Exhibit 10.3
NORTEL NETWORKS CORPORATION
CHANGE IN CONTROL PLAN
January 18, 2008

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NORTEL NETWORKS CORPORATION
CHANGE IN CONTROL PLAN
     1. PURPOSE OF THE PLAN
     1.1 The Corporation relies upon the experience and expertise of the
Specified Executives to manage the business of Nortel objectively and for the
benefit of the Corporation and its shareholders.
     1.2 The Corporation recognizes that, in view of the existing market
conditions for the shares of publicly-traded companies involved in the
telecommunications business as well as the existing distribution and ownership
of the outstanding shares of the Corporation, there is a possibility of a Change
in Control.
     1.3 To reinforce and encourage the continued attention and commitment of
the Specified Executives to their duties without distraction in the face of the
potentially disturbing circumstances arising from the possibility of a Change in
Control, the Corporation has established this Plan to provide certain
arrangements for Specified Executives whose employment with Nortel is terminated
as a result of a Change in Control.
     2. DEFINITIONS
     For the purpose of the Plan, the terms below shall have the following
meanings:
“affiliated companies” shall have the meaning ascribed to the term “affiliated
bodies corporate” in subsection 2(2) of the Canada Business Corporations Act.
“affiliated entities” means (a) affiliated companies of the Corporation and
(b) such other companies, partnerships or other legal entities as the Nortel
Board may determine for the purposes of any of the provisions of the Plan.
“Awards” means restricted stock units, performance stock units or other stock
based incentive awards, other than Options, granted pursuant to a Stock
Incentive Plan.
“Annual Salary” means, with respect to a Specified Executive, the greater of
(A) the annual base salary rate paid to the Specified Executive by or on behalf
of Nortel immediately prior to the CIC Date and (B) the annual base salary rate
paid to the Specified Executive immediately prior to his or her Termination
Date; provided, however, if the Specified Executive incurs a Termination Due to
Change in Control as a result of his or her resignation for Good Reason due to a
reduction in such Specified Executive’s annual salary rate, the applicable
annual base salary rate of such Specified Executive for purposes of this
Paragraph (B) shall be the annual base salary rate in effect immediately prior
to any such reduction.

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“Auditor” means the independent auditor of the Corporation as appointed by the
Corporation’s shareholders or by the Nortel Board in relation to this Plan from
time to time.
“Canadian Executive” means a Specified Executive who is a resident of Canada for
the purposes of the Income Tax Act (Canada), as amended from time to time.
“Canadian Trust” means the trust established pursuant to the Canadian Trust
Agreement.
“Canadian Trust Agreement” has the meaning given to that term in Section 3.1.
“Canadian Trustee” means the trustee under the Canadian Trust Agreement.
“Cause” means, for the purposes of this Plan only, a Specified Executive’s:

  (i)   conviction (including any pleas of guilty or nolo contendere) of a
criminal offence or felony that involves fraud in connection with the
performance by the Specified Executive of the duties of the Specified
Executive’s employment with Nortel or moral turpitude;     (ii)   the willful
and continual failure of the Specified Executive substantially to perform the
duties of the Specified Executive’s employment with Nortel (other than any such
failure due to the Specified Executive’s physical or mental illness), after a
written demand for substantial performance has been delivered to the Specified
Executive by the Nortel Board, and a reasonable opportunity to cure has been
given to the Specified Executive by the Nortel Board;     (iii)   material
violation of any written agreement between the Specified Executive and Nortel
not to disclose any confidential or proprietary information of Nortel or
confidential or proprietary information of a third person in respect of which
Nortel is under a written confidentiality obligation to such third party of
which the Specified Executive has received prior written notice;     (iv)  
fraud or willful and serious misconduct in connection with the performance of
the Specified Executive’s duties for Nortel, which, in the case of any such
misconduct, has caused direct material injury to Nortel; or     (v)   dismissal
for just cause (including but not limited to a dismissal for performance related
reasons or for misconduct) in accordance with applicable law.

“CEO” means the individual serving as chief executive officer of the Corporation
at any time during the period which is thirty (30) days prior to the CIC Date.
“Change in Control” or “CIC” means the occurrence of any of the events described
in Schedule “A” hereto.
“CIC Date” means the date on which the Change in Control occurs.

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“Code” means the United States Internal Revenue Code of 1986, as amended, the
regulations thereunder and any interpretive guidance as may be issued from time
to time.
“Committee” means the compensation and human resources committee of the Nortel
Board and the board of directors of NNL or such other committee of the Nortel
Board as the Nortel Board may designate from time to time as the “Committee” for
the purposes of this Plan; provided, however, that the Committee may, in its
discretion, delegate in writing such of its powers, rights and duties under the
Plan, in whole or in part, to such committee, person or persons as it may
determine, from time to time, on written terms and conditions as it may
determine.
“Corporation” means Nortel Networks Corporation and any successor thereto,
including, without limitation, any successor to Nortel Networks Corporation
following a Change in Control.
“Designated Beneficiary” of any Specified Executive means, with respect to any
Entitlement available to such Specified Executive, the person designated by the
Specified Executive as his or her beneficiary for the purposes of any plan or
arrangement governing such Entitlement or, if the Specified Executive has not
made such designation with respect to such Entitlement (or no plan or
arrangement governs such Entitlement), then the “Designated Beneficiary” of such
Specified Executive means the estate of the Specified Executive for the purpose
of such Entitlement. For the purposes of this Plan, “estate” shall include only
the executors or administrators of such estate or any person or persons who
shall have acquired the right to the applicable Entitlement directly from the
Specified Executive by bequest or inheritance.
“Entitlements” means the payments, benefits, rights and other entitlements to be
paid or provided to a Specified Executive pursuant to Article 4 of this Plan.
“Excluded Replacement Options” means the replacement options covered by a grant
to a Specified Executive under the key contributor program of the applicable
Stock Incentive Plan if, on the Termination Date: (i) all of the original
options granted to such Specified Executive in connection with the grant of such
replacement options have not been exercised; or (ii) such original options have
been exercised but the replacement options could never become exercisable due to
such Specified Executive’s failure to continue to own beneficially the required
number of common shares that were acquired on the exercise of the original
options, determined in accordance with the terms of the grant of the replacement
options.
“EVP Corporate Operations” means the individual holding the most senior position
responsible for corporate operations at the Corporation at the applicable time.
“Good Reason” means the occurrence of any of the following condition(s) without
the prior written consent of the Specified Executive which condition(s) remain
in effect more than thirty (30) days after written notification by the Specified
Executive to the EVP Corporate Operations (such notification to be made within a
period not to exceed ninety (90) days from the initial existence of the Good
Reason condition):

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  (i)   the requirement that the Specified Executive relocate his or her office
or home base to a location that is outside a 100 kilometre radius of his or her
office or home base immediately prior to the CIC Date; or     (ii)   the
assignment to the Specified Executive of a set of responsibilities and/or the
employment or continued employment of the Specified Executive on terms and
conditions that are not the Substantial Equivalent of such Specified Executive’s
set of responsibilities and/or the terms and conditions of employment in effect
immediately prior to the CIC Date;

provided, however that a “Good Reason” shall not be deemed to have occurred
until the end of such thirty (30) day period.
“International Executives” means Specified Executives other than Canadian
Executives.
“Key Employee” means such term as defined by section 416(i) of the Code.
“NNL” means Nortel Networks Limited and its successors.
“Nortel Board” means the board of directors of the Corporation.
“Nortel” means the Corporation and the affiliated entities.
“Option” means a stock option and related stock appreciation right, if any, and
any stand-alone stock appreciation rights granted pursuant to a Stock Incentive
Plan, but does not include Excluded Replacement Options.
“Payment Date” means, with respect to a Specified Executive, the later of
(i) his or her Termination Date and (ii) the CIC Date.
“Person” includes any individual, legal or personal representative, corporation,
company, partnership, syndicate, unincorporated association, trust, trustee,
government body, regulatory authority or other entity, howsoever designated or
constituted.
“Plan” means the Nortel Networks Corporation Change in Control Plan as set forth
herein and as may be amended from time to time and “hereto”, “herein”, “hereof”,
“herewith” and similar terms refer to this Plan in its entirety, unless a
particular provision is specified.
“Pro Rata Basis” means, (i) for any performance stock units or other similar
performance-based awards, 100% of the unvested target amount of the award
awarded, 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 until the Termination Date and the denominator of
which is 36 and (ii) for any restricted stock units or other time-based awards
excluding Options, the product of one-third of the award awarded multiplied by a
fraction, the numerator of which equals the number of days which have elapsed at
the Termination Date since the later of (a) the date 33 percent of the

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awards became vested; and (b) the date 66 percent of the awards became vested,
and the denominator of which is 365; provided, however, that no portion of an
award shall become vested earlier than the first anniversary of the date the
award was granted.
“Separation From Service” means separation from service as defined by section
409A of the Code and refers to a separation from service from the affiliated
group as determined using a 50% common ownership test with reference to section
414(b) and (c) of the Code.
“Specified Executive” means each of (i) the CEO, (ii) each Tier I Executive
(iii) each Tier II Executive and (iv) any other individual whose employment with
Nortel is terminated more than thirty (30) days prior to the CIC Date at the
direction of any Person who acquires control of the Corporation, within the
meaning of Paragraph (i) of the definition of the term “Termination Due to
Change in Control,” if, immediately prior to such termination of such
individual’s employment, such individual is identified in the records of the
Plan maintained by the Corporation as a Tier I Executive or a Tier II Executive
or is serving in the position of CEO.
“Stock Incentive Plan” means each of the Nortel Networks Corporation 1986 Stock
Option Plan, As Amended And Restated, the Nortel Networks Corporation 2000 Stock
Option Plan and the Nortel 2005 Stock Incentive Plan, As Amended and Restated
and as each may be further amended from time to time prior to the CIC Date, or
any other similar plan adopted or assumed by the Corporation or NNL for the
benefit of employees of Nortel, and included any grant or award agreement (and
any amendments to such agreements made prior to the CIC Date) relating to an
Award under such plans.
“Substantial Equivalent” means, with respect to a Specified Executive:

  (i)   a set of responsibilities that are (x) commensurate with such Specified
Executive’s professional training and experience and (y) in all material
respects, equivalent to or better than the set of responsibilities of such
Specified Executive immediately prior to the CIC Date; and     (ii)   terms and
conditions of employment that (x) include an annual base salary rate and annual
cash incentive compensation opportunity that are each equal to or greater than
such Specified Executive’s annual base salary rate and annual cash incentive
compensation opportunity in effect immediately prior to the CIC Date,
(y) include overall additional compensation and benefits that are substantially
equivalent to or better than the additional compensation and benefits of the
Specified Executive immediately prior to the CIC Date, and (z) are otherwise
substantially equivalent to or better than the terms and conditions of such
Specified Executive in effect immediately prior to the CIC Date.

“Supplementary Executive Retirement Plan” means the Nortel Networks Limited
Supplementary Executive Retirement Plan, as amended from time to time prior to
the CIC Date.
“Termination Date” means: (i) the actual date of a Specified Executive’s
termination of employment with Nortel, or (ii) if required to comply with
section 409A of the Code, the actual date of a Specified Executive’s Separation
From Service with Nortel.

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“Termination Due to Change in Control” means:

  (i)   any termination of the employment of the Specified Executive by Nortel
during the period commencing thirty (30) days prior to the CIC Date and ending
on the date which is twenty-four (24) months after the CIC Date, provided
however that a termination of the employment of a Specified Executive by Nortel
prior to such 30 day period at the direction of the Person who acquires control
of the Corporation in the Change in Control, shall be deemed to be a Termination
Due to Change in Control; or     (ii)   any resignation for Good Reason within
twenty-four (24) months after the CIC Date by a Specified Executive provided
that such Specified Executive resigns no later than thirty (30) days after a
Good Reason has occurred with respect to such Specified Executive.

Notwithstanding the foregoing, “Termination Due to Change in Control” shall not
include any termination of the employment of the Specified Executive: (1) by
Nortel for Cause; or (2) pursuant to an agreement to resign or retire entered
into by Nortel and the Specified Executive prior to the CIC Date.
“Tier I Executives” means the executives determined by the Committee from time
to time prior to the CIC Date to be Tier I Executives and identified as such in
the records of the Plan maintained by the Corporation at any time during the
period which is thirty (30) days prior to the CIC Date.
“Tier II Executives” means the executives determined by the Committee from time
to time prior to the CIC Date to be Tier II Executives and identified as such in
the records of the Plan maintained by the Corporation at any time during the
period which is thirty (30) days prior to the CIC Date.
“U.S. Trust” has the meaning given to that term in Section 3.2.
“U.S. Trust Agreement” has the meaning given to that term in Section 3.2.
“U.S. Trustee” means the trustee under the U.S. Trust Agreement.
“Voting Shares” has the meaning given to that term in Schedule A.
     3. ESTABLISHMENT OF TRUST
     3.1 Source of Payments to Canadian Executives — At least 30 days prior to
any CIC Date, or if the Corporation is not aware in advance that a CIC Date will
occur, immediately following the Corporation becoming aware of the occurrence of
a CIC Date, the Corporation shall, or shall cause one or more of its affiliated
entities to, enter into an agreement or agreements (collectively, the “Canadian
Trust Agreement”) pursuant to which the Canadian Trustee will have available to
it, for the benefit of the Canadian Executives, the funds necessary to fund the
Entitlements available to the Canadian Executives, unless there has been a
recent down turn in the financial health of Nortel. Under the terms of the
Canadian Trust Agreement, the Corporation shall be required, immediately prior
to the CIC Date or, if it is not known in advance that the CIC Date will occur,
immediately

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following the Corporation’s becoming aware of the occurrence of a CIC Date, to
contribute, or to cause one or more of its affiliated entities to contribute, to
the trust or trusts an amount equal to 200% of the fee payable to acquire a
letter of credit for an amount equal to the estimated maximum liability of
Nortel for any and all Entitlements that would arise if all Canadian Executives
experienced a Termination Due to Change in Control on the earlier of the
Specified Executive’s Termination Date or the CIC Date, as calculated by the
Auditor. If neither the Corporation nor any of its affiliated entities satisfies
the obligations of the Corporation hereunder to pay or provide the Entitlements
to a Canadian Executive within the time set out herein, such Canadian Executive
shall be entitled to deliver a notice to the Canadian Trustee stating that such
obligation or obligations have not been satisfied and the Canadian Trustee shall
thereupon satisfy such obligation or obligations to such Canadian Executive from
the assets of the Canadian Trust, subject to and in accordance with the Canadian
Trust Agreement, unless the Canadian Trustee shall be directed by an arbitrator
duly appointed pursuant to Article 6 hereof or a court of competent jurisdiction
not to satisfy such obligation or obligations.
     3.2 Source of Payments to International Executives — The Corporation shall,
or shall cause one or more of its affiliated entities to, pay the Entitlements
to which International Executives are entitled under the terms of this Plan to
the International Executives out of the general corporate assets of the
Corporation and/or the applicable affiliated entities of the Corporation, and no
assets of the Corporation or any such affiliated entities shall be designated to
fund such Entitlements provided herein or deemed to be assets to be used for
that purpose, it being understood that this Plan is an unfunded plan with
respect to the International Executives. This Plan does not confer on any
International Executive or his or her Designated Beneficiary a beneficial
interest in any asset of Nortel. Notwithstanding the foregoing, at least 30 days
prior to any CIC Date, or if the Corporation is not aware in advance that a CIC
Date will occur, immediately following the Corporation becoming aware of the
occurrence of a CIC Date, the Corporation shall, or shall cause one or more of
its affiliated entities to, establish a trust or trusts (collectively, the “U.S.
Trust”) pursuant to a trust agreement or agreements (collectively, the “U.S.
Trust Agreement”) and the Corporation shall make contributions thereto or cause
contributions to be made thereto for the purpose of providing for the
Entitlements to International Executives hereunder, unless there has been a
recent down turn in the financial health of Nortel. Immediately prior to the CIC
Date or, if it is not known in advance that the CIC Date will occur, immediately
following the Corporation’s becoming aware of the occurrence of a CIC Date, the
Corporation shall, or shall cause one or more of its affiliated entities to,
contribute to the U.S. Trust an amount in cash equal to the excess of (i) the
estimated maximum liability of Nortel for any and all Entitlements that would
arise if all International Executives experienced a Termination Due to Change in
Control on the earlier of the Specified Executive’s Termination Date or the CIC
Date, as calculated by the Auditor, over (ii) the aggregate amount then held in
the U.S. Trust. The U.S. Trust Agreement shall contain procedures to the
following effect:
(a) In the event of the insolvency of the Corporation or other affiliated entity
of the Corporation that has established the applicable U.S. Trust Agreement (the
party that has established such U.S. Trust Agreement, the “Grantor”), the trust
fund will be available to pay the claims of any creditor of the Grantor to which
a distribution may be made in accordance with the bankruptcy laws of the
jurisdiction to which the Grantor is subject. The Grantor shall be deemed to be
“insolvent” if the Grantor is subject to a pending proceeding as a debtor under
the bankruptcy laws of such applicable jurisdiction. In the event the Grantor
becomes insolvent, the Nortel Board

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shall notify the U.S. Trustee of the event as soon as practicable. Upon receipt
of such notice, or if the U.S. Trustee receives other written allegations of the
Grantor’s insolvency, the U.S. Trustee shall cease making payments to
International Executives from the trust fund, shall hold the trust fund for the
benefit of the Grantor’s creditors, and shall take such steps that are necessary
to determine within thirty (30) days whether the Grantor is insolvent. In the
case of the U.S. Trustee’s actual knowledge of or other determination of the
Grantor’s insolvency, the U.S. Trustee will deliver assets of the trust fund to
satisfy claims of the Grantor’s creditors as directed by a court of competent
jurisdiction; and
(b) The U.S. Trustee shall resume payments to the International Executive or in
the event of the death of the International Executive, his or her Designated
Beneficiary, as applicable, under the U.S. Trust Agreement only after the U.S.
Trustee has determined that the Grantor is not insolvent (or is no longer
insolvent, if the U.S. Trustee had previously determined the Grantor to be
insolvent) or upon receipt of an order of a court of competent jurisdiction
requiring such payment. If the U.S. Trustee discontinues payment pursuant to
Subsection 3.2(a) and subsequently resumes such payment, the first payment to be
made to each International Executive or in the event of the death of the
International Executive, his or her Designated Beneficiary, as applicable,
following such discontinuance shall include an aggregate amount equal to the
excess of (i) the payments which would have been made to such International
Executive or Designated Beneficiary during any such period of discontinuance,
plus interest on such amount at a rate equivalent to the net rate of return
earned by the trust during the period of such discontinuance, over (ii) the sum
of all payments actually made to such International Executive or Designated
Beneficiary during such period of discontinuance plus interest on such payments
at a rate equivalent to the net rate of return earned by the trust during the
period of discontinuance.
          Upon the Termination Due to Change in Control of any International
Executive, the Corporation shall and such International Executive shall be
entitled to deliver a notice to the U.S. Trustee stating that such Termination
Due to Change in Control has occurred. Upon receipt of any such notice from the
Corporation and/or an International Executive, the U.S. Trustee shall commence
paying the Entitlements due to such International Executive in accordance with
Section 4.1, 4.2 and 4.3 hereof, subject to and in accordance with the U.S.
Trust Agreement, unless the U.S. Trustee shall be directed by an arbitrator duly
appointed pursuant to Article 6 hereof or a court of competent jurisdiction not
to make such payments.
     3.3 Alternative Source of Payments. Notwithstanding Sections 3.1 and 3.2
hereof, effective no later than 30 days prior to the CIC Date or, if the
Corporation is not aware in advance that a CIC Date will occur, immediately
following the Corporation becoming aware of the occurrence of a CIC Date, and to
maximize the tax benefits available to Nortel in the various jurisdictions in
which Specified Executives reside or are employed, the Corporation may provide
for alternative arrangements pursuant to which the Entitlements hereunder shall
be paid to Specified Executives, provided that any such alternative arrangements
must protect the rights of the affected Specified Executives at least to the
same extent such rights would have been protected had the Entitlements been paid
in accordance with Section 3.1 or 3.2, whichever is applicable.

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     4. OBLIGATIONS OF THE CORPORATION TO SPECIFIED EXECUTIVES
     4.1 Entitlements — In the event of a Specified Executive’s Termination Due
to Change in Control, the Specified Executive shall be entitled to the
following:
(a) within thirty (30) days after the Payment Date, payment to or to the order
of the Specified Executive in cash, certified cheque or wire transfer of a lump
sum amount equal to the Specified Executive’s accrued but unpaid salary for the
period to and including the Termination Date, together with an amount equal to
the cash value of any accrued but unused vacation entitlement to the Termination
Date;
(b) within thirty (30) days of submission by the Specified Executive of proper
expense reports, reimbursement in cash, certified cheque or wire transfer to the
Specified Executive in accordance with Nortel’s expense reimbursement policy for
all expenses incurred by the Specified Executive in connection with the business
of Nortel prior to the Termination Date;
(c) within one hundred and twenty (120) days after the Payment Date, payment to
or to the order of the Specified Executive in cash, certified cheque or wire
transfer of a lump sum equal to the sum of the following amounts:
(i) an amount equal to three times the CEO’s Annual Salary in the case of the
CEO, two times the Specified Executive’s Annual Salary in the case of a Tier I
Executive and 1.5 times the Specified Executive’s Annual Salary in the case of a
Tier II Executive; and
(ii) an amount equal to 300% in the case of the CEO, 200% in the case of a Tier
I Executive, and 100% in the case of a Tier II Executive, of the annual bonus
that the Specified Executive would have been entitled to receive pursuant to the
applicable Nortel executive management incentive award plan(s) for the fiscal
year of the Corporation or the affiliated entity, as the case may be, which
includes the Specified Executive’s Termination Date had the Specified Executive
remained in the continuous employment of Nortel until at least the last day of
such fiscal year and as if the Corporation, any applicable affiliated entity,
any applicable business unit and the Specified Executive had each achieved 100%
of their respective performance objectives, if any, established by Nortel for
such fiscal year, otherwise fulfilled all other relevant eligibility criteria
and with any other applicable factor set at mid-range, after deduction for any
mid-year payments in respect of such plan(s) for such fiscal year paid by Nortel
to the Specified Executive prior to the Termination Date;
(d) continuation of any loans from Nortel to the Specified Executive, without
modification or amendment;

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(e) out placement counseling services of a firm chosen from time to time by the
Specified Executive, for a period not to exceed 18 months after the Payment
Date;
(f) maintenance of coverage for the maximum extended reporting period available
under any directors’ and officers’ liability insurance that is in place on the
Termination Date in the event that such policy is cancelled or not renewed;
(g) during the period ending on the three-year anniversary of the Specified
Executive’s Termination Date in the case of the CEO, the two-year anniversary of
the Specified Executive’s Termination Date in the case of a Tier I Executive and
the eighteen-month anniversary of the Specified Executive’s Termination Date in
the case of a Tier II Executive (such applicable period, the “Continuation
Period”), provision of continued coverage under each of Nortel’s life insurance,
medical, dental, health and disability plans or arrangements in which the
Specified Executive was entitled to participate immediately prior to the earlier
of the Termination Date or the CIC Date at a cost to the Specified Executive no
greater than the actual amount that the Specified Executive paid or would have
paid for such coverage immediately prior to the earlier of the Termination Date
or the CIC Date and otherwise in accordance with the terms of such plans and
arrangements as in effect immediately prior to the earlier of the Termination
Date or the CIC Date; provided however that:
(i) if the continued coverage of a Specified Executive under any such plan or
arrangement is not permitted under the terms thereof or under applicable law,
the Corporation shall arrange to provide the Specified Executive with benefits
that are substantially equivalent to those which the Specified Executive was
entitled to receive under such plan or arrangement immediately prior to the
earlier of the Termination Date or the CIC Date or pay an amount to the
Specified Executive in cash or by certified cheque sufficient to enable the
Specified Executive to purchase substantially equivalent coverage for the
applicable period on an individual basis, in either case at a cost to the
Specified Executive no greater than the Specified Executive paid or would have
paid for such coverage immediately prior to the earlier of the Termination Date
or the CIC Date, determined on an after-tax basis to the Specified Executive;
(ii) in the event that a Specified Executive obtains alternative employment
during the applicable Continuation Period and, in connection therewith, the
Specified Executive receives substantially equivalent coverage under the plans
of his or her new employer, the obligation of the Corporation to provide such
Specified Executive with continued coverage under the corresponding plan or
arrangement of Nortel (and the obligation to provide benefits and payments
pursuant to Paragraph 4.1(g)(i)) shall terminate as of the effective date of
such substantially equivalent coverage; and
(iii) in the case of a Specified Executive whose Termination Date occurs prior
to the CIC Date, if the coverage of such Specified Executive and, where
applicable, his or her eligible dependants, under any such plan or arrangement
terminates prior to the expiration of the Continuation Period

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applicable to such Specified Executive, (A) the Corporation shall reimburse the
Specified Executive or cause the Specified Executive to be reimbursed for the
actual costs incurred by such Specified Executive for alternative and
substantially equivalent life insurance, medical, dental, health and disability
coverage obtained by him or her (other than alternative coverage described in
the preceding Paragraph (ii)) for the portion of the applicable Continuation
Period following the termination of the Specified Executive’s coverage under the
corresponding plan or arrangement of Nortel (such portion, the “Stub Period”) or
(B) (x) in the case of medical, dental and/or other health coverage, if no such
alternative coverage has been obtained, the Corporation shall reimburse the
Specified Executive for the medical, dental and/or other health expenses, as
applicable, actually paid by the Specified Executive for medical, dental and/or
other health services provided to the Specified Executive and, where applicable,
his or her eligible dependants or beneficiaries during the Stub Period to the
extent such expenses would have been reimbursed under the corresponding plan or
arrangement of Nortel had the Specified Executive’s coverage thereunder
continued for the duration of the Continuation Period or any earlier date
determined under the preceding Paragraph (ii) (the amount of such reimbursement
to be determined after reduction for the costs the Specified Executive would
have been required to pay under the applicable plan or arrangement of Nortel had
his or her coverage thereunder continued) and (y) in the case of life insurance
or disability coverage, if no such alternative coverage has been obtained and,
during the Stub Period, the Specified Executive or, where applicable, any of his
or her eligible dependants dies or becomes disabled (within the meaning of the
applicable disability plan of Nortel), the Corporation shall pay to the
Specified Executive (or in the event of the Specified Executive’s death, the
Specified Executive’s Designated Beneficiary) an amount equal to the death or
disability benefits, as applicable, that would have been payable had the
Specified Executive’s coverage under the life insurance and/or disability plan
of Nortel continued for the Continuation Period (such amount to be determined
after reduction for the costs the Specified Executive would have been required
to pay under such plan of Nortel had the Specified Executive’s coverage
thereunder continued for the Continuation Period or Stub Period, as the case may
be);
(h) if the Specified Executive is 50 years of age or older on the Termination
Date, then:

  (i)   if the Specified Executive is eligible to participate in the
Supplementary Executive Retirement Plan (the “SERP”) prior to the Termination
Date, then the Specified Executive will be eligible for SERP , in accordance
with the terms of the SERP, and     (ii)  
commencing on the latest of (x) such time as the health, medical and dental
benefits available to a Specified Executive pursuant to Subsection 4.1(g) hereof
expire, (y) the beginning of the calendar year during which the Specified
Executive will attain age 55 and (z)

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      the expiration of any coverage of the Specified Executive by such
Specified Executive’s new employer as contemplated by Paragraph 4.1(g)(ii)
hereof, the Specified Executive shall be eligible for coverage under the health,
dental and medical benefits available to retired executives of Nortel
immediately prior to the earlier of the Termination Date or the CIC Date;
provided, however, if the continued coverage of a Specified Executive under any
such plan or arrangement is not permitted under the terms thereof or under
applicable law, but the Specific Executive was a member of the Traditional
option under the Capital Accumulation and Retirement Program and reached age 50
and completed 5 years of service before July 1, 2006, the Corporation shall
arrange to provide the Specified Executive benefits that are substantially
equivalent to those which retired executives of Nortel were entitled to receive
under such plan or arrangement immediately prior to the earlier of the
Termination Date or the CIC Date or pay an amount to the Specified Executive in
cash or by certified cheque sufficient to enable the Specified Executive to
purchase substantially equivalent coverage for the applicable period on an
individual basis in any event at a cost no greater than the Specified Executive
paid or would have paid for such coverage immediately prior to the earlier of
the Termination Date or the CIC Date, determined on an after-tax basis to the
Specified Executive; and

(i) (i) for Specified Executives subject to taxation under the Code, payment to
or to the order of the Specified Executive in settlement pursuant to section 4.2
of this Plan of Awards allocated to the Specified Executive under a Stock
Incentive Plan in cash, shares or a combination thereof in accordance with the
applicable settlement provisions of this Plan, the applicable Stock Incentive
Plan and/or the instrument of award for the particular Award will be made on the
later of (x) the next following anniversary of the grant date and (y) 45 days
after the “separation from service” (as defined in Section 409A of the Code);
and
     (ii) for Specified Executives not subject to taxation under the Code,
subject to any provisions of any Stock Incentive Plan that are contrary to this
provision and which cannot be waived or amended by the Corporation, within
thirty (30) days after the Payment Date, payment to or to the order of the
Specified Executive in settlement pursuant to section 4.2 of this Plan of Awards
allocated to the Specified Executive under a Stock Incentive Plan in cash,
shares or a combination thereof in accordance with the applicable settlement
provisions of this Plan, the applicable Stock Incentive Plan and/or the
instrument of award for the particular Award.
     4.2 Stock Incentive Plan Awards
(a) Acceleration of Options — In the event of a Specified Executive’s
Termination Due to Change in Control, subject to any provisions of any Stock
Incentive Plan that

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are contrary to this provision and which cannot be waived or amended by the
Corporation, the Corporation shall cause all unvested outstanding Options held
by the Specified Executive immediately prior to his or her Termination Date to
become fully exercisable as of such Termination Date and which Options will
thereafter be exercisable by the Specified Executive (or, in the event of his or
her death or incapacity, by his or her Designated Beneficiary) in accordance
with the applicable Stock Incentive Plan and this Plan.
(b) Acceleration of Awards. In the event of a Specified Executive’s Termination
Due to Change in Control, subject to any provision of any Stock Inventive Plan
that are contrary to this provision and which cannot be waived or amended by the
Corporation, (i) unvested Awards granted on or after June 1, 2007 that are
subject to performance or time-based vesting criteria outstanding immediately
prior to the Specified Executive’s Termination Date will be deemed to have
vested on a Pro Rata Basis as of the Termination Date, and (ii) unvested Awards
that are granted prior to June 1, 2007 that are subject to performance or
time-based vesting criteria outstanding immediately prior to the Specified
Executive’s Termination Date will be deemed to have fully vested as of the
Termination Date in accordance with the applicable vesting conditions of the
applicable Stock Incentive Plan and will be settled in accordance with the terms
of the applicable Stock Incentive Plan at 100% of the unvested target amount or
on the basis of the Specified Executive having satisfied the time-based
criteria, as applicable.
(c) Waiver of Certain Provisions — None of the Options or Awards held by a
Specified Executive as of his or her Termination Date shall be subject to the
right of Nortel to require, in certain circumstances, repayment of the proceeds
of an Option exercise or an Award vest and the related sale of any underlying
common  shares; provided, however, that this provision shall not apply to any
forfeiture or recoupment of incentive compensation made by Nortel pursuant to
the Compensation and Human Resources Committee Policy Regarding Recoupment of
Incentive Compensation.
(d) Period for Exercise — In the event of a Specified Executive’s Termination
Due to Change in Control, the Specified Executive will be deemed to continue to
be actively employed by Nortel under any Stock Incentive Plan (i) with respect
of the exercise of outstanding vested Options on the Termination Date, except
with respect to future grants of stock options, for the applicable Continuation
Period and (ii) with respect to the settlement of outstanding Awards on the
Termination Date, until such time as is required in connection with the
settlement of Awards in order to comply with the provisions of section 4.1(i)
and section 4.2 of this Plan.
     4.3 Other Deferred Compensation and Pension Arrangements — If a Specified
Executive participates in any deferred compensation, pension or supplementary
retirement plans offered by Nortel, then upon such Specified Executive’s
Termination Due to Change in Control, and except as otherwise specifically
provided in this Plan, such Specified Executive shall be entitled to payments
under such plans in accordance with the terms of each such plan. The full
unfunded amount payable under any deferred compensation, pension or
supplementary retirement plans shall be

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funded in accordance with Article 3.
     4.4 Mechanism for Providing Entitlements to a Specified Executive -
(a) Obligation of the Corporation — The Corporation shall provide or cause to be
provided all Entitlements available to a Specified Executive pursuant to the
Plan, including this Article 4 (or, in the event of his or her death, to the
Specified Executive’s Designated Beneficiary); it being understood that to the
extent any amount is paid to the Specified Executive (or, if applicable, his or
her Designated Beneficiary) under Article 3, such payment shall be deemed made
on behalf of the Corporation and the applicable affiliated entity, if any, in
satisfaction of the Corporation’s and such affiliated entity’s obligations
therefor. All Entitlements shall be paid or provided at the applicable time set
forth in the Plan. In the event that the Corporation makes contributions
hereunder on behalf of an affiliated entity, such contributions shall be charged
by the Corporation to such affiliated entity.
(b) Where No Time Specified — If no time is set out in Section 4.1 hereof with
respect to any Entitlement, the Corporation shall be deemed to be required to
provide such Entitlement as of or on the Payment Date.
     4.5 Reasonable Efforts — Subject to the provisions hereof, the Corporation
shall use commercially reasonable efforts to take or cause to be taken all
actions and to do or cause to be done all things reasonably necessary in
accordance with applicable law to implement and make effective the Plan,
including the Entitlements available to Specified Executives pursuant to the
Plan.
     4.6 No Mitigation Required — A Specified Executive shall not be required to
mitigate the amount of any Entitlement provided for in this Plan either by
seeking other employment or otherwise. The amount of any Entitlement provided
for herein shall not be reduced by any remuneration that the Specified Executive
may earn from employment with another employer or otherwise following his or her
Termination Date except as specified in Subsection 4.1(g) hereof.
     4.7 Tax Withholding — The Corporation shall withhold or shall cause to be
withheld from amounts payable hereunder any applicable employment or other
withholding taxes required to be withheld under applicable law.
     4.8 Requirements for U.S. Citizens and all other employees not exempt from
Section 409A of the Code — Notwithstanding the timing of any distribution
described herein to the contrary, all distributions made to U.S. Citizens and
all other employees not exempt from Section 409A of the Code pursuant to
Subsection 4.1(a), 4.1(b), and 4.1(c) by reason of a Termination Due to Change
in Control will be distributed on the date of the Specified Executive’s
Separation from Service; provided, however, that this date includes the
extension provided by section 409A of the Code of the later of (x) two and one
half months after the date of the Specified Executive’s Separation from Service
or (y) the end of the calendar year in which the Specified Executive’s
Separation from Service occurs. Any Entitlements that are “deferred
compensation” (as that term is defined in section 409A of the Code) payable to
Key Employees on the determination date (as provided by section 409A of the
Code, as may be modified from time to time) (“Deferred Compensation Payments”)
shall not be distributed earlier than six months following a Separation from
Service. Such Deferred

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Compensation Payments shall exclude any payments that qualify as “separation
pay” (as that term is defined in section 409A of the Code) and any other
payments excluded from the definition of “deferred compensation” under section
409A of the Code, including without limitation payments that qualify as
“short-term deferrals” (as that term is defined in section 409A of the Code).
     This Plan is intended to comply and shall be interpreted to comply with
Section 409A of the Code.
     4.9 Modified Cap — Any Entitlements to a Specified Executive under this
section 4 shall be reduced to the extent necessary so that no excise tax would
be imposed pursuant to section 4999 of the Code if doing so would result in the
Specified Executive retaining a larger after-tax amount, taking into account the
income, excise and employment taxes imposed on the Entitlements; provided,
however, that any such reduction will be effected first through adjustments to
or reductions of Entitlements not subject to Section 409A and, second, to the
extent further reduction is required, a reduction of the amount paid under
Section 4.1(c) hereof..
     5. OBLIGATIONS OF SPECIFIED EXECUTIVE
     5.1 Exclusive Remedy — The Entitlements shall constitute each Specified
Executive’s sole and exclusive remedy for any claim arising out of such
Specified Executive’s Termination Due to Change in Control.
     5.2 Release — It shall be a condition precedent to the delivery to the
Specified Executive of any Entitlement that the Specified Executive execute, and
deliver to Nortel within 30 days of the later of (x) the Termination Date and
(y) the CIC Date, a full and final release in the form which the EVP Corporate
Operations has designated as being acceptable prior to the Change in Control. If
such release is not executed and delivered within the specified period, the
Specified Executive will receive only the Entitlements paid under Section 4.1(a)
and 4.1(b) hereof.
     5.3 Non-Solicitation — If the Specified Executive accepts the Entitlements
pursuant to Article 4 hereof, then for a period of one year after the Payment
Date, the Specified Executive will not, directly or indirectly, solicit the
services of or in any other manner persuade any employee of Nortel to
discontinue his or her employment with Nortel or to materially alter that
relationship in a manner which is adverse to Nortel.
     5.4 Options — If the Specified Executive accepts the Entitlements pursuant
to Article 4 hereof, then the Specified Executive acknowledges and agrees he or
she will not exercise and waives any entitlement to exercise any Options which
become fully exercisable as of the Termination Date until after the later to
occur of the CIC Date or the Termination Date.
     6. ARBITRATION PROVISION
     6.1 Arbitration Requirement — Any disputes arising hereunder between a
Specified Executive and the Corporation, including the interpretation, validity,
enforceability or applicability

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of the Plan, shall be subject to binding arbitration under the Arbitration Act
(Ontario) or the International Commercial Arbitration Act (Ontario) depending
upon the Specified Executive’s office or home base.
     6.2 Qualification of Arbitrator — Any arbitrator appointed pursuant hereto
shall be a disinterested Person or alternative dispute resolution service of
recognized competence.
     6.3 Appointment of Arbitrator — Each of the Corporation and the Specified
Executive involved in the dispute shall act reasonably to come to agreement as
to the identity of an appropriate arbitrator with respect to the particular
dispute hereunder. If the Corporation and the Specified Executive cannot agree
on the identity of the arbitrator, each of them shall submit to binding
arbitration before a single arbitrator selected from the roster of available
arbitrators kept by CPR Institute for Dispute Resolution, JAMs/Indispute or the
Canadian Foundation for Dispute Resolution (CFDR) depending upon the site for
such arbitration. Arbitrations hereunder shall be governed by the laws of
Ontario. The arbitrator shall not have the right to confer any rights with
respect to the trade secrets, confidential and proprietary information or other
intellectual property rights of Nortel upon the Specified Executive or any third
party and this arbitration provision shall not preclude Nortel from seeking
legal and equitable relief from any court having jurisdiction with respect to
disputes or claims relating to or arising out of the misuse or misappropriation
of Nortel’s intellectual property.
     6.4 Determination of Arbitrator — The determination of any arbitrator
appointed in accordance with this Article 6 shall be final and binding on the
Specified Executive and the Corporation.
     6.5 Site of Arbitration — Any arbitration proceedings required to be
conducted pursuant to this Plan shall be conducted in the location agreed to by
the parties, but if the parties cannot agree, in the City of Toronto.
     6.6 Costs and Expenses — Each party shall bear its own costs and expenses
for arbitration or litigation arising out of this Plan, except that the
Corporation will pay or cause to be paid all of the fees and expenses of the
arbitrator. The Specified Executive who institutes the arbitral proceedings
provided hereunder may apply at the conclusion of such proceedings to the
arbitrator for the reimbursement for the legal fees and expenses expended in
connection with the arbitral proceedings and the arbitrator shall have
jurisdiction to determine whether payment of the Specified Executive’s legal
fees and expenses are reasonable in the circumstances and the amounts to be
reimbursed by or on behalf of the Corporation.
     7. GENERAL
     7.1 No Obligation to Employ — This Plan does not obligate Nortel to
continue to employ a Specified Executive for any specific period of time, or in
any specific role or geographic location. Subject to the terms of any applicable
written employment agreement between Nortel and a Specified Executive and
applicable law, Nortel may assign that Specified Executive to other duties, and
either Nortel or the Specified Executive may terminate the Specified Executive’s
employment at any time for any reason.

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     7.2 Governing Law — This Plan shall be governed by and construed in
accordance with the laws of Ontario and the laws of Canada applicable therein
and shall be treated in all respects as an Ontario contract.
     7.3 Severability — If any provision of this Plan is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
     7.4 Enurement -
(a) This Plan shall enure to the benefit of and be binding upon the Specified
Executives and their respective heirs, executors, administrators and other legal
personal representatives and upon the Corporation and its successors and
assigns.
(b) This Plan shall enure to the benefit of and shall be binding upon and
enforceable against the Corporation and any successor thereto, including,
without limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the business or assets of the
Corporation, whether by merger, consolidation, sale or otherwise, but shall not
otherwise be assignable by the Corporation.
(c) Without limitation of Subsection 7.4(b) hereof, the Corporation shall
require any successor (whether direct or indirect, by merger, consolidation,
sale or otherwise) to all or substantially all of the business or assets of the
Corporation, by a written agreement expressly, absolutely and unconditionally to
assume and agree to perform the covenants and obligations of the Corporation
pursuant to the terms of this Plan in the same manner and to the same extent as
the Corporation would have been required to perform if no such succession had
taken place, provided however, that such agreement shall not be required if the
successor assumes the obligations of the Corporation hereunder by operation of
law. Failure of the Corporation to obtain the written agreement of a successor
required by this Subsection 7.4 (c) shall be deemed to be a circumstance
permitting a Specified Executive to terminate his or her employment for Good
Reason and, accordingly, to be entitled to the Entitlements.
     7.5 Notice — Notices and other communications given or made under the Plan
shall be delivered as follows:
(a) if to the Corporation, at its principal executive offices, to the attention
of the EVP Corporate Operations;
(b) if to a Specified Executive, to the most recent residential address shown
for such Specified Executive in the records of Nortel;
(c) if to the Canadian Trustee, at the address provided to the Corporation from
time to time; and

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(d) if to the U.S. Trustee, at the address provided to the Corporation from time
to time.

  8.   AMENDMENT AND TERMINATION

(a) Amendment Prior to Any Proposed CIC — Except as provided in Subsection 8(b)
hereof, the Corporation may amend this Plan at any time, in whole or in part.
(b) Amendment Prior to Proposed CIC — No amendment of any provision of this
Plan, the Canadian Trust Agreement, the U.S. Trust Agreement and any other trust
agreement established in accordance with Article 3 hereof made after thirty (30)
days prior to the earliest of: (1) the date that the Corporation first publicly
announces it is conducting negotiations leading to a transaction that results in
a Change in Control; or (2) the date that the Corporation enters into a
definitive agreement documenting a Change in Control (even though still subject
to approval by the Corporation’s shareholders and other conditions and
contingencies); or (3) the date of the first public announcement of a
transaction that results in a Change in Control which does not fall within the
events described in the preceding (1) or (2); (4) the date that the Corporation
first enters into negotiations leading to a transaction that results in a Change
in Control; or (5) the CIC Date; shall be effective unless consented to in
writing by the Corporation and by any Specified Executive affected by such
amendment.
(c) Termination — The Nortel Board may from time to time suspend or terminate
the Plan in whole or in part. Notwithstanding the foregoing, the Plan shall not
be suspended or terminated at any time after thirty (30) days prior to the
earliest of: (1) the date that the Corporation first publicly announces it is
conducting negotiations leading to a transaction that results in a Change in
Control; or (2) the date that the Corporation enters into a definitive agreement
documenting a Change in Control (even though still subject to approval by the
Corporation’s shareholders and other conditions and contingencies); or (3) the
date of the first public announcement of a transaction that results in a Change
in Control which does not fall within the events described in the preceding
(1) or (2); (4) the date that the Corporation first enters into negotiations
leading to a transaction that results in a Change in Control; or (5) the CIC
Date, unless such suspension or termination is consented to in writing by the
Corporation and by any Specified Executive affected by such suspension or
termination.

  9.   EFFECTIVE DATE AND TERM OF THE PLAN

The Plan was adopted by resolution of the board of directors of Nortel Networks
Limited on August 19, 1999 with effect from September 1, 1999. The Plan was
assumed by the Corporation effective May 1, 2000 and amended and restated by the
Nortel Board with effect from July 26, 2001. The Plan was amended and restated
by the Nortel Board with effect from June 26, 2002. The Plan was further amended
and restated by the Nortel Board with effect from June 1, 2007. The Plan was
further amended and restated by the Nortel Board with effect from January 18,
2008. Any amendments to the Plan shall become effective as specified by the
Nortel Board, and consented to by

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the Corporation and the Specified Executives required hereby. Any termination or
suspension of the Plan shall become effective as specified by the Nortel Board,
and consented to by the Corporation and the Specified Executives as required
hereby.

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SCHEDULE “A”
CHANGE IN CONTROL
     1. Events Constituting Change in Control — For the purposes of this Plan,
the term “Change in Control” means the occurrence of any of the following:

  (a)   any Person or group acquires beneficial ownership of securities of the
Corporation representing more than 20% of the outstanding securities entitled to
vote in the election of directors of the Corporation (collectively, the “Voting
Shares”) other than in connection with a Permitted Business Combination;     (b)
  the consummation of a merger, amalgamation, business combination,
reorganization or consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation or any liquidation or
dissolution of the Corporation, including by way of plan of arrangement (a
“Business Combination”) unless, in any such case:

  (i)   such Business Combination involves solely the Corporation, and one and
more affiliated entities; or     (ii)   following completion of all steps
involved in the transaction or transactions pursuant to which the Business
Combination is effected:

(A) Persons who were the beneficial owners, respectively, of the outstanding
common shares of the Corporation immediately prior to such Business Combination
beneficially own, directly or indirectly, by reason of such prior ownership of
common shares, more than 50% of the then-outstanding voting shares of (x) the
entity resulting from such Business Combination (the “Resulting Entity”) or
(y) the Person that ultimately controls the Resulting Entity, whether directly
or indirectly (the “Ultimate Parent”); and
(B) at least a majority of the members of the board of directors of the
Resulting Entity (or the Ultimate Parent) were members of the Nortel Board at
the earlier of the time of the execution of the initial agreement providing for,
or the action of the Nortel Board approving, such Business Combination;

  (c)   the persons who were directors of the Corporation on the date hereof
(the “Incumbent Directors”) cease (for any reason other than death or
disability) to constitute at least a majority of the Nortel Board; provided,
that, any person who was not a director on the date hereof shall be deemed to be
an Incumbent Director if such person was elected or appointed to the Nortel
Board by, or on the recommendation of or with the approval of, at least two-

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      thirds of the directors who then qualify as Incumbent Directors either
actually or by operation of this proviso, unless such election, appointment,
recommendation or approval was the result of any actual or publicly threatened
proxy contest for the election of directors; or

  (d)   any other event which the Nortel Board determines in good faith could
reasonably be expected to give rise to a Change in Control resulting from
situations such as:

  (i)   any Person acquiring a significant interest in the Corporation; or    
(ii)   the election of any Person to the Nortel Board in circumstances in which
management has not solicited proxies in respect of such election.

     2. Definitions — In addition to the definitions set out in Article 2 of the
Plan, for the purposes of this Schedule A:
          (a) “beneficial ownership” means ownership at law or in equity and,
for the purposes of this Plan, includes “beneficial ownership” as interpreted in
accordance with Subsections 1(5) and (6) and Section 90 of the Securities Act
(Ontario) as in force as of June 1, 2007 (the “OSA”);
          (b) “control” or “controls” means, with respect to any Person, the
direct or indirect ownership of voting securities of such Person that carry with
them in the aggregate more than 50% of the votes for the election of directors
of such Person;
          (c) “group” means a Person and one or more other Persons who are
acting jointly or in concert with such Person and, for the purposes of this
Plan, “acting jointly or in concert” shall be interpreted in accordance with
Subsection 91(1) of the OSA; and
          (d) “Permitted Business Combination” means a Business Combination
described in Paragraph 1(b)(i) or 1(b)(ii) above.