exv10w15



 










EXHIBIT 10.15




Court File No. 05-CV-285606CP




ONTARIO

SUPERIOR COURT OF JUSTICE




	 	 	 	 	 	 	 
	THE HONOURABLE SENIOR REGIONAL

	 	 	)	 	 	TUESDAY, THE 27TH DAY
	 

	 	 	)	 	 	 
	JUSTICE                     

	 	 	)	 	 	OF JUNE, 2006






BETWEEN




PETER GALLARDI




Plaintiff




- and -




NORTEL NETWORKS CORPORATION, FRANK A. DUNN

DOUGLAS BEATTY, MICHAEL GOLLOGLY,

JOHN EDWARD CLEGHORN, ROBERT ELLIS BROWN,

ROBERT ALEXANDER INGRAM, GUYLAINE SAUCIER,

SHERWOOD HUBBARD SMITH, JR. and DELOITTE & TOUCHE LLP




Defendants




Proceedings under the Class Proceeding Act, 1992



ORDER



     THIS MOTION made by the Plaintiff for an Order certifying this action as a class proceeding
for the purpose of settlement, approving the notice to class members and other declaratory relief
was heard this day at the Court House, 361 University Avenue, Toronto, Ontario.



     ON READING the materials filed, including the Settlement Agreement (defined herein), and on
hearing the submissions of counsel for the Plaintiff and counsel for the Defendants:









 



 


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	1.	 	THIS COURT ORDERS AND DECLARES that for the purposes of this Order the following definitions
apply and are incorporated into this Order:











 



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	 	(a)	 	“Claims Administrator” means the entity approved by this Court pursuant to paragraph
10 herein to administer the Settlement;
	 
	 	(b)	 	“Class Members” means members of the Ontario National Class, the Quebec Class
and the U.S. Global Class;
	 
	 	(c)	 	“Class Period” means the period of time between April 24, 2003 through April
27, 2004, inclusive;
	 
	 	(d)	 	“Courts” means this Court, the Supreme Court of British Columbia and the United
States District Court for the Southern District of New York;
	 
	 	(e)	 	“Defendants” means the persons and entities named as defendants in the Ontario
National Action;
	 
	 	(f)	 	“Escrow Agent” has the meaning set forth in the Stipulation;
	 
	 	(g)	 	“Excluded Persons” means: (i) Nortel and the Individual Defendants; (ii) the
Other Individuals; (iii) members of any of the Individual Defendants’ immediate
families; (iv) any entity in which Nortel or any of the Individuals Defendants or the
Other Individuals has a controlling interest; (v) any parent, subsidiary or affiliate
of Nortel; (vi) any person who was an officer or directors of Nortel or any of its
subsidiaries or affiliates during the Class Period; and (vii) legal representatives,
heirs, predecessors, successors or assigns of any of the Excluded Persons;
	 
	 	(h)	 	“Gross Cash Settlement Fund” has the meaning set forth in the Stipulation;
	 
	 	(i)	 	“Gross Settlement Fund” has the meaning set forth in the Stipulation;
	 
	 	(j)	 	“Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to
be issued by Nortel, pursuant to the Settlement, as may be adjusted in accordance with
paragraph 4(d) of the Stipulation;
	 
	 	(k)	 	“Individual Defendants” means Frank A. Dunn, Douglas Beatty, Michael Gollogly,
John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier and
Sherwood Hubbard Smith, Jr.;
	 
	 	(l)	 	“Nortel” means the Defendant, Nortel Networks Corporation;
	 
	 	(m)	 	“Nortel II Actions” means the Ontario National Action, the Quebec Action, and
the U.S. Action;
	 
	 	(n)	 	“Nortel II Defendants” means Nortel, the Individual Defendants and Deloitte &
Touche LLP;










 



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	 	(o)	 	“Notice” means the notice to the class in the Nortel II Actions, substantially
in the form attached as Schedule “B” to this Order;
	 
	 	(p)	 	“Notice Plan” means the plan for the publication and dissemination of the
Notice, Publication Notice and Proof of Claim by the Claims Administrator, attached as
Schedule “E” to this Order;
	 
	 	(q)	 	“Ontario National Action” means this proceeding which raises claims in the
nature of negligence, negligent and/or reckless misrepresentation, and alleges breaches
of the Canada Business Corporations Act, Competition Act and Ontario Securities Act,
for which relief is sought through an award of damages;
	 
	 	(r)	 	“Ontario National Class” means the class certified for the purpose of
settlement in the Ontario National Action pursuant to paragraph 3 of this Order;
	 
	 	(s)	 	“Ontario National Class Counsel” means Rochon Genova LLP and Lerners LLP;
	 
	 	(t)	 	“Ontario National Class Counsel Fees” means the fees, disbursements, costs,
GST, and other applicable taxes or charges of Ontario National Class Counsel;
	 
	 	(u)	 	“Ontario National Class Member” means a member of the Ontario National Class
who does not opt out of the Ontario National Class in the manner set forth in this
Order;
	 
	 	(v)	 	“Other Individuals” means James Kinney (Finance Chief for Nortel’s Wireless
Networks Division, Richardson, Texas), Ken Taylor (Vice President for Nortel’s
Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance Director
for Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance
Director for Nortel’s Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice
President of Finance for Europe), Robert Ferguson (Vice President of Finance for
China), and William Bowrey (Controller for Asia);
	 
	 	(w)	 	“Proof of Claim” means the form substantially in the form attached as Schedule
“C” to this Order;
	 
	 	(x)	 	“Publication Notice” means the summary notice of certification and proposed
settlement, and of the hearing of the Settlement Approval Motion, substantially in the
form attached as Schedule “D” to this Order;
	 
	 	(y)	 	“Representative Plaintiffs” means, collectively, the representative or lead
plaintiffs in each of the Nortel II Actions;










 



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	 	(z)	 	“Quebec Action” means the proceeding in the Superior Court of Quebec (District
of Montreal), Clifford W. Skarstedt v. Corporation Nortel Networks, No.
500-06-000277-059;
	 
	 	(aa)	 	“Quebec Class” means all persons and “entities”, except Excluded Persons who,
while resident in Quebec at the time, purchased Nortel common stock or call options on
Nortel common stock or wrote (sold) put options on Nortel common stock during the Class
Period. For purposes of the definition of Quebec Class, an entity means a legal person
established for a private interest, a partnership or an association if at all times
during the 12-month period preceding February 18, 2005, not more than 50 persons bound
to it by contract of employment were under its direction or control and if it is
dealing at arm’s length with the representative of the Quebec Class;
	 
	 	(bb)	 	“Released Parties” means any and all of the Nortel II Defendants, their past or
present subsidiaries, parents, principals, affiliates, general or limited partners or
partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment advisors, investment bankers, underwriters,
insurers, co-insurers, re-insurers, accountants, auditors, consultants, administrators,
executors, trustees, personal representatives, immediate family members and any person,
firm, trust, partnership, corporation, officer, director or other individual or entity
in which any Nortel II Defendant has a controlling interest or which is related to or
affiliated with any of the Nortel II Defendants, and the legal representatives, heirs,
executors, administrators, trustees, successors in interest or assigns of the Nortel II
Defendants;
	 
	 	(cc)	 	“Settled Claims” means any and all claims, debts, demands, rights or causes of
action, suits, matters, and issues or liabilities whatsoever (including, but not
limited to, any claims for damages, interest, attorneys’ fees, expert or consulting
fees, and any other costs, expenses or liability whatsoever), whether based on United
States or Canadian federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, at law or in equity, matured or un-matured, whether class
or individual in nature, including both known claims and Unknown Claims, (i) that have
been asserted in any of the Nortel II Actions against any of the Released Parties, or
(ii) that could have been asserted in any forum by the Class Members in the Nortel II
Actions, or any of them, against any of the Released Parties, that arise out of or are
based upon the allegations, transactions, facts, matters or occurrences,
representations or omissions involved, set forth, or referred to in the Nortel II
Actions and that relate to the purchase of Nortel common stock or call options or the
sale of Nortel put options during the Class Period or (iii) any oppression or other
claims under the Business Corporations Act, R.S.C. 1985, c. C-44, as amended, that
arise out of or are based upon the allegations, transactions, facts, matters or
occurrences, representations or omissions, set forth or referred to in the Nortel II
Actions. “Settled Claims”










 



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does not mean or include claims, if any, against the Released Parties: (a) arising
under the United States Employee Retirement Income Security Act of 1974, as amended,
29 U.S.C. § 1001, et seq. (“ERISA”) that are not common to all Class Members and
which ERISA claims are the subject of an action pending before the Judicial Panel on
Multidistrict Litigation, denominated In re Nortel Networks Securities and “ERISA’
Litigation, MDL Docket No. 1537. “Settled Claims” further does not include: (a) the
action in Rohac et al v. Nortel Networks et al, Ontario Superior Court of Justice,
Court File No. 04-CV-3268; and (b) the application brought in Indiana Electrical
Workers Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v.
Nortel Networks Corporation, Ontario Superior Court of Justice, Court File No.
49059, for leave pursuant to the Canada Business Corporations Act to commence a
representative action in the name of and on behalf of Nortel against certain of the
Released Parties;




	 	(dd)	 	“Settlement Agreement” means the Settlement Agreement and Confirmation of
Stipulation and Agreement of Settlement, including the Stipulation attached as Schedule
“A” thereto, entered into between the Plaintiffs and Nortel, dated June 20, 2006, which
is attached to this Order as Schedule “A”;
	 
	 	(ee)	 	“Settlement” means the proposed settlement of the Nortel II Actions pursuant to
the terms set forth in the Settlement Agreement adopting and ratifying the Stipulation;
	 
	 	(ff)	 	“Settlement Approval Motion” means the motion for final approval of the
Settlement by this Court to be heard at the date, time and location described in
paragraph 6 of this Order;
	 
	 	(gg)	 	“Stipulation” means the Stipulation and Agreement of Settlement attached to the
Settlement Agreement as Schedule “A”;
	 
	 	(hh)	 	“Supplemental Agreement” means the agreement referred to in paragraph 23 of the
Stipulation setting forth certain conditions under which the Settlement may be
terminated by Nortel if potential Class Members who purchase in excess of a certain
number of Nortel common stock or options on Nortel common stock during the Class Period
exclude themselves from the Class;
	 
	 	(ii)	 	“Unknown Claims” means any and all Settled Claims which any of the
Representative Plaintiffs, or Class Members does not know or suspect to exist in his,
her or its favour at the time of the release of the Released Parties which if known by
him, her or it might have affected his, her or its decision(s) with respect to the
Settlement;
	 
	 	(jj)	 	“U.S. Action” means the proceeding in the U.S. Federal District Court for the
Southern District of New York, Master File No. 05-MD-1659 (LAP);










 



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	 	(kk)	 	“U.S. Global Class” means all persons, except Excluded Persons, who purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock (collectively, “Nortel Securities”) during the Class Period, and
who suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock
Exchange.




2. THIS COURT ORDERS that the Ontario National Action be certified as a class proceeding for the
purpose of settlement.



3. THIS COURT ORDERS that the Ontario National Class be defined as:





All persons and entities, except Excluded Persons and members of the
Quebec Class, who, while resident in Canada at the time, purchased
Nortel common stock or call options on Nortel common stock or wrote
(sold) put options on Nortel common stock during the Class Period.


4. THIS COURT ORDERS that Peter Gallardi be and is hereby appointed as the representative plaintiff
for the Ontario National Class.



5. THIS COURT ORDERS that the Ontario National Action is certified as a class proceeding for the
purpose of settlement on the basis of the following common issue:





Did Nortel make false or misleading statements or omissions
concerning its financial performance or its revenue and earnings
during the Class Period?


6. THIS COURT ORDERS that the Settlement Approval Motion and the motion by Ontario National Class
Counsel for approval of Ontario National Class Counsel Fees shall be heard by this Court on a date
to be set by the Registrar, approximately 90 days from the date set herein for the mailing of the
notice at the Court House at 361 University Avenue, Toronto, Ontario.



7. THIS COURT ORDERS that each potential member of the Ontario National Class who elects to opt out
of the Ontario National Class must do so by writing a letter, signed by such person, clearly
requesting exclusion and clearly indicating the name, address and










 



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telephone number of the person seeking to opt out and the date(s), price(s), and number(s) of
shares of all purchases of Nortel common stock or call options on Nortel common stock and of all
put options of Nortel common stock written (sold) during the Class Period, and sending it by first
class mail post marked no later than 60 days after the date set herein for the mailing of the
notice, to the address indicated in the Notice.



8. THIS COURT ORDERS that any potential member of the Ontario National Class who does not opt out
in accordance with paragraph 7 of this Order shall be bound by any future Orders in the Ontario
National Action, and shall be bound by the terms of the Settlement if approved by each of the
Courts in each of the Actions.



9. THIS COURT ORDERS that any potential member of the Ontario National Class who opts out of the
Ontario National Class in accordance with paragraph 7 of this Order may no longer participate in
the Settlement or any continuation of the Nortel II Actions, shall not be entitled to file a Proof
of Claim as provided in paragraph 19 of this Order, shall not be entitled to receive any payment
out of the Settlement and shall not be entitled to object to the approval of the Settlement as
provided in paragraph 21 of this Order.



10. THIS COURT ORDERS that The Garden City Group, Inc. is hereby appointed and approved as the
Claims Administrator, and shall be subject to the jurisdiction of this Court for all matters
relating to the Ontario National Action, including the administration, interpretation, effectuation
or enforcement of the Settlement Agreement and this Order.



11. THIS COURT ORDERS that the Escrow Agent, acting in its capacity as escrow agent, shall be
subject to the jurisdiction of this Court in respect of the Gross Cash Settlement Fund.










 



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12. THIS COURT ORDERS that the form and content of the Notice, substantially in the form attached
hereto as Schedule “B”, is hereby approved.



13. THIS COURT ORDERS that the form and content of the Proof of Claim form, substantially in the
form attached hereto as Schedule “C”, is hereby approved.



14. THIS COURT ORDERS that the plan of dissemination of the Notice substantially in the manner
described in the Notice Plan attached to this Order as Schedule “D” is hereby approved.



15. THIS COURT ORDERS that upon approval of the Notice and the Proof of Claim and the appointment
of The Garden City Group, Inc. as the Claims Administrator by the Courts, the Claims Administrator
shall cause the Notice and the Proof of Claim, substantially in the forms attached as Schedules “B”
and “C” to this Order, to be mailed, by first class mail, postage prepaid, on or before 14 days
after entry of the last order by any of the courts in the Nortel II actions and the Nortel I
actions (as defined in the stipulation) approving the notice applicable to that proceeding, to all
members of the Ontario National Class who can be identified with reasonable effort, in accordance
with the Notice Plan.



16. THIS COURT ORDERS that additional copies of the Notice shall be made available to any record
holder requesting such for the purpose of distribution to beneficial owners, and such record
holders shall be reimbursed from the Gross Settlement Fund (as defined in the Stipulation), upon
receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending
the Notice and Proof of Claim to beneficial owners.



17. THIS COURT ORDERS that Ontario National Class Counsel shall, at or before the hearing of the
Settlement Approval Motion, file with the Court proof of mailing of the Notice and Proof of Claim.










 



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18. THIS COURT ORDERS that the form of Publication Notice in substantially the form and content
attached hereto as Schedule “E” is hereby approved, and directs that Claims Administrator shall
cause the Publication Notice to be published in accordance with the Notice Plan, which publication
shall begin within ten (10) days of the mailing of the Notice, and Ontario National Class Counsel
shall, at or before the hearing of the Settlement Approval Motion, file with this Court proof of
the publication of the Publication Notice.




19. THIS COURT ORDERS that in order to be entitled to participate in the Net Settlement Fund (as
defined in the Stipulation), each Ontario National Class Member shall take the following actions
and be subject to the following conditions:





	 	(a)	 	A properly executed Proof of Claim, substantially in the form attached hereto
as Schedule “C”, must be submitted to the Claims Administrator, at the Post Office Box
indicated in the Notice, postmarked not later than 120 days after the date set herein
for the mailing of the Notice. Such deadline may be further extended by order of this
Court.
	 
	 	(b)	 	Each Proof of Claim shall be deemed to have been submitted when postmarked (if
properly addressed and mailed by first class mail, postage prepaid) provided such Proof
of Claim is actually received prior to the motion for an order of this Court approving
distribution of the Net Settlement Fund.
	 
	 	(c)	 	Any Proof of Claim submitted in any other manner shall be deemed to have been
submitted when it was actually received at the address designated in the Notice.




20. THIS COURT ORDERS that the Proof of Claim submitted by each Ontario National Class Member must
satisfy the following conditions:





	 	(a)	 	it must be properly completed, signed and submitted in a timely manner in
accordance with the provisions of the preceding paragraph;
	 
	 	(b)	 	it must be accompanied by adequate supporting documentation for the
transactions reported therein, in the form of broker confirmation slips, broker account
statements, an authorized statement from the broker containing the transactional
information found in a broker confirmation slip, or such other documentation as is
deemed adequate by the Claims Administrator;










 



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	 	(c)	 	if the person executing the Proof of Claim is acting in a representative
capacity, a certification of his current authority to act on behalf of the Ontario
National Class Member must be included in the Proof of Claim; and
	 
	 	(d)	 	the Proof of Claim must be complete and contain no material deletions or
modifications of any of the printed matter contained therein and must be signed under
penalty of perjury.




21. THIS COURT ORDERS that, as part of the Proof of Claim, each Ontario National Class Member shall
submit to the jurisdiction of this Court with respect to the claim submitted, and shall (subject to
the approval of the Settlement by the Courts) release all Settled Claims against the Released
Parties.



22. THIS COURT ORDERS that Ontario National Class Members who wish to file with the Court an
objection or comment to the Settlement or to the approval of Ontario National Class Counsel Fees
shall deliver a written submission to the Claims Administrator at the address indicated in the
Notice, no later than 60 days after the date set herein for the mailing of the notice, and the
Claims Administrator shall file all such submissions with the Court prior to the hearing o the
Settlement Approval Motion.



23. THIS COURT ORDERS that if (a) the Settlement is terminated by Nortel pursuant to the
Supplemental Agreement and paragraph 26 in the Stipulation; (b) any specified condition to the
Settlement set forth in the Stipulation is not satisfied and any of the Representative Plaintiffs
or Nortel elect(s) to terminate the Settlement as provided in paragraph 25 in the Stipulation; or
(c) the Settlement is terminated pursuant to paragraph 27 of the Stipulation, then: (i) this Order,
including the certification of the action as a class proceeding for the purpose of settlement,
shall be set aside and be of no further force or effect, and without prejudice to any party; (ii)
each party to the Ontario National Action shall be restored to his, her or its respective position
in the litigation as it existed immediately prior to the execution of the Settlement Agreement; and
(iii) this Action shall be decertified as a










 



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class proceeding pursuant to Section 10 of the Class Proceedings Act, 1992, without prejudice to
the Plaintiffs ability to reapply for certification.



24. THIS COURT ACKNOWLEDGES having been notified that a determination of fairness of the Settlement
at the Settlement Approval Hearing will be relied upon by Nortel for an exemption, pursuant to
Section 3(a)(10) of the United States Securities Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), to
enable the Gross Settlement Shares to be distributed to Class Members, and to counsel for the
Representative Plaintiffs as may be awarded by the respective Courts for counsel fees, without
registration and compliance with the prospectus delivery requirements of U.S. securities laws.



25. THIS COURT DECLARES that Schedule “A” hereto satisfies the requirements of subsections 8(1)(c)
and (d) of the Class Proceedings Act, 1992.




	 	 	 
	 

	 	               /s/ Winkler
	 
	 	 
	 

	 	entered at/inscrit a toronto
	 

	 	on/book no:
	 

	 	Le/dans le registre no.:
	 
	 	 
	 

	 	jul 6, 2006
	 
	 	 
	 

	 	per/par:













 



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	PETER GALLARDI	 	 	 	NORTEL NETWORKS CORPORATION	 	 	Court File No: 05-CV-285606CP
	Plaintiff	 	and	 	et al.	 	 	 
	 	 	 	 	Defendants	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	ONTARIO
	 

	 	 	 	 	 	 	SUPERIOR COURT OF JUSTICE
	 
	 	 	 	 	 	 	 
	 

	 	 	 	
	 	 	Proceeding commenced at Toronto
	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	O R D E R