Exhibit 10.15
NORTEL NETWORKS CORPORATION — PERFORMANCE STOCK UNITS
INSTRUMENT OF AWARD
«COUNTRY»

     
NAME:
  «NAME» («GID»)
 
   
EFFECTIVE DATE:
  «AWARD_DATE»
 
   
NUMBER OF PSUs:
  «AWARDED»
 
   
PLAN:
  NORTEL 2005 STOCK INCENTIVE PLAN

This instrument (hereinafter the “Instrument of Award”) evidences an Award to
you of the number of Performance Stock Units (“PSUs”) indicated above, on the
Effective Date indicated above, pursuant to the Nortel 2005 Stock Incentive Plan
(as may be amended from time to time, the “Plan”). Subject to and unless
otherwise specified by the Committee at the time it established the applicable
Performance Criteria, each PSU covered by this Instrument of Award generally
entitles you to receive one common share (a “Share”) of Nortel Networks
Corporation (the “Corporation”) at or as soon as reasonably practicable
following the date it has been determined that the Performance Criteria have
been met, or such earlier date as may be applicable pursuant to the provisions
of the Plan and this Instrument of Award. Capitalized terms not otherwise
defined in this Instrument of Award have the meanings set forth in the Plan.
1.   All PSUs covered by this Instrument of Award are subject to the terms and
conditions stated in the Plan, except as specifically or additionally provided
in this Instrument of Award and/or in any rules, regulations, determinations or
interpretations prescribed and/or made by the Committee (or its delegates) under
the power and authority granted under the Plan (the “Rules and Regulations”),
and all of the provisions of the Plan and the Rules and Regulations are
incorporated by reference as if expressly restated herein. Different Rules and
Regulations may apply to you and/or the PSUs covered by this Instrument of Award
depending on your country work location, residency or payroll, whether on the
Effective Date of the Award, on the date of settlement of the PSUs, or
otherwise. Accordingly, you should review the Plan and the Rules and Regulations
from time to time, which are available as indicated below, in conjunction with
this Instrument of Award.
2.   Subject to the provisions below, you will have the right to receive such
number of Shares in settlement of each PSU as may be required by the
satisfaction of the Performance Criteria, provided that you have been in the
continuous employment of the Company from the Effective Date to the end of the
applicable performance period.
3.   In the event the Performance Criteria are satisfied, PSUs will be settled
by transfer of Shares to you on or as soon as reasonably practicable following
the close of the applicable performance period provided that you execute any
required documentation as provided in the Plan, this Instrument of Award or the
Rules and Regulations, in such form or manner as may be specified from time to
time by the Corporation. You will remain responsible for any local legal
compliance requirements resulting from your receipt of PSUs, the subsequent
ownership and possible sale of Shares acquired on settlement of PSUs, and the
opening and maintaining of a foreign brokerage account, if applicable.
4.   In consideration of the Award of PSUs, in the event that all or any part of
the PSUs become Vested, at any time subsequent to the date which is twelve
(12) months prior to the date of termination of your employment (whether
wrongful or for any other reason) (the “Applicable Period”) and:

(i)   while employed or during the period of twelve (12) months following the
termination of employment (whether wrongful or for any other reason), you accept
employment with an employer, or accept an engagement to supply services,
directly or indirectly, to a third party, that is in competition with the
Company,   (ii)   you fail to comply with or otherwise breach the terms and
conditions of any confidentiality agreement or non-disclosure agreement with the
Company,   (iii)   while employed or during the period of twelve (12) months
following the termination of employment (whether wrongful or for any other
reason), you, on your own behalf or on any other’s behalf, directly or
indirectly recruit, induce or solicit, or attempt to recruit, induce or solicit,
any current employee or other individual who is/was supplying services to the
Company, to terminate their employment or contractual arrangements with the
Company, or   (iv)   while employed or during the period of twelve (12) months
following the termination of employment (whether wrongful or for any other
reason), you, on your own behalf or on any other’s behalf, solicit, divert or
take away, or attempt to divert or take away, the business of any of the
customers or accounts, or prospective customers or accounts, of the Company or
any of its distributors, representatives or vendors which you had contact or
communication with while employed at the Company;

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you agree that you will, if required by the Company in its sole discretion, pay
to the Company within ten (10) days of written demand for payment from the
Company an amount in cash equal to the number of Shares delivered to you upon
the Committee’s determination of target payout based on the level of achievement
of the Performance Criteria multiplied by the Market Value of a Share on the
applicable settlement date (the “Applicable Amount”);
     Provided you are not entitled to any Corresponding Tax Benefit, the
Applicable Amount shall be reduced by the amount of Tax paid by you or on your
behalf (or required to be paid by you or on your behalf as of a future Tax due
date) in respect of the issuance of Shares upon settlement of the PSUs during
the Applicable Period (and, where applicable, in respect of the Award of such
PSUs);
     If you are entitled to a Corresponding Tax Benefit which is equal to or
less than the amount of Tax paid by you or on your behalf (or required to be
paid by you or on your behalf as of a future Tax due date) in respect of the
Vesting of the PSUs or your receipt of Shares upon the settlement of Vested PSUs
during the Applicable Period (such difference between the Corresponding Tax
Benefit and Tax, if any, is referred to herein as the “Tax Benefit Deficiency”),
the Applicable Amount shall be reduced by an amount equal to the Tax Benefit
Deficiency;
     For the purposes of this provision:

    “Corresponding Tax Benefit” means the amount of any deduction from or
reduction or credit to the amount of Taxes paid or payable by you or on your
behalf in accordance with the laws of the tax jurisdiction applicable to you as
a result of or in connection with the payment to the Company of all or any
portion of the Applicable Amount by you; and       “Tax” means any income tax,
capital gains tax, statutory pension plan contributions and/or other social
security tax or applicable social security charge levied in accordance with the
laws of the jurisdiction to which you are subject at the time of Vesting of the
PSUs or at the time you receive Shares in settlement of the PSUs, whichever is
applicable (and, where applicable, at the time of the Effective Date of the
Award of such PSUs).

5.   The Company may withhold from any amount payable to you, either under the
Plan or this Instrument of Award or otherwise, such amount as may be necessary
so as to ensure that the Company will be able to comply with the applicable
provisions of any federal, provincial, state or local law relating to the
withholding of tax (collectively referred to herein as “taxes”) or to ensure
that any other required deductions are paid or otherwise satisfied, including
withholding of the amount, if any, includable in your income. The Company shall
also have the right in its discretion to satisfy any such liability for
withholding or other required deduction amounts by retaining or acquiring any
Shares, or retaining any amount payable, which would otherwise be issued or
delivered, provided or paid to you hereunder. The Company may require you, as a
condition to the settlement of a PSU, to pay or reimburse the Company for any
such withholding or other required deduction amounts related to the settlement
of the PSUs.
     The Company may require, as a condition of settlement of PSUs, that you:
(i) pay any taxes which are required to be paid by you; (ii) reimburse any taxes
which are required to be withheld and remitted by the Company; (iii) complete
any forms or provide any additional documents in connection with taxes; and
(iv) otherwise comply with all applicable tax laws; in each case in connection
with the Award of the PSUs, the settlement of the PSUs, the exercise of the
PSUs, and/or the forfeiture of the PSUs, and as may be specified in this
Instrument of Award, the Rules and Regulations or otherwise in accordance with
the Plan. The Company may also require, as a condition of the settlement of
PSUs, that all or a portion of the related Shares be sold by you or on your
behalf to generate proceeds sufficient to cover any tax withholdings made by the
Company on account of applicable taxes (hereinafter “tax withholdings”), if you
do not pay such tax withholdings within the designated time periods as may be
specified in this Instrument of Award, the Rules and Regulations or otherwise in
accordance with the Plan. You further acknowledge and agree that conditions or
restrictions on the transferability of the Shares received by you upon the
settlement of the Vested PSUs may be imposed on such Shares on account of taxes
or tax withholdings in connection with the Award of the PSUs, the settlement of
the PSUs, and/or the forfeiture of the PSUs, in each case as may be specified in
this Instrument of Award, the Rules and Regulations or otherwise in accordance
with the Plan.
6.   In the event that you become subject to long-term disability benefits, a
“pro rata portion” of the then outstanding unvested PSUs shall become Vested on
the third anniversary of the Effective Date, provided the applicable Performance
Criteria has been achieved and you have been a regular full-time employee of the
Company for at least twelve (12) months since the beginning of the performance
period, and the remaining portion of such PSUs shall be forfeited and cancelled
for no consideration as of the date you commence long-term disability. In the
event of your Termination prior to the date that all of the PSUs awarded to you
pursuant to this Instrument of Award have become Vested, (i) if such Termination
is a Qualifying Termination Without Cause, all then outstanding unvested PSUs
awarded to you pursuant to this Instrument of Award shall be forfeited and
cancelled for no consideration; (ii) if such Termination is due to your
Retirement, a “pro rata portion” of the then outstanding unvested PSUs awarded
to you shall become Vested on the third anniversary of the Effective Date,
provided the applicable Performance Criteria has been achieved and you have been
a regular full-time employee of the Company for at least twelve (12) months
since the beginning of the performance period, and the remaining portion of such
PSUs shall be forfeited and cancelled for no consideration as of the Date of
Termination; (iii) if such Termination is due to death and you have been a
regular full-time employee of the Company for at least twelve (12) months since
the beginning of the performance period, a “pro rata portion” of the outstanding
unvested PSUs awarded to you shall become immediately Vested and, in accordance
with the terms of the Plan and this Instrument of Award, settled based on the
target amount and (iv) if such Termination is for any other reason (including by
your employer for Cause or by reason of your resignation for any reason), all
then outstanding unvested PSUs awarded to you pursuant to this Instrument of
Award shall immediately be forfeited and cancelled for no consideration;
provided, however, that any vesting pursuant to this paragraph shall be delayed
until six months after your Retirement or other type of Termination to the
extent necessary to avoid adverse tax treatment under Section 409A of the U.S.
Internal Revenue Code.

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     For purposes of this section 6, “pro rata portion” shall mean the full
amount of the PSUs awarded to you pursuant to the Plan and this Instrument of
Award multiplied by a fraction, the numerator of which equals the number of full
months of continuous service provided since the commencement of the applicable
performance period and the denominator of which is 36.
7.   In the event you are a Specified Executive (as defined under the Nortel
Networks Corporation Executive Retention and Termination Plan (the “ERTP Plan”))
and are subject to a Termination Due to Change in Control (as defined in the
ERTP Plan), the PSUs awarded to you in accordance with this Instrument of Award
shall receive the same treatment as RSUs (as defined under the ERTP Plan) and
shall receive the same benefits as provided to RSUs under the ERTP Plan in the
event of a Termination Due to Change in Control.
8.   This Instrument of Award: (i) shall be binding upon and inure to the
benefit of any successor of the Corporation; (ii) shall be governed by the laws
of the Province of Ontario, and any applicable laws of Canada; and (iii) may not
be amended except in writing or as otherwise provided in the Plan. In the event
of a conflict between the provisions of this Instrument of Award and those of
the Plan or the Rules and Regulations, the provisions of the Plan or the Rules
and Regulations, as the case may be, shall govern, except to the extent that the
terms and conditions of the Award of PSUs evidenced by this Instrument of Award
are specifically recorded as a variation from the terms and conditions of the
Plan or the Rules and Regulations, as the case may be. A copy of the Plan, the
Prospectus for the Plan pursuant to Section 10(a) of the U.S. Securities Act of
1933, any amendments to such Prospectus, and the Rules and Regulations can be
found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw). The Services@Work
site also contains other general information about the PSUs. You should check
the Services@Work site frequently since it may be updated from time to time.
     You acknowledge that a copy of the Plan and the Rules and Regulations, if
any, have been delivered to you with this Instrument of Award.
9.   You acknowledge that: (i) the Plan is discretionary and may be suspended or
terminated by the Corporation at any time; (ii) the Award of PSUs does not
create any right to receive future Awards of PSUs, or benefits in lieu of PSUs,
and the terms and conditions of any future Awards of PSUs, if any, will be
communicated if and when new Awards of PSUs are to be made; (iii) the value of
the PSUs is outside the scope of your employment contract and severance
payments, if any, and the Award of PSUs is not for labour performed nor does it
guarantee future employment; (iv) participation in the Plan is voluntary;
(v) the Corporation is not responsible for foreign exchange fluctuations between
your local currency and the US dollar, if applicable, and the future value of
the Shares is unknown and cannot be predicted with certainty; (vi) the PSUs are
not part of remuneration for purposes of any compensation on termination of
employment, severance payments, indemnities or end of service payments or
benefits of any nature; (vii) the Vesting of the PSUs ceases upon termination of
employment, whether lawful or otherwise, except as provided in the Plan and this
Instrument of Award, and neither the Corporation nor any of its subsidiaries is
required to compensate you for any financial loss (including taxes, social
security premiums and lost capital gain) as a result of the forfeiture of PSUs
or the early settlement thereof on any such termination of employment; and
(viii) the Award of the PSUs does not give rise to additional obligations for
any subsidiary which employs you. If, notwithstanding the foregoing, any
contractual or statutory (employment or otherwise) claim is found to have
arisen, then you, by accepting this Instrument of Award or the PSUs, shall, to
the extent permitted by applicable law, be deemed irrevocably to have waived
your entitlement to pursue such claim.
10.   The various provisions and sub-provisions of this Instrument of Award are
severable and if any provision or identifiable part thereof is held to be
unenforceable by any court of competent jurisdiction then such unenforceability
shall not affect the enforceability of the remaining provisions or identifiable
parts thereof in this Instrument of Award, the Plan, the Rules and Regulations,
or any documents related to the Plan.
11.   Nortel and its third party service providers may need to collect and use
information about employees for the purpose of the Award and/or settlement of
PSUs, administering the Plan, and to comply with tax, reporting and disclosure
obligations under applicable laws and regulations. Such information may be
communicated to any person deemed necessary for the administration of the Plan,
even if it requires such information to be transferred or communicated to
persons based outside your country of employment. Such information is from time
to time transferred between companies within the group and to such third party
service providers, to achieve these objectives. Nortel and its third party
service providers will hold your “Plan participation file” at any location
deemed necessary, on the understanding that you will be given access without
constraint at reasonable intervals and without excessive delay or expense to
examine and correct such information. By accepting the Instrument of Award or
the PSUs, you are affirming your consent to the collection, processing, storage,
disclosure and transfer of your personal information for these purposes.
12.   By accepting this Instrument of Award or the PSUs, you expressly consent
that the Plan, the Rules and Regulations and any other document relating
thereto, including this Instrument of Award, be drawn up and/or available in
English only. Par votre acceptation de la présente Entente ou des PSUs, vous
consentez expressément à ce que le Régime, les Règlements et tout autre document
connexe, y compris la présente Entente soient rédigés et/ou disponibles en
anglais seulement.
13.   By accepting this Instrument of Award or the PSUs, you (i) acknowledge and
confirm that you have read and understood the Plan, the Rules and Regulations
and this Instrument of Award, and that you have had an opportunity to seek
separate fiscal, legal and taxation advice in relation thereto; and (ii) agree
to be bound by the terms and conditions stated in this Instrument of Award,
including without limitation the terms and conditions of the Plan and the Rules
and Regulations incorporated by reference herein.

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     Note: You should be aware that your acceptance of this Award of PSUs may
have tax and legal consequences for you. You are responsible for any and all
compliance requirements under local and national law related to these
consequences and accordingly you are strongly recommended to seek expert advice
from a local duly qualified professional advisor.
     If you accept the terms and conditions of this Award of PSUs as described
in this Instrument of Award, please confirm your acceptance by signing where
indicated below and returning it to Nortel Stock Option Administration at the
address indicated below.

     
Signature of Employee:
   
 
   

Nortel Stock Option Administration Department
8200 Dixie Road, Suite 100
Brampton, Ontario, Canada L6T 5P6
Fax# : 905-863-8273 (ESN 333)

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NORTEL NETWORKS CORPORATION — RESTRICTED STOCK UNITS
INSTRUMENT OF AWARD

     
NAME:
  0
 
   
EFFECTIVE DATE:
  0
 
   
NUMBER OF RSUs:
  0
 
   
VESTING SCHEDULE:
  33% ON FIRST ANNIVERSARY OF THE EFFECTIVE DATE;
 
  33% ON SECOND ANNIVERSARY OF THE EFFECTIVE;
 
  34% ON THIRD ANNIVERSARY OF THE EFFECTIVE DATE
 
   
PLAN:
  NORTEL 2005 STOCK INCENTIVE PLAN

This instrument (hereinafter the “Instrument of Award”) evidences an Award to
you of the number of Restricted Stock Units (“RSUs”) indicated above, on the
Effective Date indicated above, pursuant to the Nortel 2005 Stock Incentive Plan
(as may be amended from time to time, the “Plan”). Each RSU covered by this
Instrument of Award generally entitles you to receive one common share (a
“Share”) of Nortel Networks Corporation (the “Corporation”) at or as soon as
reasonably practicable following the date the RSU becomes Vested in accordance
with the Vesting schedule indicated above, or such earlier date as may be
applicable pursuant to the provisions of the Plan and this Instrument of Award.
Capitalized terms not otherwise defined in this Instrument of Award have the
meanings set forth in the Plan.
1.   All RSUs covered by this Instrument of Award are subject to the terms and
conditions stated in the Plan, except as specifically or additionally provided
in this Instrument of Award and/or in any rules, regulations, determinations or
interpretations prescribed and/or made by the Committee (or its delegates) under
the power and authority granted under the Plan (the “Rules and Regulations”),
and all of the provisions of the Plan and the Rules and Regulations are
incorporated by reference as if expressly restated herein. Different Rules and
Regulations may apply to you and/or the RSUs covered by this Instrument of Award
depending on your country work location, residency or payroll, whether on the
Effective Date of the Award, on the date of settlement of the RSUs, or
otherwise. Accordingly, you should review the Plan and the Rules and Regulations
from time to time, which are available as indicated below, in conjunction with
this Instrument of Award.
2.   You will have the right to receive one Share in settlement of each RSU once
the RSU has become Vested in accordance with the Vesting schedule indicated
above, provided that you have been in the continuous employment of the Company
from the Effective Date to the applicable Vesting date.
3.   Vested RSUs will be settled by transfer of Shares to you on or as soon as
reasonably practicable following the Vesting date provided that you execute any
required documentation as provided in the Plan, this Instrument of Award or the
Rules and Regulations, in such form or manner as may be specified from time to
time by the Corporation. You will remain responsible for any local legal
compliance requirements resulting from your receipt of RSUs, the subsequent
ownership and possible sale of Shares acquired upon settlement of RSUs, and the
opening and maintaining of a foreign brokerage account, if applicable.
4.   In consideration of the Award of RSUs, in the event that all or any part of
the RSUs become Vested at any time subsequent to the date which is twelve
(12) months prior to the date of termination of your employment (whether
wrongful or for any other reason) (the “Applicable Period”), and:

(i)   while employed or during the period of twelve (12) months following the
termination of your employment (whether wrongful or for any other reason), you
accept employment with an employer, or accept an engagement to supply services,
directly or indirectly, to a third party, that is in competition with the
Company;   (ii)   you fail to comply with or otherwise breach the terms or
conditions of any confidentiality agreement or non-disclosure agreement with the
Company;   (iii)   while employed or during the period of twelve (12) months
following termination of your employment (whether wrongful or for any other
reason), you, on your own behalf or on any other’s behalf, directly or
indirectly recruit, induce or solicit, or attempt to recruit, induce or solicit,
any current employee or other individual who is/or was supplying services to the
Company, to terminate their employment or contractual arrangements with the
Company; or

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(iv)   while employed or during the period of twelve (12) months following
termination of your employment (whether wrongful or for any other reason), you,
on your own behalf or on any other’s behalf, solicit, divert or take away, or
attempt to divert or take away the business of any of the customers or accounts,
or prospective customers or accounts, of the Company or any of its distributors,
representatives or vendors, which you have had contact or communication with
while employed at the Company;

you agree that you will, if required by the Company in its sole discretion, pay
to the Company within ten (10) days of written demand for payment from the
Company an amount in cash equal to the number of RSUs that Vested during the
Applicable Period multiplied by the Market Value on the applicable Vesting date
(the “Applicable Amount”).
     Provided you are not entitled to any Corresponding Tax Benefit, the
Applicable Amount shall be reduced by the amount of Tax paid by you or on your
behalf (or required to be paid by you or on your behalf as of a future Tax due
date) in respect of the Vesting of the RSUs or your receipt of Shares upon the
settlement of Vested RSUs during the Applicable Period (and, where applicable,
in respect of the Award of such RSUs).
     If you are entitled to a Corresponding Tax Benefit which is equal to or
less than the amount of Tax paid by you or on your behalf (or required to be
paid by you or on your behalf as of a future Tax due date) in respect of the
Vesting of the RSUs or your receipt of Shares upon the settlement of Vested RSUs
during the Applicable Period (such difference between the Corresponding Tax
Benefit and Tax, if any, is referred to herein as the “Tax Benefit Deficiency”),
the Applicable Amount shall be reduced by an amount equal to the Tax Benefit
Deficiency.
     For the purposes of this paragraph 4:

    “Corresponding Tax Benefit” means the amount of any deduction from or
reduction or credit to the amount of Taxes paid or payable by you or on your
behalf in accordance with the laws of the tax jurisdiction applicable to you as
a result of or in connection with the payment to the Company of all or any
portion of the Applicable Amount by you; and       “Tax” means any income tax,
capital gains tax, statutory pension plan contributions and/or other social
security tax or applicable social security charge levied in accordance with the
laws of the jurisdiction to which you are subject at the time of Vesting of the
RSUs or at the time you receive the Shares in settlement of the RSUs, whichever
is applicable (and, where applicable, at the time of the Effective Date of the
Award of such RSUs).

5.   The Company may withhold from any amount payable to you, either under the
Plan or this Instrument of Award or otherwise, such amount as may be necessary
so as to ensure that the Company will be able to comply with the applicable
provisions of any federal, provincial, state or local law relating to the
withholding of tax (collectively referred to herein as “taxes”) or to ensure
that any other required deductions are paid or otherwise satisfied, including
withholding of the amount, if any, includable in your income. The Company shall
also have the right in its discretion to satisfy any such liability for
withholding or other required deduction amounts by retaining or acquiring any
Shares, or retaining any amount payable, which would otherwise be issued or
delivered, provided or paid to you hereunder. The Company may require you, as a
condition to the settlement of a RSU, to pay or reimburse the Company for any
such withholding or other required deduction amounts related to the settlement
of the RSUs.
     The Company may require, as a condition of settlement of Vested RSUs, that
you: (i) pay any taxes which are required to be paid by you; (ii) reimburse any
taxes which are required to be withheld and remitted by the Company;
(iii) complete any forms or provide any additional documents in connection with
taxes; and (iv) otherwise comply with all applicable tax laws; in each case in
connection with the Award of the RSUs, the Vesting of the RSUs, the exercise of
the RSUs, and/or the forfeiture of the RSUs, and as may be specified in this
Instrument of Award, the Rules and Regulations or otherwise in accordance with
the Plan. The Company may also require, as a condition of the settlement of
Vested RSUs, that all or a portion of the related Shares be sold by you or on
your behalf to generate proceeds sufficient to cover any tax withholdings made
by the Company on account of applicable taxes (hereinafter “tax withholdings”),
if you do not pay such tax withholdings within the designated time periods as
may be specified in this Instrument of Award, the Rules and Regulations or
otherwise in accordance with the Plan. You further acknowledge and agree that
conditions or restrictions on the transferability of the Shares received by you
upon the settlement of the Vested RSUs may be imposed on such Shares on account
of taxes or tax withholdings in connection with the Award of the RSUs, the
Vesting of the RSUs, the settlement of the RSUs, and/or the forfeiture of the
RSUs, in each case as may be specified in this Instrument of Award, the Rules
and Regulations or otherwise in accordance with the Plan.
6.   In the event of your Termination prior to the date that all of the RSUs
awarded to you pursuant to this Instrument of Award have become Vested, (i) if
such Termination is a Qualifying Termination Without Cause, all then outstanding
unvested RSUs awarded to you pursuant to this Instrument of Award shall remain
outstanding, shall continue to Vest in accordance with the Vesting schedule
indicated above during the Extension Period and, once Vested, shall be settled
in accordance with the terms of the Plan and this Instrument of Award; (ii) if
such Termination is due to your Retirement or death, a “pro rata portion” of the
then outstanding unvested RSUs awarded to you shall become immediately Vested
and, in accordance with the terms of the Plan and this Instrument of Award,
settled and the remaining portion of such RSUs shall be forfeited and cancelled
for no consideration as of the Date of Termination; (iii) if such Termination is
a Qualifying Termination Without Cause and, immediately following the end of the
Extension Period, you commence Retirement, a “pro rata portion” of the unvested
RSUs awarded to you that are outstanding as of the end of the Extension Period
shall become immediately Vested and, in accordance with the terms of the Plan
and this Instrument of Award, settled and the remaining portion of any RSUs then
outstanding shall be forfeited and cancelled for no consideration as of the date
you commence Retirement and (iv) if such Termination is for any other reason
(including by your employer for Cause or by reason of your resignation for any
reason), all then outstanding unvested RSUs awarded to you pursuant to this
Instrument of Award shall immediately be forfeited and cancelled for no
consideration; provided, however, that any Vesting pursuant to this paragraph
shall

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be delayed until six months after your Retirement or other type of Termination
to the extent necessary to avoid adverse tax treatment under Section 409A of the
U.S. Internal Revenue Code.
     For purposes of this section 6, “pro rata portion” shall mean the product
of one-third of the RSUs awarded to you pursuant to the Plan and this Instrument
of Award multiplied by a fraction, the numerator of which equals the number of
days which have elapsed at the relevant date since the later of (i) the
Effective Date of Award of the RSUs, (ii) the date 33 percent of the RSUs became
Vested; and (iii) the date 66 percent of the RSUs became Vested; and the
denominator of which is 365.
     For the purposes of this section 6, the following shall be excluded from
the definition of “Extension Period” in the Plan: “the earlier of (x) the
twenty-four month anniversary of the Participant’s Date of Termination and (y)”.
7.   In the event you are a Specified Executive (as defined under the Nortel
Networks Corporation Executive Retention and Termination Plan (the “ERTP Plan”))
and are subject to a Termination Due to Change in Control (as defined in the
ERTP Plan), the RSUs awarded to you in accordance with this Instrument of Award
shall be included as RSUs (as defined under the ERTP Plan) and receive all of
the benefits provided to RSUs under the ERTP Plan in the event of a Termination
Due to Change in Control.
8.   This Instrument of Award: (i) shall be binding upon and inure to the
benefit of any successor of the Corporation; (ii) shall be governed by the laws
of the Province of Ontario, and any applicable laws of Canada; and (iii) may not
be amended except in writing or as otherwise provided in the Plan. In the event
of a conflict between the provisions of this Instrument of Award and those of
the Plan or the Rules and Regulations, the provisions of the Plan or the Rules
and Regulations, as the case may be, shall govern, except to the extent that the
terms and conditions of the Award of RSUs evidenced by this Instrument of Award
are specifically recorded as a variation from the terms and conditions of the
Plan or the Rules and Regulations, as the case may be. A copy of the Plan, the
Prospectus for the Plan pursuant to Section 10(a) of the U.S. Securities Act of
1933, any amendments to such Prospectus, and the Rules and Regulations can be
found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw). The Services@Work
site also contains other general information about the RSUs. You should check
the Services@Work site frequently since it may be updated from time to time.
     You acknowledge that a copy of the Plan and the Rules and Regulations, if
any, have been delivered to you with this Instrument of Award.
9.   You acknowledge that: (i) the Plan is discretionary and may be suspended or
terminated by the Corporation at any time; (ii) the Award of RSUs does not
create any right to receive future Awards of RSUs, or benefits in lieu of RSUs,
and the terms and conditions of any future Awards of RSUs, if any, will be
communicated if and when new Awards of RSUs are to be made; (iii) the value of
the RSUs is outside the scope of your employment contract and severance
payments, if any, and the Award of RSUs is not for labour performed nor does it
guarantee future employment; (iv) participation in the Plan is voluntary;
(v) the Corporation is not responsible for foreign exchange fluctuations between
your local currency and the US dollar, if applicable, and the future value of
the Shares is unknown and cannot be predicted with certainty; (vi) the RSUs are
not part of remuneration for purposes of any compensation on termination of
employment, severance payments, indemnities or end of service payments or
benefits of any nature; (vii) the Vesting of the RSUs ceases upon termination of
employment, whether lawful or otherwise, except as provided in the Plan and this
Instrument of Award, and neither the Corporation nor any of its subsidiaries is
required to compensate you for any financial loss (including taxes, social
security premiums and lost capital gain) as a result of the forfeiture of RSUs
or the early settlement thereof on any such termination of employment; and
(viii) the Award of the RSUs does not give rise to additional obligations for
any subsidiary which employs you. If, notwithstanding the foregoing, any
contractual or statutory (employment or otherwise) claim is found to have
arisen, then you, by accepting this Instrument of Award or the RSUs, shall, to
the extent permitted by applicable law, be deemed irrevocably to have waived
your entitlement to pursue such claim.
10.   The various provisions and sub-provisions of this Instrument of Award are
severable and if any provision or identifiable part thereof is held to be
unenforceable by any court of competent jurisdiction then such unenforceability
shall not affect the enforceability of the remaining provisions or identifiable
parts thereof in this Instrument of Award, the Plan, the Rules and Regulations,
or any documents related to the Plan.
11.   Nortel and its third party service providers may need to collect and use
information about employees for the purpose of the Award and/or settlement of
RSUs, administering the Plan, and to comply with tax, reporting and disclosure
obligations under applicable laws and regulations. Such information may be
communicated to any person deemed necessary for the administration of the Plan,
even if it requires such information to be transferred or communicated to
persons based outside your country of employment. Such information is from time
to time transferred between companies within the group and to such third party
service providers, to achieve these objectives. Nortel and its third party
service providers will hold your “Plan participation file” at any location
deemed necessary, on the understanding that you will be given access without
constraint at reasonable intervals and without excessive delay or expense to
examine and correct such information. By accepting the Instrument of Award or
the RSUs, you are affirming your consent to the collection, processing, storage,
disclosure and transfer of your personal information for these purposes.
12.   By accepting this Instrument of Award or the RSUs, you expressly consent
that the Plan, the Rules and Regulations and any other document relating
thereto, including this Instrument of Award, be drawn up and/or available in
English only. Par votre acceptation de la présente Entente ou des RSUs, vous
consentez expressément à ce que le Régime, les Règlements et tout autre document
connexe, y compris la présente Entente soient rédigés et/ou disponibles en
anglais seulement.

3

--------------------------------------------------------------------------------

 

13.   By accepting this Instrument of Award or the RSUs, you (i) acknowledge and
confirm that you have read and understood the Plan, the Rules and Regulations
and this Instrument of Award, and that you have had an opportunity to seek
separate fiscal, legal and taxation advice in relation thereto; and (ii) agree
to be bound by the terms and conditions stated in this Instrument of Award,
including without limitation the terms and conditions of the Plan and the Rules
and Regulations incorporated by reference herein.
     Note: You should be aware that your acceptance of this Award of RSUs may
have tax and legal consequences for you. You are responsible for any and all
compliance requirements under local and national law related to these
consequences and accordingly you are strongly recommended to seek expert advice
from a local duly qualified professional advisor.
     If you accept the terms and conditions of this Award of RSUs as described
in this Instrument of Award, please confirm your acceptance by signing where
indicated below and returning it to Nortel Stock Option Administration at the
address indicated below.

     
Signature of Employee:
   
 
   

Nortel Executive Compensation
8200 Dixie Road, Suite 100
Brampton, Ontario, Canada L6T 5P6
Fax#: 905-863-8420 (ESN 333)

4

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NORTEL NETWORKS CORPORATION — STOCK OPTIONS
INSTRUMENT OF GRANT
«COUNTRY»

     
NAME OF OPTIONEE:
  «NAME» («GID»)
 
   
EFFECTIVE DATE:
  «GRANT_DATE»
 
   
NUMBER OF OPTIONS:
  «GRANTED»
 
   
SUBSCRIPTION PRICE:
  «PRICE» (USD)
 
   
EXPIRATION DATE:
  «EXPIRY_DATE»
 
   
VESTING SCHEDULE:
  «VESTING» — «Vest_Desc»
 
   
VESTING START DATE:
   
 
   
PLAN:
  Nortel 2005 Stock Incentive Plan

This instrument (hereinafter the “Instrument of Grant”) evidences a Grant to you
of the number of Options indicated above, on the Effective Date indicated above,
pursuant to the Nortel 2005 Stock Incentive Plan, as may be amended from time to
time (hereinafter the “Plan”). Each Option covered by this Instrument of Grant
generally entitles you to purchase one common share (a “Share”) of Nortel
Networks Corporation (the “Corporation”), at the Subscription Price per Share
indicated above, no later than the Expiration Date indicated above, or such
earlier date as may be applicable pursuant to the provisions of the Plan.
Capitalized terms not otherwise defined in this Instrument of Grant have the
meanings set forth in the Plan.
1.   All Options covered by this Instrument of Grant are subject to the terms
and conditions stated in the Plan, except as specifically or additionally
provided in this Instrument of Grant and/or in any rules, regulations,
determinations or interpretations prescribed and/or made by the Committee (or
its delegates) under the power and authority granted under the Plan (the “Rules
and Regulations”), and all of the provisions of the Plan and the Rules and
Regulations are incorporated by reference as if expressly restated herein.
Different Rules and Regulations may apply to you and/or the Options covered by
this Instrument of Grant depending on your country work location, residency or
payroll, whether on the Effective Date of the Grant of Options, on the date of
exercise of the Options, or otherwise. Accordingly, you should review the Plan
and the Rules and Regulations from time to time, which are available as
indicated below, in conjunction with this Instrument of Grant.
2.   The Options covered by this Instrument of Grant are U.S. Options, so the
Subscription Price and all other amounts to be calculated in accordance with the
provisions of the Plan for purposes of this Grant of Options shall be calculated
and stated in U.S. dollars. The Options are Non-Qualified Stock Options for the
purposes of the Plan. Such designation is only relevant in determining the U.S.
federal income tax consequences, if any, applicable to the Options, and has no
bearing on the tax treatment applicable to Options in countries outside of the
United States. Optionees are urged to seek their own tax advice to assess the
tax status of such Options.
3.   You will have the right to exercise the Options after they have vested in
such amounts and on such dates in accordance with the vesting schedule indicated
above, provided that you have been in the continuous employment of the
Corporation or any of its subsidiaries or affiliated entities from the Effective
Date. The exact amounts and dates for vesting are specified in your Grant
information available through the Nortel Intranet — WebStock site
(https://webstock.us.nortel.com:49701/webstock/docs/default.html), “Personal
Summary of Stock Options” web page, or such other web site or through such other
means as may be specified by the Corporation from time to time.
4.   Options may be exercised: (i) by irrevocable notice of exercise in writing,
executed and delivered by the Optionee to the Nortel Stock Option Administration
Department (at 8200 Dixie Road, Suite 100, Brampton, Ontario, Canada L6T 5P6, or
such other address as may be in effect from time to time); and/or (ii) through
such Internet-based or on-line system or such telephonic or voice recognition
system (whether provided by the Corporation or any third party on behalf of the
Corporation); in each case, in such form or manner as may be specified from time
to time by the Corporation on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw), under
People/Compensation/Stock Options/Exercise Process, or otherwise in accordance
with the Plan. The date of exercise of the Options shall be the date on which
the notice of exercise, accompanied by payment of the Subscription Price and any
other required documentation as provided in the Plan or the Rules and
Regulations, is received by the Corporation, in such form or manner as may be
specified from time to time by the Corporation.
«NO»

 

--------------------------------------------------------------------------------

 

2

5.   The terms and conditions in this paragraph apply to you only if one or both
of the following apply: (i) you are a “Reporting Insider” for the purpose of
Corporate Procedure No. 320.28 — Use of Undisclosed Material Information on the
Effective Date indicated above; or (ii) the number of Options evidenced by this
Instrument of Grant is equal to or in excess of 15,000 Options. In consideration
of the Grant of Options, in the event that you exercise all or any part of the
Options at any time subsequent to the date which is twelve (12) months prior to
the date of termination of your employment (whether wrongful or for any other
reason) (the “Applicable Period”), and:

(i)   while employed or during the period of twelve (12) months following the
termination of your employment (whether wrongful or for any other reason), you
accept employment with an employer, or accept an engagement to supply services,
directly or indirectly, to a third party, that is in competition with any Nortel
Company;   (ii)   you fail to comply with or otherwise breach the terms or
conditions of any confidentiality agreement or non-disclosure agreement with any
Nortel Company;   (iii)   while employed or during the period of twelve
(12) months following termination of your employment (whether wrongful or for
any other reason), you, on your own behalf or on any other’s behalf, directly or
indirectly recruit, induce or solicit, or attempt to recruit, induce or solicit,
any current employee or other individual who is/or was supplying services to any
Nortel Company, to terminate their employment or contractual arrangements with
any Nortel Company; or   (iv)   while employed or during the period of twelve
(12) months following termination of your employment (whether wrongful or for
any other reason), you, on your own behalf or on any other’s behalf, solicit,
divert or take away, or attempt to divert or take away the business of any of
the customers or accounts, or prospective customers or accounts, of any Nortel
Company or any of its distributors, representatives or vendors, which you have
had contact or communication with while employed at any Nortel Company;

you agree that you will, if required by the Corporation in its sole discretion,
pay to the Corporation within ten (10) days of written demand for payment from
the Corporation an amount equal to the amount of the excess of the Market Value,
on the date of exercise of the Options, of the Shares purchased as a result of
the exercise of the Options over the Subscription Price for the Shares covered
by the Options (the “Applicable Amount”).
     Provided you are not entitled to any Corresponding Tax Benefit, the
Applicable Amount shall be reduced by the amount of Tax paid by you or on your
behalf (or required to be paid by you or on your behalf as of a future Tax due
date) in respect of the issuance of Shares upon the exercise of options during
the Applicable Period (and, where applicable, in respect of the Grant of such
Options).
     If you are entitled to a Corresponding Tax Benefit which is equal to or
less than the amount of Tax paid by you or on your behalf (or required to be
paid by you or on your behalf as of a future Tax due date) in respect of the
issuance of Shares upon the exercise of options during the Applicable Period
(such difference between the Corresponding Tax Benefit and Tax, if any, is
referred to herein as the “Tax Benefit Deficiency”), the Applicable Amount shall
be reduced by an amount equal to the Tax Benefit Deficiency.
     For the purposes of this paragraph 5:

    “Corresponding Tax Benefit” means the amount of any deduction from or
reduction or credit to the amount of Taxes paid or payable by you or on your
behalf in accordance with the laws of the tax jurisdiction applicable to you as
a result of or in connection with the payment to the Corporation of all or any
portion of the Applicable Amount by the Designated Employee;       “Nortel
Company” means, collectively, Nortel Networks Corporation and its direct and
indirect Subsidiaries (as such term is defined by the Nortel 2005 Stock
Incentive Plan); and       “Tax” means any income tax, capital gains tax,
statutory pension plan contributions and/or other social security tax or
applicable social security charge levied in accordance with the laws of the
jurisdiction to which you are subject at the time the Shares are issued upon the
exercise of Options (and, where applicable, at the time of the Effective Date of
the Grant of such Options).

6.   The Corporation may require, as a condition of exercise of the Options,
that you: (i) pay any applicable taxes, charges, duties, contributions or
otherwise (hereinafter “taxes”) which are required to be paid by you to any
federal, provincial, state, local, foreign or other taxation authority;
(ii) reimburse any taxes which are required to be withheld and remitted by the
Corporation or any of its subsidiaries; (iii) complete any forms or provide any
additional documents in connection with taxes; and (iv) otherwise comply with
all applicable tax laws; in each case in connection with the Grant of the
Options, the vesting of the Options, the exercise of the Options, and/or the
expiration of the Options, and as may be specified in the Rules and Regulations
or otherwise in accordance with the Plan. The Corporation may also require, as a
condition of exercise of the Options, that all or a portion of the Shares issued
to you upon the exercise of the Options: (i) be withheld, until such time as
payment for any tax withholdings made by the Corporation or any of its
subsidiaries on account of applicable taxes (hereinafter “tax withholdings”) has
been received; and/or (ii) be sold by you or on your behalf to generate proceeds
sufficient to cover tax withholdings, in each case if you do not pay such tax
withholdings within the designated time periods as may be specified in the Rules
and Regulations or otherwise in accordance with the Plan. You further
acknowledge and agree that conditions or restrictions on the transferability of
the Shares issued to you upon the exercise of the Options may be imposed on such
Shares on account of taxes or tax withholdings in connection with the Grant of
the Options, the vesting of the Options, the exercise of the Options, and/or the
expiration of the Options, in each case as may be specified in the Rules and
Regulations or otherwise in accordance with the Plan.
7.   The Options are not transferable or assignable and shall only be
exercisable by you or your legal guardian while you are alive. In the event of
your death, the right to exercise shall be governed by the terms of the Plan,
subject to any applicable Rules and Regulations.
«NO»

 

--------------------------------------------------------------------------------

 

3

8.   This Instrument of Grant: (i) shall be binding upon and inure to the
benefit of any successor of the Corporation; (ii) shall be governed by the laws
of the Province of Ontario, and any applicable laws of Canada; and (iii) may not
be amended except in writing or as otherwise provided in the Plan. In the event
of a conflict between the provisions of this Instrument of Grant and those of
the Plan or the Rules and Regulations, the provisions of the Plan or the Rules
and Regulations, as the case may be, shall govern, except to the extent that the
terms and conditions of the Grant of Options evidenced by this Instrument of
Grant are specifically recorded as a variation from the terms and conditions of
the Plan or the Rules and Regulations, as the case may be.
9.   A copy of the Plan, the Prospectus for the Plan pursuant to Section 10(a)
of the U.S. Securities Act of 1933, any amendments to such Prospectus, and the
Rules and Regulations can be found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw), under
People/Compensation/Stock Options/Stock Option Plan Documents. The Services@Work
site also contains other general information about the Options. You should check
the Services@Work site frequently since it may be updated from time to time.
10.   You acknowledge that: (i) the Plan is discretionary and may be suspended
or terminated by the Corporation at any time; (ii) the Grant of Options does not
create any right to receive future Grants of Options, or benefits in lieu of
Options and the terms and conditions of any future Grants of Options, if any,
will be communicated if and when new Grants of Options are to be made; (iii) the
value of the Options is outside the scope of your employment contract, if any,
and the Grant of Options is not for labour performed; (iv) participation in the
Plan is voluntary; (v) the future value of the Shares is unknown and cannot be
predicted with certainty; (vi) the Options are not part of remuneration for
purposes of any compensation on termination of employment, severance payments,
indemnities or end of service payments or benefits of any nature; (vii) the
vesting of the Options ceases upon termination of employment, whether lawful or
otherwise, except as provided in the Plan, and neither the Corporation nor any
of its subsidiaries is required to compensate you for any financial loss
(including taxes, social security premiums and lost capital gain) as a result of
the expiration of Options or the early exercise thereof on any such termination
of employment; and (viii) the Grant of the Option does not give rise to
additional obligations for any subsidiary which employs you. If, notwithstanding
the foregoing, any contractual or statutory (employment or otherwise) claim is
found to have arisen, then you, by accepting this Instrument of Grant or the
Options, shall, to the extent permitted by applicable law, be deemed irrevocably
to have waived your entitlement to pursue such claim.
11.   The various provisions and sub-provisions of this Instrument of Grant are
severable and if any provision or identifiable part thereof is held to be
unenforceable by any court of competent jurisdiction then such unenforceability
shall not affect the enforceability of the remaining provisions or identifiable
parts thereof in this Instrument of Grant, the Plan, the Rules and Regulations,
or any documents related to the Plan.
12.   Nortel and its third party service providers may need to collect and use
information about employees for the purpose of the grant and/or exercise of
Options, administering the Plan, and to comply with tax, reporting and
disclosure obligations under applicable laws and regulations. Such information
may be communicated to any person deemed necessary for the administration of the
Plan, even if it requires such information to be transferred or communicated to
persons based outside your country of employment. Such information is from time
to time transferred between companies within the group and to such third party
service providers, to achieve these objectives. Nortel and its third party
service providers will hold your “Plan participation file” at any location
deemed necessary, on the understanding that you will be given access without
constraint at reasonable intervals and without excessive delay or expense to
examine and correct such information. By accepting the Instrument of Grant or
the Options, you are affirming your consent to the collection, processing,
storage, disclosure and transfer of your personal information for these
purposes.
13.   By accepting this Instrument of Grant or the Options, you expressly
consent that the Plan, the Rules and Regulations, the Prospectus for the Plan
and any other document relating thereto, including this Instrument of Grant and
the information about the Grant available through the Nortel Intranet — WebStock
site, be drawn up and/or available in English only. Par votre acceptation de la
présente Entente ou des Options, vous consentez expressément à ce que le Régime,
les règlements et le prospectus relatifs au Régime et tout autre document
connexe, y compris la présente Entente et l’information concernant vos options
disponible à la page « WebStock » de l’intranet de Nortel soient rédigés et/ou
disponibles en anglais seulement.
14.    By accepting this Instrument of Grant or the Options, you (i) acknowledge
and confirm that you have read and understood the Plan, the Rules and
Regulations, this Instrument of Grant and all information about the Grant
available on WebStock Option Summary, and that you have had an opportunity to
seek separate fiscal, legal and taxation advice in relation thereto; and
(ii) agree to be bound by the terms and conditions stated in this Instrument of
Grant, including without limitation the terms and conditions of the Plan and the
Rules and Regulations incorporated by reference herein.
If you accept the terms and conditions of this Grant of Options as described in
this Instrument of Grant, please confirm your acceptance by signing where
indicated below and returning it to Nortel Stock Option Administration at the
address indicated above.

     
Signature of Optionee:
   
 
   

«NO»