Exhibit 10.5

     

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CONFIDENTIAL-SPECIAL HANDLING
   
 
   
September 18, 2007
  VIA ELECTONIC TRANSMISSION
 
   
Mr. Steve Slattery
   
507 Laredo Circle
   
Allen, TX 75013
   
U.S.A.
   

Dear Steve,
This letter (“Agreement”) records the arrangements between you and Nortel
Networks Inc. concerning the cessation of your employment. The arrangements are
as follows:
Cessation of Employment

1.   As used in this Agreement, the term “Corporation” shall mean Nortel
Networks Inc., its parent, subsidiaries, affiliates (including, but not limited
to, Nortel Networks Corporation and Nortel Networks Limited), predecessors,
successors and assigns and all past and present officers, directors, employees
and agents (in their individual and representative capacities only) of Nortel
Networks Inc., its parent, subsidiaries, affiliates, predecessors, successors
and assigns, in every case individually and collectively.

2.   Your employment relationship with the Corporation shall cease on
September 30, 2007 (“Employment Termination Date”). All previous external
responsibilities which you had will be assumed by a person designated by the
Corporation, including any participation in industry or other associations
representing the Corporation. You cease to act as an officer and/or director of
the Corporation and any of the Corporation’s subsidiaries and affiliates on
September 18, 2007, and the Corporation will take all necessary steps to remove
you from all such positions.

Revocation Clause

3.   You acknowledge that you received this document on or about September 10,
2007, and have been provided at least twenty-one (21) days on or about
September 10, 2007, at your discretion, to consider the terms in this Agreement.
In addition, you shall have seven (7) calendar days following your execution of
this document to revoke this Agreement by written notice. To be valid, the
letter of revocation must be received by Gordon A. Davies at Nortel Networks,
195 The

 

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Mr. Steve Slattery
September 18, 2007
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    West Mall, Toronto, Ontario M9C 5K1, consistent with the terms of paragraph
10 of this Agreement, not later than the close of business seven (7) calendar
days after you sign this Agreement. The terms and conditions of this Agreement
shall become operative seven (7) days after you execute and deliver this
Agreement to Mr. Davies, provided that you are in compliance with all terms and
conditions of this Agreement as of such date, you have not revoked this
Agreement pursuant to the provisions set forth above in this paragraph and the
conditions in clauses (i) and (viii) of the first paragraph of paragraph 4 have
been satisfied.

Post Termination Payments/Benefits (“PTPB”) To Be Provided by the Corporation

4.   The Corporation will provide you the payments and benefits set out in this
paragraph 4(a) through (f) below, in addition to the payments and benefits set
forth in paragraph 5 of this Agreement, conditional upon (i) completion of the
Corporation’s governance process, including approval by the Compensation and
Human Resources Committee of the Boards of Directors of Nortel Networks
Corporation and Nortel Networks Limited, (ii) your signing and returning to
Mr. Davies a copy of this Agreement within the time period provided in paragraph
10 of this Agreement; (iii) your compliance with the terms and conditions of
this Agreement and the Employee Agreement and other documents such as the
Agreement Relating to Intellectual Property (collectively, the “Employment
Documents”); (iv) you not revoking this Agreement pursuant to paragraph 3 above;
(v) you not soliciting, either directly or indirectly, for employment during the
Severance Period any employee(s) currently employed by the Corporation; (vi) you
not electing to accept employment with, or serve as a consultant, contractor or
representative for, any of the companies identified on the Corporation’s
comparator list which was reviewed with you on September 13, 2007 (the
“Comparator List”), without the written consent of the Chief Legal Officer;
(vii) your execution on or promptly following the Employment Termination Date,
and returning to Mr. Davies, a Release in the Form of Exhibit A, which is
attached and made a part of this Agreement; and (viii) the Corporation’s
execution of this Agreement. Notwithstanding the foregoing, if the events in
clauses (i) and (viii) hereof do not occur on or prior to October 2, 2007, this
Agreement, including your release of claims in paragraph 9 hereof and your
agreement to terminate your employment, shall be null and void. So long as you
comply with the foregoing provisions, the Corporation will:       (Severance
allowance)

  (a)   pay you severance allowances (“Severance Pay”) pursuant to the Nortel
Networks Enhanced Severance Allowance Plan (“Severance Plan”) from October 1,
2007 through March 31, 2009 (“Severance Period”), paid in a bi-weekly amount of
nineteen thousand two hundred thirty dollars and seventy-seven cents
($19,230.77); provided that the payments which

 

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Mr. Steve Slattery
September 18, 2007
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      would ordinarily have been paid to you during the first six (6) months
shall be paid to you in a lump sum on or about April 1, 2008;

    (Insurance benefits)

  (b)   allow you to elect to: (i) continue during the Severance Period, all
group life insurance (basic and optional employee and optional spouse and
dependent), health coverages (medical, dental, vision, hearing, Employee
Assistance Program and Health Care Reimbursement Account (“HCRA”)) and AD&D
coverage in which you and your covered eligible dependents, if any, are enrolled
on the Employment Termination Date pursuant to the terms and conditions of such
coverages, or (ii) revoke all such coverages. If you elect (i), your coverages
will continue at the applicable active employee contribution rates and you shall
be responsible for the payment of such employee contribution rates by making
monthly payments during the first six months of the Severance Period and
subsequent to that period applicable payments will be deducted from Severance
Pay. The Corporation shall have the right to change coverages to the extent that
it is generally changing its coverages for employees. Upon termination of
coverage, only continued health coverage will be offered, as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for a period
generally extending for eighteen (18) months from your Employment Termination
Date, minus the period of coverage at active contribution rates during the
Severance Period. If you elect (ii), your life and AD&D coverages will terminate
effective 12:01 a.m. on October 1, 2007, and your health coverages, with the
exception of UCRA, will terminate at the end of the month in which your
employment relationship ceases (September 2007), with an opportunity for
continued health coverage under COBRA. If you decline the opportunity to
continue HCRA coverage under COBRA, only eligible expenses incurred on or prior
to the Employment Termination Date will be considered for reimbursement.
Irrespective if you select (i) or (ii) above, at the time your group life
insurance coverages terminate, you may convert appropriate coverages to
applicable individual policies. AD&D cannot be converted to an individual
policy. Please make your election in the space provided at the end of this
Agreement concerning your decision to elect or decline the benefits set forth in
this paragraph 4(b);

    (Stock Options, Restricted Stock Unit Awards (“RSUs”) and Performance Stock
Unit Awards (“PSUs”))

  (c)   consider you ineligible for consideration for any future grant(s) of
stock options, RSUs and PSUs. Moreover, all PSUs previously granted to you are
forfeited as of the Employment Termination Date. Further, the

 

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Mr. Steve Slattery
September 18, 2007
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      Corporation, in accordance with the applicable Nortel stock option plans
and applicable Instruments of Grant and/or Instruments of Award, will determine
your rights with respect to those stock options and RSUs granted to you prior to
the Employment Termination Date as set forth in Exhibit B attached hereto.
Subject to any applicable trading restrictions (including Nortel policies or
applicable securities laws) that may restrict your ability to trade Nortel
securities, you will have the right to exercise any vested Nortel stock options
or settle any vested RSUs in accordance with the terms of the applicable
instruments of grant/award, stock option plan(s) and any other relevant
documents governing the options and RSUs as set forth in Exhibit B. 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. Finally, please see paragraph 6(f) of this
Agreement for Stock Insider Obligations;

    (Outplacement assistance)

  (d)   make available to you, should you elect, senior executive outplacement
services in Dallas, Texas to assist you in securing new employment and pay the
professional fees for such services as are reasonably incurred;

    (Tax Preparation Services)

  (e)   provide you with income tax preparation service through a tax preparer
as designated by the Corporation, for the tax years 2007 and 2008;

    (Attorney’s Fees)

  (f)   reimburse you for the cost of your attorney’s fees incurred in
connection with the review of this Agreement in an amount not to exceed five
thousand dollars ($5,000);

    (2007 Annual Incentive Plan (“AIP”))

  (f)   you will not be eligible to receive an AIP payment for 2007;

 

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Mr. Steve Slattery
September 18, 2007
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    (Withholdings)

  (g)   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, state or local tax withholding.

Benefits and Payments Available to You Without Signing this Agreement

5.   The following payments and benefits shall be provided to you by the
Corporation, as applicable, without the requirement that you sign this
Agreement:       (Pension benefits)

  (a)   you shall be eligible for applicable benefits, pursuant to the terms and
conditions of the Nortel Networks Retirement Income Plan (“Retirement Income
Plan”);

    (Nortel Networks Retirement Income Plan Restoration Plan (“Restoration
Plan”), as applicable)

  (b)   you shall be eligible for applicable benefits, pursuant to the terms and
conditions of the Restoration Plan, however it is agreed and understood that in
no event will you receive benefits under the Restoration Plan earlier than six
months from your Employment Termination Date due to your status as a “key
employee” under Internal Revenue Code Section 409A;

    (Insurance benefits)

  (c)   you will be allowed to elect to: (i) continue applicable health
coverages, as required by the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), for a period generally extending for eighteen (18) months
following the Employment Termination Date from the Corporation; (ii) convert
your group life insurance to an individual policy without a medical examination
within thirty-one (31) days of the termination of that coverage; or (iii) if
eligible, to commence coverage under the Nortel Networks Retiree Medical Plan
and the Nortel Networks Retiree Life Plan pursuant to the terms and conditions
of those plans;

    (Stock options, Restricted Stock Unit Awards (“RSUs”) and Performance Stock
Unit Awards (“PSUs”))

  (d)   you are ineligible for consideration for any future grant(s) of stock
options and RSUs and PSUs. Moreover, all PSUs previously granted to you are
forfeited as of Employment Termination Date. It is understood that if you

 

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Mr. Steve Slattery
September 18, 2007
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      do not sign this Agreement there will be no Severance Period during which
stock options or RSUs granted to you prior to the Employment Termination Date
may be exercised or settled, as described in paragraph 4(c). Further, the
Company, in accordance with the applicable Nortel stock option plans and
applicable Instrument(s) of Grant and/or Instrument(s) of Award, will determine
your rights with respect to those stock options and RSUs granted to you prior to
the Employment Termination Date. Subject to any applicable trading restrictions
(including Nortel policies or applicable securities laws) that may restrict your
ability to trade Nortel securities, you will have the right to exercise any
vested Nortel stock options or settle any vested RSUs in accordance with the
terms of the applicable instruments of grant/award, stock option 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. Finally, please see paragraph 6(f) of this Agreement for Stock Insider
Obligations. The provisions of this paragraph 5(d) shall only apply if you do
not execute this Agreement in accordance with paragraph 10 hereof;

    (Nortel Networks Long Term Investment Plan (“LTIP”), as applicable)

  (e)   contributions made by you and any amounts that have vested in your LTIP
account will be maintained or distributed, pursuant to your direction(s) as
permitted by the terms and conditions of the LTIP;

    (Deferred Compensation, as applicable)

  (f)   any amounts in your account in the Nortel Networks U.S. Deferred
Compensation Plan (“NNDP”) will be distributed pursuant to your direction(s) as
permitted by the terms and conditions of the NNDP; however, it is agreed and
understood that in no event will you receive benefits under the Deferred
Compensation Plan earlier than six (6) months from your Employment Termination
Date due to your status as a “key employee” under Internal Revenue Code Section
409A;

 

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Mr. Steve Slattery
September 18, 2007
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    (Vacation benefit)

  (g)   you shall be paid, on or before the first pay period following the
Employment Termination Date, a lump sum amount equivalent to your current
accrued but unused vacation benefit (fifty [50] days) with no further vacation
accrual subsequent to the Employment Termination Date; and

    (Nortel Stock Purchase Plan (“NSPP”), as applicable)

  (h)   any shares in your account in the NSPP will be distributed to you. If
your account has not been closed within ninety (90) days of the Employment
Termination Date, it will automatically be closed by Mourant Equity Compensation
Solutions and all shares will be sold at the current market value.

Obligations of STEVE SLATTERY

6.   Your signature at the end of this Agreement is required to receive the PTPB
set forth in paragraph 4. Additionally, your signature will confirm the
obligations set forth in this paragraph 6. Notwithstanding your signature, you,
nonetheless, will be expected to comply with these obligations:      
(Business/Expense Accounts)

  (a)   you shall reconcile and settle your employee expense account, and any
advances made to you by the Corporation, as soon as possible, but not later than
the Employment Termination Date, and the Corporation shall in the normal course
reimburse you for any business expenses incurred by you through the Employment
Termination Date;

    (Inventions/Confidentiality)

  (b)   you acknowledge that you continue to be bound by the Employment
Documents. You confirm that your entire right, title, and interest to all
Inventions as generally described in such agreement with the Corporation are
assigned to the Corporation regardless of the exact terms in, or the existence
of, such an agreement between you and the Corporation.         With respect to
Inventions as described in the above paragraph, you have disclosed or will
promptly disclose them in writing to the Corporation, and you will, on the
Corporation’s request, promptly execute a specific assignment of title to the
Corporation or its designee, and do anything else reasonably necessary, at the
Corporation’s sole expense, to enable the

 

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Mr. Steve Slattery
September 18, 2007
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      Corporation to secure a patent or other form of protection for such
Inventions in the United States and in other countries. Any information
pertaining to such an Invention is considered the confidential information of
the Corporation unless and until such Invention is patented or published by the
Corporation.         Further, you agree that this Agreement is a confidential
document as are all the terms and conditions expressed herein, subject to the
Corporation’s right to disclose this Agreement in accordance with applicable
securities laws. Accordingly, unless and until the Corporation publicly
discloses this Agreement, you agree that you will not, except as required by law
or judicial process, directly or indirectly, disclose, publicize or discuss the
terms and/or conditions of this Agreement, with any employee and/or former
employee of the Corporation, other than Mr. Davies, myself, the Corporation’s
attorneys, or any other person, except as applicable, your spouse, your
attorney, accountant, financial advisor, outplacement advisor and/or any
prospective employer (but with respect to a prospective employer only with
respect to the restrictions, or lack thereof, on your activities following
termination of employment) beyond what is stated in any press coverage release
or disclosure by the Corporation. In the event that you discuss this Agreement
with any of the aforementioned individuals, it shall be your duty,
responsibility and obligation to advise said individual(s) of the confidential
nature of this Agreement and direct them not to discuss the terms and/or
conditions of this Agreement with any person.         Also, you shall continue
to maintain the confidentiality of all trade secrets and confidential,
proprietary, commercial, technical or other information of the Corporation
obtained by you during your employment 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 or
know-how of any nature (whether or not a trade secret) relating to an activity
of the Corporation or to any invention, which is owned or licensed by the
Corporation. Further, during the Severance Period, you agree, except as required
by law or Judicial process, not to publicly reveal, disclose, or cause to be
publicly revealed or disclosed anything with respect to the Corporation that
could be reasonably expected to be injurious or harmful to any of its interests.
In addition, during the Severance Period, you shall issue no public statement on
the business affairs, policies or the like of the Corporation without the prior
written consent of the Corporation and without limiting the foregoing, during
the Severance Period neither party shall make any public statement that could be
reasonably expected to

 

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Mr. Steve Slattery
September 18, 2007
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      disparage the other. Nothing in this Agreement or otherwise shall prevent
you 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 extent necessary in connection with
circumstances covered by clauses (i), (ii) or (iii) of the next paragraph.      
  Notwithstanding any of the foregoing, the provisions of this paragraph 6(b)
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 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 6(d) hereof or (iv) as to
information that becomes generally known to the public or within the relevant
trade or industry other than due to your violation of this paragraph 6(b).

    (Notice)

  (c)   upon the occurrence of any contingency which affects your rights in or
to any subsequent payment or benefit as expressly set forth in clause (vi) of
the first paragraph of paragraph 4 hereof, or upon your commencement of coverage
under a new employer’s benefit plan(s), you shall, within ten (10) days of such
occurrence, give written notice to the Corporation of that event. Such notice
shall be sent in writing to Mr. Davies;

    (Advice and Assistance)

  (d)   you shall make available to the Corporation advice, assistance and
information that shall include, but not be limited to, offering and explaining
evidence, providing sworn statements, participation in discovery, critical
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, but
not including attorneys’ or other professional fees incurred without the prior
approval of the Corporation’s Chief Legal Officer (provided that in all events
you shall have the benefits of paragraph 8 hereof);

 

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Mr. Steve Slattery
September 18, 2007
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    (Company Property and Information Preservation)

  (e)   prior to your Employment Termination Date and before receiving any
monies pursuant to this Agreement, you shall return to the Corporation any and
all property of the Corporation currently in your possession and/or subject to
your control, whether such material shall be written instruments or tapes in
electronic and/or recorded format. Nothing herein shall prevent you from
retaining your personal papers, materials relating to your compensation and/or
business expenses, materials you reasonably believe are necessary for your
personal taxes or your work product (provided you treat any confidential
information contained in such work product in accordance with paragraph 6(b) of
this Agreement).         The Corporation’s Corporate Procedure 206.01 provides
that all data, including personal documents and messages stored on or
transmitted through the network resources 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.         You are aware
that Nortel Networks has received a formal order of investigation from the
United States Securities and Exchange Commission (“SEC”) that requires the
preservation and collection and disclosure of certain Information to the SEC.
The Corporation is also a party to various civil lawsuits and other
investigations and may need access to certain Information for those matters as
well. Therefore, you agree to take affirmative steps to preserve all Information
in your possession, custody and control (including information controlled by
your assistant, if any), will leave all such information in the possession and
custody of the Corporation, and will not retain any Information in your
possession or custody.         In addition, the Corporation will take possession
of your computer and preserve all electronic Information on your computer, as
well as any related servers on which you have Information stored, at the time
your computer is turned into the Corporation. Except to the extent you are
permitted to retain certain Information pursuant to the last sentence of the
first paragraph of this paragraph 6(e), any Information located in your home,
including on a home personal computer, must be returned to the Corporation and
deleted from your home computer.

 

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Mr. Steve Slattery
September 18, 2007
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      The Information will be used by the Corporation for general business
purposes and may also be provided by the Corporation 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 other entities within the Nortel Networks group 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 Nortel
Networks entities, third parties and regulatory authorities within and outside
of your geographic area for the purposes set out above;

    (Stock Insider)

  (f)   you understand and agree that if you have the designation of either
“Reporting” or “Non-Reporting” Insider pursuant to Corporate Policy 320.28 of
Nortel Networks Corporation (and under applicable Canadian/US securities
legislation for Reporting Insiders), you will cease to have this designation
effective on the Employment Termination Date. Notwithstanding the fact that you
will no longer have this designation, if you are in possession of material
non-public information relating to Nortel Networks, you are prohibited from
trading in Nortel Networks securities (or informing another person of the
material non-public information) in accordance with applicable laws. If you are
a “Reporting” Insider, you understand that you are required to amend your
insider profile within ten (10) days of your termination date on the Canadian
System for Electronic Disclosure by Insiders (SEDI) to indicate that you are no
longer a “Reporting” Insider of Nortel Networks. You should contact the Insider
Reporting Department at (905) 863-1220 and fax (905) 863-8524 for assistance in
amending the SEDI profile;

    (Completion of Forms/Paperwork)

  (g)   you agree to complete such documentation/forms and paperwork that may be
necessary to commence benefits to be provided under this Agreement; and

    (Repayment)

  (h)   you understand and agree that the Corporation may deduct from any
payment provided to you under this Agreement any amounts (including, but not
limited to, any advance loans, overpayment, tax equalization

 

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Mr. Steve Slattery
September 18, 2007
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      payments of other monies) that the Corporation determines that you owe the
Corporation.

Cessation of Benefits

7.   All company benefits not expressly extended to you pursuant to this
Agreement shall be terminated effective 12:01 a.m. on the day after the
Employment Termination Date.

Indemnification

8.   The Corporation shall indemnify you in accordance with section 124 of the
Canada Business Corporation’s Act and the Corporation’s 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 (hereafter, a “Matter”). However, in the event that the
Corporation’s counsel cannot represent you in a Matter because of a conflict,
the Corporation agrees to pay your reasonable and actual legal expenses in that
Matter provided you agree that you will not settle the Matter, retain defense
counsel or expert witnesses or consultants, or incur any defense costs without
obtaining the Corporation’s prior written consent, which consent will not be
unreasonably withheld.

RELEASE

9.   IN CONSIDERATION OF THE FOREGOING PAYMENTS AND BENEFITS DETAILED ABOVE, FOR
WHICH YOU WOULD OTHERWISE BE INELIGIBLE, YOU HEREBY FULLY AND UNCONDITIONALLY
RELEASE AND FOREVER DISCHARGE CORPORATION (EXCEPT FOR THE PROMISES AND
COMMITMENTS CONTAINED HEREIN, YOUR RIGHTS TO BE INDEMNIFIED AND/OR EXPENSES PAID
UNDER APPLICABLE LAW OR THE CORPORATION’S BY-LAWS OR TO BE COVERED UNDER ANY
APPLICABLE INSURANCE POLICIES AND YOUR RIGHTS TO VESTED OR ACCRUED BENEFITS AS
OF THE EMPLOYMENT TERMINATION DATE) TO THE EXTENT PERMITTED BY LAW, FROM ANY AND
ALL CLAIMS, INCLUDING WITHOUT LIMITATION, PROVISIONS FOR SALARY, INCENTIVE
COMPENSATION, VACATION PAY, SEVERANCE PAY UNDER THE NORTEL NETWORKS EXECUTIVE
MANAGEMENT TEAM SEVERANCE ALLOWANCE PLAN, NORTEL NETWORKS ENHANCED SEVERANCE
ALLOWANCE PLAN, NORTEL

 

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Mr. Steve Slattery
September 18, 2007
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    NETWORKS CORPORATION SPECIAL RETENTION PLAN, COMMISSIONS, PENSION OR OTHER
BENEFITS OR OTHER COMPENSATION AND PERQUISITES AND ANY AND ALL REAL OR PRETENDED
CLAIMS, CAUSES OF ACTION, OR DEMANDS, INCLUDING, WITHOUT LIMITATION, THOSE FROM
RIGHTS UNDER ANY FEDERAL, STATE, AND LOCAL LAW, INCLUDING, WITHOUT LIMITATION,
THE WORKER ADJUSTMENT AND RETRAINING NOTIFICTION ACT (“WARN”) AND THOSE
PROHIBITING DISCRIMINATION ON ANY BASIS, INCLUDING SEX, AGE, RELIGION, SEXUAL
ORIENTATION, DISABILITY, RACE, NATIONAL ORIGIN, AS MAY BE PROHIBITED UNDER SUCH
LAWS AS THE AGE DISCRIMINATION ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION
ACT (OWEPA), THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT,
THE EQUAL PAY ACT AND THE FAMILY AND MEDICAL LEAVE ACT, INCLUDING ANY AMENDMENTS
TO THOSE LAWS (INCLUDING, BUT NOT LIMITED TO, YOUR RIGHT TO MAKE A CLAIM IN YOUR
OWN RIGHT OR THROUGH A SUIT BROUGHT BY ANY THIRD PARTY ON YOUR BEHALF) OR ANY
COMMON LAW CLAIMS OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, CONTRACT, TORT,
AND PROPERTY RIGHTS INCLUDING, BUT NOT LIMITED TO, BREACH OF CONTRACT, FRAUD,
DECEIT, NEGLIGENCE, NEGLIGENT MISREPRESENTATION, DEFAMATION, NEGLIGENT
SUPERVISION, BREACH OF PRIVACY, MISREPRESENTATION, WRONGFUL TERMINATION,
INVASION OF PRIVACY, INTENTIONAL OR NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS,
BREACH OF FIDUCIARY DUTY, VIOLATION OF PUBLIC POLICY AND ANY OTHER COMMON LAW
CLAIM OF ANY KIND WHATSOEVER AS OF THE DATE OF THIS AGREEMENT WHICH YOU EVER HAD
OR NOW HAVE, DIRECTLY OR INDIRECTLY, BASED UPON ANY FACT, MATTER, EVENT OR
CAUSE, WHETHER KNOWN OR UNKNOWN, ARISING OUT OF OR RELATING TO YOUR EMPLOYMENT
BY CORPORATION AND YOUR SEPARATION THEREFROM, OR YOUR RELATIONSHIP WITH
CORPORATION OR THE TERMS OF ANY WRITTEN OR ORAL EMPLOYMENT ARRANGEMENTS OR THE
LIKE THAT YOU MAY HAVE ENTERED INTO WITH THE CORPORATION. THIS AGREEMENT MAY NOT
BE USED TO INTERFERE WITH YOUR RIGHT TO FILE A CHARGE OR PARTICIPATE IN AN
INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR ANY OTHER APPROPRIATE AGENCY. HOWEVER, YOU UNDERSTAND AND AGREE
THAT THE CORPORATION WILL USE THIS AGREEMENT AS A DEFENSE TO ANY SUCH CHARGE YOU
FILE, INVESTIGATION OR PROCEEDING IN WHICH YOU PARTICIPATE, OR REMEDY WHICH YOU
SEEK. YOU AGREE THAT THIS RELEASE SHALL BE BINDING UPON YOU AND

 

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Mr. Steve Slattery
September 18, 2007
Page 14 of 18  

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    YOUR HEIRS, ADMINISTRATORS, REPRESENTATIVES, EXECUTORS, SUCCESSORS AND
ASSIGNS, AND ITS ENFORCEABILITY SHALL NOT BE CHALLENGED. YOU ACKNOWLEDGE THAT
YOU HAVE READ THIS AGREEMENT AND THAT YOU UNDERSTAND ALL OF ITS TERMS AND
EXECUTE IT VOLUNTARILY WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND THE
CONSEQUENCES THEREOF. FURTHER, YOU ACKNOWLEDGE THAT YOU HAVE HAD AN ADEQUATE
OPPORTUNITY TO REVEW AND CONSIDER THE TERMS OF THIS AGREEMENT, INCLUDING AT YOUR
DISCRETION, THE RIGHT TO DISCUSS THIS AGREEMENT WITH LEGAL COUNSEL OF YOUR
CHOICE. YOU HEREBY ACKNOWLEDGE THAT YOU INTEND TO GRANT TO THE CORPORATION A
FULL AND FINAL RELEASE AS SET FORTH HEREIN.   10.   The terms and conditions of
this Agreement will be open for your review and consideration through the close
of business on October 2, 2007. If you have not returned an executed copy of
this Agreement to Mr. Davies, at the address referenced in paragraph 3 of this
Agreement by the close of business on October 2, 2007, then the terms and
conditions set forth in this Agreement shall be withdrawn as of that time and
date.   11.   This Agreement constitutes the entire understanding of the parties
with respect to your prior employment, including termination thereof, and there
are no promises, understandings or representations other than those set forth
herein. This Agreement may be modified only with a written instrument duly
executed by you and Corporation. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, assigns, heirs
(in your case) and assigns.   12.   This Agreement shall be governed by the laws
of North Carolina 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.
  13.   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.   14.   You shall be under no obligation to seek other
employment, including self-employment, and, except as otherwise provided in
paragraph 6(c) hereof, there shall be no offset against amounts or entitlements
due you on account of any remuneration or benefits provided by subsequent
employment you may obtain.

 

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Mr. Steve Slattery
September 18, 2007
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15.   In the event of your death while any payment, benefit or entitlement is
due to you under this Agreement, such payment, benefit or entitlement shall be
paid or provided to your beneficiary, devisee, legatee or other designee, or if
there is no such designee, to your estate.

Please acknowledge that the foregoing correctly and completely sets forth your
understanding of the arrangements and commitments, and your acceptance thereby,
by signing, dating and returning this Agreement to Mr. Davies.
Yours truly,
/s/ Mike Zafirovski
 
Mike S. Zafirovski
Chief Executive Officer

 

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Mr. Steve Slattery
September 18, 2007
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IN WITNESS WHEREOF, intending to be legally bound, the parties have executed
this Agreement as set forth below.
PLEASE INDICATE BELOW YOUR
ELECTIONS REGARDING
• Insurance Benefits
I elect the provisions of: (CIRCLE ONE)
paragraph 4(b)(i) OR 4(b)(ii)
     SS          
INITIALS

              NORTEL NETWORKS INC.    STEVE SLATTERY    
 
           
By:
  /s/ William J. LaSalle
 
   /s/ Steve Slattery
 
   
 
  William J. LaSalle        
Title:
  General Counsel — Operations    Date: September 18, 2007    
Date:
  September 21, 2007        

 

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Mr. Steve Slattery
September 18, 2007
Page 17 of 18  

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EXHIBIT A
RELEASE
In consideration of your continued employment through the Employment Termination
Date and the payments and benefits as set forth in the letter Agreement between
Nortel Networks Inc. and you dated September 13, 2007, none of which are
released or waived hereby, you hereby fully and unconditionally release and
forever discharge Corporation, as defined in the Agreement (except for the
promises and commitments contained in the letter dated September 13, 2007, your
rights to be indemnified and/or expenses paid under applicable law or the
Corporation’s By-laws or to be covered under any applicable directors’ and
officers’ insurance policies and your rights to vested or accrued benefits as of
the date you execute this Release), to the extent permitted by law, from any and
all claims, including without limitation, provisions for salary, incentive
compensation, vacation pay, severance pay under the Nortel Networks Executive
Management Team Severance Allowance Plan, Nortel Networks Enhanced Severance
Allowance Plan, Nortel Networks Corporation Special Retention Plan, commissions,
pension or other benefits or other compensation and perquisites and any and all
real or pretended claims, causes of action, or demands, including, without
limitation, those from rights under any federal, state, and local law, including
without limitation, the Worker Adjustment and Retraining Notification Act
(“WARN”) and those prohibiting discrimination on any basis including sex, age,
religion, sexual orientation, disability, race, national origin, as may be
prohibited under such laws as The Age Discrimination Act of 1967, The Older
Workers Benefit Protection Act (OWBPA), the Civil Rights Act of 1964, the
Americans With Disabilities Act, The Equal Pay Act and the Family and Medical
Leave Act, including any amendments to those laws (including but not limited to,
your right to make a claim in your own right or through a suit brought by any
third party on your behalf) or any common law claims of any kind, including, but
not limited to, contract, tort, and property rights including, but not limited
to, breach of contract, fraud, deceit, negligence, negligent misrepresentation,
defamation, negligent supervision, breach of privacy, misrepresentation,
wrongful termination, invasion of privacy, intentional or negligent infliction
of emotional distress, breach of fiduciary duty, violation of public policy and
any other common law claim of any kind whatsoever as of the date of this Release
which you ever had or now have, directly or indirectly, based upon any fact,
matter, event or cause, whether known or unknown, arising out of or relating to
your employment by Corporation and your separation therefrom, or your
relationship with Corporation or the terms of any written or oral employment
arrangements or the like that you may have entered into with the Corporation.
This Release may not be used to interfere with your right to file a charge or
participate in an investigation or proceeding conducted by the Equal Employment
Opportunity Commission or any other appropriate agency. However, you understand
and agree that the Corporation will use this Release as a defense to any

 

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Mr. Steve Slattery   Confidential — Special Handling September 18, 2007     Page
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such charge you file, investigation or proceeding in which you participate, or
remedy which you seek. You agree 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 Release and that you understand all of its terms and execute it
voluntarily with full knowledge of its significance and the consequences
thereof. Further, you acknowledge that you have had an adequate opportunity to
review and consider the terms of this Release, including at your discretion, the
right to discuss this Release with legal counsel of your choice. You hereby
acknowledge that you intend to grant to the Corporation a full and final release
as set forth herein.

           

(Signature)   /s/ Steve Slattery    
 
   
 
STEVE SLATTERY    
 
         
 
(Date)   September 18, 2007