IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

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In re : Chapter 11
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Nortel Networks Inc., et al.,1 : Case No. 09-10138 (KG)
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Debtors. : Jointly Administered
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Hearing date: April 26, 2011 at 9:30 am (ET)
: Objections due: April 4, 2011 at 4:00 pm (ET)
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DEBTORS’ MOTION FOR ENTRY OF AN ORDER (I)

AUTHORIZING AND APPROVING THE SALE OF INTERNET NUMBERS
FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND
INTERESTS; (II) AUTHORIZING AND APPROVING ENTRY INTO A
PURCHASE AND SALE AGREEMENT; (III) AUTHORIZING THE FILING OF
CERTAIN DOCUMENTS UNDER SEAL AND (IV) GRANTING RELATED RELIEF

Nortel Networks Inc. (“NNI”), and certain of its affiliates, as debtors and debtors in

possession, (collectively, the “Debtors”), hereby move this Court (the “Motion”), pursuant to

sections 105, 107(b)(1) and 363 of title 11 of the United States Code (the “Bankruptcy Code”),

Rules 2002, 6004 and 9018 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy

Rules”), and Rules 6004-1 and 9018-1(b) of the Local Rules of Bankruptcy Practice and

Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local

Rules”), for the entry of an order substantially in the form attached hereto as Exhibit A (i)

authorizing the sale, assignment and transfer of all of NNI’s right, title and interest in and to

1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s tax identification
number, are: Nortel Networks Inc. (6332), Nortel Networks Capital Corporation (9620), Nortel Altsystems Inc.
(9769), Nortel Altsystems International Inc. (5596), Xros, Inc. (4181), Sonoma Systems (2073), Qtera Corporation
(0251), CoreTek, Inc. (5722), Nortel Networks Applications Management Solutions Inc. (2846), Nortel Networks
Optical Components Inc. (3545), Nortel Networks HPOCS Inc. (3546), Architel Systems (U.S.) Corporation (3826),
Nortel Networks International Inc. (0358), Northern Telecom International Inc. (6286), Nortel Networks Cable
Solutions Inc. (0567) and Nortel Networks (CALA) Inc. (4226). Addresses for the Debtors can be found in the
Debtors’ petitions, which are available at http://dm.epiq11.com/nortel.
approximately 666,624 legacy IPv4 numbers (as described further in the Agreement, the

“Internet Numbers”) on an “as-is” and “where-is” basis, free and clear of all Liens,2 Claims,

encumbrances and interests, other than Assumed Liabilities, Permitted Encumbrances or Liens

created by or through the Purchaser or any of its Affiliates, or as otherwise provided in the

Agreement (collectively, the “Interests”) pursuant to section 363 of the Bankruptcy Code (the

“Transaction”), (ii) authorizing and approving entry into that certain purchase and sale

agreement dated as of March 16, 2011 among NNI (the “Seller”) and Microsoft Corporation (the

“Purchaser”) for the sale, assignment and transfer of the Internet Numbers as described therein,

substantially in the form attached hereto as Exhibit B (the “Agreement”), (iii) authorizing the

Debtors to file certain documents under seal and (iv) granting such other and further relief as the

Court deems just and proper.

Jurisdiction

1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). Venue is

proper pursuant to 28 U.S.C. §§ 1408 and 1409.

Background

2. On January 14, 2009 (the “Petition Date”), the Debtors, other than Nortel

Networks (CALA) Inc.,3 filed voluntary petitions for relief under chapter 11 of the Bankruptcy

Code, which cases are consolidated for procedural purposes only. The Debtors continue to

2
Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement.
3
Nortel Networks (CALA) Inc. filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code
on July 14, 2009, which was consolidated and is being jointly administered with the other Debtors’ chapter 11 cases
for procedural purposes [D.I. 1098].

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operate their remaining businesses and manage their properties as debtors in possession pursuant

to sections 1107(a) and 1108 of the Bankruptcy Code.

3. The Office of the United States Trustee for the District of Delaware (the “U.S.

Trustee”) has appointed an Official Committee of Unsecured Creditors (the “Committee”) in

respect of the Debtors [D.I.s 141, 142], and an ad hoc group of bondholders has been organized.

4. On the Petition Date, the Debtors’ ultimate corporate parent Nortel Networks

Corporation (“NNC”), NNI’s direct corporate parent Nortel Networks Limited (“NNL,” and

together with NNC and their affiliates, including the Debtors, “Nortel”), and certain of their

Canadian affiliates (collectively, the “Canadian Debtors”)4 commenced a proceeding with the

Ontario Superior Court of Justice (the “Canadian Court”) under the Companies’ Creditors

Arrangement Act (Canada) (the “CCAA), seeking relief from their creditors (collectively, the

“Canadian Proceedings”) and a Monitor, Ernst & Young Inc. (the “Monitor”), was appointed by

the Canadian Court. Also on the Petition Date, the High Court of England and Wales placed

nineteen of Nortel’s European affiliates (collectively, the “EMEA Debtors”)5 into administration

(the “English Proceedings”) under the control of individuals from Ernst & Young LLP

(collectively, the “Joint Administrators”). Other Nortel affiliates have commenced and in the

future may commence additional creditor protection, insolvency and dissolution proceedings

around the world.

4
The Canadian Debtors include the following entities: NNC, NNL, Nortel Networks Technology
Corporation, Nortel Networks Global Corporation and Nortel Networks International Corporation.
5
The EMEA Debtors include the following entities: Nortel Networks UK Limited, Nortel Networks S.A.,
Nortel Networks (Ireland) Limited, Nortel GmbH, Nortel Networks France S.A.S., Nortel Networks Oy, Nortel
Networks Romania SRL, Nortel Networks AB, Nortel Networks N.V., Nortel Networks S.p.A., Nortel Networks
B.V., Nortel Networks Polska Sp. z.o.o., Nortel Networks Hispania, S.A., Nortel Networks (Austria) GmbH, Nortel
Networks, s.r.o., Nortel Networks Engineering Service Kft, Nortel Networks Portugal S.A., Nortel Networks
Slovensko, s.r.o. and Nortel Networks International Finance & Holding B.V.

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 5. On June 19, 2009, Nortel announced that it was advancing in discussions with

external parties to sell its businesses and that it would assess other restructuring alternatives for

its businesses in the event that it was unable to maximize value through sales. Since then, Nortel

has sold many of its business units and assets to various purchasers. Efforts continue to be made

with respect to the realization of value from Nortel’s remaining assets. For further information

regarding these chapter 11 cases, reference may be made to the Monthly Operating Reports filed

by the Debtors and http://dm.epiq11.com/nortel.

Relief Requested

6. By this motion, the Debtors seek an order (i) authorizing and approving the sale

of the Internet Numbers free and clear of all Interests; (ii) authorizing and approving entry into

the Agreement; and (iii) granting related relief.

Facts Relevant to this Motion

A. The Internet Numbers

7. All devices connecting to the Internet, at home or via a business, require a unique

Internet number space. There are approximately 4.3 billion existing IPv4 numbers, most of

which have already been allocated. The Internet industry is preparing to transition to the next

generation of Internet Protocol, IPv6. IPv4 addresses will eventually be supplanted by IPv6

addresses, of which there is a virtually unlimited supply, but this is expected to take several

years. Because of the limited supply of IPv4 addresses, there is currently an opportunity to

realize value from marketing the Internet Numbers, which opportunity will diminish over time as

IPv6 addresses are more widely adopted.

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 8. The Internet Numbers consist of 666,624 IPv4 Numbers that were allocated to

NNI’s predecessors in interest in the 1990s, which entities were ultimately merged into NNI.6

Of the 666,624 IPv4 Numbers proposed to be transferred to the Purchaser pursuant to the

Agreement, 470,016 are available for immediate use by the Purchaser (the “Initial Legacy

Numbers”), and the remaining 196,608 are currently being used in connection with the provision

of transition services to existing purchasers of Nortel’s business lines, and would not be

transferred to the Purchaser until those respective agreements terminate later this year (the

“Subsequent Legacy Numbers”).

B. Efforts to Market the Internet Assets

9. NNI began actively marketing the Internet Numbers in late 2010, following its

research into the potential value of the assets and the opportunities to realize such value. As

more fully described in the Application of the Debtors Pursuant to 11 U.S.C. § 327(a) to Retain

and Employ Addrex Inc. Nunc Pro Tunc to November 24, 2010 (D.I. 4435), the Debtors retained

Addrex, Inc. (“Addrex”) to advise the Debtors on monetization of the Internet Numbers and to

attract qualified purchasers.

10. On behalf of the Seller, Addrex forwarded solicitation materials to over eighty

(80) potential purchasers in early December, 2010. The Seller signed non-disclosure agreements

with fourteen (14) potential purchasers, who were then provided access to an electronic data

room containing summary financial information, an initial process letter, chain of custody

information, and draft agreements. The Seller received bids in January, 2011 from four (4)

potential purchasers who bid for the entire portfolio of Internet Numbers, along with three (3)

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The Internet Numbers were assigned to NNI and its predecessors in interest prior to the formation of an
applicable regional Internet registry (“RIR”). IPv4 numbers (like the Internet Numbers) that were not allocated by
an RIR are commonly referred to as “legacy numbers.”

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additional bids for less than all of the Internet Numbers. Pursuant to the bid process letter, the

bids included a full markup of the draft sale agreement.

11. Following NNI’s consideration of the various bids received and discussions with

the bidders, the Debtors determined that the Purchaser’s bid represents the highest and best offer

for the assets. NNI has engaged in good-faith negotiations with the Purchaser on the terms of the

sale, which negotiations resulted in the Agreement.

C. The Agreement7

12. On March 16, 2011, the Seller and the Purchaser executed the Agreement, which

contains the following material terms:8

 Purchase Price. The Purchaser will pay to the Seller the Gross Purchase Price of
$7,500,000. On the Closing Date, the Purchaser will transfer to the Seller the percentage
of the Gross Purchase price attributable to the Initial Legacy Numbers, less the Good
Faith Deposit. The balance of the Gross Purchase Price shall be paid into escrow, and on
each Subsequent Transfer Date the Escrow Agent shall release to the Seller the amount of
the Gross Purchase Price attributable to the Subsequent Legacy Numbers transferred on
that date. If any Subsequent Legacy Numbers have not been transferred on or before
January 31, 2012, the Escrow Agent shall release the cash attributable to such numbers to
the Purchaser, and those numbers will be excluded from the Transaction.

 Internet Assets. Purchaser agrees to purchase from the Seller all of the Seller’s right,
title, and interest in and to the Internet Assets set forth on Schedule A of the Agreement.

 Sale Free and Clear. Seller will transfer and assign all of its right, title and interest in and
to the Internet Assets, on an “as is” and “where is” basis, free and clear of all Interests, to
the fullest extent permitted by section 363 of the Bankruptcy Code and other applicable
law.

 Good Faith Deposit. No later than ten (10) days after Seller’s execution of the
Agreement, Purchaser will deliver to Seller cash in an amount of $225,000 (i.e. three
percent (3%) of $7,500,000) to serve as earnest money under the Agreement.

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To the extent that there are inconsistencies between any summary description of the Agreement contained
herein and the terms and conditions of the Agreement, the terms and conditions of the Agreement shall control.
8
Any capitalized terms used in this Section C but not otherwise defined herein, shall have the meaning
assigned in the Agreement.

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  Restrictions on Solicitation of Competing Bids and No Auction. As the Debtors have
widely marketed the Internet Assets, no further public auction is contemplated for the
Internet Assets. From the time of the signing of the Agreement until the Sale Order
becomes a Final Order, the Debtors shall not a solicit bid from any third party for the sale
of the Internet Assets.

 Duties and Obligations Related to Internet Assets. As of the applicable Transfer Date for
each Internet Number, Purchaser shall assume all liabilities with respect to ownership and
exploitation of the Internet Number relating to periods after the applicable Transfer Date,
including all Liabilities related to actions or claims brought against or in relation to the
Internet Number, and all maintenance fees, service charges, and registration costs, as
applicable, related to the Internet Number.

 Closing Conditions. The Agreement contains customary closing conditions, and requires
the entry of a Sale Order approving the Agreement and providing, among other things,
that the Internet Numbers shall be sold, assumed, assigned and transferred to the
Purchaser free and clear of all Liens, claims and interests to the fullest extent permitted
by section 363 of the Bankruptcy Code. The sale shall be evidenced by changing the
Point of Contact information in the applicable regional Internet registry’s WHOIS
database record.

 Multiple Transfer Dates. The Closing shall take place five (5) business days after all of
the closing conditions specified in the Agreement have been satisfied or, if permissible,
waived by the applicable party, or as otherwise mutually agreed in writing by the Seller
and the Purchaser. Upon occurrence of the Closing, legal title, equitable title and risk of
loss with respect to the Initial Legacy Numbers will transfer to the Purchaser, and the
Assumed Liabilities will be assumed by the Purchaser. The completion of the purchase
and sale of the Subsequent Legacy Numbers shall take place on the date which is five (5)
business days after the applicable date set out in Exhibit C to the Agreement, or on such
other date and time as shall be mutually agreed upon in writing by the Purchaser and
Seller.

13. Based on NNI’s broad marketing efforts to date, and the good-faith negotiations

with Purchaser, the Debtors believe that the consideration and terms set forth in the Agreement

represent the highest and best offer available for the Internet Assets, that further marketing of the

Internet Assets would not yield a better offer and that further marketing of the Internet Assets

could result in a reduction in the Purchase Price or the loss of the Transaction with the Purchaser

altogether. Accordingly, the Debtors intend to proceed with the sale contemplated by the

Agreement at this time. The Debtors have consulted with counsel for the Committee and counsel

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to the steering committee members of the ad hoc group of bondholders that have executed

confidentiality or non-disclosure agreements (the “Bondholder Group”) regarding the

Transaction, and understand that they do not oppose the Transaction as described herein.

D. Sale Free and Clear of All Bankruptcy Claims

14. Pursuant to this Court’s order approving the Agreement (the “Order”) on the

terms set forth in the Agreement, the Debtors have agreed to sell, transfer and assign pursuant to

section 363 of the Bankruptcy Code, NNI’s right, title and interest in the Internet Numbers, free

and clear of any and all interests to the fullest extent permitted by applicable law, including

(without limitation) (i) any and all liens, including any lien (statutory or otherwise), mortgage,

pledge, security interest, hypothecation, deed of trust, deemed trust, option, right of use, right of

first offer or first refusal, servitude, encumbrance, easement, encroachment, right-of-way,

restrictive covenant on real property, real property license, charge, prior claim, lease, conditional

sale agreement, or other similar restriction of any kind (collectively, including “Liens” as defined

in the Agreement, the “Liens”), and (ii) any and all Claims, debts, liabilities, and obligations,

whether accrued or fixed, direct or indirect, liquidated or unliquidated, absolute or contingent,

matured or unmatured, known or unknown, or determined or undeterminable, including any tax

liability (collectively, the “Liabilities” and together with the Liens, the “Interests”), in each case

other than Assumed Liabilities, Permitted Encumbrances and Liens created by or through the

Purchaser or any of its Affiliates, with such Interests to attach to the sale proceeds in the same

validity, extent and priority as immediately prior to the Transaction, subject to any rights, claims

and defenses of the Debtors and other parties in interest. Except as otherwise expressly provided

in the Agreement, all such Interests (other than Assumed Liabilities, Permitted Encumbrances

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and Liens created by or through the Purchaser or any of its Affiliates) will be released,

terminated and discharged as to the Purchaser and the Internet Numbers.

15. The Debtors seek a finding by the Court that upon the Closing, and except as

otherwise provided in the Agreement, the Purchaser shall not be liable for any Claims against,

and Interests and obligations of, the Debtors or of any the Debtors’ predecessors or affiliates.

Basis for Relief

A. Entry into the Agreement Is a Product of the Debtors’ Reasonable Business

Judgment

16. Section 363(b)(1) of the Bankruptcy Code provides: “The trustee, after notice

and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of

the estate.” Section 105(a) of the Bankruptcy Code provides in relevant part: “The court may

issue any order, process, or judgment that is necessary or appropriate to carry out the provisions

of this title.”

17. Virtually all courts have held that approval of a proposed sale of assets of a debtor

under section 363 of the Bankruptcy Code, outside the ordinary course of business and prior to

the confirmation of a plan of reorganization, is appropriate if a court finds that the transaction

represents a reasonable business judgment on the part of the trustee or debtor-in-possession. See

In re Abbotts Dairies of Pa., Inc., 788 F.2d 143 (3d Cir. 1986); In re Delaware & Hudson Ry.

Co., 124 B.R. 169, 176 (D. Del. 1991) (holding that the following non-exclusive list of factors

may be considered by a court in determining whether there is a sound business purpose for an

asset sale: “the proportionate value of the asset to the estate as a whole; the amount of elapsed

time since the filing; the effect of the proposed disposition of [sic] the future plan of

reorganization; the amount of proceeds to be obtained from the sale versus appraised values of

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the property; and whether the asset is decreasing or increasing in value”); In re Stroud Ford, Inc.,

164 B.R. 730, 732 (Bankr. M.D. Pa. 1993); Titusville Country Club v. Pennbank (In re Titusville

Country Club), 128 B.R. 396, 399 (Bankr. W.D. Pa. 1991); In re Industrial Valley Refrigeration

& Air Conditioning Supplies Inc., 77 B.R. 15, 21 (Bankr. E.D. Pa. 1987); In re Lionel Corp., 722

F.2d 1063 (2d Cir. 1983); Stephens Indus., Inc. v. McClung, 789 F.2d 386, 391 (6th Cir. 1986);

In re Ionosphere Clubs, Inc., 100 B.R. 670, 675 (Bankr. S.D.N.Y. 1989); In re Phoenix Steel

Corp., 82 B.R. 334, 335-36 (Bankr. D. Del. 1987) (stating that the elements necessary for

approval of a section 363 sale in a chapter 11 case are “that the proposed sale is fair and

equitable, that there is a good business reason for completing the sale and the transaction is in

good faith”).

18. The “sound business reason” test requires a trustee or debtor-in-possession to

establish four elements: (1) that a sound business purpose justifies the sale of assets outside the

ordinary course of business; (2) that accurate and reasonable notice has been provided to

interested persons; (3) that the trustee or the debtor-in-possession has obtained a fair and

reasonable price; and (4) good faith. In re Titusville Country Club, 128 B.R. at 399; In re

Sovereign Estates, Ltd., 104 B.R. 702, 704 (Bankr. E.D. Pa. 1989); Phoenix Steel Corp., 82 B.R.

at 335-36; see also Stephens Indus., 789 F.2d at 390; In re Lionel Corp., 722 F.2d at 1071.9

19. The transfer of the Internet Numbers in connection with the Transaction meets the

“sound business reason” test. First, sound business purposes justify the Transaction. The

Debtors believe that a prompt sale of the Internet Numbers presents the best opportunity to

realize the maximum value of the Internet Numbers for NNI’s estate and its creditors. The
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Lionel’s “sound business purpose test” replaces an older rule that held that sales of substantially all of a
debtor’s assets prior to the confirmation of a plan of reorganization could only be made in emergencies, i.e. when
the assets to be sold were “wasting” or perishable. In re Lionel, 722 F.2d at 1071.

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Debtors further believe that this benefit could be adversely affected, or perhaps lost, absent a

prompt transfer of the Internet Numbers. See In re Lionel Corp., 722 F.2d at 1071 (finding that

of factors for courts to evaluate on motion under section 363(b), “most important perhaps, [is]

whether the asset is increasing or decreasing in value”). In light of the current window of

opportunity presented for the monetization of the Internet Numbers, coupled with the Debtors’

current efforts to restructure or wind down their remaining assets, the Debtors believe that a

prompt transfer will maximize the value of the Internet Numbers for the benefit of NNI’s

creditors and its estate.

20. Second, notice of the Motion will be provided to interested parties as set forth in

the Agreement and in accordance with the requirements of the Bankruptcy Code, the Bankruptcy

Rules, the Local Rules and applicable Court orders as appropriate under the circumstances.

21. Third, the Debtors believe they have obtained a fair and reasonable price for the

Internet Numbers that constitutes reasonably equivalent value and fair consideration for the

Internet Numbers. The consideration agreed to in the Agreement is the result of a marketing

effort by Seller that targeted the likely interested parties in these assets and the culmination of

arm’s-length negotiations between Seller and the Purchaser. Seller diligently and in good faith

analyzed other available options in connection with the disposition of the Internet Numbers and

determined that the terms and conditions set forth in the Agreement are all fair and reasonable

and that the purchase price contemplated in the Agreements constitutes the highest or otherwise

best value available for such Internet Numbers.

22. Finally, the marketing and negotiation process satisfies the good faith requirement

of Abbotts Dairies. 788 F.2d at 149-50. The Debtor submits that the Agreement is the product

of good faith solicitation efforts and arm’s-length negotiations among Seller and the Purchaser

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with respect to the price and other terms of the Agreement. While there is limited public

precedent for the sale of the Internet Numbers that could be directly compared to the

Transaction, NNI has concluded that the price received by Seller for the Internet Numbers is

reasonable in light of prices charged by certain Internet service providers for Internet number

space, Nortel’s estimate of its own cost to transition from IPv4 to IPv6 (including hardware,

software and labor costs), internal and external projections of market conditions at and after IPv4

exhaustion, and the approximate amount of time until IPv4 numbers become obsolete.

B. The Sale of the Internet Numbers without Auction is Justified

23. Under Bankruptcy Rule 6004, a debtor may sell assets outside of the ordinary

course of business by private sale or public auction. See Fed. R. Bankr. P. 6004 (“All sales not

in the ordinary course of business may be by private sale or by public auction.”).

24. The Debtors believe that the sale of the Internet Numbers to the Purchaser without

an auction is the best way to maximize value for their estates. As described above, the proposed

Agreement is the result of an effort by Nortel to market the interests to numerous potential

bidders and the Purchaser was selected as the highest and best bidder following the marketing

process. Based on this marketing process, the Debtors have concluded that it is unlikely the

Debtors would realize a higher purchase price for the Internet Numbers that would warrant the

costs and delays associated with a further formal auction process.

C. The Purchasers Should be Granted the Protection of Bankruptcy Code Section

363(m)

25. As described above, the Seller and the Purchaser negotiated the Agreement in

good faith and at arm’s length. Accordingly, the Debtors maintain that the Purchaser is entitled

to the protections afforded by Bankruptcy Code section 363(m).

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 26. Specifically, Bankruptcy Code section 363(m) provides that:

[t]he reversal or modification on appeal of an authorization under subsection (b)

or (c) of this section of a sale or lease of property does not affect the validity of a
sale or lease under such authorization to an entity that purchased or leased such
property in good faith, whether or not such entity knew of the pendency of the
appeal, unless such authorization and such sale or lease were stayed pending
appeal.

11 U.S.C. § 363(m).

27. While the Bankruptcy Code does not define “good faith,” the Third Circuit in In

re Abbotts Dairies of Pa., Inc., has held that:

[t]he requirement that a purchaser act in good faith . . . speaks to the integrity of
his conduct in the course of the sale proceedings. Typically, the misconduct that
would destroy a purchaser’s good faith status at a judicial sale involves fraud,
collusion between the purchaser and other bidders or the trustee, or an attempt to
take grossly unfair advantage of other bidders.

788 F.2d at 147 (citations omitted); see generally Marin v. Coated Sales, Inc., (In re Coated

Sales, Inc.), Case No. 89-3704 (KMW), 1990 WL 212899 (S.D.N.Y. Dec. 13, 1990) (holding

that party, to show lack of good faith, must demonstrate “fraud, collusion, or an attempt to take

grossly unfair advantage of other bidders”); see also In re Sasson Jeans, Inc., 90 B.R. 608, 610

(S.D.N.Y. 1988) (quoting In re Bel Air Assocs., Ltd., 706 F.2d 301, 305 (10th Cir. 1983)); In re

Pisces Leasing Corp., 66 B.R. 671, 673 (E.D.N.Y. 1986) (examining facts of each case,

concentrating on “integrity of [an actor’s] conduct during the sale proceedings” (quoting In re

Rock Indus. Mach. Corp., 572 F.2d 1195, 1198 (7th Cir. 1978)).

28. The Seller and the Purchaser have spent a considerable amount of time and

resources over the past several weeks finalizing proposed sale terms for the Internet Numbers

and negotiating the Agreement at arm’s length, with give and take on both sides. All parties

have acted in good faith to advance their interests in this arm’s-length process.

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 29. Neither the Purchaser nor any of its affiliates is an “insider” of the Debtors as that

term is defined in section 101(31) of the Bankruptcy Code. Neither the Purchaser nor any of its

affiliates is (i) a mere continuation of the Debtors or their estates and there is no continuity

between the Purchaser and its affiliates and the Debtors or (ii) holding itself out to the public as a

continuation of the Debtors. The Transaction is not being undertaken for the purpose of escaping

liability for the Debtors’ debts. Under the circumstances, this Court should find that the

Purchaser is entitled to all of the protections of Bankruptcy Code section 363(m).

D. The Agreement is Not the Subject of Collusive Bidding Under Bankruptcy Code
Section 363(n)

30. As set forth above, Seller and the Purchaser have been negotiating at arm’s length

and in good faith regarding the Agreement. Moreover, the Debtors do not believe the Agreement

to be the result of collusion or other bad faith between bidders or that the price under the

Agreement has been or will be controlled by an agreement between potential or actual bidders

within the meaning of Bankruptcy Code section 363(n). The Debtors are not aware of any

agreement between Purchaser and any other entity relating to bidding for the Internet Numbers.

31. The Agreement has been negotiated, and proposed, and will be entered into by

Seller and the Purchaser without collusion, in good faith, and from arm’s-length bargaining

positions. Neither Seller nor the Purchaser nor any of their affiliates have engaged in any

conduct that could cause or permit the Agreement to be avoided under Bankruptcy Code section

363(n).

E. Sale of the Internet Numbers Should Be Free and Clear of Bankruptcy Claims

32. Pursuant to section 363(f) of the Bankruptcy Code, the Debtors seek authority to

transfer, convert, cancel or otherwise dispose of Seller’s right, interest and title in the Internet

14
Numbers to the Purchaser free and clear of all Interests, as defined in the Agreement and except

as set forth in the Agreement, with any Interests to attach to the proceeds of the sale of the

Internet Numbers as applicable, subject to any rights and defenses of the Debtors and other

parties in interest with respect thereto. Section 363(f) of the Bankruptcy Code provides, in

pertinent part:

The trustee may sell property under subsection (b) or (c) of this section
free and clear of any interest in such property of an entity other than the
estate, only if –

(1) applicable nonbankruptcy law permits sale of such property free

and clear of such interest;

(2) such entity consents;

(3) such interest is a lien and the price at which such property is to be
sold is greater than the aggregate value of all liens on such
property;

(4) such interest is in bona fide dispute; or

(5) such entity could be compelled, in a legal or equitable proceeding,

to accept a money satisfaction of such interest.

11 U.S.C. § 363(f). See also In re Elliot, 94 B.R. 343, 345 (E.D. Pa. 1988) (holding that section

363(f) is written in the disjunctive and thus, court may approve sale “free and clear” provided at

least one of the requirements is met).

33. With respect to each creditor that asserts an Interest, the Debtors submit that one

or more of the standards set forth in Bankruptcy Code § 363(f)(1)-(5) will be satisfied. Those

holders of Interests who do not object or who withdraw their objections to the Motion or the

Transaction will be deemed to have consented to the Motion and the Transaction pursuant to

Bankruptcy Code § 363(f)(2). The Debtors also submit that, for holders of Interests who do

15
object, their Interests will fall within one or more of the other subsections of Bankruptcy Code

section 363(f).

34. A sale free and clear of Interests is necessary to maximize the value of the

Internet Numbers. The Purchaser would not have entered into the Agreement and will not

consummate the Transaction if the Internet Numbers were not to be transferred to the Purchaser

free and clear of all Interests (except as permitted by the Agreement). A transfer of the Internet

Numbers other than one free and clear of all Interests would yield substantially less value for the

Debtors’ estates, with less certainty than the proposed Agreement. Therefore, the Transaction is

in the best interests of NNI and its estate and creditors, and all other parties in interest. A sale

free and clear of Interests is particularly appropriate under the circumstances because any lien or

claim in, to or against NNI’s right, interest and title in the Internet Numbers that exists

immediately prior to the relevant Closing for such Internet Numbers will attach to the proceeds

with the same validity, priority, force and effect as existed with respect to the Internet Numbers

at such time, subject to the rights and defenses of the Debtors or any party in interest. NNI

submits that holders of Interests, if any, will be adequately protected by the availability of the

proceeds of the Transaction to satisfy their claims and interests.

F. Filing of Schedule and Exhibits Under Seal

35. The Debtors respectfully submit that it is appropriate to allow the exhibits and

schedules to the Agreement (the “Schedules”) to be filed under seal. The Schedules contain

substantial sensitive commercial information concerning the Debtors’ business, records and

related documentation, including without limitation the individual Internet Numbers that are

subject to the Transaction, the public disclosure of which could lead to devaluation of the

Internet Numbers based on inappropriate use of such internet numbers by third parties.

16
 36. The relief requested is squarely authorized under the Bankruptcy Code. Section

107(b) of the Bankruptcy Code provides bankruptcy courts with the power to issue orders to

protect a party’s confidential, commercial or proprietary information

On request of a party in interest, the bankruptcy court shall . . .

protect an entity with respect to a trade secret or confidential
research, development, or commercial information . . . .

11 U.S.C. § 107(b).

37. Furthermore, Bankruptcy Rule 9018 defines the procedure by which a party may

move for relief under section 107(b) of the Bankruptcy Code:

On motion or on its own initiative, with or without notice, the court

may make any order which justice requires . . . to protect the estate
or any entity in respect of a trade secret or other confidential
research, development, or commercial information . . . .

Fed. R. Bankr. P. 9018.

38. This Court has defined “commercial information” in the context of section 107(b)

as follows:

Commercial information is information which would result in ‘an

unfair advantage to competitors by providing them information as
to the commercial operations of the debtor.’

In re Alterra Healthcare Corp., 353 B.R. 66, 75-76 (Bankr. D. Del. 2006) (citing In re Orion

Pictures Corp., 21 F.3d 24, 27-28 (2d Cir. 1994)). This Court has also explained that section

107(b)’s exception to usual public disclosure mandated by section 107(a) is “intended to avoid

‘affording an unfair advantage to competitors by providing them information as to the

commercial operations of the debtor.’” In re MUMA Services Inc., 279 B.R. 478, 484 (Bankr.

Del. Del. 2002) (citing In re Itel Corp., 17 B.R. 942, 944 (B.A.P. 9th Cir. 1982).

17
 39. Disclosure of this confidential commercial information would be damaging to the

Debtors and the Purchaser if it is disclosed to their competitors. The filing of the Schedules

under seal is in the best interests of the Debtors and their estates, creditors, and interest holders

and all other parties in interest herein.

Notice

40. Notice of the Motion has been given via first class mail, facsimile, electronic

transmission, hand delivery or overnight mail to (i) the Office of the U.S. Trustee; (ii) counsel to

the Committee; (iii) counsel to the Bondholder Group; (iv) counsel to the Purchaser; (v) all

parties to any transition services or similar agreement pursuant to which any of the Internet

Numbers are being used to provide services; (vi) the American Registry for Internet Numbers,

(“ARIN”) and (vii) the general service list established in these chapter 11 cases. The Debtors

submit that under the circumstances no other or further notice is necessary.

No Prior Request

41. No prior request for the relief sought herein has been made to this or any other

court.

WHEREFORE, the Debtors respectfully request that this Court (i) grant this

Motion and the relief requested herein; (ii) enter the proposed order attached hereto; and

(iii) grant such other and further relief as it deems just and proper.

Dated: March 21, 2011 CLEARY GOTTLIEB STEEN & HAMILTON LLP
Wilmington, Delaware
James L. Bromley (admitted pro hac vice)
Lisa M. Schweitzer (admitted pro hac vice)
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999

18
 - and -

MORRIS, NICHOLS, ARSHT & TUNNELL LLP

___/s/ Alissa T. Gazze_________________________

Derek C. Abbott (No. 3376)
Eric D. Schwartz (No. 3134)
Ann C. Cordo (No. 4817)
Alissa T. Gazze (No. 5338)
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989

Counsel for the Debtors

and Debtors in Possession

19
 Exhibit A

Proposed Order
 IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

----------------------------------------------------------------
X
:
In re : Chapter 11
:
Nortel Networks Inc., et al.,1 : Case No. 09-10138 (KG)
:
Debtors. : Jointly Administered
:
: RE: D.I. ______
:
----------------------------------------------------------------
X

ORDER (I) AUTHORIZING AND APPROVING THE SALE OF INTERNET

NUMBERS FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES
AND INTERESTS; (II) AUTHORIZING AND APPROVING ENTRY INTO A
PURCHASE AND SALE AGREEMENT; (III) AUTHORIZING THE FILING OF
CERTAIN DOCUMENTS UNDER SEAL AND (IV) GRANTING RELATED RELIEF

Upon the motion, (the “Motion”) dated March 21, 2011, of Nortel Networks, Inc.

(“NNI”) as debtor and debtor-in-possession in the above-captioned chapter 11 case, for the entry

of an order, as more fully described in the Motion, pursuant to sections 105, 107(b)(1) and 363 of

title 11 of the United States Code (the “Bankruptcy Code”), Rules 2002, 6004 and 9018 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rules 6004-1 and 9018-

1(b) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy

Court for the District of Delaware (the “Local Rules”) (i) authorizing the sale, assignment and

transfer of all of NNI’s right, title and interest in and to approximately 666,624 legacy IPv4

1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s tax identification
number, are: Nortel Networks Inc. (6332), Nortel Networks Capital Corporation (9620), Nortel Altsystems Inc.
(9769), Nortel Altsystems International Inc. (5596), Xros, Inc. (4181), Sonoma Systems (2073), Qtera Corporation
(0251), CoreTek, Inc. (5722), Nortel Networks Applications Management Solutions Inc. (2846), Nortel Networks
Optical Components Inc. (3545), Nortel Networks HPOCS Inc. (3546), Architel Systems (U.S.) Corporation (3826),
Nortel Networks International Inc. (0358), Northern Telecom International Inc. (6286), Nortel Networks Cable
Solutions Inc. (0567) and Nortel Networks (CALA) Inc. (4226). Addresses for the Debtors can be found in the
Debtors’ petitions, which are available at http://dm.epiq11.com/nortel.
numbers (as described further in the Agreement, the “Internet Numbers”) on an “as-is” and

“where-is” basis, free and clear of all Liens,2 Claims, encumbrances and interests, other than

Assumed Liabilities, Permitted Encumbrances or Liens created by or through the Purchaser or

any of its Affiliates, or as otherwise provided in the Agreement (collectively, the “Interests”)

pursuant to section 363 of the Bankruptcy Code (the “Transaction”), (ii) authorizing and

approving entry into that certain purchase and sale agreement dated as of March 16, 2011 among

NNI (the “Seller”) and Microsoft Corporation (the “Purchaser”) for the sale, assignment and

transfer of the Internet Numbers as described therein, substantially in the form attached to the

Motion as Exhibit B (the “Agreement”), (iii) authorizing the filing of certain documents under

seal and (iv) granting such other and further relief as the Court deems just and proper; and a

hearing having been held on [●], 2011 in connection with the Motion (the “Hearing”); and all

parties in interest having been heard, or having had the opportunity to be heard, regarding the

relief requested in the Motion; and the Court having considered (x) the Motion, (y) the

objections, if any, to the Motion and (z) the arguments made and evidence proffered or adduced

in support of the Motion at the Hearing; and it appearing that entry of this Order is in the best

interests of the Debtors and their estates; and after due deliberation and good and sufficient cause

appearing therefor,

2
Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement.

2
 IT IS HEREBY FOUND AND DETERMINED THAT:3

A. This Court has jurisdiction over these chapter 11 cases, over the Motion as

a core proceeding and over the parties and property affected hereby under 28 U.S.C. §§ 157(b)

and 1334. Venue is proper in this Court under 28 U.S.C. §§ 1408 and 1409.

B. This Order constitutes a final and appealable order within the meaning of

28 U.S.C. § 158(a).

C. Notice of the Motion has been given via first class mail, facsimile,

electronic transmission, hand delivery or overnight mail to (i) the U.S. Trustee; (ii) counsel to the

Committee; (iii) counsel to the Bondholder Group; (iv) the Purchaser; (v) the American Registry

for Internet Numbers (“ARIN”), (vi) all parties to any transition services or similar agreement

pursuant to which any of the Internet Numbers are being used to provide services; and (vii) the

general service list established in these chapter 11 cases. The notice given by the Debtors of the

Motion, the Hearing and the relief being requested constitutes appropriate notice under the

circumstances and complies with sections 107(b) and 363 of the Bankruptcy Code, Bankruptcy

Rules 2002, 6004 and 9018 and Local Rules 6004-1 and 9018-1(b).

E. Based upon the affidavits of service filed with the Court: (a) notice and

service of the Motion was adequate and sufficient under the circumstances of these chapter 11

cases and these proceedings and complied with the various applicable requirements of the

Bankruptcy Code and the Bankruptcy Rules; and (b) a reasonable opportunity to object and be

heard with respect to the Motion and the relief requested therein was afforded to all interested

persons and entities.

3
Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as
findings of fact when appropriate. See Fed. R. Bankr. P. 7052.

3
 F. Neither the Purchaser nor any of its affiliates is an “insider” of the Debtors

as that term is defined in section 101(31) of the Bankruptcy Code. The Purchaser negotiated the

terms and conditions of the Agreement in good faith and at arm’s length with the Seller. The

Purchaser is a “good faith” purchaser within the meaning of section 363(m) of the Bankruptcy

Code and is, therefore, entitled to the protections afforded thereby. Neither the Seller nor the

Purchaser nor any of their affiliates has engaged in any conduct that would cause or permit the

Transaction to be avoidable under Section 363(n) of the Bankruptcy Code.

G. The legal and factual bases set forth in the Motion and the record in these

proceedings establish just cause for the relief requested therein, and that such relief is in the best

interests of the Debtors, their estates and creditors, and all other parties in interest.

H. The Debtors have demonstrated good, sufficient and sound business

purpose and justification for entering into the Agreement and consummating the Transaction

because, among other things, the Seller and its advisors diligently and in good faith analyzed all

available options in connection with the disposition of the Internet Numbers, initiated and

conducted a competitive bidding process under which the Purchaser was the winning bidder, and

determined that (i) the terms and conditions set forth in the Agreement and (ii) the sale,

assignment and transfer of the Internet Numbers in exchange for the purchase price, as more

fully described in Agreement, are all fair and reasonable and together constitute the highest or

otherwise best value obtainable for such Internet Numbers.

I. The Agreement was negotiated and has been and is undertaken by the

Debtors and the Purchaser at arm’s length, without collusion or fraud, and in good faith within

4
the meaning of Bankruptcy Code section 363(m). As a result of the foregoing, the Debtors and

the Purchaser are entitled to the protections of section 363(m) of the Bankruptcy Code.

J. The Purchaser would not have entered into the Agreement and would not

consummate the Transaction if the sale, transfer and assignment of the Internet Numbers to the

Purchaser was not free and clear of all Interests pursuant to section 363(f) of the Bankruptcy

Code. A sale, assignment and transfer of the Internet Numbers other than one free and clear of

Interests would yield substantially less value for the Debtors’ estates, with less certainty, than the

Transaction. Therefore, the Transaction contemplated by the Agreement is in the best interests

of NNI and its estate and creditors, and all other parties in interest.

K. The consideration to be paid by Purchaser for the Internet Numbers under

the Agreement and the terms and conditions thereunder constitute transfers for reasonably

equivalent value and fair consideration and may not be avoided under section 363(n) of the

Bankruptcy Code.

L. The Internet Numbers are property of the Seller’s bankruptcy estate. No

consents or approvals are required for the Seller to enter into the Agreement, to transfer the

Internet Numbers to the Purchaser or to consummate the Transaction other than entry of this

Order and as set forth in the Agreement. The execution of the Agreement by the Seller will not

constitute a violation of any provision of either the organizational documents of the Seller or any

other instrument, law, regulation or ordinance under which the Seller is bound. Upon entry of

this Order, the Seller has full corporate power and authority to execute the Agreement.

M. Upon entry of this Order, the Agreement shall be a legal, valid and

binding contract between the Seller and the Purchaser and is enforceable against the Seller and

the Purchaser in accordance with its terms.

5
 N. Upon entry of this Order, (i) no further action is required under the

Bankruptcy Code for the Seller to consummate the Transaction pursuant to the Agreement and

(ii) the consummation of the Transaction pursuant to the Agreement will be legal, valid and

properly authorized under all applicable provisions of the Bankruptcy Code, including

sections 105(a), 363(b), 363(f) and 363(m), and all of the applicable requirements of such

sections have been complied with in respect of the Transaction.

O. The Internet Numbers will be transferred, converted, cancelled or

otherwise disposed of free and clear of Interests pursuant to the terms of the Agreement because,

with respect to each person or entity asserting an interest in the Internet Numbers, one or more of

the standards set forth in section 363(f) have been satisfied. All holders of Interests who did not

object to the Motion and the relief requested therein, or who withdrew any objections to the

Motion and the relief requested therein, are deemed to have consented to the Transaction

pursuant to section 363(f)(2) of the Bankruptcy Code. Those holders Interests who did object

fall within one or more of the other subsections of section 363(f), and all holders of Liens are

adequately protected by having their Liens, if any, attach to the cash proceeds of the Transaction

attributable to the Internet Numbers against or in which they claim an interest, with the same

priority, validity, force and effect as they attached to such property immediately before the

Closing of the Transaction relating to such Internet Asset.

P. The Schedules contain substantial sensitive commercial information

concerning the Debtors’ business, records and related documentation, including without

limitation the individual Internet Numbers that are subject to the Transaction, the public

disclosure of which could lead to devaluation of the Internet Numbers based on inappropriate use

6
of such internet numbers by third parties. Filing the Schedules to the Sale Agreement under seal

is in the best interests of the Debtors, their estates, creditors and other parties-in-interest.

NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that:

1. The Motion is granted.

2. All objections, if any, to the entry of this Order are overruled to the extent

not otherwise withdrawn or resolved as set forth on the record of the Hearing.

3. The Agreement and all of the terms and conditions thereof are hereby

approved. The Debtors are authorized and directed to consummate the Transaction as provided

in the Agreement. Without limiting the foregoing, the Debtors are authorized to take all actions

as may be reasonably requested by the Purchaser that may be reasonably necessary or

appropriate to the performance of the obligations as contemplated by the Agreement or to

effectuate the relief granted pursuant to this Order.

4. The Agreement is legal, valid and effective under the Bankruptcy Code.

Pursuant to the Agreement and to section 363(f) of the Bankruptcy Code, the Internet Numbers

shall be transferred, assigned and otherwise disposed of to the Purchaser (or its designated

assignee, as permitted by the Agreement (the “Assignee”)) free and clear of all Interests, whether

known or unknown, contingent or otherwise, whether arising prior to or subsequent to the

commencement of the Debtors’ chapter 11 cases, and whether imposed by agreement,

understanding, law, equity or otherwise. Upon the consummation of the Transaction, the

Purchaser or the Assignee shall be vested with all of the Seller’s right, title and interest in and to

the Internet Numbers, free and clear of all Interests. Any and all Liens shall attach to the net

proceeds of the Transaction contemplated in the Agreement, with the same priority, validity,

7
force and effect as they now have against the Internet Numbers and subject to any rights, claims

or defenses of the Debtors or their estates with respect thereto.

5. The provisions of this Order are nonseverable and mutually dependent.

6. Nothing in this Order shall be deemed to waive, release, extinguish or

estop the Debtors or their estates from asserting or otherwise impair or diminish any right

(including without limitation any right of recoupment), claim, cause of action, defense, offset or

counterclaim in respect of any asset that is not an Internet Number.

7. Except with respect to enforcing the terms of the Agreement, absent a stay

pending appeal, no person or entity shall take any action to prevent, enjoin or otherwise interfere

with consummation of the Transaction contemplated in or by the Agreement or this Order.

8. The Agreement may be amended, modified or supplemented, or the

provisions thereof waived, in accordance with the terms thereof without further order of this

Court or notice thereof to any party in interest in the Debtors’ chapter 11 cases, provided,

however, that further order of this Court shall be required if there is an amendment, modification,

supplement or waiver to the Agreement that has a material and adverse impact on the Seller;

provided further that no such modifications, amendments, or supplements may be made except

following two (2) days written notice to, or the prior consent of, the counsel to the Committee,

Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, NY 10036 (Attention: Fred

S. Hodara, Stephen Kuhn, and Kenneth Davis) and the counsel to the Bondholder Group,

Milbank, Tweed, Hadley & McCloy, One Chase Manhattan Plaza, New York, New York, 10006

(Attention: Albert A. Pisa and Thomas J. Matz).

9. In the absence of a stay of the effectiveness of this Order, in the event that

the Purchaser and the Seller consummate the Transaction contemplated by the Agreement at any

8
time after entry of this Order, then with respect to the Transaction approved and authorized

herein, the Purchaser or Assignee, as arm’s-length purchaser in good faith within the meaning of

section 363(m) of the Bankruptcy Code, shall be entitled to all of the protections of

section 363(m) of the Bankruptcy Code in the event this Order or any authorization contained

herein is reversed or modified on appeal.

10. Each and every federal, state, and local governmental agency or

department is hereby authorized to accept any and all documents and instruments necessary and

appropriate to consummate the Transaction contemplated by the Agreement.

11. The failure specifically to include any particular provision of the

Agreement in this Order shall not diminish or impair the effectiveness of such provision, it being

the intent of the Court that the Agreement be authorized and approved in its entirety.

12. The Court shall retain exclusive jurisdiction to (i) interpret, construe and

enforce the provisions of the Agreement, all amendments thereto, any waivers and consents

thereunder, and each of the agreements executed in connection therewith and this Order in all

respects, in each case solely to the extent such interpretation, construction or enforcement

pertains to a Debtor and (ii) hear and determine any and all disputes arising under or related to

the Agreement or the Transaction, except as otherwise provided in the Agreement, and solely to

the extent that a Debtor is directly involved in such dispute.

13. The terms of this Order and the Agreement shall be binding on and inure

to the benefit of the Debtors, all stakeholders (whether known or unknown) of the Debtors, the

Purchaser, the Assignee, the Debtors’ creditors and all other parties in interest, including all

persons served with notice of the Motion pursuant to Paragraph C above, and any successors of

the Debtors, the Purchaser and the Assignee (if any), and the Debtors’ creditors, including any

9
trustee or examiner appointed in these cases or any subsequent or converted cases of the Debtors

under chapter 7 or chapter 11 of the Bankruptcy Code.

14. Nothing contained in any plan confirmed in this case or any order of the

Court confirming such plan shall conflict with or derogate from the provisions of the Agreement

or the terms of this Order.

15. The failure to include any particular provision of the Agreement in this

Order shall not diminish or impair the effectiveness of that provision, it being the intent of the

Court and the parties that the Agreement be approved and authorized in its entirety.

16. Any conflict between the terms and provisions of this Order and the

Agreement shall be resolved in favor of this Order.

17. The Debtors are hereby authorized to perform each of their covenants and

undertakings as provided in the Agreement prior to the final Closing Date without further order

of the Court.

18. The Schedules delivered to the Court by the Debtors shall be kept

segregated and under seal by the Clerk of Court and shall not be made publicly available

pursuant to sections 105(a) and 107(b) of the Bankruptcy Code, Bankruptcy Rule 9018 and

Local Rule 9018-1(b).

10
 19. Pursuant to Bankruptcy Rule 6004(h), this Order is stayed until the

expiration of 14 days after entry hereof. Thereafter, the Agreement shall be effective and

enforceable by and against the Seller and the Purchaser, and the Debtors are authorized to take

all steps necessary to consummate the Transaction contemplated in the Agreement.

Dated: ______________, 2011

Wilmington, Delaware

______________________________________
THE HONORABLE KEVIN GROSS
UNITED STATES BANKRUPTCY JUDGE

11
 Exhibit B

Purchase and Sale Agreement

 ASSET SALE AGREEMENT

BY AND AMONG

NORTEL NETWORKS INC.

AND

MICROSOFT CORPORATION

DATED AS OF March 16, 2011

EXECUTION COPY
ARTICLE I INTERPRETATION ..................................................................... 1
SECTION 1.1I. Definitions...................................................................1.
SECTION 1.2. Interpretation .................................................................. 7
ARTICLE II PURCHASE AND SALE OF LEGACY NUMBER BLOCKS ..................... 7
SECTION 2. 1. Purchase and Sale............................................................. 7
SECTION 2.2. Purchase Price ................................................................. 8
SECTION 2.3. Closing........................................................................ 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......... 11
SECTION 3. 1. Organization and Corporate Power.......................................11I
SECTION 3.2. Authorization; Binding Effect; No Breach ............................... 12
SECTION 3.3. Purchaser's Acknowledgments; Exclusivity of Representations
and Warranties ............................................................... 12
SECTION 3.4. Brokers ....................................................................... 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER ............... 13
SECTION 4. 1. Organization and Corporate Power ........................................ 14
SECTION 4.2. Authorization; Binding Effect; No Breach ................................ 14
SECTION 4.3. Internet Protocol Addresses. To the Knowledge of the Seller: ........ 14
SECTION 4.4. Litigation..................................................................... 15
SECTION 4.5. Taxes.......................................................................... 15
SECTION 4.6. Exclusivity ................................................................... 16
ARTICLE V COVENANTS AND OTHER AGREEMENTS...................................... 16
SECTION 5. 1. Bankruptcy Actions ......................................................... 16
SECTION 5.2. Consultation; Notification .................................................. 16
SECTION 5.3. Pre-Closing Cooperation.................................................... 17
SECTION 5.4. Public Announcements...................................................... 17
SECTION 5.5. Further Actions .............................................................. 17
SECTION 5.6. Transaction Expenses ....................................................... 18
SECTION 5.7. Confidentiality ............................................................... 18
SECTION 5.8. No Solicitation of Transactions ............................................ 18
ARTICLE VI TAX MATTERS........................................................................ 18
SECTION 6. 1. Transfer Taxes ............................................................... 18
SECTION 6.2. Reserved...................................................................... 20
SECTION 6.3. Tax Characterization of Payments Under This Agreement............. 20

i
 SECTION 6.4. Apportionment of Taxes .................................................... 20
SECTION 6.5. Records....................................................................... 21
SECTION 6.6. Tax Disclosure............................................................... 21
SECTION 6.7. Tax Returns .................................................................. 21
ARTICLE VII CONDITIONS TO THE CLOSING................................................. 22
SECTION 7. 1. Conditions to Each Party's Obligation .................................... 22
SECTION 7.2. Conditions to Seller's Obligation .......................................... 23
SECTION 7.3. Conditions to Purchaser's Obligation...................................... 24
ARTICLE VIII TERMINATION...................................................................... 25
SECTION 8. 1. Termination.................................................................. 25
SECTION 8.2. Effects of Termination ...................................................... 26
SECTION 8.3. Failed Subsequent Transfers................................................ 26
ARTICLE IX MISCELLANEOUS.................................................................... 27
SECTION 9. 1. No Survival of Representations and Warranties or Covenants......... 27
SECTION 9.2. Remedies..................................................................... 27
SECTION 9.3. No Third-Party Beneficiaries............................................... 27
SECTION 9.4. Consent to Amendments; Waivers......................................... 27
SECTION 9.5. Successors and Assigns..................................................... 27
SECTION 9.6. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial........................................................................... 28
SECTION 9.7. Notices........................................................................ 29
SECTION 9.8. Exhibits; Seller Disclosure Schedule ...................................... 30
SECTION 9.9. Counterparts ................................................................. 30
SECTION 9. 10. No Presumption.............................................................. 30
SECTION 9.11. Severability................................................................... 31
SECTION 9.12. Headings...................................................................... 31
SECTION 9.13. Entire Agreement ............................................................ 31
SECTION 9.14. Availability of Equitable Relief; Limitation on Damages .............. 31
 ASSET SALE AGREEMENT

This Asset Sale Agreement is dated as of March 16, 2011, between Nortel Networks Inc.,
a corporation organized under the laws of Delaware (the "Seller" or "NNI") and Microsoft
Corporation, a corporation organized under the laws of the State of Washington (the
"Purchaser").

WITNESS ETH:

WHEREAS, the Seller is a debtor-in-possession under the Bankruptcy Code (as defined
below), and commenced its case under Chapter 11 of the Bankruptcy Code on the Petition Date
(as defined below) by filing a voluntary petition for relief in the Bankruptcy Court for the
District of Delaware (the "Chapter 11 Case");

WHEREAS, the Seller has agreed to transfer to the Purchaser, and the Purchaser has
agreed to purchase and assume, including, to the extent applicable, pursuant to section 363 of the
Bankruptcy Code, the Legacy Number Blocks and the Assumed Liabilities (each as defined
below) from the Seller, upon the terms and conditions set forth hereinafter;

WHEREAS, the Parties (as defined below) acknowledge and agree that the purchase by
the Purchaser of the Legacy Number Blocks and the assumption by the Purchaser of the
Assumed Liabilities (as defined below) are being made at arm's length and in good faith and
without intent to hinder, delay or defraud creditors of the Seller and its affiliates.

NOW, THEREFORE, in consideration of the respective covenants, representations and

warranties made herein, and of the mutual benefits to be derived hereby (the sufficiency of which
is acknowledged), the Parties agree as follows:

ARTICLE I
INTERPRETATION

SECTION 1.1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth below:

"Accounting Arbitrator"means the auditing firm of international reputation that is Gi)

jointly selected by the Parties, or (ii) in case they cannot agree on any such firm, such other
auditing firm of international reputation (or, if the Parties agree on other criteria, such Person as
satisfies such other criteria) that is selected by the American Arbitration Association at the
request of the first of the Parties to move.

"Acquisition Proposal" has the meaning set forth in Section 5.8.

"Action" means any litigation, action, suit, charge, binding arbitration, or other legal,
administrative or judicial proceeding.

"Affiliate" means, as to any Person, any other Person that directly or indirectly through
one or more intermediaries Controls, or is under common Control with, or is Controlled by, such
Person.
 "Agreement" means this Asset Sale Agreement, the Seller Disclosure Schedule and all
Exhibits and Schedules attached hereto and thereto and all amendments hereto and thereto made
in accordance with Section 9.4.

"Alternative Transaction" means the sale, transfer or other disposition, directly or

indirectly, of all or substantially all of the Legacy Number Blocks, in a transaction or a series of
transactions with one or more Persons other than the Purchaser and/or its Affiliates.

"Assumed Liabilities" has the meaning set forth in Section 2.1.3.

"Bankruptcy Code" means Title I11 of the United States Code.

"Bankruptcy Consent" has the meaning set forth in Section 4. 1(a).

"Bankruptcy Court" means the United States Bankruptcy Court for the District of
Delaware.

"Bankruptcy Proceedings" means the Chapter 11 Case and any proceedings occurring
or authorized thereunder, as well as any other voluntary or involuntary bankruptcy, insolvency,
administration or similar judicial or other proceedings concerning the Seller or its Affiliates that
are held from time to time.

"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and the local
rules of the Bankruptcy Court.

"Business Day" means a day on which the banks are opened for business (Saturdays,
Sundays, statutory and civic holidays excluded) in New York, New York, United States.

"Chapter 11 Case" has the meaning set forth in the recitals to this Agreement.

"Claim" has the meaning set forth in section 10 1(5) of the Bankruptcy Code.

"Closing" has the meaning set forth in Section 2.3. 1.

"Closing Date" has the meaning set forth in Section 2.3. 1.

"Code" means the United States Internal Revenue Code of 1986, as amended.

"Consent" means any approval, authorization, consent, order, license, permission,

permit, qualification, exemption or waiver by any Government Entity or other Third Party.

"Contract" means any written binding contract, agreement, instrument, lease, ground
lease or commitment.

"Control", including, with its correlative meanings, "Controlled by" and "under common
Control with", means, in connection with a given Person, the possession, directly or indirectly, of
the power to either (i) elect more than fifty percent (50%) of the directors of such Person or (ii)
direct or cause the direction of the management and policies of such Person, whether through the
ownership of securities, contract or otherwise.

"Designated Courts" has the meaning set forth in Section 9.6(b).

"Escrow Account" means the escrow account holding the Good Faith Deposit and
Subsequent Purchase Price to be set up by the Escrow Agent pursuant to the Escrow Agreement.

"Escrow Agent" means Wells Fargo Bank, National Association.

"Escrow Agreement" means the escrow agreement among the Seller, the Purchaser and
the Escrow Agent to be entered into substantially in the form of Exhibit D hereto in accordance
with Section 2.2.4(a).

"Excluded Assets" has the meaning set forth in Section 2.1.2.

"Excluded Liabilities" has the meaning set forth in Section 2.1.4.

"Good Faith Deposit" has the meaning set forth in Section 2.2.2(a).

"Government Entity" means any U.S., supranational, foreign, domestic, federal,

territorial, provincial, state, municipal or local governmental authority, instrumentality, court,
government or commission or tribunal or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing.

"Initial Legacy Numbers" means the Legacy Number Blocks listed on Exhibit B.

"Initial Purchase Price" has the meaning set forth in Section 2.2. 1.

"Intentional Breach" means, with respect to an agreement, an action or omission

(including a failure to cure circumstances) that the breaching party knows or reasonably should
have known is or would result in a breach of the agreement.

"IPv4 Number Block" means a contiguous block of Internet Protocol Version 4

Numbers, commonly expressed as a Classless Inter-Domain Routing notation, e.g., A.B.C.D/X,
where A, B, C and D are numbers between 0 and 255 and X is a number between 0 and 32.

"IRS" means the United States Internal Revenue Service.

"Knowledge" or "aware of ' or "notice or ' or a similar phrase shall mean, with reference
to the Seller, the actual knowledge after due inquiry and investigation of those Persons listed on
Section 1.1(a) of the Seller Disclosure Schedule.

"Law" means any U.S., supranational, foreign, domestic, federal, territorial, state,
provincial, local or municipal statute, law, common law, ordinance, rule, regulation, order, writ,
injunction, directive, judgment, decree, policy or guideline having the force of law.

"Legacy Number Blocks" means the IPv4 Number Blocks listed on Exhibit A.
 "Liabilities" means debts, liabilities, commitments and obligations, whether accrued or
fixed, absolute or contingent, matured or unmnatured or determined or undeterminable, including
those arising under any Law or Action and those arising under any contract, agreement,
arrangement, commitment or undertaking or otherwise, including any Tax liability or tort
liability.

"Lien" means any lien, mortgage, pledge or security interest, hypothecation,

encumbrance, license, lease, lien or similar charge of any kind (including any conditional sale
arrangement or other title retention agreement or use right).

"Losses" means all losses, damages and reasonable and documented out-of-pocket costs
and expenses.

"Material Adverse Effect" means any circumstance, state of fact, event, change or effect
(each an "Effect") that, individually or in the aggregate with all other Effects, (a) has, or would
reasonably be expected to have, a material adverse effect on the Legacy Number Blocks, taken
as a whole, or (b) prevents or materially impedes or delays or would reasonably be expected to
prevent or materially impede or delay the ability of the Seller to performn its obligations under
this Agreement or the timely consummation of the transactions contemplated by this Agreement,
provided, however that any Effect to the extent arising out of or resulting from the following,
either alone or in combination, shall not be considered in determining whether there has been a
"Material Adverse Effect": (i) Effects resulting from changes in general economic conditions in
any jurisdiction worldwide; (ii) Effects arising from the execution or delivery of this Agreement
or the public announcement thereof; (iii) Effects that result from any action required to be taken
pursuant to this Agreement or any action taken pursuant to the written request or with the prior
written consent of the Purchaser; (iv) Effects relating to the industries and markets to which the
Legacy Number Blocks relate; (v) Effects relating to changes in Law, generally accepted
accounting principles or official interpretations of the foregoing; and (vi) Effects relating to the
pendency of the Bankruptcy Proceedings and any action approved by, or motion made before,
the Bankruptcy Court or any other court overseeing the Bankruptcy Proceedings.

"New York Courts" has the meaning set forth in Section 9.6(b).

"NNI" has the meaning set forth in the preamble to this Agreement.

"Non-Disclosure Agreement" means the non-disclosure agreement by and among the

Purchaser and NMI, dated December 20, 2010, as well as any exhibits and amendments thereto.

"Party" or "Parties" means individually or collectively, as the case may be, the Seller
and the Purchaser.

"Permitted Encumbrances" means statutory Liens for Taxes or governmental

assessments, charges or claims the payment of which is not yet due, or for Taxes the validity of
which are being contested in good faith by appropriate proceedings.

"Person" means an individual, a partnership, a corporation, an association, a limited or

unlimited liability company, a joint stock company, a trust, a joint venture, an unincorporated
organization or other legal entity or Government Entity.
 "Petition Date" has the meaning set forth in the recitals to this Agreement.

"Post-Closing Taxable Period" means any taxable period or portion thereof beginning
after the Closing Date (or Subsequent Transfer Date, as applicable).

"Pre-Closing Taxable Period" means any taxable period or portion thereof ending on or
prior to the Closing Date (or Subsequent Transfer Date, as applicable).

"Gross Purchase Price" has the meaning set forth in Section 2.2. 1.

"Purchaser"has the meaning set forth in the preamble to this Agreement.

"Sale Order" means an order (or orders) of the Bankruptcy Court, which has been
entered on the Bankruptcy Court docket, in form and substance reasonably acceptable to the
Purchaser, approving this Agreement, the transactions contemplated under the Transaction
Documents and all of the terms and conditions thereof, and approving and authorizing NNI to
consummate the transactions contemplated thereby. Without limiting the generality of the
foregoing, such order shall find and provide, unless otherwise agreed between the parties and
among other things, that (i) notice of the proposed sale was duly provided in accordance with the
Bankruptcy Code to all creditors and parties-in-interest, to all existing buyers of NNI's business
units pursuant to sales conducted since the Petition Date, and to the American Registry for
Internet Numbers ("ARIN"); (ii) the Legacy Number Blocks are property of NNI's bankruptcy
estate; (iii) the Legacy Number Blocks shall be sold, assumed, assigned and transferred to the
Purchaser free and clear of all Liens, claims and interests to the fullest extent permitted by
section 363 of the Bankruptcy Code; (iv) the sale will vest the Purchaser with all of NNM's right,
title and interest in and to the Legacy Number Blocks; (v) the Purchaser has acted in "good faith"
within the meaning of section 363(m) of the Bankruptcy Code; (vi) this Agreement was
negotiated, proposed and entered into by the parties without collusion, in good faith and from
arm's length bargaining positions; (vii) no Consents are required; and (viii) the Bankruptcy
Court shall retain jurisdiction to resolve any controversy or claim arising out of or relating to this
Agreement, or the breach thereof.

"SEC" means the Securities and Exchange Commission.

"Securities Disclosure Documents" has the meaning set forth in the first sentence of
Article IV.

"Seller" has the meaning set forth in the preamble to this Agreement.

"Seller Disclosure Schedule" means the disclosure schedule delivered by the Seller to
Purchaser on the date hereof.

"Software" means any computer programs, applications and interfaces, whether in

source code or object code, and all related documentation, user and operational guides and/or
manuals.

"Straddle Period" has the meaning set forth in Section 6.4(b).

 "Subsequent Legacy Numbers" means the Legacy Number Blocks listed on Exhibit C.

"Subsequent Purchase Price" has the meaning set forth in Section 2.2.3(a).

"Subsequent Transfer" has the meaning set forth in Section 2.3.3(a).

"Subsequent Transfer Date" has the meaning set forth in Section 2.3.3(a).

"Subsidiary" of any Person means any Person Controlled by such first Person.

"Tax" means (a) any domestic or foreign federal, state, local, provincial, territorial or
municipal taxes or other impositions by or on behalf of any Government Entity, including the
following taxes and impositions: net income, gross income, individual income, capital, value
added, goods and services, harmonized sales, gross receipts, sales, use, ad valorem, business
rates, transfer, franchise, profits, business, environmental, real property, personal property,
service, service use, withholding, payroll, employment, unemployment, severance, occupation,
social security, excise, stamp, stamp duty reserve, customs, and all other taxes, fees, duties,
assessments, deductions, withholdings or charges of the same or of a similar nature, however
denominated, together with any interest and penalties, additions to tax or additional amounts
imposed or assessed with respect thereto whether or not disputed, and (b) any obligation to pay
any amounts set forth in clause (a) with respect to another Person, whether by contract, by reason
of law, as a result of transferee or successor liability, as a result of being or ceasing to be a
member of an affiliated, consolidated, combined or unitary group or otherwise for any period.

"Tax Authority" means any local, municipal, governmental, state, provincial, territorial,
federal, including any U.S. or other fiscal, customs or excise authority, body or officials (or any
entity or individual acting on behalf of such authority, body or officials) anywhere in the world
with responsibility for, and competent to impose, collect or administer, any form of Tax.

"Tax Returns" means all returns, reports (including any amendments, elections,
declarations, disclosures, claims for refunds, schedules, estimates and information returns) and
other information filed or required to be filed with any Tax Authority relating to Taxes.

"Third Party" means any Person other than the Parties and their representatives, and the
Escrow Agent.

"Transaction Documents" means this Agreement and all other ancillary agreements to
be entered into, or documentation delivered by, any Party pursuant to this Agreement.

"Transfer Taxes" means all sales and use, and all other similar Taxes, together with
interest, penalties and additional amounts imposed with respect thereto whether or not disputed.

"Transfer Tax Return" has the meaning set forth in Section 6.7.

"Transition Services Agreements" has the meaning set forth in Section 4.3(d).
SECTION 1.2. Interpretation.

1.2.1 Gender and Number. Any reference in this Agreement to gender includes all
genders and words importing the singular include the plural and vice versa.

1.2.2 Certain Phrases and Calculation of Time. In this Agreement (i) the words
"including" and "includes"~ mean "including (or includes) without limitation", (ii) the terms
"hereof, "...herein,"and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified, (iii) in the
computation of periods of time from a specified date to a later specified date, unless otherwise
expressly stated, the word "from" means "from but excluding" and the words "to" and "until"
each mean "to and including", and (iv) the words "date hereof' or "date of this Agreement" shall
mean March 16, 2011. If the last day of any such period is not a Business Day, such period will
end on the next Business Day. When calculating the period of time "within" which, "prior to" or
"following" which any act or event is required or permitted to be done, notice given or steps
taken, the date which is the reference date in calculating such period is excluded from the
calculation. If the last day of any such period is not a Business Day, such period will end on the
next Business Day.

1.2.3 Headings. etc. The inclusion of a table of contents, the division of this Agreement
into Articles and Sections and the insertion of headings are for convenient reference only and are
not to affect or be used in the construction or interpretation of this Agreement.

1.2.4 Currency and Calculations. All monetary amounts in this Agreement, unless
otherwise specifically indicated, are stated in United States currency. All calculations and
estimates to be performed or undertaken, unless otherwise specifically indicated, are to be
expressed in United States currency. All payments required under this Agreement shall be paid
in United States currency in immediately available funds, unless otherwise specifically indicated.
Where another currency is to be converted into United States currency it shall be converted on
the basis of the exchange rate published in the Wall Street Journal, Eastern Edition for the day in
question.

1.2.5 Statutory References. Unless otherwise specifically indicated, any reference to a

statute in this Agreement refers to that statute and to the regulations made under that statute as in
force from time to time.

ARTICLE II
PURCHASE AND SALE OF LEGACY NUMBER BLOCKS

SECTION 2. 1. Purchase and Sale.

2.1.1 Legacy Number Blocks. Subject to the terms and conditions of this Agreement, at
the Closing (with regard to the Initial Legacy Numbers) and the Subsequent Transfer Dates (with
regard to the Subsequent Legacy Numbers), the Purchaser shall purchase from the Seller, and the
Seller shall sell, transfer and assign to the Purchaser, on an "as is" and "where is" basis and to
the fullest extent permitted under Section 363(f) of the Bankruptcy Code, all of the Seller's right,
title and interest in and to the Legacy Number Blocks free and clear of all Liens and Claims
(other than Permitted Encumbrances, Assumed Liabilities and Liens created by or through the
Purchaser or any of its Affiliates).

2.1.2 Excluded Assets. Notwithstanding anything in this Section 2.1 or elsewhere in

this Agreement to the contrary, the Seller shall retain its right, title and interest in and to, and the
Purchaser shall have no rights with respect to the right, title and interest of the Seller in and to,
any assets of the Seller other than the Legacy Number Blocks (collectively, the "Excluded
Assets").

2.1.3 Assumed Liabilities. On the terms and subject to the conditions set forth in this
Agreement, at the Closing (with respect to the Initial Legacy Numbers) or the applicable
Subsequent Transfer Date (with respect to the Subsequent Legacy Numbers), the Purchaser shall
assume and become responsible for, and perform, discharge and pay when due, the following
Liabilities of the Seller (the "Assumed Liabilities"):

(a) all Liabilities with respect to the ownership or exploitation of the Legacy
Number Blocks arising and relating to periods after the Closing Date (with respect to the Initial
Legacy Numbers) or the applicable Subsequent Transfer Date (with respect to the Subsequent
Legacy Numbers), including all such Liabilities related to Actions or claims brought against or in
relation to the Legacy Number Blocks, and all maintenance fees, service charges and registration
costs, as applicable, related to the Legacy Number Blocks; and

(b) all Liabilities for, or related to any obligation for, any Tax that the Purchaser
bears under Article VI (including, for the avoidance of doubt, Transfer Taxes imposed in
connection with this Agreement and the transactions contemplated hereunder or in connection
with the execution of any other Transaction Document).

2.1.4 Excluded Liabilities. Except as provided in Section 2.1.3 and Article VI, the
Purchaser shall not assume at the Closing or any Subsequent Transfer Date, as applicable, any of
the Liabilities of Seller (collectively, the "Excluded Liabilities"). Without limiting the
foregoing, Excluded Liabilities include all Liabilities for, or related to any obligation for, any
Tax that the Seller is required to bear under Article VI (including, for the avoidance of doubt,
any liability of the Seller for unpaid Taxes of any Person under Treasury Regulation Section
1.15 02-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise) and any maintenance fees, service charges and registration costs relating
to the Legacy Number Blocks for periods prior to the Closing Date or applicable Subsequent
Transfer Date, as applicable.

SECTION 2.2. Purchase Price.

2.2.1 Purchase Price. Pursuant to the terms and subject to the conditions set forth in
this Agreement, in consideration of the sale of the Legacy Number Blocks pursuant to the terms
hereof, the Purchaser shall assume and become obligated to pay, perform and discharge, when
due, the Assumed Liabilities and shall pay an aggregate amount of cash (the "Gross Purchase
Price") equal to Seven Million Five Hundred Thousand Dollars ($7,500,000) which shall include
(i) the Good Faith Deposit paid to the Escrow Agent pursuant to Section 2.2.2(a), (ii) the
Subsequent Purchase Price paid to the Escrow Agent pursuant to Section 2.2.3 (a), and (iii) the
balance of the Gross Purchase Price paid to the Seller at the Closing (the "Initial Purchase
Price," i.e., the Gross Purchase Price less the sum of amount of the Good Faith Deposit and the
amount of the Subsequent Purchase Price).

2.2.2 Good Faith Deposit.

(a) No later than ten (10) business days after Seller's execution and delivery of
this Agreement to Purchaser, the Purchaser will deliver to the Escrow Agent cash in the amount
of Two Hundred Twenty-Five Thousand Dollars ($225,000) (the "Good Faith Deposit") to
serve as earnest money under this Agreement.

(b) The Good Faith Deposit shall be applied to the Gross Purchase Price to be
paid by the Purchaser pursuant to Section 2.2.1 at the Closing, pursuant to Section 2.3.2.

(c) On the Closing Date, the Purchaser and the Seller shall cause the Escrow
Agent to release to the Seller the amount of cash equivalent to the Good Faith Deposit (exclusive
of the actual earnings thereon).

2.2.3 Subsequent Purchase Price.

(a) On the Closing Date, the Purchaser will deliver to the Escrow Agent cash in
the amount equal to the product of (i) the Gross Purchase Price divided by the total number of
IPv4 addresses included in the Legacy Number Blocks (the "Unit Cost") and (ii) the total
number of IPv4 addresses included in the Subsequent Legacy Numbers (such product, the
"Subsequent Purchase Price").

(b) On each Subsequent Transfer Date, the Purchaser and Seller shall cause the
Escrow Agent to release to the Seller the amount of cash equivalent to the Unit Cost multiplied
by the total number of IPv4 addresses then transferred pursuant to the applicable Subsequent
Transfer (the "Release Amount").

(c) For any Subsequent Legacy Numbers that are not transferred as a result of the
operation of Section 8.3 on or before January 31, 2012, the Parties shall instruct the Escrow
Agent to release to the Purchaser (i) the amount of cash equivalent to the Unit Cost multiplied by
the total number of IPv4 addresses included in such remaining Subsequent Legacy Numbers, and
such remaining Subsequent Legacy Numbers shall be deemed Excluded Legacy Number Blocks
at such time, and (ii) all amounts remaining in the Escrow Account.

2.2.4 Escrow.

(a) As of the date hereof, each of the Seller and the Purchaser shall have entered
into the Escrow Agreement with the Escrow Agent in order to secure payment of the Good Faith
Deposit and the Subsequent Purchase Price as provided in this Agreement.

(b) Each of the Seller and the Purchaser hereby undertakes to promptly execute
and deliver to the Escrow Agent, in accordance with the formalities set forth in the Escrow
Agreement, joint instructions to pay to the Seller or the Purchaser, as applicable, funds from the
Escrow Account any time that any Person becomes entitled to such payment from the Escrow
Account pursuant to this Agreement.

SECTION 2.3. Closing.

2.3.1 Closing Date.

(a) The completion of the purchase and sale of the Initial Legacy Numbers and
the assumption of the Assumed Liabilities (the "Closing") shall take place at the offices of
Cleary Gottlieb Steen & Hamilton LLP in New York, New York, commencing at 10:00 am New
York time on the date which is five (5) Business Days after the day upon which all of the
conditions set forth under Article VII (other than conditions to be satisfied at the Closing, but
subject to the waiver or fulfillment of those conditions) have been satisfied or, if permissible,
waived by the Seller and/or the Purchaser (as applicable), or on such other place, date and time
as shall be mutually agreed upon in writing by the Purchaser and Seller (the day on which the
Closing takes place being the "Closing Date"). The Closing will be deemed completed at the
time the Seller receives the deliverables set forth in Section 2.3.2.

(b) Upon occurrence of the Closing, legal title, equitable title and risk of loss with
respect to the Initial Legacy Numbers will transfer to the Purchaser, and the Assumed Liabilities
will be assumed by the Purchaser, at 12: 01 a.m. local time on the Closing Date in the jurisdiction
in which the Initial Legacy Numbers are located in accordance with the terms hereof.

2.3.2 Closing Actions and Deliveries. At the Closing:

(a) The Purchaser shall deliver to the Seller, an amount equal to the Initial
Purchase Price by wire transfer in immediately available funds to an account or accounts
designated at least two Business Days prior to the Closing Date by the Seller in a written notice
to the Purchaser; and

(b) The Seller shall deliver a bill of sale or similar instrument reasonably
acceptable to Purchaser that assigns all of Seller's right, title and interest in and to the Initial
Legacy Numbers to Purchaser.

(c) Each Party shall deliver, or cause to be delivered, to the other any other
documents reasonably requested by such other Party in order to effect, or evidence the
consummation of, the transactions contemplated herein, it being acknowledged and agreed that
Seller's satisfaction of the condition set forth in Section 7.3. 1(e) shall be deemed to have
satisfied Seller's obligations under this Section 2.3.2(c).

2.3.3 Subseqiuent Transfer Dates.

(a) The completions of the purchase and sale of the Subsequent Legacy Numbers
(each, a "Subsequent Transfer") shall take place on the date which is five (5) Business Days
after the applicable date set out in Exhibit C with respect to each Subsequent Legacy Number or
group of Subsequent Legacy Numbers, or on such other date and time as shall be mutually
agreed upon in writing by the Purchaser and Seller (each such date, a "Subsequent Transfer
Date"). Each Subsequent Transfer will be deemed completed at the time the Seller receives the
deliverables set forth in Section 2.3.4.

(b) Upon occurrence of each Subsequent Transfer, legal title, equitable title and
risk of loss with respect to the applicable Subsequent Legacy Numbers will transfer to the
Purchaser at 12: 01 a.m. local time on the Subsequent Transfer Date in the jurisdiction in which
such Subsequent Legacy Numbers are located in accordance with the terms hereof.

2.3.4 Subsequent Transfer Actions and Deliveries. At each Subsequent Transfer:

(a) The Seller and the Purchaser shall cause the Escrow Agent to deliver to the
Seller, and the Escrow Agent shall deliver to the Seller, the Subsequent Transfer Price (together
with actual earnings thereon) applicable to such Subsequent Legacy Numbers (in accordance
with Section 2.2.3) by wire transfer in immediately available funds to an account or accounts
designated at least two Business Days prior to the Subsequent Transfer Date by the Seller in a
written notice to the Purchaser; and

(b) The Seller shall deliver a bill of sale or similar instrument reasonably
acceptable to Purchaser that assigns all of Seller's right, title and interest in and to the
Subsequent Legacy Numbers to Purchaser.

(c) Each Party shall deliver, or cause to be delivered, to the other any other
documents reasonably requested by such other Party in order to effect, or evidence the
consummation of, the transactions contemplated herein, it being acknowledged and agreed that
Seller's satisfaction of the condition set forth in Section 7.3.2(d) shall be deemed to have-
satisfied Seller's obligations under this Section 2.3.4(c).

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THlE PURCHASER

The Purchaser hereby represents and warrants to the Seller as of the date of this
Agreement as follows:

SECTION 3. 1. Orizanization and Corporate Power.

(a) The Purchaser is a corporation duly organized and validly existing under the
Laws of the jurisdiction in which it was incorporated. The Purchaser has all requisite power and
authority to enter into, deliver and perform its obligations pursuant to each of the Transaction
Documents to which it is or will become a party.

(b) The Purchaser is qualified to do business as contemplated by this Agreement

and the other Transaction Documents and to own or lease and operate its properties and assets,
except to the extent that the failure to be so qualified would not, individually or in the aggregate,
materially hinder, delay or impair the Purchaser's ability to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement.
SECTION 3.2. Authorization: Bindiing Effect: No Breach.

(a) The execution, delivery and performance of each Transaction Document to

which the Purchaser is, or at the Closing Date will be, a party have been duly authorized by the
Purchaser. Assuming due authorization, execution and delivery by the Seller, each Transaction
Document to which the Purchaser is, or at the Closing Date will be, a party constitutes, or upon
execution thereof will constitute, a valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its respective terms.

(b) The execution, delivery and performance by the Purchaser of the Transaction
Documents to which the Purchaser is, or on the Closing Date will be, a party do not and will not
conflict with or result in a breach of the terms, conditions or provisions of, constitute a default
under, result in a violation of, or require any Consent of any Person or other action by or
declaration or notice to any Government Entity pursuant to (i) the articles, charter or by-laws (or
similar governing document) of the Purchaser; (ii) any Contract or other document to which the
Purchaser is a party or to which any of the Purchaser's assets is subject; or (iii) any Laws to
which the Purchaser or any of the Purchaser's assets is subject; except, in the case of clauses (ii)
and (iii) of this sentence, for such defaults, violations, actions and notifications that would not,
individually or in the aggregate, materially hinder, delay or impair the Purchaser's ability to
carry out its obligations under, and to consummate the transactions contemplated by, this
Agreement.

SECTION 3.3. Purchaser's Acknowledizients: Exclusivity of Representations and

Warranties.

(a) The Purchaser is experienced and sophisticated with respect to transactions of

the type contemplated by this Agreement and the other Transaction Documents. In consultation
with experienced counsel and advisors of its choice, the Purchaser has conducted its own
independent review and analysis of the Legacy Number Blocks, the Assumed Liabilities, and the
rights and obligations it is acquiring and assuming under this Agreement and the other
Transaction Documents. The Purchaser acknowledges that it and its representatives have been
permitted such access to the books and records, contracts and other properties related to the
Legacy Number Blocks as it required to complete its review.

(b) The Purchaser acknowledges and agrees that:

(i) except for the representations and warranties expressly set forth in
Article IV, the Purchaser has not relied on any representation or warranty from the Seller or any
Affiliate of any such Person or any employee, officer, director, broker, accountant, financial,,
legal or other representative of the Seller in determining whether to enter into this Agreement;

(ii) except for the representations and warranties expressly set forth in
Article IV, none of the Seller, or any employee, officer, director, broker, accountant, financial,
legal or other representative of the Seller, or any Affiliate of any such Person has made any
representation or warranty, express or implied, as to the Legacy Number Blocks (including any
implied representation or warranty as to the condition, merchantability, suitability or fitness for a
particular purpose of any of the Legacy Number Blocks including under the International
Convention on Contracts for the Sale of Goods (Geneva Convention) and any other applicable
sale of goods Laws), the Assumed Liabilities, or any Affiliate of any such Person or as to the
accuracy or completeness of any information regarding any of the foregoing that the Seller, or
any other Person furnished or made available to the Purchaser and its representatives (including
any projections, estimates, budgets, offering memoranda, management presentations or due
diligence materials);

(iii) Neither the Seller nor any other Person shall have or be subject to any
liability to the Purchaser or any other Person resulting from the distribution to the Purchaser, or
the Purchaser's use, of the information referred to in Section 3.3(b)(ii);

(iv) subject to the terms of the Sale Order in the Chapter 11 Case in
connection with the transactions contemplated hereby and the other Transaction Documents (the
"Bankruptcy Consent"), the Purchaser takes the Legacy Number Blocks on an "as is" and
"where is" basis; and

(v) the enforceability of this Agreement against the Seller is subject to

receipt of the Bankruptcy Consent.

(c) Without limiting the generality of the foregoing, PURCHASER

ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED HEREIN,
THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, CONDITION, SUITABILITY OR TITLE OF
THE LEGACY NUMBER BLOCKS, OR REGARDING THE SCOPE OR VALIDITY OF
ANY LEGACY NUMBER BLOCKS.

SECTION 3.4. Brokers.

Except for fees and commissions that will be paid by the Seller to Addrex, Inc. and by the
Purchaser, no broker, finder or investment banker is entitled to any brokerage, finder's or similar
fee or commission in connection with (i) the transactions contemplated by this Agreement and
(ii) the other Transaction Documents, each based upon arrangements made by or on behalf of the
Purchaser or any of its Affiliates.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER

Except (a) subject to the provisions of Section 9.8(b), as set forth in the applicable
sections of the Seller Disclosure Schedule; (b) as set forth in the registration statements,
prospectuses, reports, schedules, forms and other filings (excluding any exhibits thereto but
including any documents incorporated by reference and any amendments thereto) filed by Nortel
Networks Corporation with the SEC (collectively, the "Securities Disclosure Documents") (but
excluding any forward-looking disclosures in Securities Disclosure Documents as to risk factors,
forward-looking statements and other similarly cautionary or generic disclosure contained or
incorporated by reference therein) and/or in any filings made in the Bankruptcy Proceedings; or
(c) to the extent relating to the Excluded Assets or the Excluded Liabilities, the Seller represents
and warrants to the Purchaser as set forth in Section 4.1 through Section 4.6 as of the date of this
Agreement.

SECTION 4. 1. Orgzanization and Corporate Power.

(a) Seller is duly organized and validly existing under the Laws of the jurisdiction
in which it is organized. Subject to the receipt of the Bankruptcy Consent, Seller has the
requisite corporate power and authority to enter into, deliver and perform its obligations pursuant
to each of the Transaction Documents to which it is or will become a party.

(b) Seller is qualified to do business and to own, lease or otherwise hold its
properties and assets, including the Legacy Number Blocks, and to conduct its business as
presently conducted, as applicable in each jurisdiction in which its ownership of property or
conduct of business relating to the Legacy Number Blocks requires it to so qualifyr, except to the
extent that the failure to be so qualified does not have, or would not reasonably be expected to
have, a Material Adverse Effect.

SECTION 4.2. Authorization: Binding Effect: No Breach.

(a) Subject to the receipt of the Bankruptcy Consent, the execution, delivery and
performance by Seller of the Transaction Documents to which Seller is, or at the Closing will be,
a party has been duly authorized by Seller. Subject to receipt of the Bankruptcy Consent, and
assuming due authorization, execution and delivery by the Purchaser, the Transaction
Documents to which Seller is or will be a party, will constitute a legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms.

(b) Assuming the accuracy of Purchaser's representations and warranties set forth
in Article III and satisfaction of the Closing Conditions set forth in Section 7.1 and Section 7.2,
and subject to receipt of the Bankruptcy Consent, the execution, delivery and performance by
Seller of the Transaction Documents to which Seller is or will be a party do not and will not
conflict with or result in a breach of the terms, conditions or provisions of, constitute a default
under, result in a violation of, result in the creation or imposition of any Lien upon any of the
Legacy Number Blocks, or require any Consent (other than the Bankruptcy Consent) or other
action by or declaration or notice to any Government Entity or other Third Party pursuant to
(i) the articles, charter or by-laws (or similar governing document) of the Seller; (ii) any order of
any Government Entity applicable to Seller or by which any of its properties or Legacy Number
Blocks are bound; (iii) any Laws to which the Seller or any of the Legacy Number Blocks are
subject; or (iv) any Contract to which Seller is a party or by which the Legacy Number Blocks
are bound; except, in the case of clauses (ii), (iii) and (iv) of this sentence, for such defaults,
violations, actions and notifications that have not had, and would not reasonably be expected to
have, a Material Adverse Effect.

SECTION 4.3. Internet Protocol Addresses. To the Knowledge of the Seller:

(a) The Legacy Number Blocks are not subject to any Liens other than Permitted
Encumbrances. Seller has the right to assign and transfer all of its right, title and interest in and
to the Legacy Number Blocks pursuant to Section 2. 1.1 in the manner contemplated by this
Agreement.

(b) The Legacy Number Blocks are not under an allocation or assignment
agreement with any regional or other Internet registry.

(c) Seller (i) is the holder or assignee of the right to use all of the Legacy Number
Blocks, subject to Permitted Encumbrances, (ii) holds to the full extent allowed by Law, all
rights, title and interest in and to the Legacy Number Blocks and (iii) subject to Permitted
Encumbrances, no other Person has title to or the right to use the Legacy Number Blocks.

(d) Section 4.3(d) of the Seller Disclosure Schedule sets forth all Contracts
between Seller on the one hand and a Third Party on the other hand pursuant to which Seller
provides services in which any Legacy Number Blocks are used (the "Transition Services
Agreements"). None of the Transition Services Agreements has a term that extends beyond (or
may be renewed or extended for a period beyond) December 31, 2011. No Transition Service
Agreement grants to any Third Party any ownership rights, or any preferential rights, rights of
first refusal, rights of first offer or other similar rights in or to any Legacy Number Block.

(e) Except as set forth in Section 4.3(e) of the Seller Disclosure Schedule, there
has been no assertion or claim made in writing to the Seller during the past five (5) years
preceding the date of this Agreement asserting invalidity or misuse of the Legacy Number
Blocks or challenging the Seller's rights to the Legacy Number Blocks.

(f) The Initial Legacy Numbers include no fewer than 470,016 JPv4 numbers.
The Subsequent Legacy Numbers include no fewer than 196,608 IPv4 numbers.

SECTION 4.4. Litigation.

As of the date hereof, except for the Bankruptcy Proceedings, there is no Action pending
or, to the Knowledge of Seller, threatened in writing before any Government Entity against
Seller involving the Legacy Number Blocks that would be reasonably expected to result in a
Material Adverse Effect.

SECTION 4.5. Taxes.

Except for matters that would not have a Material Adverse Effect, (i) Seller has timely
filed all Tax Returns required to be filed with the appropriate Tax Authorities in all jurisdictions
in which such Tax Returns are required to be filed (taking into account any extension of time to
file granted or to be obtained on behalf of Seller), and all such Tax Returns were correct and
complete in all respects; and (ii) all Taxes owed by Seller (whether or not shown or required to
be shown on any Tax Return) have been paid on a timely basis. There are no liens on any of the
Legacy Number Blocks that arose in connection with any failure (or alleged failure) to pay any
Tax.
SECTION 4.6. Exclusivity.

Other than the transactions contemplated by this Agreement and except as set
forth in Section 4.6 of the Seller Disclosure Schedule, Seller is not a party to or bound by any
agreement providing for a sale, exchange or other disposition of all or any of the Legacy Number
Blocks.

ARTICLE V
COVENANTS AND OTHER AGREEMENTS

SECTION 5. 1. Bankrutcy Actions.

On the timetables and subject to the terms set forth below, the Seller shall (i) file with the
Bankruptcy Court one or more motions and proposed orders as set forth below each in form and
substance reasonably satisfactory to the Purchaser; (ii) notify, as required by the Bankruptcy
Code and the Bankruptcy Rules, all parties entitled to notice of such motions and orders, as
modified by orders in respect of notice which may be issued at any time and from time to time
by the Bankruptcy Court, and such additional parties as the Purchaser may reasonably request;
and (iii) subject to the provisions of this Agreement, including the provisions of Section 8. 1, use
its reasonable best efforts to obtain Bankruptcy Court approval of such orders. As promptly as
possible, but in no event later than ten (10) days after the date of this Agreement, the Seller shall
file with the Bankruptcy Court a motion (the "Sale Motion") and a proposed Sale Order seeking
approval of the sale of the Legacy Number Blocks.

SECTION 5.2. Consultation:, Notification.

(a) The Purchaser and the Seller shall cooperate with filing and prosecuting the
Sale Motion, a draft of which shall be delivered by the Seller to the Purchaser no later than three
(3) days after the date hereof, and the Seller shall deliver to the Purchaser prior to filing, and as
early in advance as is practicable to permit adequate and reasonable time for the Purchaser and
its counsel to review and comment, copies of all proposed pleadings, motions, notices,
statements schedules, applications, reports and other material papers to be filed by the Seller in
connection with such motion and the relief requested therein.

(b) If the Sale Order or any other order of the Bankruptcy Court relating to this
Agreement shall be appealed by any Person (or a petition for certiorari or motion for rehearing,
re-argument or stay shall be filed with respect thereto), the Seller agrees to use its reasonable
best efforts, to defend against such appeal, petition or motion, and the Purchaser agrees to
cooperate in such efforts. Each of the Parties hereby agrees to use its commercially reasonable
efforts to obtain an expedited resolution of such appeal; provided, however, that, subject to the
conditions set forth herein, nothing contained in this Section shall preclude the Parties from
consummating, or permit the Parties not to consummate, the transactions contemplated hereby if
the Sale Order shall have been entered and shall not have been stayed, modified, revised or
amended, in which event the Purchaser shall be able to assert the benefits of section 363(m) of
the Bankruptcy Code and, as a consequence of which, such appeal shall become moot.
SECTION 5.3. Pre-Closing Cooperation.

(a) Prior to the Closing and each Subsequent Transfer, as applicable, and subject
to the terms and conditions of this Agreement, each of the Parties shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with
each other in order to do, all things necessary, proper or advisable under applicable Law to
consummate the transactions contemplated by this Agreement as soon as practicable and cause
the fulfillment at the earliest practicable date of all of the conditions to the other Party's
obligations to consummate the transactions contemplated by this Agreement, including: (i) upon
mutual consent, the preparation and filing of all forms, registrations and notices required to be
filed to consummate the Closing and each Subsequent Transfer, as applicable; (ii) using
commercially reasonable efforts to defend all lawsuits and other proceedings by or before any
Government Entity challenging this Agreement or the consummation of the Closing and each
Subsequent Transfer, as applicable; and (iii) using commercially reasonable efforts to cause to be
lifted or rescinded any injunction, decree, ruling, order or other action of any Government Entity
adversely affecting the ability of the Parties to consummate the Closing and each Subsequent
Transfer, as applicable. The Parties acknowledge and agree that no Consents other than the
Bankruptcy Consents are required in order to consummate the Closing and any Subsequent
Transfer.

(b) Each Party shall promptly notify the other Party of the occurrence, to such
party's Knowledge, of any event or condition, or the existence, to such party's Knowledge, of
any fact, that would reasonably be expected to result in any of the conditions to the other Party's
obligation to effect the Closing and each Subsequent Transfer, as applicable, set forth in Article
VII not being satisfied.

SECTION 5.4. Public Announcements.

Subject to the Parties' disclosure obligations imposed by Law (including any obligations
under applicable bankruptcy Law), the Parties shall (a) cooperate with each other in the
development and distribution of all news releases, other public information disclosures and
announcements, including announcements and notices to customers, suppliers and employees,
with respect to this Agreement, or any of the transactions contemplated by this Agreement and
the other Transaction Documents and (b) not issue any such announcement or statement prior to
consultation with, and the written approval of, the other Party; provided that approval shall not
be required where a Party determines, based on advice of counsel and after consultation with the
other Party, that such disclosure is required by Law.

SECTION 5.5. Further Actions.

Without limiting the foregoing, on and after the Closing Date and Subsequent Transfer
Dates, each Party shall cooperate with the other Party, without any further consideration, to
cause to be executed and delivered, all instruments, including instruments of conveyance,
novations, assignment and transfer, and to make all filings with, and to obtain all consents, under
any permit, license, agreement, indenture or other instrument or regulation, and to take all such
other actions as each Party may reasonably request to take by the other Party from time to time,
consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of
this Agreement and the other Transaction Documents; provided that, subject to Section 5.3 and
Section 5.4, neither the Purchaser nor the Seller shall be obligated to make any payment or
deliver anything of value to any Third Party.

SECTION 5.6. Transaction Expenses.

Except as otherwise provided in this Agreement or the other Transaction Documents,

each of the Purchaser and the Seller shall bear its own costs and expenses (including brokerage
commissions, finders' fees or similar compensation, and legal fees and expenses) incurred in
connection with this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby.

SECTION 5.7. Confidentiality.

The Parties acknowledge that the Non-Disclosure Agreement remains in full force and
effect in accordance with its terms, which are incorporated herein by reference, and the Parties
agree to be bound thereby in the same manner and to the same extent as if the terms had been set
forth herein in full, except that the Seller shall be at liberty to disclose the terms of this
Agreement to any court or in connection with seeking approval of the Sale Agreement by the
Bankruptcy Court pursuant to Section 5.1 or an offer for sale of assets of Seller or Seller's
Affiliates, and show appropriate figures in their administration records, accounts and returns.

SECTION 5.8. No Solicitation of Transactions.

Prior to the Closing, and provided that Purchaser is proceeding in good faith to
consummate the transactions contemplated hereby in a timely manner, Seller shall not, directly
or indirectly, (i) solicit a proposal by any third person to acquire the Legacy Number Blocks, or
any material part of them (an "Acquisition Proposal"), (ii) execute an agreement with respect to
an Acquisition Proposal, or (iii) except as provided in this Agreement, seek or support
Bankruptcy Court approval of a motion or Order inconsistent in any way with the transactions
contemplated in this Agreement. For the avoidance of doubt, this Agreement is not intended by
the Parties to be a "stalking horse agreement" and the Sale Motion shall not seek an auction or
overbid procedures, because the Gross Purchase Price was selected as the winning bid in a
competitive bidding process that did not contemplate further bidding.

ARTICLE VI
TAX MATTERS

SECTION 6. 1. Transfer Taxes.

(a) The Parties agree that the Gross Purchase Price is exclusive of any Transfer
Taxes. The Purchaser shall promptly pay directly to the appropriate Tax Authority all applicable
Transfer Taxes that may be imposed upon or payable or collectible or incurred in connection
with this Agreement or the transactions contemplated herein, or that may be imposed upon or
payable or collectible or incurred in connection with the execution of any other Transaction
Document; provided, that if any such Transfer Taxes are required to be collected, remitted or
paid by the Seller or any Subsidiary, Affiliate, representative or agent thereof, such Transfer
Taxes shall be paid by the Purchaser to such Seller, Subsidiary, Affiliate or agent, as applicable,
at the Closing or thereafter, as requested of or by the Seller. The Seller, Subsidiary, Affiliate or
agent, as applicable, shall provide original receipt to the Purchaser evidencing the payment of
such Transfer Taxes to the Seller. Upon request from the Seller, the Purchaser shall provide to
the Seller an original receipt (or such other evidence as shall be reasonably satisfactory to the
Seller) evidencing the payment of Transfer Taxes by the Purchaser to the applicable Tax
Authority under this Section 6. 1. For the avoidance of doubt, the Purchaser shall remain liable in
respect of any Transfer Taxes regardless of the date that the Legacy Number Blocks are removed
from the premises of the Seller or any Seller's supplier, except to the extent the Seller or any
Seller's agent has been provided an original receipt evidencing the Purchaser's payment of
Transfer Taxes to the Seller. All other closing expenses will be paid by the Party incurring such
expenses.

(b) If the Purchaser wishes to claim any exemption relating to; or a reduced rate
of, or make an election with the effect of reducing, Transfer Taxes, in connection with this
Agreement or the transactions contemplated herein, or in connection with the execution of any
other Transaction Document, the Purchaser, as the case may be, shall be solely responsible for
ensuring that such exemption, reduction or election applies and, in that regard, shall provide the
Seller prior to Closing with its permit number or other similar registration numbers and/or any
appropriate certificate of exemption, election and/or other document or evidence to support the
claimed entitlement to such exemption or reduction by the Purchaser, as the case may be. All
parties shall make conmnercially reasonable efforts to cooperate to the extent necessary to obtain
any such exemption or reduction. Notwithstanding the foregoing, any such cooperation to be
provided in this Section 6. 1(b) shall not include or extend to (i) a liquidation or restructuring of
Seller or any business of Seller, including the transfer of any assets or Legacy Number Blocks or
liabilities or Assumed Liabilities between Seller or its Affiliates, except in the Seller's discretion,
but in no case if there is a material cost to Seller or its Affiliates resulting from such liquidation
or restructuring unless the Seller or the relevant Affiliate is indemnified (prior to such liquidation
or restructuring) against any cost or expense of such liquidation or restructuring to its satisfaction
(acting at all times reasonably and in good faith); (ii) any action or omission that would result in
the imposition on Seller or any Affiliate of Seller of any additional Transfer Tax liability or
making any additional payment to any Tax Authority or Government Entity in respect of
Transfer Tax which is an Excluded Liability, unless Seller or Affiliate is (prior to the relevant
action or omission) indemnified against such additional Transfer Tax liability or payment; (iii)
any action or omission that would result in any material out of pocket cost or expense for Seller
or any Affiliate of Seller, unless Seller or Affiliate is (prior to the relevant action or omission),
indemnified against such cost or expense to their satisfaction (acting at all times reasonably and
in good faith) by the Purchaser; (iv) any action or omission which would cause the Seller or any
Affiliates of the Seller to be in contravention of any applicable Law (including Bankruptcy Law)
or published practice of a Tax Authority; (v) changing the identity or Tax residence of Seller, the
location of any Legacy Number Blocks or Assumed Liabilities, the nature or extent of any
Legacy Number Blocks or Assumed Liabilities, the Legacy Number Blocks or Assumed
Liabilities to be transferred by Seller or the structure of the transaction as an asset sale rather
than the sale of any form of entity, except in the Seller's commercially reasonable discretion, but
in no case if there is a material cost to Seller or its Affiliates resulting from such action, unless
the Seller or the relevant Affiliate is indemnified (prior to such action) against any cost or
expense of such action to its satisfaction (acting at all times reasonably and in good faith); or (vi)
any reduction in the obligations of the Purchaser or rights of the Seller.

SECTION 6.2. Reserved.

SECTION 6.3. Tax Characterization of Payments Under This Agreement.

The Seller and the Purchaser agree to treat all payments made either to or for the benefit
of the other Party under this Agreement (other than any interest payments) as adjustments to the
Gross Purchase Price for Tax purposes and that such treatment shall govern for purposes hereof
to the extent permitted under applicable Tax Law.

SECTION 6.4. Apportionment of Taxes.

(a) Except as otherwise provided in this Article VI, (i) the Seller shall bear all
Taxes of any kind relating to the Legacy Number Blocks for all Tax periods or portions thereof
ending on or before the Closing Date (and where such Legacy Number Blocks are Subsequent
Legacy Numbers, for all Tax periods or portions thereof ending on or before the corresponding
Subsequent Transfer Dates) and (ii) the Purchaser shall bear all Taxes relating to the Legacy
Number Blocks for all Tax periods or portions thereof beginning after the Closing Date (and
where the Legacy Number Blocks are Subsequent Legacy Numbers, for all Tax periods or
portions thereof beginning after the corresponding Subsequent Transfer Dates).

(b) For purposes of this Agreement, any Taxes of any kind relating to the Legacy
Number Blocks for a "Straddle Period" (a Tax period that includes, but does not end on, the
Closing Date, or Subsequent Transfer Date, as relevant) shall be apportioned between the Seller,
on the one hand, and the Purchaser, on the other hand, based on the portion of the period ending
on and including the Closing Date (or Subsequent Transfer Date, as relevant) and the portion of
the period beginning after the Closing Date (or Subsequent Transfer Date, as relevant),
respectively. The amount of any Taxes based on or measured by income or receipts related to
the Legacy Number Blocks shall be allocated between the Pre-Closing Taxable Period and the
Post-Closing Taxable Period on a closing-of-the-books basis. The amount of other Taxes shall
be allocated between the Pre-Closing Taxable Period and the Post-Closing Taxable Period in the
following manner: (i) in the case of a Tax imposed in respect of property (excluding, for the
avoidance of doubt, any income Tax) and that applies ratably to a Straddle Period, the amount of
Tax allocable to a portion of the Straddle Period shall be the total amount of such Tax for the
period in question multiplied by a fraction, the numerator of which is the total number of days in
such portion of such Straddle Period and the denominator of which is the total number of days in
such Straddle Period, and (ii) in the case of sales, value-added and similar transaction-based
Taxes (other than Transfer Taxes allocated under Section 6. 1), such Taxes shall be allocated to
the portion of the Straddle Period in which the relevant transaction occurred.
SECTION 6.5. Records.

(a) Except as provided elsewhere in this Section 6.5, (i) after the Closing Date,
the Purchaser, on the one hand, and the Seller, on the other hand, will make available to the
other, as reasonably requested, and to any Tax Authority, all information, records or documents
relating to liability for Taxes with respect to the Legacy Number Blocks or the Assumed
Liabilities for all periods prior to or including the Closing Date (including Straddle Periods), and
will preserve such information, records or documents until the expiration of any applicable
statute of limitations or extensions thereof, and (ii) in the event that one party needs access to
records in the possession of a second party relating to any of the Legacy Number Blocks or the
Assumed Liabilities for purposes of preparing Tax Returns or complying with any Tax audit
request, subpoena or other investigative demand by any Tax Authority, or for any other
legitimate Tax-related purpose not injurious to the second party, the second party will allow
representatives of the other party access to such records during regular business hours at the
second party's place of business for the sole purpose of obtaining information for use as
aforesaid and will permit such other party to make extracts and copies thereof as may be
necessary or convenient. The obligation to cooperate pursuant to this Section 6.5 shall terminate,
for each taxable period, at the later of the time the relevant applicable statute of limitations
expires (giving effect to any extension thereof) and the time when any appeal of an assessment of
additional Tax with respect to such period is finally terminated.

SECTION 6.6. Tax Disclosure.

Notwithstanding anything to the contrary in this Agreement, except as reasonably

necessary to comply with applicable securities Laws and regulations, any party may (i) consult
any Tax adviser regarding the U.S. federal income Tax treatment or Tax structure of the
transactions contemplated by this Agreement, and (ii) disclose to any and all persons, without
limitation of any kind, the U.S. federal income Tax treatment and Tax structure of the
transactions contemplated hereunder and all materials of any kind (including opinions or other
Tax analyses) that are provided to the taxpayer relating to such Tax treatment and Tax structure
(but without disclosure of identifying information or any non-public commercial or financial
information); provided, however, that clause (ii) of this paragraph shall not apply until the date
of the public announcement of the execution of this Agreement and performance of the
transactions contemplated hereunder. For this purpose, "Tax structure" is limited to any facts
relevant to the U.S. federal income Tax treatment of the transactions contemplated hereunder.

SECTION 6.7. Tax Returns.

(a) The Seller shall be responsible for the preparation and timely filing (taking
into account any extensions received from the relevant Tax Authorities) of all Tax Returns in
respect of the Legacy Number Blocks, for all Pre-Clo sing Taxable Periods (other than any Tax
Returns with respect to Transfer Taxes ("Transfer Tax Returns") described below in Section
6.7(b)). Such Tax Returns shall be prepared in compliance with all applicable laws and shall be
true, correct and complete in all material respects. Except as otherwise provided in this
Agreement, all Taxes indicated as due and payable on such Tax Returns shall be paid by (or shall
be caused to be paid by) Seller as and when required by Law.
 (b) Each Transfer Tax Return with respect to Transfer Taxes imposed in respect
of this Agreement and the transactions contemplated hereunder or in respect of the execution of
any other Transaction Document shall be prepared by the Party that customarily has primary
responsibility for filing such Transfer Tax Return pursuant to the applicable Tax Laws. The
Seller shall make available to the Purchaser that portion of such Transfer Tax Returns prepared
by the Seller that is applicable to the sale and purchase transaction contemplated by this
Agreement, and, to the extent not already disclosed, such information as will enable the
Purchaser to review and object to such portion of such Transfer Tax Returns, at least fifteen (15)
Business Days before such Tax Returns are due to be filed. In the event the Purchaser
reasonably objects to the Transfer Tax Returns, the Seller may not include the applicable sale
and purchase transaction and associated Transfer Tax. The Purchaser shall pay to the Seller any
amount of Transfer Taxes payable in respect of Transfer Tax Returns to be filed by the Seller
pursuant to this Section 6.7(b) at least one (1) Business Day before such Transfer Tax becomes
due and payable in each case to the extent such Transfer Taxes are the responsibility of the
Purchaser pursuant to Section 6. 1(a).

(c) The Purchaser shall be responsible for the preparation and timely filing
(taking into account any extensions received from the relevant Tax Authorities) of all Tax
Returns with respect to the Legacy Number Blocks for all Post-Closing Taxable Periods and
Straddle Periods, except for Tax Returns for Taxes based on or measured by income or receipts
that are allocated pursuant to Section 6.4 on a closing-of-the-books basis, which Tax Returns
shall be filed by the Purchaser and Seller, each reporting its allocated income or receipts. All
Taxes indicated as due and payable on Tax Returns for a Straddle Period shall be paid by (or
shall be caused to be paid by) the Purchaser as and when required by Law.

(d) If the Seller is required to pay a portion of the Tax shown on any Tax Return
for a Straddle Period, the Purchaser shall make available to the Seller that portion of such Tax
Return prepared by the Purchaser at least fifteen (15) Business Days before such Tax Return is
due to be filed. The Seller shall pay to the Purchaser Seller's portion of any Tax shown on any
Tax Return in respect of the Legacy Number Blocks for the Straddle Period as determined under
Section 6.3(b) at least one (1) Business Day before any such Tax becomes due and payable,
provided that the Seller need not pay such Tax to the extent it reasonably objects to the
computation of such Tax on the Tax Return for the Straddle Period until the Seller and the
Purchaser can come to agreement on the amount of such Tax due.

ARTICLE VII
CONDITIONS TO TI-L CLOSING

SECTION 7. 1. Conditions to Each Party's Obligation.

The Parties' obligation to effect the Closing and each Subsequent Transfer, as applicable,
is subject to the satisfaction or the express written waiver of the Parties, at or prior to the Closing
and each Subsequent Transfer, as applicable, of the following conditions:

(a) No Injunctions or Restraints. There shall be in effect no Law, or any binding

material order, injunction, decree or judgment of any court or other Government Entity
prohibiting the consummation of any of the transactions contemplated hereby.
 (b) Sale Order. The Sale Order shall have been entered and shall not be stayed or
have been modified, revised or amended in a manner adverse to the Parties.

SECTION 7.2. Conditions to Seller's Obligation.

7.2.1 The Seller's obligation to effect the Closing shall be subject to the fulfillment (or
express written waiver by the Seller), at or prior to the Closing, of each of the following
conditions:

(a) No Breach of Representations and Warranties. Each of the representations

and warranties contained in Article III (disregarding all materiality and material adverse effect
qualifications contained therein) shall be true and correct (i) as if restated on and as of the
Closing Date or (ii) if made as of a date specified therein, as of such date, except, in each case,
for any failure to be true and correct that, individually and together with other such failures, has
not had a material adverse effect on the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.

(b) No Breach of Covenants. The Purchaser shall have performed in all material
respects all material covenants, obligations and agreements contained in this Agreement required
to be performed by the Purchaser on or before the Closing.

(c) Officer Certificate. The Seller shall have been furnished with a certificate
signed by a senior officer of the Purchaser certifying that the conditions set forth in Sections
7.2(a) and 7.2(b) have been satisfied.

(d) Closing Deliveries. Purchaser shall have delivered, or caused to be delivered,

to Seller all of the items set forth in Section 2.3.2(a) and (c).

7.2.2 The Seller's obligation to effect each Subsequent Transfer shall be subject to the
fulfillment (or express written waiver by the Seller), at or prior to each Subsequent Transfer Date
of each of the following conditions with regard to the Subsequent Legacy Numbers to be
transferred in such Subsequent Transfer:

(a) No Breach of Representations and Warranties. Each of the representations

and warranties contained in Article III (disregarding all materiality and material adverse effect
qualifications contained therein) shall be true and correct (i) as if restated on and as of the
Subsequent Transfer Date or (ii) if made as of a date specified therein, as of such date, except, in
each case, for any failure to be true and correct that, individually and together with other such
failures, has not had a material adverse effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement.

(b) No Breach of Covenants. The Purchaser shall have performed in all material
respects all material covenants, obligations and agreements contained in this Agreement required
to be performed by the Purchaser on or before each Subsequent Transfer.

(c) Transferabilityof Subsequent Legacy Numbers. The Subsequent Legacy

Numbers to be transferred in such Subsequent Transfer shall not be in use by the Seller, any
affiliate of the Seller or any Third Party and shall otherwise be available for transfer to the
Purchaser.

(d) Transfer Deliveries. Purchaser shall have delivered, or caused to be delivered,

to Seller all of the items set forth in Section 2.3.4(a) and (c).

SECTION 7.3. Conditions to Purchaser's Obligation.

7.3.1 The Purchaser's obligation to effect the Closing shall be subject to the fulfillment
(or express written waiver by the Purchaser), at or prior to the Closing, of each of the following
conditions:

(a) No Breach of Representations and Warranties. Each of the representations

and warranties set forth in Article IV, disregarding all materiality and Material Adverse Effect
qualifications contained therein, shall be true and correct (i) as if restated on and as of the
Closing Date, or (ii) if made as of a date specified therein, as of such date, except in each case
for any failure to be true and correct that has not had a Material Adverse Effect.

(b) No Breach of Covenants. The Seller shall have complied in all material
respects with all material covenants, obligations and agreements contained in this Agreement
required to be performed by the Seller on or before the Closing.

(c) Officer Certificate. The Purchaser shall have been furnished with a certificate
signed by a senior officer of one of the Seller that the conditions set forth in Sections 7.3(a) and
7.3(b) have been satisfied.

(d) Closing Deliveries. Seller shall have delivered, or caused to be delivered, to

Purchaser all of the items set forth in Section 2.3.2(b) and (c).

(e) Change to Point of Contact. Seller will have caused the applicable regional
Internet registry (that manages the "Whois" record for each of the Initial Legacy Numbers) to
change the "Point of Contact" for each of the Initial Legacy Numbers to a new contact
designated at least three (3) Business Days prior Closing, in writing, by Purchaser in Purchaser's
reasonable discretion

7.3.2 The Purchaser's obligation to effect each Subsequent Transfer shall be subject to
the fulfillment (or express written waiver by the Purchaser) at or prior to the Subsequent Transfer
Date, of each of the following conditions with regard to the Subsequent Legacy Numbers to be
transferred in such Subsequent Transfer:

(a) No Breach of Representationsand Warranties. Each of the representations

and warranties set forth in Article IV, disregarding all materiality and Material Adverse Effect
qualifications contained therein, shall be true and correct (i) as if restated on and as of the
Subsequent Transfer Date, or (ii) if made as of a date specified therein, as of such date, except in
each case for any failure to be true and correct that has not had a Material Adverse Effect.
 (b) No Breach of Covenants. The Seller shall have complied in all material
respects with all material covenants, obligations and agreements contained in this Agreement
required to be performed by the Seller on or before each Subsequent Transfer.

(c) Transfer Deliveries. Seller shall have delivered, or caused to be delivered, to

Purchaser all of the items set forth in Section 2.3 .4(a)-(c).

(d) Change to Point of Contact. Seller will have caused the applicable regional
Internet registry (that manages the "Whois" record for each of the Subsequent Legacy Numbers)
to change the "Point of Contact" for each of the Subsequent Legacy Numbers being transferred
to Purchaser on the applicable Subsequent Transfer Date to a new contact designated at least
three (3) Business Days prior to such Subsequent Transfer Date, in writing, by Purchaser in
Purchaser's reasonable discretion.

ARTICLE VIII
TERMINATION

SECTION 8. 1. Termination.

This Agreement may be terminated at any time prior to the Closing:

(a) by mutual written consent of the Parties;

(b) by any Party, upon written notice to the other Party:

(i) if the Closing does not take place on or prior to January 31, 2012; or

(ii) upon or following the entry of an order by the Bankruptcy Court

approving an Alternative Transaction;

(c) (i) by the Purchaser, upon written notice to the Seller, in the event of a
material breach by the Seller of the Seller's representations, warranties, agreements or covenants
set forth in this Agreement, which breach would result in a failure of the conditions to Closing
set forth in Section 7. 1(a), 7.3.1 (a) or 7.3. 1(b), as applicable, or (ii) by the Seller, upon written
notice to the Purchaser, in the event of a material breach by the Purchaser of the Purchaser's
representations, warranties, agreements or covenants set forth in this Agreement, which breach
would result in a failure of the conditions to Closing set forth in Section 7. 1(a), 7.2. 1(a) or
7.2. 1(b), as applicable, and, in each case under clauses (i) and (ii) of this paragraph, which, if
capable of being cured, has not been cured within twenty-five (25) days from receipt of a written
notice thereof from the non-breaching Party (but not later than the date set forth in Section
8.
()(i);or

(d) by the Seller, upon written notice to the Purchaser upon Purchaser's material
breach of its obligation to close the transactions contemplated hereby at the Closing, which
breach is not cured within twenty-five (25) days from the receipt of a written notice thereof from
the Seller (but not later than the date set forth in Section 8.1(b)(i));
provided, however, that the right to terminate this Agreement pursuant to Section 8.1(b)(i),
Section 8. 1(b)(ii), Section 8. 1(c) or Section 8. 1(d) shall not be available to the Party seeking to
terminate if such Party is then in breach of this Agreement and such breach has been the cause
of, or has resulted in, the event or condition giving rise to a right to terminate this Agreement.

SECTION 8.2. Effects of Termination.

If this Agreement is terminated pursuant to Section 8. 1:

(a) all fuirther obligations of the Parties under or pursuant to this Agreement shall
terminate without fuirther liability of any Party to the other Parties except for the provisions of, or
as provided in (i) Section 2.2.3 (Escrow), (ii) Section 5.4 (Public Announcements), (iii) Section
5.6 (Transaction Expenses), (iv) Section 5.7 (Confidentiality), (v) this Section 8.2 (Effects of
Termination), and (vi) Article IX; provided, that, except as set forth in Section 9.14, nothing
herein shall relieve any Party from liability for any breach of this Agreement occurring before
the termination hereof;

(b) the Purchaser shall return to the Seller all documents, work papers and other
material of any of the Seller relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof;

(c) the Parties shall cause the Escrow Agent to return the Good Faith Deposit to
the Purchaser if (i) the Parties terminate this Agreement pursuant to Section 8. 1(a) or (ii) subject
to the proviso at the end of Section 8. 1, either Party terminates this Agreement pursuant to
Section(s) 8. 1(b) or 8. 1(c)(i); and

(d) the provisions of the Non-Disclosure Agreement will continue in full force
and effect.

SECTION 8.3. Failed Subseqiuent Transfers.

Following the Closing, upon written notice from the Seller to the Purchaser, if any of the
conditions precedent set forth in Section 7.2.2 relating to any Subsequent Legacy Numbers shall
have become incapable of fulfillment (and shall not have been waived by the Seller), or if the
transfer of any Subsequent Legacy Numbers to the Purchaser has otherwise not occurred
hereunder by January 31, 2012, no Party shall have any further obligation with respect to the
transfer of such Subsequent Legacy Numbers and any obligation with respect to such Subsequent
Legacy Numbers hereunder that would have expired upon any such transfer shall become null
and void and of no further force or effect, except that if the conditions precedent set forth in
Section 7.2.2 shall have become incapable of fulfillment as a result of the Purchaser's failure to
comply with its obligations under this Agreement, the Seller's right to pursue all legal remedies
shall survive unimpaired. With respect to such Subsequent Legacy Numbers that shall not be
transferred hereunder as a result of the operation of this Section 8.3, the amount of cash (together
with the actual earnings thereon) equivalent to the Unit Cost multiplied by the total number of
IPv4 addresses that have not been transferred shall be refunded to the Purchaser in accordance
with Section 2.2.3(c), which refund will be the sole and exclusive remedy of the Purchaser,
whether at law or in equity, with respect to such Subsequent Legacy Numbers unless the
conditions precedent to the transfers of the Subsequent Legacy Numbers shall have become
incapable of fulfillment as a result of Seller's failure to comply with its obligations under this
Agreement, in which case Purchaser's rights to pursue equitable relief pursuant to Section
9.14(a) shall survive unimpaired.
ARTICLE IX
MISCELLANEOUS

SECTION 9. 1. No Survival of Representations and Warranties or Covenants.

Except for the representations set forth in Section 3.3, no representations or warranties,
covenants or agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive beyond the Closing Date (with regard to the Initial Legacy Numbers) or
the applicable Subsequent Transfer Date (with regard to the applicable Subsequent Legacy
Numbers), except for covenants set forth in Article VI and covenants and agreements that by
their terms are to be satisfied after the Closing Date, which covenants and agreements shall
survive until satisfied in accordance with their terms.

SECTION 9.2. Remedies.

No failure to exercise, and no delay in exercising, any right, remedy, power or privilege
under this Agreement by any Party will operate as a waiver of such right, remedy, power or
privilege, nor will any single or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise of such right, remedy, power or privilege
or the exercise of any other right, remedy, power or privilege.

SECTION 9.3. No Third-Party Beneficiaries.

This Agreement is for the sole benefit of the Parties and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any other Person any legal
or equitable right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

SECTION 9.4. Consent to Amendments: Waivers.

No Party shall be deemed to have waived any provision of this Agreement or any of the
other Transaction Documents unless such waiver is in writing, and then such waiver shall be
limited to the circumstances set forth in such written waiver. This Agreement shall not be
amended, altered or qualified except by an instrument in writing signed by all the parties hereto
or thereto, as the case may be.

SECTION 9.5. Successors and Assigns.

Except as otherwise expressly provided in this Agreement, all representations, warranties,

covenants and agreements set forth in this Agreement by or on behalf of the Parties will be
binding upon and inure to the benefit of such Parties and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any Party without the prior written consent of the Seller in case of
an assignment by the Purchaser or the Purchaser in case of an assignment by the Seller, which
consent may be withheld in such Party's sole discretion, except for the following assignments
which shall not require consent: (i) assignment to an Affiliate of a Party (provided that such
Party remains liable jointly and severally with its assignee Affiliate for the assigned obligations
to the other Party) and (ii) assignment by the Seller to a succeeding entity following Seller's
emergence from the Chapter 11I Case.

SECTION 9.6. Governin Law-, Submission to Jurisdiction; Waiver of Jur Trial.

(a) Any questions, claims, disputes, remedies or Actions arising from or related to
this Agreement, and any relief or remedies sought by any Parties, shall be governed exclusively
by the Laws of the State of New York applicable to contracts made and to be performed in that
State and without regard to the rules of conflict of Laws of the State of New York or any other
jurisdiction.

(b) To the fullest extent permitted by applicable Law, each Party:

(i) agrees that any claim, action, proceeding by such Party seeking any
relief whatsoever arising out of, or in connection with, this Agreement, or the transactions
contemplated hereby shall be brought only in the (A) Bankruptcy Court, if brought prior to the
entry of a final decree closing the Chapter 11 Case or (B) Federal Courts in the Southern District
of New York, Borough of Manhattan or the State Courts of the State of New York, County of
New York, Borough of Manhattan (collectively, the "New York Courts"), if brought after entry
of a final decree closing the Chapter 11I Case (the courts specified in clauses (A) and (B)
collectively, the "Designated Courts"), and shall not be brought in each case, in any other court
in the United States of America or any court in any other country;

(ii) agrees to submit to the jurisdiction of the Designated Courts for

purposes of all legal proceedings arising out of, or in connection with, this Agreement or the
transactions contemplated hereby;

(iii) waives and agrees not to assert any objection that it may now or
hereafter have to the laying of the venue of such action brought in any Designated Court or any
claim that any such action brought in any Designated Court has been brought in an inconvenient
forum;

(iv) agrees that the mailing of process or other papers in connection with
any such action or proceeding in the manner provided in Section 9.7 or any other manner as may
be permitted by Law shall be valid and sufficient service thereof, and

(v) agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable Law.

(c) Reserved.

(d) EACH PARTY HEREBY WAIVES, TO TTE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY (1) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (11) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 9.6.

SECTION 9.7. Notices.

All demands, notices, communications and reports provided for in this Agreement shall
be in writing and shall be either sent by facsimile transmission with confirmation to the number
specified below or personally delivered or sent by reputable overnight courier service (delivery
charges prepaid) to any Party at the address specified below, or at such address, to the attention
of such other Person, and with such other copy, as the recipient Party has specified by prior
written notice to the sending Party pursuant to the provisions of this Section 9.7.

If to the Purchaser to:

Microsoft Corporation
One Microsoft Way
Redmond Washington, USA 98052-6339
Attention: CVP, Global Foundation Services
Facsimile: 425 936-7329

With copies (that shall not constitute notice) to:

Microsoft Corporation
One Microsoft Way
Redmond Washington, USA 98052-6339
Attention: Legal and Corporate Affairs, Associate General Counsel,
Global Foundation Services
Facsimile: 425 936-7329

If to the Seller, to:

Nortel Networks Inc.

4001 E. Chapel Hill - Nelson Hwy.
Research Triangle Park, NC 27709
United States
Attention: Timothy Ross
Vice President - U.S. Finance Operations
Facsimile: +1-919-905-3714
 With copies (that shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza
New York, NY 10006
United States
Attention: Lisa Schweitzer
James Bromley
Facsimile: +1-212-225-3999

Any such demand, notice, communication or report shall be deemed to have been given pursuant
to this Agreement when delivered personally, when confirmed if by facsimile transmission, or on
the calendar day after deposit with a reputable overnight courier service, as applicable.

SECTION 9.8. Exhibits: Seller Disclosure Schedule.

(a) The Seller Disclosure Schedule and the Exhibits attached hereto constitute a
part of this Agreement and are incorporated into this Agreement for all purposes as if fully set
forth herein.

(b) Disclosure in any section of the Seller Disclosure Schedule of any facts or
circumstances shall be deemed to be adequate response and disclosure of such facts or
circumstances in any other section of the Seller Disclosure Schedule as though fully set forth in
such other section, if it is reasonably apparent from the Seller Disclosure Schedule that such
disclosure is applicable. The inclusion of any information in any section of the Seller Disclosure
Schedule shall not be construed as indicating that such matter is necessarily required to be
disclosed in order for any representation or warranty to be true and correct in all material
respects. The Seller Disclosure Schedule is qualified in its entirety by reference to this
Agreement and is not intended to constitute, and shall not be construed as constituting,
representations or warranties by any Party except to the extent expressly set forth therein. The
inclusion of any information in any section of the Seller Disclosure Schedule or other document
delivered by the Seller pursuant to this Agreement shall not be deemed to be an admission or
evidence of the materiality of such item, nor shall it establish a standard of materiality for any
purpose whatsoever.

SECTION 9.9. Counterparts.

The Parties may execute this Agreement in two or more counterparts (no one of which
need contain the signatures of all Parties), each of which will be an original and all of which
together will constitute one and the same instrument. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or electronic mail shall be as effective as delivery
of a manually executed counterpart of a signature page to this Agreement.

SECTION 9. 10. No Presumption.

The Parties agree that this Agreement was negotiated fairly between them at arm's length
and that the final terms of this Agreement are the product of the Parties' negotiations. Each
Party represents and warrants that it has sought and received experienced legal counsel of its
own choosing with regard to the contents of this Agreement and the rights and obligations
affected hereby. The Parties agree that this Agreement shall be deemed to have been jointly and
equally drafted by them, and that the provisions of this Agreement therefore should not be
construed against a Party on the grounds that such Party drafted or was more responsible for
drafting the provisions.

SECTION 9.11. Severability.

If any provision, clause, or part of this Agreement, or the application thereof under
certain circumstances, is held invalid, illegal or incapable of being enforced in any jurisdiction,
(i) as to such jurisdiction, the remainder of this Agreement or the application of such provision,
clause or part under other circumstances, and (ii) as for any other jurisdiction, all provisions of
this Agreement, shall not be affected and shall remain in full force and effect, unless, in each
case, such invalidity, illegality or unenforceability in such jurisdiction materially impairs the
ability of the Parties to consummate the transactions contemplated by this Agreement. Upon
such determination that any clause or other provision is invalid, illegal or incapable of being
enforced in such jurisdiction, the Parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the Parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible even in such jurisdiction.

SECTION 9.12. Headings.

The headings used in this Agreement are for the purpose of reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.

SECTION 9.13. Entire Agreement.

This Agreement and the Non-Disclosure Agreement together set forth the entire
understanding of the Parties relating to the subject matter thereof, and all prior or
contemporaneous understandings, agreements, representations and warranties, whether written or
oral, are superseded by this Agreement, the Non-Disclosure Agreement and all such prior or
contemporaneous understandings, agreements, representations and warranties are hereby
terminated. In the event of any irreconcilable conflict between this Agreement and the Non-
Disclosure Agreement the provisions of this Agreement shall prevail.

SECTION 9.14. Availability of Equitable Relief: Limitation on Damages.

(a) The Parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, subject to the limitations set forth in Section 8.3 and in
this Section 9.14, each of the Parties shall be entitled to equitable relief to prevent or remedy
breaches of this Agreement prior to the Closing or applicable Subsequent Transfer Date, without
the proof of actual damages, including in the form of an injunction or injunctions or orders for
specific performance in respect of such breaches. Each Party agrees, to the extent that such Party
is subject to any equitable remedy, to waive any requirement for the security or posting of any
bond in connection with any such equitable remedy. Each Party further agrees that the only
permitted objection that it may raise in response to any action for equitable relief is that it
contests the existence of a breach or threatened breach of the provisions of this Agreement or
that equitable relief is not available pursuant to section 8.3 or this Section 9.14. Without limiting
the preceding provisions of this Section 9.14(a), it is acknowledged and agreed that under no
circumstances shall any Person be responsible or liable for any Losses that are consequential, in
the nature of lost profits, diminution in the value of property, special or punitive or otherwise
not actual damages arising out of, or in connection with, this Agreement or the transactions
contemplated hereby or any breach or alleged breach of any of the terms hereof or any other
Transaction Document. Nothing set forth in this Agreement shall confer or give or shall be
construed to confer or give to any Person (including any Person acting in a representative
capacity) any rights or remedies against any Person other than the Parties.

(b) Notwithstanding anything to the contrary set forth in Section 9.14(a), if this
Agreement is terminated by either Party pursuant to Section 8. 1, then equitable relief shall not be
available as a remedy for any breach hereof to the terminating Party or its Affiliates against the
non-terminating Party or its Affiliates.

(c) Notwithstanding anything to the contrary contained in any Transaction

Document, in no event shall the Seller be subject to any Liability to the Purchaser for the failure
of the purchase and sale of the Legacy Number Blocks contemplated by this Agreement to be
consunmmated, or in respect of any Liabilities arising under, or relating to, this Agreement or any
other Transaction Document or the transactions contemplated hereby or thereby, including as a
result of an Intentional Breach of this Agreement or any other Transaction Document by the
Seller prior to Closing (or if any contemplated Subsequent Transfer Date will not occur as a
result of the operation of Section 8.3, the later of the Closing Date or the last Subsequent
Transfer Date occurring hereunder), other than equitable relief granted pursuant to and in
accordance with this Section 9.14.

[Remainder of this page intentionally left blank. Signature pages follow.]

IN.W1TNBSS WHREF the SeUlc and thr; PmrhJascrhave duly ekcuted this Asset Sale
Agrcmmt as of the 4axte Amxt wnftten abnvr.

NORTEL TW RKS INC.

MCROSUOr COIRPuJRATON
Exhibit A to the Sale Agreement

Filed Under Seal

Exhibit B to the Sale Agreement

Filed Under Seal

Exhibit C to the Sale Agreement

Filed Under Seal

Exhibit D to the Sale Agreement

Filed Under Seal

Schedules to the Sale Agreement

Filed Under Seal

 IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

----------------------------------------------------------------
X
:
In re : Chapter 11
:
Nortel Networks Inc., et al.,1 : Case No. 09-10138 (KG)
:
Debtors. : Jointly Administered
:
Hearing date: April 26, 2011 at 9:30 am (ET)
: Objections due: April 4, 2011 at 4:00 pm (ET)
:
----------------------------------------------------------------
X

NOTICE OF DEBTORS’ MOTION FOR ENTRY OF AN ORDER (I)

AUTHORIZING AND APPROVING THE SALE OF INTERNET NUMBERS
FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND
INTERESTS; (II) AUTHORIZING AND APPROVING ENTRY INTO A
PURCHASE AND SALE AGREEMENT; (III) AUTHORIZING THE FILING OF
CERTAIN DOCUMENTS UNDER SEAL AND (IV) GRANTING RELATED RELIEF

PLEASE TAKE NOTICE that the debtors and debtors-in-possession

(collectively, the “Debtors”) in the above-captioned cases, have today filed the attached
Debtor’s Motion For Entry Of An Order (i) Authorizing And Approving The Sale Of
Internet Numbers Free And Clear Of All Liens, Claims, Encumbrances And Interests; (ii)
Authorizing And Approving Entry Into A Purchase And Sale Agreement; (iii) Authorizing
The Filing Of Certain Documents Under Seal And (iv) Granting Related Relief (“Motion”).

PLEASE TAKE FURTHER NOTICE that any party wishing to oppose the entry
of an order approving the Motion must file a response or objection (“Objection”) if any, to the
Motion with the Clerk of the United States Bankruptcy Court for the District of Delaware, 824
Market Street, 3rd Floor, Wilmington, Delaware 19801 on or before the proposed objection
deadline of April 4, 2011 at 4:00 p.m. (Eastern Time) (the “Objection Deadline”).

1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s tax
identification number, are: Nortel Networks Inc. (6332), Nortel Networks Capital Corporation
(9620), Nortel Altsystems Inc. (9769), Nortel Altsystems International Inc. (5596), Xros, Inc.
(4181), Sonoma Systems (2073), Qtera Corporation (0251), CoreTek, Inc. (5722), Nortel
Networks Applications Management Solutions Inc. (2846), Nortel Networks Optical
Components Inc. (3545), Nortel Networks HPOCS Inc. (3546), Architel Systems (U.S.)
Corporation (3826), Nortel Networks International Inc. (0358), Northern Telecom International
Inc. (6286), Nortel Networks Cable Solutions Inc. (0567) and Nortel Networks (CALA) Inc.
(4226). Addresses for the Debtors can be found in the Debtors’ petitions, which are available at
http://dm.epiq11.com/nortel.
 At the same time, you must serve such Objection on counsel for the Debtors so as
to be received by the Objection Deadline.

PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE MOTION

WILL BE HELD ON APRIL 26, 2011 AT 9:30 A.M. (EASTERN TIME) BEFORE THE
HONORABLE KEVIN GROSS AT THE UNITED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF DELAWARE, 824 MARKET STREET, 6TH FLOOR, COURTROOM #3,
WILMINGTON, DELAWARE 19801. ONLY PARTIES WHO HAVE FILED A TIMELY
OBJECTION WILL BE HEARD AT THE HEARING.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE

COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT
FURTHER NOTICE OR HEARING.
Dated: March 21, 2011
Wilmington, Delaware
CLEARY GOTTLIEB STEEN & HAMILTON LLP
James L. Bromley (admitted pro hac vice)
Lisa M. Schweitzer (admitted pro hac vice)
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999

- and -

MORRIS NICHOLS, ARSHT & TUNNELL LLP

___/s/ Alissa T. Gazze_________________

Derek C. Abbott (No. 3376)
Eric D. Schwartz (No. 3134)
Ann C. Cordo (No. 4817)
Alissa T. Gazze (No. 5338)
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989

Counsel for the Debtors

and Debtors in Possession

4147064.1