Document:

exv10w15

 

Exhibit 10.15

NORTEL NETWORKS CORPORATION — PERFORMANCE STOCK UNITS

INSTRUMENT OF AWARD

«COUNTRY»

	 	 	 
	NAME:

	 	«NAME» («GID»)
	 
	 	 
	EFFECTIVE DATE:

	 	«AWARD_DATE»
	 
	 	 
	NUMBER OF PSUs:

	 	«AWARDED»
	 
	 	 
	PLAN:

	 	NORTEL 2005 STOCK INCENTIVE PLAN

This instrument (hereinafter the “Instrument of Award”) evidences an Award to you of the number
of Performance Stock Units (“PSUs”) indicated above, on the Effective Date indicated above,
pursuant to the Nortel 2005 Stock Incentive Plan (as may be amended from time to time, the
“Plan”). Subject to and unless otherwise specified by the Committee at the time it established
the applicable Performance Criteria, each PSU covered by this Instrument of Award generally
entitles you to receive one common share (a “Share”) of Nortel Networks Corporation (the
“Corporation”) at or as soon as reasonably practicable following the date it has been determined
that the Performance Criteria have been met, or such earlier date as may be applicable pursuant
to the provisions of the Plan and this Instrument of Award. Capitalized terms not otherwise
defined in this Instrument of Award have the meanings set forth in the Plan.

1.   All PSUs covered by this Instrument of Award are subject to the terms and conditions stated
in the Plan, except as specifically or additionally provided in this Instrument of Award and/or
in any rules, regulations, determinations or interpretations prescribed and/or made by the
Committee (or its delegates) under the power and authority granted under the Plan (the “Rules
and Regulations”), and all of the provisions of the Plan and the Rules and Regulations are
incorporated by reference as if expressly restated herein. Different Rules and Regulations may
apply to you and/or the PSUs covered by this Instrument of Award depending on your country work
location, residency or payroll, whether on the Effective Date of the Award, on the date of
settlement of the PSUs, or otherwise. Accordingly, you should review the Plan and the Rules and
Regulations from time to time, which are available as indicated below, in conjunction with this
Instrument of Award.

2.   Subject to the provisions below, you will have the right to receive such number of Shares in
settlement of each PSU as may be required by the satisfaction of the Performance Criteria,
provided that you have been in the continuous employment of the Company from the Effective Date
to the end of the applicable performance period.

3.   In the event the Performance Criteria are satisfied, PSUs will be settled by transfer of
Shares to you on or as soon as reasonably practicable following the close of the applicable
performance period provided that you execute any required documentation as provided in the Plan,
this Instrument of Award or the Rules and Regulations, in such form or manner as may be
specified from time to time by the Corporation. You will remain responsible for any local legal
compliance requirements resulting from your receipt of PSUs, the subsequent ownership and
possible sale of Shares acquired on settlement of PSUs, and the opening and maintaining of a
foreign brokerage account, if applicable.

4.   In consideration of the Award of PSUs, in the event that all or any part of the PSUs become
Vested, at any time subsequent to the date which is twelve (12) months prior to the date of
termination of your employment (whether wrongful or for any other reason) (the “Applicable
Period”) and:

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

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you agree that you will, if required by the Company in its sole discretion, pay to the Company
within ten (10) days of written demand for payment from the Company an amount in cash equal to
the number of Shares delivered to you upon the Committee’s determination of target payout based
on the level of achievement of the Performance Criteria multiplied by the Market Value of a
Share on the applicable settlement date (the “Applicable Amount”);

     Provided you are not entitled to any Corresponding Tax Benefit, the Applicable Amount shall
be reduced by the amount of Tax paid by you or on your behalf (or required to be paid by you or
on your behalf as of a future Tax due date) in respect of the issuance of Shares upon settlement
of the PSUs during the Applicable Period (and, where applicable, in respect of the Award of such
PSUs);

     If you are entitled to a Corresponding Tax Benefit which is equal to or less than the
amount of Tax paid by you or on your behalf (or required to be paid by you or on your behalf as
of a future Tax due date) in respect of the Vesting of the PSUs or your receipt of Shares upon
the settlement of Vested PSUs during the Applicable Period (such difference between the
Corresponding Tax Benefit and Tax, if any, is referred to herein as the “Tax Benefit
Deficiency”), the Applicable Amount shall be reduced by an amount equal to the Tax Benefit
Deficiency;

     For the purposes of this provision:

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

5.   The Company may withhold from any amount payable to you, either under the Plan or this
Instrument of Award or otherwise, such amount as may be necessary so as to ensure that the
Company will be able to comply with the applicable provisions of any federal, provincial, state
or local law relating to the withholding of tax (collectively referred to herein as “taxes”) or
to ensure that any other required deductions are paid or otherwise satisfied, including
withholding of the amount, if any, includable in your income. The Company shall also have the
right in its discretion to satisfy any such liability for withholding or other required
deduction amounts by retaining or acquiring any Shares, or retaining any amount payable, which
would otherwise be issued or delivered, provided or paid to you hereunder. The Company may
require you, as a condition to the settlement of a PSU, to pay or reimburse the Company for any
such withholding or other required deduction amounts related to the settlement of the PSUs.

     The Company may require, as a condition of settlement of PSUs, that you: (i) pay any taxes
which are required to be paid by you; (ii) reimburse any taxes which are required to be withheld
and remitted by the Company; (iii) complete any forms or provide any additional documents in
connection with taxes; and (iv) otherwise comply with all applicable tax laws; in each case in
connection with the Award of the PSUs, the settlement of the PSUs, the exercise of the PSUs,
and/or the forfeiture of the PSUs, and as may be specified in this Instrument of Award, the
Rules and Regulations or otherwise in accordance with the Plan. The Company may also require,
as a condition of the settlement of PSUs, that all or a portion of the related Shares be sold by
you or on your behalf to generate proceeds sufficient to cover any tax withholdings made by the
Company on account of applicable taxes (hereinafter “tax withholdings”), if you do not pay such
tax withholdings within the designated time periods as may be specified in this Instrument of
Award, the Rules and Regulations or otherwise in accordance with the Plan. You further
acknowledge and agree that conditions or restrictions on the transferability of the Shares
received by you upon the settlement of the Vested PSUs may be imposed on such Shares on account
of taxes or tax withholdings in connection with the Award of the PSUs, the settlement of the
PSUs, and/or the forfeiture of the PSUs, in each case as may be specified in this Instrument of
Award, the Rules and Regulations or otherwise in accordance with the Plan.

6.   In the event that you become subject to long-term disability benefits, a “pro rata portion”
of the then outstanding unvested PSUs shall become Vested on the third anniversary of the
Effective Date, provided the applicable Performance Criteria has been achieved and you have been
a regular full-time employee of the Company for at least twelve (12) months since the beginning
of the performance period, and the remaining portion of such PSUs shall be forfeited and
cancelled for no consideration as of the date you commence long-term disability. In the event
of your Termination prior to the date that all of the PSUs awarded to you pursuant to this
Instrument of Award have become Vested, (i) if such Termination is a Qualifying Termination
Without Cause, all then outstanding unvested PSUs awarded to you pursuant to this Instrument of
Award shall be forfeited and cancelled for no consideration; (ii) if such Termination is due to
your Retirement, a “pro rata portion” of the then outstanding unvested PSUs awarded to you shall
become Vested on the third anniversary of the Effective Date, provided the applicable
Performance Criteria has been achieved and you have been a regular full-time employee of the
Company for at least twelve (12) months since the beginning of the performance period, and the
remaining portion of such PSUs shall be forfeited and cancelled for no consideration as of the
Date of Termination; (iii) if such Termination is due to death and you have been a regular
full-time employee of the Company for at least twelve (12) months since the beginning of the
performance period, a “pro rata portion” of the outstanding unvested PSUs awarded to you shall
become immediately Vested and, in accordance with the terms of the Plan and this Instrument of
Award, settled based on the target amount and (iv) if such Termination is for any other reason
(including by your employer for Cause or by reason of your resignation for any reason), all then
outstanding unvested PSUs awarded to you pursuant to this Instrument of Award shall immediately
be forfeited and cancelled for no consideration; provided, however, that any vesting pursuant to
this paragraph shall be delayed until six months after your Retirement or other type of
Termination to the extent necessary to avoid adverse tax treatment under Section 409A of the
U.S. Internal Revenue Code.

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     For purposes of this section 6, “pro rata portion” shall mean the full amount of the PSUs
awarded to you pursuant to the Plan and this Instrument of Award multiplied by a fraction, the
numerator of which equals the number of full months of continuous service provided since the
commencement of the applicable performance period and the denominator of which is 36.

7.   In the event you are a Specified Executive (as defined under the Nortel Networks Corporation
Executive Retention and Termination Plan (the “ERTP Plan”)) and are subject to a Termination Due
to Change in Control (as defined in the ERTP Plan), the PSUs awarded to you in accordance with
this Instrument of Award shall receive the same treatment as RSUs (as defined under the ERTP
Plan) and shall receive the same benefits as provided to RSUs under the ERTP Plan in the event
of a Termination Due to Change in Control.

8.   This Instrument of Award: (i) shall be binding upon and inure to the benefit of any successor
of the Corporation; (ii) shall be governed by the laws of the Province of Ontario, and any
applicable laws of Canada; and (iii) may not be amended except in writing or as otherwise
provided in the Plan. In the event of a conflict between the provisions of this Instrument of
Award and those of the Plan or the Rules and Regulations, the provisions of the Plan or the
Rules and Regulations, as the case may be, shall govern, except to the extent that the terms and
conditions of the Award of PSUs evidenced by this Instrument of Award are specifically recorded
as a variation from the terms and conditions of the Plan or the Rules and Regulations, as the
case may be. A copy of the Plan, the Prospectus for the Plan pursuant to Section 10(a) of the
U.S. Securities Act of 1933, any amendments to such Prospectus, and the Rules and Regulations
can be found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw). The Services@Work site also
contains other general information about the PSUs. You should check the Services@Work site
frequently since it may be updated from time to time.

     You acknowledge that a copy of the Plan and the Rules and Regulations, if any, have been
delivered to you with this Instrument of Award.

9.   You acknowledge that: (i) the Plan is discretionary and may be suspended or terminated by the
Corporation at any time; (ii) the Award of PSUs does not create any right to receive future
Awards of PSUs, or benefits in lieu of PSUs, and the terms and conditions of any future Awards
of PSUs, if any, will be communicated if and when new Awards of PSUs are to be made; (iii) the
value of the PSUs is outside the scope of your employment contract and severance payments, if
any, and the Award of PSUs is not for labour performed nor does it guarantee future employment;
(iv) participation in the Plan is voluntary; (v) the Corporation is not responsible for foreign
exchange fluctuations between your local currency and the US dollar, if applicable, and the
future value of the Shares is unknown and cannot be predicted with certainty; (vi) the PSUs are
not part of remuneration for purposes of any compensation on termination of employment,
severance payments, indemnities or end of service payments or benefits of any nature; (vii) the
Vesting of the PSUs ceases upon termination of employment, whether lawful or otherwise, except
as provided in the Plan and this Instrument of Award, and neither the Corporation nor any of its
subsidiaries is required to compensate you for any financial loss (including taxes, social
security premiums and lost capital gain) as a result of the forfeiture of PSUs or the early
settlement thereof on any such termination of employment; and (viii) the Award of the PSUs does
not give rise to additional obligations for any subsidiary which employs you. If,
notwithstanding the foregoing, any contractual or statutory (employment or otherwise) claim is
found to have arisen, then you, by accepting this Instrument of Award or the PSUs, shall, to the
extent permitted by applicable law, be deemed irrevocably to have waived your entitlement to
pursue such claim.

10.   The various provisions and sub-provisions of this Instrument of Award are severable and if
any provision or identifiable part thereof is held to be unenforceable by any court of competent
jurisdiction then such unenforceability shall not affect the enforceability of the remaining
provisions or identifiable parts thereof in this Instrument of Award, the Plan, the Rules and
Regulations, or any documents related to the Plan.

11.   Nortel and its third party service providers may need to collect and use information about
employees for the purpose of the Award and/or settlement of PSUs, administering the Plan, and to
comply with tax, reporting and disclosure obligations under applicable laws and regulations.
Such information may be communicated to any person deemed necessary for the administration of
the Plan, even if it requires such information to be transferred or communicated to persons
based outside your country of employment. Such information is from time to time transferred
between companies within the group and to such third party service providers, to achieve these
objectives. Nortel and its third party service providers will hold your “Plan participation
file” at any location deemed necessary, on the understanding that you will be given access
without constraint at reasonable intervals and without excessive delay or expense to examine and
correct such information. By accepting the Instrument of Award or the PSUs, you are affirming
your consent to the collection, processing, storage, disclosure and transfer of your personal
information for these purposes.

12.   By accepting this Instrument of Award or the PSUs, you expressly consent that the Plan, the
Rules and Regulations and any other document relating thereto, including this Instrument of
Award, be drawn up and/or available in English only. Par votre acceptation de la présente
Entente ou des PSUs, vous consentez expressément à ce que le Régime, les Règlements et tout
autre document connexe, y compris la présente Entente soient rédigés et/ou disponibles en
anglais seulement.

13.   By accepting this Instrument of Award or the PSUs, you (i) acknowledge and confirm that you
have read and understood the Plan, the Rules and Regulations and this Instrument of Award, and
that you have had an opportunity to seek separate fiscal, legal and taxation advice in relation
thereto; and (ii) agree to be bound by the terms and conditions stated in this Instrument of
Award, including without limitation the terms and conditions of the Plan and the Rules and
Regulations incorporated by reference herein.

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     Note: You should be aware that your acceptance of this Award of PSUs may have tax and legal
consequences for you. You are responsible for any and all compliance requirements under local
and national law related to these consequences and accordingly you are strongly recommended to
seek expert advice from a local duly qualified professional advisor.

     If you accept the terms and conditions of this Award of PSUs as described in this
Instrument of Award, please confirm your acceptance by signing where indicated below and
returning it to Nortel Stock Option Administration at the address indicated below.

	 	 	 
	Signature of Employee:
	 	 
	 

	 	 

Nortel Stock Option Administration Department

8200 Dixie Road, Suite 100

Brampton, Ontario, Canada L6T 5P6

Fax# : 905-863-8273 (ESN 333)

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NORTEL NETWORKS CORPORATION — RESTRICTED STOCK UNITS

INSTRUMENT OF AWARD

	 	 	 
	NAME:

	 	0
	 
	 	 
	EFFECTIVE DATE:

	 	0

	 
	 	 
	NUMBER OF RSUs:

	 	0
	 
	 	 
	VESTING SCHEDULE:

	 	33% ON FIRST ANNIVERSARY OF THE EFFECTIVE DATE;

	 

	 	33% ON SECOND ANNIVERSARY OF THE EFFECTIVE;

	 

	 	34% ON THIRD ANNIVERSARY OF THE EFFECTIVE DATE

	 
	 	 
	PLAN:

	 	NORTEL 2005 STOCK INCENTIVE PLAN

This instrument (hereinafter the “Instrument of Award”) evidences an Award to you of the number
of Restricted Stock Units (“RSUs”) indicated above, on the Effective Date indicated above,
pursuant to the Nortel 2005 Stock Incentive Plan (as may be amended from time to time, the
“Plan”). Each RSU covered by this Instrument of Award generally entitles you to receive one
common share (a “Share”) of Nortel Networks Corporation (the “Corporation”) at or as soon as
reasonably practicable following the date the RSU becomes Vested in accordance with the Vesting
schedule indicated above, or such earlier date as may be applicable pursuant to the provisions
of the Plan and this Instrument of Award. Capitalized terms not otherwise defined in this
Instrument of Award have the meanings set forth in the Plan.

1.   All RSUs covered by this Instrument of Award are subject to the terms and conditions stated
in the Plan, except as specifically or additionally provided in this Instrument of Award and/or
in any rules, regulations, determinations or interpretations prescribed and/or made by the
Committee (or its delegates) under the power and authority granted under the Plan (the “Rules
and Regulations”), and all of the provisions of the Plan and the Rules and Regulations are
incorporated by reference as if expressly restated herein. Different Rules and Regulations may
apply to you and/or the RSUs covered by this Instrument of Award depending on your country work
location, residency or payroll, whether on the Effective Date of the Award, on the date of
settlement of the RSUs, or otherwise. Accordingly, you should review the Plan and the Rules and
Regulations from time to time, which are available as indicated below, in conjunction with this
Instrument of Award.

2.   You will have the right to receive one Share in settlement of each RSU once the RSU has
become Vested in accordance with the Vesting schedule indicated above, provided that you have
been in the continuous employment of the Company from the Effective Date to the applicable
Vesting date.

3.   Vested RSUs will be settled by transfer of Shares to you on or as soon as reasonably
practicable following the Vesting date provided that you execute any required documentation as
provided in the Plan, this Instrument of Award or the Rules and Regulations, in such form or
manner as may be specified from time to time by the Corporation. You will remain responsible
for any local legal compliance requirements resulting from your receipt of RSUs, the subsequent
ownership and possible sale of Shares acquired upon settlement of RSUs, and the opening and
maintaining of a foreign brokerage account, if applicable.

4.   In consideration of the Award of RSUs, in the event that all or any part of the RSUs become
Vested at any time subsequent to the date which is twelve (12) months prior to the date of
termination of your employment (whether wrongful or for any other reason) (the “Applicable
Period”), and:

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

1

 

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

you agree that you will, if required by the Company in its sole discretion, pay to the Company
within ten (10) days of written demand for payment from the Company an amount in cash equal to
the number of RSUs that Vested during the Applicable Period multiplied by the Market Value on
the applicable Vesting date (the “Applicable Amount”).

     Provided you are not entitled to any Corresponding Tax Benefit, the Applicable Amount shall
be reduced by the amount of Tax paid by you or on your behalf (or required to be paid by you or
on your behalf as of a future Tax due date) in respect of the Vesting of the RSUs or your
receipt of Shares upon the settlement of Vested RSUs during the Applicable Period (and, where
applicable, in respect of the Award of such RSUs).

     If you are entitled to a Corresponding Tax Benefit which is equal to or less than the
amount of Tax paid by you or on your behalf (or required to be paid by you or on your behalf as
of a future Tax due date) in respect of the Vesting of the RSUs or your receipt of Shares upon
the settlement of Vested RSUs during the Applicable Period (such difference between the
Corresponding Tax Benefit and Tax, if any, is referred to herein as the “Tax Benefit
Deficiency”), the Applicable Amount shall be reduced by an amount equal to the Tax Benefit
Deficiency.

     For the purposes of this paragraph 4:

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

5.   The Company may withhold from any amount payable to you, either under the Plan or this
Instrument of Award or otherwise, such amount as may be necessary so as to ensure that the
Company will be able to comply with the applicable provisions of any federal, provincial, state
or local law relating to the withholding of tax (collectively referred to herein as “taxes”) or
to ensure that any other required deductions are paid or otherwise satisfied, including
withholding of the amount, if any, includable in your income. The Company shall also have the
right in its discretion to satisfy any such liability for withholding or other required
deduction amounts by retaining or acquiring any Shares, or retaining any amount payable, which
would otherwise be issued or delivered, provided or paid to you hereunder. The Company may
require you, as a condition to the settlement of a RSU, to pay or reimburse the Company for any
such withholding or other required deduction amounts related to the settlement of the RSUs.

     The Company may require, as a condition of settlement of Vested RSUs, that you: (i) pay any
taxes which are required to be paid by you; (ii) reimburse any taxes which are required to be
withheld and remitted by the Company; (iii) complete any forms or provide any additional
documents in connection with taxes; and (iv) otherwise comply with all applicable tax laws; in
each case in connection with the Award of the RSUs, the Vesting of the RSUs, the exercise of the
RSUs, and/or the forfeiture of the RSUs, and as may be specified in this Instrument of Award,
the Rules and Regulations or otherwise in accordance with the Plan. The Company may also
require, as a condition of the settlement of Vested RSUs, that all or a portion of the related
Shares be sold by you or on your behalf to generate proceeds sufficient to cover any tax
withholdings made by the Company on account of applicable taxes (hereinafter “tax
withholdings”), if you do not pay such tax withholdings within the designated time periods as
may be specified in this Instrument of Award, the Rules and Regulations or otherwise in
accordance with the Plan. You further acknowledge and agree that conditions or restrictions on
the transferability of the Shares received by you upon the settlement of the Vested RSUs may be
imposed on such Shares on account of taxes or tax withholdings in connection with the Award of
the RSUs, the Vesting of the RSUs, the settlement of the RSUs, and/or the forfeiture of the
RSUs, in each case as may be specified in this Instrument of Award, the Rules and Regulations or
otherwise in accordance with the Plan.

6.   In the event of your Termination prior to the date that all of the RSUs awarded to you
pursuant to this Instrument of Award have become Vested, (i) if such Termination is a Qualifying
Termination Without Cause, all then outstanding unvested RSUs awarded to you pursuant to this
Instrument of Award shall remain outstanding, shall continue to Vest in accordance with the
Vesting schedule indicated above during the Extension Period and, once Vested, shall be settled
in accordance with the terms of the Plan and this Instrument of Award; (ii) if such Termination
is due to your Retirement or death, a “pro rata portion” of the then outstanding unvested RSUs
awarded to you shall become immediately Vested and, in accordance with the terms of the Plan and
this Instrument of Award, settled and the remaining portion of such RSUs shall be forfeited and
cancelled for no consideration as of the Date of Termination; (iii) if such Termination is a
Qualifying Termination Without Cause and, immediately following the end of the Extension Period,
you commence Retirement, a “pro rata portion” of the unvested RSUs awarded to you that are
outstanding as of the end of the Extension Period shall become immediately Vested and, in
accordance with the terms of the Plan and this Instrument of Award, settled and the remaining
portion of any RSUs then outstanding shall be forfeited and cancelled for no consideration as of
the date you commence Retirement and (iv) if such Termination is for any other reason
(including by your employer for Cause or by reason of your resignation for any reason), all then
outstanding unvested RSUs awarded to you pursuant to this Instrument of Award shall immediately
be forfeited and cancelled for no consideration; provided, however, that any Vesting pursuant to
this paragraph shall

2

 

 be delayed until six months after your Retirement or other type of Termination to the extent
necessary to avoid adverse tax treatment under Section 409A of the U.S. Internal Revenue Code.

     For purposes of this section 6, “pro rata portion” shall mean the product of one-third of
the RSUs awarded to you pursuant to the Plan and this Instrument of Award multiplied by a
fraction, the numerator of which equals the number of days which have elapsed at the relevant
date since the later of (i) the Effective Date of Award of the RSUs, (ii) the date 33 percent
of the RSUs became Vested; and (iii) the date 66 percent of the RSUs became Vested; and the
denominator of which is 365.

     For the purposes of this section 6, the following shall be excluded from the definition of
“Extension Period” in the Plan: “the earlier of (x) the twenty-four month anniversary of the
Participant’s Date of Termination and (y)”.

7.   In the event you are a Specified Executive (as defined under the Nortel Networks Corporation
Executive Retention and Termination Plan (the “ERTP Plan”)) and are subject to a Termination Due
to Change in Control (as defined in the ERTP Plan), the RSUs awarded to you in accordance with
this Instrument of Award shall be included as RSUs (as defined under the ERTP Plan) and receive
all of the benefits provided to RSUs under the ERTP Plan in the event of a Termination Due to
Change in Control.

8.   This Instrument of Award: (i) shall be binding upon and inure to the benefit of any successor
of the Corporation; (ii) shall be governed by the laws of the Province of Ontario, and any
applicable laws of Canada; and (iii) may not be amended except in writing or as otherwise
provided in the Plan. In the event of a conflict between the provisions of this Instrument of
Award and those of the Plan or the Rules and Regulations, the provisions of the Plan or the
Rules and Regulations, as the case may be, shall govern, except to the extent that the terms and
conditions of the Award of RSUs evidenced by this Instrument of Award are specifically recorded
as a variation from the terms and conditions of the Plan or the Rules and Regulations, as the
case may be. A copy of the Plan, the Prospectus for the Plan pursuant to Section 10(a) of the
U.S. Securities Act of 1933, any amendments to such Prospectus, and the Rules and Regulations
can be found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw). The Services@Work site also
contains other general information about the RSUs. You should check the Services@Work site
frequently since it may be updated from time to time.

     You acknowledge that a copy of the Plan and the Rules and Regulations, if any, have been
delivered to you with this Instrument of Award.

9.   You acknowledge that: (i) the Plan is discretionary and may be suspended or terminated by the
Corporation at any time; (ii) the Award of RSUs does not create any right to receive future
Awards of RSUs, or benefits in lieu of RSUs, and the terms and conditions of any future Awards
of RSUs, if any, will be communicated if and when new Awards of RSUs are to be made; (iii) the
value of the RSUs is outside the scope of your employment contract and severance payments, if
any, and the Award of RSUs is not for labour performed nor does it guarantee future employment;
(iv) participation in the Plan is voluntary; (v) the Corporation is not responsible for foreign
exchange fluctuations between your local currency and the US dollar, if applicable, and the
future value of the Shares is unknown and cannot be predicted with certainty; (vi) the RSUs are
not part of remuneration for purposes of any compensation on termination of employment,
severance payments, indemnities or end of service payments or benefits of any nature; (vii) the
Vesting of the RSUs ceases upon termination of employment, whether lawful or otherwise, except
as provided in the Plan and this Instrument of Award, and neither the Corporation nor any of its
subsidiaries is required to compensate you for any financial loss (including taxes, social
security premiums and lost capital gain) as a result of the forfeiture of RSUs or the early
settlement thereof on any such termination of employment; and (viii) the Award of the RSUs does
not give rise to additional obligations for any subsidiary which employs you. If,
notwithstanding the foregoing, any contractual or statutory (employment or otherwise) claim is
found to have arisen, then you, by accepting this Instrument of Award or the RSUs, shall, to the
extent permitted by applicable law, be deemed irrevocably to have waived your entitlement to
pursue such claim.

10.   The various provisions and sub-provisions of this Instrument of Award are severable and if
any provision or identifiable part thereof is held to be unenforceable by any court of competent
jurisdiction then such unenforceability shall not affect the enforceability of the remaining
provisions or identifiable parts thereof in this Instrument of Award, the Plan, the Rules and
Regulations, or any documents related to the Plan.

11.   Nortel and its third party service providers may need to collect and use information about
employees for the purpose of the Award and/or settlement of RSUs, administering the Plan, and to
comply with tax, reporting and disclosure obligations under applicable laws and regulations.
Such information may be communicated to any person deemed necessary for the administration of
the Plan, even if it requires such information to be transferred or communicated to persons
based outside your country of employment. Such information is from time to time transferred
between companies within the group and to such third party service providers, to achieve these
objectives. Nortel and its third party service providers will hold your “Plan participation
file” at any location deemed necessary, on the understanding that you will be given access
without constraint at reasonable intervals and without excessive delay or expense to examine and
correct such information. By accepting the Instrument of Award or the RSUs, you are affirming
your consent to the collection, processing, storage, disclosure and transfer of your personal
information for these purposes.

12.   By accepting this Instrument of Award or the RSUs, you expressly consent that the Plan, the
Rules and Regulations and any other document relating thereto, including this Instrument of
Award, be drawn up and/or available in English only. Par votre acceptation de la présente
Entente ou des RSUs, vous consentez expressément à ce que le Régime, les Règlements et tout
autre document connexe, y compris la présente Entente soient rédigés et/ou disponibles en
anglais seulement.

3

 

13.   By accepting this Instrument of Award or the RSUs, you (i) acknowledge and confirm that you have
read and understood the Plan, the Rules and Regulations and this Instrument of Award, and that
you have had an opportunity to seek separate fiscal, legal and taxation advice in relation
thereto; and (ii) agree to be bound by the terms and conditions stated in this Instrument of
Award, including without limitation the terms and conditions of the Plan and the Rules and
Regulations incorporated by reference herein.

     Note: You should be aware that your acceptance of this Award of RSUs may have tax and
legal consequences for you. You are responsible for any and all compliance requirements under
local and national law related to these consequences and accordingly you are strongly
recommended to seek expert advice from a local duly qualified professional advisor.

     If you accept the terms and conditions of this Award of RSUs as described in this
Instrument of Award, please confirm your acceptance by signing where indicated below and
returning it to Nortel Stock Option Administration at the address indicated below.

	 	 	 
	Signature of Employee:
	 	 
	 

	 	 

Nortel Executive Compensation

8200 Dixie Road, Suite 100

Brampton, Ontario, Canada L6T 5P6

Fax#: 905-863-8420 (ESN 333)

4

 

NORTEL NETWORKS CORPORATION — STOCK OPTIONS

INSTRUMENT OF GRANT

«COUNTRY»

	 	 	 
	NAME OF OPTIONEE:

	 	«NAME» («GID»)
	 
	 	 
	EFFECTIVE DATE:

	 	«GRANT_DATE»
	 
	 	 
	NUMBER OF OPTIONS:

	 	«GRANTED»
	 
	 	 
	SUBSCRIPTION PRICE:

	 	«PRICE» (USD)
	 
	 	 
	EXPIRATION DATE:

	 	«EXPIRY_DATE»
	 
	 	 
	VESTING SCHEDULE:

	 	«VESTING» — «Vest_Desc»
	 
	 	 
	VESTING START DATE:
	 	 
	 
	 	 
	PLAN:

	 	Nortel 2005 Stock Incentive Plan

This instrument (hereinafter the “Instrument of Grant”) evidences a Grant to you of the number
of Options indicated above, on the Effective Date indicated above, pursuant to the Nortel 2005
Stock Incentive Plan, as may be amended from time to time (hereinafter the “Plan”). Each Option
covered by this Instrument of Grant generally entitles you to purchase one common share (a
“Share”) of Nortel Networks Corporation (the “Corporation”), at the Subscription Price per Share
indicated above, no later than the Expiration Date indicated above, or such earlier date as may
be applicable pursuant to the provisions of the Plan. Capitalized terms not otherwise defined
in this Instrument of Grant have the meanings set forth in the Plan.

1.   All Options covered by this Instrument of Grant are subject to the terms and conditions
stated in the Plan, except as specifically or additionally provided in this Instrument of Grant
and/or in any rules, regulations, determinations or interpretations prescribed and/or made by
the Committee (or its delegates) under the power and authority granted under the Plan (the
“Rules and Regulations”), and all of the provisions of the Plan and the Rules and Regulations
are incorporated by reference as if expressly restated herein. Different Rules and Regulations
may apply to you and/or the Options covered by this Instrument of Grant depending on your
country work location, residency or payroll, whether on the Effective Date of the Grant of
Options, on the date of exercise of the Options, or otherwise. Accordingly, you should review
the Plan and the Rules and Regulations from time to time, which are available as indicated
below, in conjunction with this Instrument of Grant.

2.   The Options covered by this Instrument of Grant are U.S. Options, so the Subscription Price
and all other amounts to be calculated in accordance with the provisions of the Plan for
purposes of this Grant of Options shall be calculated and stated in U.S. dollars. The Options
are Non-Qualified Stock Options for the purposes of the Plan. Such designation is only relevant
in determining the U.S. federal income tax consequences, if any, applicable to the Options, and
has no bearing on the tax treatment applicable to Options in countries outside of the United
States. Optionees are urged to seek their own tax advice to assess the tax status of such
Options.

3.   You will have the right to exercise the Options after they have vested in such amounts and on
such dates in accordance with the vesting schedule indicated above, provided that you have been
in the continuous employment of the Corporation or any of its subsidiaries or affiliated
entities from the Effective Date. The exact amounts and dates for vesting are specified in your
Grant information available through the Nortel Intranet — WebStock site
(https://webstock.us.nortel.com:49701/webstock/docs/default.html), “Personal Summary of
Stock Options” web page, or such other web site or through such other means as may be specified
by the Corporation from time to time.

4.   Options may be exercised: (i) by irrevocable notice of exercise in writing, executed and
delivered by the Optionee to the Nortel Stock Option Administration Department (at 8200 Dixie
Road, Suite 100, Brampton, Ontario, Canada L6T 5P6, or such other address as may be in effect
from time to time); and/or (ii) through such Internet-based or on-line system or such telephonic
or voice recognition system (whether provided by the Corporation or any third party on behalf of
the Corporation); in each case, in such form or manner as may be specified from time to time by
the Corporation on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw), under
People/Compensation/Stock Options/Exercise Process, or otherwise in accordance with the Plan.
The date of exercise of the Options shall be the date on which the notice of exercise,
accompanied by payment of the Subscription Price and any other required documentation as
provided in the Plan or the Rules and Regulations, is received by the Corporation, in such form
or manner as may be specified from time to time by the Corporation.

«NO»

 

 

2

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

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

you agree that you will, if required by the Corporation in its sole discretion, pay to the
Corporation within ten (10) days of written demand for payment from the Corporation an amount
equal to the amount of the excess of the Market Value, on the date of exercise of the Options,
of the Shares purchased as a result of the exercise of the Options over the Subscription Price
for the Shares covered by the Options (the “Applicable Amount”).

     Provided you are not entitled to any Corresponding Tax Benefit, the Applicable Amount shall
be reduced by the amount of Tax paid by you or on your behalf (or required to be paid by you or
on your behalf as of a future Tax due date) in respect of the issuance of Shares upon the
exercise of options during the Applicable Period (and, where applicable, in respect of
the Grant of such Options).

     If you are entitled to a Corresponding Tax Benefit which is equal to or less than the
amount of Tax paid by you or on your behalf (or required to be paid by you or on your behalf as
of a future Tax due date) in respect of the issuance of Shares upon the exercise of options
during the Applicable Period (such difference between the Corresponding Tax Benefit and Tax, if
any, is referred to herein as the “Tax Benefit Deficiency”), the Applicable Amount shall be
reduced by an amount equal to the Tax Benefit Deficiency.

     For the purposes of this paragraph 5:

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

6.   The Corporation may require, as a condition of exercise of the Options, that you: (i) pay any
applicable taxes, charges, duties, contributions or otherwise (hereinafter “taxes”) which are
required to be paid by you to any federal, provincial, state, local, foreign or other taxation
authority; (ii) reimburse any taxes which are required to be withheld and remitted by the
Corporation or any of its subsidiaries; (iii) complete any forms or provide any additional
documents in connection with taxes; and (iv) otherwise comply with all applicable tax laws; in
each case in connection with the Grant of the Options, the vesting of the Options, the exercise
of the Options, and/or the expiration of the Options, and as may be specified in the Rules and
Regulations or otherwise in accordance with the Plan. The Corporation may also require, as a
condition of exercise of the Options, that all or a portion of the Shares issued to you upon the
exercise of the Options: (i) be withheld, until such time as payment for any tax withholdings
made by the Corporation or any of its subsidiaries on account of applicable taxes (hereinafter
“tax withholdings”) has been received; and/or (ii) be sold by you or on your behalf to generate
proceeds sufficient to cover tax withholdings, in each case if you do not pay such tax
withholdings within the designated time periods as may be specified in the Rules and Regulations
or otherwise in accordance with the Plan. You further acknowledge and agree that conditions or
restrictions on the transferability of the Shares issued to you upon the exercise of the Options
may be imposed on such Shares on account of taxes or tax withholdings in connection with the
Grant of the Options, the vesting of the Options, the exercise of the Options, and/or the
expiration of the Options, in each case as may be specified in the Rules and Regulations or
otherwise in accordance with the Plan.

7.   The Options are not transferable or assignable and shall only be exercisable by you or your
legal guardian while you are alive. In the event of your death, the right to exercise shall be
governed by the terms of the Plan, subject to any applicable Rules and Regulations.

«NO»

 

 

3

8.   This Instrument of Grant: (i) shall be binding upon and inure to the benefit of any successor
of the Corporation; (ii) shall be governed by the laws of the Province of Ontario, and any
applicable laws of Canada; and (iii) may not be amended except in writing or as otherwise
provided in the Plan. In the event of a conflict between the provisions of this Instrument of
Grant and those of the Plan or the Rules and Regulations, the provisions of the Plan or the
Rules and Regulations, as the case may be, shall govern, except to the extent that the terms and
conditions of the Grant of Options evidenced by this Instrument of Grant are specifically
recorded as a variation from the terms and conditions of the Plan or the Rules and Regulations,
as the case may be.

9.   A copy of the Plan, the Prospectus for the Plan pursuant to Section 10(a) of the U.S.
Securities Act of 1933, any amendments to such Prospectus, and the Rules and Regulations can be
found on the Nortel Intranet — Services@Work site
(http://services-canada.ca.nortel.com/livelinksupport/saw), under
People/Compensation/Stock Options/Stock Option Plan Documents. The Services@Work site also
contains other general information about the Options. You should check the Services@Work site
frequently since it may be updated from time to time.

10.   You acknowledge that: (i) the Plan is discretionary and may be suspended or terminated by
the Corporation at any time; (ii) the Grant of Options does not create any right to receive
future Grants of Options, or benefits in lieu of Options and the terms and conditions of any
future Grants of Options, if any, will be communicated if and when new Grants of Options are to
be made; (iii) the value of the Options is outside the scope of your employment contract, if
any, and the Grant of Options is not for labour performed; (iv) participation in the Plan is
voluntary; (v) the future value of the Shares is unknown and cannot be predicted with certainty;
(vi) the Options are not part of remuneration for purposes of any compensation on termination of
employment, severance payments, indemnities or end of service payments or benefits of any
nature; (vii) the vesting of the Options ceases upon termination of employment, whether lawful
or otherwise, except as provided in the Plan, and neither the Corporation nor any of its
subsidiaries is required to compensate you for any financial loss (including taxes, social
security premiums and lost capital gain) as a result of the expiration of Options or the early
exercise thereof on any such termination of employment; and (viii) the Grant of the Option does
not give rise to additional obligations for any subsidiary which employs you. If,
notwithstanding the foregoing, any contractual or statutory (employment or otherwise) claim is
found to have arisen, then you, by accepting this Instrument of Grant or the Options, shall, to
the extent permitted by applicable law, be deemed irrevocably to have waived your entitlement to
pursue such claim.

11.   The various provisions and sub-provisions of this Instrument of Grant are severable and if
any provision or identifiable part thereof is held to be unenforceable by any court of competent
jurisdiction then such unenforceability shall not affect the enforceability of the remaining
provisions or identifiable parts thereof in this Instrument of Grant, the Plan, the Rules and
Regulations, or any documents related to the Plan.

12.   Nortel and its third party service providers may need to collect and use information about
employees for the purpose of the grant and/or exercise of Options, administering the Plan, and
to comply with tax, reporting and disclosure obligations under applicable laws and regulations.
Such information may be communicated to any person deemed necessary for the administration of
the Plan, even if it requires such information to be transferred or communicated to persons
based outside your country of employment. Such information is from time to time transferred
between companies within the group and to such third party service providers, to achieve these
objectives. Nortel and its third party service providers will hold your “Plan participation
file” at any location deemed necessary, on the understanding that you will be given access
without constraint at reasonable intervals and without excessive delay or expense to examine and
correct such information. By accepting the Instrument of Grant or the Options, you are affirming
your consent to the collection, processing, storage, disclosure and transfer of your personal
information for these purposes.

13.   By accepting this Instrument of Grant or the Options, you expressly consent that the Plan,
the Rules and Regulations, the Prospectus for the Plan and any other document relating thereto,
including this Instrument of Grant and the information about the Grant available through the
Nortel Intranet — WebStock site, be drawn up and/or available in English only. Par votre
acceptation de la présente Entente ou des Options, vous consentez expressément à ce que le
Régime, les règlements et le prospectus relatifs au Régime et tout autre document connexe, y
compris la présente Entente et l’information concernant vos options disponible à la page «
WebStock » de l’intranet de Nortel soient rédigés et/ou disponibles en anglais seulement.

14.    By accepting this Instrument of Grant or the Options, you (i) acknowledge and confirm
that you have read and understood the Plan, the Rules and Regulations, this Instrument of
Grant and all information about the Grant available on WebStock Option Summary, and that
you have had an opportunity to seek separate fiscal, legal and taxation advice in relation
thereto; and (ii) agree to be bound by the terms and conditions stated in this Instrument
of Grant, including without limitation the terms and conditions of the Plan and the Rules
and Regulations incorporated by reference herein.

If you accept the terms and conditions of this Grant of Options as described in this Instrument
of Grant, please confirm your acceptance by signing where indicated below and returning it to
Nortel Stock Option Administration at the address indicated above.

	 	 	 
	Signature of Optionee:
	 	 
	 

	 	 

«NO»EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of June 2, 2006, by and between YOUNG INNOVATIONS, INC., a Missouri corporation ("Employer"), and Christine R. Boehning, of Chicago, Illinois ("Employee").  Capitalized terms are defined in the Appendix to this Agreement.

In consideration of Employer's employment of Employee, the terms, conditions and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer, intending to be legally bound, hereby agree as follows:

1.        EMPLOYMENT.  Employer hereby agrees to employ Employee and Employee agrees to accept such employment upon the terms and conditions herein set forth.

2.            TERM.  The initial term of employment hereunder shall commence on the date hereof and shall expire on June 2, 2007 (such period, the "Term"); PROVIDED, HOWEVER, that the Term shall automatically be extended for an additional period of one year on June 2, 2007 and on each June 2 thereafter unless Employer or Employee delivers written notice of the intention not to extend the Term not later than six (6) months prior to its expiration.  

3.            POSITION AND DUTIES.  Employee hereby agrees to serve as Vice President and Chief Financial Officer or in such other capacity to which Employee may be promoted during the term hereof.  Employee shall devote her full business time and attention to the management, development and enhancement of the business of Employer and perform such duties as are necessary and required of the Vice President and Chief Financial Officer or in such capacity as Employee may then be serving.  During the Term, Employee may not undertake any other employment, engagements, consulting or other outside activities that in the opinion of the Board of Directors interfere with the effective carrying out of Employee's duties hereunder, PROVIDED, HOWEVER, that nothing herein shall prevent Employee from
engaging in community and/or charitable activities, so long as such activities, either singly or in the aggregate, do not interfere with the proper performance of her duties and responsibilities to Employer.

	
             
 	
            4.
 	
            COMPENSATION AND BENEFITS.  
 

(a)          BASE SALARY.  Employer shall pay to Employee salary at the rate of $160,000 per year during the Term hereof, or such higher amounts as shall be recommended and approved by the Compensation Committee of the Board of Directors (in each case, the "Base Salary").  

(b)          BONUS COMPENSATION.  In addition to Base Salary, Employee shall be entitled to receive bonus compensation as recommended and approved by the Compensation Committee of the Board of Directors (the "BONUS COMPENSATION").  

(c)          HOLIDAYS, VACATION TIME AND SICK LEAVE.  Employee shall be entitled to paid holidays, vacation and sick leave as is consistent with Employer's policy for executive employees with respect to such matters as of the date hereof.  

 

 

 

 

(d)          OTHER BENEFITS.  Subject to Employer's rules, policies and regulations as in effect from time to time, Employee shall be entitled to all other rights and benefits for which Employee may be eligible under any: (i) group life insurance, disability or accident, death or dismemberment insurance, (ii) medical and/or dental insurance program, (iii) 401(k) benefit plan, or (iv) other employee benefits that Employer may, in its sole discretion, make generally available to employees of Employer of the same level and responsibility as Employee; PROVIDED, HOWEVER, that nothing herein shall obligate Employer to establish or maintain any of such benefits or benefit plans.  

(e)          AUTOMOBILE ALLOWANCE.  Employer shall provide Employee with an automobile allowance consistent with Employer’s policy for executive employees with respect to such matters as of the date hereof.  

5.            SUPPLEMENTAL PAYMENT UPON A CHANGE IN CONTROL.  If a Change In Control (as hereafter defined) occurs and Employee is employed by Employer on the date of the Change In Control or Employee demonstrates that Employee would have been employed by Employer on the date of the Change In Control but for steps taken at the request of a third party to effect the Change In Control or Employee's termination was without Cause and arose in connection with or anticipation of such Change In Control, then Employee shall have the additional rights set forth in this Section 5.  Namely,  Employer shall, within thirty (30) days immediately following the date of the Change In Control, pay to Employee a lump sum cash amount equal to Employee’s then current annual base salary plus an amount equal
to the maximum Bonus Compensation for the year in which the Change In Control occurs that Employee would have been eligible to receive under Employer’s bonus program (the “Change of Control Payment”); provided however, in no event may the aggregate present value of such payments to Employee exceed 2.9999 times the “base amount” (as such term is used in Section 280G(b)(3) of the Code), and Employee agrees to reduce the amount permitted to be paid pursuant to this Agreement (including amounts specified under Sections 5 and 6 hereto) which may be subject to Section 280G of the Code to comply with this limitation.  Employer shall engage its accounting firm to determine the “base amount” and all amounts payable in connection with a Change In Control; provided, however, that if the accounting firm is serving as accountant or auditor for the person, entity or group effecting the Change In Control, Employer shall appoint another nationally recognized
accounting firm which shall provide Employee with detailed supporting calculations for its conclusions.  All fees and expenses of the accounting firm shall be borne solely by Employer.

	
             
 	
            6.
 	
            TERMINATION OF EMPLOYMENT.
 

(a)          PERMANENT DISABILITY.  In the event of the Permanent Disability (as defined below) of Employee.  Employer may terminate this Agreement by giving notice to Employee of its intention to terminate and this Agreement shall terminate at the end of the month following the month in which notice is given.  In the event of such termination, Employer shall pay (offset by any such amounts payable under Employer’s benefit plans or insurance) all amounts of Base Salary and Bonus Compensation accrued pursuant to Section 4 above through the date of termination, which payment shall constitute full and complete satisfaction of Employer’s obligations hereunder.  Notwithstanding the foregoing, all payments hereunder shall 

 

- 2 -

 

 

end upon the earlier to occur of Employee's attaining the age of sixty-five (65) or the cessation of such Permanent Disability (whether as a result of recovery, rehabilitation, death or otherwise).

(b)          DEATH.  In the event of Employee's death, Employer shall pay to Employee's personal representative (on behalf of Employee's estate), within sixty (60) days after Employer receives written notice of such representative's appointment, all amounts of Base Salary and Bonus Compensation accrued pursuant to Section 4 above as of the date of Employee's death, which payment shall constitute full and complete satisfaction of Employer's obligations hereunder.  Employee and her dependents shall also be entitled to any continuation of health insurance coverage rights, if any, under applicable law.

(c)          TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT GOOD REASON.  Employer may in its sole discretion terminate this Agreement and Employee's employment with Employer for Cause (as defined in the Appendix) at any time and with or without advance notice to Employee.  If Employee's employment is terminated for Cause, or if Employee Voluntarily Terminates (as defined in the Appendix) her employment with Employer without Good Reason (as defined in the Appendix), Employer shall promptly pay to Employee all amounts of Base Salary accrued pursuant to Section 4 above through the date of termination (but not Bonus Compensation), whereupon Employer shall have no further obligations to Employee under this Agreement.  Employee and her dependents shall also be entitled to any continuation health
insurance coverage rights, if any, under applicable law.  

(d)          TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION WITH GOOD REASON.  Employer may terminate this Agreement and Employee's employment with Employer without Cause at any time, with or without notice, for any reason or no reason (and no reason need be given).  Employee may terminate this Agreement and Voluntarily Terminate her employment with Employer with Good Reason upon thirty (30) days' prior written notice to Employer, provided that Employer does not correct the circumstances giving Employee Good Reason during such thirty (30) day period.  In the event Employee's employment with Employer is terminated pursuant to this Section 6(d) and such termination is not in connection with a Change In Control, (i) Employer shall pay to Employee all amounts of Base Salary and Bonus Compensation accrued
pursuant to Section 4 above through the date of termination, and (ii) Employee shall be relieved of her obligations under Sections 1 and 3 hereof.  In addition, if Employee's employment with Employer is terminated pursuant to this Section 6(d) and such termination is not in connection with a Change In Control, Employer shall pay to Employee the Base Salary that Employee would have earned under this Agreement for the remaining Term together with all reasonable attorneys' or other professional fees and costs incurred by Employee in enforcing her rights under this Section 6(d).  Employer may also require Employee to fully and completely release any and all claims for breach of this Agreement at the time of termination as a condition to receiving such payments under this Section 6(d).  Employee and her dependents shall also be entitled to any continuation health insurance coverage rights, if any, under applicable law.  Any lump sum payment shall be made as soon as practicable following
the effective date of Employee’s termination (but in no event later than the fifteenth day of the third month after the date of termination), unless Employer reasonably determines that Code Section 409A will result in the imposition of additional tax on account of such payment before the expiration of the 6-month period described in Section 409A(a)(2)(B)(i) of the Code in which case such payment will be paid on the date that is six (6) months and one (1) day following the 

 

- 3 -

 

 

date of Employee’s separation from service (as defined in Code Section 409A) or, if earlier, the date of death of Employee.

(e)          MUTUAL AGREEMENT.  This Agreement may be terminated by the mutual written agreement of Employer and Employee. Employee's rights and obligations, in such event, shall be as set forth in that agreement.

	
             
 	
            7.
 	
            EMPLOYEE COVENANTS.
 

(a)          CONSIDERATION AND ACKNOWLEDGEMENTS.  Employee acknowledges and agrees that the covenants described in this Section 7 are essential terms of this Agreement and that the Agreement would not be entered into by Employer in the absence of the covenants described herein.  Employee acknowledges and agrees that the covenants set forth in this Section are necessary for the protection of the business interests of Employer.  Employee further acknowledges that these covenants are supported by adequate consideration as set forth elsewhere in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of her employment, and that these covenants do not place undue restraint on Employee and are not in conflict with any public
interest . Employee acknowledges and agrees that the covenants set forth in this Section 7 are reasonable and enforceable in every respect under applicable law.

(b)          DEFINITIONS.  As used in this Section 7, the following terms have the following meanings:

(i)           "Employer" shall mean Young Innovations, Inc., including and any parent, subsidiary or affiliate as of the date of this Agreement or at any time during the term of Employee’s employment.

(ii)          "Confidential Information" shall include any and all information not generally available to the public through legitimate means regarding any past, current or anticipated future business, product, system service, process, or practice of Employer, as well as any and all information relating to Employer's business, research, development, purchasing, accounting, advertising, marketing, manufacturing, merchandising and selling . Confidential Information includes but is not limited to information that may constitute a "trade secret" under applicable law.

(c)          Employee hereby acknowledges and agrees that all personal property and equipment furnished to or prepared by Employee in the course of or incident to her employment by Employer, belongs to Employer and shall be promptly returned to Employer upon termination of Employee's employment.  The term "PERSONAL PROPERTY" includes, without limitation, all books, manuals, records, reports, notes, contracts, requests for proposals, bids, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), and all other proprietary information relating  to the business of Employer or any of its affiliates.  Following termination, Employee will not retain any written or other tangible material containing any proprietary information of Employer or any of its affiliates.

(d)          Upon termination of employment, Employee shall be deemed to have resigned from all offices and directorships then held with Employer and each of its affiliates.

 

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(e)          The representations and warranties contained herein and Employee's obligations under Sections 7 and 10 shall survive termination of employment and the expiration of the Term of this Agreement.

(f)           CONFIDENTIALITY . Except as necessary to perform her job duties, Employee agrees not to use any Confidential Information, or disclose any Confidential Information to any person or entity, either during or at any time after her employment, without Employer's prior written consent, unless required to do so by a court of competent jurisdiction, or by an administrative or legislative body (including a committee thereof) with purported or apparent jurisdiction to order Employee to divulge, disclose or make accessible such information.

(g)          NON-SOLICITATION.  Employee agrees that during the term of her employment that she will not directly or indirectly solicit any other employee to leave the employ of Employer or to carry out, directly or indirectly, any such activity; provided, however, that Employer shall not be in violation of this provision if an employee decides to join the new employer of Employee if Employee did not intentionally direct or solicit such employee to leave.

(h)          INVENTIONS AND PATENTS . Employee agrees to promptly and fully disclose in writing and does hereby assign to Employer every invention, innovation, copyright, or improvement made or conceived by Employee during the period of her employment that relates directly or indirectly to her employment with Employer.  Employee further agrees that both during and after her employment, without charge to Employer but at Employer's expense, she will execute, acknowledge and deliver any documents, including applications for Letters Patent, as may be necessary, or in the opinion of Employer, advisable to (a) obtain, enjoy and/or enforce Letters Patent for those inventions, innovations or improvements in the United States and in any other country; (b) obtain, enjoy or enforce the right to claim the priority
of the first filed patent application anywhere in the world; or (c) vest title in Employer and its successors, assigns or nominees.  Additionally, Employee agrees that for a period of one (1) year after termination of her employment, any invention, development, innovation, or improvement within the scope of this Section shall be presumed to have been made during the term of her employment. Employee shall have the burden of clearly and convincingly establishing otherwise.

This Agreement does not apply to any invention for which no equipment, supplies, facility or trade secret information of Employer was used and which was developed entirely on Employee's own time, and (1) which does not relate (a) directly to the business of Employer or (b) to Employer's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by employee for Employer.

(i)           ENFORCEMENT OF THESE COVENANTS.  Employee acknowledges that full compliance with all of the covenants set forth in this Section 7 is necessary to enable Employer to do business with its customers.  In the event of a breach of any of these covenants, Employee therefore acknowledges and agrees that Employer shall be entitled to injunctive relief, regardless of whether or not Employer has complied with this Agreement, and Employer shall further be entitled to such other relief, including money damages, as may be deemed appropriate by a court of competent jurisdiction.  In the event of a court action based upon an alleged breach of any of these covenants, the prevailing party (as determined by court ruling on the merits of the 

 

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dispute) will be reimbursed by the other party for reasonable attorneys' fees and costs incurred as a result of the dispute.  If any court should at any time find any one of these covenants to be unenforceable or unreasonable as to scope, territory or period of time, then the scope, territory or period of time of the covenant shall be that determined by the court to be reasonable, and the parties hereby agree that the court has the authority to so modify any of these covenants as necessary to make the covenant enforceable.

(j)           EXISTENCE OF OTHER OBLIGATIONS.  Employee represents and warrants that she is not currently subject to any contractual or other obligations to any former employer or other entity, including but not limited to obligations not to use or disclose confidential information, or to refrain from competing with any person or entity.

(k)          WAIVER.  Employee agrees that Employer's failure to enforce any of the covenants of this Section 7 in any particular instance shall not be deemed to be a waiver of the covenant in that or any subsequent instance, nor shall it be deemed a waiver by Employer of any other rights at law or under this Agreement.

8.            JURISDICTION; SERVICE OF PROCESS.  Each of the parties hereto agrees that any action or proceeding initiated or otherwise brought to judicial proceedings by either Employee or Employer concerning the subject matter of this Agreement shall be litigated in the United States District Court for the Northern District of Illinois or, in the event such court cannot or will not exercise jurisdiction, in the state courts of the State of Illinois (the "COURTS").  Each of the parties hereto expressly submits to the jurisdiction and venue of the Courts and consents to process being served in any suit, action or proceeding of the nature referred to above either (a) by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to her or its
address as set forth herein or (b) by serving a copy thereof upon such party's authorized agent for service of process (to the extent permitted by applicable law, regardless of whether the appointment of such agent for service of process for any reason shall prove to be ineffective or such agent for service of process shall accept or acknowledge such service); PROVIDED that, to the extent lawful and practicable, written notice of said service upon said agent shall be mailed by registered or certified mail, postage prepaid, return receipt requested, to the party at her or its address as set forth herein.  Each party hereto agrees that such service, to the fullest extent permitted by law, (i) shall be deemed in every respect effective service of process upon her or it in any such suit, action or proceeding and (ii) shall be taken and held to be valid personal service upon and personal delivery to her or it.  Each party hereto waives any claim that the Courts are an inconvenient forum or
an improper forum based on lack of venue or jurisdiction. 

9.            INJUNCTIVE RELIEF.  Employee acknowledges that damages would be an inadequate remedy for Employee's breach of any of the provisions of Section 7 of this Agreement, and that breach of any of such provisions will result in immeasurable and irreparable harm to Employer.  Therefore, in addition to any other remedy to which Employer may be entitled by reason of Employee's breach or threatened breach of any such provision, Employer shall be entitled to seek and obtain a temporary restraining order, a preliminary and/or permanent injunction, or any other form of equitable relief from any court of competent jurisdiction restraining Employee from committing or continuing any breach of such provisions, without the necessity of posting a bond.  It is further agreed that the existence of
any claim or cause of action 

 

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on the part of Employee against Employer, whether arising from this Agreement or otherwise, shall in no way constitute a defense to the enforcement of the provisions of Section 7 of this Agreement. 

	
             
 	
            10.
 	
            MISCELLANEOUS.
 

(a)          NOTICES.  All notices and other communications hereunder shall be in writing and shall be deemed given (i) when made, if delivered personally, (ii) three (3) days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or (iii) two (2) days after delivery to a reputable overnight courier service, to the parties, their successors in interest or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:

To Employer:

Young Innovations, Inc.

13705 Shoreline Court East

Earth City, MO 63045

Attention:  President

To Employee, to her home address as recorded in the payroll records of Employer from time to time.

(b)          GOVERNING LAW.  This Agreement shall be governed as to its validity and effect by the internal laws of the State of Illinois, without regard to its rules regarding conflicts of law.

(c)          SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and shall inure to the benefit of (i) the heirs, executors and legal representatives of Employee, upon Employee's death, and (ii) any successor of Employer, and any such successor shall be deemed substituted for Employer under the terms hereof for all purposes.  As used in this Agreement, "successor" shall include any person, firm, corporation or other business entity that at any time, whether by purchase, merger, consolidation or otherwise, directly or indirectly acquires a majority of the assets, business or stock of Employer.  

(d)          NO REPRESENTATIONS.  No person or entity has made or has the authority to make any representations or promises on behalf of any of the parties which are inconsistent with the representations or promises contained in this Agreement, and this Agreement has not been executed in reliance on any representations or promises not set forth herein.  Specifically, no promises, warranties or representations have been made by anyone on any topic or subject matter related to Employee's relationship with Employer or any of its executives or employees, including but not limited to any promises, warranties or representations regarding future employment, compensation, commissions and benefits, any entitlement to stock, stock rights, stock incentive plan benefits, profits, debt and equity interests in
Employer or any of its affiliated companies or regarding the termination of Employee's employment.  In this regard, Employee agrees that no promises, warranties or representations shall be deemed to be made in 

 

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the future unless they are set forth in writing and signed by an authorized representative of Employer.

(e)          AMENDMENTS.  This Agreement may be modified only by a written instrument executed by the parties that is designated as an amendment to this Agreement.

(f)           COUNTERPARTS.  This Agreement is being executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(g)          SEVERABILITY AND NON-WAIVER.  Any provision of this agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.  No waiver of any provision or violation of this Agreement by Employer shall be implied by Employer's forbearance or failure to take action.

(h)          VOLUNTARY AND KNOWLEDGEABLE ACT.  Employee represents and warrants that Employee has read and understands each and every provision of this Agreement and has freely and voluntarily entered into this Agreement. 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

EMPLOYER

YOUNG INNOVATIONS, INC.

By:       /s/ Arthur L. Hertbst, Jr., President

EMPLOYEE

By:       /s/ Christine R. Boehning

	
             
 	
            Christine R. Boehning
 

 

 

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APPENDIX

EMPLOYMENT AGREEMENT

Definitions

The terms set forth below have the following meanings (such meanings to be applicable to both the singular and plural forms, except where otherwise expressly indicated):

DEFINITIONS.  For the purposes of this Agreement the following terms and phrases shall have the following meanings:

1.            AFFILIATE(S) shall have the same meaning ascribed to such term in the Exchange Act.

	
             
 	
            2.
 	
            BOARD shall mean the board of directors of Employer.
 

3.            CAUSE shall mean (i) violation of any agreement or law relating to non-competition, trade secrets, inventions, non-solicitation or confidentiality between Employee and Employer or an affiliate, (ii) willful, intentional or bad faith conduct that materially injures Employer or an Affiliate, (iii) commission of a felony, an act of fraud or the misappropriation of property; (iv) gross neglect or moral turpitude; and (v) violation of Employer’s Code of Ethics.

4.            CHANGE IN CONTROL shall mean and be deemed to occur upon the first of the following events: 

(a)          the acquisition, after the date hereof, by an individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of the Voting Securities of Employer then outstanding after giving effect to such acquisition; or

(b)          Employer is merged or consolidated or reorganized into or with another company or other legal entity, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the Voting Securities of such company or entity immediately after such transaction is held in the aggregate by the holders of Voting Securities of Employer immediately prior to such merger, consolidation or reorganization; or

(c)          Employer sells or otherwise transfers all or substantially all of its assets (including but not limited to its Subsidiaries) to another company or legal entity in one transaction or a series of related transactions, and as a result of such sale(s) or transfer(s), less than a majority of the combined voting power of the then outstanding Voting Securities of such company or entity immediately after such sale or transfer is held in the aggregate by the holders of Voting Securities of Employer immediately prior to such sale or transfer; or

(d)          approval by the Board or the stockholders of Employer of a complete or substantial liquidation or dissolution of Employer; or 

 

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(e)          the majority of the members of the Board being replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of members of the Board immediately prior to such appointment or election.

Notwithstanding the foregoing, unless otherwise determined in a specific case by majority vote of the Board, a Change in Control shall not be deemed to have occurred solely because (a) Employer, (b) a Subsidiary, (c) any one or more members of executive management of Employer or its Affiliates, (d) any employee stock ownership plan or any other employee benefit plan of Employer or any Subsidiary or (e) any combination of the Persons referred to in the preceding clauses (a) through (d) becomes the actual or beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the Voting Securities of Employer.  

	
             
 	
            5.
 	
            CODE shall mean the Internal Revenue Code of 1986, as amended.
 	
             

	
             
 	
            6.
 	
            EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended.
 

7.            GOOD REASON shall mean, with respect to a Voluntary Termination, (i) a material and adverse change in Employee's duties, responsibilities or status with Employer or an affiliate made without Cause, (ii) a reduction in the annual compensation or total benefit package of Employee (other than a comparable reduction in cash compensation or benefits generally affecting substantially all officers or executive employees of Employer), (iii) a change in Employee's job location beyond an area outside of a 25-mile radius of Employee's principal office or (iv) the Board of Directors of Employer otherwise determines that a Voluntary Termination by Employee is for "Good Reason" under the circumstances then prevailing; provided, however, that Good Reason will not be deemed to exist unless
Employee provides written notice to Employer within 60 days after the occurrence of the event specified above and Employer fails to cure the event to Employee's reasonable satisfaction within 60 days after Employer receives such notice.

8.            PERMANENT DISABILITY shall have the meaning set forth in Section 22(e)(3) of the Code.

9.            PERSON shall have the same meaning as ascribed to such term in Sections 13(d) and 14(d)(2) of the Exchange Act; provided, however, that for purposes of this Agreement, neither Employer nor any trustee or fiduciary acting in such capacity for an employee benefit plan sponsored or maintained by Employer or any entity controlled by Employer, shall be deemed to be a "person".

10.          QUALIFIED DEPENDENTS shall mean Employee's spouse and unmarried children less than 19 years old; provided, that the 19 year age limit does not apply to a child who: i) is enrolled as a full time student in school and ii) has not attained the age of 23 years.

11.          SUBSIDIARY shall mean a company or other entity (a) more than fifty percent (50%) of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (b) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, or unincorporated association), but more than fifty percent (50%) of whose ownership interest representing the right generally to 

 

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make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by Employer.

12.          VOLUNTARY TERMINATION shall mean the termination by Employee of her employment by Employer by voluntary resignation or any other means other than death, retirement or Permanent Disability and other than simultaneous with or following termination for Cause or an event which, whether or not known to Employer at the time of such Voluntary Termination by such Executive, would constitute Cause.

13.          VOTING SECURITIES shall mean with respect to any Person, any securities entitled to vote (including by the execution of action by written consent) generally in the election of directors of such Person (together with direct or indirect options or other rights to acquire any such securities).

 

 

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