Document:

exv10w3

 

Exhibit 10.3

ESCROW AGREEMENT

THIS ESCROW AGREEMENT dated as of March 1, 2005 among:

Each of the individuals named on the attached Schedule I
(individually, an “Officer” and collectively, the “Officers”),

— and —

Nortel Networks Corporation, a corporation incorporated pursuant
to the laws of Canada (“NNC”),

— and —

COMPUTERSHARE TRUST COMPANY OF CANADA, as escrow agent (the
“Escrow Agent”).

     WHEREAS each Officer wishes to pay to his or her respective NNC Employer (as defined below) an
amount equal to the entire Return to Profitability bonus paid to the Officer by such NNC Employer
in 2003, net of tax deductions at source, being the amount set forth opposite the name of the
Officer on the attached Schedule I (the “RtP Amount”), as set forth in a letter of undertaking from
the Officers to NNC dated January 10, 2005, as modified by a letter dated as of March 1, 2005 (the
“Undertaking”);

     AND WHEREAS, as contemplated by the Undertaking, each Officer wishes to place into escrow NNC
Shares (as defined below) to be used to facilitate the payment by the Officer of his or her RtP
Amount as provided below;

     NOW THEREFORE, in consideration of the premises and mutual covenants and agreements contained
herein, the parties agree as follows:

1. Definitions and Interpretation

	(a)	 	As used herein, unless the context requires otherwise, the following terms have the
definitions ascribed thereto below.
	 
	 	 	“Affected Parties” means those parties to this Agreement directly affected by a particular
waiver or exercise of rights by one or more other parties, and excludes those not so
directly affected.
	 
	 	 	“Agreement” means this Escrow Agreement together with all Schedules and Exhibits hereto and
all amendments made thereto in writing by the parties hereto.
	 
	 	 	“Blackout Trading Restrictions” means the trading restrictions prescribed by (i) an Order of
the Ontario Securities Commission under paragraph 2 of subsection 127(1) of the Securities
Act (Ontario) dated May 31, 2004 In the matter of certain Directors, Officers and Insiders
of Nortel Networks Corporation and Nortel Networks Limited ((2004) 27 OSCB 5503), (ii)
Decision No. 2004-MC-1783 of the Autorité des Marchés Financiers, and (iii) Section 306(a)
of the

 

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	 	 	United States Sarbanes-Oxley Act of 2002 (15 U.S.C. Section 7244(a) and 17 U.S. Code of
Federal Regulations Part 245 (Regulation BTR — Blackout Trading Restrictions).

“Business Day” means a day that is not a Saturday or a Sunday or a statutory holiday in
Toronto, Ontario, Canada or New York City, New York, U.S.A. or a day on which the offices of
the Escrow Agent in Toronto are not open for business.

“Confirmation” has the meaning set out in section 5(f).

“Corporate Secretary” means the Corporate Secretary from time to time of NNC.

“Deemed Surrender Notice” has the meaning set out in section 5(b).

“Escrowed Shares” has the meaning set out in section 2(a).

“First Payment Day” means the day that is five Business Days after the Trading Ban
Termination Notice is delivered to each Officer and the Escrow Agent pursuant to section
5(a)(ii).

“Market Value” means:

	 	(i)	 	in respect of NNC Shares delivered to the Escrow Agent pursuant to section
2(a), U.S. $3.13, being the U.S. dollar closing price per NNC Share as reported by the
NYSE on February 7, 2005;
	 
	 	(ii)	 	in respect of Escrowed Shares delivered by the Escrow Agent to the Corporate
Secretary for cancellation pursuant to a Deemed Surrender Notice pursuant to section
5(b) where such delivery has not been delayed pursuant to section 5(e), the U.S. dollar
closing price per NNC Share as reported by the NYSE on the trading day immediately
preceding the Payment Day in respect of which the Deemed Surrender Notice is delivered
by NNC to the Escrow Agent, or if there is no such closing price reported by the NYSE
on such day, the closing price per NNC Share reported by the NYSE on the next preceding
trading day for which a closing price has been reported;
	 
	 	(iii)	 	in respect of Escrowed Shares delivered by the Escrow Agent to the Corporate
Secretary for cancellation pursuant to a Surrender Notice pursuant to section 5(c)
where such delivery has not been delayed pursuant to section 5(e), the U.S. dollar
closing price per NNC Share as reported by the NYSE on the trading day immediately
preceding the day on which such Surrender Notice is delivered by an Officer to NNC and
the Escrow Agent, or if there is no such closing price reported by the NYSE on such
day, the closing price per NNC Share reported by the NYSE on the next preceding trading
day for which a closing price has been reported; or
	 
	 	(iv)	 	in respect of Escrowed Shares delivered by the Escrow Agent to the Corporate
Secretary for cancellation pursuant to section 5(e), the U.S. dollar closing price per
NNC Share as reported by the NYSE on the trading day immediately preceding the day on
which the Escrowed Shares are delivered by the Escrow Agent to the Corporate Secretary,
or if there is no such closing price reported by the NYSE on such day, the closing
price per

 

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	 	 	 	NNC Share reported by the NYSE on the next preceding trading day for which a closing
price has been reported.

If an Officer’s RtP Amount is in a currency other than U.S. dollars, the U.S. dollar closing
price determined as aforesaid will be converted to the applicable currency (rounded to two
decimal points) based on the noon buying rate for such currency for cable transfers quoted
in New York City as certified for customs purposes by the Federal Reserve Bank of New York,
in the case of clause (i) above, on February 7, 2005 (being Cdn.$1.26 per U.S.$1.00 and
U.S.$1.00 per £1.86 on such date), and in the case of clause (ii), (iii) or (iv) above, on
the trading day on which the U.S. dollar closing price is to be determined as aforesaid.
All references to closing prices as reported by the NYSE refer to the closing price on the
relevant trading day for regular (not extended hours) trading.

“NYSE” means the New York Stock Exchange.

“NNC Employer” means the direct or indirect subsidiary of NNC that is the employer of the
Officer.

“NNC Shares” means common shares in the capital of NNC or such other securities of NNC or
successor entity resulting from any exchange, reclassification or conversion of such common
shares as a result of any capital reorganization of NNC or amalgamation, merger,
consolidation or reorganization of NNC with or into any other entity or acquisition of NNC
by any other entity.

“Payment Day” means a day on which a Scheduled Payment is to be made.

“Pre-Payment” means a payment by the Officer of a portion of the RtP Amount prior to the
time the Undertaking contemplates payment of such portion by a Scheduled Payment.

“Procedure 320-28” means Nortel Networks Corporate Procedure No. 320-28 — Use of Undisclosed
Information, as may be amended or replaced and in effect from time to time.

“Remaining Balance” means, in respect of any Officer at any time, the difference between
such Officer’s RtP Amount and the cumulative total of the Officer’s payments made on account
of such RtP Amount to that time.

“RtP Amount” has the meaning set out in the recitals hereto.

“Scheduled Payment” means, in respect of any Officer, the payment scheduled to be made by
such Officer on the First Payment Day and on February 15 and August 15 of each year
commencing on August 15, 2005 and ending on August 15, 2007 as contemplated by the
Undertaking.

“Stock Transfer Power” has the meaning set out in section 2(a).

“Surrender Notice” has the meaning set out section 5(c).

“Termination Notice” has the meaning set out in section 5(g)(ii).

“Trading Ban Termination Notice” has the meaning set out in section 5(a).

 

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“Undertaking” has the meaning set out in the recitals hereto.

“Unpaid Amount” has the meaning set out in section 5(b).

“Window Period” means a Window Period under Procedure No. 320-28.

	(b)	 	The headings of sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation.

	(c)	 	Unless otherwise indicated, references herein to sections, Schedules and Exhibits are to
sections, Schedules and Exhibits of this Agreement.
	 
	(d)	 	The following are the Schedules and Exhibits to this Agreement:

Schedule I
— Officers, RtP Amount and Escrowed Shares

Exhibit A
— Stock Transfer Power

Exhibit B — Trading Ban Termination Notice

Exhibit C — Deemed Surrender Notice

Exhibit D — Surrender Notice

Exhibit E — Confirmation

Exhibit F — Termination Notice

2. Establishment of Escrow

	(a)	 	Each Officer delivers herewith to the Escrow Agent a certificate or certificates representing
the number of NNC Shares set forth opposite the name of the Officer on the attached Schedule I
(the “Escrowed Shares”), which shares, except as noted on Schedule I, have an aggregate Market
Value of not less than the RtP Amount, together with a stock transfer power therefor
substantially in the form attached as Exhibit A (a “Stock Transfer Power”) duly executed in
blank.

	(b)	 	The Escrow Agent agrees to act as Escrow Agent and hereby acknowledges receipt of the
Escrowed Shares and executed stock transfer power.

	(c)	 	The Escrow Agent agrees to hold, safeguard and disburse the Escrowed Shares pursuant to the
terms and conditions hereof.

	(d)	 	Each Officer will from time to time deliver to the Escrow Agent upon its request sufficient
Stock Transfer Powers duly executed in blank so that at all times the Escrow Agent will have
an executed Stock Transfer Power for all Escrowed Shares then held by the Escrow Agent on
behalf of such Officer under this Agreement.

3. Representations and Warranties

	(a)	 	Each Officer represents and warrants to NNC and the Escrow Agent that, except as otherwise
disclosed by the Officer in writing to NNC and the Escrow Agent and accepted by NNC for the
purposes hereof at the time such Officer’s Escrowed Shares are delivered to the Escrow Agent
under section 2(a):

 

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	 	(i)	 	the Officer is the beneficial owner of all of his or her Escrowed Shares, with
good and marketable title thereto, free and clear of all liens, charges and other
encumbrances of whatever nature; and

	 	(ii)	 	except as contemplated herein, no consent of any person is required for the
delivery by the Officer of his or her Escrowed Shares or for the execution, delivery or
performance of this Agreement by the Officer.

	(b)	 	NNC and each Officer represents to the Escrow Agent that any account to be opened by, or
interest to be held by, the Escrow Agent in connection with this Agreement, for or to the
credit or such party, is not intended to be used by or on behalf of any third party.

4. Ownership; Voting Rights and Dividends

     While an Officer’s Escrowed Shares are held in escrow pursuant to this Agreement, the Officer
will continue to be the beneficial owner of such Escrowed Shares (subject to any disclosure made
pursuant to section 3) and entitled, inter alia, to:

	(a)	 	exercise any and all voting and other consensual rights pertaining to such Escrowed Shares
for any purpose not inconsistent with the terms of this Agreement;

	(b)	 	receive and retain any and all dividends or other distributions payable in respect of such
Escrowed Shares; and

	(c)	 	tender some or all of such Escrowed Shares in acceptance of a tender offer or take-over-bid
made for NNC Shares provided all Blackout Trading Restrictions to which the Officer is subject
have been previously terminated or ceased to apply to such Officer.

5. Surrender of Escrowed Shares

	(a)	 	NNC will:

	 	(i)	 	notify each Officer and the Escrow Agent of each Window Period during the term
of this Agreement not less than one Business Day prior to the commencement of such
Window Period; and

	 	(ii)	 	deliver to each Officer and the Escrow Agent a notice substantially in the form
attached as Exhibit B (the “Trading Ban Termination Notice”) promptly upon the
termination or cessation of all Blackout Trading Restrictions to which the Officer is
subject.

	(b)	 	An Officer who makes a Scheduled Payment or Pre-payment pursuant to the Undertaking will
notify the Corporate Secretary thereof at the time of such Payment or Pre-payment. If an
Officer does not pay to such Officer’s NNC Employer all or any portion of a Scheduled Payment
by 5:00 p.m. (local time in the place where such Officer’s NNC Employer’s head office is
located) on a Payment Day, NNC will on the first Business Day following such Payment Day
deliver to the Officer and the Escrow Agent a notice substantially in the form attached as
Exhibit C (a “Deemed Surrender Notice”) of non-payment by such Officer setting out therein the
amount of the Scheduled Payment that was not paid by the Officer (the “Unpaid Amount”) and the
Payment Day on which such Scheduled Payment was to have been made. The Officer is

 

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	 	 	thereupon deemed to have on such Payment Day irrevocably instructed the Escrow Agent to, and
the Escrow Agent will, subject to sections 5(e) and 5(h), within two Business Days of
receipt of the Deemed Surrender Notice, surrender to NNC for cancellation (to be credited
against the RtP Amount to be paid by the Officer to the NNC Employer as contemplated by the
Undertaking) the lesser of (i) that number of such Officer’s Escrowed Shares having an
aggregate Market Value determined by NNC equal to the Unpaid Amount (rounded up to the
nearest number of whole NNC Shares), and (ii) the number of such Officer’s Escrowed Shares
remaining in escrow hereunder.

	(c)	 	If an Officer delivers written instructions substantially in the form attached as Exhibit D
(a “Surrender Notice”) to NNC and the Escrow Agent to deliver Escrowed Shares to NNC on
account of all or any portion of a Scheduled Payment or a Pre-Payment, the Escrow Agent will,
subject to sections 5(e) and 5(h), within two Business Days of receipt of such Surrender
Notice surrender to NNC for cancellation (to be credited against the RtP Amount to be paid by
the Officer to the NNC Employer as contemplated by the Undertaking) the number of such
Officer’s Escrowed Shares having a Market Value determined by NNC equal to the amount
instructed by the Officer to be paid by the surrender of Escrowed Shares (rounded up to the
nearest number of whole NNC Shares) pursuant to the Surrender Notice.

	(d)	 	In any case where the aggregate Market Value of an Officer’s Escrowed Shares surrendered
pursuant to section 5(b) or 5(c) is in excess of the amount of any Scheduled Payment or Unpaid
Amount on account of which such surrender is made, as the case may be, such excess will be
applied by NNC against the next succeeding Scheduled Payment to be made by such Officer.

	(e)	 	If:

	 	(i)	 	the day on which the Escrow Agent is to surrender Escrowed Shares for
cancellation pursuant to a Surrender Notice or a Deemed Surrender Notice is a day that
is not during a Window Period, the surrender of such Escrowed Shares will be delayed
until the first Business Day of the next Window Period; or

	 	(ii)	 	prior to the day on which Escrowed Shares are to be surrendered pursuant to a
Surrender Notice or a Deemed Surrender Notice, an Officer notifies NNC and the Escrow
Agent, or NNC notifies an Officer and the Escrow Agent, that such Officer is precluded
from trading in NNC Shares pursuant to (A) Procedure No. 320.28, (B) applicable law, or
(C) any applicable order of regulatory authorities having jurisdiction, the surrender
of such Escrowed Shares pursuant to such Surrender Notice or Deemed Surrender Notice
will be delayed until the first Business Day of the first Window Period following the
day on which the Officer notifies NNC and the Escrow Agent or NNC notifies such Officer
and the Escrow Agent, as the case may be, that the Officer is no longer precluded from
trading in NNC Shares.

	(f)	 	Within three Business Days following any surrender of Escrowed Shares, NNC will deliver to
the Escrow Agent and the Officer on account of whom such shares have been surrendered a
written confirmation substantially in the form attached as Exhibit E (a “Confirmation”)
confirming the calculation of the number of Escrowed Shares surrendered and such Officer’s
Remaining Balance. Upon demonstration by the Officer of a calculation error, NNC will, at the
Officer’s election, credit any over payment against the Officer’s Remaining Balance (and
deliver a corrected Confirmation therefor) or refund the over payment to the Officer in cash.

 

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	(g)	 	If there are any Escrowed Shares of an Officer remaining in escrow after the Escrow Agent
receives:

	 	(i)	 	a Confirmation from NNC indicating that an Officer’s Remaining Balance is zero;
or

	 	(ii)	 	notice substantially in the form of Exhibit F attached (a “Termination Notice”)
from NNC that this Agreement has terminated in respect of such Officer,

the Escrow Agent will within three Business Days of receipt of such notice return to the
Officer, by pre-paid insured courier for next-day delivery, the certificate or certificates
for such remaining Escrowed Shares of the Officer together with all remaining executed Stock
Transfer Powers for such shares.

	(h)	 	Notwithstanding the Undertaking or any other provision of this Agreement, NNC will not accept
the surrender of an Officer’s Escrowed Shares for cancellation, and NNC will have no right to
deliver a Deemed Surrender Notice with respect to an Officer under section 5(b), and such
Officer will not instruct or be deemed to have instructed the Escrow Agent to surrender such
Officer’s Escrowed Shares or any other right, title or interest in such Officer’s Escrowed
Shares to NNC for cancellation, to the extent that such surrender, or instruction or deemed
instruction, would result in such Officer’s violation of the Blackout Trading Restrictions or
any of them.

6. Duties of Escrow Agent

	(a)	 	This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any
and all matters pertinent hereto. No implied duties or obligations will be read into this
Agreement against the Escrow Agent. The Escrow Agent is not bound by the provisions of any
agreement among the other parties hereto except this Agreement. The parties hereto agree that
the Escrow Agent is not acting as a trustee or in any fiduciary capacity, that no trust is
intended to be, or will be, created, and that the duties of the Escrow Agent hereunder are
purely administrative in nature. The Escrow Agent will not be under any duty to give the
Escrowed Shares held by it hereunder any greater degree of care than it gives its own similar
property. The Escrow Agent does not have any interest in the Escrowed Shares deposited
hereunder but is serving as escrow holder only and having only possession thereof.

	(b)	 	The Escrow Agent will not be liable for any error of judgement, or for any act done or step
taken or omitted by it in good faith, or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, except for its own fraud, negligence
or wilful misconduct. In the absence of fraud, negligence or wilful misconduct by the Escrow
Agent, the Escrow Agent will not be liable to the Officers or NNC for any loss or injury to
them.

	(c)	 	Subject to section 6(b), upon the Escrow Agent’s delivery of any Escrowed Shares in
accordance with this Agreement, the Escrow Agent will be automatically and immediately
released from all obligations under this Agreement in respect of such Escrowed Shares.

	(d)	 	Subject to section 6(b), the Escrow Agent:

	 	(i)	 	may, if in its sole discretion it deems it necessary or desirable, retain such
independent counsel or other advisors as it reasonably may require for the purpose of
discharging or determining its duties, obligations or rights hereunder;

 

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	 	(ii)	 	may act pursuant to the advice of its legal counsel or the reasonable advice of
external legal counsel to NNC with respect to any matter relating to this Agreement;

	 	(iii)	 	will not be required to institute legal proceedings of any kind and will not
be required to defend any legal proceedings which may be instituted against it in
respect of the subject matter of this Agreement;

	 	(iv)	 	will be entitled to rely upon any order, judgment, certification, demand,
notice, instrument or other writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity of the service thereof;
	 
	 	(v)	 	may act in reliance upon any instrument or signature believed by it to be
genuine and may assume that the person purporting to give receipt or advice or make any
statement or execute any document in connection with the provisions hereof has been
duly authorized to do so;
	 
	 	(vi)	 	may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and authority to
instruct the Escrow Agent on behalf of that party unless written notice to the contrary
is delivered to the Escrow Agent; and
	 
	 	(vii)	 	is not required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties or in the exercise of any of its
rights or powers, or do anything not expressly provided for herein; and
	 
	 	(viii)	 	retains the right not to act and will not be liable for refusing to act if, due to a
lack of information or for any other reason whatsoever, the Escrow Agent, in its sole
judgment, determines that such act might cause it to be in non-compliance with any
applicable anti-money laundering or anti-terrorist legislation, regulation or
guideline.

	(e)	 	In the event of any disagreement between the other parties hereto resulting in adverse claims
or demands being made in connection with any Escrowed Shares or in the event that the Escrow
Agent is in doubt as to what action it should take hereunder, the Escrow Agent will be
entitled to retain such Escrowed Shares until the Escrow Agent has received (i) a final
non-appealable order of a court of competent jurisdiction directing delivery of such Escrowed
Shares or (ii) a written agreement executed by the other Affected Parties hereto directing
delivery of such Escrowed Shares, in which event the Escrow Agent will disburse such Escrowed
Shares in accordance with such order or agreement. Any court order must be accompanied by a
legal opinion by counsel for the presenting party reasonably satisfactory to the Escrow Agent
to the effect that the order is final and non-appealable. The Escrow Agent will act on such
court order and legal opinion without further question.

7. Successor Escrow Agent

	(a)	 	Any company into which the Escrow Agent or its corporate trust department may be merged or,
with or to which it may be consolidated, amalgamated or sold, or any company resulting from
any merger, consolidation, sale or amalgamation to which the Escrow Agent is a party, will be
the new escrow agent under this Agreement without the execution of any instrument or any

 

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	 	 	further act, provided that such company is resident in Canada and is authorized to carry on
the business of a trust company in the Province of Ontario.

	(b)	 	The Escrow Agent may:

	 	(i)	 	be removed at any time by the mutual consent of NNC and each Officer in respect
of which this Agreement remains in force by delivering notice thereof to the Escrow
Agent; and

	 	(ii)	 	at any time resign as such by delivering notice thereof to NNC and each Officer
in respect of which this Agreement remains in force;

whereupon the removal or resignation of the Escrow Agent, as the case may be, will take
effect on the earlier of (i) the appointment of a successor (including a court of competent
jurisdiction) or (ii) the day which is 30 days after the date of delivery of the notice of
removal or resignation, as the case may be, to the other applicable party or parties hereto.
The Escrow Agent will deliver the Escrowed Shares to any successor Escrow Agent jointly
designated by the other parties hereto, or to any court of competent jurisdiction,
whereupon, subject to section 6(b), the Escrow Agent will be discharged of and from any and
all further obligations arising in connection with this Agreement. If the Escrow Agent has
not received a designation of a successor Escrow Agent within 30 days of delivery of the
notice of removal or resignation, as the case may be, the Escrow Agent’s sole responsibility
after that time will be to retain and safeguard the Escrowed Shares until receipt of a
designation of the successor Escrow Agent or a joint written disposition instruction by the
other parties hereto or a final non-appealable order of a court of competent jurisdiction.
Upon receipt of the Escrowed Shares from the predecessor Escrow Agent, such successor Escrow
Agent will, without further act, become vested with all of the rights, powers and duties of
the predecessor Escrow Agent as if originally named herein.

8. Indemnity

     In consideration of the Escrow Agent agreeing to act hereunder, NNC covenants and agrees to
save, defend and keep harmless and fully indemnify the Escrow Agent, its officers, directors,
employees and agents, and their respective heirs, executors, administrators, successors and
assigns, from and against all losses, costs, liabilities, charges, suits, demands, claims, damages
and expenses of any nature which the Escrow Agent, its successors or assigns, may at any time
hereafter bear, sustain, suffer or be part to for or by reason of or on account of its acting as
escrow agent or anything in any manner relating thereto or by reason of the Escrow Agent’s
compliance with the terms hereof, except such as result primarily from its own fraud, negligence or
wilful misconduct.

9. Not Obliged to Defend

     Without restricting the foregoing indemnity, if proceedings are taken by arbitration or in any
court respecting the Escrowed Shares, the Escrow Agent will not be obliged to defend or otherwise
participate in any such proceedings until it has such security as the Escrow Agent determines, in
its sole discretion, to be adequate for its costs in such proceedings in addition to the indemnity
set out above.

 

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10. Expenses and Fees

     NNC shall reimburse the Escrow Agent for all reasonable expenses reasonably incurred in
connection with acting hereunder, including without limitation legal fees paid by the Escrow Agent
in respect of this Agreement. The fees of the Escrow Agent relating to this Agreement and its
responsibilities hereunder will be borne by NNC.

11. Notices

     All notices, consents, waivers and other communications under this Agreement must be in
writing and will be deemed to have been duly given:

	(a)	 	to any party hereto, when delivered by hand (with written confirmation of receipt) or sent by
telecopier (with written confirmation of receipt); or
	 
	(b)	 	to NNC or any Officer, when e-mailed (with electronic confirmation of receipt);

to the appropriate addresses, telecopier numbers or e-mail addresses set forth below (or such other
addresses, telecopier numbers or e-mail addresses as a party may designate by notice to the other
parties), as applicable. Any such notice will be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt or confirmation
therefor, in the case of telecopier delivery or e-mail.

12. Actions on Business Days

     If any day on which any action required to be taken hereunder is not a Business Day, then,
unless otherwise expressly provided for herein, such action will be required to be taken on or
before the requisite time on the next succeeding day that is a Business Day.

13. Waiver

     The rights and remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any right, power, or privilege under
this Agreement or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or
the documents referred to in this Agreement can be discharged by one party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing signed by the other Affected
Parties; (b) no waiver that may be given by an Affected Party will be applicable except in the
specific instance of which it is given; and (c) no notice to or demand on one party will be deemed
to be a waiver of any obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.

14. Amendment

     This Agreement may not be amended except, as to any Officer, by a written agreement executed
by such Officer and NNC. The Escrow Agent shall not be bound by any notice of a claim or demand,
or any waiver, modification, amendment, termination or rescission of this Agreement, unless
received by it

 

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in writing and signed by NNC and the affected Officer or Officers and, if its duties herein
are affected, unless it has given its prior written consent thereto.

15. Governing Law

     This Agreement will be governed by the laws of the Province of Ontario, Canada, without regard
to conflicts of law principles.

16. Further Assurances

     Each of the parties hereto will execute such further instruments and take such other actions
as any other party may reasonably request in order to effectuate the purposes of this Agreement.

17. Binding Effect, Termination and Survival of Certain Provisions

     This Agreement will be binding upon and inure to the benefit of NNC and the Escrow Agent, and
each of their respective successors, assigns, heirs, executors and administrators, and each
Officer. This Agreement will terminate and be of no further force or effect in respect of an
Officer upon the earliest of (i) the last of such Officer’s Escrowed Shares being surrendered to
the Corporate Secretary, (ii) the payment in full of such Officer’s RtP Amount, and (iii) the death
or permanent disability of such Officer. Upon termination of this Agreement in respect of an
Officer, NNC will within two Business Days thereof deliver a Termination Notice to the Escrow Agent
in respect of such Officer. For greater certainty, upon the last of an Officer’s Escrowed Shares
being surrendered to the Corporate Secretary, such Officer will not be obligated to deliver into
escrow hereunder any further NNC Shares notwithstanding that such Officer’s RtP Amount may not have
been paid in full. Notwithstanding the foregoing, the provisions of sections 8, 9 and 10 will
survive the resignation or removal of the Escrow Agent and the termination of this Agreement.

18. Counterparts; Facsimilied Agreements

     This Agreement may be executed in two or more counterparts, each of which will be deemed to be
an original and all of which, when taken together, will be deemed to constitute one and the same.
Any party hereto is entitled to rely on delivery by facsimile of an executed copy of this
Agreement, and acceptance of such facsimile copy will be legally effective to create a valid and
binding agreement between the parties hereto in accordance with the terms hereof.

19. Administration of Escrow

     For the avoidance of doubt, to the extent the provisions of this Agreement are inconsistent or
conflict with Schedule B to the Undertaking, this Agreement will govern the administration of the
escrow contemplated by the Undertaking.

20. Severability

     If any provision of this Agreement becomes illegal or unenforceable in whole or in part for
any reason whatsoever, the remaining provisions will nevertheless be deemed valid, binding and
subsisting.

 

- 12 -

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

	 	 	 	 	 	 	 	 	 
	NORTEL NETWORKS CORPORATION	 	COMPUTERSHARE TRUST COMPANY
	 

	 	 	 	OF CANADA	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/   Gordon Davies
	 	By:	 	/s/   Mircho
Mirchev
	 	 
	Name:

	 	Gordon A. Davies	 	Name:	 	Mircho Mirchev	 	 
	Title:

	 	Corporate Secretary	 	Title:	 	Professional, Corporate Trust	 	 
	 

	 	August 11, 2005	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:

	 	8200 Dixie Road	 	 	 	 	 	 
	 

	 	Brampton, ON L6T 5P6
	 	By:	 	/s/   C. Davidson
	 	 
	Fax:

	 	 	 	Name:	 	Cheryl Davidson	 	 
	 

	 	 
	 	 	 	 	 	 
	Attention:

	 	 	 	Title:	 	Administrator, Corporate Trust	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 

	 	/s/   Anna Ventresca	 	Address:
	 	100 University Avenue	 	 
	 

	 	Anna Ventresca
	 	 	 	9th Floor,	 	 
	 

	 	Assistant Secretary
	 	 	 	North Tower Toronto,	 	 
	 

	 	
	 	 	 	ON M5J 2Y1	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Attention:
	 	Manager, Corporate Trust	 	 
	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 
	/s/   Chahram Bolouri	 	/s/   Malcom Collins
	 	 	 
	Chahram Bolouri	 	Malcom Collins	 	 
	 
	 	 	 	 	 	 
	Address:

	 	130 Beaconsfield Blvd
	 	Address:
	 	1801 Oatlands Court
	 

	 	Beaconsfield, Quebec
	 	 	 	Wake Forest
	 

	 	Canada H9W 3Z7
	 	 	 	North Carolina 27587
	Fax:

	 	514-426-2715
	 	Fax:
	 	919-997-6130
	 
	 	 	 	 	 	 
	/s/   P Debon	 	/s/   Nicholas J. DeRoma
	Pascal Debon	 	Nicholas DeRoma
	 
	 	 	 	 	 	 
	Address:

	 	15190 Prestonwood Blvd
	 	Address:
	 	1 Chedington Place, Suite 8-D
	 

	 	Apt 433
	 	 	 	Toronto, Ontario
	 

	 	Dallas, Texas 75248
	 	 	 	Canada M4M 3R4
	Fax:

	 	(972) 684-3632 or ESN
444-3632	Fax:
	 	416-489-0095

 

 

- 13 -

	 	 	 	 	 	 	 	 
	/s/   Bill Donovan	 	/s/   John Giamatteo
	Bill Donovan	 	John Giamatteo
	 
	 	 	 	 	 	 
	Address:

	 	600 Hogans Valley Way
	 	Address:
	 	Gate City Ohsaki, East Tower 9F
	 

	 	Cary, NC 27513
	 	 	 	1-11-2 Ohsaki, Shinagawa-ku
	 

	 	 	 	 	 	Tokyo 141-8411, Japan
	Fax:

	 	Home Fax 919-468-0924
	 	Fax:
	 	81-3-5740-1849
	 
	 	 	 	 	 	 
	/s/   D Joannou	 	/s/   Robert Mao
	Dion Joannou	 	Robert Mao
	 
	 	 	 	 	 	 
	Address:

	 	2839 NE 24th
Place
	 	Address:
	 	1126 River Garden
	 

	 	Ft. Lauderdale, FL, 33305
	 	 	 	Shunyi County, Beijing
	 

	 	USA
	 	 	 	China, 101300
	Fax:

	 	954-851-8126
	 	Fax:
	 	 86-10-8046-5745
	 
	 	 	 	 	 	 
	/s/   B. McFadden	 	/s/   Greg Mumford
	Brian McFadden	 	Greg Mumford
	 
	 	 	 	 	 	 
	Address:

	 	6 Magnolia St.
	 	Address:
	 	1201 Spinnaker Place
	 

	 	Baie-D’Urfé
	 	 	 	Kingston, Ontario
	 

	 	Quebec, H9X 3P4
	 	 	 	Canada K7L 5H6
	Fax:

	 	514-457-0739
	 	Fax:
	 	613-544-7444
	 
	/s/   Steve Pusey	 	/s/   Susan Spradley
	Steve Pusey	 	Susan L. Spradley
	 
	 	 	 	 	 	 
	Address:

	 	8 St. Davids Drive
	 	Address:
	 	2 Dorset Pl
	 

	 	Englefield Green
	 	 	 	Dallas, Texas 75229
	 

	 	Surrey	 	 	 	 
	Fax:

	 	(44) 1628 437760
	 	Fax:
	 	972-684-3950

 

 

Schedule I

OFFICERS, RtP AMOUNT AND ESCROWED SHARES

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	RtP Amount	 	Escrowed
	Name	 	RtP Amounts	 	Converted to $US(1)	 	Shares(2)
	BOLOURI, Chahram
	 	 	C$891,697	 	 	US $707,696.03	 	 	226,101	 
	COLLINS, Malcolm
	 	GBP£395,409	 	US $735,460.74	 	 	234,972	 
	DEBON, Pascal
	 	US $1,078,963	 	 	 	 	 	 	344,717	 
	DeROMA, Nicholas
	 	 	C$953,747	 	 	US $756,942.06	 	 	241,835	 
	DONOVAN, Bill
	 	US $640,271	 	 	 	 	 	 	204,559	 
	GIAMATTEO, John
	 	US $259,875	 	 	 	 	 	 	83,027	 
	JOANNOU, Dion
	 	US $328,412	 	 	 	 	 	 	104,924	 
	MAO, Robert
	 	US $627,500	 	 	 	 	 	 	200,479	 
	McFADDEN, Brian
	 	 	C$899,630	 	 	US $713,992.06	 	 	228,112	 
	MUMFORD, Greg
	 	 	C$921,500	 	 	US $731,349.21	 	 	233,658	 
	PUSEY, Steve
	 	GBP£473,173	 	US $880,101.78	 	 	281,183	 
	SPRADLEY, Susan
	 	US $967,694	 	 	 	 	 	 	309,167	(1)

 

			
	(1)	 	C$ amounts are converted to US$ at the rate of C$1.26 per US$1.00 and GBP£ are
converted to US$ at the rate of US$1.00 per £1.86.
	 
	(2)	 	The closing price of NNC Shares on the NYSE on February 7, 2005 was US$3.13.
	 
	(3) 	 	Represents all NNC Shares beneficially owned by such Officer (excluding NNC Shares
held in long term investment plans).

 

Exhibit A

STOCK TRANSFER POWER

     THE UNDERSIGNED hereby surrenders for cancellation, without return of capital, to Nortel
Networks Corporation,                                                                                 common shares in Nortel
Networks Corporation standing in the name of the undersigned on the books of the said corporation
represented by certificate number                                                                                 , together
with all renewals thereof, substitutions therefore, accretions thereto and proceeds thereof (all of
which are hereinafter collectively referred to as the “Shares”) and hereby irrevocably constitutes
and appoints any one officer of Computershare Trust Company of Canada as the attorney of the
undersigned to transfer the said Shares on the books of the said corporation with full power of
substitution in the premises.

     THE UNDERSIGNED shall from time to time at the request of Computershare Trust Company of
Canada, do such further acts and execute all such further deeds and instruments as shall be
necessary to fully perform and carry out the terms and intent of this Stock Transfer Power.

     DATED:                                                             

	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

 

Exhibit B

TRADING BAN TERMINATION NOTICE

	 	 	 
	To:

	 	Computershare Trust Company of Canada, as Escrow Agent (“Escrow Agent”)
	 
	 	 
	To:

	 	                                                                                                                        (the “Officer”)
	 

	 	Name of Officer
	 
	 	 
	Copy to:

	 	                                                                                                                        
	 

	 	Name of Nortel Employer
	 
	 	 
	From:

	 	Nortel Networks Corporation (“NNC”)

     Pursuant to section 5(a)(ii) of the Escrow Agreement dated March 1, 2005 among the Escrow Agent,
NNC and the Officer, et al, (the “Escrow Agreement”), you are hereby notified that all Blackout
Trading Restrictions (as defined in the Escrow Agreement) to which the Officer is subject have
terminated or ceased as of
                                                             (insert date). The First Payment Day (as defined under the Escrow
Agreement) will therefore be                                                             .

	 	 	 	 	 
	 

	 	 	 	Nortel Networks Corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

 

Exhibit C

DEEMED SURRENDER NOTICE

	 	 	 	 
	To:

	 	Computershare Trust Company of Canada, as Escrow Agent	 
	 
	 	 	 
	To:
	 	 	 
	 

	 	 	 
	 

	 	Name of Officer	 
	 
	 	 	 
	Copy to:
	 	 	 
	 

	 	 	 
	 

	 	Name of Nortel Employer	 
	 
	 	 	 
	From:

	 	Nortel Networks Corporation (“NNC”)	 
	 
	 	 	 
	Re:

	 	Escrow Agreement dated as of March 1, 2005 among the Escrow Agent, NNC and the Officer, et al	 
	 

	 	 	 

	 	 	 
	Date of Scheduled Payment to which this
	 	 
	Deemed Surrender Notice relates:

	 	 

	 
	 	 
	Unpaid Amount to be paid by surrender of Escrowed Shares:

	 	 

	 
	 	 
	Date on which Market Value of NNC
	 	 
	Shares determined:

	 	 

	 
	 	 
	Closing Price of NNC Common Shares on NYSE on Market Value determination date:

	 	 

	 
	 	 
	Exchange rate rounded to two decimal points (if applicable)

	 	 

	 
	 	 
	Number of Escrowed Shares to be surrendered (Unpaid Amount divided by
Market Value of one NNC Share, rounded up to the nearest whole number):
	 	 

	 	 	 	 	 
	 

	 	 	 	Nortel Networks Corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

 

 

Exhibit D

SURRENDER NOTICE

	 	 	 	 
	To:

	 	Computershare Trust Company of Canada, as Escrow Agent	 
	 
	 	 	 
	Copy to:
	 	 	 
	 

	 	 	 	 
	 

	 	Name of Nortel Employer	 
	 
	 	 	 
	Copy to:

	 	Nortel Networks Corporation (“NNC”)	 
	 
	 	 	 
	From:
	 	 	 
	 

	 	 	 	 
	 

	 	Name of Officer	 
	 
	 	 	 
	Re:

	 	Escrow Agreement dated as of
March 1, 2005 among the Escrow Agent, NNC and the Officer, et al
	 

	 	 	 

Amount to be paid on account of 

RtP Amount by the surrender

of Escrowed Shares:                                                                                                                         

	 	 	 	 	 
	Check One:

	o	Scheduled Payment:
	 	                                                                                                                        
	 

	 	 	 	(insert date)
	 
	 	 	 	 
	 

	o	Pre-payment	 	 
	 
	 	 	 	 
	 

	 	 	 	                                                                                                                        
	 

	 	 	 	Signature of Officer
	 
	 	 	 	 
	 

	 	Date:
	 	                                                                                                                        

 

 

Exhibit E

CONFIRMATION

	 	 	 	 
	To:
	 	 	 
	 

	 	 	 	 
	 

	 	Name of Officer	 
	 
	 	 	 
	To:

	 	Computershare Trust Company of Canada, as Escrow Agent	 
	 
	 	 	 
	Copy to:
	 	 	 
	 

	 	 	 	 
	 

	 	Name of Nortel Employer	 
	 
	 	 	 
	From:

	 	Nortel Networks Corporation (“NNC”)	 
	 
	 	 	 
	Re:

	 	Escrow Agreement dated as of March 1, 2005 among the Escrow
Agent, NNC and the Officer, et al	 

	 	 	 
	Date of Surrender Notice or Deemed Surrender Notice to which this Confirmation
relates:

	 	 

	 
	 	 
	Amount of payment made pursuant to notice referred to above:

	 	 

	 
	 	 
	Date on which Market Value of NNC Shares determined:

	 	 

	 
	 	 
	Closing Price of NNC Shares on NYSE on Market Value determination date:

	 	 

	 
	 	 
	Exchange rate rounded to two decimal points (if applicable)

	 	 

	 
	 	 
	Number of Escrowed Shares surrendered (Unpaid Amount divided by Market Value of
one NNC Share, rounded up to the nearest whole number):

	 	 

	 
	 	 
	Officer’s Remaining Balance:

	 	 

	 	 	 	 	 
	 

	 	 	 	Nortel Networks Corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

 

 

Exhibit F

TERMINATION NOTICE

	 	 	 
	To:

	 	Computershare Trust Company of Canada, as Escrow Agent (the “Escrow Agent”)
	 
	 	 
	To:
	 	 
	 

	 	 	 
	 

	 	Name of Nortel Employer
	 
	 	 
	From:

	 	Nortel Networks Corporation (“NNC”)
	 
	 	 
	Re:

	 	             
                   
                   
                   
                   
                   
            
(the “Officer”)
	 

	 	Name of Officer in respect of whom this Notice is delivered

You are hereby notified that the Escrow Agreement dated March 1, 2005 among the Escrow Agent, NNC
and the Officer, et al, is terminated in respect of such Officer.

	 	 	 	 	 
	 

	 	 	 	Nortel Networks Corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:exv10w6

 

EXHIBIT 10.6

CONFIDENTIAL — SPECIAL HANDLING

September 7, 2005

Nicholas J. DeRoma

Chief Legal Officer

Nortel Networks

8200 Dixie Rd., Suite 100

Brampton, Ontario

L6T 5P6

Dear Mr. DeRoma:

This letter (“Agreement”) records the arrangements between you and Nortel Networks Corporation
concerning the cessation of your responsibilities as Chief Legal Officer reporting to William A.
Owens, Nortel’s Vice-Chairman and Chief Executive Officer. The arrangements are as follows:

Cessation of Employment

	1.	 	As used in this Agreement, the term “Corporation” shall mean Nortel Networks Corporation, its
subsidiaries and affiliates, their successors and assigns, and all of their past and present
officers, directors, employees and agents (in their individual and representative capacities),
in every case, individually and collectively.
	 
	2.	 	Effective as of the close of business on September 9, 2005, your employment relationship with
the Corporation shall cease. All previous external responsibilities which you had will be
assumed by other persons designated by the Corporation, including any participation in
industry or other associations representing the Corporation. Prior thereto, you will cease to
be an officer and/or director of the Corporation and any of the Corporation’s subsidiaries and
affiliates and you will sign such documents as may be reasonably required to record these
resignations. You will continue to have access to your office to close out your personal and
business affairs as needed until and including September 30, 2005.
	 
	3.	 	You understand and agree that if you have the designation of either “Reporting” or
“Non-Reporting” Insider pursuant to Corporate Policy 320.28 of Nortel Networks Corporation
(and under applicable Canadian/US securities legislation for Reporting Insiders), you will
cease to have this designation effective 12:01 a.m. the day following your termination date of
September 9, 2005. Notwithstanding the fact that you will no longer have this designation, if
you are in possession of material non-public information relating to Nortel Networks, you are
prohibited from trading in Nortel Networks securities (or informing another person of the
material non-public information) in accordance with applicable laws. If you are a “Reporting”
Insider, you understand that you are required to amend your insider profile within 10 days of
your termination date on the Canadian System for Electronic Disclosure by Insiders (SEDI) to
indicate that you are no longer a “Reporting” Insider of Nortel Networks. You should contact
the Insider Reporting Department at (905) 863-1220 and fax (905) 863-8524 for assistance in
amending the SEDI profile.

 

- 2 -

Compensation, Benefits & Perquisites

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

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

	 	 	(Vacation Benefit)

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

	 	 	(Incentive Award)

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

	 	 	(Insurance Benefits)

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

	 	 	(Outplacement or Counseling Services)

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

	 	 	(Pension Benefits)

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

 

- 3 -

	 	 	(Stock Options)

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

 

- 4 -

	 	 	(Investment Plan)

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

	 	 	(Relocation Costs)

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

	 	 	(Withholdings)

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

	 	 	(Tax Preparation Services)

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

Cessation of Compensation, Benefits and Perquisites

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

Expense Accounts

	6.	 	You shall reconcile and settle your employee expense account, and any advances made to you by
the Corporation, as soon as possible, but not later than September 30, 2005.

Securities Indemnification

	7.	 	The Corporation shall indemnify you in accordance with section 124 of the Canada Business
Corporations Act and the Corporation’s By-Laws. Subject to and without limiting the
foregoing, the Corporation’s legal counsel will represent you in respect of any civil,
criminal, administrative, investigative (including any internal investigation or independent
review being conducted by the Corporation’s Board of Directors or a Committee thereof) or
other proceeding in Canada, the United States or other applicable jurisdiction in which you
are involved (including as a witness) because of your

 

- 5 -

	 	 	association with the Corporation (hereafter, a “Matter”). However, in the event that the
Corporation’s counsel cannot represent you in a Matter because of a conflict, the Corporation
agrees to advance monies to pay your reasonable and actual legal expenses in that Matter
provided you agree that you will not settle the Matter, retain defense counsel or expert
witnesses or consultants, or incur any defense costs without obtaining the Corporation’s
prior consent, which consent will not be unreasonably withheld.

Confidentiality

	8.	 	You acknowledge that you continue to be bound by the terms of the Agreement Relating to
Intellectual Property and Confidentiality and any related agreements which you executed in the
course of your hiring and employment by the Corporation. You confirm that your entire right,
title, and interest to all intellectual property as generally described in such agreements
with the Corporation are assigned to the Corporation regardless of the exact terms in, or the
existence of, such an agreement between you and the Corporation.

	 	 	With respect to inventions, discoveries, improvements and designs as covered by the above
paragraph, you have disclosed or will promptly disclose them in writing to the Corporation,
and you will, on the Corporation’s request, promptly execute a specific assignment of title
to the Corporation or its designee, and do anything else reasonably necessary to enable the
Corporation to secure a patent or other form of protection in Canada, the United States, and
other countries. Any information pertaining to such inventions, discoveries, improvements
and designs is considered the confidential information of the Corporation until and unless
patented or published by the Corporation.
	 
	 	 	Unless and until the terms of this Agreement are disclosed by the Corporation as required by
applicable law, you agree that you will not directly or indirectly disclose, publicize or
discuss this Agreement, including the terms and/or conditions, with any employee and/or
former employee of the Corporation or any other person except your spouse, your lawyer and/or
accountant, financial advisor and/or outplacement counsellor. In the event that you discuss
this Agreement with any of the aforementioned individuals, it shall be your duty,
responsibility and obligation to advise said individual(s) of the confidential nature of this
Agreement and direct them not to discuss the terms and/or conditions of this Agreement with
any person.
	 
	 	 	Also, you shall continue to maintain the confidentiality of all trade secrets and
confidential, proprietary, commercial, technical or other information; and specifically you
agree that you shall not at any time during or following your employment with the
Corporation, disclose, other than to the Corporation’s authorized personnel, or otherwise use
for non-Corporation purposes, any confidential or proprietary information or know-how of any
nature (whether or not a trade secret) relating to an activity of the Corporation to any
invention, which is owned or licensed by the Corporation. You shall continue to maintain the
confidentiality of any dealings, transactions or affairs of the Corporation which may have
come to your knowledge in any manner during your employment. Further, you agree not to
reveal, disclose, or cause to be revealed or disclosed, anything with respect to the
Corporation that is injurious or harmful to any of its interests, or the interests of its
employees, officers or directors. In addition, during the period September 6, 2005 to
September 9, 2007, you:

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

 

- 6 -

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

Other

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

Notice

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

Advice and Assistance

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

Company Property and Information Preservation

	12.	 	Prior to your termination date, and before receiving any monies pursuant to this Agreement,
you shall return to Nortel Networks any and all property of Nortel Networks currently in your
possession and/or subject to your control, whether such material shall be written instruments
or tapes in electronic and/or recorded format.
	 
	 	 	Nortel Networks Corporate Procedure 206.01 states that “all documents, messages or data
composed, sent, or received through the network of Nortel Networks in any form are and remain
at all times the property of Nortel Networks”. In addition, all work product that you have
produced during your employment with Nortel Networks is the property of Nortel Networks.
Therefore, all information, (however recorded or stored) (“Information”) in your possession
and/or that you have created in the course of your employment with Nortel Networks (whether
or not currently in your possession or control) is the property of Nortel Networks.
	 
	 	 	You are aware that Nortel Networks has received a formal order of investigation from the
United States Securities and Exchange Commission (“SEC”) that requires the preservation and
collection and disclosure of certain Information to the SEC. Nortel Networks is also a party
to various civil lawsuits and other investigations and may need access to certain Information
for those matters as well. Therefore, you agree to take affirmative steps to preserve all
Information in your possession, custody and control (including information controlled by your
assistant, if any).

 

- 7 -

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

Review Period

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

Release

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

 

- 8 -

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

Please acknowledge that the foregoing correctly and completely sets forth your understanding of the
arrangements, and your acceptance hereof, by signing, dating and returning to me, the attached
second copy of this Agreement.

Yours truly,

/s/   W. J. Donovan

William J. Donovan

For Nortel Networks Corporation

By: /s/   William J. LaSalle          
                 

/s/   Nicholas J. DeRoma         
                      

Nicholas J. DeRoma

Sept. 8, 2005                                                  

Date

	 	 	 
	Attachment I

	 	Pension Estimate
	Attachment II

	 	Summary of Stock Option Grants and Vesting Schedule

 

 

	

 

	

Personal Information

Date of Birth:         March 1, 1946

Spouse's Date of Birth:      March 25, 1946

Date of Hire (Canada):      June 1, 1997

Pension Entry Date:         June 1, 1999

Pension Plan:         Canadian Traditional Part II Program

SERP Participant         Yes

Special Pension Credits (SPC):   Must be minimum age 60 to be eligible for

            a benefit from this Plan (eligible as at

            March 1, 2006)

            For Eligibility Purposes:  16 years, 3 months

              For Benefit Purposes:       8 years, 1-1/2 months

 

	

Pension Estimate:

  Actual benefit payable will be determined at the retirement date

Termination Date:         September 9, 2005

Salary Continuance:         September 10, 2005 through September 9, 2007

Retirement Date:         September 10, 2007

Age at Pension:         61 years, 6 months

Continuous Service at Pension:   10 years, 3 months

Pensionable Service:        8 years, 4 months

SPC Service:           8 years, 1-1/2 months

Total Benefit Service:      16 years, 5-1/2 months

Canadian Pension Benefit (CAD):

(option of electing either an immediate lifetime monthly pension or a lump sum/15-year term
annuity)

Monthly Pension:         $30,000 (Joint & Survivor 60%)

or

Total Lump Sum Value:      $4,650,000, payable as follows:

            $362,000 lump sum (of which approx. $218,000

            must be transferred to a locked-in RRSP)

            + $34,000/month for 15 years

 

Attachment II

Summary of Stock Option

Grants and Vesting Schedule

 

 

			
	Statement of Option Grant
	 	Page 1 of 1

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

	 	 	 	 	 	 	 
	Global ID

	 	Employee Name
	 	Employee Address
	 	 
	0503455

	 	Nicholas Deroma
	 	8200 Dixie Road, Suite 100, Brampton, ON, L6T 5P6, CA	 	 

 

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

Stock Option information is updated on a weekly basis. The information provided here is current as
of August 24, 2005. Grants that have been forfeited or cancelled are not reflected on the Personal
Summary.

View Vesting Schedule

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

This page generated August 29, 2005

8/29/2005

 

 

			
	Vesting Schedule
	 	Page 1 of 2

VESTING SCHEDULE

	 	 	 	 	 	 	 
	Global ID

	 	Employee Name
	 	Employee Address
	 	 
	0503455

	 	Nicholas Deroma
	 	8200 Dixie Road,
Suite 100, Brampton, ON, L6T 5P6, CA
 	 	 
	 

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

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

Note: Non-standard vesting schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

Note: Non-standard vesting schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

	 

 

 

			
	Vesting Schedule
	 	Page 2 of 2

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

Note: Non-standard vesting schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

Note: Non-standard vesting schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

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

	 

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

This page generated August 29, 2005

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