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CONFIDENTIAL-SPECIAL HANDLING    Exhibit 10.71

November 11, 2008

Mr. David Drinkwater

195 The West Mall

Toronto, Ontario

M9C 5K1

Dear David:

This letter (“Agreement”) records the arrangements between you and Nortel
Networks Limited (“NNL”) concerning the cessation of your employment. The
Agreement shall bind and inure to the benefit of each party and their respective
heirs, successors and assigns. You acknowledge that this Agreement contains
modifications to the arrangements provided to you in an earlier document on or
about October 16, 2008 concerning the cessation of your employment.

 

1. As used in this Agreement, the term “Corporation” shall mean Nortel Networks
Corporation (“NNC”), its subsidiaries and affiliates, their successors and
assigns, and all of their past and present officers, directors, employees and
agents (in their individual and representative capacities), in every case,
individually and collectively.

 

2. You will cease to act as Chief Legal Officer of NNC and NNL effective
December 31, 2008 and, you will be appointed Senior Advisor of NNC and NNL
effective January 1, 2009. Effective as of the close of business on February 28,
2009, your active employment relationship with the Corporation will cease (the
“Employment Termination Date”) unless otherwise extended beyond February 28,
2009 by mutual agreement between you and the Corporation. You will cease to act
as an officer and/or director of the Corporation and any of the Corporation’s
subsidiaries and affiliates on February 28, 2009, and the Corporation will take
all necessary steps to remove you from all such positions.

 

3.

You understand and agree that your designation of Reporting Insider pursuant to
Corporate Policy 320.28 of the Corporation (and under applicable Canadian/U.S.
securities legislation for Reporting Insiders), shall cease effective 12:01 a.m.
on March 1, 2009. Notwithstanding the fact that you no longer have this
designation, if you are in possession of material non-public information
relating to the Corporation, you are prohibited from trading in securities of
the Corporation (or informing another person of the material non-public
information) in accordance with applicable laws. You further understand that you
are required to amend your insider profile within 10 days of February 28, 2009
on the Canadian System for Electronic Disclosure by Insiders (SEDI) to indicate
that you are no longer a Reporting Insider of the Corporation. You should

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contact the Insider Reporting Department at (905) 863-1220 and fax
(905) 863-8524 for assistance in amending the SEDI profile.

 

4. Conditional upon your compliance with all terms and conditions of this
Agreement, including, without restriction, paragraph 9 of this Agreement, the
Corporation shall:

(Severance Allowance)

 

  (a) pay you the sum of CAD$21,153.85 (Canadian dollars) bi-weekly, less
applicable deductions, for the period commencing on March 1, 2009 and
terminating August 31, 2010 (“Salary Continuation Period”);

(Vacation Benefit)

 

  (b) pay you, on or before March 31, 2009 a lump sum amount equivalent to 14
days of base salary representing all of your current accrued but unused vacation
benefit, with no further vacation accrual subsequent to February 28, 2009;

(2008 Nortel Networks Limited Annual Incentive Plan (“AIP”))

 

  (c) determine your eligibility for any AIP payment for calendar year 2008 in
accordance with the terms and conditions of the 2008 AIP. Any payment under the
Plan will be determined by the Corporation based on the terms and conditions of
the Plan applicable to you as of this date, applying the corporate performance
data applicable to all other participants. Eligibility shall not be construed as
a right to any payment. In accordance with the AIP, you will not be eligible for
any AIP payment for calendar year 2009 or any year thereafter;

(Pension benefits)

 

  (d) continue your participation and the related matching by the Corporation in
the Capital Accumulation and Retirement Program (CARP) during the Salary
Continuation Period, pursuant to the terms of the Northern Telecom Managerial
and Non-Negotiated Pension Plan (the “Pension Plan”) and the changes to the
Pension Plan which became effective January 1, 2008. Your final Pension Plan
benefits will be calculated in accordance with the Pension Plan provisions that
apply to you as of the date of determination;

(Long Term Incentives)

 

  (e)

consider you ineligible for consideration for any future grant(s) of stock
options, restricted stock units (“RSUs”) and performance stock units (“PSUs”).
Stock

 

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options and RSUs previously granted to you will continue to vest during the
Salary Continuation Period in accordance with the provisions of such plans. Your
rights with respect to any outstanding stock options and RSUs will continue to
be determined in accordance with the applicable Nortel equity plans and
applicable Instruments of Grant and/or Instruments of Award. Subject to any
applicable trading restrictions that may restrict your ability to trade Nortel
securities, you will have the right to exercise any vested Nortel stock options
or have any vested RSUs settled as set forth in Exhibit A in accordance with the
terms of the applicable instruments of grant/award, equity plan(s) and any other
relevant documents governing the options and RSUs. In addition, you acknowledge
that, in certain circumstances, you agree that you will, if required by Nortel
in its sole discretion, pay to Nortel an amount in cash equal to; (i) the amount
by which the market value of the shares on the date of exercise of the options
exceeds the exercise price (in the case of options); and (ii) the amount
(subject to certain adjustments) equal to the number of RSUs that vested during
the applicable period multiplied by the market value of the shares on the
applicable settlement date (in the case of RSUs), all in accordance with the
terms of the applicable instruments of award/grant and any other documents that
govern. All outstanding unvested PSU’s previously granted to you shall be
forfeited and cancelled for no consideration in accordance with the applicable
equity plan and instrument of award;

(Investment Plan)

 

  (f) following your completion of the necessary documentation, distribute your
account balance in accordance with the provisions of the Nortel Networks
Investment Plan. Your right to contribute to and participate in the Investment
Plan will cease at the end of the Salary Continuation Period;

(Income Tax Preparation)

 

  (g) pay the cost of personal income tax preparation by a service provider
selected by you for the tax years 2008, 2009 and 2010; and.

(Taxation)

 

  (h) with respect to any monies or monetary equivalents to be paid hereunder,
in its reasonable discretion withhold appropriate amounts concerning any and all
applicable federal and provincial taxes.

 

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(Independent Legal Advice)

 

  (i) pay the cost of independent legal advice relating to this agreement to a
maximum of $5,000.

 

5. All of the Corporation’s compensation, benefits and perquisites not expressly
extended to or preserved for you pursuant to this Agreement shall be terminated
effective 12:01 a.m., March 1, 2009.

 

6. Regardless of whether you comply with this Agreement, the Corporation shall
indemnify you, and advance any reasonable legal fees and expenses, to the extent
permitted by, and in accordance with, section 124 of the Canada Business
Corporations Act (the “CBCA”) and the Corporation’s By-Laws (the “By-Laws”). You
shall repay such fees and expenses if and to the extent it is determined that
you do not fulfill the conditions set forth in subsection 124(3) of the CBCA or
the By-Laws. Subject to and without limiting the foregoing, the Corporation’s
legal counsel will represent you in respect of any civil, criminal,
administrative, investigative (including any internal investigation or
independent review being conducted by the Corporation’s Board of Directors or a
Committee thereof) or other proceeding in Canada, the United States or other
applicable jurisdiction in which you are involved (including as a witness)
because of your association with the Corporation (hereinafter, the “Matter”).
However, in the event that the Corporation’s counsel cannot represent you in the
Matter because of a conflict, the Corporation agrees to advance monies to pay
your reasonable and actual legal expenses in the Matter provided that you will
not settle the Matter, retain defense counsel or expert witnesses or
consultants, or incur any defense costs without obtaining the prior written
consent of the Deputy General Counsel and Corporate Secretary, which consent
will not be unreasonably withheld.

 

7. It is agreed and understood that for the purposes of the Nortel Networks
Corporation Change in Control Plan (“CIC Plan”), “Termination Date” as defined
in the CIC Plan is February 28, 2009. In the event that in the 30 day period
after February 28, 2009, you become eligible for the Entitlements (as defined
under the CIC Plan) provided under the CIC Plan, this Agreement shall cease and
be replaced by the terms and conditions of the CIC Plan.

 

8. You shall reconcile and settle your employee expense account, and any
advances made to you by the Corporation, as soon as possible, but in any event
no later than March 31, 2009 and the Corporation shall in the normal course
reimburse you for any business expenses incurred by you through the Employment
Termination Date.

 

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9. You shall continue to maintain the confidentiality of all of the
Corporation’s trade secrets and confidential or proprietary commercial,
technical or other information; and specifically you agree that you shall not at
any time during or following your employment with the Corporation, disclose,
other than to the Corporation’s authorized personnel, or otherwise use for
non-Corporation purposes, any confidential or proprietary information (whether
or not a trade secret) relating to an activity of the Corporation. You shall
also continue to maintain the confidentiality of any dealings, transactions or
affairs of the Corporation which may have come to your knowledge in any manner
during your employment.

Further, you agree not to reveal, disclose, or cause to be revealed or
disclosed, anything with respect to the Corporation that is injurious or harmful
of any of its interests, or the interests of its employees, officers or
directors. In addition, during the period March 1, 2009 through to the end of
the Salary Continuation Period, you:

 

  (i) shall issue no public statement on the business affairs, policies or the
like of the Corporation without the prior written consent of the Deputy General
Counsel and Corporate Secretary and, without limiting the foregoing, you shall
not in any way disparage the Corporation or any director, officer and/or
employee of the Corporation from the date of receipt of this Agreement to and
including the last day of the Salary Continuation Period; and

 

  (ii) shall not, on behalf of yourself or others, directly or indirectly,
recruit, induce or solicit or attempt to recruit, induce or solicit any
individual who is supplying services to the Corporation, whether as an employee,
contractor, consultant or otherwise, to terminate their employment or
contractual arrangements with the Corporation; and

 

  (iii) shall not become an employee, contractor, consultant, representative or
in any manner or capacity accept any assignment, project or work for a company
in competition with the Corporation, without the prior written approval of the
Deputy General Counsel and Corporate Secretary, provided that such approval
shall not be unreasonably withheld.

The Corporation, on its own behalf and on behalf of its employees, officers and
directors agrees not to reveal, disclose or cause to be revealed or disclosed,
anything with respect to you that is injurious or harmful to any of your
interests and, without limiting the foregoing, shall not in any way disparage
you.

Nothing in this Agreement or otherwise shall prevent you or the Corporation from
(x) responding to incorrect, disparaging or derogatory statements to the extent
reasonably necessary to correct or refute such statement or (y) making any
truthful statement to the

 

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extent necessary in connection with the circumstances covered by clauses (i),
(ii) and (iii) of the next paragraph.

Notwithstanding any of the foregoing, the provisions of this paragraph 9 shall
not apply (i) when disclosure is required by law or by any court, or
administrative or legislative body (including any committee thereof) with actual
or apparent jurisdiction to order you or the Corporation to disclose or make
accessible any such information, (ii) with respect to any litigation involving
this Agreement or any other agreement between you and the Corporation, (iii) in
connection with any assistance provided by you pursuant to paragraph 12 hereof
or (iv) as to information that becomes generally known to the public or within
the relevant trade or industry other than due to a violation of this paragraph
9.

Also, you hereby acknowledge and agree that until your Employment Termination
Date you, as a senior executive of Nortel, are expected to continue to perform
your responsibilities at an exemplar level while displaying the highest
professional standards.

 

10. The Corporation’s obligations under paragraphs 4(a), (c), (d), (e), (f) and
(g) will terminate forthwith if you become an employee, consultant, contractor
or representative of any direct competitor of the Corporation unless the Deputy
General Counsel and Corporate Secretary provides prior written approval of such
engagement.

 

11. Upon the occurrence of any contingency which may affect your rights in or to
any subsequent payment or benefit, or affects the Corporation’s rights under
this Agreement, including without limitation, your obtaining new employment, you
shall, within ten (10) days of such occurrence, provide written notice to the
Corporation of that event. Such notice shall be sent in writing to the Deputy
General Counsel and Corporate Secretary. Subject to paragraph 10 above, and
provided that you are in compliance with this Agreement, it is understood that
you are under no duty to mitigate, and no remuneration or benefits earned by or
paid to you during the Salary Continuation Period shall affect the obligations
of the Corporation to make the payments, or provide the benefits, to you
contemplated by this Agreement.

 

12.

You shall make available to the Corporation, upon reasonable notice and at a
time convenient to you, advice, assistance and information that shall include,
but not be limited to, offering and explaining evidence, providing sworn
statements, participation in discovery, and trial preparation testimony as may
be deemed necessary by the Corporation concerning the Corporation’s position in
any legal proceedings involving issues brought against or initiated by the
Corporation of which you have knowledge. In the event it is necessary for you to
provide the aforementioned services, then the Corporation shall reimburse you
for authorized, reasonable and documented travel expenses, including, but not
limited to, transportation, lodging and meals. The

 

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Corporation acknowledges that attorneys’ fees and associated expenses are
reimbursable if the assistance you provide is related to any Matter, as set
forth in paragraph 6 hereof.

 

13. Prior to your Employment Termination Date, you shall return to the
Corporation any and all property of the Corporation that was in your possession
and/or subject to your control, whether such material shall be written
instruments or tapes in electronic and/or recorded format.

Nortel Networks Corporate Procedure 206.01 states that “all documents, messages
or data composed, sent, or received through the network of Nortel Networks in
any form are and remain at all times the property of Nortel Networks”. In
addition, all work product that you have produced during your employment with
the Corporation is the property of the Corporation. Therefore, all information,
(however recorded or stored) (“Information”) in your possession and/or that you
have created in the course of your employment with the Corporation (whether or
not currently in your possession or control) is the property of the Corporation.
Information does not include copies in your possession of your records of
employment and/or financial dealings between you and the Corporation.

The Corporation is a party to certain civil lawsuits and other investigations
and may need access to certain Information for those matters as well. Therefore,
you took affirmative steps to preserve all applicable information in your
possession, custody and control (including information controlled by your
assistant, if any), have left all such information in the possession and custody
of the Corporation, and do not have any other Information that is not in public
domain in your possession or custody.

The Information will be used by the Corporation for general business purposes
and may also be provided to regulatory authorities in response to their requests
or disclosed in any relevant private litigation to which the Corporation is a
party. Also, the Information may be used by and provided to entities within the
Corporation’s group of companies and/or the Corporation’s external advisors. In
some instances, the recipients of this Information will be located outside your
geographic area. To the extent that the information contains any personal
information, you consent to the collection, transfer and disclosure of that
information by the Corporation to subsidiaries and affiliates of the
Corporation, third parties and regulatory authorities within and outside of your
geographic area for the purposes set out above, and the Corporation shall advise
you of any such transmittal.

 

14.

In consideration of the monies and other benefits to be provided to you as set
forth herein, you hereby fully and completely release the Corporation, its
subsidiaries and affiliates, and their respective directors, officers and
employees, to the extent permitted by law, from any and all real or pretended
claims, causes of actions, rights, damages or

 

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injuries of any nature whatsoever you may have had or now have, whether known or
unknown, (except for promises and commitments contained or preserved herein),
arising from or connected with your employment with the Corporation or the
termination thereof, including any and all such claims, causes of action,
rights, damages or injuries arising under any statute, including, without
limitation, the applicable labour legislation in Ontario or at common law.
Furthermore, you understand that this release shall be binding upon you and your
heirs, administrators, representatives, executors, successors, and assigns and
its enforceability shall not be challenged.

You acknowledge that you have read this letter and that you understand all of
its terms and have executed it voluntarily with full knowledge of its
significance. Further, you acknowledge that you have had an adequate opportunity
to review and consider the arrangements, including at your discretion, the right
to discuss this Agreement with legal counsel of your choice. Also, you
acknowledge that you understand you are hereby granting to the Corporation a
full and final release as set forth above. In addition, you agree that your
receipt of payments and benefits described in this Agreement are contingent upon
you executing on or promptly following the Employment Termination Date, and
returning to Deputy General Counsel and Corporate Secretary, a release in the
Form of Exhibit B, which is attached and made a part of this Agreement.

 

15. This Agreement constitutes the entire understanding of the parties with
respect to your employment, including the cessation of your employment, and
there are no promises, understandings or representations other than those
expressly set forth or preserved herein. This Agreement may be modified only
with a written instrument duly executed by you and the Corporation.

 

16. This Agreement shall be governed by the laws of Ontario, Canada without
regard to any provisions concerning conflict of laws. This Agreement may be
delivered by facsimile and executed in counterparts, all of which, taken
together, shall constitute one and the same original instrument.

 

17. The parties agree that should any provision of this Agreement be declared or
be determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term, or provision shall be deemed not to be a part of
this Agreement.

 

18. If you have not returned an executed copy of this Agreement, by facsimile or
the original, to Deputy General Counsel and Corporate Secretary by the close of
business on November 28, 2008, then the terms and conditions set forth in this
Agreement shall be withdrawn as of that time and date.

 

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19. References to the Deputy General Counsel and Corporate Secretary contained
herein shall mean, as applicable, the Deputy General Counsel and Corporate
Secretary prior to December 31, 2008 and the Chief Legal Officer after
December 31, 2008.

Please acknowledge that the foregoing correctly and completely sets forth your
understanding of the arrangements, and your acceptance hereof, by signing,
dating and returning to Deputy General Counsel and Corporate Secretary, the
attached second copy of this Agreement.

 

Yours truly,

/s/ Mike S. Zafirovski

Mike S. Zafirovski For and on behalf of Nortel Networks Limited

/s/ Gordon A. Davies

Gordon A. Davies Deputy General Counsel and Corporate Secretary

/s/ David Drinkwater

David Drinkwater Date  

November 20, 2008

Attach. Second copy of this Agreement

 

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EXHIBIT A

David Drinkwater - Outstanding Equity as of February 28, 2009

 

Award

 

Grant

Date

 

Plan

  Number
of Units
Granted   Number
of Units
(Outstanding
as of Dec 31,
2008)   Strike Price
($CAD)  

 

Vesting

 

 

Termination Treatment

           

Date

  Amount  

Date

  Vested     Forfeit   Expiry

PSU-SRs

  14-Jun-06   2005 SIP   11,500   11,500   n/a   1-Jan-09   11,500     TBD (1)  
  n/a   21-Mar-07   2005 SIP   13,500   13,500   n/a   1-Jan-10   13,500  
14-Apr-09 (2)     13,500     3-Mar-08   2005 SIP   22,975   22,975   n/a  
31-Jan-11   22,975   14-Apr-09 (2)     22,975  

PSU-OMs

  3-Mar-08   2005 SIP   22,975   22,975   n/a   1-Jan-11   22,975  
14-Apr-09 (2)     22,975  

RSU

  19-Dec-05   2005 SIP   14,200     n/a   19-Dec-08   4,734           14-Jun-06
  2005 SIP   11,500   3,834   n/a   14-Jun-09   3,834   14-Jun-09   3,834      
n/a   21-Mar-07   2005 SIP   13,500   9,000   n/a   21-Mar-09   4,500  
21-Mar-09   4,500       n/a             21-Mar-10   4,500   21-Mar-10   4,500  
    n/a   3-Mar-08   2005 SIP   15,600   15,600   n/a   3-Mar-09   5,200  
3-Mar-09   5,200       n/a             3-Mar-10   5,200   3-Mar-10   5,200      
n/a             3-Mar-11   5,200   31-Aug-10     5,200  

Options

  19-Dec-05   2000   10,000   10,000   37.40   vested   7,500   vested   7,500  
    30-Aug-13             19-Dec-09   2,500   19-Dec-09   2,500       30-Aug-13
  14-Jun-06   2005 SIP   20,000   20,000   23.60   vested   10,000   vested  
10,000       29-Nov-10             14-Jun-09   5,000   14-Jun-09   5,000      
29-Nov-10             14-Jun-10   5,000   14-Jun-10   5,000       29-Nov-10  
21-Mar-07   2005 SIP   27,100   27,100   29.90   vested   6,775   vested   6,775
      29-Nov-10             21-Mar-09   6,775   21-Mar-09   6,775      
29-Nov-10             21-Mar-10   6,775   21-Mar-10   6,775       29-Nov-10    
        21-Mar-11   6,775   31-Aug-10     6,775     3-Mar-08   2005 SIP   62,550
  62,550   8.21   3-Mar-09   15,637   3-Mar-09   15,637       29-Nov-10        
    3-Mar-10   15,638   3-Mar-10   15,638       29-Nov-10             3-Mar-11  
15,637   31-Aug-10     15,637               3-Mar-12   15,638   31-Aug-10    
15,638  

Total

      245,400   219,034           104,834     102,700  

 

Notes:

 

(1) PSU-SR vesting subject to the CHRC determining the percentage of target
payout, if any, based on the level of achievement of the performance

(2) Upon termination, unvested PSUs remain outstanding and do not forfeit until
April 14, 2009 to address the change in control 30 day look back.

 

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