Document:

exv10w2

 

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT dated March 28, 2007 (the “Agreement”) is entered into by
and among Nortel Networks Corporation, a Canadian corporation (the “Company”), Nortel Networks
Limited, a Canadian corporation (“NNL”), and Nortel Networks Inc., a Delaware corporation (“NNI”
and, together with NNL, the “Guarantors”), [            ] (“[            ]”), [          
] (“[           ]”) and the several Initial Purchasers listed in Schedule 1
hereto (the “Initial Purchasers”) for whom [           ] and [            ] are
acting as representatives (in such capacity, the “Representatives”).

     The Company, the Guarantors and the Initial Purchasers are parties to the Purchase Agreement
dated March 22, 2007 (the “Purchase Agreement”), which provides for the sale by the Company to the
Initial Purchasers of U.S.$500,000,000 aggregate principal amount of its 2.125% Convertible Senior
Notes due 2014 (the “2014 Notes”), U.S.$500,000,000 aggregate principal amount of its 1.750%
Convertible Senior Notes due 2012 (the “2012 Notes”) and, at the election of the Representatives up
to an additional U.S.$75,000,000 aggregate principal amount of its 1.750% Convertible Senior Notes
due 2012 (the “2012 Optional Notes”) and/or up to an additional U.S.$75,000,000 aggregate principal
amount of its 2.125% Convertible Senior Notes due 2014 (the “2014 Optional Notes” and, together
with the 2012 Optional Notes, the “Optional Securities” and, together with the 2012 Notes, the 2014
Notes and the Common Shares into which the 2012 Notes, the 2014 Notes and the Optional Securities
are convertible, the “Securities”), in each case to cover over-allotments, if any. The 2012 Notes,
the 2014 Notes and the Optional Securities will, in each case, be guaranteed on an unsecured senior
basis by NNL and, initially, NNI. As an inducement to the Initial Purchasers to enter into the
Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.

     In consideration of the foregoing, the parties hereto agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

     “Business Day” shall mean 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.

     “[       ]” shall have the meaning set forth in the preamble.

     “Common Shares” shall mean any common shares, no par value, of the Company.

     “Company” shall have the meaning set forth in the preamble and shall also include the
Company’s successors.

     “[       ]” shall have the meaning set forth in the preamble.

     “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended from
time to time.

 

 

     “First Closing Date” shall mean the First Closing Date as defined in the Purchase Agreement.

     “Free Writing Prospectus” shall mean any free writing prospectus (as defined in Rule 405 under
the Securities Act) in connection with the Shelf Registration.

     “Guarantors” shall have the meaning set forth in the preamble and shall also include any
Guarantor’s successors.

     “Holders” shall mean the Initial Purchasers, for so long as they own any Registrable
Securities, and each of their successors, assigns and direct and indirect transferees who become
owners of Registrable Securities under the Indenture.

     “Indemnified Person” shall have the meaning set forth in Section 4(c) hereof.

     “Indemnifying Person” shall have the meaning set forth in Section 4(c) hereof.

     “Indenture” shall mean the Indenture relating to the Securities dated as of March 28, 2007
among the Company, the Guarantors and The Bank of New York, as trustee, and as the same may be
amended from time to time in accordance with the terms thereof.

     “Initial Purchasers” shall have the meaning set forth in the preamble.

     “Inspector” shall have the meaning set forth in Section 3(a)(xiii) hereof.

     “Issuer” shall mean the Company and the Guarantors.

     “Issuer Free Writing Prospectus” shall mean any Free Writing Prospectus prepared by and on
behalf of an Issuer or referred to by any Issuer in connection with the Shelf Registration.

     “Issuer Information” shall have the meaning set forth in Section 4(a) hereof.

     “Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of
the outstanding Registrable Securities (assuming conversion of all Securities into Common Shares);
provided that whenever the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, any Securities, or Common Shares into which the Securities were
converted, owned directly or indirectly by the Company or any of its affiliates shall not be
counted in determining whether such consent or approval was given by the Holders of such required
percentage or amount.

     “Notes” shall mean the 2012 Notes, the 2014 Notes, the 2012 Optional Notes and the 2014
Optional Notes.

     “Optional Securities” shall have the meaning given to such term in the preamble hereto.

     “Person” shall mean an individual, partnership, limited liability company, corporation, trust
or unincorporated organization, or a government or agency or political subdivision thereof.

     “Prospectus” shall mean the prospectus included in the Shelf Registration Statement, including
any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including any document incorporated
by reference therein.

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     “Purchase Agreement” shall have the meaning set forth in the preamble.

     “Questionnaire” shall have the meaning set forth in Section 2(a)(iii) of this Agreement.

     “Registrable Securities” shall mean each Note and related guarantees and the Common Shares
into which the Notes are convertible until the earlier of (i) the date on which such Note and
related guarantees or the Common Shares into which the Notes are convertible have been sold or
otherwise transferred pursuant to an effective Shelf Registration Statement; (ii) the date that is
two years after the later of the date of original issue of such Note and related guarantees and the
last date that the Company or any of its affiliates was the owner of such Note and related
guarantees (or any predecessor thereto); (iii) the date on which such Note and related guarantees
or the Common Shares into which the Notes are convertible may be resold without restriction
pursuant to Rule 144(k) under the Securities Act or any successor provision thereto; or (iv) the
date such Note and related guarantees or the Common Shares into which the Notes are convertible
have been publicly sold pursuant to Rule 144 under the Securities Act or any successor provision
thereto.

     “Registration Default” shall have the meaning set forth in Section 2(d) of this Agreement.

     “Registration Expenses” shall mean any and all expenses incident to performance of or
compliance by the Company and the Guarantors with this Agreement, including without limitation: (i)
all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all reasonable fees and expenses incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and disbursements of one counsel for any
Underwriters or one counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Initial Purchasers) in connection with blue
sky qualification of any Registrable Securities), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing the Shelf Registration
Statement, any Prospectus and any amendments or supplements thereto, any underwriting agreements,
securities sales agreements or other similar agreements and any other documents relating to the
performance of and compliance with this Agreement, (iv) any fees charged by rating agencies for
rating the Registrable Securities, (v) all fees and disbursements relating to the qualification of
the Indenture under applicable securities laws, (vi) the fees and expenses of the Trustee and any
paying agent (including related fees and expenses of any counsel to such parties), (vii) the fees
and disbursements of counsel for the Company and the Guarantors and the reasonable fees and
disbursements of one counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Initial Purchasers) but not in addition to
the one counsel referred to in clause (ii) above and (viii) the fees and disbursements of the
independent public accountants of the Company and the Guarantors, including the expenses of any
special audits or “comfort” letters required by or incident to the performance of and compliance
with this Agreement, but excluding fees and expenses of counsel to the Underwriters or the Holders
(other than fees and expenses set forth in clause (ii) above) and underwriting discounts and
commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Securities by a Holder.

     “Representatives” shall have the meaning set forth in the preamble.

     “SEC” shall mean the United States Securities and Exchange Commission.

     “Securities” shall have the meaning set forth in the preamble.

     “Securities Act” shall mean the United States Securities Act of 1933, as amended from time to
time.

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          “Shelf Effectiveness Deadline” shall have the meaning set forth in Section 2(a)(i) hereof.

          “Shelf Effectiveness Period” shall have the meaning set forth in Section 2(a)(ii) hereof.

          “Shelf Registration” shall mean a registration effected pursuant to Section 2(a) hereof.

          “Shelf Registration Statement” shall mean a “shelf” registration statement of the Company and
the Guarantors that covers all of the Registrable Securities on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any
document incorporated by reference therein; provided, however, that a registration statement shall
not be deemed the Shelf Registration Statement until such time as it includes a Prospectus relating
to the Securities.

          “Suspension Period” shall have the meaning set forth in Section 2(e) of this Agreement.

          “Trust Indenture Act” shall mean the United States Trust Indenture Act of 1939, as amended
from time to time.

          “Trustee” shall mean the trustee with respect to the Securities under the Indenture.

          “Underwriter” shall have the meaning set forth in Section 3(e) hereof.

          “Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an
Underwriter for reoffering to the public.

          2. Registration Under the Securities Act. (a)(i) The Company shall file with the SEC
prior to or on the 191st day after the First Closing Date, and use its reasonable best
efforts to cause to become effective prior to or on the 283rd day after the First
Closing Date (the “Shelf Effectiveness Deadline”), the Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders that have provided the information
pursuant to Section 2(a)(iii).

     (ii) The Company shall use its reasonable best efforts (subject to the Company’s right to
suspend the Shelf Registration Statement as described in Section 2(e) below) to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders until such time as all of the Securities cease to be Registrable
Securities (the “Shelf Effectiveness Period”).

     (iii) Notwithstanding any other provision hereof, no Holder of Registrable Securities may
include any of its Registrable Securities in the Shelf Registration Statement pursuant to this
Agreement unless the Holder furnishes to the Company a fully completed notice and questionnaire in
the form attached as Annex A to the Final Offering Memorandum (the “Questionnaire”) and such other
information in writing as the Company and Guarantors may reasonably request in writing for use in
connection with the Shelf Registration Statement or Prospectus included therein and in any
application to be filed with or under state securities laws. At least 30 days prior to the filing
of the Shelf Registration Statement, the Company will provide notice to the Holders of its
intention to file the Shelf Registration Statement; provided, however, that if the Company elects
to register the Registrable Securities pursuant to the Shelf Registration Statement that has
already been declared effective, the Company will provide notice to the Holders of its intention to
file the initial Prospectus relating to the Registrable Securities at least 30 days prior to such
filing. In order to be named as a selling securityholder in the Shelf Registration Statement or
Prospectus at the time of effectiveness of the Shelf Registration Statement or filing of such
Prospectus, as

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applicable, each Holder must no later than 20 days following notice by the Company of such
filing, furnish the completed Questionnaire and such other information that the Company may
reasonably request in writing, if any, to the Company in writing and the Company will include the
information from the completed Questionnaire and such other information, if any, in the Shelf
Registration Statement and the Prospectus, as necessary and in a manner, so that upon effectiveness
of the Shelf Registration Statement the Holder will be permitted to deliver the Prospectus to
purchasers of the Holder’s Registrable Securities. From and after the date that the Shelf
Registration Statement becomes effective, upon receipt of a completed Questionnaire and such other
information that the Company may reasonably request in writing, if any, the Company will as
promptly as practicable but in any event within 15 Business Days of such receipt, or within 15
Business Days of the end of any period during which the Company has suspended use of the
Prospectus, any amendments or supplements to the Shelf Registration Statement necessary for such
Holder to be named as a selling securityholder in the Prospectus contained therein to permit such
Holder to deliver the Prospectus to purchasers of the Holder’s Securities (subject to the Company’s
right to suspend the Shelf Registration Statement as described in Section 2(e) below); provided
that from and after the beginning of the first calendar quarter after the three-month anniversary
of the date on which the Shelf Registration Statement initially becomes effective, the Company
shall not be required to file any such amendment or supplement to the Shelf Registration Statement
(including by way of supplement to the Prospectus or filing of a document to be incorporated by
reference in the Shelf Registration Statement or Prospectus) to add Holders for such purpose on
more than one occasion per calendar quarter. Holders that do not deliver a completed written
Questionnaire and such other information, as provided for in this Section 2(a)(iii), will not be
named as selling securityholders in the Prospectus. Each Holder named as a selling securityholder
in the Prospectus agrees to promptly furnish to the Company all information required to be
disclosed in order to make information previously furnished to the Company by the Holder not
materially misleading. In addition, each such Holder agrees to promptly furnish to the Company any
other information regarding such Holder and the distribution of such Holder’s Registrable
Securities as the Company and the Guarantors may from time to time reasonably request in writing.

     (iv) Each Holder agrees that if such Holder wishes to sell Registrable Securities pursuant to
the Shelf Registration Statement and related Prospectus it will do so only in accordance with
Section 2(a)(iii) and subject to Section 2(e). Each Holder agrees not to sell any Registrable
Securities pursuant to the Shelf Registration Statement without delivering, or causing to be
delivered, a Prospectus to the purchaser thereof and, following termination of the Shelf
Effectiveness Period, to notify the Company, within ten days of a written request by the Company,
of the amount of Registrable Securities sold pursuant to the Shelf Registration Statement and, in
the absence of a response, the Company may assume that all of such Holder’s Registrable Securities
have been so sold.

     (v) The Company represents and agrees that, unless it obtains the prior consent of the
Majority Holders or the consent of the managing Underwriter in connection with any Underwritten
Offering of Registrable Securities, and each Holder represents and agrees that, unless it obtains
the prior consent of the Company and any such Underwriter, it will not make any offer relating to
the Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise
constitute a Free Writing Prospectus, required to be filed with the SEC. The Company represents
that any Issuer Free Writing Prospectus will not include any information that conflicts with the
information contained in the Shelf Registration Statement or the Prospectus; and that any Issuer
Free Writing Prospectus, when taken together with the information in the Shelf Registration
Statement and the Prospectus, will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

          The Company agrees to supplement or amend the Shelf Registration Statement if required by the
Securities Act or the rules and regulations thereunder or by the instructions applicable to the
registration form used by the Company. In addition, to the extent the Company does not reasonably
object, the

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Company agrees to supplement or amend the Shelf Registration Statement as reasonably requested by
the Initial Purchasers with respect to information relating to such Initial Purchasers or as
reasonably requested by the Trustee on behalf of the Holders covered by such Shelf Registration
Statement with respect to information relating to such Holders.

     (b) Expenses. The Company and the Guarantors shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a). Each Holder shall pay all underwriting
discounts, commissions and transfer taxes, if any, relating to the sale or disposition of such
Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

     (c) Effectiveness. After the Shelf Registration Statement is effective, if the
offering of Registrable Securities pursuant to the Shelf Registration Statement is interfered with
by any stop order, injunction or other order or requirement of the SEC or any other governmental
agency or court, such Shelf Registration Statement will be deemed not to have been effective during
the period of such interference, until the offering of Registrable Securities pursuant to such
Shelf Registration Statement may legally resume.

     (d) Liquidated Damages. Each of the following is a “Registration Default”: (w) the
Shelf Registration Statement has not been filed with the SEC on or before the 191st day
following the First Closing Date, (x) the Shelf Registration Statement has not become effective by
the Shelf Effectiveness Deadline, provided that a failure of the shelf registration statement to
become effective by the Shelf Effectiveness Deadline will not constitute a registration default if
such failure arises from a delay in effectiveness based upon the advice of the Company’s legal
counsel and legal counsel for the Initial Purchasers, unless such failure continues after the first
anniversary of the earliest date of original issuance of any of the Notes; (y) after the Shelf
Registration Statement has become effective, subject to Section 2(e), the Shelf Registration
Statement fails to be effective or usable by the Holders without being succeeded within ten
Business Days by a post-effective amendment or a report filed with the SEC pursuant to the Exchange
Act that cures the failure to be effective or usable or (z) the Shelf Registration Statement has
become effective and then ceases to remain effective or otherwise available for more than the
Suspension Period (as defined in Section 2(e)). If a Registration Default occurs, additional
interest, as liquidated damages (“Liquidated Damages”), will accrue, from and including the day
following the Registration Default to but excluding the earlier of (1) the day on which the
Registration Default has been cured and (2) the day after the end of the Shelf Effectiveness
Period, at a rate per annum of 0.25% of the principal amount of the Notes constituting Registrable
Securities to and including the 90th day following such Registration Default and at a
rate of 0.50% of the principal amount of the Notes constituting Registrable Securities from and
after the 91st day following such Registration Default until all Registration Defaults
have been cured; provided that (i) in no event shall Liquidated Damages accrue at a rate per annum
exceeding 0.50% of the principal amount of the Registrable Securities, (ii) no Liquidated Damages
shall accrue on a Security that is not a Registrable Security and (iii) Liquidated Damages shall
not accrue under clause (y) or (z) above with respect to any Holder that does not timely complete
and deliver a Questionnaire. Upon the cure of all Registration Defaults then continuing, the
accrual of Liquidated Damages will automatically cease and the interest rate borne by the
Registrable Securities will revert to the original interest rate at such time. Liquidated Damages
shall be computed based on the actual number of days elapsed in each 90-day period in which the
Shelf Registration Statement is not effective or is unusable. Liquidated Damages will be paid
semi-annually in arrears, with the first semi-annual payment due on the first interest payment
date, as applicable, following the date on which such Liquidated Damages begin to accrue. If a
Holder converts some or all of its Notes into Common Shares when there exists a Registration
Default with respect to such Notes, the Holder will not be entitled to receive Liquidated Damages
on such Common Shares and will not receive any additional shares or cash upon conversion. Holders
that have converted Notes into Common Shares will not be entitled to receive any Liquidated Damages
with respect to such Common Shares or the Registrable Securities converted.

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     The parties agree that the sole monetary damages payable for a violation of the terms of this
Agreement with respect to which Liquidated Damages are expressly provided shall be such Liquidated
Damages. Nothing shall preclude a Holder of Registrable Securities from pursuing or obtaining
specific performance or equitable relief with regard to this Agreement.

     A Registration Default under clause (w) shall be cured upon filing of the Shelf Registration
Statement. A Registration Default under clause (x) above shall be cured upon the effectiveness of
the Shelf Registration Statement. A Registration Default under clause (y) or (z) above shall be
cured on the date an amended Shelf Registration Statement becomes effective or the Company
otherwise declares the Shelf Registration Statement and the Prospectus useable. The Company will
have no liabilities for monetary damages other than the Liquidated Damages with respect to any
Registration Default.

     The parties agree that the Liquidated Damages provided for in this Section 2(d) constitute a
reasonable estimate of the damages that may be incurred by Holders of Registrable Securities and do
not constitute a penalty.

     (e) Suspension. The Company may suspend the use of any Prospectus, without incurring
or accruing any obligation to pay Liquidated Damages pursuant to Section 2(d), for a period not to
exceed 45 days in any 90-day period or an aggregate of 120 calendar days in any twelve-month period
(each, a “Suspension Period”) if the Company shall have determined in good faith that because of
valid business reasons (not including avoidance of the Company’s obligations hereunder), including
without limitation proposed or pending corporate developments and similar events or because of
filings with the SEC, it is in the best interests of the Company to suspend such use, and prior to
suspending such use the Company provides the Holders with notice of such suspension, which notice
need not specify the nature of the event giving rise to such suspension. If the disclosure relates
to a previously undisclosed proposed or pending material business transaction, the disclosure of
which the Company determines in good faith would be reasonably likely to impede its ability to
consummate such transaction, or would otherwise be seriously detrimental to the Company and its
subsidiaries taken as a whole, the Company may extend the suspension period from 45 days to 60 days
in any 90 day period. Each Holder shall keep confidential at all times any communications received
by it from the Company regarding the suspension of the use of the Prospectus, except as required by
applicable law.

     3. Registration Procedures. (a) In connection with their obligations pursuant to the
Section 2, the Company and the Guarantors shall as expeditiously as possible:

     (i) prepare and file with the SEC the Shelf Registration Statement on the appropriate
form under the Securities Act, (x) which form shall be selected by the Company and the
Guarantors and shall be available for the sale of the Registrable Securities by the Holders
thereof and (y) which Shelf Registration Statement shall comply as to form in all material
respects with the requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; and use their reasonable efforts to cause such
Shelf Registration Statement to become effective and remain effective for the Shelf
Effectiveness Period;

     (ii) prepare and file with the SEC such amendments and post-effective amendments to the
Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement
effective for the Shelf Effectiveness Period and cause each Prospectus to be supplemented by
any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act; and keep each Prospectus current during the Shelf Effectiveness
Period;

     (iii) to the extent any Issuer Free Writing Prospectus is used, file with the SEC any
Issuer Free Writing Prospectus that is required to be filed by the Company or the Guarantors
with

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the SEC in accordance with the Securities Act and to retain any Issuer Free Writing
Prospectus not required to be filed;

     (iv) furnish to each Holder of Registrable Securities, to counsel for the Initial
Purchasers and to each Underwriter of an Underwritten Offering of Registrable Securities, if
any, without charge, as many copies of each Prospectus, including each preliminary
Prospectus or Issuer Free Writing Prospectus, and any amendment or supplement thereto, in
order to facilitate the sale or other disposition of the Registrable Securities thereunder;
and the Company and the Guarantors consent to the use of such Prospectus, preliminary
Prospectus or such Issuer Free Writing Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable Securities covered
by and in the manner described in such Prospectus, preliminary Prospectus or such Issuer
Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable
law;

     (v) use their reasonable efforts to register or qualify as soon as practicable the
Registrable Securities under all applicable state securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by the Shelf Registration
Statement shall reasonably request in writing by the time the applicable Shelf Registration
Statement becomes effective; and do any and all other acts and things that may be reasonably
necessary or advisable to enable each Holder to complete the disposition in each such
jurisdiction of the Registrable Securities owned by such Holder; provided that neither the
Company nor any Guarantor shall be required to (1) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (2) file any general consent to service of process in any such
jurisdiction or (3) subject itself to taxation in any such jurisdiction if it is not so
subject; and cooperate with such Holders in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.;

     (vi) notify each Holder of Registrable Securities and one counsel (plus one Canadian
counsel) for the Initial Purchasers promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (1) when the Shelf Registration Statement has become
effective and when any post-effective amendment thereto has been filed and becomes
effective, when any Issuer Free Writing Prospectus has been filed or any amendment or
supplement to the Prospectus or any Issuer Free Writing Prospectus has been filed, (2) of
any request by the SEC or any state securities authority for amendments and supplements to
the Shelf Registration Statement, Prospectus or any Issuer Free Writing Prospectus or for
additional information after the Shelf Registration Statement has become effective, (3) of
the issuance by the SEC or any state securities authority of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of any proceedings for
that purpose, including the receipt by the Company of any notice of objection of the SEC to
the use of the Shelf Registration Statement or any post-effective amendment thereto pursuant
to Rule 401(g)(2) under the Securities Act, (4) if, between the applicable effective date of
the Shelf Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company or any Guarantor
contained in any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to an offering of such Registrable Securities cease to be true
and correct in all material respects or if the Company or any Guarantor receives any
notification with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for such
purpose, (5) of the happening of any event during the period the Shelf Registration
Statement is effective that makes any statement made in such Shelf Registration Statement or
the related Prospectus or any Issuer Free Writing Prospectus untrue in any material respect
or that requires the making of any changes in such Shelf Registration Statement or

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Prospectus or any Issuer Free Writing Prospectus in order to make the statements
therein not misleading and (6) of any determination by the Company or any Guarantor that a
post-effective amendment to the Shelf Registration Statement or any amendment or supplement
to the Prospectus or any Issuer Free Writing Prospectus would be appropriate;

     (vii) use their reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of the Shelf Registration Statement or to resolve any objection of the SEC
pursuant to Rule 401(g)(2), including by filing an amendment to such Shelf Registration
Statement on the proper form, at the earliest possible moment and provide immediate notice
to each Holder of the withdrawal of any such order or such resolution;

     (viii) furnish to each Holder of Registrable Securities included in such Shelf
Registration Statement, without charge, at least one conformed copy of each Shelf
Registration Statement and any post-effective amendment thereto (without any documents
incorporated therein by reference or exhibits thereto, unless requested);

     (ix) cooperate with the Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and enable such Registrable Securities to be issued in
such denominations and registered in such names (consistent with the provisions of the
Indenture) as such Holders may reasonably request at least one Business Day prior to the
closing of any sale of Registrable Securities;

     (x) upon the occurrence of any event contemplated by Section 3(a)(vi)(2) through (6)
hereof, use their reasonable efforts to prepare and file with the SEC a supplement or
post-effective amendment to the Shelf Registration Statement or the related Prospectus or
any Issuer Free Writing Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered (or, to the extent permitted by
law, made available) to purchasers of the Registrable Securities, such Prospectus or Issuer
Free Writing Prospectus, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and the Company
and the Guarantors shall notify the Holders of Registrable Securities to suspend use of the
Prospectus or any Issuer Free Writing Prospectus, as the case may be, as promptly as
practicable after the occurrence of such an event, and such Holders hereby agree to suspend
use of the Prospectus or any Issuer Free Writing Prospectus, as the case may be, until the
Company and the Guarantors have amended or supplemented the Prospectus or any Issuer Free
Writing Prospectus, as the case may be, to correct such misstatement or omission;

     (xi) a reasonable time prior to the filing of the Shelf Registration Statement, any
Prospectus, any Issuer Free Writing Prospectus, any amendment to the Shelf Registration
Statement or amendment or supplement to a Prospectus or to a Issuer Free Writing Prospectus,
provide copies of such document to one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel for the Initial
Purchasers); and the Company and the Guarantors shall use their reasonable best efforts to
reflect in the document, when so filed, such comments as are reasonably proposed, provided
that such comments are provided by two Business Days of receipt of any such documents; and
provided further that, the Company and the Guarantors shall not be required to provide to
such counsel pursuant to this paragraph copies of any proposed Exchange Act filings by the
Company or the Guarantors;

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     (xii) cause the Indenture to be qualified under the Trust Indenture Act in connection
with the registration of the Registrable Securities; cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for the Indenture to be
so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use
their reasonable efforts to cause the Trustee to execute, all documents as may be required
to effect such changes and all other forms and documents required to be filed with the SEC
to enable the Indenture to be so qualified in a timely manner;

     (xiii) make available for inspection by a representative of the Holders of the
Registrable Securities (an “Inspector”), any Underwriter participating in an Underwritten
Offering pursuant to such Shelf Registration Statement and one firm of accountants, if any,
designated by a majority of the Holders of Registrable Securities covered by such Shelf
Registration and in an Underwritten Offering, one counsel (plus one Canadian counsel) and
one firm of accountants, if any, designated by such Underwriter, at reasonable times and in
a reasonable manner, all pertinent financial and other records, documents and properties of
the Company and its subsidiaries and cause the respective officers, directors and employees
of the Company and the Guarantors to supply all information reasonably requested by any such
Inspector, Underwriter, counsel or accountant in connection with the Shelf Registration
Statement; provided that if any such information is identified by the Company or any
Guarantor as being confidential or proprietary, each Person receiving such information shall
take such actions as are reasonably necessary to protect the confidentiality of such
information to the extent such action is otherwise not inconsistent with, an impairment of
or in derogation of the rights and interests of any Inspector, Holder, Underwriter, counsel
or accountant;

     (xiv) use their reasonable efforts to cause all Registrable Securities to be listed on
any securities exchange or any automated quotation system on which similar securities issued
or guaranteed by such Issuer are then listed if requested by the majority of the Holders
whose Registrable Securities are covered by such Shelf Registration Statement, to the extent
such Registrable Securities and Issuers satisfy applicable listing requirements;

     (xv) if reasonably requested by any Holder of Registrable Securities covered by the
Shelf Registration Statement, promptly include in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as such Holder reasonably requests to
be included therein and make all required filings of such Prospectus supplement or such
post-effective amendment as soon as reasonably practicable after the Company has received
notification of the matters to be so included in such filing; and

     (xvi) enter into such customary agreements and take all such other actions in
connection therewith (including those requested by the Holders of a majority in principal
amount of the Registrable Securities covered by the Shelf Registration Statement) in order
to expedite or facilitate the disposition of such Registrable Securities including, but not
limited to, an Underwritten Offering and in such connection, (1) to the extent possible,
make such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Company and its subsidiaries and
the Shelf Registration Statement, Prospectus, any Issuer Free Writing Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any, in each
case, in form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings of comparable securities and confirm the same if and when requested,
(2) obtain opinions of counsel to the Company and the Guarantors (which counsel and
opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders of a
majority in principal amount of the Registrable Securities being sold and such Underwriters
and their respective counsel) addressed to each selling Holder and Underwriter of
Registrable

-10-

 

Securities, covering the matters customarily covered in opinions requested in
underwritten offerings of comparable securities, (3) obtain “comfort” letters from the
independent certified public accountants of the Company and the Guarantors (and, if
necessary, any other certified public accountant of any subsidiary of the Company or any
Guarantor, or of any business acquired by the Company or any Guarantor for which financial
statements and financial data are or are required to be included in the Shelf Registration
Statement) addressed to each selling Holder (to the extent permitted by applicable
professional standards) and Underwriter of Registrable Securities, such letters to be in
customary form and covering matters of the type customarily covered in “comfort” letters in
connection with underwritten offerings of comparable securities, including but not limited
to financial information contained in any preliminary Prospectus, Prospectus or Issuer Free
Writing Prospectus and (4) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the Registrable Securities
being sold or the Underwriters, and which are customarily delivered in underwritten
offerings of comparable securities, to evidence the continued validity of the
representations and warranties of the Company and the Guarantors made pursuant to clause (1)
above and to evidence compliance in all material respects with any customary conditions
contained in an underwriting agreement.

     (b) The Company may require each Holder of Registrable Securities to furnish to the Company
such information regarding such Holder and the proposed disposition by such Holder of such
Registrable Securities as the Company and the Guarantors may from time to time reasonably request
in writing, and the Company and the Guarantors may exclude from such registration the Registrable
Securities of any Holder that fails to furnish such information within a reasonable time after
receiving such request.

     (c) Each Holder of Registrable Securities covered in the Shelf Registration Statement agrees
that, upon receipt of any notice from the Company or the Guarantors of the happening of any event
of the kind described in Section 3(a)(vi)(2) through 3(a)(vi)(6) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement
until such Holder’s receipt of the copies of the supplemented or amended Prospectus and any Issuer
Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company
or the Guarantors, such Holder will deliver to the Company and the Guarantors all copies in its
possession, other than permanent file copies then in such Holder’s possession, of the Prospectus
and any Issuer Free Writing Prospectus covering such Registrable Securities.

     (d) The Holders of Registrable Securities covered by the Shelf Registration Statement who
desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such
Underwritten Offering, the Underwriters that will administer the offering will be selected by the
Holders of a majority in principal amount of the Registrable Securities included in such offering.
In no event will an Underwritten Offering of Registrable Securities be made without the prior
written agreement of the Company (such agreement not to be unreasonably withheld).

     4. Indemnification and Contribution. (a) The Company and each Guarantor, jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser and each Holder, their
respective affiliates, directors and officers and each Person, if any, who controls any Initial
Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and liabilities (including,
without limitation, legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), that arise out of, or
are based upon, (1) any untrue statement or alleged untrue statement of a material fact contained
in the Shelf Registration Statement or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements therein not
misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in
any Prospectus, any Issuer Free Writing Prospectus used in violation of this Agreement

-11-

 

or any “issuer information” (“Issuer Information”) filed or required to be filed pursuant
to Rule 433(d) under the Securities Act, or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case except insofar as such losses, claims,
damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser or information relating to any Holder furnished to the Company in writing
through The Representatives or any selling Holder expressly for use therein. In connection with
any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and
severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their respective affiliates
and each Person who controls such Persons (within the meaning of the Securities Act and the
Exchange Act) to the same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with the Shelf Registration Statement, any Prospectus, any
Issuer Free Writing Prospectus or any Issuer Information (except as to any information relating to
any such Underwriter, selling brokers, dealers and similar securities industry professionals
participating in the relevant distribution).

     (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless each of the
Company, the Guarantors, the Initial Purchasers and the other selling Holders, the directors of the
Company and the Guarantors, each officer of the Company and the Guarantors who signed the Shelf
Registration Statement and each Person, if any, who controls the Company, the Guarantors, any
Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph
(a) above, but only with respect to any losses, claims, damages or liabilities that arise out of,
or are based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in the Shelf Registration Statement, any
Prospectus and any Issuer Free Writing Prospectus.

     (c) If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Person in respect of which indemnification
may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”)
shall promptly notify the Person against whom such indemnification may be sought (the “Indemnifying
Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve
it from any liability that it may have under this Section 4 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure;
and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have to an Indemnified Person otherwise than under this Section 4. If
any such proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (or if the Holders, to the Majority Holders) to represent
the Indemnified Person and any others entitled to indemnification pursuant to this Section 4 that
the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of
such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person, and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it that are different from or in
addition to those available to the Indemnifying Person (or if the Holders, to the Majority
Holders); or (iv) the named parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and representation of

-12-

 

both parties by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood and agreed that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and
any control Persons of such Initial Purchaser shall be designated in writing by the
Representatives, (y) for any Holder, its directors and officers and any control Persons of such
Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be
designated in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or
could have been a party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

     (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company and the
Guarantors from the offering of the Securities, on the one hand, and by the Holders from receiving
Securities registered under the Securities Act, on the other hand, or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the relative fault of the
Company and the Guarantors on the one hand and the Holders on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative fault of the Company and the Guarantors
on the one hand and the Holders on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company and the
Guarantors or by the Holders and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

     (e) The Company, the Guarantors and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata allocation
(even if the Holders were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of this Section 4, in no
event shall a Holder be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was

-13-

 

not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute
pursuant to this Section 5 are several and not joint.

     (f) The remedies provided for in this Section 4 are not exclusive and shall not limit any
rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

     (g) The indemnity and contribution provisions contained in this Section 4 shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of the Initial Purchasers or any Holder or any Person
controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the
Guarantors or the officers or directors of or any Person controlling the Company or the Guarantors
and (iii) any sale of Registrable Securities pursuant to the Shelf Registration Statement.

     5. General.

     (a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree
that (i) the rights granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of any other outstanding securities issued or
guaranteed by the Company or any Guarantor under any other agreement and (ii) neither the Company
nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any
agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof.

     (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company and the Guarantors have obtained the
written consent of Majority Holders affected by such amendment, modification, supplement, waiver or
consent; provided that no amendment, modification, supplement, waiver or consent to any departure
from the provisions of Section 4 hereof that adversely affects the rights of any Holder of
Registrable Securities shall be effective as against any such Holder unless consented to in writing
by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this
Section 5(b) shall be by a writing executed by each of the parties hereto.

     (c) Notices. All notices and other communications provided for or permitted hereunder shall
be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such
Holder to the Company in a Questionnaire, which address initially shall be the address of the
Initial Purchasers set forth in the Purchase Agreement (and thereafter at such other address of
which notice is given in accordance with the provisions of this Section 5(c)); (ii) if to the
Company and the Guarantors, initially at the Company’s address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance with the provisions of
this Section 5(c); and (iii) to such other persons at their respective addresses as provided in the
Purchase Agreement and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 5(c). All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery. Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.

-14-

 

     (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors, assigns and transferees of each of the parties, including, without limitation and
without the need for an express assignment, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Registrable Securities in
violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder
shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and
holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and such Person shall be
entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial
Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to
any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.

     (e) Third Party Beneficiaries. Each Initial Purchaser (even if such Initial Purchaser is not
a Holder of Registrable Securities) shall be a third party beneficiary to the agreements made
hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder. Each Holder shall be a third
party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of other Holders hereunder.

     (f) Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.

     (g) Specific Enforcement. Without limiting the remedies available to the Initial Purchasers
and the Holders, the Company acknowledges that any failure by the Company to comply with its
obligations under Section 2(a) may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it may not be possible to measure
damages for such injuries precisely and that, in the event of any such failure, any Initial
Purchaser or any Holder may seek such relief as may be required to specifically enforce the
Company’s obligations under Sections 2(a).

     (h) Headings. The headings in this Agreement are for convenience of reference only, are not a
part of this Agreement and shall not limit or otherwise affect the meaning hereof.

     (i) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

     (j) Miscellaneous. This Agreement contains the entire agreement between the parties relating
to the subject matter hereof and supersedes all oral statements and prior writings with respect
thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the
remainder of the terms, provisions, covenants and restrictions contained herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated. The Company, the
Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the
invalid, void or unenforceable provisions with valid provisions the economic effect of which comes
as close as possible to that of the invalid, void or unenforceable provisions.

-15-

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	Very truly yours,

NORTEL NETWORKS CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Katharine B. Stevenson 	 
	 	 	Title:  	Treasurer 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	Gordon A. Davies	 
	 	 	Title:  	General Counsel—Corporate and Corporate
Secretary 	 
	 
	 	NORTEL NETWORKS LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	Katharine B. Stevenson 	 
	 	 	Title:  	Treasurer 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Gordon A. Davies 	 
	 	 	Title:  	General Counsel—Corporate and Corporate
Secretary 	 
	 
	 	NORTEL NETWORKS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Allen K. Stout 	 
	 	 	Title:  	Vice President, Finance 	 
	 

-16-

 

Accepted: March 28, 2007

[                      ],

as Representatives of the Several Initial Purchasers listed
in Schedule 1 to the Purchase Agreement.

BY: [                      ],

on behalf of the Representatives

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

-17-exv4w1

 

Exhibit
4.1

NORTEL NETWORKS CORPORATION,

as Issuer,

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

as Guarantors,

and

THE BANK OF NEW YORK,

as Trustee, Registrar, Paying Agent and Conversion Agent

$575,000,000 1.75% Convertible Senior Notes due 2012 and

$575,000,000 2.125% Convertible Senior Notes due 2014

 

INDENTURE

Dated as of March 28, 2007

 

 

	 	 	 	 	 	 	 
	ARTICLE 1 DEFINITIONS	 	 	1	 
	SECTION 1.01.
	 	Definitions	 	 	1	 
	SECTION 1.02.
	 	Other Definitions	 	 	10	 
	SECTION 1.03.
	 	Incorporation by Reference of Trust Indenture Act	 	 	11	 
	SECTION 1.04.
	 	Rules of Construction	 	 	12	 
	ARTICLE 2 THE NOTES AND THE GUARANTEES	 	 	12	 
	SECTION 2.01.
	 	Form and Dating	 	 	12	 
	SECTION 2.02.
	 	Registrar, Paying Agent and Conversion Agent	 	 	17	 
	SECTION 2.03.
	 	Money for Notes Payments to be Held in Trust	 	 	17	 
	SECTION 2.04.
	 	Holder Lists	 	 	19	 
	SECTION 2.05.
	 	Transfer and Exchange	 	 	19	 
	SECTION 2.06.
	 	Replacement Notes	 	 	21	 
	SECTION 2.07.
	 	Outstanding Notes	 	 	21	 
	SECTION 2.08.
	 	When Treasury Notes Disregarded	 	 	22	 
	SECTION 2.09.
	 	Temporary Notes	 	 	22	 
	SECTION 2.10.
	 	Cancellation	 	 	23	 
	SECTION 2.11.
	 	Defaulted Interest	 	 	23	 
	SECTION 2.12.
	 	CUSIP Number	 	 	23	 
	SECTION 2.13.
	 	Judgment	 	 	23	 
	SECTION 2.14.
	 	Legends; Restricted Securities Legends	 	 	24	 
	ARTICLE 3 REDEMPTION	 	 	28	 
	SECTION 3.01.
	 	Optional Redemption	 	 	28	 
	SECTION 3.02.
	 	Notices to Trustee	 	 	28	 
	SECTION 3.03.
	 	Redemption for Changes in Canadian Withholding Taxes	 	 	28	 
	SECTION 3.04.
	 	Selection of Notes To Be Redeemed	 	 	29	 
	SECTION 3.05.
	 	Notice of Redemption	 	 	29	 
	SECTION 3.06.
	 	Effect of Notice of Redemption	 	 	30	 
	SECTION 3.07.
	 	Deposit of Redemption Price	 	 	30	 
	SECTION 3.08.
	 	Notes Redeemed in Part	 	 	31	 
	SECTION 3.09.
	 	Conversion Arrangement on Call for Redemption	 	 	31	 
	ARTICLE 4 COVENANTS	 	 	32	 
	SECTION 4.01.
	 	Payment of Notes	 	 	32	 

ii

 

	 	 	 	 	 	 	 
	SECTION 4.02.
	 	Reports	 	 	32	 
	SECTION 4.03.
	 	Compliance Certificate	 	 	33	 
	SECTION 4.04.
	 	Maintenance of Office or Agency	 	 	33	 
	SECTION 4.05.
	 	Reserved	 	 	33	 
	SECTION 4.06.
	 	Offer to Repurchase Upon a Change of Control	 	 	33	 
	SECTION 4.07.
	 	Payment of Additional Amounts	 	 	37	 
	SECTION 4.08.
	 	Registration Rights	 	 	38	 
	ARTICLE 5 SUCCESSORS	 	 	38	 
	SECTION 5.01.
	 	Amalgamation, Merger, Conveyance, Transfer or Lease	 	 	38	 
	SECTION 5.02.
	 	Successor Corporation Substituted	 	 	39	 
	SECTION 5.03.
	 	Offer to Repurchase on Change of Control	 	 	39	 
	SECTION 5.04.
	 	Amalgamation of the Issuer and NNL	 	 	39	 
	ARTICLE 6 DEFAULTS AND REMEDIES	 	 	40	 
	SECTION 6.01.
	 	Events of Default	 	 	40	 
	SECTION 6.02.
	 	Acceleration	 	 	41	 
	SECTION 6.03.
	 	Other Remedies	 	 	42	 
	SECTION 6.04.
	 	Waiver of Past Defaults	 	 	42	 
	SECTION 6.05.
	 	Control by Majority	 	 	42	 
	SECTION 6.06.
	 	Limitation on Suits	 	 	42	 
	SECTION 6.07.
	 	Rights of Holders to Receive Payment	 	 	43	 
	SECTION 6.08.
	 	Collection Suit by Trustee	 	 	43	 
	SECTION 6.09.
	 	Trustee May File Proofs of Claim	 	 	43	 
	SECTION 6.10.
	 	Priorities	 	 	43	 
	SECTION 6.11.
	 	Undertaking for Costs	 	 	44	 
	ARTICLE 7 THE TRUSTEE	 	 	44	 
	SECTION 7.01.
	 	Duties of the Trustee	 	 	44	 
	SECTION 7.02.
	 	Rights of the Trustee	 	 	45	 
	SECTION 7.03.
	 	Individual Rights of the Trustee	 	 	47	 
	SECTION 7.04.
	 	Trustee’s Disclaimer	 	 	47	 
	SECTION 7.05.
	 	Notice of Defaults	 	 	47	 
	SECTION 7.06.
	 	Reports by the Trustee to Holders	 	 	47	 
	SECTION 7.07.
	 	Compensation and Indemnity	 	 	47	 

iii

 

	 	 	 	 	 	 	 
	SECTION 7.08.
	 	Replacement of the Trustee	 	 	48	 
	SECTION 7.09.
	 	Successor Trustee by Merger, Etc.	 	 	50	 
	SECTION 7.10.
	 	Eligibility, Disqualification	 	 	50	 
	SECTION 7.11.
	 	Preferential Collection of Claims Against Issuer	 	 	50	 
	SECTION 7.12.
	 	Appointment of Co-Trustee	 	 	50	 
	ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE	 	 	51	 
	SECTION 8.01.
	 	Discharge of Indenture	 	 	51	 
	SECTION 8.02.
	 	Deposited Monies to be Held In Trust by Trustee	 	 	51	 
	ARTICLE 9 AMENDMENTS	 	 	51	 
	SECTION 9.01.
	 	Without the Consent of Holders	 	 	51	 
	SECTION 9.02.
	 	With the Consent of Holders	 	 	53	 
	SECTION 9.03.
	 	Compliance With the Trust Indenture Act	 	 	54	 
	SECTION 9.04.
	 	Notation on or Exchange of Notes	 	 	54	 
	SECTION 9.05.
	 	Trustee Protected	 	 	54	 
	SECTION 9.06.
	 	No Discharge, Revision,
Extinguishment, Novation, Rescission or Substitution	 	 	54	 
	ARTICLE 10 GENERAL PROVISIONS	 	 	55	 
	SECTION 10.01.
	 	Trust Indenture Act Controls	 	 	55	 
	SECTION 10.02.
	 	Notices	 	 	55	 
	SECTION 10.03.
	 	Communication by Holders With Other Holders	 	 	56	 
	SECTION 10.04.
	 	Certificate and Opinion as to Conditions Precedent	 	 	56	 
	SECTION 10.05.
	 	Statements Required in Certificate or Opinion	 	 	56	 
	SECTION 10.06.
	 	Legal Holidays	 	 	57	 
	SECTION 10.07.
	 	No Recourse Against Others	 	 	57	 
	SECTION 10.08.
	 	Counterparts	 	 	57	 
	SECTION 10.09.
	 	Other Provisions	 	 	57	 
	SECTION 10.10.
	 	Governing Law, Etc.	 	 	58	 
	SECTION 10.11.
	 	WAIVER OF JURY TRIAL	 	 	59	 
	SECTION 10.12.
	 	No Adverse Interpretation of Other Agreements	 	 	59	 
	SECTION 10.13.
	 	Successors	 	 	59	 
	SECTION 10.14.
	 	Severability	 	 	59	 
	SECTION 10.15.
	 	Table of Contents, Headings, Etc.	 	 	60	 

iv

 

	 	 	 	 	 	 	 
	SECTION 10.16.
	 	Interest Act (Canada)	 	 	60	 
	SECTION 10.17.
	 	Acts of Holders	 	 	60	 
	ARTICLE 11 COVENANT DEFEASANCE	 	 	61	 
	SECTION 11.01.
	 	Discharge by Deposit of Money or Notes	 	 	61	 
	SECTION 11.02.
	 	Application of Trust Money	 	 	62	 
	SECTION 11.03.
	 	Repayment to the Issuer or the Guarantor	 	 	62	 
	ARTICLE 12 CONVERSION OF NOTES	 	 	63	 
	SECTION 12.01.
	 	Right to Convert	 	 	63	 
	SECTION 12.02.
	 	Exercise of Conversion Privilege;
Issuance of Common Shares on Conversion; No Adjustment for Interest or Dividends	 	 	63	 
	SECTION 12.03.
	 	Cash Payments in Lieu of Fractional Common Shares	 	 	65	 
	SECTION 12.04.
	 	Conversion Price	 	 	65	 
	SECTION 12.05.
	 	Adjustment of Conversion Rate	 	 	65	 
	SECTION 12.06.
	 	Effect of Reclassification,
Amalgamation, Consolidation, Merger or Sale	 	 	69	 
	SECTION 12.07.
	 	Conversion Upon a Make Whole Change of Control	 	 	71	 
	SECTION 12.08.
	 	Taxes on Shares Issued	 	 	72	 
	SECTION 12.09.
	 	Reservation of Shares; Shares to be
Fully Paid; Listing of Common Shares	 	 	72	 
	SECTION 12.10.
	 	Responsibility of Trustee	 	 	73	 
	SECTION 12.11.
	 	Notice to Holders Prior to Certain Actions	 	 	73	 
	SECTION 12.12.
	 	Restriction on Common Shares Issuable Upon Conversion	 	 	74	 
	SECTION 12.13.
	 	Calculations and Determinations	 	 	75	 
	ARTICLE 13 MEETINGS OF HOLDERS OF NOTES	 	 	75	 
	SECTION 13.01.
	 	Purposes for Which Meetings May Be Called	 	 	75	 
	SECTION 13.02.
	 	Call, Notice and Place of Meetings	 	 	75	 
	SECTION 13.03.
	 	Persons Entitled to Vote at Meetings	 	 	76	 
	SECTION 13.04.
	 	Quorum; Action	 	 	76	 
	SECTION 13.05.
	 	Determination of Voting Rights; Conduct and Adjournment of Meetings	 	 	77	 
	SECTION 13.06.
	 	Counting Votes and Recording Action of Meetings	 	 	77	 

v

 

CROSS-REFERENCE TABLE*

	 	 	 	 	 
	Trust Indenture	 	Indenture
	Act Section	 	Section
	310(a)(1)
	 	 	7.10	 
	(a)(2)
	 	 	7.11	 
	(a)(3)
	 	 	n/a	 
	(a)(4)
	 	 	n/a	 
	(b)
	 	 	7.08, 7.10, 10.02	 
	(c)
	 	 	n/a	 
	(g)
	 	 	7.10	 
	 
	311(a)
	 	 	7.11	 
	(b)
	 	 	7.11	 
	(c)
	 	 	n/a	 
	 
	312(a)
	 	 	2.04	 
	(b)
	 	 	10.03	 
	(c)
	 	 	10.03	 
	 
	313(a)
	 	 	7.06	 
	(b)(1)
	 	 	n/a	 
	(b)(2)
	 	 	5.07, 7.05	 
	(c)
	 	 	7.06, 10.02	 
	(d)
	 	 	7.06	 
	 
	314(a)
	 	 	4.02, 6.02(b), 10.02, 10.05	 
	(b)
	 	 	n/a	 
	(c)(1)
	 	 	10.04	 
	(c)(2)
	 	 	10.04	 
	(c)(3)
	 	 	n/a	 
	(d)
	 	 	n/a	 
	(e)
	 	 	10.05	 
	(f)
	 	 	n/a	 
	 
	315(a)
	 	 	7.01	(b)
	(b)
	 	 	7.05, 10.02	 
	(c)
	 	 	7.01	(a)
	(d)
	 	 	7.01	(c)
	(e)
	 	 	6.11	 
	 
	316(a)(last sentence)
	 	 	n/a	 
	(a)(1)(A)
	 	 	6.05	 
	(a)(1)(B)
	 	 	6.04	 
	(a)(2)
	 	 	n/a	 
	(b)
	 	 	6.04, 6.07	 
	(c)
	 	 	9.04	 
	 
	317(a)(1)
	 	 	6.08	 
	(a)(2)
	 	 	6.09	 
	(b)
	 	 	2.03	(c)
	 
	318(a)
	 	 	10.01	 
	(b)
	 	 	n/a	 
	(c)
	 	 	10.01	 

 

			
	“n/a” means not applicable.
	*        This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the
Indenture

vi

 

     THIS INDENTURE, dated as of March 28, 2007, is among Nortel Networks Corporation, a
Canadian corporation (together with any successors, the “Issuer”), Nortel Networks Limited, a
Canadian corporation (together with any successors, “NNL”), Nortel Networks Inc., a Delaware
corporation (together with any successors, “NNI” and, together with NNL, the “Guarantors”), and The
Bank of New York, a New York banking corporation, as trustee (together with any successors, the
“Trustee”), Registrar, Paying Agent and Conversion Agent. The Issuer has duly authorized the
creation of its 1.75% Convertible Senior Notes due 2012 (the “2012 Notes”) and its 2.125%
Convertible Senior Notes due 2014 (the “2014 Notes” and, together with the 2012 Notes, the
“Notes”). Each Guarantor has duly authorized its Guarantee of the Notes to the extent described
herein, and each of the Issuer, each Guarantor and the Trustee have duly authorized the execution
and delivery of this Indenture. Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the holders from time to time of the Notes:

ARTICLE 1

DEFINITIONS

SECTION 1.01. Definitions.

     “2012 Notes” has the meaning specified in the preamble hereto.

     “2014 Notes” has the meaning specified in the preamble hereto.

     “Additional Amounts” means any additional payments required to be made by the Issuer or the
Guarantors as a result of a requirement to withhold or deduct for or on account of Canadian Tax
pursuant to Section 4.07 hereof.

     “Additional Interest” means (i) any “Liquidated Damages,” as such term is defined in the
Registration Rights Agreement and (ii) any liquidated damages pursuant to Section 6.02(b) hereof.

     “Affiliate” means, when used with reference to any person, any other person directly or
indirectly controlling, controlled by, or under direct or indirect common control of, the referent
person. For the purposes of this definition, “control” when used with respect to any specified
person means the power to direct or cause the direction of management and policies of the referent
person, directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise. The terms “controlling” and “controlled” have meanings correlative of the foregoing.

     “Agent” means any Registrar, Paying Agent, Conversion Agent, authenticating agent or
co-registrar.

     “Agent Member” means any member of, or participant in, the Depositary.

     “Applicable Exchange Rate” means, on any date, the noon Dollar buying rate for Canadian
Dollars for wire transfers quoted in The City of New York, as certified for customs purposes by the
Federal Reserve Bank of New York.

1

 

     “Applicable Securities Exchange,” with respect to any security, means (i) if that security is
listed on the NYSE, the NYSE; (ii) if that security is listed on one or more U.S. national
securities exchange (other than the NYSE) and not listed on the TSX, the U.S. national securities
exchange with the highest volume of sales for that security on that date; (iii) if that security is
listed on (a) one or more U.S. national securities exchanges (other than the NYSE) and (b) the TSX,
whichever of such exchanges had the highest volume of sales for that security on that date; and
(iv) if that security is (a) listed on the TSX and (b) not listed on any U.S. national securities
exchange, the TSX.

     “Applicable Procedures” means, with respect to any transfer or transaction involving a Global
Security or beneficial interest therein, the rules and procedures of the Depositary for such Global
Security to the extent applicable to such transaction and as in effect from time to time.

     “Authorized Newspaper” means a newspaper in an official language of the country of publication
or in the English language customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in the place in connection with which
the term is used or in the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be made in the same
or in different newspapers in the same city meeting the foregoing requirements and in each case on
any Business Day.

     “Authorized Officers” means, with respect to, (i) each of the Issuer and NNL, any two of its
President and Chief Executive Officer, General Counsel, Chief Legal Officer, Chief Operating
Officer and Chief Financial Officer or any one of the aforesaid officers together with any one of
its Corporate Secretary, its Treasurer, any Assistant Secretary or any Assistant Treasurer; and
(ii) NNI, any one of its President, its Vice-President, Finance and Treasurer, any other of its
Vice-Presidents, its Secretary, or any of its Assistant Secretaries; provided that the Issuer, NNL
and NNI may, from time to time, designate additional officers who would qualify as “Authorized
Officers” pursuant to an Officers’ Certificate delivered to the Trustee.

     “Board of Directors” means, in respect of the Issuer or any Guarantor, the board of directors,
the executive committee or any other committee of that board or any group of directors of that
board, duly authorized to make a decision on the matter in question.

     “Board Resolution” means a copy of a resolution certified by the Corporate Secretary or an
Assistant Secretary of the Issuer or a Guarantor, as the case may be, to have been duly adopted by
the Board of Directors of the Issuer or such Guarantor, respectively, and to be in full force and
effect on the date of such certification.

     “Business Day” means any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York City (or the city in which the Corporate Trust Office of the
Trustee is located, if not New York City) are not required to be open or are authorized or
obligated by law to close.

     “Canadian Dollar” means the lawful currency of the Government of Canada.

     “Canadian Taxes” means any present or future taxes, duties, assessments or governmental
charges imposed or levied by or on behalf of the Government of Canada or of any

2

 

province or territory therein or thereof, or by any authority or agency therein or thereof
having power to tax.

     “Capital Stock” means:

	 	(a)	 	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 shares and preferred stock
of such person; and
	 
	 	(b)	 	with respect to any person that is not a corporation, any and all partnership,
membership or other equity interests of such person.

     “Certificated Note” means any Note issued under this Indenture in fully-registered,
certificated form (other than a Global Security).

     “Change of Control” means the occurrence of any of the following events:

	 	(a)	 	any “person,” including its affiliates and associates, or any “group,” in each
case, other than the Issuer, any one or more of the Issuer’s Subsidiaries or the
Issuer’s or the Issuer’s Subsidiaries’ employee benefit plans, files a Schedule 13D or
Schedule TO (or any successor schedule, form or report under the Exchange Act)
disclosing that such person or group (x) has become the “beneficial owner” of 50% or
more of the combined voting power of the Issuer’s Capital Stock having ordinary power
to elect members of the Issuer’s Board of Directors, or (y) has the power to, directly
or indirectly, elect a majority of the members of the Issuer’s Board of Directors;
provided that the foregoing shall not apply if as a result of, and immediately
following, the transaction giving a person such beneficial ownership (including an
exchange offer or a transaction referred to in clause (c) below), the holders of the
Common Shares or holders of the common shares of NNL immediately prior to such
transaction are, directly or indirectly, the beneficial owners of at least a majority
of the total voting power in the aggregate of all classes of Capital Stock of such
person;
	 
	 	(b)	 	a change of control occurs with respect to NNL which shall mean that the Issuer
ceases to be the “beneficial owner” of 100% of the voting power of the common shares of
NNL;
	 
	 	(c)	 	consummation of any transaction or event (whether by means of a liquidation,
share exchange, tender offer, consolidation, recapitalization, reclassification, merger
or amalgamation of the Issuer or any sale, lease or other transfer of 90% or more of
the Issuer’s consolidated assets) or a series of related transactions or events
pursuant to which Common Shares are exchanged for, converted into or constitute the
right to receive cash, securities or other property, in each case other than pursuant
to such a transaction, event or series of related transactions or events in which the
holders of Common Shares immediately prior to such transaction, event or series of
related transactions have, directly or indirectly, at least a majority of the total
voting power in the aggregate of all classes of Capital

3

 

	 	 	 	Stock of the continuing or surviving corporation (or of the parent of such
continuing or surviving corporation) immediately after such transaction, event or
series of related transactions; or
	 
	 	(d)	 	the Issuer or NNL is dissolved or liquidated,

provided, however, that a Change of Control shall not be deemed to have occurred if:

	 	(1)	 	the Change of Control Sale Price per Common Share for any five Trading Days
within the period of ten consecutive Trading Days ending immediately after the later of
the potential Change of Control or the public announcement of the potential Change of
Control (in the case of a potential Change of Control under clause (a) above) or the
period of ten consecutive Trading Days ending immediately before the Change of Control
(in the case of a potential Change of Control under clause (c) above) shall equal or
exceed 105% of the Conversion Price of the Notes in effect on the date of the potential
Change of Control or the public announcement of the potential Change of Control, as
applicable; or
	 
	 	(2)	 	at least 90% of the consideration (excluding cash payments for fractional
Common Shares) in the transaction or transactions constituting the potential Change of
Control consists of common shares that are, or upon issuance will be, traded on a U.S.
national securities exchange or the TSX.

     Notwithstanding the foregoing, any (i) amalgamation, consolidation or merger of the Issuer
with or into NNL (whether directly or indirectly by amalgamation, consolidation or merger with or
into an entity with only nominal assets created in anticipation or contemplation of such
amalgamation, consolidation or merger), (ii) transfer of assets solely between or among the Issuer,
NNL and any successor entity to the Issuer or NNL or (iii) liquidation or dissolution of the Issuer
or NNL resulting in the transfer of all of the assets of the Issuer or NNL to the Issuer, NNL or
any successor entity to the Issuer or NNL shall, in each case, not constitute a Change of Control;
provided that such transaction does not contravene the terms of Section 5.01.

     For purposes of this “Change of Control” definition:

	 	(i)	 	“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; and
	 
	 	(ii)	 	a “beneficial owner” will be determined in accordance with Rule
13d-3 under the Exchange Act, as in effect on the date of this Indenture.

     “Change of Control Sale Price,” on any date, means the closing sale price per Common Share (or
if no closing sale price is reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask prices) on such date as reported in
composite transactions for the Applicable Securities Exchange. In the absence of such quotations,
the Issuer shall be entitled to determine the Change of Control Sale Price on the

4

 

basis of such quotations as it considers appropriate. The Trustee shall be entitled to rely
exclusively upon the Issuer’s certification of the Change of Control Sale Price as set forth in an
Officers’ Certificate.

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

     “Common Shares” means any share of any class of the Issuer which has no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Issuer and which is not subject to redemption by the Issuer.
Subject to the provisions of Section 12.06, however, shares issuable on conversion of Notes shall
include only shares of the class designated as Common Shares of the Issuer at the date of this
Indenture or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Issuer and which are not subject to redemption by the Issuer; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such class resulting from
all such reclassifications bears to the total number of shares of all such classes resulting from
all such reclassifications.

     “Conversion Price” as of any day will equal $1,000 divided by the Conversion Rate applicable
to a particular series of Notes as of such date.

     “Conversion Rate” means (a) with respect to any 2012 Note, the initial conversion rate
specified in paragraph 16 of the form of Note attached as Exhibit A hereto, as adjusted in
accordance with the provisions of Article 12 hereof and (b) with respect to any 2014 Note, the
initial conversion rate specified in paragraph 16 of the form of Note attached as Exhibit B hereto,
as adjusted in accordance with the provisions of Article 12 hereof.

     “Corporate Trust Office” means the principal office of the Trustee at which at any particular
time its corporate trust business shall be administered.

     “Current Market Price” of the Common Shares on any day means the average of the Last Reported
Sale Price of the Common Shares for each of the 10 consecutive Trading Days ending on the earlier
of the day in question and the day before the Ex-Dividend Date with respect to the issuance or
distribution requiring such computation.

     “Default” means any event that is, or after notice or passage of time, or both, would be, an
Event of Default.

     “Depositary” means, with respect to any Global Securities, a clearing agency that is
registered as such under the Exchange Act and is designated by the Issuer to act as Depositary for
such Global Securities (or any successor securities clearing agency so registered), which shall
initially be DTC.

     “Dollar” or “$,”, unless otherwise indicated, means the lawful currency of the United States
of America.

5

 

     “DTC” means The Depository Trust Company, a New York corporation.

     “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     “Ex-Dividend Date” means the first date on which the Common Shares trade on the Applicable
Securities Exchange or in the applicable market, regular way, without the right to receive a
specified issuance or distribution or without giving effect to a specified stock split or stock
combination, as the case may be.

     “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant segment of the
accounting profession of the United States, which are in effect from time to time.

     “Global Class Action Settlement” means the Issuer’s agreement to settle certain significant
class action lawsuits pending in the U.S. District Court for the Southern District of New York and
related Canadian actions as disclosed in the Issuer’s Current Report on Form 8-K dated February 8,
2006.

     “Global Securities Legend” means the legend substantially in the form set forth in Section
2.14(b) hereof.

     “Guarantee” means the guarantee of each of the Guarantors as endorsed on each Global Security
and Certificated Note authenticated and delivered pursuant to this Indenture and shall include the
Guarantee set forth in Section 2.01(f) of this Indenture and all other obligations and covenants of
the Guarantors contained in this Indenture and any Global Security and Certificated Note.

     “Guarantor” means each of (a) Nortel Networks Limited, (b) at any time other than during a
Suspension Period, Nortel Networks Inc. and (c) any successor corporation to a Guarantor that has
become a Guarantor pursuant to the applicable provisions of this Indenture.

     “Guarantor Request” and “Guarantor Order” mean, respectively, a written request or order
signed in the name of a Guarantor by, in the case of NNL, any two Authorized Officers and, in the
case of NNI, any Authorized Officer, and delivered to the Trustee.

     “Indenture” means this Indenture as amended or supplemented from time to time.

     “Initial Purchasers” has the meaning set forth in the Purchase Agreement.

     “Interest Payment Date” means April 15 and October 15 of each year.

     “Investment Grade Status,” with respect to the Notes of any series, shall occur when the Notes
of such series have both (i) a rating of “BBB—” or higher from S&P and (ii) a rating of “Baa3” or
higher from Moody’s, and each such rating shall have been published by the applicable agency, in
each case with no negative outlook.

6

 

     “Issue Date” means the first date on which Notes are issued and authenticated under this
Indenture.

     “Issuer” has the meaning specified in the preamble hereto. References to the Issuer shall not
include any Subsidiary of the Issuer.

     “Issuer Articles” means the original or restated articles of incorporation, articles of
amendment, articles of amalgamation, articles of continuance, articles of reorganization or
articles of arrangement of the Issuer from time to time in effect and includes all amendments
thereto.

     “Issuer Request” and “Issuer Order” mean, respectively, a written request or order signed in
the name of the Issuer by any two Authorized Officers and delivered to the Trustee.

     “Last Reported Sale Price” means, on any date, with respect to (a) any security listed on an
Applicable Securities Exchange other than the TSX, the closing sale price per share (or if no
closing sale price is reported, the average of the bid and asked prices or, if more than one in
either case, the average of the average bid and the average asked prices) on that date as reported
by such Applicable Securities Exchange, (b) any security listed on the TSX, (x) the closing sale
price per share (or if no closing sale price is reported, the average of the bid and asked prices
or, if more than one in either case, the average of the average bid and the average asked prices)
on that date as reported by such Applicable Securities Exchange multiplied by (y) the Applicable
Exchange Rate for such date, and (c) any security that is not listed on an Applicable Securities
Exchange, the average of the mid-point of the last bid and asked prices of such security on the
relevant date from each of at least three nationally recognized independent U.S. investment banking
firms selected by the Issuer for this purpose, or if such prices are not so available, the market
value of such security in Dollars on the relevant date as determined by a nationally recognized
U.S. independent investment banking firm selected by the Issuer for this purpose.

     “Make Whole Change of Control” means the occurrence, after the Issue Date, of any Change of
Control or an event that would have been a Change of Control but for the 105% trading price
exception or for the 90% of consideration exception contained in clauses (1) and (2), respectively,
of the proviso to such definition; provided that the occurrence of a Change of Control resulting
from a transaction described in clause (d) of the definition of Change of Control shall not
constitute a Make Whole Change of Control.

     “Make Whole Change of Control Effective Date” means, with respect to a Make Whole Change of
Control, the date on which such Make Whole Change of Control becomes effective.

     “Maturity Date” means, (i) with respect to the 2012 Notes, April 15, 2012 and (ii) with
respect to the 2014 Notes, April 15, 2014.

     “Moody’s” means Moody’s Investors Service, Inc. and its successors.

     “NNI” has the meaning specified in the preamble hereto. References to NNI shall not include
any Subsidiary of NNI.

7

 

     “NNL” has the meaning specified in the preamble hereto. References to NNL shall not include
any Subsidiary of NNL.

     “Notes” has the meaning specified in the preamble hereto.

     “NYSE” means the New York Stock Exchange.

     “Offering Memorandum” means the final Confidential Offering Memorandum relating to the Notes
and the related Guarantees, dated March 22, 2007.

     “Officers’ Certificate” means a certificate signed by, in the case of the Issuer or NNL, any
two Authorized Officers and, in the case of NNI, any Authorized Officer and delivered to the
Trustee.

     “Opinion of Counsel” means a written opinion of counsel, who may be counsel to the Issuer or
one or more Guarantor or both, or the Trustee, as the case may be, which opinion shall be subject
to customary assumptions and qualifications.

     A “person” means any individual, corporation, partnership, joint venture, trust, estate,
unincorporated organization, limited liability company or government or any agency or political
subdivision thereof.

     “Prospectus” shall mean the prospectus included in the Shelf Registration Statement, including
any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including any document incorporated
by reference therein.

     “Redemption Date” when used with respect to any Note to be redeemed, means the date fixed by
the Issuer for such redemption pursuant to Article 3 of this Indenture and the applicable Note.

     “Redemption Price” when used with respect to any Note to be redeemed, means the price fixed
for such redemption pursuant to Article 3 of this Indenture and the applicable Note.

     “Registrable Securities” shall mean each Note and related Guarantees and the Common Shares
into which such Note is convertible until the earlier of (i) the date on which such Note and
related Guarantees or the Common Shares into which such Note is convertible have been sold or
otherwise transferred pursuant to an effective Shelf Registration Statement; (ii) the date that is
two years after the later of the date of original issue of such Note and related Guarantees and the
last date that the Issuer or any of its Affiliates was the owner of such Note and related
Guarantees (or any predecessor thereto); (iii) the date on which such Note and related Guarantees
or the Common Shares into which such Note is convertible may be resold without restriction pursuant
to Rule 144(k) under the Securities Act or any successor provision thereto; or (iv) the date such
Note and related Guarantees or the Common Shares into which such Note is convertible have been
publicly sold pursuant to Rule 144 under the Securities Act or any successor provision thereto.

8

 

     “Registration Rights Agreement” means the Registration Rights Agreement relating to the Notes,
the Guarantees and Common Shares issuable upon conversion of such Notes, dated March 28, 2007,
among the Issuer, the Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.

     “Regular Record Date” means the April 1 or October 1 immediately preceding each Interest
Payment Date.

     “S&P” means Standard & Poor’s Rating Service, a division of The McGraw-Hill Companies, Inc.,
and its successors.

     “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     “Share Price” means, with respect to a Make Whole Change of Control, (i) if holders of Common
Shares receive only cash in such Make Whole Change of Control transaction, the cash amount paid per
share in such Make Whole Change of Control; and (ii) otherwise, the average of the Last Reported
Sale Price of the Common Shares over the five-Trading Day period ending on the Trading Day
immediately preceding the applicable Make Whole Change of Control Effective Date.

     “Shelf Registration Statement” shall mean a “shelf” registration statement of the Issuer and
the Guarantors that covers all of the Registrable Securities on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto
and any document incorporated by reference therein; provided, however, that a registration
statement shall not be deemed the Shelf Registration Statement until such time as it includes a
Prospectus relating to the Registrable Securities.

     “Subsidiary” means, with respect to the Issuer or any Guarantor, a corporation, a majority of
the outstanding voting shares of which are owned, directly or indirectly, by the Issuer or such
Guarantor or by one or more other Subsidiaries of the Issuer or such Guarantor, or by the Issuer or
such Guarantor and one or more other Subsidiaries of the Issuer or such Guarantor. For the
purposes of this definition, “voting shares” means shares having voting power for the election of
directors, whether at all times or only so long as no other shares have such voting power by reason
of any contingency.

     “Suspension Period” means, for any series of Notes, any period (a) beginning on the date that:

     (1) the Notes of such series have Investment Grade Status;

     (2) no Default or Event of Default has occurred and is continuing; and

     (3) the Issuer has delivered an Officers’ Certificate to the Trustee certifying that the
conditions set forth in clauses (1) and (2) above are satisfied; and

9

 

     (b) ending on the date (the “Reversion Date”) that the Notes of such series cease to have the
applicable rating from either Moody’s or S&P, specified in the definition of Investment Grade
Status; provided that solely for the purpose of determining whether and when the Reversion Date
shall have occurred, a series of Notes shall be deemed to have Investment Grade Status if clauses
(i) and (ii) of the definition of Investment Grade Status are otherwise satisfied, notwithstanding
that either Moody’s and/or S&P shall have announced a negative outlook with respect to such Notes.

     “TIA” means the United States Trust Indenture Act of 1939, as amended, as in effect on the
date of execution of this Indenture, except as provided in Sections 9.03 and 12.06.

     “Trading Day” means (x) if the applicable security is listed or admitted for trading on an
Applicable Securities Exchange, a day on which such Applicable Securities Exchange is open for
trading or quotation or (y) if the applicable security is not so listed or admitted for trading,
any day that is a Business Day.

     “Trustee” means the party named as such above until a successor replaces it in accordance with
the applicable provisions of this Indenture and thereafter means the successor.

     “Trust Officer” means, when used with respect to the Trustee, any officer within the Corporate
Trust Office, including any Vice President, Assistant Vice President or any other officer of the
Trustee customarily performing functions similar to those performed by any of the above designated
officers, and also, with respect to a particular matter, any other officer to whom such matter is
referred because of such officer’s knowledge and familiarity with the particular subject.

     “TSX” means The Toronto Stock Exchange.

     “U.S. Government Obligations” means direct obligations of the United States of America for the
payment of which the full faith and credit of the United States of America is pledged and which are
not callable at the issuer’s option.

     “Voting Shares” means any class or classes of Capital Stock the holders of which under
ordinary circumstances have the power to vote in the election of the board of directors, managers
or trustees of any person or other persons performing similar functions irrespective of whether or
not, at the time Capital Stock of any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency.

SECTION 1.02. Other Definitions.

	 	 	 	 	 
	 	 	Defined in	 
	 	 	Section	 
	“Act”
	 	 	10.16	 
	“Additional Shares”
	 	 	12.07	(b)
	“Canadian Restricted Securities Legend”
	 	 	2.14	(a)
	“cash”
	 	 	4.06	(a)
	“Change of Control Date”
	 	 	4.06	 

10

 

	 	 	 	 	 
	 	 	Defined in	 
	 	 	Section	 
	“Change of Control Offer”
	 	 	4.06	 
	“Change of Control Offer Termination Date”
	 	 	4.06	 
	“Change of Control Payment”
	 	 	4.06	 
	“Change of Control Payment Date”
	 	 	4.06	 
	“Change in Tax Redemption”
	 	 	3.02	 
	“Conversion Agent”
	 	 	2.03	 
	“Defaulted Interest”
	 	 	2.11	 
	“Event of Default”
	 	 	6.01	 
	“Expiration Time”
	 	 	12.05	 
	“fair market value”
	 	 	12.05	 
	“Global Security”
	 	 	2.01	 
	“Ineligible Consideration”
	 	 	12.05	(i)
	“Issuer Notice”
	 	 	4.06	 
	“Legal Holiday”
	 	 	10.06	 
	“Make Whole Change of Control Notice
	 	 	12.07	(a)
	“Make Whole Conversion Cut-off Date
	 	 	12.07	(d)
	“Make Whole Conversion Date”
	 	 	12.07	(d)
	“Make Whole Conversion Period”
	 	 	12.07	(a)
	“Optional Redemption”
	 	 	3.02	 
	“Paying Agent”
	 	 	2.02	 
	“Permitted Securities”
	 	 	12.05	(i)
	“Purchase Agreement”
	 	 	2.01	 
	“Purchase Notice”
	 	 	4.06	 
	“purchased shares”
	 	 	12.05	(e)
	“QIBs”
	 	 	2.01	 
	“Registrar”
	 	 	2.02	 
	“Register”
	 	 	2.02	 
	“Restricted Common Share Legend”
	 	 	2.14	(a)
	“Restricted Securities”
	 	 	2.14	(a)
	“Restricted Securities Legend”
	 	 	2.14	(a)
	“Rule 144A”
	 	 	2.01	 

SECTION 1.03. Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

          “Commission” means the Commission;

          “indenture securities” means the Notes and the Guarantees;

          “indenture security holder” means a holder of a Note;

          “indenture to be qualified” means this Indenture;

          “indenture trustee” or “institutional trustee” means the Trustee; and

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“obligor” on the Notes means the Issuer or any other obligor on the Notes and on the
Guarantees means the respective Guarantor or any other obligor on the Guarantees.

     All other terms in this Indenture that are defined by the TIA, defined by TIA reference to
another statute or defined by Commission rule under the TIA have the meanings so assigned to them.

SECTION 1.04. Rules of Construction.

     Unless the context otherwise requires:

	 	(1)	 	a term has the meaning assigned to it;
	 
	 	(2)	 	an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;
	 
	 	(3)	 	“or” is not exclusive;
	 
	 	(4)	 	words in the singular include the plural, and in the plural include the
singular;
	 
	 	(5)	 	the male, female and neuter genders include one another; and
	 
	 	(6)	 	references in this Indenture to Articles, Sections, subsections, paragraphs,
clauses, other subdivisions, Exhibits, appendices or schedules are to Articles,
Sections, subsections, paragraphs, clauses, other subdivisions, Exhibits, appendices or
schedules of or to this Indenture.

ARTICLE 2

THE NOTES AND THE GUARANTEES

SECTION 2.01. Form and Dating.

     (a) Global Securities. The Notes and the Guarantees are being offered and sold by the Issuer
pursuant to a Purchase Agreement relating to the Notes, dated March 22, 2007, among the Issuer, the
Guarantors and the Initial Purchasers (the “Purchase Agreement”).

     The Notes and the Guarantees are being offered and sold to “qualified institutional buyers” as
defined in Rule 144A (“QIBs”) in reliance on Rule 144A under the Securities Act (“Rule 144A”) and,
in the case of sales in Canada, pursuant to an exemption available under applicable Canadian
securities laws, as provided in the Purchase Agreement and shall be issued in the form of one or
more permanent global securities in definitive, fully registered form without interest coupons with
the Global Securities Legend, the Restricted Securities Legend and the Canadian Restricted
Securities Legend set forth in Section 2.14 (each, a “Global Security”). Any Global Security shall
be deposited on behalf of the purchasers of the Notes and the Guarantees represented thereby with
the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of
the Depositary or a nominee of the Depositary for the accounts of participants in the Depositary,
duly executed by the Issuer and the Guarantors and

12

 

authenticated by the Trustee as hereinafter provided. The aggregate principal amount of a
Global Security may from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depositary or its nominee as hereinafter provided.

     (b) Book-Entry Provisions. This Section 2.01(b) shall apply only to a Global Security
deposited with or on behalf of the Depositary. The Global Securities initially shall:

          (i) be registered in the name of DTC (or a nominee thereof), as the initial Depositary;

          (ii) be delivered to the Trustee as custodian for DTC; and

          (iii) bear the Restricted Securities Legend set forth in Section 2.14(a)(i);

          (iv) bear the Canadian Restricted Securities Legend set forth in Section 2.14(a)(iii); and

          (v) bear the Global Securities Legend set forth in Section 2.14(b).

          Agent Members shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global
Security, and the Depositary may be treated by the Issuer, any Guarantor, the Trustee and any agent
of the Issuer, any Guarantor or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the
Issuer, any Guarantor, the Trustee or any agent of the Issuer, any Guarantor or Trustee from giving
effect to any written certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and the Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any Note.

     (c) The registered holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through Agent Members, to take
any action that a holder is entitled to take under this Indenture or the Notes.

     (d) A Global Security may not be transferred, in whole or in part, to any person other than
the Depositary (or a nominee thereof), and no such transfer to any such other person may be
registered. Beneficial interests in a Global Security may be transferred in accordance with the
rules and procedures of the Depositary and the provisions of Section 2.05 hereof.

     (e) Notwithstanding any other provisions of this Indenture or the Notes, a Global Security
shall not be exchanged in whole or in part for a Note registered in the name of any person other
than the Depositary or one or more nominees thereof; provided that a Global Security may be
exchanged for Notes registered in the names of any person designated by the Depositary in the event
that (i) the Depositary has notified the Issuer that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be a “clearing agency”
registered under the Exchange Act, and, in each case, a successor Depositary is not appointed by
the Issuer within 90 days; (ii) to the extent permitted by the Depositary, the Issuer determines at
any time that the Notes shall no longer be represented by Global Securities

13

 

and shall inform such Depositary of such determination and participants in such Depository
elect to withdraw their beneficial interests in the Global Securities from such Depository,
following notification by the Depository of their right to do so; or (iii) an Event of Default has
occurred and is continuing and the Depositary so requests. Any Global Security exchanged pursuant
to clause (i) above shall be so exchanged in whole and not in part, and any Global Security
exchanged pursuant to clause (ii) or (iii) above may be exchanged in whole or from time to time in
part as directed by the Depositary. Any Note issued in exchange for a Global Security or any
portion thereof shall be a Global Security; provided that any such Note so issued that is
registered in the name of a person other than the Depositary or a nominee thereof shall be a
Certificated Note.

          Upon the occurrence of (i), (ii) or (iii) above, the Depositary shall surrender such Global
Security or Global Securities to the Trustee for cancellation and the Issuer and the Guarantors
shall execute, and the Trustee, upon receipt of an Officers’ Certificate and Issuer Order for the
authentication and delivery of Notes, shall authenticate and deliver in exchange for such Global
Security or Global Securities, Certificated Notes of like tenor as that of the Global Securities in
an aggregate principal amount equal to the aggregate principal amount of such Global Security or
Global Securities. Such Certificated Notes shall be registered in such names as the Depositary
shall identify in writing as the beneficial owners of the Notes represented by such Global Security
or Global Securities (or any nominees thereof).

          Notwithstanding the foregoing, in connection with any such surrender and subsequent exchange
pursuant to Section 2.05 hereof, the Registrar shall reflect on its books and records the date and
a decrease in the principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in such Global Security to be transferred.

     (f) Guarantee by the Guarantors; Form of Guarantee. (i) Each Guarantor by its execution of
this Indenture hereby agrees with each Holder of a Note of each series authenticated and delivered
by the Trustee and with the Trustee on behalf of each such Holder, to be unconditionally bound by
the terms and provisions of the Guarantees set forth below and authorizes the Trustee to confirm
such Guarantees to the Holder of each such Note by its execution and delivery of each such Note,
with such Guarantees endorsed thereon, authenticated and delivered by the Trustee. Guarantees to
be endorsed on the Notes shall, subject to this Section 2.01 be in substantially the form set forth
below:

GUARANTEE

OF

[GUARANTOR]

     For value received, [Guarantor] (the “Guarantor”) hereby fully and unconditionally guarantees,
jointly and severally, to the Holder of the Note upon which this Guarantee is endorsed and to the
Trustee on behalf of each such Holder the due and punctual payment of the principal of, premium, if
any, interest, Additional Interest, if any, and Defaulted Interest, if any, on such Note when and
as the same shall become due and payable, whether on April 15, 201[2][4] (the “Maturity Date”), by
declaration of acceleration, call for redemption or otherwise, according to the terms thereof and
of the indenture dated as of March 28, 2007 among Nortel

14

 

Networks Corporation, as Issuer (together with any successor person under the Indenture, the
“Issuer”), Nortel Networks Limited and Nortel Networks Inc., as guarantors, and The Bank of New
York, as trustee (the “Indenture”). In case of the failure of the Issuer to punctually make any
such payment of principal, premium, if any, interest, Additional Interest, if any, or Defaulted
Interest, if any, the Guarantor, for so long as this Guarantee shall be in effect, hereby agrees to
cause any such payment to be made to or to the order of the Trustee punctually when and as the same
shall become due and payable, whether on the Maturity Date or by declaration of acceleration, call
for redemption or otherwise, and as if such payment were made by the Issuer.

     The Guarantor hereby agrees that its obligations hereunder shall be as if it were the
principal debtor and not merely surety, and shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of such Note or the
Indenture, any failure to enforce the provisions of such Note or the Indenture, or any waiver,
modification or indulgence granted to the Issuer with respect thereto, by the Holder of such Note
or the Trustee or any other circumstance which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, protest or notice with respect to such Note
or the indebtedness evidenced thereby or with respect to any sinking fund or analogous payment
required under such Note and all demands whatsoever, and covenants that this Guarantee will not be
discharged except by payment in full of the principal of, premium, if any, interest, Additional
Interest, if any, and Defaulted Interest, if any, on such Note or as otherwise described in Section
2.01(g) of the Indenture.

     This Guarantee shall be automatically and unconditionally released on the terms set forth in
Section 2.01(g) of the Indenture.

     The Guarantor shall be subrogated to all rights of the Holder of such Note and the Trustee
against the Issuer in respect of any amounts paid to such Holder by the Guarantor pursuant to the
provisions of this Guarantee; provided, however, that the Guarantor shall not be entitled to
enforce, or to receive any payments arising out of or based upon such right of subrogation until
the principal of, premium, if any, interest and Additional Interest, if any, on all Notes shall
have been paid in full.

     The Guarantor hereby agrees that its obligations hereunder shall be direct, unconditioned and
unsubordinated. The Holder of a guaranteed Note will be entitled to payment under this Guarantee
without taking any action whatsoever against the Issuer.

     No reference herein to the Indenture and no provision of this Guarantee or of the Indenture
shall alter or impair the Guarantee of the Guarantor, which is absolute and unconditional, of the
due and punctual payment of the principal of, premium, if any, interest, Additional Interest, if
any, or Defaulted Interest, if any, on the Note upon which this Guarantee is endorsed.

     This Guarantee shall not be valid or obligatory for any purpose with respect to any Note until
the certificate of authentication of such Note shall have been manually executed by or on behalf of
the Trustee under the Indenture.

15

 

     All capitalized terms used but not defined in this Guarantee shall have the meanings assigned
to them in the Indenture.

     This Guarantee shall be governed by and construed in accordance with the laws of the State of
New York, but without giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.

     Executed and dated the date on the face hereof.

	 	 	 	 	 	 	 
	 	 	   [GUARANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

	 	(g)	 	Release of Guarantee.
	 
	 	(i)	 	The Guarantee of each Guarantor shall be released automatically with respect to
any series of Notes upon discharge or defeasance of such series of Notes as provided
below under Article Eight or Article Eleven of this Indenture.
	 
	 	(ii)	 	The Guarantee of NNI will be automatically and unconditionally released and NNI
shall be relieved of any obligations under its Guarantee with respect to any series of
Notes upon the occurrence, and during the continuance, of a Suspension Period with
respect to such series of Notes. At such time as NNI’s Guarantee is released with
respect to any series of Notes, NNI will no longer be considered a “Guarantor” of such
series of Notes. Within 15 Business Days of the occurrence of a Reversion Date with
respect to such series of Notes, NNI will enter into a supplemental indenture in order
to provide a Guarantee of such series of Notes on the terms set forth herein.
	 
	 	(iii)	 	The Trustee shall promptly execute any documents reasonably requested by the
Issuer or a Guarantor in order to evidence the release of a Guarantor from its
obligations under its Guarantee in accordance with this clause (g); provided that the
Trustee shall not be obligated to execute or deliver any document evidencing the
release of a Guarantee pursuant this Section 2.01(g) unless the Issuer has delivered an
Officers’ Certificate or an Opinion of Counsel to the effect that such release is in
accordance with the provisions of this Indenture.

     (h) Execution and Authentication. Any two Authorized Officers of the Issuer shall sign the
Notes for the Issuer by manual or facsimile signature. Any two Authorized Officers of NNL and any
Authorized Officer of NNI shall sign the Guarantee for each Guarantor by manual or facsimile
signature.

     If an Authorized Officer whose signature is on a Note or the Guarantee endorsed thereon no
longer holds that office at the time the Note is authenticated, the Note and the Guarantee shall
nevertheless be valid.

16

 

     A Note shall not be valid until authenticated by the manual signature of the Trustee. The
signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

     Upon an Issuer Order, the Trustee shall authenticate 2012 Notes for original issue up to an
aggregate principal amount of $575,000,000 and 2014 Notes for original issue up to an aggregate
principal amount of $575,000,000 to the Initial Purchasers.

     The Notes shall be issuable only in registered form without coupons and only in denominations
of $1,000 or any integral multiple thereof.

     The Trustee may appoint an authenticating agent acceptable to the Issuer and the Guarantors,
to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes authentication by
such agent.

SECTION 2.02. Registrar, Paying Agent and Conversion Agent.

     The Issuer shall maintain or cause to be maintained in the borough of Manhattan, the City and
State of New York, which may be a Corporate Trust Office, an office or agency where: (i) securities
may be presented for registration of transfer or for exchange (“Registrar”); (ii) Notes may be
presented for payment (“Paying Agent”); (iii) Notes may be presented for conversion (the
“Conversion Agent”); and (iv) notices and demands to or upon the Issuer or the Guarantors, as the
case may be, in respect of Notes, the Guarantees and this Indenture may be served by the holders of
the Notes. The Registrar shall keep at the office or agency of the Registrar in the borough of
Manhattan a Register (each, a “Register”) of each series of the Notes and of their transfer and
exchange. The Issuer may appoint one or more co-registrars, one or more additional paying agents
and one or more additional conversion agents. The term “Paying Agent” includes any additional
paying agent and the term “Conversion Agent” includes any additional Conversion Agent. The Issuer
may change any Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice. The
Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this
Indenture and shall enter into an appropriate agency agreement with any Registrar, Paying Agent,
Conversion Agent or co-registrar not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Issuer or any of its Subsidiaries may
act as Paying Agent, Registrar, Conversion Agent or co-registrar. If the Issuer fails to appoint
or maintain another entity as Registrar, or Paying Agent or Conversion Agent, the Trustee shall act
as such, and the Trustee shall initially act as such.

SECTION 2.03. Money for Notes Payments to be Held in Trust.

     (a) If the Issuer, NNL or NNI shall at any time act as its own Paying Agent with respect to
any payment on the Notes, it will, on or before each due date of the principal of (and premium, if
any) or interest (including Additional Interest, if any) on the Notes, segregate and hold in trust
for the benefit of the persons entitled thereto a sum sufficient to pay the principal (and premium,
if any) or interest (including Additional Interest, if any) so becoming due until such sums shall
be paid to such persons or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.

17

 

     (b) Whenever the Issuer shall have one or more Paying Agents with respect to the Notes, it
will, prior to each due date of the principal of (and premium, if any) or interest (including
Additional Interest, if any) on the Notes (but no later than 10:00 a.m., New York City time on such
due date), deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any)
or interest (including Additional Interest, if any) so becoming due, such sum to be held in trust
for the benefit of the persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.

     (c) The Issuer will cause each Paying Agent, other than the Trustee, to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:

          (i) hold all sums held by it for the payment of the principal of (and premium, if any) or
interest (including Additional Interest, if any) on the Notes in trust for the benefit of the
persons entitled thereto until such sums shall be paid to such persons or otherwise disposed of as
herein provided;

          (ii) give the Trustee notice of any Default by the Issuer or a Guarantor in the making of any
payment of principal of (and premium, if any) or interest (including Additional Interest, if any)
on the Notes or Guarantees endorsed thereon; and

          (iii) at any time during the continuance of any such Default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

     (d) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or by Issuer Order direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Issuer or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the Issuer or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

     (e) Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer or
the Guarantors, in trust for the payment of the principal of (and premium, if any) or interest
(including Additional Interest, if any) on the Notes and remaining unclaimed for two years after
such principal (and premium, if any) or interest (including Additional Interest, if any) has become
due and payable shall be paid to the Issuer or Guarantors on Issuer Request or Guarantors Request,
as the case may be, or (if then held by the Issuer or Guarantors) shall be discharged from such
trust; and the holder of Notes shall thereafter, as an unsecured general creditor, look only to the
Issuer or Guarantors, as the case may be, for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the Issuer or Guarantors,
as the case may be, as trustee thereof, shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at the expense of the
Issuer or Guarantors, as the case may be, cause to be published once, in an Authorized Newspaper of
general circulation in the borough of Manhattan, notice that such money remains unclaimed and that,
after a date specified therein, which shall not

18

 

be less than 30 days from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Issuer or Guarantors, as the case may be.

SECTION 2.04. Holder Lists.

     The Registrar shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of holders of each series of Notes and shall
otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Issuer shall furnish
to the Trustee at least seven Business Days before each Interest Payment Date, and as the Trustee
may request in writing within fifteen (15) days after receipt by the Issuer of any such request (or
such lesser time as the Trustee may reasonably request in order to enable it to timely provide any
notice to be provided by it hereunder), a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of holders of Notes.

SECTION 2.05. Transfer and Exchange.

     (a) Upon surrender for registration of transfer or exchange of any Notes of any series to the
Registrar or a co-registrar, the Issuer shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Notes of the same
series of any authorized denomination or denominations, of like tenor and aggregate principal
amount and having endorsed thereon the Guarantees executed by the applicable Guarantor(s). Every
Note presented or surrendered for registration of transfer or for exchange shall (i) be accompanied
by a completed “Assignment Form” substantially as set forth on such Note and (ii) (if so required
by the Issuer, any Guarantor, the Registrar or the Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Issuer, any Guarantor, the Registrar
and the Trustee, and duly executed, by the holder thereof or his attorney duly authorized in
writing. No service charge shall be made to a holder for any registration of transfer or exchange
(except as otherwise expressly permitted herein), but the Issuer may require payment of a sum
sufficient to cover any transfer tax or other governmental charge payable upon transfers or
exchanges pursuant to Sections 2.09, 3.08, 9.04 or 12.02.

     The Issuer or the Registrar shall not be required (i) to issue, register the transfer or
exchange of Notes of a series during a period beginning at the opening of business fifteen (15)
days before the day of the mailing of the notice of redemption with respect to such series under
Section 3.02 and ending at the close of business on the day of such mailing, (ii) to register the
transfer or exchange of any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part, or (iii) to register the transfer of any
Notes surrendered for repurchase pursuant to Section 4.06.

     All Notes issued upon any transfer or exchange of Notes in accordance with this Indenture
shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture as the Notes surrendered upon such registration of transfer or
exchange.

     (b) Notwithstanding any other provision of this Section 2.05, unless and until it is exchanged
in whole or in part for a Certificated Note, a Global Security representing all or a portion of the
Notes of a series may not be transferred except as a whole by the Depositary for

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such series to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a
successor Depositary for such series or a nominee of such successor Depositary.

     In the event that a Global Security is exchanged for Certificated Notes pursuant to Section
2.01(e) or Section 2.09 prior to the effectiveness of a Shelf Registration Statement with respect
to such Notes, such exchange may occur, and such Notes may be further exchanged or transferred,
only upon receipt by the Registrar of (1) such Global Security or such Certificated Notes, duly
endorsed as provided herein, as applicable, (2) instructions from the holder directing the Trustee
to authenticate and deliver one or more Certificated Notes in definitive form of the same aggregate
principal amount as the Global Security or the Notes in definitive form (or portion thereof), as
applicable, to be transferred, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the Certificated Notes
to be so issued and appropriate delivery instructions, and (3) such certifications or other
information and, in the case of transfers pursuant to Rule 144 under the Securities Act, legal
opinions as the Issuer may reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act (including the certification requirements intended to ensure that such transfers
comply with Rule 144A, as the case may be).

     (c) Except in connection with a Shelf Registration Statement contemplated by and in accordance
with the terms of the Registration Rights Agreement, if Notes are issued upon the registration of
transfer, exchange or replacement of Notes bearing a Restricted Securities Legend, or if a request
is made to remove such a Restrictive Securities Legend from Notes, the Notes so issued shall bear
the Restricted Securities Legend, or a Restricted Securities Legend shall not be removed, as the
case may be, other than as set forth in Section 2.14.

     (d) Neither the Trustee nor any Agent shall have any responsibility for any actions taken or
not taken by the Depositary.

     (e) The Trustee shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Notes (including any transfers between or among
the Depositary’s participants or beneficial owners of interests in any Global Security) other than
to require delivery of such certificates and other documentation as is expressly required by, and
to do so if and when expressly required by, the terms of this Indenture and to examine the same to
determine substantial compliance as to form with the express requirements hereof.

     (f) Each holder of a Note will be deemed to have represented and agreed for the benefit of the
Issuer that it will not transfer such Note, or the Common Shares issuable upon conversion of such
Note, into or in Canada, including through the facilities of a Canadian stock exchange, for a
period of four months and one day following the Issue Date except pursuant to an available
exemption from the prospectus requirements of applicable Canadian securities laws. Any transfer of
Notes or Common Shares issuable upon conversion of such Notes into or in Canada shall be made in
compliance with applicable Canadian securities laws.

20

 

SECTION 2.06. Replacement Notes.

     If the holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, in
the absence of notice to the Issuer, the Guarantors or the Trustee that such Notes have been
acquired by a protected purchaser the Issuer shall issue, the Guarantors shall endorse and the
Trustee shall authenticate a replacement Note if the Issuer’s and the Guarantors’ requirements are
met. If required by the Trustee, the Issuer or Guarantors as a condition of receiving a
replacement Note, the holder of a Note must provide a certificate of loss and an indemnity and/or
an indemnity bond sufficient, in the judgment of the Issuer, the Guarantors and the Trustee, to
fully protect the Issuer, the Guarantors, the Trustee, any Agent and any authenticating agent from
any loss, liability, cost or expense which any of them may suffer or incur if the Note is replaced.
The Issuer, the Guarantors and the Trustee may charge the relevant holder for their expenses in
replacing any Note.

     The Trustee or any authenticating agent may authenticate any such substituted Note, and
deliver the same upon the receipt of such security or indemnity as the Trustee, the Issuer, the
Guarantors and, if applicable, such authenticating agent may require. Upon the issuance of any
substituted Note, the Issuer and the Guarantors may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note which has matured or is about to mature, has been
called for redemption pursuant to Article 3, has been submitted for repurchase pursuant to Section
4.06 or is about to be converted into Common Shares pursuant to Article 12, shall become mutilated
or be destroyed, lost or stolen, the Issuer and the Guarantors may, instead of issuing a substitute
Note, pay or authorize the payment of or convert or authorize the conversion of the same (without
surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for
such payment or conversion shall furnish to the Issuer and the Guarantors, to the Trustee and, if
applicable, to the authenticating agent such security or indemnity as may be required by them to
save each of them harmless for any loss, liability, cost or expense caused by or connected with
such substitution, and, in case of destruction, loss or theft, evidence satisfactory to the Issuer,
the Guarantors, the Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Note and of the ownership thereof.

     Every replacement Note (including the related Guarantee) is an additional obligation of the
Issuer and the Guarantors and shall be entitled to all the benefits provided under this Indenture
equally and proportionately with all other Notes duly issued, authenticated and delivered
hereunder.

SECTION 2.07. Outstanding Notes.

     The Notes outstanding at any time are all the Notes properly authenticated by the Trustee
except for those canceled by the Trustee, those delivered to it for cancellation, and those
described in this Section as not outstanding.

     If a Note is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

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     If Notes are considered paid under Section 4.01 or converted under Article 12, they cease to
be outstanding and interest (and Additional Interest, if any) on them ceases to accrue.

     Subject to Section 2.08 hereof, a Note does not cease to be outstanding because the Issuer,
any Guarantor or an Affiliate of the Issuer or any Guarantor holds the Note.

SECTION 2.08. When Treasury Notes Disregarded.

     In determining whether the holders of the required principal amount of Notes have concurred in
any direction, waiver or consent, Notes owned by the Issuer, a Guarantor or an Affiliate of the
Issuer or a Guarantor shall be considered as though they are not outstanding except that for the
purposes of determining whether the Trustee shall be protected in relying on any such direction,
waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded; Notes
so owned that have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right to act with respect to such
Notes, and that the pledgee is not the Issuer or a Guarantor or any Affiliate of the Issuer or a
Guarantor.

SECTION 2.09. Temporary Notes.

     (a) Until definitive Notes are ready for delivery, the Issuer may prepare, and the Guarantors
shall endorse and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the Issuer and the
Guarantors consider appropriate for temporary Notes and shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuer shall prepare, the Guarantors shall endorse and
the Trustee shall authenticate definitive Notes in exchange for temporary Notes.

     (b) A Global Security deposited with the Depositary or with the Trustee as custodian for the
Depositary pursuant to Section 2.01 shall be transferred to the beneficial owners thereof in the
form of Certificated Notes in definitive form only if such transfer complies with Section 2.05 and
this Section 2.09.

     (c) Any Global Security or interest thereon that is transferable to the beneficial owners
thereof in the form of Certificated Notes in definitive form shall, if held by the Depository, be
surrendered by the Depositary to the Trustee, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an equal aggregate
principal amount of Notes of authorized denominations in the form of Certificated Notes in
definitive form. Any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any integral multiple
thereof and registered in such names as the Depositary shall direct. Any Notes in the form of
Certificated Notes in definitive form delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.14, bear the Restricted Securities Legend and the
Canadian Restricted Securities Legend.

     (d) Prior to any transfer pursuant to Section 2.09(b), the registered holder of a Global
Security may grant proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a holder is entitled to
take under this Indenture or the Notes.

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SECTION 2.10. Cancellation.

     The Issuer or the Guarantors at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else may cancel Notes
surrendered for registration of transfer, exchange, payment, replacement, conversion, redemption,
repurchase or cancellation. Upon written instructions of the Issuer, the Trustee shall destroy and
dispose of canceled Notes in accordance with its customary practices in effect from time to time.
The Issuer may not issue new Notes to replace Notes that it has paid or redeemed or that have been
delivered to the Trustee for cancellation or that any holder has (i) converted pursuant to Article
12 hereof, (ii) submitted for redemption pursuant to Article 3 hereof or (iii) submitted for
repurchase pursuant to Section 4.06 hereof (unless revoked).

SECTION 2.11. Defaulted Interest.

     If the Issuer (and the Guarantors) fail to make a payment of interest on the Notes, it (and
the Guarantors) shall pay such defaulted interest plus, to the extent lawful, any interest payable
on the defaulted interest (collectively, the “Defaulted Interest”). It may pay such defaulted
interest, plus any such interest payable on it, to the persons who are holders of Notes on a
subsequent special record date. The Issuer shall fix any such record date and payment date, and
the Issuer shall provide written notice of such record date and payment date to the Trustee. At
least 10 days before any such record date, the Trustee shall mail to holders of the Notes a notice
that states the record date, payment date and amount of such interest to be paid.

SECTION 2.12. CUSIP Number.

     The Issuer in issuing the Notes may use a “CUSIP” number, and if so, such CUSIP number shall
be included in notices of redemption, repurchase or exchange as a convenience to holders of Notes;
provided, however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the Notes and that reliance
may be placed only on the other identification numbers printed on the Notes. The Issuer will
promptly notify the Trustee of any change in the CUSIP number.

SECTION 2.13. Judgment.

     Any payment in respect of principal of (and premium, if any) and interest (and Additional
Interest, if any) otherwise due on Notes made in Canadian currency by the Issuer or the Guarantors
to any holder of Notes (the “Payee”) pursuant to a judgment or order of a court or tribunal in
Canada shall constitute a discharge of the Issuer only to the extent of the amount of U.S. Dollars
on such Notes (the “Purchased Amount”) that the Payee, on the date of such payment in Canadian
currency, would be able to purchase with the amount so paid based on the noon buying rate for U.S.
Dollars for wire transfers quoted on the date of payment or, if such date if not a business day in
Toronto, Canada, on the next business day in Toronto, Canada. If the amount otherwise due to the
Payee (the “Amount Due”) is greater or less than the Purchased Amount, the Issuer shall indemnify
and hold harmless the Payee to the extent that the Amount Due exceeds the Purchased Amount and the
Issuer may retain the amount, if any, by which the Amount Due is less than the Purchased Amount.
This indemnity shall constitute a separate and

23

 

independent obligation from the other obligations contained in this Indenture and shall give
rise to a separate and independent cause of action and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of amounts due under the
Notes or any judgment or order.

SECTION 2.14. Legends; Restricted Securities Legends. 

     (a) Each Note issued hereunder shall, upon issuance, bear the legend set forth in Section
2.14(a)(i) (the “Restricted Securities Legend”) and such legend shall not be removed except as
provided in Section 2.14(a)(iv). Each Note issued hereunder shall, upon issuance, bear the legend
set forth in Section 2.14(a)(iii) (the “Canadian Restricted Securities Legend”) and such legend
shall not be removed except as provided in Section 2.14(a)(iii). Each Note that bears or is
required to bear the Restricted Securities Legend and/or the Canadian Restricted Securities Legend
(together with any Common Shares issued upon conversion of the Notes and required to bear the
Restricted Securities Legend set forth in Section 2.14(a)(ii) (the “Restricted Common Share
Legend”) and/or the Canadian Restricted Securities Legend set forth in Section 2.14(a)(iii),
collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set
forth in this Section 2.14(a), and the holder of each such Restricted Security, by such holder’s
acceptance thereof, shall be deemed to have agreed to be bound by all such restrictions on
transfer.

     As used in this Section 2.14(a), the term “Transfer” encompasses any sale, pledge, transfer or
other disposition whatsoever of any Restricted Security.

          (i) Restricted Securities Legend for Notes. Except as provided in Section 2.14(a)(iv), until
the expiration of the holding period applicable to sales of the Notes under Rule 144(k) under the
Securities Act (or any successor provision) as evidenced by a certificate to such effect from the
Issuer to the Trustee, any Note (and all securities issued in exchange therefor or substitution
thereof, other than Common Shares, if any, issued upon conversion thereof, which shall bear the
legend set forth in Section 2.14(a)(ii), if applicable) shall bear a Restricted Securities Legend
in substantially the following form:

     THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NONE OF THIS SECURITY (AND RELATED
GUARANTEES), THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY AND ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY (AND RELATED GUARANTEES),
BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH
IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE

24

 

HEREOF AND THE LAST DATE ON WHICH THE ISSUER, ANY GUARANTOR OR ANY AFFILIATE OF THE ISSUER OR
ANY GUARANTOR WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
ISSUER OR ANY GUARANTOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S, ANY GUARANTOR’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

          (ii) Restricted Securities Legend for Common Shares issued upon conversion of any Note.
Except as provided in Section 2.03(a)(iv), until the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor provision) as evidenced
by a certificate to such effect from the Issuer to the Trustee, any share certificate representing
Common Shares issued upon conversion of such Note shall bear a Restricted Common Share Legend in
substantially the following form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT
FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS

25

 

GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUER’S AND THE TRANSFER AGENT’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.

          (iii) Canadian Restricted Securities Legend for Notes Common Shares Issued upon Conversion of
any Note. Except as provided in this Section 2.14(a)(iii), until July 29, 2007, each Note (and all
securities issued in exchange therefor or substitution thereof, other than Common Shares, if any,
issued upon conversion thereof) and any share certificate representing Common Shares issued upon
conversion of such Note shall bear a Canadian Restricted Securities Legend in substantially the
following form:

     UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THIS SECURITY IN CANADA BEFORE JULY 29, 2007.

     Notwithstanding the foregoing, the Canadian Restricted Securities Legend may be removed if
there is delivered to the Issuer such satisfactory evidence, as may be reasonably required by the
Issuer, that neither the Canadian Restricted Securities Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with applicable Canadian
securities laws. Upon provision to the Issuer and the Guarantors of such satisfactory evidence,
the Trustee, upon receipt of an Issuer Order, shall authenticate and deliver Notes (including the
related Guarantee) that do not bear the Canadian Restricted Securities Legend.

          (iv) Each Note shall bear the Restricted Securities Legend set forth in Section 2.14(a)(i) and
each Common Share issued upon conversion of such Note shall bear the Restricted Common Share Legend
set forth in Section 2.03(a)(ii), in each case, until the earlier of:

               (A) the expiration of the holding period applicable to sales thereof under Rule 144(k) under
the Securities Act (or any successor provision) as evidenced by a certificate to such effect from
the Issuer to the Trustee;

               (B) such Note or Common Share has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and that was effective at the time of such sale); or

               (C) in the case of any such Common Share, such Common Share has been issued upon conversion of
any Note that has been sold pursuant to a registration statement that has been declared effective
under the Securities Act (and that was effective at the time of such sale).

     The holder must give notice of the occurrence of any event described in clause (A), (B) or (C)
above to the Trustee and any transfer agent for the Common Shares, as applicable.

26

 

     Notwithstanding the foregoing, the Restricted Securities Legend or Restricted Common Share
Legend, as the case may be, may be removed if there is delivered to the Issuer such satisfactory
evidence, which, in the case of a transfer made pursuant to Rule 144 under the Securities Act, may
include an opinion of counsel, as may be reasonably required by the Issuer, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that transfers thereof
comply with the provisions of Rule 144A or Rule 144 under the Securities Act or that such Notes are
not “restricted” within the meaning of Rule 144 under the Securities Act. Upon provision to the
Issuer and the Guarantors of such satisfactory evidence, the Trustee, upon receipt of an Issuer
Order, shall authenticate and deliver Notes (including the related Guarantee) that do not bear the
legend. The Issuer shall not otherwise be entitled to require the delivery of a legal opinion in
connection with any transfer or exchange of Securities

     If the Restricted Securities Legend has been removed from a Note or Common Share, as the case
may be, as provided above, no other Note or Common Share issued in exchange for all or any part of
such Note or Common Share shall bear such legend, unless the Issuer has reasonable cause to believe
that such other Note or Common Share is a “restricted security” within the meaning of Rule 144 and
instructs the Trustee in writing to cause a Restricted Securities Legend or Restricted Common Share
Legend to appear thereon.

     Any Note (or security issued in exchange or substitution thereof) as to which such
restrictions on transfer shall have expired in accordance with their terms or as to which the
conditions for removal of the Restricted Securities Legend set forth in Section 2.14(a)(i) as set
forth therein have been satisfied may, upon surrender of such Note for exchange to the Registrar in
accordance with the provisions of Section 2.05 hereof, be exchanged for a new Note or Notes, of
like tenor and aggregate principal amount, which shall not bear the Restricted Securities Legend
required by Section 2.14(a)(i).

          (v) Any Common Share issued upon conversion of a Note as to which such restrictions on
transfer shall have expired in accordance with their terms or as to which the conditions for
removal of the Restricted Common Share Legend set forth in Section 2.14(a)(ii) or the Canadian
Restricted Securities Legend set forth in Section 2.14(a)(iii), as the case may be, have been
satisfied may, upon surrender of the certificates representing such Common Shares for exchange in
accordance with the procedures of the transfer agent for the Common Shares, be exchanged for a new
certificate or certificates for a like aggregate number of Common Shares, which shall not bear the
Restricted Securities Legend required by Section 2.14(a)(ii) or the Canadian Restricted Securities
Legend required by Section 2.14(a)(iii), as applicable.

     (b) Each Global Security shall also bear the following legend on the face thereof:

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY
THE ISSUER, ANY GUARANTOR, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR
ALL PURPOSES.

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ARTICLE 3

REDEMPTION

SECTION 3.01. Optional Redemption.

     (a) On or after April 15, 2011, the Issuer may, at its option, redeem the 2012 Notes, in whole
or from time to time in part, in cash at a repurchase price equal to 100.35% of the principal
amount of the 2012 Notes so redeemed, plus accrued and unpaid interest and Additional Interest, if
any, up to but excluding the applicable Redemption Date.

     (b) On or after April 15, 2013, the Issuer may, at its option, redeem the 2014 Notes, in whole
or from time to time in part, in cash at a repurchase price equal to 100.30% of the principal
amount of the 2014 Notes so redeemed, plus accrued and unpaid interest and Additional Interest, if
any, up to but excluding the applicable Redemption Date.

SECTION 3.02. Notices to Trustee.

     If the Issuer elects to redeem Notes of any series pursuant to Section 3.01 (the “Optional
Redemption”), it shall notify the Trustee in writing at least 45 days before a Redemption Date
(unless a shorter period shall be agreed upon in writing by the Trustee) of (i) the Section of this
Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the series
and principal amount of Notes (if less than all) to be redeemed, (iv) the Redemption Price, (v) the
place where such Notes are to be surrendered and (vi) the CUSIP number of the Notes being redeemed.
In case the Issuer elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.03 relating to changes in Canadian withholding taxes (the “Change in Tax Redemption”),
the Issuer shall similarly notify the Trustee in writing at least 20 days but not more than 60 days
before a Redemption Date and in addition furnish to the Trustee an Opinion of Counsel and an
Officers’ Certificate attesting to such change or amendment of Canadian withholding taxes.

SECTION 3.03. Redemption for Changes in Canadian Withholding Taxes.

     The Issuer may redeem the Notes in whole, but not in part, at its option at any time in cash
at a repurchase price equal to 100% of the aggregate principal amount, together with accrued and
unpaid interest and Additional Interest, if any, to the Redemption Date and all Additional Amounts
then due or becoming due with respect to the Notes on the Redemption Date, in the event the Issuer
or NNL (or either of their successors) is, has become or would become obligated to pay, on the next
date on which any amount would be payable with respect to the Notes, any Additional Amount as a
result of a change or amendment in the laws or treaties (including any regulations promulgated
thereunder) of Canada (or any political subdivision or taxing authority thereof or therein) or any
change in or new or different position regarding the application, interpretation or administration
of such laws, treaties or regulations of the Canada Revenue Agency or another applicable taxing
authority of Canada (or any political subdivision thereof or therein) (including a holding,
judgment or order by a court of competent jurisdiction) or any proposed change in law that if
enacted would be retroactive to a date prior to the Redemption Date, which change is announced or
becomes effective on or after March 22, 2007; provided that the Issuer or NNL (or either of their
successors) (a) delivers to the Trustee an

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Opinion of Counsel and an Officers’ Certificate attesting to such change or amendment and (b)
determines, in its business judgment, that such obligation cannot be avoided by the use of
reasonable measures available to it.

SECTION 3.04. Selection of Notes To Be Redeemed.

     If less than all the Notes of a series are to be redeemed, the Trustee shall select the Notes
of such series to be redeemed by a method that complies with the requirements of the Applicable
Securities Exchange (which requirements shall be provided or caused to be provided by the Issuer to
the Trustee), if any, on which the Notes are listed or quoted or, if the Notes are not so listed,
on a pro rata basis by lot or by any other method that the Trustee considers fair and appropriate.
The Trustee shall make the selection not more than 45 days before the Redemption Date from Notes of
such series outstanding and not previously called for redemption. The Trustee may select for
redemption a portion of the principal of any Notes of such series that have a denomination larger
than $1,000. Notes and portions thereof will be redeemed in the amount of $1,000 or integral
multiples of $1,000.

     Provisions of this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption. The Trustee shall notify the Issuer promptly of the Notes or
portions of Notes to be called for redemption.

     If any Note selected for partial redemption is converted in part after such selection, the
converted portion of such Note shall be deemed (so far as may be deemed) to be the portion to be
selected for redemption. The Notes (or portion thereof) so selected shall be deemed duly selected
for redemption for all purposes hereof, notwithstanding that any such Note is converted in whole or
in part before the mailing of the notice of redemption. Upon any redemption of less than all the
Notes, the Issuer and the Trustee may treat as outstanding any Notes surrendered for conversion
during the period of 15 days next preceding the mailing of a notice of redemption and need not
treat as outstanding any Note authenticated and delivered during such period in exchange for the
unconverted portion of any Note converted in part during such period.

SECTION 3.05. Notice of Redemption.

     At least 20 days but not more than 60 days before a Redemption Date of an Optional Redemption
or a Change in Tax Redemption, the Issuer shall mail by first class mail a notice of redemption to
each holder whose Notes are to be redeemed, at such holder’s address shown on the Register
maintained by the Registrar.

     The notice shall identify the Notes to be redeemed and shall state:

          (1) the Redemption Date;

          (2) the Redemption Price;

          (3) the series of Notes being called for redemption;

          (4) if any Note is being redeemed in part, the portion of the principal amount of such Note to
be redeemed and that, after the Redemption Date, upon surrender of such Note, a

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new Note or Notes of the same series in principal amount equal to the unredeemed portion will
be issued in the name of the holder thereof;

          (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the
Redemption Price;

          (6) that interest and Additional Interest, if applicable, on Notes called for redemption and
for which funds have been set apart for payment, ceases to accrue on and after the Redemption Date
(unless the Issuer and the Guarantors default in the payment of the Redemption Price);

          (7) the Section of this Article III pursuant to which the Notes called for redemption are
being redeemed;

          (8) the aggregate principal amount of Notes of the relevant series (if less than all) that are
being redeemed;

          (9) the CUSIP number of the Notes (provided that the disclaimer permitted by Section 2.12 may
be made);

          (10) the name and address of the Paying Agent;

          (11) that Notes called for redemption may be converted at any time prior to the close of
business on the last Trading Day immediately preceding the Redemption Date and if not converted
prior to the close of business on such date, the right of conversion will be lost; and

          (12) that in the case of Notes or portions thereof called for redemption on a date that is
also an Interest Payment Date, the interest payment and Additional Interest, if any, due on such
date shall be paid to the person in whose name the Note is registered at the close of business on
the relevant Regular Record Date.

     The notice if mailed in the manner herein provided shall be conclusively presumed to have been
given, whether or not the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Note designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of any Note.

     At the Issuer’s request, the Trustee shall give notice of redemption in the Issuer’s name and
at its expense.

SECTION 3.06. Effect of Notice of Redemption.

     Once notice of redemption is mailed, Notes of any series called for redemption become due and
payable on the Redemption Date at the Redemption Price set forth in Section 3.01.

SECTION 3.07. Deposit of Redemption Price.

     On or before the Redemption Date, the Issuer shall deposit with the Trustee or with the Paying
Agent (or, if the Issuer is acting as its own Paying Agent, segregate and hold in trust as

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provided in Section 2.03) money sufficient to pay the Redemption Price of and accrued interest
(including Additional Interest, if any) on all Notes to be redeemed on that date, provided,
however, that any funds deposited on the Redemption Date shall be deposited by the Issuer no later
than 10:00 a.m., New York City time on such Redemption Date. The Trustee or the Paying Agent shall
promptly return to the Issuer any money not required for that purpose.

     On and after the Redemption Date, unless the Issuer and the Guarantors shall default in the
payment of the Redemption Price, interest and Additional Interest, if applicable, will cease to
accrue on the principal amount of the Notes or portions thereof called for redemption and for which
funds have been set apart for payment and such Notes, or portions thereof, shall cease after the
close of business on the Trading Day immediately preceding the Redemption Date to be convertible
into Common Shares and, except as provided in this Section 3.07, to be entitled to any benefit or
security under this Indenture, and the holders thereof shall have no right in respect of such
Notes, or portions thereof, except the right to receive the Redemption Price thereof and unpaid
interest and Additional Interest, if any, to (but excluding) the Redemption Date. In the case of
Notes or portions thereof redeemed on a Redemption Date which is also an Interest Payment Date, the
interest payment and Additional Interest, if any, due on such date shall be paid to the person in
whose name the Note is registered at the close of business on the relevant Regular Record Date.

SECTION 3.08. Notes Redeemed in Part.

     Upon surrender of a Note that is redeemed in part only, the Issuer shall issue, the Guarantors
shall endorse and the Trustee shall authenticate and deliver to the holder of a Note a new Note of
the same series equal in principal amount to the unredeemed portion of the Note surrendered, at the
expense of the Issuer, except as specified in Section 2.05.

SECTION 3.09. Conversion Arrangement on Call for Redemption.

     In connection with any redemption of Notes, the Issuer at its option may arrange for the
purchase and conversion of any Notes by an arrangement with one or more investment bankers or other
purchasers to purchase such Notes by paying to the Trustee in trust for the holders, on or before
the date fixed for redemption, an amount not less than the applicable Redemption Price, together
with interest and Additional Interest, if any, accrued to the date fixed for redemption, of such
Notes. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the
Issuer to pay the Redemption Price of such Notes, together with interest and Additional Interest,
if any, accrued to the date fixed for redemption, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by the purchasers. If such an agreement is entered into, a copy
of which will be filed with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the Issuer, be deemed, to
the fullest extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article 12) surrendered by such purchasers
for conversion, all as of immediately prior to the close of business on the date fixed for
redemption (and the right to convert any such Notes shall be deemed to have been extended through
such time), subject to payment of the above amount as aforesaid. At the written direction of the
Issuer, the Trustee shall hold and dispose of any such amount paid to it in the same manner as it
would monies deposited with it by the Issuer for the redemption of Notes.

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Without the Trustee’s prior written consent, no arrangement between the Issuer and such
purchasers for the purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Issuer agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement for the purchase and
conversion of any Notes between the Issuer and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses incurred by the Trustee in the defense of
any claim or liability arising out of or in connection with the exercise or performance of any of
its powers, duties, responsibilities or obligations under this Indenture.

ARTICLE 4

COVENANTS

SECTION 4.01. Payment of Notes.

     The Issuer shall pay the principal of and interest (including Additional Interest, if any) on
the Notes on the dates and in the manner provided in the Notes. Principal, interest (including
Additional Interest, if any), the Redemption Price and Change of Control Payments shall be
considered paid on the date due if the Trustee or Paying Agent (other than the Issuer or a
Subsidiary of the Issuer) holds on that date immediately available funds designated for and
sufficient to pay all principal, interest (including Additional Interest, if any), the Redemption
Price then due or the Change of Control Payment then due.

     To the extent lawful, the Issuer shall pay interest (including post-petition interest in any
proceeding under any bankruptcy, insolvency or other similar applicable law) on (i) overdue
principal, at the rate borne by Notes; and (ii) overdue installments of interest (without regard to
any applicable grace period) at the same rate.

SECTION 4.02. Reports. 

(a) The Issuer will:

	 	(i)	 	file with the Trustee, within 15 days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Issuer is not required to file information, documents or
reports pursuant to either of these Sections, the Issuer will file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time to time
by the Commission, such of the supplementary and periodic information, documents and
reports that may be required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
	 
	 	(ii)	 	file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional

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	 	 	 	information, documents and reports with respect to compliance thereby with the
conditions and covenants of this Indenture as may be required from time to time by
such rules and regulations; and
	 
	 	(iii)	 	notify the Trustee when Notes of any series are listed on any stock exchange.

(b) Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Issuer’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers’ Certificates).

SECTION 4.03. Compliance Certificate.

     The Issuer shall deliver to the Trustee within 120 days after the end of each fiscal year of
the Issuer, an Officers’ Certificate stating whether the signers know of any Event of Default that
occurred during the fiscal year. If any Event of Default shall have occurred, the applicable
certificate shall describe the nature of the Event of Default and its current status. The
certificate shall be in a form in compliance with the TIA.

SECTION 4.04. Maintenance of Office or Agency.

     The Issuer shall maintain or cause to be maintained the office or agency required under
Section 2.02. The Issuer shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not maintained by the Trustee. If at any time the
Issuer shall fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, presentations, surrenders, notices and demands with respect to
the Notes may be made or served at the Corporate Trust Office of the Trustee.

     The Issuer may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designation; provided however, that no such designation shall in any manner relieve
the Issuer of its obligation to maintain an office or agency in the borough of Manhattan. The
Issuer will give prompt written notice to the Trustee of any such designation and any change in the
location of any such other office or agency.

SECTION 4.05.  Reserved.

SECTION 4.06.  Offer to Repurchase Upon a Change of Control.

     Following a Change of Control (the date of each such occurrence being the “Change of Control
Date”), the Issuer shall notify the holders of Notes in writing of such occurrence and shall make
an offer (the “Change of Control Offer”) to repurchase all Notes then outstanding at a repurchase
price equal to 100% of the aggregate principal amount thereof (the “Change of Control Payment”),
plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the Change
of Control Payment Date (as defined below).

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     Notice of a Change of Control (the “Issuer Notice”) shall be mailed by or at the direction and
expense of the Issuer through the Trustee to the holders of Notes as shown on the Register of such
holders maintained by the Registrar not more than 30 days after the applicable Change of Control
Date at the addresses as shown on the Register of holders maintained by the Registrar, with a copy
to the Trustee and the Paying Agent. The Change of Control Offer shall remain open until a
specified date (the “Change of Control Offer Termination Date”) which is at least 20 Business Days
from the date such Issuer Notice is mailed. During the period specified in such notice, holders of
Notes of any series may elect to tender their Notes in whole or in part in integral multiples of
$1,000. Payment shall be made by the Issuer in the manner elected by the Issuer pursuant to
Section 4.06(b) in respect of Notes properly tendered pursuant to this Section on a specified
Business Day (the “Change of Control Payment Date”) which shall be no earlier than 20 Business Days
and no later than 35 Business Days after the date of the Issuer Notice.

     The notice, which shall govern the terms of the Change of Control Offer, shall include such
disclosures as are required by law and shall state:

          (1) that a Change of Control Offer is being made pursuant to this Section 4.06 and that all
Notes will be accepted for payment;

          (2) the event, transaction or transactions that constitute the Change of Control;

          (3) the Change of Control Payment for each Note, the Change of Control Offer Termination Date
and the Change of Control Payment Date;

          (4) the Conversion Rate applicable to the Notes of each series and any adjustments to such
Conversion Rate;

          (5) that a Note subject to the Change of Control Offer may be converted only if the holder of
such Note declines the Change of Control Offer or has withdrawn its acceptance of the Change of
Control Offer in accordance with the terms of such Change of Control Offer and the provisions of
this Indenture;

          (6) that any Note not accepted for payment will continue to accrue interest and Additional
Interest, if applicable, in accordance with the terms thereof;

          (7) that, unless the Issuer and the Guarantors default on making the Change of Control
Payment, any Note accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest and Additional Interest, if applicable, on the Change of Control Payment Date and
no further interest or Additional Interest shall accrue on or after such date;

          (8) the name and address of the Paying Agent and Conversion Agent;

          (9) that holders electing to have Notes repurchased pursuant to a Change of Control Offer will
be required to surrender their Notes, if in certificated form, together with any necessary
endorsements, to the Paying Agent at the address specified in the notice prior to 5:00 p.m., New
York City time on the Change of Control Offer Termination Date and must complete any form letter of
transmittal proposed by the Issuer and acceptable to the Trustee and the Paying Agent (a “Purchase
Notice”);

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          (10) that holders of Notes will be entitled to withdraw their election if the Paying Agent
receives, not later than 5:00 p.m., New York City time, on the Change of Control Offer Termination
Date, a facsimile transmission or letter setting forth the name of the holder, the series and
principal amount of Notes the holder delivered for repurchase, the Note certificate number (if any)
and a statement that such holder is withdrawing his election to have such Notes purchased;

          (11) that holders whose Notes of any series are repurchased only in part will be issued Notes
of such series equal in principal amount to the unpurchased portion of the Notes surrendered;

          (12) the instructions that holders must follow in order to tender their Notes; and

          (13) that in the case of a Change of Control Offer Termination Date that is also an Interest
Payment Date, the interest payment and Additional Interest, if any, due on such date shall be paid
to the person in whose name the Note is registered at the close of business on the relevant Change
of Control Offer Termination Date.

     To accept a Change of Control Offer, a holder of Notes subject to such Change of Control Offer
must deliver a written notice so as to be received by the Paying Agent no later than 5:00 pm, New
York City Time on the Change of Control Offer Termination Date. The required notice must state:

          (1) the series of the Notes to be delivered by the holder for repurchase;

          (2) the certificate numbers of the Notes to be delivered by the holder for repurchase, if
applicable;

          (3) the portion of the principal amount of Notes to be repurchased, which portion must be an
integral multiple of $1,000; and

          (4) that the holder accepts the Change of Control Offer pursuant to the terms of such Change
of Control Offer and the provisions of this Indenture.

     A holder may withdraw any acceptance of the Change of Control Offer by delivering to the
Paying Agent a written notice of withdrawal prior to the close of business on the Business Day
immediately preceding the Change of Control Payment Date. Such notice of withdrawal must state:

          (1) the series of Notes being withdrawn;

          (2) the principal amount of Notes being withdrawn, which must be an integral multiple of
$1,000;

          (3) the certificate numbers of the Notes being withdrawn, if applicable; and

          (4) the principal amount, if any, of the Notes that remain subject to acceptance of the Change
of Control Offer.

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     On the Business Day following the Change of Control Offer Termination Date the Issuer shall,
to the extent lawful, (i) accept for payment all Notes or portions thereof that have been properly
tendered (and not properly withdrawn) pursuant to the Change of Control Offer, (ii) by 10:00 a.m.,
New York City time, deposit with the Paying Agent, an amount in U.S. legal tender (“cash”)
sufficient to pay the Change of Control Payment with respect to all Notes or portions thereof so
tendered and accepted, and an amount in cash equal to accrued and unpaid interest and Additional
Interest, if any, and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers’ Certificate setting forth the aggregate principal amount of Notes or
portions thereof tendered to and accepted for payment by the Issuer. On the Change of Control
Payment Date, the Paying Agent shall mail or deliver (or cause to be transferred by book entry) to
the holders of Notes so accepted, the Change of Control Payment, and the Trustee shall promptly
authenticate and mail or cause to be transferred by book entry to such holders a new Note of the
same series equal in principal amount to any unpurchased portion of the Note surrendered, if any;
provided that such new Notes will be in a principal amount of $1,000 or an integral multiple
thereof. Any Notes not so accepted shall be promptly mailed or delivered by the Issuer to the
holder thereof.

     Immediately after the Change of Control Payment Date, (i) each properly tendered Note accepted
for purchase in such Change of Control Offer will cease to be outstanding, (ii) interest will cease
to accrue on each properly tendered Note, and (iii) all other rights of the holder of a properly
tendered Note will terminate, other than the right to receive the Change of Control Payment upon
delivery of such Note, in each case, regardless of whether or not book-entry transfer of the Note
has been made or the Note has been delivered to the Paying Agent.

     In the case of any reclassification, change, amalgamation, consolidation, merger, combination
or sale or conveyance to which Section 12.06 applies, in which the Common Shares of the Issuer are
changed or exchanged as a result into the right to receive stock, securities or other property or
assets (including cash) which includes Common Shares or common shares of another person, then the
person formed by such amalgamation, or consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution of such
supplemental indenture) modifying the provisions of this Indenture relating to the right of holders
of Notes to cause the Issuer to repurchase Notes following a Change of Control, including the
applicable provisions of this Section 4.06 and the definition of Change of Control, as determined
in good faith by the Issuer (which determination shall be conclusive and binding), to make such
provision apply to such common shares and the issuer thereof if different from the Issuer and
Common Shares (in lieu of the Issuer and the Common Shares of the Issuer).

     Each Change of Control Offer shall be made by the Issuer in compliance with Rule 14e-4 and
Rule 13e-4 and all other applicable provisions of the Exchange Act and, with respect to Canadian
holders, Canadian securities laws, and all applicable tender offer rules promulgated thereunder and
any other applicable securities laws and regulations, to the extent such laws and regulations are
then applicable and shall include all instructions and materials that the Issuer shall reasonably
deem necessary to enable such holders of Notes to tender their Notes.

     Notwithstanding the foregoing, the Issuer may not repurchase any Note in connection with a
Change of Control Offer if there has occurred and is continuing an Event of Default with

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respect to such Note, other than a Default in the payment of the Change of Control Payment
with respect to such Note.

     Subject to the foregoing, a Change of Control will be an “event of failure” within the meaning
of paragraph 212(1)(b)(vii) of the Income Tax Act (Canada) that requires the Issuer to make a
Change of Control Offer. For the avoidance of doubt, the occurrence of such an event of failure is
not an Event of Default under Section 6.01 hereof.

SECTION 4.07. Payment of Additional Amounts.

     (a) All payments of principal and premium, if any, and interest and Additional Interest, if
any, by the Issuer under this Indenture or by a Guarantor under a Guarantee shall be made without
withholding or deduction for, or on account of, Canadian Taxes. In the event withholding or
deduction for Canadian Taxes is required by law or by the interpretation or administration thereof
by the relevant governmental authority, the Issuer or Guarantors, as the case may be, will pay such
Additional Amounts as may be necessary in order that the net amounts received by a holder after
such withholding or deduction will not be less than the amount which would have been receivable in
respect of the Notes in the absence of such withholding or deduction, except that no such
Additional Amounts shall be payable to a holder in respect of a beneficial owner:

          (i) with whom the Issuer or the applicable Guarantor does not deal at arm’s length (within the
meaning of the Income Tax Act (Canada)) at the time of the making of such payment;

          (ii) who is subject to such Canadian Taxes by reason of its being connected with Canada or any
province or territory thereof otherwise than solely by reason of the holder’s activity in
connection with purchasing the Notes, the mere holding of Notes or the receipt of payments
thereunder; or

          (iii) who could lawfully avoid (but has not so avoided) such withholding or deduction by
complying, or procuring that any third party complies with, any statutory requirements or by
making, or procuring that any third party make, a declaration of non-residence or other similar
claim for exemption to any relevant tax authority.

     (b) The Issuer or the applicable Guarantor shall make such withholding or deduction and remit
the full amount deducted or withheld to the relevant authority in accordance with applicable law.
The Issuer shall furnish to the Trustee, within 30 days after the date the payment of any Canadian
Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing that such
payment has been made or other evidence of such payment satisfactory to the Trustee. The Issuer or
the applicable Guarantor shall indemnify and hold harmless each holder of Notes (other than a
holder described under clauses (i), (ii) or (iii) of Section 4.07(a)) and upon written request
reimburse each such holder for the amount of (x) any Canadian Taxes so levied or imposed and paid
by such holder as a result of payments made under or with respect to the Notes or the Guarantee,
and (y) any Canadian Taxes levied or imposed and paid by such holder with respect to any
reimbursement under (x) above, but excluding any such Canadian Taxes on such holder’s net income or
capital.

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     (c) At least 30 days prior to each date on which any payment under or with respect to the
Notes is due and payable, if the Issuer or any Guarantor is obligated to pay Additional Amounts
with respect to such payment, the Issuer or the applicable Guarantor shall deliver to the Trustee
and the Paying Agent an Officers’ Certificate stating the fact that such Additional Amounts will be
payable, and the amounts so payable, and certifying that the Issuer or one or both of the
Guarantors, as applicable, will pay such deduction or withholding amount to the relevant taxing
authority and will set forth such other information necessary to enable the Trustee or the Paying
Agent to pay such Additional Amounts to holders of the Notes on such payment date. References in
this Indenture to the payment of principal of, premium, interest or Additional Interest on any Note
shall be deemed to include the payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable.

     (d) Each of the Issuer and the Guarantors agrees to indemnify the Trustee and the Paying
Agents for, and to hold each harmless against, any loss, liability or expense reasonably incurred
without willful misconduct or bad faith on its part arising out of or in connection with actions
taken or omitted by it in reliance on any Officers’ Certificate furnished pursuant to this Section
4.07 or any failure to furnish such a certificate.

     (e) The obligations of the Issuer and the Guarantors pursuant to this Section 4.07 shall
survive termination or discharge of this Indenture, payment of the Notes and/or resignation or
removal of the Trustee or the Paying Agent.

SECTION 4.08. Registration Rights. 

     The Issuer agrees that all holders are entitled to the benefits of the Registration Rights
Agreement. If a Note and related Guarantees constitute Registrable Securities, and the holder
thereof elects to sell such Registrable Securities pursuant to the Shelf Registration Statement
(which is defined herein as defined in the Registration Rights Agreement) then, by its acceptance
thereof, the holder of such Registrable Securities will have agreed to be bound by the terms of the
Registration Rights Agreement relating to the Registrable Securities that are subject of such
election.

     If liquidated damages in the form of Additional Interest are payable by the Issuer pursuant to
the Registration Rights Agreement, the Issuer shall deliver to the Trustee an Officers’ Certificate
to that effect stating (i) the amount of such Additional Interest that is payable, (ii) the reason
why such Additional Interest is payable and (iii) the date on which such Additional Interest is
payable. Unless and until a Trust Officer of the Trustee receives such an Officers’ Certificate,
the Trustee may assume without inquiry that no Additional Interest is payable. If the Issuer has
paid Additional Interest directly to the persons entitled to such amounts, the Issuer shall deliver
to the Trustee a certificate setting forth the particulars of such payment.

ARTICLE 5

SUCCESSORS

SECTION 5.01. Amalgamation, Merger, Conveyance, Transfer or Lease.

     (a) So long as the Notes of any series remains outstanding, the Issuer will not amalgamate or
merge with any other corporation or enter into any reorganization or arrangement

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or effect any conveyance, transfer or lease of all or substantially all of its and its
Subsidiaries’ assets, taken as a whole (other than with or to NNL), unless in any such case (i)(x)
the Issuer is the surviving corporation or one of the continuing corporations or (y) the successor
corporation (or the person that leases or that acquires by conveyance or transfer all or
substantially all of the Issuer’s and the Issuer’s Subsidiaries’ assets, taken as a whole) is a
corporation with shares listed on the TSX or a major exchange or quotation system in the United
States or the United Kingdom and expressly assumes, by supplemental indenture, the Issuer’s
obligations under this Indenture and (ii) immediately after giving effect to such transaction, no
Default or Event of Default has occurred and is continuing.

     (b) So long as the Notes of any series remains outstanding, NNL will not amalgamate or merge
with any other corporation or enter into any reorganization or arrangement or effect any
conveyance, transfer or lease of all or substantially all of its and its Subsidiaries’ assets,
taken as a whole (other than with or to the Issuer), unless in any such case (i)(x) NNL is the
surviving corporation or one of the continuing corporations; (y) the surviving corporation is a
wholly-owned Subsidiary of the Issuer and expressly assumes, by supplemental indenture, NNL’s
obligations under the Indenture and NNL’s Guarantee; or (z) the successor corporation (or the
person that leases or that acquires by conveyance or transfer all or substantially all of its and
its Subsidiaries’ assets, taken as a whole) is a corporation with shares listed on the TSX or a
major exchange or quotation system in the United States or the United Kingdom and expressly
assumes, by supplemental indenture, NNL’s obligations under the Indenture and NNL’s Guarantee and
(ii) immediately after giving effect to such transaction, no Default or Event of Default has
occurred and is continuing.

SECTION 5.02. Successor Corporation Substituted.

     In case of any such amalgamation, merger, reorganization, conveyance, transfer or lease and
upon any such assumption by the successor corporation, such successor corporation shall agree to be
bound by the terms of this Indenture as principal obligor or Guarantor in place of either the
Issuer or NNL, as the case may be, with the same effect as if it had been named herein as the
Issuer or NNL, as the case may be.

SECTION 5.03. Offer to Repurchase on Change of Control.

     This Article 5 does not affect the obligations of the Issuer (including without limitation any
successor to the Issuer) under Section 4.06.

SECTION 5.04. Amalgamation of the Issuer and NNL.

     In the event that the Issuer shall merge, amalgamate or consolidate with or into NNL,
thereafter all references herein to the Issuer and NNL shall mean the merged, amalgamated or
consolidated corporation and clause (b) of the definition of “Change of Control” shall cease to
apply.

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ARTICLE 6

DEFAULTS AND REMEDIES

SECTION 6.01. Events of Default.

     An “Event of Default” with respect to any series of Notes occurs if:

     (a) the Issuer defaults in the payment of principal of, or premium, if any, on the Notes of
such series when due at maturity, upon acceleration or otherwise, including, without limitation,
failure of the Issuer to make a Change of Control Payment with respect to Notes of such series or
any payment of the Redemption Price with respect to Notes of such series when required pursuant to
Article 3; or

     (b) the Issuer defaults in the payment of any installment of interest, Additional Interest or
Additional Amounts on the Notes of such series when due (including any interest or Additional
Interest payable in connection with any optional redemption payment pursuant to Article 3 or any
offer to repurchase pursuant to Section 4.06) and continuance of such default for a continuous
period of 30 days or more; or

     (c) a default in performing or observing any of the respective covenants, agreements or other
obligations under this Indenture of the Issuer, NNL or during any period in which NNI is a
Guarantor, NNI, as described herein for a continuous period of 90 days after receipt of written
notice by the Issuer or such Guarantor from the holders of not less than 25% in aggregate principal
amount of the then outstanding Notes of such series requiring the same to be remedied; or

     (d) the Issuer defaults in performing its obligation to deliver Common Shares, together with
cash in lieu thereof in respect of any fractional Common Shares, upon conversion of any Note of
such series, pursuant to Section 12.02 and that failure continues for 10 days; or

     (e) the Issuer defaults in performing its obligation to make a Change of Control Offer or give
any notice of a Change of Control or a Make Whole Change of Control required hereunder with respect
to Notes of such series, in each case, within the time period specified for doing so hereunder; or

     (f) the occurrence of a default as defined in any evidence of indebtedness for borrowed money
of the Issuer or any Guarantor exceeding on its face $100,000,000 in principal amount, whether such
indebtedness now exists or shall hereafter be created, which results in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise become due and
payable and such acceleration shall not be rescinded or annulled within 10 days after written
notice (i) specifying such default, (ii) requiring such defaulting entity to cause such
acceleration to be rescinded or annulled, and (iii) that meets the specific requirements for such a
notice of default under the applicable indenture, loan agreement or similar document governing the
terms of such indebtedness; or

     (g) a decree, judgment, or order by a court having jurisdiction in the premises shall have
been entered adjudging the Issuer or NNL a bankrupt or insolvent or approving as properly filed a
petition seeking reorganization, readjustment, arrangement, composition or similar relief

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for the Issuer or NNL under any bankruptcy, insolvency or other similar applicable law and
such decree, judgment or order of a court having jurisdiction in the premises for the appointment
of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Issuer or
NNL, as the case may be, of a substantial part of its property, or for the winding up or
liquidation of its affairs, shall have remained in force for a period of 60 consecutive days; or
any substantial part of the property of the Issuer or NNL shall be sequestered or attached and
shall not be returned to the possession of the Issuer or NNL or released from such attachment
whether by filing of a bond, or stay or otherwise within 60 consecutive days thereafter; or

     (h) the Issuer or NNL shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization, readjustment, arrangement, composition or similar relief
under any bankruptcy, insolvency or other similar applicable law or the Issuer or NNL shall consent
to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency for it or of a substantial part of its property,
or shall make an assignment for the benefit of creditors, or shall be unable, or admit in writing
its inability, to pay its debts generally as they become due, or corporate action shall be taken by
the Issuer or NNL in furtherance of any of the aforesaid actions.

SECTION 6.02. Acceleration.

     (a) Subject to clause (b) below, if an Event of Default with respect to any series of Notes
occurs and is continuing, then and in every such case the Trustee, by written notice to the Issuer,
or the holders of at least 25% in aggregate principal amount of the then outstanding Notes of such
series, by written notice to the Issuer and the Trustee, may declare the unpaid principal of,
premium, if any, and accrued and unpaid interest and Additional Interest, if any, on all the Notes
of such series to be due and payable. Upon such declaration, such principal amount, premium, if
any, and accrued and unpaid interest and Additional Interest, if any, shall become immediately due
and payable, notwithstanding anything contained in this Indenture or the Notes of such series to
the contrary.

     (b) The sole remedy for any breach of the obligations of the Issuer or any Guarantor under
this Indenture (including without limitation under Section 4.02 and Section 4.03) to file periodic
or other reports (including pursuant to section 314(a)(1) of the TIA) shall, except as provided in
the final sentence of this Section 6.02(b) be the payment of liquidated damages in the form of
Additional Interest, and holders of the Notes will not have any right under the Indenture to
accelerate the maturity of the Notes as a result of any such breach. If a breach of the
obligations under the Indenture to file periodic or other reports (including pursuant to section
314(a)(1) of the TIA) continues for 90 days after notice thereof is given in accordance with
Section 6.01(c), the Issuer will pay Additional Interest to all holders of Notes at a rate per
annum equal to (i) 0.25% per annum of the principal amount of the Notes from the 90th day following
such notice to but not including the 180th day following such notice (or such earlier date on which
the Event of Default relating to the reporting obligations referred to in this Section 6.02(b)
shall have been cured or waived) and (ii) 0.50% per annum of the principal amount of the Notes from
the 180th day following such notice to but not including the 270th day following such notice (or
such earlier date on which the Event of Default relating to the reporting obligations referred to
in this Section 6.02(b) shall have been cured or waived). On such 270th

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day (or
earlier, if the Event of Default relating to the reporting obligations referred to in this
Section 6.02(b) shall have been cured or waived prior to such 270th day), such Additional Interest
will cease to accrue, and the Notes will be subject to acceleration as provided above if the Event
of Default is continuing.

SECTION 6.03. Other Remedies.

     If an Event of Default with respect to any series of Notes occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of
principal of or interest or Additional Interest, if applicable, on such Notes or to enforce the
performance of any provision of such Notes or this Indenture. The Trustee may maintain a
proceeding even if it does not possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any holder of a Note in exercising any right or
remedy occurring upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent
permitted by law.

SECTION 6.04. Waiver of Past Defaults.

     The holders of a majority in aggregate principal amount of the Notes of a series then
outstanding may, on behalf of the holders of all the Notes of such series, waive an existing
Default or Event of Default and its consequences, except a Default or Event of Default in the
payment of the principal of, premium, if any, or interest or Additional Interest, if applicable, on
such Notes (other than the non-payment of principal of and premium, if any, and interest and
Additional Interest, if any, on such Notes which has become due solely by virtue of an acceleration
which has been duly rescinded as provided above), or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of all holders of Notes. When a
Default or Event of Default with respect to such series is waived, it is cured and stops continuing
with respect to such series. No waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.

SECTION 6.05. Control by Majority.

     The holders of a majority in aggregate principal amount of the then outstanding Notes of any
series may direct the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on it with respect to such series of
Notes. However, the Trustee may refuse to follow any direction that conflicts with law or this
Indenture that the Trustee determines may be unduly prejudicial to the rights of other holders of
Notes; provided, further, that the Trustee may take any other action the Trustee deems proper that
is not inconsistent with such directions.

SECTION 6.06. Limitation on Suits.

     A holder of a Note may not pursue any remedy with respect to this Indenture or the Notes
unless:

          (1) the holder gives to the Trustee written notice of a continuing Event of Default;

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          (2) the holders of at least 25% in aggregate principal amount of the then outstanding Notes
(treated as a single class) make a request to the Trustee to pursue the remedy;

          (3) such holder or holders offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;

          (4) the Trustee does not comply with the request within 60 days after receipt of the request
and the offer and, if requested, the provision of indemnity; and

          (5) during such 60-day period the holders of a majority in aggregate principal amount of the
then outstanding Notes (treated as a single class) do not give the Trustee a direction inconsistent
with the request.

     A holder of a Note may not use this Indenture to prejudice the rights of another holder or to
obtain a preference or priority over another holder.

SECTION 6.07. Rights of Holders to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any holder of a Note to
receive payment of principal, premium, if any, and interest and Additional Interest, if any, on the
Note, on or after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, or to bring suit for the
enforcement of the right to convert the Note shall not be impaired or affected without the consent
of the holder of a Note.

SECTION 6.08. Collection Suit by Trustee.

     If an Event of Default with respect to a series of Notes specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an
express trust against the Issuer and the Guarantors for the whole amount of principal and interest
and Additional Interest, if any, remaining unpaid on the Notes of such series and interest on
overdue principal and interest and Additional Interest, if any.

SECTION 6.09. Trustee May File Proofs of Claim.

     The Trustee may file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors or its property. Nothing contained
herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any holder of a Note any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any holder thereof, or to authorize the Trustee to vote in
respect of the claim of any holder in any such proceeding.

SECTION 6.10. Priorities.

     If the Trustee collects any money pursuant to this Article, it shall pay out the money upon
presentation of the Notes of such series and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid, in the following order:

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     First: to the Trustee and the Agents for amounts due under Section 7.07,
including payment of all compensation, expenses and liabilities incurred by the
Trustee, and the costs and expenses of collection;

     Second: to holders of Notes of such series (treated as a single series for such
purposes) for amounts due and unpaid on such Notes for principal, premium, if any,
and interest and Additional Interest, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes of such
series for principal, premium, if any, and interest and Additional Interest, if any,
respectively; and

     Third: to the Issuer or, to the extent the Trustee collects any amount pursuant
to the Guarantee from the Guarantor, to the Guarantor.

     Except as otherwise provided in Section 2.12, the Trustee may fix a record date and payment
date for any payment to holders of Notes of a series.

SECTION 6.11. Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit, other than the Trustee, of an undertaking
to pay the costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a holder pursuant to Section 6.07 or a suit by
holders of more than 10% in aggregate principal amount of the then outstanding Notes of a series.

ARTICLE 7

THE TRUSTEE

     The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and
agrees to perform the same, as herein expressed. Whether or not herein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Article 7.

SECTION 7.01. Duties of the Trustee.

     (a) If an Event of Default actually known to a Trust Officer of the Trustee has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his or her own affairs.

     (b) Except during the continuance of an Event of Default known to the Trustee:

          (1) The duties of the Trustee shall be determined solely by the express provisions of this
Indenture and the Trustee need perform only those duties that are specifically

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set forth in this Indenture and no others and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

          (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and opinions required to be
delivered to it pursuant to the terms of this Indenture to determine whether or not they conform to
the form required by this Indenture.

     (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

          (1) This paragraph does not limit the effect of paragraph (b) of this Section;

          (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust
Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
and

          (3) The Trustee shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to Section 6.05.

          (4) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or incur any financial liability in the performance of any of its duties or the exercise of any of
its rights and powers hereunder, if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk of liability is not reasonably assured to it.

     (d) Whether or not therein expressly so provided, every provision of this Indenture that is in
any way related to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

     (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.

SECTION 7.02. Rights of the Trustee.

     (a) The Trustee may conclusively rely on and shall be fully protected in acting or refraining
from acting upon any resolution, Officers’ Certificate, or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, security or other document believed
by it to be genuine and to have been signed or presented by the proper person or persons. The
Trustee need not investigate any fact or matter contained therein but the Trustee, in its
discretions, may make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Issuer, personally or by agent
or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation.

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     (b) Any request, direction, order or demand of the Issuer or any Guarantor mentioned herein
shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect
thereof is herein specifically prescribed). In addition, before the Trustee acts or refrains from
acting, it may require an Officers’ Certificate, an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

     (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through the appointment of co-trustees or through its attorneys,
agents, custodians or nominees and other persons not regularly in its employ and shall not be
responsible for the misconduct or negligence of any attorneys, agents, custodians or nominees
appointed with due care.

     (d) The Trustee shall not be liable for any error of judgment made in good faith by a Trust
Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
and

     (e) The Trustee shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to Section 6.05.

     (f) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Issuer shall be sufficient if signed by any two Authorized Officers of the
Issuer or NNL or any Authorized Officer of NNI, as the case may be.

     (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the holders of Notes pursuant to
the provisions of this Indenture, unless such holders have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred
therein or thereby.

     (h) The permissive rights of the Trustee to do things enumerated in this Indenture shall not
be construed as a duty and the Trustee shall not be answerable for other than its negligence or
willful misconduct.

     (i) The Trustee shall not be responsible for the computation of any Additional Interest of the
type described in clause (i) of the definition thereof or of any adjustment to the Conversion Rate
or Conversion Price or for any determination as to whether an adjustment is required and shall not
be deemed to have knowledge of any adjustment unless and until it shall have received written
notice from the Issuer of such adjustment.

     (j) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder as Registrar, Paying Agent and
Conversion Agent, each Agent and each other agent, custodian and person employed to act hereunder.

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SECTION 7.03. Individual Rights of the Trustee.

     Subject to Sections 7.10 and 7.11, the Trustee in its individual or any other capacity may
become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee
and may otherwise deal with the Issuer or an Affiliate of the Issuer and receive, collect, hold and
retain collections from the Issuer with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.

SECTION 7.04. Trustee’s Disclaimer.

     The Trustee shall not be responsible for and makes no representation as to the validity or
adequacy of the Offering Memorandum, this Indenture, the Notes or the Guarantee. It shall not be
accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or
upon the Issuer’s direction under any provision of this Indenture. It shall not be responsible for
the use or application of any money received by any Paying Agent other than the Trustee, and it
shall not be responsible for any statement or recital in any offering materials, herein or any
statement in the Notes or any other document in connection with the sale of the Notes or pursuant
to this Indenture other than its certificate of authentication.

SECTION 7.05. Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is actually known to a
Trust Officer of the Trustee, the Trustee shall mail to each holder of a Note a notice of the
Default or Event of Default within 90 days after it occurs. A Default or an Event of Default shall
not be considered known to the Trustee unless it is a Default or Event of Default in the payment of
principal or interest when due under Section 6.01(a) or (b) or the Trustee shall have received
written notice thereof, in accordance with this Indenture, from the Issuer or from the holders of a
majority in aggregate principal amount of the outstanding Notes of the relevant series. Except in
the case of a Default or Event of Default in payment of principal of, premium, if any, or interest
or Additional Interest, if any, on any Note, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding the notice is in the
interest of the holders of the Notes.

SECTION 7.06. Reports by the Trustee to Holders.

     Within 60 days after May 15 of each year, the Trustee shall mail to holders of Notes a brief
report dated as of such reporting date that complies with TIA § 313(a). The Trustee also
shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA § 313(c).

     A copy of each report at the time of its mailing to holders of Notes shall be filed by the
Trustee with the Commission and each stock exchange or securities market, if any, on which the
Notes are listed.

SECTION 7.07. Compensation and Indemnity.

     The Issuer shall pay to the Trustee from time to time and the Trustee shall be entitled to
reasonable compensation for its acceptance of this Indenture and its services hereunder as agreed

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to in writing. The Trustee’s compensation shall not be limited by any law on compensation of
a trustee of an express trust. The Issuer shall reimburse the Trustee promptly upon request for
all reasonable disbursements and expenses incurred or made by or on behalf of it in addition to the
compensation for its services.

     Each of the Issuer and the Guarantors, jointly and severally, shall indemnify and hold
harmless the Trustee and its agents against any loss, damages, claims, liability or expense
(including reasonable attorney’s fees and expenses) incurred by it arising out of or in connection
with the acceptance or administration of its duties or the exercise of its rights under this
Indenture and the trusts hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises, except as set forth in the next paragraph.
The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity. The
Issuer shall defend the claim with counsel designated by the Issuer and the Guarantors, who may be
outside counsel to the Issuer but shall in all events be reasonably satisfactory to the Trustee,
and the Trustee shall cooperate in the defense, provided that the Issuer will not be liable for any
settlement made without its consent; provided further that the Trustee may defend any such claim
with another counsel selected by the Trustee and reasonably acceptable to the Issuer and the
Guarantors if the Trustee determines, acting reasonably, that a conflict of interest exists between
the Trustee and the Issuer in the defense of such claim.

     The Issuer need not reimburse any expense or indemnify against any loss or liability incurred
by the Trustee or its agent through its or such agent’s own negligence, bad faith or willful
misconduct.

     The Trustee shall have a lien prior to the Notes on all money or property held or collected by
the Trustee to secure the Issuer’s payment obligations in this Section 7.07, except that held in
trust to pay principal and interest and Additional Interest, if any, on Notes.

     When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 6.01(g) or (h) occurs, the expenses and the compensation for the services (including the
fees and expenses of its agents and counsel) are intended to constitute expenses of administration
under any bankruptcy, insolvency or other similar applicable law.

     The provisions of this Section 7.07 shall survive payment of the Notes, the termination of
this Indenture and the resignation or removal of the Trustee.

SECTION 7.08. Replacement of the Trustee.

     A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section
7.08.

     The Trustee may resign at any time and be discharged from the trust hereby created by so
notifying the Issuer; provided that such resignation . The holders of a majority in aggregate
principal amount of the then outstanding Notes (treated as a single series for such purposes) may
remove the Trustee by so notifying the Trustee and the Issuer in writing and may appoint a
successor Trustee if:

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          (i) the Trustee fails to comply with Section 7.10;

          (ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with
respect to the Trustee under any bankruptcy, insolvency or other similar laws;

          (iii) a custodian or public officer takes charge of the Trustee or its property; or

          (iv) the Trustee becomes incapable of acting.

     In addition, in any such case the Issuer or the Guarantors may by a Board Resolution thereof
remove the Trustee.

     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Issuer shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the holders of a majority in aggregate principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Issuer.

     If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Issuer or the holders of at least 10% in aggregate
principal amount of the then outstanding Notes (treated as a single series for such purposes) may
petition any court of competent jurisdiction for the appointment of a successor Trustee.

     If the Trustee after written request by any holder of a Note who has been a holder for at
least six months fails to comply with Section 7.10, such holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
holders of Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, provided that all sums owing to the retiring Trustee hereunder have been
paid and subject to the lien provided for in Section 7.07. Notwithstanding the replacement of the
Trustee pursuant to this Section 7.08, the Issuer’s obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it
prior to such replacement.

     Upon request of any such successor Trustee, the Issuer shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the preceding paragraph.

     No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article 7.

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SECTION 7.09. Successor Trustee by Merger, Etc.

     If the Trustee consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business (including the trust created by this Indenture) to, another
corporation, the resulting, surviving or transferee corporation without any further act shall be
the successor Trustee with the same effect as if the successor Trustee had been named as the
Trustee herein, provided that prior written notice thereof is given to the Issuer and the
Guarantors and such successor corporation is acceptable to the Issuer and the Guarantors.

SECTION 7.10. Eligibility, Disqualification.

     This Indenture shall always have a Trustee who satisfies the requirements of
TIA §
310(a)(1). The Trustee shall always have a combined capital and surplus as stated in Section
10.09. The Trustee is subject to TIA § 310(b), including the optional provision permitted by
the second sentence of TIA § 310(b)(9).

SECTION 7.11. Preferential Collection of Claims Against Issuer.

     The Trustee shall comply with TIA § 311(a), excluding any creditor relationship set
forth in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA
§ 311(a) to the extent indicated therein.

SECTION 7.12. Appointment of Co-Trustee.

     The Issuer, the Guarantors and the Trustee may, at any time, appoint a co-trustee for any
purpose or purposes of this Indenture if considered necessary or desirable in the circumstances
including, without limitation, to fulfill any legal requirement under the applicable laws of any
jurisdiction, including any applicable provision of the Canada Business Corporations Act, subject
to the following provisions and conditions:

          (i) the instrument appointing the co-trustee shall refer to this Indenture and the conditions
of this Section 7.12;

          (ii) the instrument appointing the co-trustee shall set forth the rights, powers, duties and
obligations under or in connection with this Indenture to be made available to, imposed upon,
exercised and performed by the co-trustee and may, for greater certainty, identify those rights,
powers, duties and obligations that will not be made available to, imposed upon, exercised or
performed by such co-trustee; and

          (iii) no trustee hereunder shall be responsible for or personally liable by reason of any act
or omission of any other trustee hereunder.

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ARTICLE 8

Satisfaction and Discharge of Indenture

SECTION 8.01. Discharge of Indenture.

     When (a) the Issuer delivers to the Trustee for cancellation all Notes theretofore
authenticated (other than any other Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes have been authenticated and delivered) and not theretofore
canceled, or (b) all the Notes not theretofore canceled or delivered to the Trustee for
cancellation have become due and payable, or by their terms will become due and payable within one
year or are to be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and the Issuer deposits with the Trustee, in trust,
amounts sufficient to pay at maturity or upon redemption of all of the Notes (other than any Notes
which have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes have been authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest, Additional
Interest and Additional Amounts, if any, due or to become due to such date of maturity or
Redemption Date, as the case may be, and if in either case the Issuer also pays, or causes to be
paid, all other sums payable hereunder by the Issuer and delivers to the Trustee an Officer’s
Certificate and Opinion of Counsel each stating that all conditions precedent herein provided
related to the satisfaction and discharge of this Indenture have been complied with, then this
Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer,
substitution, replacement and exchange and conversion of Notes, (ii) rights hereunder of holders of
Notes to receive payments of principal of and premium, if any, and interest, and Additional
Interest, if any, on, the Notes, (iii) the obligations under Section 2.03 hereof and (iv) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the Issuer, however,
hereby agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services thereafter reasonably and
properly rendered by the Trustee in connection with this Indenture or the Notes.

SECTION 8.02. Deposited Monies to be Held In Trust by Trustee.

     All monies deposited with the Trustee pursuant to Section 8.01 shall be held in trust and
applied by it to the payment, either directly or through the Paying Agent, to the holders of the
particular Notes for the payment or redemption of which such monies have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest, and Additional
Interest, if any, and premium, if any.

ARTICLE 9

AMENDMENTS

SECTION 9.01. Without the Consent of Holders.

     The Issuer and the Guarantors, when authorized by a Board Resolution, and the Trustee may
amend this Indenture or the Notes without notice to or the consent of any holder of a Note for the
purposes of:

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     (a) curing any ambiguity or correcting or supplementing any defective or inconsistent
provision contained in this Indenture or making any other changes in the provisions of this
Indenture which the Issuer and the Trustee may deem necessary or desirable provided such amendment
does not materially and adversely affect the interests of the holders of Notes in any material
respect;

     (b) providing for uncertificated Notes in addition to or in place of Certificated Notes;

     (c) providing for the succession of another corporation to the Issuer or a Guarantor and the
assumption of the Notes or the applicable Guarantee by such successor as permitted by Section 5.01;

     (d) providing for conversion rights and/or repurchase rights of holders of any series of Notes
in the event of amalgamation, merger, share exchange or sale of all or substantially all of the
assets of the Issuer as required to comply with Sections 5.01 and/or 12.06;

     (e) subject to Section 12.06, provide for conversion rights of holders of any series of Notes
in connection with any reclassification or change of the Common Shares or in the event of any
amalgamation, consolidation, merger or sale of the consolidated assets of the Issuer and its
Subsidiaries substantially as an entirety occurs;

     (f) reducing the Conversion Price applicable to any series of Notes;

     (g) evidencing and providing for the acceptance of appointment under this Indenture of a
successor Trustee;

     (h) making any changes that would provide the holders of the Notes of any series with any
additional rights or benefits or that does not adversely affect the legal rights under this
Indenture of any such holder;

     (i) adding an additional guarantor in respect of the Guarantee;

     (j) provide any liens or security for the benefit of the holders of any series of Notes;

     (k) add to the covenants for the benefit of the holders of any series of Notes;

     (l) surrender any right or power conferred upon the Issuer or any Guarantor with respect to
any series of Notes;

     (m) increase the Conversion Rate in the manner described in Article 12, provided that the
increase will not adversely affect the interests of the holders of the Notes in any material
respect;

     (n) permitting or facilitating defeasance or discharge of any or all Notes, provided that such
modification shall not adversely affect the interest of any holder of Notes in any material
respect; or

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     (o) complying with the requirements of the Commission in order to effect or maintain the
qualification of this Indenture under the TIA.

SECTION 9.02. With the Consent of Holders.

     Subject to Section 6.07, the Issuer and the Guarantors, when authorized by a Board Resolution,
and the Trustee may amend this Indenture or the Notes with the written consent of the holders of at
least a majority in aggregate principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).

     Subject to Sections 6.04 and 6.07, the holders of a majority in aggregate principal amount of
the Notes then outstanding may also waive compliance in a particular instance by the Issuer with
any provision of this Indenture or the Notes.

     However, without the consent of each holder of a Note affected, an amendment or waiver under
this Section may not:

     (a) reduce the percentage in aggregate principal amount of outstanding Notes whose holders
must consent to an amendment, supplement or waiver;

     (b) reduce the principal of or premium on or change the fixed maturity of any Note or, except
as permitted pursuant to Section 9.01(a), (d), (g) or (m), alter the redemption provisions with
respect thereto;

     (c) reduce the rate of or change the time for payment of interest, including defaulted
interest, Additional Interest or a premium on any Note;

     (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or
interest or Additional Interest, if any, on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate principal amount of the Notes then
outstanding and a waiver of the payment default that resulted from such acceleration);

     (e) make the principal of, or premium, if any, or interest or Additional Interest, if any, on,
any Note payable in money other than as provided for herein and in the Notes;

     (f) make any change in the provisions of this Indenture relating to waivers of past Defaults
or Events of Default or the rights of holders of Notes to receive payments of principal of,
premium, if any, or interest or Additional Interest, if any, on the Notes;

     (g) waive a redemption payment with respect to any Notes;

     (h) except as permitted herein (including Section 9.01(a)), increase the Conversion Price or,
except as set forth in Section 9.01(a), modify the provisions contained herein relating to
conversion of the Notes in a manner adverse to the holders thereof;

     (i) make any Note payable in money other than that stated in this Indenture and the Notes;

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     (j) modify any Guarantee; or

     (k) make any change to the abilities of holders of Notes to enforce their rights hereunder or
the provisions of clauses (a) through (i) of this Section 9.02.

     To secure a consent of the holders of Notes under this Section, it shall not be necessary for
such holders to approve the particular form of any proposed amendment or waiver, but it shall be
sufficient if such consent approves the substance thereof.

     After an amendment or waiver under this Section becomes effective, the Issuer shall mail to
holders of Notes a notice briefly describing the amendment or waiver.

SECTION 9.03. Compliance With the Trust Indenture Act.

     Every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture
that complies with the TIA as then in effect.

SECTION 9.04. Notation on or Exchange of Notes.

     Notes authenticated and delivered after the execution of any supplemental indenture pursuant
to this Article 9 may, and shall if required by the Trustee, bear a notation in the form approved
by the Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall
so determine, new Notes so modified as to conform, in the opinion of the Issuer and the Trustee, to
any such supplemental indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for outstanding Notes without charge to the holders of the
Notes, except as specified in Section 2.05.

SECTION 9.05. Trustee Protected.

     The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this
Article 9 if such amendment or supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In
signing such amendment or supplemental indenture, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplemental indenture is authorized or permitted by
this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon
the Issuer in accordance with its terms.

SECTION 9.06. No Discharge, Revision, Extinguishment, Novation, Rescission or
Substitution.

     Any amendment made pursuant to Section 9.01 or 9.02 shall not be, nor shall it be deemed to
be, a discharge, revision, extinguishment, novation, rescission or substitution of any Note, and in
any event the Notes shall be considered to be a continuation of the same obligations.

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ARTICLE 10

GENERAL PROVISIONS

SECTION 10.01. Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
TIA § 318(c), such duties imposed by such section of the TIA shall control. If any provision
of this Indenture expressly modifies or excludes any provision of the TIA that may be so modified
or excluded, the Indenture provision so modifying or excluding such provision of the TIA shall be
deemed to apply.

SECTION 10.02. Notices.

     Any notice or communication by the Issuer, any Guarantor or the Trustee shall be in writing
and delivered in person or mailed by first-class mail, with postage prepaid, or sent by facsimile
or overnight air couriers guaranteeing next day delivery, to such other’s address as stated in
Section 10.09. The Issuer, any Guarantor or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

     All notices and communications (other than those sent to holders of Notes) shall be deemed to
have been duly given at the time of delivery or upon receipt of a facsimile transmission. However,
any delivery made or facsimile sent on a day other than a business day in New York shall be deemed
to be received on the next following business day in New York, any delivery made or facsimile sent
on a day other than a business day in Toronto, Ontario shall be deemed to be received on the next
following business day in Toronto, Ontario and any delivery made or facsimile sent on a day other
than a business day in Richardson, Texas shall be deemed to be received on the next following
business day in Richardson, Texas.

     Any notice or communication to a holder of a Note shall be mailed by first-class mail, with
postage prepaid, to his or her address shown on the Register kept by the Registrar. Failure to
mail a notice or communication to a holder or any defect in it shall not affect its sufficiency
with respect to other holders.

     If the regular mail service is suspended or for any other reason it shall be impracticable to
give notice to holders by mail, then such notification to holders as shall be made with the
approval of the Trustee shall constitute sufficient notification for every purpose hereunder. If a
notice or communication is sent in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.

     If the Issuer sends a notice or communication to holders of Notes, it shall send a copy to the
Trustee and each Agent at the same time.

     All notices or communications shall be in writing and shall be in the English language.

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SECTION 10.03. Communication by Holders With Other Holders.

     Holders may communicate pursuant to TIA § 312(b) with other holders with respect to
their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar and anyone
else shall have the protection of TIA § 312(c).

SECTION 10.04. Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Issuer to the Trustee to take any action under this
Indenture, the Issuer shall furnish to the Trustee:

     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 10.05) stating that, in the opinion of
such person, all conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and

     (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 10.05) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been complied with.

SECTION 10.05. Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall
include:

     (a) a statement that the person making such certificate or opinion has read such covenant or
condition;

     (b) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;

     (c) a statement that, in the opinion of such person, he or she has made such examination or
investigation as is necessary to enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and

     (d) a statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.

     Any Officers’ Certificate may be based, insofar as it relates to legal matters, upon an
Opinion of Counsel, unless such Authorized Officer knows that the opinion with respect to the
matters upon which his or her certificate may be based as aforesaid is erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon certificates, statements or
opinions of, or representations by an officer or officers of the Issuer, or other persons or firms
deemed appropriate by such counsel, unless such counsel knows that the certificates, statements or
opinions or representations with respect to the matters upon which his or her opinion may be based
as aforesaid are erroneous.

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     Any Officers’ Certificate, statement or Opinion of Counsel may be based, insofar as it relates
to accounting matters, upon a certificate or opinion of or representation by an accountant (who may
be an employee of the Issuer), or firm of accountants, unless such Authorized Officer or counsel,
as the case may be, knows that the certificate or opinion or representation with respect to the
accounting matters upon which his or her certificate, statement or opinion may be based as
aforesaid is erroneous.

SECTION 10.06. Legal Holidays.

     A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions in the City
of New York or the city in which the Corporate Trust Office of the Trustee is located are not
required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding Business Day, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without limitation, a
Redemption Date under Paragraph 5 of any of the Notes, is not a Business Day, then such date shall
be the next succeeding Business Day.

SECTION 10.07. No Recourse Against Others.

     No director, officer, employee, shareholder or Affiliate, as such, of the Issuer or any
Guarantor from time to time shall have any liability for any obligations of the Issuer or the
Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect
of, or by reason of such obligations or their creation. Each holder by accepting a Note waives and
releases all such liability. This waiver and release are part of the consideration for the Notes.
Each of such directors, officers, employees, shareholders and Affiliates is a third party
beneficiary of this Section 10.07.

SECTION 10.08. Counterparts.

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

SECTION 10.09. Other Provisions.

     The Issuer initially appoints the Trustee as Paying Agent, Registrar and authenticating agent.

     The Trustee shall always have, or shall be a subsidiary of a bank or bank holding company
which has, a combined capital and surplus of at least $5,000,000 as set forth in its most recent
published annual report of condition.

     The Issuer’s address is:

Nortel Networks Corporation

195 The West Mall

Toronto, Ontario, Canada

ON M9C 5K1

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Attention: Corporate Secretary

Facsimile: (905) 863-7386

Telephone: (905) 863-7000

     NNL’s address is:

Nortel Networks Limited

195 The West Mall

Toronto, Ontario, Canada

ON M9C 5K1

Attention: Corporate Secretary

Facsimile: (905) 863-7386

Telephone: (905) 863-7000

     NNI’s address is:

2221 Lakeside Boulevard

Richardson, Texas 75082-4399

Attention: Corporate Secretary

Facsimile (615) 432-4067

Telephone: (615) 432-4000

     The Trustee’s address is:

The Bank of New York

101 Barclay Street, 4E

New York, New York 10286

Attention: Corporate Trust Department

Facsimile (212) 815-5366

Telephone: (212) 815-5213

SECTION 10.10. Governing Law, Etc.

     This Indenture, the Notes and the Guarantees shall be governed by and construed in accordance
with the laws of the State of New York, but without giving effect to applicable principles of
conflicts of law to the extent that the application of the law of another jurisdiction would be
required thereby.

     Each of the Issuer and NNL has appointed CT Corporation System with offices at 111 Eighth
Avenue, 13th Floor, New York, New York, 10011 as its authorized agent (the “Authorized Agent”) upon
whom all writs, process and summonses may be served in any suit, action or proceeding arising out
of or based upon this Indenture or the Notes which may be instituted in any state or U.S. federal
court in the City of New York, New York. The Issuer and NNL hereby represent and warrant that the
Authorized Agent has accepted such appointment and has agreed to act as said agent for service of
process, and the Issuer and the Guarantors agree to take any and all action, including the filing
of any and all documents, that may be reasonably necessary to continue each such appointment in
full force and effect as aforesaid so long as the

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Notes remain outstanding. The Issuer and NNL agree that the appointment of the Authorized
Agent shall be irrevocable so long as any Notes remain outstanding or until the irrevocable
appointment by the Issuer and the Guarantors of a successor agent in the City of New York, New York
as each of their authorized agent for such purpose and the acceptance of such appointment by such
successor. Service of process upon the Authorized Agent shall be deemed, in every respect,
effective service of process upon the Issuer and the Guarantors.

     Each of the Issuer and the Guarantors hereby:

     (a) agrees that any suit, action or proceeding against it arising out of or relating to this
Indenture or the Notes, as the case may be, may be instituted in any U.S. federal or state court
sitting in the City of New York,

     (b) waives to the extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding, and any claim that
any suit, action or proceeding in such a court has been brought in an inconvenient forum,

     (c) irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action
or proceeding, and

     (d) agrees that service of process by mail to the addresses specified herein shall constitute
personal service of such process on it in any such suit, action or proceeding.

SECTION
10.11. WAIVER OF JURY TRIAL.

     EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHT TO A TRIAL BY JURY (BUT NO OTHER JUDICIAL REMEDIES) IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED THEREBY.

SECTION 10.12. No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret another indenture, loan or debt agreement of the
Issuer, any Guarantor or any Subsidiary of the Issuer or any Guarantor. Any such other indenture,
loan or debt agreement may not be used to interpret this Indenture.

SECTION 10.13. Successors.

     All agreements of the Issuer and the Guarantors in this Indenture, the Notes and the
Guarantees shall bind their respective successors. All agreements of the Trustee in this Indenture
shall bind its respective successors.

SECTION 10.14. Severability.

     In case any provision in this Indenture or in the Notes or the Guarantees shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

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SECTION 10.15. Table of Contents, Headings, Etc.

     The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 10.16. Interest Act (Canada).

     Solely for the purposes of disclosure pursuant to the Interest Act (Canada) and without
affecting any calculation of interest required by this Indenture or the Notes, whenever any
interest payable under this Indenture or the Notes is calculated using a rate based on a year of
360 days, such rate, when expressed as an annual rate, is equivalent to such rate multiplied by the
number of days in the calendar year in which interest is paid divided by 360.

SECTION 10.17. Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such holders in person or by an agent
duly appointed in writing. Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Issuer and the Guarantors or any of them. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred
to as the “Act” of the holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and, subject to Section 7.01, conclusive in favor of the Trustee, the Issuer and the
Guarantors, if made in the manner provided in this Section. The record of any meeting of holders
of Notes shall be proved in the manner provided in Section 13.06.

     (b) The fact and date of the execution by any person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity, other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person executing the same, may
also be proved in any manner that the Trustee deems sufficient.

     (c) The ownership of Notes shall be proved by the Register.

     (d) If the Issuer or any Guarantor shall solicit from the holders of Notes any Act, the Issuer
or such Guarantor, as the case may be, may, at its option, by Board Resolution, fix in advance a
record date for the determination of holders of Notes entitled to take such Act, but the Issuer or
such Guarantor, as the case may be, shall have no obligation to do so. Any such record date shall
be fixed at the discretion of the Issuer or such Guarantor, as the case may be. If such a record
date is fixed, such Act may be sought or taken before or after the record date, but only the
holders of record at the close of business on such record date shall be deemed to be holders for

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the purpose of determining whether holders of the requisite proportion of the outstanding
Notes have authorized or agreed or consented to such Act, and for that purpose the Notes shall be
computed as of such record date.

     (e) Any Act of the holder of Notes shall bind every future holder of the Notes issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything
done, suffered or omitted by the Trustee, the Issuer or the Guarantors in reliance thereon, whether
or not notation of such action is made upon such Notes.

ARTICLE 11

COVENANT DEFEASANCE

SECTION 11.01. Discharge by Deposit of Money or Notes.

     (a) In addition to the provisions of Article 8 relating to the satisfaction and discharge of
this Indenture, the Issuer and the Guarantors may at any time omit to comply with, and all
obligations, covenants and agreements of the Issuer and such Guarantor under this Indenture with
respect to the Notes of any series and the Guarantees thereof or for the benefit of the holders
thereof (except for those set forth in Article 12 or as to any surviving rights of registration of
transfer or exchange of Notes or herein expressly provided for) shall cease, terminate and be
discharged if:

          (i) the Issuer or any Guarantor has, at least 91 days prior thereto, irrevocably deposited
with the Trustee, as specific security pledged for, and dedicated solely to, the due payment and
ultimate satisfaction of its obligations under this Indenture with respect to the Notes of such
series an amount of cash, and/or

          (ii) an amount of U.S. Government Obligations that are not subject to prepayment, redemption
or call,

as will together with the predetermined and certain income to accrue thereon without consideration
of any reinvestment thereof, be sufficient (in the case of such obligations, through the payment of
interest and principal thereunder) to pay (A) the principal of and premium, if any and interest and
Additional Interest, if any, on the Notes of such series, on the Maturity Date of such principal or
interest or of any installment thereof, and (B) any mandatory prepayments or analogous payments
applicable to such Notes on the day on which such payments are due and payable in accordance with
the terms of this Indenture and such Notes;

     (b) the Issuer and the Guarantors shall have received an Opinion of Counsel to the effect that
holders of the Notes will not recognize income, gain or loss for United States federal income tax
purposes as a result of such deposit and defeasance in respect of the Issuer’s and Guarantor’s
obligations and will be subject to United States federal income tax as if such deposit and
defeasance had not occurred;

     (c) the Issuer and the Guarantors shall have received an Opinion of Counsel to the effect that
the holders of the Notes affected will not recognize income (whether taxable to them by deduction
or withholding by the Issuer or the Guarantor or otherwise), gain or loss for Canadian federal
income tax purposes as a result of such deposit and defeasance in respect of the

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Issuer’s and Guarantor’s obligations and will be subject to Canadian federal income tax as if
such deposit and defeasance had not occurred;

     (d) such deposit will not result in a breach or violation of, or constitute a default under,
this Indenture or any other material agreement or instrument to which the Issuer is a party or by
which it is bound;

     (e) no Default or Event of Default shall have occurred and be continuing on the date of such
deposit;

     (f) if the Notes are then listed on the NYSE, the Issuer shall have delivered to the Trustee
an Opinion of Counsel to the effect that such deposit and defeasance will not cause the Notes to be
delisted;

     (g) the Issuer or any Guarantor, as the case may be, shall have delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating compliance with all conditions
precedent to the defeasance contemplated by Section 11.01; and

     (h) the deposit of funds shall not cause the Trustee to have a conflicting interest, within
the meaning of this Indenture and the TIA.

Notwithstanding any defeasance under this Indenture with respect to the Notes, the obligation of
the Issuer and the Guarantors to indemnify and compensate the Trustee under this Indenture and the
obligations and rights of the Trustee shall survive with respect to the Notes.

SECTION 11.02. Application of Trust Money.

     All money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes of the relevant series and this
Indenture and any applicable written direction of the Issuer or the Guarantors to the payment,
either directly or through any Paying Agent (including the Issuer or any Guarantor acting as the
Paying Agent), to the persons entitled thereto, of the principal (and premium, if any) and interest
and Additional Interest, if any, for whose payment such money has been deposited with the Trustee.

SECTION 11.03. Repayment to the Issuer or the Guarantor.

     (a) The Trustee and any Paying Agent shall promptly pay to the Issuer or a Guarantor upon the
Issuer Request or Guarantor Request, as the case may be, any money or U.S. Governmental Obligations
not required for the payment of the principal of and premium, if any and interest and Additional
Interest, if any, on Notes for which currency or U.S. Government Obligations have been deposited
pursuant to Section 11.01 held by them at any time.

     (b) The Trustee and any Paying Agent shall pay to the Issuer or a Guarantor upon the Issuer
Request or Guarantor Request, as the case may be, any money held by them for the payment of
principal and premium, if any and interest and Additional Interest, if any, that remains unclaimed
for two years after the Maturity Date of the Notes for which a deposit has been made pursuant to
Section 11.01. After such payment to the Issuer or such Guarantor, as the

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case may be, the holders of Notes shall thereafter, as unsecured general creditors, look only
to the Issuer or such Guarantor, as the case may be, for payment thereof.

ARTICLE 12

CONVERSION OF NOTES

SECTION 12.01. Right to Convert.

     Subject to and upon compliance with the provisions of this Indenture, each holder of Notes
shall, with respect to any Note, have the right, at his, her or its option, at any time on or
before the close of business on the last Trading Day prior to the Maturity Date of such Note
(except that, (a) with respect to any Note or portion thereof which is called for redemption prior
to such date, such right shall terminate, except as provided in Section 12.02(d), before the close
of business on the last Trading Day preceding the date fixed for redemption (unless the Issuer
defaults in payment of the Redemption Price in which case the conversion right will terminate at
the close of business on the date such default is cured) and (b) with respect to any Note or
portion thereof subject to a duly completed election for repurchase, such right shall terminate on
the close of business on the Change of Control Offer Termination Date (unless the Issuer defaults
in the payment due upon repurchase or such holder elects to withdraw the submission of such
election to repurchase)) to convert the principal amount of such Note held by such holder, or any
portion of such principal amount which is $1,000 or an integral multiple thereof, into the number
of fully paid and non-assessable Common Shares at the Conversion Rate in effect at such time with
respect to such Note, by surrender of the Note so to be converted in whole or in part in the manner
provided in Section 12.02.

     A holder of Notes is not entitled to any rights of a holder of Common Shares until such holder
of Notes has converted his or her or its Notes to Common Shares under this Article 12.

SECTION 12.02. Exercise of Conversion Privilege; Issuance of Common Shares on Conversion; No
Adjustment for Interest or Dividends.

     (a) To exercise, in whole or in part, the conversion privilege with respect to any Note, the
holder of such Note shall (i) if such Note is in certificated form, surrender such Certificated
Note, duly endorsed, at the office of the Conversion Agent, accompanied by the funds, if any,
required by Section 12.02(d), and (ii) give written notice of conversion in the form provided on
the Notes (or such other notice which is acceptable to the Issuer) to the office of the Conversion
Agent that the holder of Notes elects to convert such Note or such portion thereof specified in
said notice. Such notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for Common Shares which are issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to Section 12.08. Each
such Note surrendered for conversion shall, unless the Common Shares issuable upon conversion are
to be issued in the same name as the registration of such Note, be duly endorsed by, or be
accompanied by instruments of transfer in form satisfactory to the Issuer duly executed by, the
holder of Notes or his or her duly authorized attorney. The holder of such Notes will not be
required to pay any tax or duty which may be payable in respect of the issue or delivery of Common
Shares upon conversion, but will be required to pay any tax or duty which may be

63

 

payable in respect of any transfer involved in the issue or delivery of Common Shares in a
name other than the same name as the registration of such Note.

     (b) As promptly as practicable, but no later than the third Business Day, after satisfaction
of the requirements for conversion set forth above, the Issuer shall issue and shall deliver to
such holder at the office or agency maintained by the Issuer for such purpose pursuant to Section
4.04, a certificate or certificates for the number of full Common Shares issuable upon the
conversion of such Note or portion thereof in accordance with the provisions of this Article 12 and
a check or cash in respect of any fractional interest in respect of a Common Share arising upon
such conversion, as provided in Section 12.03 (which payment, if any, shall be paid no later than
three Business Days after satisfaction of the requirements for conversion set forth above).
Certificates representing Common Shares will not be issued or delivered unless all taxes and
duties, if any, payable by the holder have been paid. In case any Note of a denomination of an
integral multiple greater than $1,000 is surrendered for partial conversion, and subject to Section
2.01(b), the Issuer shall execute, and the Trustee shall authenticate and deliver to the holder of
the Note so surrendered, without charge to him, her or it, a new Note or Notes of the same series
in authorized denominations in an aggregate principal amount equal to the unconverted portion of
the surrendered Note.

     (c) Each conversion shall be deemed to have been effected as to any such Note (or portion
thereof) on the date on which the requirements set forth above in this Section 12.02 have been
satisfied as to such Note (or portion thereof), and the person in whose name any certificate or
certificates for Common Shares are issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; provided, however, that any such
surrender on any date when the Issuer’s stock transfer books are closed shall constitute the person
in whose name the certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such conversion shall be
at the Conversion Price in effect on the date upon which such Note is surrendered.

     (d) Upon conversion of a Note (unless such conversion occurs between a Regular Record Date and
the Interest Payment Date to which it relates), a holder will not receive any cash payment of
interest and the Issuer shall not adjust the Conversion Rate to account for accrued and unpaid
interest. Holders of Notes at the close of business on a Regular Record Date will receive payment
of interest payable on the corresponding Interest Payment Date notwithstanding the conversion of
such Notes at any time after the close of business on the applicable Regular Record Date. If a
holder surrenders Notes for conversion after the close of business on any Regular Record Date but
prior to the next Interest Payment Date, the Notes surrendered for conversion must be accompanied
by payment of an amount equal to the interest that the holder of such Note is to receive on such
Note on such Interest Payment Date; provided, however, that no such payment need be made (i) if the
Issuer has made a Change of Control Offer pursuant to Section 4.06 hereof with a proposed Change of
Control Payment Date that is after a Regular Record Date and on or prior to the next Interest
Payment Date, (ii) only to the extent of overdue interest, if any overdue interest exists at the
time of conversion with respect to such Note, (iii) solely with respect to a 2012 Note, if such
2012 Note is surrendered for conversion on or after April 1, 2011 and prior to April 15, 2011, and
(iv) solely with respect to a 2014 Note, if the 2014 Note is surrendered for conversion on or after
April 1, 2013 and prior to April 15, 2013.

64

 

Except as set forth in this Article 12 hereof, no other payments or adjustments for interest,
or any dividends with respect to Common Shares, will be made upon conversion. The Issuer’s
delivery to a holder of the full number of Common Shares into which any Note is convertible and
cash in lieu of any fractional Common Shares will satisfy the Issuer’s obligation with respect to
such Note, and any accrued but unpaid interest on any Note will be deemed to be paid in full upon
conversion of such Note, rather than cancelled, extinguished or forfeited. A holder of Common
Shares issued upon conversion will not be entitled to receive any dividends payable to a holder of
Common Shares as of any record time or date before Common Shares are delivered to such holder upon
conversion of such holder’s Notes.

SECTION 12.03. Cash Payments in Lieu of Fractional Common Shares.

     No fractional Common Shares or scrip representing fractional Common Shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for conversion at one time by
the same holder, the number of full Common Shares which shall be issuable upon conversion shall be
computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof
to the extent permitted hereby) so surrendered for conversion. If any fractional Common Share
otherwise would be issuable upon the conversion of any Note or Notes, the Issuer shall make an
adjustment therefor in cash based upon the Last Reported Sale Price of the Common Shares on the
last Trading Day prior to the date of conversion.

SECTION 12.04. Conversion Price.

     The Conversion Price applicable to the 2012 Notes shall be as specified in paragraph 16 of the
form of Note attached as Exhibit A hereto, subject to adjustment as provided in this Article 12.
The Conversion Price applicable to the 2014 Notes shall be as specified in paragraph 16 of the form
of Note attached as Exhibit B hereto, subject to adjustment as provided in this Article 12.

SECTION 12.05. Adjustment of Conversion Rate.

     The Conversion Rate applicable to any series of Notes shall be adjusted from time to time by
the Issuer as follows:

     (a) If the Issuer issues Common Shares to all holders of the Common Shares as a dividend or
distribution on the Common Shares, or if the Issuer effects a stock split or stock combination, the
Conversion Rate will be adjusted based on the following formula:

               where,

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Ex-Dividend Date

65

 

	 	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding at the close of business
on the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	OS1
	 	=
	 	the number of Common Shares outstanding immediately after such
event

     (b) In case of an issuance to all holders of Common Shares of any rights, options or warrants to
purchase Common Shares for a period expiring 45 days or less from the date of issuance of such
rights, options or warrants at less than the Last Reported Sale Price of the Common Shares on the
Business Day immediately preceding the announcement of such issuance, in which event the Conversion
Rate will be adjusted based on the following formula (provided that the Conversion Rate will be
readjusted to the extent that such rights or warrants are not exercised prior to the expiration):

               where,

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to the Ex-Dividend
Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Ex-Dividend
Date
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding at the close of business
on the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	X
	 	=
	 	the total number of Common Shares issuable pursuant to
such rights
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of Common Shares equal to the aggregate
price payable to exercise such rights divided by the average of the Last
Reported Sale Prices of the Common Shares for the ten consecutive Trading
Days prior to the Business Day immediately preceding the announcement of the
issuance of such rights

     (c) In case of a dividend or other distribution to all holders of Common Shares of Capital Stock of
the Issuer (other than Common Shares) or evidences of indebtedness of the Issuer or assets or
property of the Issuer to all holders of Common Shares (excluding (x) any dividend, distribution or
issuance covered by
clause (a) or (b) above and (y) any dividend or distribution paid exclusively in cash), the
Conversion Rate will be adjusted based on the following formula:

               where,

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	 	CR0
	 	=
	 	the Conversion Rate in effect at the close of business immediately
prior to the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the Current Market Price
	 
	 	 	 	 	 	 
	 

	 	FMV
	 	=
	 	the fair market value (as determined by the Issuer’s Board of
Directors) of the shares of Capital Stock, evidences of indebtedness, assets or
property distributed with respect to each outstanding Common Share on the
Ex-Dividend Date for such distribution

     Notwithstanding the foregoing, the Conversion Rate will be adjusted based on the following
formula with respect to an adjustment pursuant to this clause (c) where there has been a payment of
a dividend or other distribution on Common Shares of Capital Stock of, or similar equity interests
in, a Subsidiary or other business unit of the Issuer that is listed on a U.S. national securities
exchange or the TSX:

               where,

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to the Ex-Dividend
Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Ex-Dividend
Date
	 
	 	 	 	 	 	 
	 

	 	FMV0
	 	=
	 	the average of the sale prices of such Capital Stock or equity
interest distributed to holders of the Common Shares applicable to one of the
Common Shares over the 10 Trading Days commencing on and including the fifth
Trading Day after the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	MP0
	 	=
	 	the average of the Last Reported Sale Prices of the Common Shares
over the 10 Trading Days commencing on and including the fifth Trading Day
after the Ex-Dividend Date

     (d) In case of dividends or other distributions consisting exclusively of cash (excluding any cash
distributed upon an amalgamation, merger, share exchange, consolidation or combination) to all
holders of Common Shares, the Conversion Rate will be adjusted based on the following formula:

               where,

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	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to the Ex-Dividend
Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Ex-Dividend Date
	 
	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the Current Market Price
	 
	 	 	 	 	 	 
	 

	 	C
	 	=
	 	the amount in cash per Common Share the Issuer
distributes to holders of Common Shares (and for which no adjustment has
been made)

     (e) In case the Issuer or one or more of its Subsidiaries make purchases of Common Shares
pursuant to a tender offer or exchange offer by the Issuer or one or more of its Subsidiaries for
Common Shares to the extent that the cash and value of any other consideration included in the
payment per Common Share exceeds the Current Market Price per Common Share on the Trading Day next
succeeding the last date on which tenders or exchanges may be made pursuant to such tender or
exchange offer (the “Expiration Date”), the Conversion Rate will be adjusted based on the following
formula:

               where,

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect on the Expiration Date
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the Conversion Rate in effect immediately after the Expiration Date
	 
	 	 	 	 	 	 
	 

	 	FMV
	 	=
	 	the fair market value (as determined by the Issuer’s Board of
Directors) of the aggregate value of all cash and any other consideration paid
or payable for Common Shares validly tendered or exchanged and not withdrawn as
of the Expiration Date (the “purchased shares”)
	 
	 	 	 	 	 	 
	 

	 	OS1
	 	=
	 	the number of Common Shares outstanding immediately after the
Expiration Date less any purchased shares
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding immediately after the
Expiration Date, including any purchased shares
	 
	 	 	 	 	 	 
	 

	 	SP1
	 	=
	 	the Last Reported Sale Price of the Common Shares on the Trading
Day next succeeding the Expiration Date

     (f) To the extent the holders of Notes may participate on an as-converted basis equally with
the holders of Common Shares in any event or occurrence, then clauses (a) through (e) of this
Section 12.05 hereof shall not apply to such event or occurrence.

     (g) For the avoidance of doubt, no payment or issuance of securities to any plaintiffs or
their counsel under the Global Class Action Settlement shall result in any of the adjustments to
the Conversion Rate set forth in clauses (a) through (e) of this Section 12.05.

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     (h) To the extent that the Issuer has a shareholder rights plan in effect upon conversion of
the Notes into Common Shares, holders will receive, in addition to the Common Shares, the rights
under the rights plan, unless prior to any conversion, the rights have separated from the Common
Shares, in which case the Conversion Rate will be adjusted at the time of separation as if the
Issuer distributed, to all holders of Common Shares, any Capital Stock, evidences of indebtedness
or assets or property as described above, subject to readjustment in the event of the expiration,
termination or redemption of such rights.

     (i) The Issuer may from time to time, to the extent permitted by law and subject to applicable
rules of any Applicable Securities Exchange, increase the Conversion Rate of the Notes of any
series by any amount for any period of at least 20 days; provided that the Issuer gives at least 15
days’ prior notice of such increase to the Trustee and holders of the Notes of such series. The
Issuer may make such increases in the Conversion Rate, in addition to those set forth above, as the
Issuer’s Board of Directors deems advisable to avoid or diminish any income tax to holders of
Common Shares resulting from any dividend or distribution of Common Shares (or rights to acquire
Common Shares) or from any event treated as such for income tax purposes.

     (j) The Issuer will not be required to adjust the Conversion Rate for any of the transactions
described in clauses (a) through (e) of this Section 12.05 if the Issuer instead makes proper
provision so that each holder of Notes who converts a Note shall be entitled to receive upon
conversion, in addition to Common Shares, the amount and kind of distributions that the holder
would have been entitled to receive if the holder had converted the Note immediately prior to the
date fixed for determining the shareholders entitled to receive the distribution; provided,
however, that if, prior to the date that is five years from the Issue Date, holders of Notes would
otherwise be entitled to receive, upon conversion of the Notes, any property (including cash) or
securities that would not constitute “prescribed securities” for the purpose of clause 212(1) (b)
(vii) (E) of the Income Tax Act (Canada), or Tax Act (the “Ineligible Consideration”), pursuant to
the operation of the foregoing provisions, such holders shall not be entitled to receive such
Ineligible Consideration but the Issuer or the Issuer’s successor, as the case may be, shall have
the right (at the sole option of the Issuer or its successor, as the case may be) only on the date
any Ineligible Consideration would otherwise be due, to deliver either such Ineligible
Consideration or “prescribed securities” with a market value comparable to such Ineligible
Consideration.

     (k) Notwithstanding the foregoing, no adjustment in the Conversion Price on any Note will be
required under clauses (a) through (e) of this Section 12.05 unless such adjustment would require a
change of at least 1% of the Conversion Price then in effect with respect to such Note; provided
that the Issuer will (i) carry forward any adjustments that are less than 1% of the Conversion Rate
with respect to such Note and take them into account when determining subsequent adjustments, (ii)
make any carry forward adjustments not otherwise effected with respect to any series of Notes upon
conversion of any Notes of such series upon (x) a conversion after a call for redemption of any
Notes of such Series, (y) any Change of Control Payment Date applicable to such series of Notes and
(z) five Business Days prior to the Maturity Date applicable to such series of Notes.

69

 

SECTION 12.06. Effect of Reclassification, Amalgamation, Consolidation, Merger or Sale.

     (a) In the case of (x) any reclassification or change (other than changes resulting from a
change in par value or a subdivision or combination) of Common Shares, (y) an amalgamation, merger,
consolidation, share exchange or combination involving the Issuer or (z) a sale or conveyance to
another person of the Issuer’s property and assets as an entirety or substantially as an entirety,
in each case as a result of which holders of Common Shares will be entitled to receive shares of
stock, other securities, other property or assets (including cash) with respect to or in exchange
for Common Shares, except as described in the proviso at the end of this paragraph, the holders of
the Notes then outstanding will be entitled thereafter to convert such Notes into the kind and
amount of shares of stock, other securities or other property or assets (including cash), which
they would have owned or been entitled to receive upon such reclassification, change, amalgamation,
merger, consolidation, share exchange, combination, sale or conveyance had such Notes been
converted into Common Shares immediately prior to such reclassification, change, amalgamation,
merger, consolidation, share exchange, combination, sale or conveyance (assuming, in a case in
which the Issuer’s shareholders may exercise rights of election, that a holder of Notes would have
exercised any rights of election as to the shares of stock, other securities or other property or
assets receivable in connection therewith and received per share the kind and amount of
consideration received per share by a plurality of electing shareholders); provided, however, that
if, prior to the date that is five years from the Issue Date, holders of Notes would otherwise be
entitled to receive, upon conversion of the Notes, Ineligible Consideration pursuant to the
operation of the foregoing provision, such holders shall not be entitled to receive such Ineligible
Consideration but the Issuer or its successor, as the case may be, shall have the right (at the
sole option of the Issuer or its successor, as the case may be) only on the date any Ineligible
Consideration would otherwise be due to deliver either such Ineligible Consideration or “prescribed
securities” with a market value comparable to such Ineligible Consideration.

     (b) Upon the occurrence of an event described in clause (a) above, the Issuer or the successor
or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so comply) providing that
the Notes shall be convertible into such kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification, amalgamation, change,
consolidation, merger, share exchange, combination, sale or conveyance by a holder of a number of
Common Shares issuable upon conversion of the Notes. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article 12. If, in the case of any such reclassification, change, amalgamation,
consolidation, merger, share exchange, combination, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of Common Shares includes shares of stock or
other securities and assets of a corporation other than the successor or purchasing corporation, as
the case may be, in such reclassification, change, amalgamation, consolidation, merger, share
exchange, combination, sale or conveyance, then such supplemental indenture shall also be executed
by such other corporation and shall contain such additional provisions to protect the interests of
the holders of the Notes as the
Issuer’s Board of Directors of the Issuer shall reasonably consider necessary by reason of the
foregoing.

70

 

     The Issuer shall cause notice of the execution of such supplemental indenture to be mailed to
each holder of Notes at his or her address appearing on the Register of holders for that purpose
within 20 days after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of such supplemental indenture.

     The above provisions of this Section 12.06 shall similarly apply to successive
reclassifications, changes, amalgamation, consolidations, mergers, share exchanges, combinations,
sales and conveyances.

     If this Section 12.06 applies to any event or occurrence, Section 12.05 shall not apply.

SECTION 12.07. Conversion Upon a Make Whole Change of Control.

     (a) If a Make Whole Change of Control occurs at any time prior to the close of business on the
Business Day prior to the Maturity Date applicable to the Notes of any series, a holder
surrendering Notes of such series for conversion, at any time during the period from and after the
15th day prior to the anticipated Make Whole Change of Control Effective Date and ending
15 days following the Make Whole Change of Control Effective Date (the “Make Whole Conversion
Period”) shall be entitled to the increase in the Conversion Rate, if any, specified in Section
12.07(b). The Issuer shall give written notice (the “Make Whole Change of Control Notice”) to all
holders and the Trustee of any such Make Whole Change of Control and issue a press release
providing the same information no later than 15 days prior to the anticipated Make Whole Change of
Control Effective Date.

     (b) During the Make Whole Conversion Period, the Conversion Rate applicable to each $1,000
principal amount of a Note shall be increased by an additional number of Common Shares (the
“Additional Shares”) determined by reference to (i) in the case of a 2012 Note, the table
attached as Exhibit C-1 hereto and (ii) in the case of a 2014 Note, the table attached as Exhibit
C-2 hereto, in each case, based on the applicable Make Whole Change of Control Effective Date and
the Share Price applicable to such Make Whole Change of Control; provided, however,
that if the actual Share Price is between two Share Prices in the table or the relevant Conversion
Date is between two Make Whole Change of Control Effective Dates in the table, the number of
Additional Shares shall be determined by a straight-line interpolation between the number of
Additional Shares set forth for the next higher and next lower Share Prices and the two Conversion
Dates, as applicable, based on a 365-day year; and provided, further, however, that if (1) the
Share Price is greater than $70.00 per Common Share (subject to adjustment in the same manner as
set forth in Sections 12.05 and 12.06), no Additional Shares will be added to the Conversion Rate,
and (2) the Share Price is less than $24.58 per Common Share (subject to adjustment in the same
manner as set forth in Sections 12.05 and 12.06), no Additional Shares will be added to the
Conversion Rate.

     (c) The Share Prices set forth in the first row of the tables in Schedule C-1 and Schedule C-2
hereto shall be adjusted as of any date on which the Conversion Rate is adjusted. The adjusted
Share Prices shall equal the Share Prices applicable immediately prior to such
adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate in effect
immediately prior to the adjustment giving rise to the Share Price adjustment and the denominator
of which is the Conversion Rate as so adjusted. The number of Additional Shares

71

 

within the tables
in Schedule C-1 and Schedule C-2 shall be adjusted in the same manner as the Conversion Rate as set
forth in Sections 12.05 and 12.06.

     (d) If the Issuer is required to increase the Conversion Rate pursuant to this Section 12.07,
Notes surrendered for conversion during the Make Whole Conversion Period will be settled as
follows:

          (i) if the date on which such Notes are surrendered for conversion (the “Make Whole Conversion
Date”) is prior to the third Trading Day preceding the Make Whole Change of Control Effective Date
(the “Make Whole Conversion Cut-Off Date”), the Issuer shall settle such conversion by delivering
the number of Common Shares (based on the Conversion Rate without regard to the number of
Additional Shares to be added to the Conversion Rate pursuant to Section 2.07(b)) on the third
Trading Day immediately following the Make Whole Conversion Cut-Off Date. In addition, as soon as
practicable following the Make Whole Change of Control Effective Date (but in any event within five
Trading Days of such Make Whole Change of Control Effective Date), the Issuer will deliver the
number of Additional Shares to be added to the Conversion Rate pursuant to Section 2.07(b); and

          (ii) if the Make Whole Conversion Date is on or following the Make Whole Conversion Cut-Off
Date, the Issuer shall settle such conversion (based on the Conversion Rate as increased by the
Additional Shares pursuant to Section 2.07(b)) on the third Trading Day on the Applicable
Securities Exchange immediately following the Make Whole Conversion Date by delivering the number
of Common Shares (based on the Conversion Rate without regard to the number of Additional Shares to
be added to the Conversion Rate pursuant to Section 2.07(b)) plus the number of Additional Shares
to be added to the Conversion Rate pursuant to Section 2.07(b).

SECTION 12.08. Taxes on Shares Issued.

     The issue of Common Shares upon conversions of Notes shall be made without charge to the
converting holder for any documentary, stamp or similar issue or transfer tax due on such issue of
Common Shares. The Issuer shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of stock in any name other than that of
the holder of any Note converted, and the Issuer shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue thereof shall have
paid to the Issuer the amount of such tax or shall have established to the satisfaction of the
Issuer that such tax has been paid. Nothing herein shall preclude any income tax withholding
required by law or regulations.

SECTION 12.09. Reservation of Shares; Shares to be Fully Paid; Listing of Common Shares.

     The Issuer shall provide, free from preemptive rights, out of its authorized but unissued
Common Shares or Common Shares held in treasury, sufficient Common Shares to provide for the
conversion of the Notes from time to time as such Notes are presented for conversion.

     Before taking any action which would cause an adjustment reducing the Conversion Price below
the then par value, if any, of the Common Shares issuable upon conversion of the Notes, the Issuer
shall take all corporate action which may, in the opinion of its counsel, be necessary in

72

 

order
that the Issuer may validly and legally issue such Common Shares at such adjusted Conversion Price.

     The Issuer covenants that all Common Shares issued upon conversion of Notes will be fully paid
and non-assessable by the Issuer and free from all taxes, liens and charges with respect to the
issue thereof.

     The Issuer further covenants that as long as the Common Shares are listed on the NYSE or the
TSX, or its respective successor, the Issuer shall cause all Common Shares issuable upon conversion
of the Notes to be eligible for such listing in accordance with, and at the times required under,
the requirements of such market.

SECTION 12.10. Responsibility of Trustee.

     The Trustee shall not at any time be under any duty of responsibility to any holders of Notes
to determine whether any facts exist which may require any adjustment of the Conversion Price, or
with respect to the nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture provided to be employed,
in making the same. The Trustee shall not be accountable with respect to the validity or value (or
the kind or amount) of any Common Shares, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee makes no representations
with respect thereto. Subject to the provisions of Section 7.01, the Trustee shall not be
responsible for any failure of the Issuer to issue, transfer or deliver any Common Shares or share
certificates or other securities or property or cash upon the surrender of any Note for the purpose
of conversion or to comply with any of the duties, responsibilities or covenants of the Issuer
contained in this Article 12. Without limiting the generality of the foregoing, the Trustee shall
not have any responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 12.06 relating either to the kind or amount
of shares of stock or securities or property (including cash) receivable by holders of Notes upon
the conversion of their Notes after any event referred to in such Section 12.06 or to any
adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may
accept as conclusive evidence of the correctness of any such provisions, and shall be fully
protected in relying upon, the Officers’ Certificate and Opinion of Counsel (which the Issuer shall
be obligated to file with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.

SECTION 12.11. Notice to Holders Prior to Certain Actions.

     If

     (a) the Issuer declares a dividend (or any other distribution) on its Common Shares; or

     (b) the Issuer authorizes the granting to the holders of its Common Shares of rights or
warrants to subscribe for or purchase any share of any class of Common Shares or any other rights
or warrants; or

73

 

     (c) there is any reclassification of the Common Shares (other than a subdivision or
combination of outstanding Common Shares, or a change in par value, or from par value to no par
value, or from no par value to par value), or any amalgamation, consolidation, merger or share
exchange to which the Issuer is a party and for which approval of any shareholders of the Issuer is
required, or of the sale or transfer of all or substantially all of the assets of the Issuer; or

     (d) there is any voluntary or involuntary dissolution, liquidation or winding-up of the
Issuer;

then the Issuer shall cause to be filed with the Trustee and to be mailed to each holder of Notes
at his or her address appearing on the Register maintained by the Registrar for that purpose as
promptly as possible but in any event at least 15 days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of
which the holders of Common Shares of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification, amalgamation,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected that holders of
Common Shares of record shall be entitled to exchange their Common Shares for securities or other
property deliverable upon such reclassification, amalgamation, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice, or
any defect therein, shall not affect the legality or validity of such dividend, distribution,
reclassification, amalgamation, consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding-up.

SECTION 12.12. Restriction on Common Shares Issuable Upon Conversion.

     (a) Common Shares to be issued upon conversion of Notes prior to the effectiveness of a Shelf
Registration Statement shall be physically delivered in certificated form to the holders converting
such Notes and the certificate representing such Common Shares shall bear the Restricted Common
Share Legend unless removed in accordance with Section 2.14. Further, Common Shares to be issued
upon conversion of Notes prior to July 29, 2007 shall bear the Canadian Restricted Securities
Legend unless removed in accordance with Section 2.14.

     (b) If (i) Common Shares to be issued upon conversion of a Note prior to the effectiveness of
a Shelf Registration Statement are to be registered in a name other than that of the holder of such
Note or (ii) Common Shares represented by a certificate bearing the Restricted
Common Shares Legend are transferred subsequently by such holder, then, unless the Shelf
Registration Statement has become effective and such shares are being transferred pursuant to the
Shelf Registration Statement, the holder must deliver a certificate in substantially the form of
the “Assignment Form” set forth on such Note to the transfer agent for the Common Shares identified
therein certifying compliance with the restrictions on transfer applicable to such Common Shares
and neither the transfer agent nor the registrar for the Common Shares shall be required to
register any transfer of such Common Shares not so accompanied by a properly completed certificate.

74

 

     (c) Except in connection with a Shelf Registration Statement, if certificates representing
Common Shares are issued upon the registration of transfer, exchange or replacement of any other
certificate representing Common Shares bearing the Restricted Common Share Legend, or if a request
is made to remove such Restricted Common Shares Legend from certificates representing Common
Shares, the certificates so issued shall bear the Restricted Common Share Legend, or the Restricted
Common Shares Legend shall not be removed, as the case may be, unless there is delivered to the
Issuer such satisfactory evidence, which, in the case of a transfer made pursuant to Rule 144 under
the Securities Act, may include an opinion of counsel pursuant to the laws in the State of New York
and U.S. Federal securities laws and/or applicable Canadian securities laws, as may be reasonably
required by the Issuer, that neither the legend nor the restrictions on transfer set forth therein
are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144
under the Securities Act or that such Common Shares are securities that are not “restricted” within
the meaning of Rule 144 under the Securities Act and that such transfers comply with applicable
Canadian securities laws. Upon provision to the Issuer of such reasonably satisfactory evidence,
the Issuer shall cause the transfer agent for the Common Shares to countersign and deliver
certificates representing Common Shares that do not bear the legend.

SECTION 12.13. Calculations and Determinations.

     Except as otherwise provided in this Article 12, no adjustment need be made for the issuance
of Common Shares or any securities convertible into or exchangeable for Common Shares or that carry
the right to purchase any of the foregoing. All calculations under this Article 12 shall be made
by the Issuer and shall be made to the nearest cent or to the nearest one hundredth of a share, as
the case may be. No adjustment need be made for a change in the par value or no par value of the
Common Shares.

     The Issuer will be responsible for making all calculations and determinations called for under
the Indenture. The Issuer or its agent will make these calculations and determinations in good
faith, and, absent manifest error, such calculations and determinations will be final and binding
on the holders of the Notes, and the Trustee and the Conversion Agent shall have no responsibility
with respect thereto. The Issuer will provide a schedule of these calculations and determinations
to the Trustee and the Conversion Agent, and the Trustee and the Conversion Agent shall be entitled
to rely upon the accuracy of these calculations without independent verification thereof.

ARTICLE 13

MEETINGS OF HOLDERS OF NOTES

SECTION 13.01. Purposes for Which Meetings May Be Called.

     A meeting of holders of Notes of a series may be called at any time and from time to time
pursuant to this Article to make, give or take any Act provided by this Indenture to be made, given
or taken by holders of Notes of such series.

75

 

SECTION 13.02. Call, Notice and Place of Meetings.

     (a) The Trustee may at any time call a meeting of holders of the Notes of a series for any
purpose specified in Section 13.01, to be held at such time and at such place in the borough of
Manhattan, the City of New York. Notice of every meeting of holders of Notes of a series, setting
forth the time and place of such meeting and in general terms the Act proposed to be taken at such
meeting, shall be given, in the manner provided in Section 10.02, not less than 21 or more than 50
days prior to the date fixed for the meeting.

     (b) If at any time the Issuer or any Guarantor, pursuant to a Board Resolution, or the holders
of at least 10% in aggregate principal amount of the outstanding Notes of a series shall have
requested the Trustee to call a meeting of the holders of Notes of such series for any purpose
specified in Section 13.01, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the first publication of
the notice of such meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Issuer or such Guarantor or
the holders of Notes of such series in the amount above specified, as the case may be, may
determine the time and the place in the borough of Manhattan, the City of New York for such meeting
and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a)
of this Section.

SECTION 13.03. Persons Entitled to Vote at Meetings.

     (a) To be entitled to vote at any meeting of holders of Notes of a series, a person shall be:
(1) a holder of Notes of such series; or (2) a person appointed by an instrument in writing as
proxy for a holder or holders of Notes of such series by such holder or holders. The only persons
who shall be entitled to be present or to speak at any meeting of holders shall be the persons
entitled to vote at such meeting and their counsel, any representatives of the Trustee and its
counsel and any representatives of the Issuer and the Guarantors and its or their counsel.

SECTION 13.04. Quorum; Action.

     (a) The persons entitled to vote a majority in aggregate principal amount of Notes of a series
shall constitute a quorum for a meeting of holders of Notes of such series. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened
at the request of holders, be dissolved. In the absence of a quorum in any other case the meeting
may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of
not less than 10 days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in paragraph 13.02(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.

     (b) Except as limited by the provisions in the third paragraph of Section 9.02, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the holders of a majority in

76

 

aggregate
principal amount of outstanding Notes of a series; provided, however, that, except as limited by
the provisions in the third paragraph of Section 9.02, any resolution with respect to any action
that this Indenture expressly provides may be made, given or taken by the holders of a specified
percentage, which is less than a majority, in aggregate principal amount of outstanding Notes of
such series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the holders of such specified percentage
in aggregate principal amount of outstanding Notes of such series.

     (c) Any resolution passed or decision taken at any meeting of holders of Notes of a series
duly held in accordance with this Section will be binding on all holders of Notes of such series,
whether or not present or represented at the meeting.

SECTION 13.05. Determination of Voting Rights; Conduct and Adjournment of Meetings.

     (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting of holders of Notes of a series in
regard to proof of the holding of Notes of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required
by any such regulations, the holding of Notes of a series shall be proved in the manner specified
in Section 10.17 and the appointment of any proxy shall be proved in the manner specified in
Section 10.17. Such regulations may provide that written instruments appointing proxies, regular
on their face, may be presumed valid and genuine without the proof specified in Section 10.17 or
other proof.

     (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the
meeting, unless the meeting shall have been called by the Issuer, any Guarantor or by holders of
Notes as provided in Section 13.02(b), in which case the Issuer, such Guarantor or the holders of
Notes calling the meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the
persons entitled to vote a majority in aggregate principal amount of outstanding Notes of such
series represented at the meeting.

     (c) At any meeting each holder of a Note of a series or proxy shall be entitled to one vote
for each $1,000 principal amount of Notes of such series held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any Notes
challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding.
The chairman of the meeting shall have no right to vote, except as a holder of Notes or proxy.

     (d) Any meeting of holders of Notes of a series duly called pursuant to Section 13.02 at which
a quorum is present may be adjourned from time to time by persons entitled to vote a majority in
aggregate principal amount of outstanding Notes of such series, represented at the meeting, and the
meeting may be held as so adjourned without further notice.

77

 

SECTION 13.06. Counting Votes and Recording Action of Meetings.

     The vote upon any resolution submitted to any meeting of holders of Notes of a series shall be
by written ballots on which shall be inscribed the signatures of the holders of the Notes of such
series or of their representatives by proxy and the principal amounts and serial numbers of
outstanding Notes of such series held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate,
of the proceedings of each meeting of holders of Notes of a series shall be prepared by the
secretary of the meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting and showing that
said notice was given as provided in Section 13.02 and, if applicable, Section 13.04. Each copy
shall be signed and verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Issuer and the Guarantors and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at
the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein
stated.

78

 

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed and attested,
all as of the date first above written, signifying their agreements contained in this Indenture.

	 	 	 	 	 	 	 	 	 
	 	 	NORTEL NETWORKS CORPORATION,	 	 
	 	 	   as Issuer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NORTEL NETWORKS LIMITED, as Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NORTEL NETWORKS INC., as Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, as Trustee, Registrar,
Paying Agent and Conversion Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

79

 

EXHIBIT A

FORM OF 2012 NOTE

(Face of Security)

[Global Securities Legend]

[The following legend shall appear on the face of each Global Security:

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY
THE ISSUER, ANY GUARANTOR, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR
ALL PURPOSES.]

     [The following legend shall appear on the face of each Global Security for which The
Depository Trust Company is to be the Depositary:

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY THE AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OR DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED NOTES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OR SUCH SUCCESSOR
DEPOSITARY.]

[Restricted Securities Legend]

     THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NONE OF THIS SECURITY (AND RELATED
GUARANTEES), THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY AND ANY INTEREST OR
PARTICIPATION

A-1

 

HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY (AND RELATED GUARANTEES),
BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH
IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER, ANY GUARANTOR OR ANY AFFILIATE OF THE ISSUER OR
ANY GUARANTOR WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
ISSUER OR ANY GUARANTOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S, ANY GUARANTOR’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

[Canadian Restricted Securities Legend]

     UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THIS SECURITY IN CANADA BEFORE JULY 29, 2007.

A-2

 

			
	No.                     
	 	US$[                       ]

CUSIP 656568 AC 6

NORTEL NETWORKS CORPORATION

1.75% CONVERTIBLE SENIOR NOTE DUE 2012

Fully and Unconditionally Guaranteed By

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

promises to pay to CEDE & CO. or registered assigns,

the principal sum of [                                 ] U.S. Dollars on April 15, 2012

Interest Payment Dates:            April 15 and October 15, commencing October 15, 2007

Regular Record Dates:            April 1 and October 1

	 	 	 	 	 
	 	 	NORTEL NETWORKS CORPORATION
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 

	 	Dated:	 	 

Certificate of Authentication

This is one of the Notes described in the within-mentioned Indenture.

	 	 	 	 	 
	 	 	The Bank of New York,
	 	 	as Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Authorized Signatory
	 

	 	Dated:	 	 

A-3

 

GUARANTEE

OF

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

     For value received, each of Nortel Networks Limited (“NNL”) and Nortel Networks Inc. (“NNI”
and, together with NNL, the “Guarantor”) hereby fully and unconditionally guarantees, jointly and
severally, to the Holder of the Note upon which this Guarantee is endorsed and to the Trustee on
behalf of each such Holder the due and punctual payment of the principal of, premium, if any,
interest, Additional Interest, if any, and Defaulted Interest, if any, on such Note when and as the
same shall become due and payable, whether on April 15, 2012 (the “Maturity Date”), by declaration
of acceleration, call for redemption or otherwise, according to the terms thereof and of the
indenture dated as of March 28, 2007 among Nortel Networks Corporation, as issuer (together with
any successor person under the Indenture, the “Issuer”), Nortel Networks Limited and Nortel
Networks Inc., as guarantors, and The Bank of New York, as trustee (the “Indenture”). In case of
the failure of the Issuer to punctually make any such payment of principal, premium, if any,
interest, Additional Interest, if any, or Defaulted Interest, if any, each Guarantor, for so long
as this Guarantee shall be in effect with respect to such Guarantor, hereby agrees to cause any
such payment to be made to or to the order of the Trustee punctually when and as the same shall
become due and payable, whether on the Maturity Date or by declaration of acceleration, call for
redemption or otherwise, and as if such payment were made by the Issuer.

     Each Guarantor hereby agrees that its obligations hereunder shall be as if it were the
principal debtor and not merely surety, and shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of such Note or the
Indenture, any failure to enforce the provisions of such Note or the Indenture, or any waiver,
modification or indulgence granted to the Issuer with respect thereto, by the Holder of such Note
or the Trustee or any other circumstance which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, protest or notice with respect to such Note
or the indebtedness evidenced thereby or with respect to any sinking fund or analogous payment
required under such Note and all demands whatsoever, and covenants that this Guarantee will not be
discharged except by payment in full of the principal of, premium, if any, interest, Additional
Interest, if any, and Defaulted Interest, if any, on such Note or as otherwise described in Section
2.01(g) of the Indenture.

     This Guarantee shall be automatically and unconditionally released on the terms set forth in
Section 2.01(g) of the Indenture.

     Each Guarantor shall be subrogated to all rights of the Holder of such Note and the Trustee
against the Issuer in respect of any amounts paid to such Holder by such Guarantor pursuant to the
provisions of this Guarantee; provided, however, that no Guarantor shall be entitled to enforce, or
to receive any payments arising out of or based upon such right of

A-4

 

subrogation until the principal of, premium, if any, interest, Additional Interest, if any,
and Defaulted Interest, if any, on all Notes shall have been paid in full.

     Each Guarantor hereby agrees that its obligations hereunder shall be direct, unconditioned and
unsubordinated. The Holder of a guaranteed Note will be entitled to payment under this Guarantee
without taking any action whatsoever against the Issuer.

     No reference herein to the Indenture and no provision of this Guarantee or of the Indenture
shall alter or impair the Guarantee of each Guarantor, which is absolute and unconditional, of the
due and punctual payment of the principal of, premium, if any, interest, Additional Interest, if
any, and Defaulted Interest, if any, on the Note upon which this Guarantee is endorsed.

     This Guarantee shall not be valid or obligatory for any purpose until the certificate of
authentication of such Note shall have been manually executed by or on behalf of the Trustee under
the Indenture.

     All capitalized terms used but not defined in this Guarantee shall have the meanings assigned
to them in the Indenture.

     This Guarantee shall be governed by and construed in accordance with the laws of the State of
New York, but without giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.

     Executed and dated the date on the face hereof.

	 	 	 	 	 
	 	 	NORTEL NETWORKS LIMITED
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 
	 	 	 	 
	 	 	NORTEL NETWORKS INC.
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 

A-5

 

(Back of Security)

NORTEL NETWORKS CORPORATION

1.75% CONVERTIBLE SENIOR NOTE DUE 2012

Fully and Unconditionally Guaranteed By

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

	1.	 	INTEREST. Nortel Networks Corporation, a Canadian corporation (the “Issuer”), promises to
pay interest on the principal amount of this Note at the rate per annum shown above. The
Issuer will pay interest semi-annually in arrears on April 15 and October 15 of each year,
beginning October 15, 2007. Interest on the Notes will accrue from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid, from March 28,
2007. Interest (including any Additional Interest) will be computed on the basis of a 360-day
year composed of twelve 30-day months. The yearly rate of interest that is equivalent to the
rate payable under the Notes is the rate payable multiplied by the actual number of days in
the year and divided by 360 and is disclosed herein solely for purposes of providing the
disclosure required by the Interest Act (Canada).

	2.	 	METHOD OF PAYMENT. The Issuer will pay interest (and Additional Interest, if any) on the
Notes (except defaulted interest) to the person in whose name this Note is registered at the
close of business on the April 1 or October 1 immediately preceding the relevant Interest
Payment Date (each a “Regular Record Date”) (other than with respect to a Note or portion
thereof called for redemption on a Redemption Date, or repurchased in connection with a Change
of Control on a repurchase date during the period from the close of business on a Regular
Record Date to (but excluding) the next succeeding Interest Payment Date, in which case
accrued interest (and Additional Interest, if any) shall be payable (unless such Note or
portion thereof is converted) to the holder of this Note or portion thereof redeemed or
repurchased in accordance with the applicable redemption or repurchase provisions of the
Indenture). Holders must surrender Notes to a Paying Agent to collect principal payments.
The Issuer will pay the principal of, premium, if any, and interest (including Additional
Interest, if any) on the Notes at the office or agency of the Issuer maintained for such
purpose, in money of the United States that at the time of payment is legal tender for payment
of public and private debts. Until otherwise designated by the Issuer, the Issuer’s office or
agency maintained for such purpose will be the principal Corporate Trust Office of the Trustee
(as defined below). However, the Issuer may pay principal, premium, if any, and interest
(including Additional Interest, if any) by check payable in such money, and may mail such
check to the holders of the Notes at their respective addresses as set forth in the Register
of holders of Notes maintained by the Registrar.

A-6

 

	3.	 	PAYING AGENT AND REGISTRAR. The Bank of New York (together with any successor Trustee under
the Indenture referred to below, the “Trustee”), will act as Conversion Agent, Paying Agent
and Registrar. The Issuer may change the Paying Agent, Registrar or co-registrar without
prior notice. Subject to certain limitations in the Indenture, the Issuer or any of its
Subsidiaries may act in any such capacity.

	4.	 	INDENTURE. The Issuer issued this Note under an Indenture dated as of March 28, 2007 (the
“Indenture”) among the Issuer, the Guarantors and the Trustee. The terms of this Note include
those stated in the Indenture and those made part of the Indenture by reference to the United
States Trust Indenture Act of 1939, as amended (as in effect on the date of this Note, the
“TIA”). This Note is subject to, and qualified by, all such terms, certain of which are
summarized herein, and holders are referred to the Indenture and the TIA for a statement of
such terms. The Notes are unsecured general obligations of the Issuer. Capitalized terms not
defined below have the same meaning as is given to them in the Indenture.

	5.	 	REDEMPTIONS. The Issuer shall have the option to redeem this Note, in whole or from time to
time in part, as set forth in Article 3 of the Indenture.

	6.	 	GUARANTEES. This Note is fully and unconditionally guaranteed by the Guarantors. If, for
any reason, the Issuer does not make any payments of the principal of, premium, if any,
interest, Additional Interest, if any, and Defaulted Interest, if any, on this Note when due,
whether on the Maturity Date, by acceleration, call for redemption, tender pursuant to an
offer to repurchase or otherwise, the Guarantors will cause the payment to be made to or to
the order of the Trustee. The Guarantees are direct, unconditional, unsecured and
unsubordinated obligations of the Guarantors and rank equally and ratably without preference
among themselves and at least equally with other senior unsecured obligations of the
Guarantors, except to the extent prescribed by law. The holder of a Note will be entitled to
payment under the Guarantees without taking any action whatsoever against the Issuer.

	7.	 	CHANGE OF CONTROL. Upon a Change of Control, the Issuer shall make a Change of Control Offer
to repurchase all outstanding Notes at a price payable in cash equal to 100% of the aggregate
principal amount of the Notes plus accrued and unpaid interest (and Additional Interest, if
any), payable in cash, to, but excluding, the date of repurchase, such offer to be made as
provided in the Indenture. To accept the Change of Control Offer, the holder hereof must
comply with the terms thereof, including surrendering this Note, together with any completed
notice of acceptance required under Section 4.06 of the Indenture as provided in the
Indenture, prior to the termination of the Change of Control Offer.

	8.	 	DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. As a condition of
transfer, the Registrar and the Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuer and the Guarantors may require
a holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer
or the Registrar need not exchange or register the transfer of any Note or portion of a Note
selected for redemption. Also, the Issuer or the Registrar need not exchange or register the
transfer of any Note for a period of 15 days before a selection of Notes to be redeemed.

A-7

 

	9.	 	PERSONS DEEMED OWNERS. The registered holder of a Note may be treated as its owner for all
purposes.

	10.	 	AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the holders of at least a majority in aggregate
principal amount of the then outstanding Notes and any existing default may be waived with the
consent of the holders of a majority in aggregate principal amount of the then outstanding
Notes.

	11.	 	DEFAULTS AND REMEDIES. The Events of Default are set forth in Section 6.01 of the Indenture.

	12.	 	TRUSTEE DEALINGS WITH THE ISSUER. The Trustee or any of its Affiliates, in their individual
or any other capacities, may make or continue loans to or guaranteed by, accept deposits from
and perform services for the Issuer or its Affiliates and may otherwise deal with the Issuer
or its Affiliates as if it were not Trustee.

	13.	 	NO RECOURSE AGAINST OTHERS. No director, officer, employee, shareholder or Affiliate, as
such, of the Issuer or any Guarantor shall have any liability for any obligations of the
Issuer or any Guarantor under the Notes or the Indenture or any Guarantee or for any claim
based on, in respect of or by reason of such obligations or their creation. Each holder by
accepting a Note waives and releases all such liability. The waiver and release are part of
the consideration for the Notes.

	14.	 	AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of
the Trustee or an authenticating agent.

	15.	 	ABBREVIATIONS. Customary abbreviations may be used in the name of a holder or an assignee,
such as: TEN CO = tenants in common, TEN ENT = tenants by the entireties, JT TEN = joint
tenants with right of survivorship and not as tenants in common, CUST = Custodian and U/G/M/A
= Uniform Gifts to Minors Act.

	16.	 	CONVERSION. Subject to and upon compliance with the provisions of the Indenture, the
registered holder of this Note has the right at any time on or before the close of business on
the last Trading Day prior to the Maturity Date (or in case this Note or any portion hereof is
(a) called for redemption prior to such date, before the close of business on the last Trading
Day preceding the date fixed for redemption (unless the Issuer defaults in payment of the
Redemption Price in which case the conversion right will terminate at the close of business on
the date such default is cured) or (b) subject to a duly completed election for repurchase, on
or before the close of business on the Change of Control Offer Termination Date (unless the
Issuer defaults in payment due upon repurchase or such holder elects to withdraw the
submission of such election to repurchase) to convert the principal amount hereof, or any
portion of such principal amount which is $1,000 or an integral multiple thereof, into fully
paid and non-assessable Common Shares at the conversion rate of 31.25 Common Shares for each
$1,000 principal amount of Notes (as adjusted in accordance with the provisions of Article 12
of the Indenture, the “Conversion Rate”), which is equivalent to an initial Conversion Price
for each $1,000 principal amount of Notes of $32.00 per Common Share.

A-8

 

	 	 	The Issuer shall not issue fractional Common Shares or scrip representing fractions of Common
Shares upon any such conversion, but shall make an adjustment therefor in cash based upon the
Current Market Price of the Common Shares on the last Trading Day prior to the date of
conversion.
	 
	17.	 	REGISTRATION RIGHTS AGREEMENT. The holder of this Note is entitled to the benefits of a
Registration Rights Agreement, dated March 28, 2007, among the Issuer, the Guarantors and the
Initial Purchasers.
	 
	18.	 	The Issuer will furnish to any holder upon written request and without charge a copy of the
Indenture and the Registration Rights Agreement. Requests may be made to: Nortel Networks
Corporation, 195 The West Mall, Toronto, Canada ON M9C 5K1, Attention: Corporate Secretary.

A-9

 

FORM OF CONVERSION NOTICE

To:   NORTEL NETWORKS CORPORATION

     The undersigned registered owner of the Note hereby irrevocably exercises the option to
convert this Note, or portion hereof (which has a principal amount of $1,000 or an integral
multiple thereof) below designated, into Common Shares of Nortel Networks Corporation in accordance
with the terms of the Indenture referred to in this Note, and directs that the Common Shares
issuable and deliverable upon the conversion, together with any check in payment for fractional
Common Shares and Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been indicated below. If
Common Shares or any portion of this Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of interest, Additional
Interest and taxes accompanies this Note.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	Fill in for registration of Common Shares if to be
	 	 
	 

	 	 
	delivered, and Notes if to be issued, other than to
	 	 
	and in the name of the registered holder
	 	 
	 

	 	 
	(Please Print):

	 	Signature(s)
	 

	 	Principal amount to be converted
(if less than all):
	 
	 	 
	 

(Name)

	 	 
          $                    ,000,000
	 
	 	 
	 

	 	 
	(Street Address)

	 	Social Security or other Taxpayer Identification Number
	 
	 	 
	 

(City, State and Zip
Code)

	 	 
	 
	 	 
	Signature Guarantee:
	 	 
	 
	 	 
	 

	 	 
	[Signatures must be guaranteed by an eligible Guarantor Institution (banks, brokers, dealers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Common Shares are
to be issued, or Notes are to be delivered, other than to and in the name of the registered
holder(s).]

Completed Notices of Conversion should be delivered to Computershare Investor Services,
transfer agent for the Common Shares at [250 Royall Street, Canton Massachusetts 02021].

A-10

 

ASSIGNMENT FORM

          To assign this Note, fill in the form below:

          (I) or (we) assign and transfer this Note to

	 	 	 
	 

	(Insert assignee’s social security or tax I.D. no.)
	 
	 

	 
	 

	 
	 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                                              agent to transfer this Note on the
books of the Registrar. The agent may substitute another to act for him.

	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 

	 

	 	(Sign exactly as your name appears on the
other side of this Note)

	 	 	 	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Medallion Signature Guarantee:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

[FOR INCLUSION ONLY IF THIS NOTE BEARS A RESTRICTED SECURITIES LEGEND] In connection with any
transfer of any of the Notes evidenced by this certificate which are “restricted securities” (as
defined in Rule 144 (or any successor thereto) under the United States Securities Act of 1933, as
amended (the “Securities Act”)), the undersigned confirms that such Notes are being transferred:

	 	 	 	 	 	 	 	 	 
	 	CHECK ONE BOX BELOW

	 	 	 	 	 	 	 
	 	(1	)	 	o
	 	to the Issuer or any Guarantor;
	 	 	 	 	 	 	 
	 	(2	)	 	o
	 	pursuant to and in compliance with Rule 144A under the Securities Act; or
	 	 	 	 	 	 	 
	 	(3	)	 	o
	 	pursuant to an exemption from registration under the Securities Act provided by
Rule 144 thereunder.

Unless one of the boxes is checked, the Registrar will refuse to register any of the Notes
evidenced by this certificate in the name of any person other than the registered
holder thereof; provided, however, that if box (1), (2) or (3) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such certifications
and other information, and such legal opinions, as the Issuer has

A-11

 

reasonably requested in writing, by delivery to the Trustee of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act; provided that this paragraph shall not be applicable to any Notes
which are not “restricted securities” (as defined in Rule 144 (or any successor
thereto) under the Securities Act).

	 	 	 	 	 
	Your Signature:	 	 
	 

	 	 

	 

	 	(Sign exactly as your name appears on the
other side of this Note)

	 	 	 	 	 	 	 	 	 
	Date:	 	 	 	 	 	 	 	 
	 

	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Medallion Signature Guarantee:	 	 	 	 
	 

	 	 	 	 

	 	 

A-12

 

EXHIBIT B

FORM OF 2014 NOTE

(Face of Security)

[Global Securities Legend]

     [The following legend shall appear on the face of each Global Security:

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY
THE ISSUER, ANY GUARANTOR, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR
ALL PURPOSES.]

     [The following legend shall appear on the face of each Global Security for which The
Depository Trust Company is to be the Depositary:

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY THE AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OR DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED NOTES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OR SUCH SUCCESSOR
DEPOSITARY.]

[Restricted Securities Legend]

     THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NONE OF THIS SECURITY (AND RELATED GUARANTEES), THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS SECURITY AND ANY INTEREST OR PARTICIPATION

B-1

 

     HEREIN OR THEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
HOLDER OF THIS SECURITY (AND RELATED GUARANTEES), BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”)
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
ISSUER, ANY GUARANTOR OR ANY AFFILIATE OF THE ISSUER OR ANY GUARANTOR WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER OR ANY GUARANTOR, (B)
PURSUANT TO A REGISTRATION STAEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER’S, ANY GUARANTOR’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[Canadian Restricted Securities Legend]

     UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THIS SECURITY IN CANADA BEFORE JULY 29, 2007.

B-2

 

			
	No.                     
	 	US$[                       ]

CUSIP 656568 AD 4

NORTEL NETWORKS CORPORATION

2.125% CONVERTIBLE SENIOR NOTE DUE 2014

Fully and Unconditionally Guaranteed By

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

promises to pay to CEDE & CO. or registered assigns,

the principal sum of [                    ] U.S. Dollars on April 15, 2014

Interest Payment Dates:      April 15 and October 15, commencing October 15, 2007

Regular Record Dates:      April 1 and October 1

	 	 	 	 	 
	 	 	NORTEL NETWORKS CORPORATION
	 
	 	 	 	 
	 	 	By
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 	 	Dated:

Certificate of Authentication

This is one of the Notes described in the within-mentioned Indenture.

	 	 	 	 	 
	 	 	The Bank of New York,
	 	 	as Trustee
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Authorized Signatory
	 	 	Dated:

B-3

 

GUARANTEE

OF

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

     For value received, each of Nortel Networks Limited (“NNL”) and Nortel Networks Inc. (“NNI”
and, together with NNL, the “Guarantor”) hereby fully and unconditionally guarantees, jointly and
severally, to the Holder of the Note upon which this Guarantee is endorsed and to the Trustee on
behalf of each such Holder the due and punctual payment of the principal of, premium, if any,
interest, Additional Interest, if any, and Defaulted Interest, if any, on such Note when and as the
same shall become due and payable, whether on April 15, 2014 (the “Maturity Date”), by declaration
of acceleration, call for redemption or otherwise, according to the terms thereof and of the
indenture dated as of March 28, 2007 among Nortel Networks Corporation, as issuer (together with
any successor person under the Indenture, the “Issuer”), Nortel Networks Limited and Nortel
Networks Inc., as guarantors, and The Bank of New York, as trustee (the “Indenture”). In case of
the failure of the Issuer to punctually make any such payment of principal, premium, if any,
interest, Additional Interest, if any, or Defaulted Interest, if any, each Guarantor, for so long
as this Guarantee shall be in effect with respect to such Guarantor, hereby agrees to cause any
such payment to be made to or to the order of the Trustee punctually when and as the same shall
become due and payable, whether on the Maturity Date or by declaration of acceleration, call for
redemption or otherwise, and as if such payment were made by the Issuer.

     Each Guarantor hereby agrees that its obligations hereunder shall be as if it were the
principal debtor and not merely surety, and shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of such Note or the
Indenture, any failure to enforce the provisions of such Note or the Indenture, or any waiver,
modification or indulgence granted to the Issuer with respect thereto, by the Holder of such Note
or the Trustee or any other circumstance which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, protest or notice with respect to such Note
or the indebtedness evidenced thereby or with respect to any sinking fund or analogous payment
required under such Note and all demands whatsoever, and covenants that this Guarantee will not be
discharged except by payment in full of the principal of, premium, if any, interest, Additional
Interest, if any, and Defaulted Interest, if any, on such Note or as otherwise described in Section
2.01(g) of the Indenture.

     This Guarantee shall be automatically and unconditionally released on the terms set forth in
Section 2.01(g) of the Indenture.

     Each Guarantor shall be subrogated to all rights of the Holder of such Note and the Trustee
against the Issuer in respect of any amounts paid to such Holder by such Guarantor pursuant to the
provisions of this Guarantee; provided, however, that no Guarantor shall be entitled to enforce, or
to receive any payments arising out of or based upon such right of

B-4

 

subrogation until the principal
of, premium, if any, interest, Additional Interest, if any, and Defaulted Interest, if any, on all
Notes shall have been paid in full.

     Each Guarantor hereby agrees that its obligations hereunder shall be direct, unconditioned and
unsubordinated. The Holder of a guaranteed Note will be entitled to payment under this Guarantee
without taking any action whatsoever against the Issuer.

     No reference herein to the Indenture and no provision of this Guarantee or of the Indenture
shall alter or impair the Guarantee of each Guarantor, which is absolute and unconditional, of the
due and punctual payment of the principal of, premium, if any, interest, Additional Interest, if
any, or Defaulted Interest, if any, on the Note upon which this Guarantee is endorsed.

     This Guarantee shall not be valid or obligatory for any purpose until the certificate of
authentication of such Note shall have been manually executed by or on behalf of the Trustee under
the Indenture.

     All capitalized terms used but not defined in this Guarantee shall have the meanings assigned
to them in the Indenture.

     This Guarantee shall be governed by and construed in accordance with the laws of the State of
New York, but without giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.

     Executed and dated the date on the face hereof.

	 	 	 	 	 
	 	 	NORTEL NETWORKS LIMITED
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 
	 	 	 	 
	 	 	Dated:
	 
	 	 	 	 
	 	 	NORTEL NETWORKS INC.
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 
	 	 	 	 
	 	 	Dated:

B-5

 

(Back of Security)

NORTEL NETWORKS CORPORATION

2.125% CONVERTIBLE SENIOR NOTE DUE 2014

Fully and Unconditionally Guaranteed By

NORTEL NETWORKS LIMITED

AND

NORTEL NETWORKS INC.

	1.	 	INTEREST. Nortel Networks Corporation, a Canadian corporation (the “Issuer”), promises to
pay interest on the principal amount of this Note at the rate per annum shown above. The
Issuer will pay interest semi-annually in arrears on April 15 and October 15 of each year,
beginning October 15, 2007. Interest on the Notes will accrue from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid, from March 28,
2007. Interest (including any Additional Interest) will be computed on the basis of a 360-day
year composed of twelve 30-day months. The yearly rate of interest that is equivalent to the
rate payable under the Notes is the rate payable multiplied by the actual number of days in
the year and divided by 360 and is disclosed herein solely for purposes of providing the
disclosure required by the Interest Act (Canada).

	2.	 	METHOD OF PAYMENT. The Issuer will pay interest (and Additional Interest, if any) on the
Notes (except defaulted interest) to the person in whose name this Note is registered at the
close of business on the April 1 or October 1 immediately preceding the relevant Interest
Payment Date (each a “Regular Record Date”) (other than with respect to a Note or portion
thereof called for redemption on a Redemption Date, or repurchased in connection with a Change
of Control on a repurchase date during the period from the close of business on a Regular
Record Date to (but excluding) the next succeeding Interest Payment Date, in which case
accrued interest (and Additional Interest, if any) shall be payable (unless such Note or
portion thereof is converted) to the holder of this Note or portion thereof redeemed or
repurchased in accordance with the applicable redemption or repurchase provisions of the
Indenture). Holders must surrender Notes to a Paying Agent to collect principal payments.
The Issuer will pay the principal of, premium, if any, and interest (including Additional
Interest, if any) on the Notes at the office or agency of the Issuer maintained for such
purpose, in money of the United States that at the time of payment is legal tender for payment
of public and private debts. Until otherwise designated by the Issuer, the Issuer’s office or
agency maintained for such purpose will be the principal Corporate Trust Office of the Trustee
(as defined below). However, the Issuer may pay principal, premium, if any, and interest
(including Additional Interest, if any) by check payable in such money, and may mail such
check to the holders of the Notes at
their respective addresses as set forth in the Register of holders of Notes maintained by the
Registrar.

B-6

 

	3.	 	PAYING AGENT AND REGISTRAR. The Bank of New York (together with any successor Trustee under
the Indenture referred to below, the “Trustee”), will act as Conversion Agent, Paying Agent
and Registrar. The Issuer may change the Paying Agent, Registrar or co-registrar without
prior notice. Subject to certain limitations in the Indenture, the Issuer or any of its
Subsidiaries may act in any such capacity.

	4.	 	INDENTURE. The Issuer issued this Note under an Indenture dated as of March 28, 2007 (the
“Indenture”) among the Issuer, the Guarantors and the Trustee. The terms of this Note include
those stated in the Indenture and those made part of the Indenture by reference to the United
States Trust Indenture Act of 1939, as amended (as in effect on the date of this Note, the
“TIA”). This Note is subject to, and qualified by, all such terms, certain of which are
summarized herein, and holders are referred to the Indenture and the TIA for a statement of
such terms. The Notes are unsecured general obligations of the Issuer. Capitalized terms not
defined below have the same meaning as is given to them in the Indenture.

	5.	 	REDEMPTIONS. The Issuer shall have the option to redeem this Note, in whole or from time to
time in part, as set forth in Article 3 of the Indenture.

	6.	 	GUARANTEES. This Note is fully and unconditionally guaranteed by the Guarantors. If, for
any reason, the Issuer does not make any payments of the principal of, premium, if any,
interest, Additional Interest, if any, and Defaulted Interest, if any, on this Note when due,
whether on the Maturity Date, by acceleration, call for redemption, tender pursuant to an
offer to repurchase or otherwise, the Guarantors will cause the payment to be made to or to
the order of the Trustee. The Guarantees are direct, unconditional, unsecured and
unsubordinated obligations of the Guarantors and rank equally and ratably without preference
among themselves and at least equally with other senior unsecured obligations of the
Guarantors, except to the extent prescribed by law. The holder of a Note will be entitled to
payment under the Guarantees without taking any action whatsoever against the Issuer.

	7.	 	CHANGE OF CONTROL. Upon a Change of Control, the Issuer shall make a Change of Control Offer
to repurchase all outstanding Notes at a price payable in cash equal to 100% of the aggregate
principal amount of the Notes, plus accrued and unpaid interest (and Additional Interest, if
any), payable in cash, to, but excluding, the date of repurchase, such offer to be made as
provided in the Indenture. To accept the Change of Control Offer, the holder hereof must
comply with the terms thereof, including surrendering this Note, together with any completed
notice of acceptance required under Section 3.06 of the Indenture as provided in the
Indenture, prior to the termination of the Change of Control Offer.

	8.	 	DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the
Indenture. As a condition of transfer, the Registrar and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents and the Issuer
and the Guarantors may require a holder to pay any taxes and fees required by law or permitted
by the Indenture. The Issuer or the Registrar need not exchange or register the transfer of
any Note or portion of a Note selected for redemption. Also, the Issuer or the Registrar need
not exchange or register the transfer of any Note for a period of 15 days before a selection of
Notes to be redeemed.

B-7

 

	9.	 	PERSONS DEEMED OWNERS. The registered holder of a Note may be treated as its owner for all
purposes.

	10.	 	AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the holders of at least a majority in aggregate
principal amount of the then outstanding Notes and any existing default may be waived with the
consent of the holders of a majority in aggregate principal amount of the then outstanding
Notes.

	11.	 	DEFAULTS AND REMEDIES. The Events of Default are set forth in Section 6.01 of the Indenture.

	12.	 	TRUSTEE DEALINGS WITH THE ISSUER. The Trustee or any of its Affiliates, in their individual
or any other capacities, may make or continue loans to or guaranteed by, accept deposits from
and perform services for the Issuer or its Affiliates and may otherwise deal with the Issuer
or its Affiliates as if it were not Trustee.

	13.	 	NO RECOURSE AGAINST OTHERS. No director, officer, employee, shareholder or Affiliate, as
such, of the Issuer or any Guarantor shall have any liability for any obligations of the
Issuer or any Guarantor under the Notes or the Indenture or any Guarantee or for any claim
based on, in respect of or by reason of such obligations or their creation. Each holder by
accepting a Note waives and releases all such liability. The waiver and release are part of
the consideration for the Notes.

	14.	 	AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of
the Trustee or an authenticating agent.

	15.	 	ABBREVIATIONS. Customary abbreviations may be used in the name of a holder or an assignee,
such as: TEN CO = tenants in common, TEN ENT = tenants by the entireties, JT TEN = joint
tenants with right of survivorship and not as tenants in common, CUST = Custodian and U/G/M/A
= Uniform Gifts to Minors Act.

	16.	 	CONVERSION. Subject to and upon compliance with the provisions of the Indenture, the
registered holder of this Note has the right at any time on or before the close of business on
the last Trading Day prior to the Maturity Date (or in case this Note or any portion hereof is
(a) called for redemption prior to such date, before the close of business on the last Trading
Day preceding the date fixed for redemption (unless the Issuer defaults in payment of the
Redemption Price in which case the conversion right will terminate at the close of business on
the date such default is
cured) or (b) subject to a duly completed election for repurchase, on or before the close of
business on the Change of Control Offer Termination Date (unless the Issuer defaults in payment
due upon repurchase or such holder elects to withdraw the submission of such election to
repurchase) to convert the principal amount hereof, or any portion of such principal amount
which is $1,000 or an integral multiple thereof, into fully paid and non-assessable Common
Shares at the conversion rate of 31.25 Common Shares for each $1,000 principal amount of Notes
(as adjusted in accordance with the provisions of Article 12 of the Indenture, the “Conversion
Rate”), which is equivalent to an initial Conversion Price for each $1,000 principal amount of
Notes of $32.00 per Common Share.

B-8

 

The Issuer shall not issue fractional Common Shares or scrip representing fractions of Common
Shares upon any such conversion, but shall make an adjustment therefor in cash based upon the
Current Market Price of the Common Shares on the last Trading Day prior to the date of
conversion.

	17.	 	REGISTRATION RIGHTS AGREEMENT. The holder of this Note is entitled to the benefits of a
Registration Rights Agreement, dated March 28, 2007, among the Issuer, the Guarantors and the
Initial Purchasers.

	18.	 	The Issuer will furnish to any holder upon written request and without charge a copy of the
Indenture and the Registration Rights Agreement. Requests may be made to: Nortel Networks
Corporation, 195 The West Mall, Toronto, Canada ON M9C 5K1, Attention: Corporate Secretary.

B-9

 

FORM OF CONVERSION NOTICE

To: NORTEL NETWORKS CORPORATION

     The undersigned registered owner of the Note hereby irrevocably exercises the option to
convert this Note, or portion hereof (which has a principal amount of $1,000 or an integral
multiple thereof) below designated, into Common Shares of Nortel Networks Corporation in accordance
with the terms of the Indenture referred to in this Note, and directs that the Common Shares
issuable and deliverable upon the conversion, together with any check in payment for fractional
Common Shares and Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been indicated below. If
Common Shares or any portion of this Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of interest, Additional
Interest and taxes accompanies this Note.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	Fill in for registration of Common Shares if to be 
	 	 
	 

	 	 
	delivered, and Notes if to be issued, other than to 
	 	 
	and in the name of the registered holder
	 	 
	 

	 	 
	(Please Print):

	 	Signature(s)
	 

	 	Principal amount to be converted
(if less than all):
	 
	 	 
	 

(Name)

	 	 
$___,000,000

	 
	 	 
	 

(Street Address)

	 	 
 Social
Security or other Taxpayer
Identification Number
	 
	 	 
	 

(City, State and Zip Code)
Signature Guarantee:

	 	 

 

[Signatures must be guaranteed by an eligible Guarantor Institution (banks, brokers, dealers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Common Shares are
to be issued, or Notes are to be delivered, other than to and in the name of the registered
holder(s).]

     Completed Notices of Conversion should be delivered to Computershare Investor Services,
transfer agent for the Common Shares at [250 Royall Street, Canton Massachusetts 02021].

B-10

 

ASSIGNMENT FORM

     To assign this Note, fill in the form below:

     (I) or (we) assign and transfer this Note to

 
(Insert assignee’s social security or tax I.D. no.)

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                                              agent to transfer this Note on the
books of the Registrar. The agent may substitute another to act for him.

	 	 	 	 
	 

	Your Signature:	 	 
	 

	 	 	 
	 

	 	 	(Sign exactly as your name appears on the
other side of this Note)

     Date:                                                             

     Medallion Signature Guarantee:                                                             

[FOR INCLUSION ONLY IF THIS NOTE BEARS A RESTRICTED SECURITIES LEGEND] In connection with any
transfer of any of the Notes evidenced by this certificate which are “restricted securities” (as
defined in Rule 144 (or any successor thereto) under the United States Securities Act of 1933, as
amended (the “Securities Act”), the undersigned confirms that such Notes are being transferred:

     CHECK ONE BOX BELOW

     (1)                      o     to the Issuer or any Guarantor;

     (2)                      o      pursuant to and in compliance with Rule 144A under the Securities Act; or

     (3)                      o      pursuant to an exemption from registration under the Securities Act provided
by Rule 144 thereunder.

Unless one of the boxes is checked, the Registrar will refuse to register any of the Notes
evidenced by this certificate in the name of any person other than the registered
holder thereof; provided, however, that if box (1), (2) or (3) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such certifications
and other information, and such legal opinions, as the Issuer has 

B-11

 

reasonably requested in writing, by delivery to the
Trustee of a standing letter of instruction, to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act; provided that this paragraph
shall not be applicable to any Notes which are not “restricted securities” (as
defined in Rule 144 (or any successor thereto) under the Securities Act).

	 	 	 	 
	 

	    Your Signature:	 	 
	 

	 	 	 
	 

	 	 	(Sign exactly as your name appears on the
other side of this Note)

     Date:                                                             

     Medallion Signature Guarantee:                                                             

B-12

 

EXHIBIT C-1

     2012 Notes Make-Whole Table

     The following table sets forth the share price and number of make-whole shares of Common
Shares to be added to the Conversion Rate per $1,000 principal amount of 2012 Notes:

Make Whole Change of Control Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Share Price on	 	 	 	 	 	 	 	 	 	 	 	 
	Change of Control	 	 	 	 	 	 	 	 	 	 	 	 
	Effective Date	 	March 22, 2007	 	April 15, 2008	 	April 15, 2009	 	April 15, 2010	 	April 15, 2011	 	April 15, 2012
	$24.58
	 	 	9.4335	 	 	 	9.1915	 	 	 	8.8207	 	 	 	8.2105	 	 	 	7.6979	 	 	 	9.4335	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$27.50
	 	 	7.5097	 	 	 	7.1241	 	 	 	6.5731	 	 	 	5.6631	 	 	 	4.0302	 	 	 	5.1136	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$30.00
	 	 	6.2682	 	 	 	5.8110	 	 	 	5.1741	 	 	 	4.1322	 	 	 	1.5884	 	 	 	2.0833	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$32.50
	 	 	5.2962	 	 	 	4.7983	 	 	 	4.1187	 	 	 	3.0274	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$35.00
	 	 	4.5247	 	 	 	4.0075	 	 	 	3.3150	 	 	 	2.2306	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$37.50
	 	 	3.9049	 	 	 	3.3832	 	 	 	2.6977	 	 	 	1.6559	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$40.00
	 	 	3.4016	 	 	 	2.8853	 	 	 	2.2195	 	 	 	1.2412	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$45.00
	 	 	2.6470	 	 	 	2.1588	 	 	 	1.5526	 	 	 	0.7240	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$50.00
	 	 	2.1220	 	 	 	1.6724	 	 	 	1.1341	 	 	 	0.4503	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$55.00
	 	 	1.7455	 	 	 	1.3365	 	 	 	0.8638	 	 	 	0.3026	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$60.00
	 	 	1.4682	 	 	 	1.0982	 	 	 	0.6840	 	 	 	0.2205	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$70.00
	 	 	1.0980	 	 	 	0.7954	 	 	 	0.4742	 	 	 	0.1441	 	 	 	0.0000	 	 	 	0.0000	 

C- 1

 

Exhibit C-2

     2014 Notes Make-Whole Table

     The following table sets forth the share price and number of make-whole shares of Common
Shares to be added to the Conversion Rate per $1,000 principal amount of 2014 Notes:

Make Whole Change of Control Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Share Price on	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Change of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Control Effective	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date	 	March 22, 2007	 	April 15, 2008	 	April 15, 2009	 	April 15, 2010	 	April 15, 2011	 	April 15, 2012	 	April 15, 2013	 	April 15, 2014
	$24.58
	 	 	9.4335	 	 	 	9.2884	 	 	 	9.1086	 	 	 	8.8492	 	 	 	8.4835	 	 	 	7.9404	 	 	 	7.6681	 	 	 	9.4335	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$27.50
	 	 	7.7323	 	 	 	7.4910	 	 	 	7.2021	 	 	 	6.8049	 	 	 	6.2470	 	 	 	5.3760	 	 	 	3.9929	 	 	 	5.1136	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$30.00
	 	 	6.6219	 	 	 	6.3311	 	 	 	5.9859	 	 	 	5.5202	 	 	 	4.8714	 	 	 	3.8545	 	 	 	1.5653	 	 	 	2.0833	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$32.50
	 	 	5.7421	 	 	 	5.4209	 	 	 	5.0424	 	 	 	4.5394	 	 	 	3.8465	 	 	 	2.7736	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$35.00
	 	 	5.0344	 	 	 	4.6963	 	 	 	4.3005	 	 	 	3.7816	 	 	 	3.0764	 	 	 	2.0087	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$37.50
	 	 	4.4577	 	 	 	4.1118	 	 	 	3.7099	 	 	 	3.1894	 	 	 	2.4931	 	 	 	1.4690	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$40.00
	 	 	3.9822	 	 	 	3.6349	 	 	 	3.2343	 	 	 	2.7220	 	 	 	2.0476	 	 	 	1.0885	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$45.00
	 	 	3.2524	 	 	 	2.9142	 	 	 	2.5297	 	 	 	2.0494	 	 	 	1.4387	 	 	 	0.6307	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$50.00
	 	 	2.7269	 	 	 	2.4060	 	 	 	2.0461	 	 	 	1.6066	 	 	 	1.0663	 	 	 	0.4004	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$55.00
	 	 	2.3365	 	 	 	2.0358	 	 	 	1.7030	 	 	 	1.3049	 	 	 	0.8307	 	 	 	0.2813	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$60.00
	 	 	2.0383	 	 	 	1.7584	 	 	 	1.4521	 	 	 	1.0926	 	 	 	0.6762	 	 	 	0.2171	 	 	 	0.0000	 	 	 	0.0000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$70.00
	 	 	1.6193	 	 	 	1.3776	 	 	 	1.1186	 	 	 	0.8238	 	 	 	0.4967	 	 	 	0.1571	 	 	 	0.0000	 	 	 	0.0000	 

C- 2

 

EXHIBIT D

FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

NORTEL NETWORKS CORPORATION

NORTEL NETWORKS LIMITED

NORTEL NETWORKS INC.

Notice of Registration Statement

and

Selling Securityholder Questionnaire

[Date]

     Nortel Networks Corporation (the “Company”), Nortel Networks Limited (“NNL”) and Nortel
Networks Inc. (“NNI,” and together with NNL, the “Guarantors”) have filed with the United States
Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (the
“Shelf Registration Statement”) for the registration and resale under Rule 415 of the United States
Securities Act of 1933, as amended (the “Securities Act”), of the Company’s 1.75% Convertible
Senior Notes due 2012 (the “2012 Notes”) and 2.125% Convertible Senior Notes due 2014 (the “2014
Notes,” and together with the 2012 notes, the “Notes”), the related guarantees by NNL and initially
NNI (the “Guarantees”) and the Company’s common shares issuable upon conversion of the notes (the
“Common Shares”), in accordance with the Registration Rights Agreement, dated as of March 28, 2007
(the “Registration Rights Agreement”), among the Company, the Guarantors and the Initial Purchasers
named therein. All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

     In order to have Registrable Securities (as defined herein) included in the Shelf Registration
Statement (or a supplement or amendment thereto), this Notice of Registration Statement and Selling
Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered
to the Company at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE].

     No holder of Registrable Securities will be entitled:

	 	•	 	to be named as a selling securityholder in the Shelf Registration Statement as of the
date the Shelf Registration Statement is declared effective or otherwise designated by the
Company for use by the Selling Securityholders; or
	 
	 	•	 	to use the prospectus forming a part of the Shelf Registration Statement for offers and
resales of Registrable Securities at any time, unless such holder has returned a completed
and signed Notice and Questionnaire to the Company before the deadline specified above.
Holders of Registrable Securities who have not returned a Notice and Questionnaire by the
deadline specified above will be included in the Shelf Registration Statement through a
prospectus supplement or a post-effective amendment to the Shelf Registration Statement,
subject to restrictions on timing provided in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling securityholder in the Shelf
Registration Statement and related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling securityholder in the Shelf
Registration Statement and related prospectus.

     “Registrable Securities” shall mean each Note and related Guarantees and the Common Shares
until the earlier of (i) the date on which such Note and related Guarantees or the Common Shares
have been sold or otherwise transferred pursuant to an effective Shelf Registration Statement; (ii)
the date that is two years after the later of the date of original issue of such Note and related
Guarantees and the last date that the Company or any of its affiliates was the owner of such Note
and related Guarantees (or any predecessor thereto); (iii) the date on which such Note and related
Guarantees or the Common Shares may be resold without restriction pursuant to Rule 144(k) under the
Securities Act or any successor provision thereto; or (iv) the date such Note and related
Guarantees or the Common Shares have been publicly sold pursuant to Rule 144 under the Securities
Act or any successor provision thereto.

D- 1

 

ELECTION

     The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects
to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it
and listed below in Item (3). The undersigned, by signing and returning this Notice and
Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and
conditions of this Notice and Questionnaire and the Registration Rights Agreement as if the
undersigned Selling Securityholder were an original party thereto.

     Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the
Selling Securityholder will be required to deliver to the Company (for itself and on behalf of the
Guarantors) and the Trustee the Notice of Transfer (completed and signed) set forth in Exhibit 1 to
this Notice and Questionnaire.

     The Selling Securityholder hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:

	 	(1)	 	(a)   Full Legal Name of Selling Securityholder:
	 
	 	 	 	    

	 
	 	 	 	(b)   Full Legal Name of Registered Holder (if not the same as in (a) above) of
Registrable Securities Listed in Item (3) Below:
	 
	 	 	 	    

	 
	 	 	 	(c)   Full Legal Name of DTC Participant (if applicable and if not the same as (b)
above) Through Which Registrable Securities Listed in Item (3) Below Are Held:
	 
	 	 	 	    

	 	(2)	 	Address for Notices to Selling Securityholder:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 	Telephone:	 	 
 

	 
	 	Fax:	 	 
 

	 
	 	Contact person:	 	 
 

	 	(3)	 	Beneficial Ownership of the Securities:
	 
	 	 	 	Except as set forth below in this Item (3), the undersigned Selling Securityholder does not
beneficially own any Registrable Securities or Common Shares issued upon conversion,
repurchase or redemption of any Registrable Securities.

	 	(a)	 	Principal amount of Registrable Securities (as defined in the Registration
Rights Agreement) beneficially owned:
	 
	 	 	 	 
 

	 
	 	 	 	CUSIP No(s). of such Registrable Securities:
	 
	 	 	 	 

D- 2

 

	 	 	 	Number of Common Shares (if any) issued upon conversion, repurchase or redemption of
Registrable Securities:
	 
	 	(b)	 	Principal amount of Securities other than Registrable Securities beneficially
owned:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	CUSIP No(s). of such other Securities:
	 
	 	 	 	 

	 
	 	 	 	Number of Common Shares (if any) issued upon conversion of such other Securities:
	 
	 	 	 	 

	 
	 	(c)	 	Principal amount of Registrable Securities which the undersigned wishes to be
included in the Shelf Registration Statement:
	 
	 	 	 	 

	 
	 	 	 	CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration
Statement:
	 
	 	 	 	 

	 
	 	 	 	Number of Common Shares (if any) issued upon conversion of Registrable Securities
which are to be included in the Shelf Registration Statement:
	 
	 	 	 	 

	 	(4)	 	Beneficial Ownership of Other Securities of the Company or of the Guarantors:
	 
	 	 	 	Except as set forth below in this Item (4), the undersigned Selling Securityholder is not
the beneficial or registered owner of any Common Shares or any other securities of the
Company or of the Guarantors, other than the Securities and Common Shares listed above in
Item (3).
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	(5)	 	Relationships with the Company or the Guarantors:
	 
	 	 	 	Except as set forth below in this Item (5), neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or more) has held any
position or office or has had any other material relationship with the Company or the
Guarantors (or their respective predecessors or affiliates) during the past three years.
	 
	 	 	 	State any exceptions here:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

D- 3

 

	 	(6)	 	Nature of the Selling Securityholder:

	 	(a)	 	Is the Selling Securityholder a reporting company under the Exchange Act, a
majority-owned subsidiary of a reporting company under the Exchange Act or a registered
investment company under the Investment Company Act? If so, please state which one.
	 
	 	 	 	 

	 
	 	 	 	If the Selling Securityholder is a majority owned subsidiary of a reporting company,
identify the majority stockholder that is a reporting company.
	 
	 	 	 	 

	 
	 	 	 	If the Selling Securityholder is not any of the above, identify the natural person or
persons having voting and investment control over the Company’s or any Guarantor’s
securities that the Selling Securityholder owns.
	 
	 	 	 	 

	 
	 	(b)	 	Is the Selling Securityholder a registered broker-dealer? Yes o      No o
	 
	 	 	 	 

	 
	 	 	 	State whether the Selling Securityholder received the Registrable Securities as
compensation for underwriting activities and, if so, provide a brief description of
the transaction(s) involved. State whether the Selling Securityholder is an affiliate
of a broker-dealer and, if so, list the name(s) of the broker-dealer affiliate(s).

Yes o      No o
	 
	 	 	 	If the answer is “Yes,” you must answer the following:
	 
	 	 	 	If the Selling Securityholder is an affiliate of a registered broker-dealer, the
Selling Securityholder purchased the Registrable Securities (i) in the ordinary course
of business and (ii) at the time of the purchase of the Registrable Securities, had no
agreements or understandings, directly or indirectly, with any person to distribute
the Registrable Securities. Yes o      No o
	 
	 	 	 	If the answer is “No,” state any exceptions here:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	If the answer is ”No,” this may affect your ability to be included in the registration statement.

	 	(xiv)	 	Plan of Distribution:
	 
	 	 	 	Except as set forth below, the undersigned Selling Securityholder intends to distribute the
Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable
Securities may be sold from time to time directly by the undersigned Selling Securityholder or,
alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may
be sold in one or more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices. Such sales may
be effected in transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the Registrable Securities may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or services or in the over-the-counter market or
(iv) through the writing of options. In connection with sales of the Registrable Securities or
otherwise, the Selling Securityholder may enter into transactions with broker-dealers, which
may in turn engage in short sales of the Registrable Securities in the course of hedging the
positions they assume. The Selling Securityholder may also sell Registrable Securities short
and deliver Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.

D- 4

 

	 	 	 	State any exceptions here:
	 
	 	 	 	 

     By signing below, the Selling Securityholder acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the prospectus delivery and other provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder, particularly
Regulation M. In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which this Notice and
Questionnaire is provided to the Company (for itself and on behalf of the Guarantors), the Selling
Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Registration Rights Agreement.

     By signing below, the Selling Securityholder consents to the disclosure of the information
contained herein in its answers to Items (1) through (6) above and the inclusion of such
information in the Shelf Registration Statement and related prospectus. The Selling Securityholder
understands that such information will be relied upon by the Company and the Guarantors in
connection with the preparation of the Shelf Registration Statement and related prospectus.

     In accordance with the Selling Securityholder’s obligation under Section 3(a) of the
Registration Rights Agreement to provide such information as may be required by law for inclusion
in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the
Company (for itself and on behalf of the Guarantors) of any inaccuracies or changes in the
information provided herein which may occur subsequent to the date hereof at any time while the
Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the
Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail or air
courier guaranteeing overnight delivery as follows:

     To the Company (for itself and on behalf of the Guarantors):

     Nortel Networks Corporation

     195 The West Mall

     Toronto, Ontario

     Canada M9C 5K1

     Attn: General Counsel — Corporate and Corporate Secretary

     Fax no.: (905) 863-7386

     Once this Notice and Questionnaire is executed by the Selling Securityholder and received by
the Company (for itself and on behalf of the Guarantors), the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the Company, the Guarantors and the Selling
Securityholder (with respect to the Registrable Securities beneficially owned by such Selling
Securityholder and listed in Item (3) above) and their respective successors, heirs, personal
representatives, and assigns. This Agreement shall be governed in all respects by the laws of the
State of New York.

     IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.

     Date:                                                                
                 

      
                                                                                                                       

     Selling Securityholder

     (Print/type full legal name of beneficial owner of Registrable Securities)

     By:

     Name:

     Title:

D- 5

 

PLEASE RETURN THIS COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE
[DEADLINE FOR RESPONSE] TO THE COMPANY (FOR ITSELF AND ON BEHALF OF THE GUARANTORS) AT:

Nortel Networks Corporation

195 The West Mall

Toronto, Ontario

Canada M9C 5K1

Attn: General Counsel —Corporate and Corporate Secretary

Fax no.: (905) 863-7386

D- 6

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