Exhibit 10.130

Nortel Networks Limited Annual Incentive Plan

Section 1: Introduction

The Nortel Networks Limited Annual Incentive Plan (“AIP Plan”) is a short-term,
incentive bonus plan that provides the potential for “Eligible Employees” (as
defined below) to receive cash awards based on their contributions to the
success of the relevant “Business Unit”1 of the Company2, conditioned on the
relevant Business Unit meeting its objectives.

The AIP Plan is intended to drive business performance by rewarding Eligible
Employees for their contributions to the relevant Business Unit’s overall
success and the completion of their role. An Eligible Employee’s contribution is
determined by the following factors: (1) the impact of the employee’s role on
business results and (2) the employee’s performance during the employee’s active
employment with the Company. The actual award received by an Eligible Employee
will reflect (1) the scope, complexity, and responsibilities of the employee’s
role and the employee’s performance during the applicable Plan Period3 and
(2) the relevant Business Unit’s performance during the applicable Plan Period
as indicated by the Business Unit Performance Factor, as described below.

 

1 For purposes of the AIP Plan, the “Business Unit” is defined as any
organization or reporting entity/function as defined and approved by the Board
of Directors (as defined in Section 2).

2 For purposes of the AIP Plan, the “Company” is defined as Nortel Networks
Limited and its subsidiaries and affiliates and other entities, which it
controls directly or indirectly and which have been approved for participation
in the AIP Plan by the Board of Directors.

3 The Plan Periods applicable to Group A and Group B Eligible Employees whose
roles are other than JCI 55 in Groups A, B as of January 1st or, if later, their
first day of AIP Plan participation in the relevant calendar year (“Semi-Annual
Basis Eligible Employees”) is January 1st through June 30th of the relevant
calendar year (“First Half”) and July 1st through December 31st of the relevant
calendar year (“Second Half”). The Plan Period applicable to Eligible Employees
who are in Group B JCI 55 roles as of January 1st or, if later, their first day
of AIP Plan participation in the relevant calendar year (“Annual Basis Eligible
Employees”) is the relevant calendar year. For avoidance of doubt, subsequent
changes in the JCI of an Eligible Employee’s role during the relevant calendar
year will not affect the Plan Period applicable to such Eligible Employee.
Groups A and B are further defined in Appendix A. The Plan Period(s) may be
changed and other Groups may be designated by the Board of Directors at any
time.

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Section 2: AIP Plan Eligibility

Generally, regular full-time and regular part-time4 Company employees assigned
to a Business Unit are eligible to participate in the AIP Plan (“Eligible
Employees”), subject to the following:

 

  (1) Eligible Employees, who participate in other Company incentive plans for a
full calendar month or the greater portion of a calendar month, as determined by
the Company, are not eligible to participate in the AIP Plan during that
calendar month. For purposes of the AIP Plan, “other incentive plans” mean any
other incentive/bonus arrangements which the Company determines have been
offered in lieu of the AIP Plan.

 

  (2) Subject to applicable law, employees who are covered under a collective
labor agreement are not eligible unless that collective labor agreement provides
for their participation in the AIP Plan.

 

  (3)

Individuals determined by the Company to be students, co-op students, interns,
temporary5, or non-payroll workers (i.e., individuals who are not paid from a
Company employee payroll) are ineligible to participate in the AIP Plan.

 

  (4) The Boards of Directors of Nortel Networks Corporation and Nortel Networks
Limited (the “Board of Directors”) may determine that certain Company employees
(including employees who are not otherwise eligible for the AIP Plan) may be
eligible to receive an award from a Discretionary Bonus Pool created pursuant to
Section 5 hereof.

 

  (5)

Subject to applicable law, to be eligible for an award for any relevant Plan
Period an employee must be actively employed in a role that is eligible under
the AIP Plan or other incentive plan (“Incentive Eligible Role”) for at least
one calendar month in that Plan Period6 and (a) be employed by the Company on
the applicable Payment Date, as defined in Section 4 hereof, or (b) if no longer
employed as of the applicable date set out in sub-section 5(a) above, then be
terminated from employment prior to the applicable Payment Date due to death,
Transfer or involuntarily by the Company for a reason determined by the Company
to be other than for Cause. For purposes of the AIP Plan, an employee will be
considered to be “actively employed” on those

 

4 For purposes of the AIP Plan, regular full-time and regular part-time Company
employees are those employees who are eligible for participation in the Company
health benefit plans based on their regularly scheduled hours.

5 Where legally required, temporary full time employees on fixed term contracts
with the Company may be included as Eligible Employees subject to the other
conditions in Section 2 of the AIP Plan.

6 The required period of active employment status may be changed by the Board of
Directors at any time.

 

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  days when the employee is classified as “active” on the applicable Company
payroll and one day of active employment in a calendar month is deemed to be
active employment for that full calendar month. “Transfer” under the AIP Plan
means an Eligible Employee’s transfer to or hire by a new employer not
affiliated with the Company that purchased one or more of the Company’s business
units or to which Company services have been outsourced with the advance written
consent, including with respect to the Eligible Employee’s transfer or hire
date, of the Company and the new employer. “Cause” under the AIP Plan means the
employee’s inappropriate actions or inactions, misconduct, breach of an
agreement with the Company or unsatisfactory performance or cause (as legally
defined, if at all, in the relevant jurisdiction)(collectively, “Cause”).

 

  (6) Pro-rated awards will be made as described below to employees who
(a) transfer into or out of positions covered by other incentive plans, (b) move
from or to a job within the Company that is ineligible for the AIP Plan, (c) are
on a Company approved leave of absence or on “notice” of termination of
employment and not actively employed for part of the Plan Period or (d) are
terminated from employment due to death, Transfer or by the Company
involuntarily for a reason determined by the Company to be other than for Cause
prior to the end of the relevant Plan Period, provided that the employee meets
the other AIP Plan requirements set out above. However, subject to applicable
law, an employee is not eligible for an AIP Plan payout for any calendar month
in which the employee is not actively employed in a position eligible under the
AIP Plan for at least one day. Except as provided in the following sentence, if
an employee meets the above AIP Plan requirements, but is actively employed in a
position that is eligible under the AIP Plan for less than the full relevant
Plan Period, the employee’s AIP Plan award for the relevant Plan Period will be
based on the number of months during the relevant Plan Period that the employee
is actively employed in a AIP Plan eligible position for at least one calendar
day divided by the number of months in the relevant Plan Period. For purposes of
determining the amount of a pro-rata AIP Plan award, an employee will not be
considered to be actively employed in an AIP Plan eligible position in a
calendar month in which (x) the employee participates in another incentive plan
for that full calendar month or (y) the employee participates in another
incentive plan for the greater portion of the month, each as determined by the
Company.

 

  (7) With respect to former employees who continue to be eligible for an AIP
Plan award under Section 2(5) (b) of the AIP Plan, the Company may deny payment
of that AIP Plan award to those former employees if they engage in conduct after
their employment termination date and prior to the applicable Payment Date that
constitutes Cause, as determined by the Company.

Notwithstanding the foregoing, any payment made after termination of employment
to a “specified employee” that would be considered a “deferral

 

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of compensation” within the meaning of, and subject to, Section 409A of the U.S.
Internal Revenue Code and regulations thereunder (“Section 409A”) will be paid
on the later of the date which is six months and one day after (a) the
termination date and (b) the date on which the award is otherwise payable under
Section 4 of the AIP Plan. A “specified employee” means any U.S. taxpayer who is
a key employee (as defined in Section 416(i) of the U.S. Internal Revenue Code
without regard to paragraph 5 thereof) of the Company. (This is generally
limited to employees who are (i) in the top 50 officers having an annual
compensation greater than US$145,000, (ii) a 5-percent owner, or (iii) a
1-percent owner having an annual compensation of more than US$150,000.). For
this purpose, termination of employment means “a separation from service” as
defined in Section 409A.

 

  (8)

An employee’s Management Team7 may, in consultation with the relevant Human
Resources Business prime, make limited exceptions to the ‘actively employed’
requirement set out in Section 2(5) above where required by applicable law
(e.g., as required under applicable maternity, paternity, parental, military,
family, or medical leave laws). Notwithstanding anything in the foregoing to the
contrary, nothing in the AIP Plan shall preclude the Company paying an employee
an award under the AIP Plan for more than the number of months the employee was
actively employed in an AIP Plan eligible role during the relevant Plan Period
pursuant to an approved individual employee’s employment termination agreement.

 

  (9) Company affiliates and joint ventures may choose to offer the AIP Plan or
a similar plan subject to the approval of the Board of Directors.

Section 3: Award Elements

An Eligible Employee’s cash award for the relevant Plan Period under the AIP
Plan will be based on the following formula8:

Formula Applicable to Semi-Annual Basis Eligible Employees:

50%9 of Annual Base Salary x Award % x Business Unit Performance Factor for
First Half or Second Half, as applicable

Formula Applicable to Annual Basis Eligible Employees:

100%10 of Annual Base Salary x Award % x Business Unit Performance Factor for
Calendar Year

 

7  The “Management Team” consists of the managers with whom the employee has a
direct or indirect reporting relationship as set out in the Organization
Structure Manager (“OSM”) or its equivalent as maintained by the Company from
time to time.

8  The AIP Plan award will be pro-rated as applicable under Section 2(6) and
(8).

9  The percentage of Annual Base Salary that is applied to the formula may be
changed by the Board of Directors at any time.

10 The percentage of Annual Base Salary that is applied to the formula may be
changed by the Board of Directors at any time.

 

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Annual Base Salary means the annualized regular compensation paid to an Eligible
Employee, excluding any other compensation, such as, but not limited to,
bonuses, commissions, overtime, and relocation benefits. The Annual Base Salary
for these purposes will be measured for all Eligible Employees during the last
calendar month of the relevant Plan Period on a uniform date.

Award % is the percentage determined for each Eligible Employee for purposes of
the applicable formula above based on the scope, complexity, and
responsibilities of the employee’s role and that employee’s performance during
the applicable Plan Period. An Eligible Employee’s Award % is subject to review,
modification and approval by Senior Management and the Board of Directors as
provided in Section 4.11

For Eligible Employees in Job Complexity Indicator (“JCI”) 1-6 and 55, target
Award %s (“Target Award %”) ranging from 3.5% to 100% are established that
reflect JCI level and assume that the Eligible Employee’s performance is at a
minimum satisfactory. The JCI level for these purposes will be measured
concurrently with Annual Base Salary as described above. There is no guarantee
that an Eligible Employee’s Award % used in the formula above will equal the
applicable Target Award %.

The total AIP Plan award for all Eligible Employees for a Business Unit is
recommended by Senior Management for approval by the Board of Directors after
the end of the relevant Plan Period. The Board of Directors will determine, in
its sole discretion, whether all or any part of the recommended total AIP Plan
award for a Business Unit for the relevant Plan Period will be paid and the
amount of any total AIP Plan award for a Business Unit in respect of that Plan
Period.

Business Unit Performance Factor applicable to each Business Unit shall be
determined by the Board of Directors in its sole discretion based on its
assessment of that Business Unit’s achievements against performance metrics
targets established for that Business Unit by the Board of Directors in its sole
discretion for the First Half and the Second Half. The Business Unit Performance
Factor may be based on one or more performance metrics, each with specific
targets. The performance metrics may have equal or different weightings.
Performance metrics are the general Business Unit objectives for the First Half
or Second Half, as applicable. Targets will be based on objective and/or
subjective criteria established to measure, directly or indirectly, the
performance metrics. Weightings will be the relative weight or percentage
accorded in the relevant Business Unit Performance Factor for achieving each
specific target. After approval by the Board of Directors, the relevant Business
Unit’s objectives for the First Half and the Second Half will be communicated to
Eligible Employees within that Business Unit. The

 

11 For purposes of the Plan only, “Senior Management” shall consist of the
person holding the most senior position in a Business Unit and any other
position(s) as identified and approved by the Board of Directors (as defined in
Section 2).

 

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Business Unit Performance Factor for each Business Unit is deemed to be 1.0
(achievement) throughout the relevant Plan Period and is then adjusted by the
Board of Directors based on its determination of each Business Unit’s
performance for (i) the First Half and Second Half, as applicable, with respect
to the award calculation of Semi-Annual Basis Eligible Employees for the
relevant Plan Period and (ii) the calendar year with respect to the award
calculation of Annual Basis Eligible Employees for the relevant Plan Period;
provided, however, that, the Business Unit Factor for the calendar year, which
is used in the award calculation for Annual Basis Eligible Employees, will be
equal to the average of the applicable Business Unit Factor for the First Half
and the Second Half. Senior Management may, in its sole discretion, recommend to
the Board of Directors that the applicable Business Unit Performance Factor be
adjusted with respect to certain sub-units within a Business Unit, JCI levels or
any other groups of employees and the Board can approve such adjustment to the
relevant Business Unit Performance Factor, in its sole discretion, based on
additional factors that Senior Management and Board of Directors determine in
their sole discretion are relevant to the award including, without limitation,
collective relative contribution to achievement of the key Business Unit
objectives during the relevant Plan Period.

The Business Unit Performance Factor used in an Eligible Employee’s Award
calculation will be based on the Business Unit to which the Eligible Employee is
aligned as of a uniform date in the last calendar month in the relevant Plan
Period.

Section 4: AIP Plan Awards

Awards for each relevant Plan Period are calculated as described in Section 3.
Notwithstanding any provision in the AIP Plan to the contrary, the maximum AIP
Plan award payable to an Eligible Employee in the relevant Plan Period is a cash
amount equal to (a) 100% of such Eligible Employee’s Annual Base Salary
multiplied by a percentage equal to one and one-half (1.5) times the Eligible
Employee’s Target Award % if such employee is an Annual Basis Eligible Employee
or (b) 50% of such Eligible Employee’s Annual Base Salary multiplied by a
percentage equal to one and one-half (1.5) times the Eligible Employee’s Target
Award % if such employee is a Semi-Annual Basis Eligible Employee.

Any award under the AIP Plan to an Eligible Employee is subject to the
discretion of the Eligible Employee’s Management Team and Senior Management and
the Board of Directors. That is, an Eligible Employee’s Management Team
determines, in its discretion, the Award % for an Eligible Employee subject to
review, modification and approval by Senior Management. Specifically, Senior
Management reserves the right, in its discretion, to review and adjust Eligible
Employees’ Award percentages, which are assigned to those Eligible Employees by
their Management Team, to reflect its assessment of the employees’
contributions, as reflected in their performance, to the Business Unit or the
achievement of the Business Unit’s key objectives, as well as to ensure that the
final payouts, if any, are within appropriate budgetary guidelines. Finally, the
Board of Directors reserves the right, in its discretion, to make a final
determination of the Award % of any Eligible Employee. The Board of Directors
determines, in its sole

 

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discretion, the achievement of the targets for the performance metrics, the
final calculation of the Business Unit Performance Factor (which may include a
determination of a Business Unit Performance Factor of zero, even if certain of
the performance metrics targets are achieved, and/or an adjustment to the
relative weighting of the performance metrics) and whether AIP Plan awards will
be paid in respect of a Plan Period. During the relevant Plan Period, the Board
of Directors can review Business Unit objectives, performance measures,
weightings, and targets to determine whether they remain appropriate. The Board
of Directors may, at its sole discretion, adjust the Business Unit’s objectives,
performance measures, weightings, targets, and/or plan payouts for the relevant
Plan Period, as it deems necessary, to reflect changes in business conditions or
other circumstances.

Subject to applicable law, Senior Management, may approve the reduction of AIP
Plan awards payable to Eligible Employees for a Plan Period by the full or
partial amount of other bonuses or similar payments, including, without
limitation, Company performance related payments required by applicable law,
that are payable to such employees in respect of any part of such Plan Period.
Senior Management, will have sole discretion to determine those bonuses or
payments that are subject to the preceding sentence and the amount of any such
reduction to the AIP Plan award.

Subject to applicable law, Senior Management may approve accelerated payments at
target (Business Unit Performance Factor of 1.0) to Eligible Employees in
entities designated for entity closure prior to the determination of a Business
Unit Performance Factor for the Plan Period by the Board of Directors. These
payments may be made on a pro-rated basis and as soon as practicable to Eligible
Employees who are terminated from employment involuntarily (not for Cause) by
the Company due to the entity closure action. Any accelerated payment shall be
contingent upon the Eligible Employee executing and submitting to the Company a
release in a form to be determined and provided by the Company (the “Release”)
of all claims related to the Plan.

If the Board of Directors approves the payment of a total AIP Plan award for a
Business Unit for the relevant Plan Period in accordance with the provisions of
the AIP Plan, any AIP Plan award approved for an Eligible Employee under the AIP
Plan in that Business Unit will be payable as follows:

Semi-Annual Basis Group A Eligible Employees:

1. 100% of the award, if any, with respect to the First Half Plan Period
following completion of the First Half;

2. 100% of the award, if any, with respect to the Second Half Plan Period
following completion of the Second Half.

Semi-Annual Basis Group B Eligible Employees:

1. 50% of the award, if any, with respect to the First Half Plan Period
following completion of the First Half;

 

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2. 50% of the award, if any, with respect to the First Half Plan Period
following completion of the Second Half; and

3. 100% of the award, if any, with respect to the Second Half Plan Period
following completion of the Second Half.

Notwithstanding the foregoing, if the employment of a Group B Semi-Annual Basis
Eligible Employee is terminated involuntarily by the Company for a reason
determined by the Company to be other than for Cause or due to the Employee’s
death or Transfer and the employment termination occurs (a) on or before
June 30th of the relevant calendar year, then 100% of the award with respect to
the First Half Plan Period will be payable following completion of the First
Half and no award will be payable with respect to the Second Half Plan Period or
(b) on or after July 1st of the relevant calendar year, then (i) with respect to
any First Half award that is payable, 50% will be paid following completion of
the First Half and the remaining 50% will be paid within 90 days of such
employment termination, but in no event earlier than such initial 50% payment,
and (ii) with respect to any Second Half award that is payable, 100% will be
paid following completion of the Second Half.

Annual Basis Eligible Employees:

100% of the award, if any, with respect to the calendar year Plan Period
following the completion of the Second Half.

The payment of any award or portion of an award payable upon completion of the
First Half, as provided above, will be made as soon as practicable following
September 1st of that calendar year, but in no event later than October 31st of
that calendar year. The payment of any award or portion of an award payable upon
completion of the Second Half, as provided above, will be made as soon as
practicable following March 1st of the following calendar year but in no event
later than April 30th of the following calendar year.

The applicable date on which an award is paid as described above is the “Payment
Date”. AIP Plan awards are considered income and are therefore subject to
national, state/provincial, and/or local taxes. All appropriate taxes and other
withholdings will be deducted from any such awards and payments as required by
applicable law. Each AIP Plan award for each separate Plan Period will be
treated as a separate payment for purposes of Section 409A.

Depending on local laws and policies, AIP Plan awards may have an impact on some
benefits and may or may not be included in the “eligible earnings” for purposes
of capital accumulation and retirement plans offered in the various regions by
the Company. Where appropriate, deductions may be made from AIP Plan awards in
accordance with the specific capital accumulation and retirement plan in which
the Eligible Employee participates.

Notwithstanding anything in the AIP Plan to the contrary, if the Board of
Directors, in its sole discretion, upon consideration of facts and circumstances
determined by the Board of Directors to be relevant, concludes that an Eligible
Employee has committed

 

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intentional misconduct, as defined in the Policy Regarding Recoupment of
Incentive Compensation (the “Recoupment Policy”) relating to the forfeiture
and/or recoupment of incentive compensation, including AIP Plan award payments,
the Eligible Employee will forfeit any planned but unpaid AIP Plan award and/or
reimburse the Company the amount of the AIP Plan award received, as determined
by the Board of Directors.

Section 5: Discretionary Bonus Pool

During a Plan Period, the Board of Directors may consider the creation of a
separate Discretionary Bonus Pool under the AIP Plan to provide discretionary,
incremental bonus awards. These awards may be made to all employees of the
Company or employees of the Company who individually or in groups made a
relative contribution that significantly added to the overall success of the
Company, whether or not the employees are eligible to participate in the AIP
Plan under the criteria set out in Section 2 of this document. The determination
that a Company employee is eligible for a Discretionary Bonus Pool award does
not otherwise entitle that employee to generally participate in the AIP Plan.
The Board of Directors have complete discretion to determine: the establishment
of the Discretionary Bonus Pool; the eligibility criteria for participation; any
performance metrics, weightings and targets; the achievement, if any, of the
targets for the performance metrics; and the amount of the awards, if any, paid
from the Discretionary Bonus Pool. Whether or not an Eligible Employee receives
a AIP Plan award shall have no effect on that employee’s eligibility to receive
a Discretionary Bonus Pool award.

Discretionary Bonus Pool awards will be considered income and therefore subject
to national, state/provincial, and/or local taxes. All appropriate taxes and
other withholdings will be deducted from the award as required by applicable
law.

Depending on local laws and policies, Discretionary Bonus Pool awards may have
an impact on some benefits and may or may not be included in the “eligible
earnings” for purposes of capital accumulation and retirement plans offered in
the various regions by the Company. Where appropriate, deductions may be made
from the Discretionary Bonus Pool awards in accordance with the specific capital
accumulation and retirement plan in which the employee participates.

Section 6: Interpretations and Amendments

This document, as amended from time to time, constitutes the “Nortel Networks
Limited Annual Incentive”. In the event of any conflicts or inconsistencies
between the provisions of the AIP Plan and any other document or communication,
written or oral, concerning the AIP Plan, the provisions of this document, as
amended from time to time, will govern.

The Board of Directors will interpret the provisions of the AIP Plan and that
interpretation will be final and binding on the Company, the Business Units and
all AIP Plan participants. This document is also subject to interpretation to
comply with applicable laws. It is not and shall not be construed as either an
employment contract or

 

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as a contract concerning the subject matter contained herein. There is no
guarantee that any award under the AIP Plan will actually be paid. Any award is
determined at the discretion of an Eligible Employee’s Management Team, Senior
Management and the Board of Directors, as the case may be. If any awards,
however, are paid, they will be determined and paid in accordance with the
provisions herein.

The AIP Plan can only be terminated or amended by the Board of Directors, which
has the full authority, at any time, to terminate the AIP Plan or to delete,
modify and/or add to any and all terms, conditions, and provisions of the AIP
Plan.

As adopted by the Board of Directors of Nortel Networks Limited on July 25,
2002, as amended on January 23, 2003 with effect from January 1, 2003, as
amended on July 28, 2003 with effect from January 1, 2003, as amended on
February 26, 2004 with effect from January 1, 2004, as amended on March 9, 2006
with effect from January 1, 2006, as amended on March 15, 2007 with effect from
January 1, 2007, as amended on February 22, 2008 with effect from January 1,
2008, as amended on February 20, 2009 with effect from January 1, 2009, as
amended on November 13, 2009 with effect from October 1, 2009, as amended on
March 10, 2010 with effect from January 1, 2010 and as amended on March 3, 2011
with effect from January 1, 2011 and as amended on May 12, 2011 with effect from
January 1, 2011 and as amended on July 21, 2011 with effect from July 1, 2011,
as amended on Feruary 16, 2012 with effect from January 1, 2012.

 

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APPENDIX A

Group A Eligible Employees

 

  •  

Eligible Employees whose country of payroll is Mexico

Group B Eligible Employees

 

  •  

Eligible Employees whose country of payroll is Canada

 

  •  

Eligible Employees whose country of payroll is the United States

 

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