EXHIBIT 10.6
CONFIDENTIAL — SPECIAL HANDLING
September 7, 2005
Nicholas J. DeRoma
Chief Legal Officer
Nortel Networks
8200 Dixie Rd., Suite 100
Brampton, Ontario
L6T 5P6
Dear Mr. DeRoma:
This letter (“Agreement”) records the arrangements between you and Nortel
Networks Corporation concerning the cessation of your responsibilities as Chief
Legal Officer reporting to William A. Owens, Nortel’s Vice-Chairman and Chief
Executive Officer. The arrangements are as follows:
Cessation of Employment

1.   As used in this Agreement, the term “Corporation” shall mean Nortel
Networks Corporation, its subsidiaries and affiliates, their successors and
assigns, and all of their past and present officers, directors, employees and
agents (in their individual and representative capacities), in every case,
individually and collectively.   2.   Effective as of the close of business on
September 9, 2005, your employment relationship with the Corporation shall
cease. All previous external responsibilities which you had will be assumed by
other persons designated by the Corporation, including any participation in
industry or other associations representing the Corporation. Prior thereto, you
will cease to be an officer and/or director of the Corporation and any of the
Corporation’s subsidiaries and affiliates and you will sign such documents as
may be reasonably required to record these resignations. You will continue to
have access to your office to close out your personal and business affairs as
needed until and including September 30, 2005.   3.   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 12:01 a.m. the day following your
termination date of September 9, 2005. 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 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.

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Compensation, Benefits & Perquisites

4.   Conditional upon your material compliance with all terms and conditions of
this Agreement, the Corporation shall:       (Salary Continuation)

  (a)   pay you the sum of US$43,833 per month, converted to Canadian currency,
in the same manner as you were paid immediately prior to the termination of your
employment, less appropriate deductions, commencing on September 10, 2005 and
terminating on September 9, 2007 (“Salary Continuation Period”); in the event of
your death prior to the conclusion of the Salary Continuation Period, the Salary
Continuation payments set forth in this section 4.(a), the Vacation Benefit set
forth in section 4.(b) below and the Incentive Award set forth in section 4.(c)
below will be made to your spouse, and the event of her death, to your estate;

    (Vacation Benefit)

  (b)   pay you, on or before September 30, 2005, a lump sum amount equivalent
to ten weeks of base salary, representing all of your current accrued but unused
vacation benefit, with no further vacation accrual subsequent to September 9,
2005;

    (Incentive Award)

  (c)   pay you, on or before September 30, 2005, a lump sum amount equivalent
to 100% of your annual base salary; for the avoidance of doubt, you will not
receive a 2005 SUCCESS bonus;

    (Insurance Benefits)

  (d)   continue your participation during the Salary Continuation Period,
subject to the provisions of the applicable plans, in group medical, life
insurance and dental insurance, for you and any of the dependents currently
covered; you shall continue to make any required contributions for such benefits
at the rates applicable for employees through the deductions authorized in
paragraph 4(a);

    (Outplacement or Counseling Services)

  (e)   make available senior executive outplacement services (services and
provider to be designated by the Corporation after considering your preferences
— please contact me for this purpose) to be provided to you in the New York City
metropolitan area, including Fairfield County, CT, USA, to assist you in
securing new employment, and pay the professional fees for such services as are
reasonably incurred;

    (Pension Benefits)

  (f)   continue your accrual of pensionable service during the Salary
Continuation Period, pursuant to the terms of the Northern Telecom Managerial
and Non-Negotiated Pension Plan, the Supplementary Executive Retirement Plan and
the Special Pension Credit Plan (“the Pension Plans”); your final pension or
retirement benefits will be calculated based on pensionable service you will
have accrued under the terms of the Pension Plans through the conclusion of the
Salary Continuation Period, and your pension estimate is set forth in Attachment
I to this Agreement;

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- 3 -

    (Stock Options)

  (g)   consider you not to be eligible for any future grant(s) of stock
options, including under the Nortel 2005 Stock Option Plan or the 1986 and 2000
stock option plans. For the avoidance of doubt, you will not receive the grant
of stock options referenced by Bill Owens in his email to you dated March 22,
2005. If you currently hold any stock options granted under one of the Nortel
Networks employee stock option plans, you will have the right to exercise any
vested Nortel Networks stock options granted to you under the Nortel Networks
Corporation 1986 Stock Option Plan as Amended and Restated (“the 1986 Plan”),
the Nortel Networks Corporation 2000 Stock Option Plan (“the 2000 Plan”) and/or
a stock option plan previously assumed by Nortel Networks in connection with
certain past merger and acquisition transactions, subject to the terms and
conditions of those plans and in accordance with the relevant Instruments of
Grant.         A summary of your stock option grants and their vesting schedule
are set forth in Attachment II to this Agreement. A copy of the 1986 Plan and
the 2000 Plan have been provided to you. A copy of the terms and conditions of
the key contributor replacement stock options granted to you on January 28, 1999
(Replacement Grant) has also been provided to you. Attachment II indicates that
all of your stock options are currently vested, except the Replacement Grant.  
      Stock options granted to you under the 1986 Plan and/or the 2000 Plan will
continue to vest during the Salary Continuation Period in accordance with the
terms of the relevant Instruments of Grant. In the event of your death during
the Salary Continuation Period, the provisions of section 6(g) of each of the
1986 Plan and the 2000 Plan, respectively, will apply to the stock options
granted to you under the applicable plan, except the Replacement Grant. In
accordance with the terms of the Replacement Grant, the Replacement Grant shall
only be exercisable in accordance with section 6(g) of the 1986 Plan if certain
of the conditions for vesting of the Replacement Grant stock options are met on
the date of death in accordance with the terms of the Replacement Grant and the
1986 Plan.         In accordance with section 6.(h) of the 1986 Plan and the
2000 Plan, respectively, all vested stock options under such plans may be
exercised by you during the thirty-six (36) month period following your
Retirement Date, (but not in any such case after the expiration of the Option
Period first established in connection with such grant). The Replacement Grant
shall be exercisable within a period of thirty-six (36) months from your
Retirement Date in accordance with section 6(h) of the 1986 Plan to the extent
the Replacement Grant stock options are vested on your Retirement Date in
accordance with their terms.         In the event of your death during
retirement, the provisions of section 6(g) of each of the 1986 Plan and the 2000
Plan, respectively, will apply to all of the stock options granted to you under
the applicable plan, except the Replacement Grant. In accordance with the terms
of the Replacement Grant, the Replacement Grant shall only be exercisable in
accordance with section 6(g) of the 1986 Plan if the Replacement Grant stock
options are vested in accordance with their terms on your Retirement Date.      
  Further, with respect to the stock options you have exercised or will be
entitled to exercise, the Instruments of Grant provide in certain circumstances
that you repay the Corporation the difference between the market value of the
shares purchased in conjunction with the exercise of your options and the
subscription price of those shares, subject to certain adjustments. The
repayment obligation is triggered if you commence employment with a competitor
of any Nortel Networks company or engage in certain other specified conduct
harmful to Nortel Networks within the time frames provided for in the
Instruments of Grant;

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    (Investment Plan)

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

    (Relocation Costs)

  (i)   (1) arrange and pay for the shipment of your household goods from
Toronto to New Canaan, CT, USA by Movers International (MI Group), subject to
the terms, limits and exclusions of the Nortel Networks International Assignment
Long-Term Program;         (2) reimburse you for the normal and customary
closing expenses, including any realtors’ sales commission, arising from the
sale of your principal residence in North York, Ontario, Canada; and        
(3) pay you an additional sum to “gross up” the value of any taxable benefit
provided to you under sections 4(i) (1) and (2) above;

    (Withholdings)

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

    (Tax Preparation Services)

  (k)   pay the cost of personal income tax preparation by Deloitte & Touche LLP
for each of calendar years 2005 and 2006; such tax preparation service shall
include any additional time and effort to prepare your tax returns as may be
required because of your plan to relocate from Canada to the U.S. and retire
from Nortel Networks; you will also receive an additional sum to “gross up” the
value of any taxable benefit provided to you under this section 4.(k); the Tax
Preparation Services and any gross up amount to be provided as set forth in this
section 4.(k) will be provided to your spouse in the event of your death.

Cessation of Compensation, Benefits and Perquisites

5.   All Corporation compensation, benefits and perquisites not expressly
extended to you pursuant to this Agreement shall be terminated effective 12:01
a.m September 10, 2005.

Expense Accounts

6.   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
September 30, 2005.

Securities Indemnification

7.   The Corporation shall indemnify you in accordance with section 124 of the
Canada Business Corporations 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

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    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 advance monies 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 consent, which
consent will not be unreasonably withheld.

Confidentiality

8.   You acknowledge that you continue to be bound by the terms of the Agreement
Relating to Intellectual Property and Confidentiality and any related agreements
which you executed in the course of your hiring and employment by the
Corporation. You confirm that your entire right, title, and interest to all
intellectual property as generally described in such agreements 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, discoveries, improvements and designs as covered
by 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 to enable the Corporation to secure a
patent or other form of protection in Canada, the United States, and other
countries. Any information pertaining to such inventions, discoveries,
improvements and designs is considered the confidential information of the
Corporation until and unless patented or published by the Corporation.      
Unless and until the terms of this Agreement are disclosed by the Corporation as
required by applicable law, you agree that you will not directly or indirectly
disclose, publicize or discuss this Agreement, including the terms and/or
conditions, with any employee and/or former employee of the Corporation or any
other person except your spouse, your lawyer and/or accountant, financial
advisor and/or outplacement counsellor. 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; 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 to any invention, which is owned or licensed by the
Corporation. You shall continue to maintain the confidentiality of any dealings,
transactions or affairs of the Corporation which may have come to your knowledge
in any manner during your employment. Further, you agree not to reveal,
disclose, or cause to be revealed or disclosed, anything with respect to the
Corporation that is injurious or harmful to any of its interests, or the
interests of its employees, officers or directors. In addition, during the
period September 6, 2005 to September 9, 2007, you:

  (i)   shall issue no public statement on the business affairs, policies or the
like of the Corporation without the prior written consent of the Corporation
and, without limiting the foregoing, you shall not disparage the Corporation;
and,     (ii)   shall not, on behalf of yourself or others, directly or
indirectly, recruit, induce or solicit or attempt to recruit, induce or solicit
any individual who is supplying services to the Corporation, whether as an
employee, contractor, consultant or otherwise, to terminate their employment or
contractual arrangements with the Corporation or to accept engagement with
another person or entity unrelated to the Corporation; and,

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  (iii)   shall not become an employee, a consultant, contractor,
representative, or in any manner or capacity accept any assignment, project or
work for a competitor of the Corporation, without prior written approval by the
Leader, Global Compensation and Benefits, provided that such approval shall not
be unreasonable withheld.

Other

9.   Absent prior approval by the Leader, Global Compensation and Benefits,
following your notification to the Corporation pursuant to paragraph 10, not to
be unreasonably withheld, the Corporation’s obligations under paragraphs 4(a),
(c), (d), (e), (f), (g), (h), (i) and (k) will terminate forthwith if you become
an employee, consultant, contractor or representative of any competitor of the
Corporation. Furthermore, you agree that if any of the commitments in paragraph
8 are breached, the Corporation has the right to recover, in addition to any
other remedy or entitlement the Corporation may have as a result of the breach,
an amount equal to the difference between the Market Value of the shares, as of
the date of exercise, which you purchased during the Salary Continuation Period
as a result of the exercise of your options, and the Subscription Price of those
shares covered by such options.

Notice

10.   Upon the occurrence of any contingency which affects your rights in or to
any subsequent payment or benefit, or affects the Corporation’s rights under
this Agreement, including without limitation, your obtaining new employment, you
shall, within fifteen (15) days of such occurrence, provide written notice to
the Corporation of that event. Such notice shall be sent in writing to Leader,
Global Compensation and Benefits.

Advice and Assistance

11.   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 or interviews, participation in discovery,
and trial preparation testimony as may be deemed necessary by the Corporation
concerning the Corporation’s position in any legal proceedings involving issues
brought against or initiated by the Corporation of which you have knowledge. In
the event it is necessary for you to provide the aforementioned services, then
the Corporation shall reimburse you for authorized, reasonable and documented
travel expenses, including, but not limited to, transportation, lodging and
meals.

Company Property and Information Preservation

12.   Prior to your termination date, and before receiving any monies pursuant
to this Agreement, you shall return to Nortel Networks any and all property of
Nortel Networks 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.       Nortel Networks Corporate Procedure 206.01 states that
“all documents, messages or data composed, sent, or received through the network
of Nortel Networks in any form are and remain at all times the property of
Nortel Networks”. In addition, all work product that you have produced during
your employment with Nortel Networks is the property of Nortel Networks.
Therefore, all information, (however recorded or stored) (“Information”) in your
possession and/or that you have created in the course of your employment with
Nortel Networks (whether or not currently in your possession or control) is the
property of Nortel Networks.       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. Nortel Networks 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).

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    As a result, you have the responsibility to secure relevant Information.    
  You shall gather (including from on-site and off-site storage) and return to
Nortel Networks all physical copies of Information (for example and without
limitation, computer discs, Jaz Drive tapes, paper copies) and arrange for this
information to be provided to your manager. In addition, Nortel Networks 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 Nortel Networks. Any Information
located in your home, including on a home personal computer, must be returned to
Nortel Networks and deleted from your home computer.       Compliance with this
requirement is not optional. Given the penalties which the law provides, it is
in everyone’s interest to comply as quickly and completely as possible. None of
these materials should be destroyed, even if they are a printout of something on
a hard drive, until the investigations and all of the ongoing litigation is
concluded. Should you have any questions regarding the implementation of these
preservation instructions, please contact your HR prime, without delay.      
The Information will be used by Nortel Networks for general business purposes
and may also be provided to regulatory authorities in response to their requests
or disclosed in any relevant private litigation to which Nortel Networks is a
party. Also, the Information may be used by and provided to entities within the
Nortel Networks group of companies and/or Nortel Networks 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 Nortel Networks to Nortel Networks entities, third parties and
regulatory authorities within and outside of your geographic area for the
purposes set out above.

Review Period

13.   The terms and conditions of this Agreement will be open for your review
and consideration through the close of business September 8, 2005. If you have
not returned an executed copy of this Agreement, by facsimile or the original,
to the undersigned, by the close of business on September 8, 2005, then the
terms and conditions set forth in this Agreement shall be withdrawn as of that
time and date.

Release

14.   In consideration of the monies and other benefits to be provided to you as
set forth herein, you hereby fully and completely release the Corporation, its
subsidiaries and affiliates, and their respective directors, officers and
employees, to the extent permitted by law, from any and all real or pretended
claims, causes of actions, rights, damages or injuries of any nature whatsoever
you may have had or now have, whether known or unknown, (except for promises and
commitments contained herein), including, without limitation, any and all such
claims, causes of action, rights, damages or injuries arising out of, or related
to, your employment by the said companies and/or the termination thereof, your
ceasing to hold office in the said companies, or arising under any statute,
including, without limitation, the Employment Standards Act (Ontario), or at
common law. Furthermore, you understand that this release shall be binding upon
you and your heirs, administrators, representatives, executors, successors, and
assigns and its enforceability shall not be challenged.       You acknowledge
that you have read this letter and that you understand all of its terms and have
executed it voluntarily with full knowledge of its significance. Further, you
acknowledge that you have had an adequate opportunity to review and consider the
arrangements, including at your discretion, the right to discuss this Agreement
with legal counsel of your choice. Finally, you acknowledge that you understand
you are hereby granting to the Corporation a full and final release as set forth
above.

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

Please acknowledge that the foregoing correctly and completely sets forth your
understanding of the arrangements, and your acceptance hereof, by signing,
dating and returning to me, the attached second copy of this Agreement.
Yours truly,
/s/   W. J. Donovan
William J. Donovan
For Nortel Networks Corporation
By: /s/   William J. LaSalle                            
/s/   Nicholas J. DeRoma                                
Nicholas J. DeRoma
Sept. 8, 2005                                                  

Date

     
Attachment I
  Pension Estimate
Attachment II
  Summary of Stock Option Grants and Vesting Schedule

 

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[t18334t18334z0001.gif]

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[t18334t18334z0002.gif]

Personal Information Date of Birth: March 1, 1946 Spouse's Date of Birth: March
25, 1946 Date of Hire (Canada): June 1, 1997 Pension Entry Date: June 1, 1999
Pension Plan: Canadian Traditional Part II Program SERP Participant Yes Special
Pension Credits (SPC): Must be minimum age 60 to be eligible for a benefit from
this Plan (eligible as at March 1, 2006) For Eligibility Purposes: 16 years, 3
months For Benefit Purposes: 8 years, 1-1/2 months

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[t18334t18334z0003.gif]

Pension Estimate: Actual benefit payable will be determined at the retirement
date Termination Date: September 9, 2005 Salary Continuance: September 10, 2005
through September 9, 2007 Retirement Date: September 10, 2007 Age at Pension: 61
years, 6 months Continuous Service at Pension: 10 years, 3 months Pensionable
Service: 8 years, 4 months SPC Service: 8 years, 1-1/2 months Total Benefit
Service: 16 years, 5-1/2 months Canadian Pension Benefit (CAD): (option of
electing either an immediate lifetime monthly pension or a lump sum/15-year term
annuity) Monthly Pension: $30,000 (Joint & Survivor 60%) or Total Lump Sum
Value: $4,650,000, payable as follows: $362,000 lump sum (of which approx.
$218,000 must be transferred to a locked-in RRSP) + $34,000/month for 15 years

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Attachment II
Summary of Stock Option
Grants and Vesting Schedule

 

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Statement of Option Grant   Page 1 of 1

PERSONAL SUMMARY OF STOCK OPTION GRANTS AS OF THE DATA LOAD DATE OF AUGUST 24,
2005

             
Global ID
  Employee Name   Employee Address    
0503455
  Nicholas Deroma   8200 Dixie Road, Suite 100, Brampton, ON, L6T 5P6, CA    

 

                                                                               
                                                              Vested   Grant  
Grant               Grant                                             and   Date
  ID   Plan   Type   Curr.   Price     Granted     Vested     Unvested    
Exercised     Outstanding     Available                                        
                              for                                              
                        Exercise  
28-
  A000000126477   CDN   NQ   CAD   $ 8.2700       250,000       250,000       0
      0       250,000       250,000  
FEB-02
      515                                                                
 
                                                                       
25-
  PASO00000002   CDN   NQ   CAD   $ 9.2900       500,000       500,000       0  
    0       500,000       500,000  
OCT-01
      515                                                                
 
                                                                       
25-
  A000000098598   CDN   NQ   CAD   $ 57.6700       150,000       150,000       0
      0       150,000       150,000  
JAN-01
      00                                                                
 
                                                                       
27-
  A000000029314   CDN   NQ   CAD   $ 71.1500       180,000       180,000       0
      0       180,000       180,000  
JAN-00
                                                                       
 
                                                                       
28-
  00009246   CD   NQ   CAD   $ 23.7000       160,000       160,000       0      
0       160,000       160,000  
JAN-99
      KEY                                                                
 
      O                                                                
 
                                                                       
28-
  00009248   CD   NQ   CAD   $ 23.7000       160,000       0       160,000      
0       160,000       0  
JAN-99
      KEY                                                                
 
      R                                                                
 
                                                                       
28-
  00009247   CDN   NQ   CAD   $ 23.7000       100,000       100,000       0    
  0       100,000       100,000  
JAN-99
                                                                       
 
                                                                       
29-
  00009245   US   NQ   USD   $ 11.2900       80,000       80,000       0       0
      80,000       80,000  
JAN-98
                                                                       
 
                                                                       
02-
  00009244   CDN   NQ   CAD   $ 14.6900       100,000       100,000       0    
  66,666       33,334       33,334  
JUN-97
                                                                       
 
                                                                       
Totals
                            1,680,000       1,520,000       160,000       66,666
      1,613,334       1,453,334  

Stock Option information is updated on a weekly basis. The information provided
here is current as of August 24, 2005. Grants that have been forfeited or
cancelled are not reflected on the Personal Summary.
View Vesting Schedule
NOTE: This page was last updated as of the data load date of August 24, 2005.
Exercise transactions which have occurred within one week prior to the “as of”
date may not be recorded in this data. If there is any discrepancy between the
information contained on this page and the information contained in the official
records of Nortel Networks, the information contained in the official records of
Nortel Networks will prevail. If you believe that any information on this page
is inaccurate, please contact Stock Option Administration at 905-863-6001 or ESN
333-6001 or email “Options, Stock” or stockopt@nortel.com.
This page generated August 29, 2005
8/29/2005

 

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Vesting Schedule   Page 1 of 2

VESTING SCHEDULE

             
Global ID
  Employee Name   Employee Address    
0503455
  Nicholas Deroma   8200 Dixie Road, Suite 100, Brampton, ON, L6T 5P6, CA
     
 

Vesting dates for grants with non-standard vesting will not be reflected in this
vesting schedule. Please refer to your original Instrument of Grant or contact
Stock Option Administration.

                                                                  Grant Id  
Grant Date     Options Granted     Outstanding     Expiration     Grant Price  
  Plan     Type     Vest                                                        
      Code  
A000000126477
  28-FEB-02     250,000       250,000     27-FEB-12   8.2700 CAD   CDN 515   NQ
  OTHER
 
  Vest Date                           Options Vesting                        

Note: Non-standard vesting schedule

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
PASO00000002
  25-OCT-01     500,000       500,000     25-OCT-07   9.2900 CAD   CDN 515   NQ
  OTHER
 
  Vest Date                           Options Vesting                        

Note: Non-standard vesting schedule

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
A000000098598
  25-JAN-01     150,000       150,000     24-JAN-11   57.6700 CAD   CDN 00   NQ
    3YA  
 
  Vest Date                           Options Vesting                        
 
  25-JAN-02                             50,000                          
 
  25-JAN-03                             50,000                          
 
  25-JAN-04                             50,000                          

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
A000000029314
  28-JAN-00     180,000       180,000     26-JAN-10   71.1500 CAD   CDN   NQ    
3YA  
 
  Vest Date                           Options Vesting                        
 
  27-JAN-01                             60,000                          
 
  27-JAN-02                             60,000                          
 
  27-JAN-03                             60,000                          

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
00009246
  28-JAN-99     160,000       160,000     27-JAN-09   23.7000 CAD   CD KEY O  
NQ     5YC  
 
  Vest Date                           Options Vesting                        
 
  28-JAN-04                             160,000                          
 
 

 

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

 

Vesting Schedule   Page 2 of 2

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest  
 
                                                          Code
00009248
  28-JAN-99     160,000       160,000     27-JAN-09   23.7000 CAD   CD KEY R  
NQ   OTHER
 
  Vest Date                           Options Vesting                        

Note: Non-standard vesting schedule

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
00009247
  28-JAN-99     100,000       100,000     27-JAN-09   23.7000 CAD   CDN   NQ    
3YA  
 
  Vest Date                           Options Vesting                        
 
  28-JAN-00                             33,333                          
 
  28-JAN-01                             33,333                          
 
  28-JAN-02                             33,334                          

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
00009245
  29-JAN-98     80,000       80,000     28-JAN-08   11.2900 USD   US   NQ  
OTHER
 
  Vest Date                           Options Vesting                        

Note: Non-standard vesting schedule

                                                                 
 
Grant Id   Grant Date     Options Granted     Outstanding     Expiration    
Grant Price     Plan     Type     Vest                                          
                    Code  
00009244
  02-JUN-97     100,000       33,334     01-JUN-07   14.6900 CAD   CDN   NQ  
OTHER
 
  Vest Date                           Options Vesting                        
 
Note: Non-standard vesting schedule  
 
 

NOTE: This page was last updated as of the data load date of August 24, 2005.
Exercise transactions which have occurred within one week prior to the “as of”
date may not be recorded in this data. If there is any discrepancy between the
information contained on this page and the information contained in the official
records of Nortel Networks, the information contained in the official records of
Nortel Networks will prevail. If you believe that any information on this page
is inaccurate, please contact Stock Option Administration at 905-863-6001 or ESN
333-6001 or email “Options,Stock” or stockopt@nortel.com.
This page generated August 29, 2005