORATION, a company organized and existing under the laws of Canada (“NNC”), NORTEL NETWORKS
LIMITED, a company organized and existing under the laws of Canada (“NNL” and together with NNI and
NNC, jointly and severally, the “Guarantors,” and each, a “Guarantor”), EXPORT DEVELOPMENT CANADA,
as provider of the EDC Support Facility, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

          Reference is made to the Credit Agreement dated as of February 14, 2006 (as amended,
supplemented or otherwise modified from time to time) (the “Credit Agreement”) among NNI, as
Borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”), J.P. Morgan Securities Inc. and Citigroup Global Markets,
Inc., as Joint Bookrunners and Joint Lead Arrangers, Citicorp USA, Inc., as Syndication Agent,
Royal Bank of Canada, as Documentation Agent, and Export Development Canada, as Managing Agent;

          WHEREAS, the Guarantors will materially benefit from the ability of the Borrower to obtain
funds pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in
order to induce the Lenders to extend such credit; and

          WHEREAS, the Lenders are prepared to enter into the Credit Agreement on the terms and subject
to the conditions (one of which is the execution and delivery by the Guarantors of this Guarantee
Agreement) set forth in the Credit Agreement, a copy of which the Guarantors hereby acknowledge
having received;

          NOW, THEREFORE, the Guarantors hereby agree with the Administrative Agent and the Lenders as
follows:

ARTICLE I

Definitions

          SECTION 1.01. Defined Terms. In this Agreement, capitalized terms not otherwise defined herein
have the meanings assigned to such terms in the Credit Agreement. In addition, the following
terms, as used in this Agreement, have the meanings specified below:

     “Administrative Agent” has the meaning assigned to such term in the preamble.

     “Affiliate” means, as to any Person, (i) any other Person (a “Controlling Person”) that
directly, or indirectly through one or more intermediaries, controls such Person or (ii) any
Person (other than such Person and its Subsidiaries) which is controlled by or is under
common control with a Controlling Person. As used herein, the term “control” means
possession, directly or indirectly, of the power to

 

 

direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

          “Agreement” means this Guarantee Agreement, as the same may be amended from time to time.

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

     (i) all commitments to extend credit under the Credit Agreement shall have
expired or been terminated;

     (ii) all Tranche A Guaranteed Obligations and Tranche B Guaranteed
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 Guaranteed Obligation or Tranche B Guaranteed Obligation
that is a Contingent Obligation shall remain outstanding, in each case other than any
general indemnification provisions (such as those set forth in Sections 8.03, 8.04 and 9.03
of the Credit Agreement) and the like, as to which no claim has been asserted on or prior to
such date.

          “Contingent Obligation” means, at any time, any Guaranteed Obligation (or portion thereof)
that is contingent in nature at such time.

          “Credit Agreement” has the meaning assigned to such term in the preamble.

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

          “EDC” means Export Development Canada and successor and assigns under the EDC Facility.

          “EDC Facility” means the facility made available by EDC to NNL pursuant to the Amended and
Restated Master Facility Agreement dated October 24, 2005, as the same may be amended from time to
time.

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

          “Guaranteed Obligations” means, (i) in the case of NNC, the NNC Guaranteed Obligations, (ii)
in the case of NNI, the NNI Guaranteed Obligations and (iii) in the case of NNL, the NNL Guaranteed
Obligations.

2

 

          “Guaranteed Party” means (i) with respect to the Tranche A Guaranteed Obligations, the
Administrative Agent and any Tranche A Lender, (ii) with respect to the Tranche B Guaranteed
Obligations, the Administrative Agent and any Tranche B Lender and (iii) with respect to the EDC
Facility Guaranteed Obligations, EDC.

          “Guarantor” has the meaning assigned to such term in the preamble.

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

          “Loan” means a Tranche A Loan or a Tranche B Loan and “Loans” means Tranche A Loans or Tranche
B Loans or any combination of the foregoing.

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

          “NNC Guaranteed Obligations” means the Tranche A Guaranteed Obligations, the Tranche B
Guaranteed Obligations and the EDC Facility Guaranteed Obligations.

          “NNI Guaranteed Obligations” means the EDC Facility Guaranteed Obligations.

          “NNL Guaranteed Obligations” means the Tranche A Guaranteed Obligations and the Tranche B
Guaranteed Obligations.

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

          “Obligors” means the Borrower and the Guarantors.

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

          “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.

          “Required Lenders” means, with respect to any amendment or waiver hereunder (including any
release of any Guarantor pursuant to Section 4.12(c)) Lenders having the percentage of the Tranche
A Commitments and Tranche A Loans specified by Section 9.05 of the Credit Agreement in order to
approve such action; provided, that 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 priority of
the Guaranteed Obligations in any manner adverse to EDC or (iii) increase the amount of Guaranteed

3

 

Obligations hereunder, then the consent of the “Required Lenders” shall not be deemed to have been
obtained unless EDC shall have also consented to such amendment or waiver.

          “Specified Event of Default” means an event described in Section 6.01(a), (f), or (g) or
6.02(a), (g) or (h) of the Credit Agreement or any Event of Default caused by a breach of any
financial covenant contained in the Credit Agreement.

          “Tranche A Lender” means a Lender in its capacity as a holder of a Tranche A Loan under the
Credit Agreement.

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

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

          “Tranche B Lender” means a Lender in its capacity as a holder of a Tranche B Loan under the
Credit Agreement.

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

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

ARTICLE II

Guarantee

          SECTION
2.01. Guarantee. (a) Each Guarantor unconditionally guarantees (jointly and severally),
as a primary obligor and not merely as a surety, the due and punctual payment and performance of
its Guaranteed Obligations. Each Guarantor further agrees that its Guaranteed Obligations may be
extended, renewed or amended, in whole or in part, without notice to or further assent from such
Guarantor, and that such Guarantor will remain bound upon its guarantee notwithstanding any
extension, renewal or amendment of any Guaranteed Obligation. Each Guarantor waives presentment
to, demand of payment from and protest to any other Obligor of any of its Guaranteed Obligations,
and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. This
guarantee is a continuing guarantee and shall be binding on each of the Guarantors and its
successors and assigns.

          SECTION
2.02. No Limitations. (a) Except for termination of each of the Guarantor’s obligations
hereunder as expressly provided in Section 4.12, the

4

 

obligations of each Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of its Guaranteed Obligations or otherwise. Without limiting the
generality of the foregoing, the Guaranteed Obligations of each Guarantor hereunder shall not be
discharged or impaired or otherwise affected by (i) the failure of the Administrative Agent or any
other Lender to assert any claim or demand or to enforce any right or remedy under the provisions
of any Loan Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or
any release from any of the terms or provisions of, any Loan Document or any other agreement; (iii)
the release of any security held by any Person as security for its Guaranteed Obligations; (iv) any
default, failure or delay, willful or otherwise, in the performance of its Guaranteed Obligations;
or (v) any other act or omission that may or might in any manner or to any extent vary the risk of
any Obligor or otherwise operate as a discharge of any
Obligor as a matter of law or equity (other than the indefeasible payment in full in cash of
all such Guarantor’s Guaranteed Obligations).

          (b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any
defense of any other Obligor or the unenforceability of its Guaranteed Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of any other Obligor, (other than the indefeasible payment in full
in cash of all its Guaranteed Obligations).

          SECTION 2.03. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any Guaranteed Obligation is rescinded or must otherwise be restored by the Administrative Agent or
any other Guaranteed Party upon the bankruptcy or reorganization of any Obligor or otherwise.

          SECTION 2.04. Agreement To Pay; Subrogation. (a) In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any other Guaranteed Party has at
law or in equity against any Guarantor by virtue hereof, upon the failure of any other Obligor to
pay any Guaranteed Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor, as applicable, hereby
promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for
distribution to the applicable Guaranteed Party in cash the amount of such unpaid Guaranteed
Obligation, as applicable. Upon payment by a Guarantor of any sums to the Administrative Agent as
provided above, all rights of such Guarantor against the Borrower or any other Obligor arising as a
result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subject to Article III.

          (b)The obligations of NNI under this Agreement shall be limited to an aggregate amount equal to the largest amount that would not render the Guarantee granted by NNI hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of applicable law.

5

 

          SECTION 2.05. Information. Each Guarantor assumes all responsibility for being and keeping itself
informed of each Credit Party’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of its Guaranteed Obligations, as applicable, and the nature,
scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Administrative Agent or the other Guaranteed Parties will have any duty to advise such
Guarantor of information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Indemnity, Subrogation and Subordination

          SECTION 3.01. Indemnity and Subrogation. In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to Section 3.02), the
Borrower agrees that in the event a payment of a Guaranteed Obligation shall be made by any
Guarantor under this Agreement, the Borrower shall indemnify such Guarantor for the full amount of
such payment and such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment.

          SECTION 3.02. Subordination. Notwithstanding any provision of this Agreement to the contrary, all
rights of each Guarantor under Section 3.01 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Guaranteed Obligations. No failure on the part of the Borrower or
any Guarantor to make the payments required by Section 3.01 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and liabilities of such
Guarantor with respect to its obligations hereunder, and such Guarantor shall remain liable for the
full amount of its obligations hereunder.

ARTICLE IV

Miscellaneous

          SECTION 4.01. Notices. (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by facsimile, as follows:

(i)
 if to NNI, to:

Nortel Networks Inc.

c/o Nortel Networks Limited

8200 Dixie Road, Suite 100

MS: 036/NO/230

Brampton, On L6T 5P6

6

 

Attention: Corporate Secretary

Facsimile: 905-863-8386;

(ii)
 if to the Administrative Agent, to:

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, NY 10017

Attention: David M. Mallett

Facsimile: 212-270-5127;

(iii)
if to NNC or NNL, to:

Nortel Networks Limited

8200 Dixie Road, Suite 100

MS: 036/NO/230

Brampton, On L6T 5P6

Attention: Corporate Secretary

Facsimile: 905-863-8386; and

(iv)
 if to Export Development Canada, to:

Export Development Canada

151 O’Connor Street

Ottawa, Ontario K1A 1K3

[Attention: David Guy

Facsimile: 613-598-6858]

(v)
 if to any other Lender, to it at its address (or facsimile number) set forth in its Administrative Questionnaire.

          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that approval of such procedures may
be limited to particular notices or communications

          (c) Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

          SECTION 4.02. Waivers; Amendment. (a)No failure or delay by the Administrative Agent or any other
Guaranteed Party in exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or

7

 

discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. The rights and remedies
of the Guaranteed Parties and the Administrative Agent hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any Obligor
therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of
this Section 4.02, and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the foregoing, the making
of a Tranche A Loan, a Tranche B Loan, or the issuance of any support under the EDC Facility shall
not be construed as a waiver of any breach of, or default under, this Agreement, any other Loan
Document or the EDC Facility, regardless of whether the Administrative Agent or any Guaranteed
Party may have had notice or knowledge of such breach or default at the time. No notice or demand
on any Obligor in any case shall entitle any Obligor to any other or further notice or demand in
similar or other circumstances.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Required Lenders, the Borrower and the Guarantors with respect to which such waiver, amendment or modification is to apply.

          SECTION 4.03. Administrative Agent’s Fees and Expenses; Indemnification. (a)The parties hereto
agree that the Administrative Agent shall be entitled to reimbursement of its expenses incurred
hereunder as provided in Section 9.03 of the Credit Agreement.

          (b) Without limitation of its indemnification obligations under the other Loan Documents,
each Guarantor agrees to indemnify the Administrative Agent, its Affiliates and the respective directors,
officers, agents and employees of the foregoing (each an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable
fees, charges and disbursements of any outside counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating to any of the foregoing agreements or
instruments contemplated hereby, whether or not any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or of any Affiliate, director, officer,
employee, counsel, agent or attorney-in-fact of such Indemnitee.

          SECTION 4.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the Guarantors or the
Administrative Agent that are

8

 

contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.

          SECTION 4.05. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed counterpart of this
Agreement. This Agreement shall become effective as to any Obligor when a counterpart hereof
executed on behalf of such Obligor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter
shall be binding upon such Obligor and the Administrative Agent and their respective permitted
successors and assigns, and shall inure to the benefit of such Obligor, the Administrative Agent
and the other Guaranteed Parties and their respective successors and assigns, except that no
Obligor shall have the right to assign or transfer its rights or obligations hereunder or any
interest herein (and any such assignment or transfer shall be void) except as expressly
contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a
separate agreement with respect to each Obligor and may be amended, modified, supplemented, waived
or released with respect to any Obligor without the approval of any other
Obligor and without affecting the obligations of any other Obligor hereunder.

          SECTION 4.06. Severability. Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

          SECTION 4.07. Right of Set-Off. If a Specified Event of Default has occurred and is continuing and
any Guaranteed Obligation is not paid promptly when due after a demand has been made, each of the
relevant Guaranteed Parties and their respective Affiliates is authorized, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing by such Guaranteed
Party or affiliate to or for the credit or the account of any relevant Guarantor against the
obligations of such Guarantor under this Agreement, irrespective of whether or not such Guaranteed
Party shall have made any demand thereunder and although such obligations may be unmatured. The
rights of each Guaranteed Party under this Section 4.07 are in addition to all other rights and
remedies (including other rights of set-off) that such Guaranteed Party may have.

9

 

          SECTION
4.08. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall
be construed in accordance with and governed by the law of the State of New York.

          (b) Each Obligor hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York City and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent or any Guaranteed Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Obligor, or its properties in the courts of any jurisdiction.

          (c) Each Obligor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 4.08. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

          (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 4.01. Each of NNC and NNL hereby appoints the CT Corporation System at 111 Eighth Avenue, New York, NY 10011, or if otherwise, its principal place of business in the City of New York from time to time, as its agent for service of process, and agrees that service of any process, summons, notice or documents by hand delivery or registered mail upon such agent shall be effective service of process for any suit, action or proceeding brought in any such court. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

          SECTION 4.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (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

10

 

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 4.09.

          SECTION 4.10. Headings. Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Agreement.

          SECTION 4.11. Taxes. For the avoidance of doubt, each of NNL and NNC agrees that the Lenders and
Participants (subject to the limitations set forth in Section 9.06(c)(ii) of the 2006 Credit
Agreement) shall be entitled to the benefits of Section 8.04 of the 2006 Credit Agreement with
respect to any obligation of NNC or NNL hereunder in respect of the Tranche A Guaranteed
Obligations or the Tranche B Guaranteed Obligations, including any payments made in respect
thereof.

          SECTION 4.12. Guarantee Absolute. Without limiting the provisions of Section 2.02 of this
Agreement, all rights of the Administrative Agent and the Guaranteed Parties hereunder and all
obligations of each Guarantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, the EDC Facility, any agreement
with respect to any of the Guaranteed Obligations or any other agreement or instrument relating to
any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any other Loan Document, the EDC Facility or
any other agreement or instrument, (c) any release or amendment or waiver of or consent under or
departure from any guarantee guaranteeing all or any of the Guaranteed Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a discharge of, any
Guarantor in respect of the Guaranteed Obligations or this Agreement.

          SECTION 4.13. Termination or Release. (a)This Agreement and the guarantees made herein shall
terminate with respect to all Guaranteed Obligations on the Bank Termination Date.

          (b) Each of NNL or NNC, as appropriate, shall automatically be released from its obligations hereunder upon the consummation of any transaction permitted by the Credit Agreement as a result of which NNL or NNC, as appropriate, ceases to exist.

          (c) A Guarantor may be released from its obligations hereunder by the Administrative Agent with the consent of the Required Lenders.

          (d) In connection with any termination or release pursuant to paragraph (a), (b) or (c), the Administrative
Agent shall execute and deliver to any Guarantor, at such Guarantor’s expense, all documents that such Guarantor shall

11

 

reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 4.12 shall be without recourse to or warranty by the Administrative Agent.

12

 

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

	 	 	 	 	 
	 	NORTEL NETWORKS INC., as Borrower

and Guarantor

 	 
	 	By:  	/s/  Karen Sledge 	 
	 	 	Name:  	Karen Sledge 	 
	 	 	Title:  	President 	 
	 
	 	NORTEL NETWORKS 

CORPORATION, as Guarantor

 	 
	 	By:  	/s/  Gordon Davies 	 
	 	 	Name:  	Gordon Davies 	 
	 	 	Title:  	General Counsel – Corporate
and Corporate Secretary 	 
	 
	 	 	 
	 	By:  	/s/  Katharine B. Stevenson
 	 
	 	 	Name:  	Katharine B. Stevenson 	 
	 	 	Title:  	Treasurer 	 
	 
	 	NORTEL NETWORKS LIMITED,

as Guarantor

 	 
	 	By:  	/s/  Gordon Davies 	 
	 	 	Name:  	Gordon Davies 	 
	 	 	Title:  	General Counsel – Corporate
and Corporate Secretary 	 
	 
	 	 	 
	 	By:  	/s/  Katharine B. Stevenson
 	 
	 	 	Name:  	Katharine B. Stevenson 	 
	 	 	Title:  	Treasurer 	 
	 

13

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as

Administrative Agent,

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

14

 

	 	 	 	 	 
	 	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 	 
	 

15

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