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Exhibit 10.2 William A. OwensAugust 31, 2004
    
    PRIVILEGED AND CONFIDENTIALPage 1
 Nortel Networks Corporation
8200 Dixie Road · Suite 100
Brampton ON · L6T 5P6 · Canada www.nortelnetworks.com L. R. Wilson
Chairman of the Board PERSONAL AND CONFIDENTIAL August 31, 2004 William A. Owens
President and Chief Executive Officer
Nortel Networks Corporation and
Nortel Networks Limited
8200 Dixie Road, Suite 100
Brampton, Ontario
L6T 5P6 Dear Bill: On behalf of the Boards of Directors of Nortel Networks Corporation and Nortel
Networks Limited (together, the Company), I am pleased to confirm the terms of
our offer of employment and your appointment as President and Chief Executive
Officer of the Company, effective April 27, 2004. The key responsibilities and accountabilities of the President and Chief
Executive Officer, which have already been discussed with you and communicated
generally, shall include responsibility for leading all functions and operations
of the Company, consistent with the best interests of the Company and all of its
stakeholders, including its shareholders, customers and employees, with
accountability for restoring confidence in the Companys leadership and
financial reporting. The compensation arrangements related to your appointment have been approved by
the independent directors of the Boards of Directors, and are as follows,
effective April 27, 2004:  1.

SalaryYour base salary will be US$1,000,000 per annum paid to you bi-weekly.2.

Incentive AwardYou will be eligible to participate in the Nortel Networks Limited 1




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William A. OwensAugust 31, 2004
    
    PRIVILEGED AND CONFIDENTIALPage 2
  SUCCESS Incentive Plan (SUCCESS) in accordance with its terms. As
President and Chief Executive Officer, your annual bonus target under
SUCCESS will be 170% of your base salary.3.

Long Term IncentivesAs a consequence of the delay of certain of our public filings, as
publicly disclosed on March 10, 2004, grants of stock options under the
Nortel Networks stock option plans have been suspended. Once the
suspension is lifted, you will be eligible to participate in stock
based compensation plans. We will review long term incentives with you
at a later date.4.

BenefitsAs an employee of Nortel Networks, Inc. (NNI), the Companys
principal U.S. operating subsidiary, you are eligible to participate in
employee benefit plans of NNI, in accordance with the terms of those
plans. These programs currently include medical, dental, vision, short
term disability, long term disability, business travel insurance,
accidental death and dismemberment, and life insurance coverage.
Details of these benefits were provided to you during your benefits
enrollment and induction session. Certain of these benefit programs
may be replaced or supplemented with expatriate benefits under the
Nortel Networks-International Assignment Relocation program
(Relocation Program).You will also be eligible for five weeks of vacation per annum.
Vacation is accrued monthly at the rate of 2.08 days per month of
employment.Your primary office and work location will be in Ontario, Canada. As a
result, you are eligible for certain expatriate benefits, including
relocation benefits, under the Relocation Program.As a board appointed officer and as an employee under the Relocation
Program, you will be required to use the Companys external tax
advisors in connection with the preparation and filing of your personal
income tax returns. Nortel Networks will also provide you with
reasonable financial planning assistance in support of your employment
and assignment under the Relocation Program.We periodically review our benefit plans, as well as compensation
programs, and we reserve the right to make modifications, including
enhancements and reductions, as we deem appropriate5.

Capital Accumulation and Retirement Programs (CARP)As a new employee, you have elected to participate in the Balanced
Program in accordance with its terms. Details of this program have
been reviewed with you.All of our capital accumulation and retirement programs are
periodically reviewed by the Company and we reserve the right to make
changes to these programs, including the Balanced Program, as we deem
appropriate. 2




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William A. OwensAugust 31, 2004
    
    PRIVILEGED AND CONFIDENTIALPage 3
  6.

Special Pension ArrangementsIn addition to your participation in the Balanced Program, you will be
eligible for certain additional pension benefits. The Company will
arrange to pay you a monthly pension benefit following your retirement,
based on a lump sum accrual for each year of your employment. No
interest will be credited on these lump sum accruals. The amount of
this special pension benefit will accrue on a quarterly basis, over the
first five years of your employment, and accordingly, it will be fully
accrued at the end of the fifth year. Vesting is immediate on all
amounts accrued. The pension benefit will be payable monthly over a
guaranteed period of five years following your retirement, unless, in a
year prior to your retirement, you elect to receive your vested accrued
monthly pension payments on a lifetime basis (with a 60% joint and
survivor provision). At the end of five years of employment, your
estimated monthly pension benefit over a guaranteed five year period
would be US$33,540 or if you choose the lifetime basis option, your
monthly lifetime estimated pension benefit would be US$13,143.Your vested accrued lump sum benefit will be converted at retirement to
an equivalent series of monthly payments over the five year guaranteed
period (or, if you choose, over the period applicable to a joint and
60% survivor annuity), based on an interest rate of 6% per annum so
that the present value of these monthly payments will be equivalent to
the vested accrued lump sum amount at retirement. This benefit will be
paid monthly in U.S. dollars from our general operating funds in Canada
commencing the month after your employment ceases. Details pertaining
to the tax implications will be discussed with you separately. If your
employment is terminated prior to April 27, 2009 for any reason
(employee or Company-initiated) other than for cause, the monthly
pension benefit entitlement will be calculated based on the vested
accrued lump sum benefit to the date of termination. If your employment
is terminated for cause you will not be entitled to any payments under
this special pension arrangement.7.

Participation in Executive Retention Termination PlanYou are eligible to participate in the Nortel Networks Corporation
Executive Retention and Termination Plan (ERTP). The ERTP provides
certain payments in the event that your employment is terminated for a
qualifying reason under the ERTP within 24 months following a change in
control (as defined in the ERTP). Currently, you would be eligible for
the benefits described for CEO participation.8.

Insider ReportingIn this role, you are considered to be a Reporting Insider and
information has already been provided to you by the Insider Reporting
group of the Securities Law function. In addition, as an officer of
the Company, you will be covered by the Companys directors and
officers insurance, the details of which have been discussed with you separately.9.

Share Ownership GuidelinesAs President and Chief Executive Officer you will be expected to comply
with the Share Ownership Guidelines that currently provide for the 3




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William A. OwensAugust 31, 2004
    
    PRIVILEGED AND CONFIDENTIALPage 4
  ownership of Nortel Networks common shares equivalent to 500% of your
base salary within five years from April 27, 2004. We strongly believe
that it is important for the President and Chief Executive Officer to
evidence his commitment to the Company through share ownership. As a
result, we review progress against these guidelines on a regular basis. You were also recently provided with a number of documents to review and
complete including our standard Agreement Related to Intellectual Property and
Confidentiality and the Conflict of Interest Policy. You acknowledge
receiving, completing and returning these documents. Your employment relationship is that of employment at will and therefore such
relationship is terminable at the will of either party and is not an employment
agreement for a year or any other specified term. Please signify your agreement by signing an original of this letter and
returning it to me, while retaining the other original for your files. Sincerely, /s/ Lynton R. Wilson Lynton R. Wilson
Chairman of the Board,
Nortel Networks Corporation and
Nortel Networks Limited Accepted this ____day of _________, 2004. Signature: _____________________ 4