Document:

exv10w74

 

	 	 	 	 	 
	 

	 	Exhibit 10.74
	 	

NORTEL NETWORKS LIMITED

DIRECTORS’ DEFERRED

SHARE COMPENSATION PLAN

AS AMENDED AND RESTATED

Amended on December 7, 2005 and Restated effective June 29, 2005

 

NORTEL NETWORKS LIMITED

DIRECTORS’ DEFERRED

SHARE COMPENSATION PLAN

AS AMENDED AND RESTATED

1. BACKGROUND; PURPOSE OF THE PLAN

The Nortel Networks Limited Directors’ Deferred Share Compensation Plan was amended and restated to
reflect the transactions contemplated by the plan of arrangement (the “Plan of Arrangement”)
described in the Amended and Restated Arrangement Agreement, made as of January 26, 2000, as
amended and restated March 13, 2000, among BCE Inc., Nortel Networks Corporation, New Nortel Inc.
and the other parties thereto. On May 1, 2000, the effective date of the Plan of Arrangement, New
Nortel Inc. acquired from the holders of the common shares (other than BCE Inc. and its affiliates)
of Nortel Networks Corporation all of the Nortel Networks Corporation common shares then held by
such shareholders in exchange for an equal number of common shares of New Nortel Inc. and each
shareholder of BCE Inc. received approximately 0.78 common shares of New Nortel Inc. for each
common share of BCE Inc. then held by such BCE shareholder. In addition, the common shares of New
Nortel Inc. were listed on the New York Stock Exchange and The Toronto Stock Exchange in
substitution for the common shares of Nortel Networks Corporation. Also, as part of the Plan of
Arrangement, Nortel Networks Corporation changed its name to Nortel Networks Limited (“Nortel
Limited”) and New Nortel Inc. changed its name to Nortel Networks Corporation (“Nortel
Corporation”).

In connection with, and effective as of May 1, 2000, Share Units granted or to be granted under the
Plan and the shares subject to the Plan were adjusted and common shares of Nortel Corporation were
substituted for common shares of Nortel Limited. In all other respects, the terms and provisions
of the Plan were reaffirmed, as therein provided.

On May 25, 2000, the Board suspended the operation of the Plan, effective April 27, 2000, with the
effect that, notwithstanding any other provision of the Plan, (i) no further Share Units would be
credited to Participants in respect of Annual Retainer Fees (as defined in the Plan as at that
date) or any other fees payable on or after April 27, 2000 in respect of services rendered by
Participants to Nortel Limited or Nortel Corporation, (ii) Share Units, as so adjusted, credited to
Participants’ accounts prior to April 27, 2000 would remain outstanding, (iii) Share Units, as so
adjusted, would continue to be credited under Section 7 of the Plan for the period prior to the
Settlement Date, and (iv) Share Units, as so adjusted, would be settled subject to and in
accordance with the Plan and the terms and conditions of the Share Units.

 

 

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On June 9, 2000, the Board approved the amendment and restatement of the Plan, (i) effective as of
May 1, 2000, to provide that Share Units would be credited to Participants in respect of services
rendered by Participants to Nortel Limited only and that the Plan would be administered by the
Board or by a Committee of the Board, and (ii) to reflect the suspension of the operation of the
Plan, effective April 27, 2000, until otherwise specifically determined by the Board, with respect
to the payment of Annual Retainer Fees (as defined in the Plan as at that date) or other fees
payable to Participants after April 27, 2000.

On January 24, 2002, the Board approved a further amendment and restatement of the Plan, effective
as of January 1, 2002, (i) to provide for the crediting of Share Units to Participants in respect
of all services rendered by such Participants as members of the Board; (ii) to provide that each
member of the Board who qualifies as an Eligible Director shall receive all fees payable to such
member for services as a member of the Board in the form of Share Units credited in respect of such
member under the Plan; and (iii) to reflect the re-commencement of the operation of the Plan as
amended and restated herein.

On May 29, 2003, the Board approved an amendment to the Plan, effective immediately, to permit
Eligible Directors to elect to receive between 0 — 100% of all fees payable to such member for
services as a member of the Board in the form of Share Units, with the remainder of such fees to be
settled in cash.

On December 18, 2003, the Board approved an amendment to the Plan, effective immediately, with
respect to the manner in which Eligible Directors may elect to receive cash in lieu of Share Units
under the Plan. On June 29, 2005, the Board approved amendments to the Plan, effectively
immediately, with respect to the election by Eligible Directors to receive Fees in the form of
Share Units, with the remainder of such Fees payable in cash.

The purpose of the Plan is to assist Nortel Limited in attracting and retaining individuals with
experience and ability to serve as members of the Board and to promote a greater alignment of
interests between Eligible Directors and the shareholders of Nortel Corporation.

2. DEFINITIONS

For the purposes of the Plan, the terms contained in this Section shall have the following
meanings.

“Administrator” shall mean such administrator as may be appointed by Nortel Limited from time to
time to assist in the administration of the Plan in accordance with Section 3 hereof.

“affiliated companies” shall have the meaning ascribed to the term “affiliated bodies corporate” in
Section 2(2) of the CBCA or such other meaning, and shall include such other entities, as may be
determined by the Committee.

“Election Form and Agreement” shall mean the election form and agreement, as it may be amended from
time to time, entered into between Nortel Limited and an Eligible Director in accordance with
Section 6 hereof.

 

 

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“Aggregate Purchase Price” shall have the meaning assigned thereto in Section 8 hereof.

“Board” shall mean the Board of Directors of Nortel Limited.

“Broker” shall have the meaning assigned thereto in Section 10 hereof.

“Business Day” shall mean a day, other than a Saturday or Sunday, on which banking institutions in
Canada and the United States are not authorized or obligated by law to close.

“CBCA” shall mean the Canada Business Corporations Act, R.S.C. 1985, c.C-44, as amended from time
to time.

“Committee” shall mean such committee of the Board comprised of members of the Board as the Board
shall from time to time appoint to administer the Plan; provided, however, that if the Board does
not appoint a Committee to administer the Plan, all references to the Committee shall be deemed to
be references to the Board, mutatis mutandis.

“Common Share” shall mean a common share of Nortel Corporation, subject to Section 16.

“Eligible Director” shall mean each member of the Board who, at the relevant time, is not an
employee of a Nortel Networks Company and such member shall continue to be an Eligible Director for
so long as such member continues to be a member of the Board and is not an employee of a Nortel
Networks Company; provided, however, that the Committee, in its sole discretion, may determine from
time to time that one or more members of the Board who is or are employees of a Nortel Networks
Company shall be an Eligible Director or Eligible Directors or that one or more members of the
Board, who would otherwise be an Eligible Director or Eligible Directors, shall not be.

“Fees” shall mean the amount, expressed in U.S. dollars, of all fees payable by Nortel Limited to
an Eligible Director (i) for all services rendered as a member of the Board, and/or any committees
thereof, and (ii) for all services rendered as an executive or non-executive chairperson of the
Board, and/or any committees thereof; except that, Fees shall not include any other fee that may be
payable by Nortel Limited to the Eligible Director in connection with services rendered by such
Eligible Director to Nortel Limited in any capacity other than as a member or chairperson of the
Board, and/or any committees thereof.

“Market Value” of a Common Share shall mean the fair market value thereof, which shall be the price
per common share which is equal to the average of the high and low prices for a board lot of the
Common Shares traded in Canadian dollars on The Toronto Stock Exchange (“TSE”) on the relevant day
or, if the volume of Common Shares traded on the composite tape in the United States exceeds the
volume of Common Shares traded in Canadian dollars on the TSE on such relevant day, the average of
the high and low prices for a board lot of Common Shares on the New York Stock Exchange (“NYSE”).
The Market Value so determined may be in Canadian dollars or in U.S. dollars. As a result, the
Market Value of a Common Share covered by a Share Unit shall be either (a) such Market Value as
determined above, if in Canadian dollars, or (b) such Market Value as determined above converted
into Canadian dollars at the noon rate of exchange of the Bank of Canada on the relevant day, if in
U.S. dollars. If on the relevant day, there is not a board lot trade in the Common Shares on the
TSE or NYSE, any of such exchanges

 

 

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are not open for trading, or there is not a noon rate of exchange of the Bank of Canada, if
required, then the Market Value of a Common Share shall be determined as provided above on the
first day immediately preceding the relevant day for which there were such board lot trades in the
Common Shares and a noon rate of exchange. If at any time the Common Shares are no longer listed
or traded on the TSE or the NYSE, the Market Value shall be calculated in such manner as may be
determined by the Committee from time to time, but shall always be established in relation to the
fair market value of a Common Share. The Market Value of a Common Share shall be rounded up to the
nearest whole cent.

“Nortel Corporation” shall mean Nortel Networks Corporation (known prior to May 1, 2000 as New
Nortel Inc.) or its successors.

“Nortel Limited” shall mean Nortel Networks Limited (known prior to May 1, 2000 as Nortel Networks
Corporation) or its successors.

“Nortel Networks Companies” shall mean, collectively, Nortel Corporation, Nortel Limited and their
respective Subsidiaries and affiliated companies or, individually, any corporate entity included
within such group, as the context indicates, and Nortel Networks Company shall mean any one of such
corporate entities.

“Participant” shall mean an Eligible Director who participates in the Plan.

“Plan” shall mean the Nortel Networks Limited Directors’ Deferred Share Compensation Plan (as
amended and restated) set forth herein and as may be further amended or restated from time to time.

“Plan of Arrangement” shall have the meaning assigned to such term in Section 1 hereof.

“Price per Common Share” shall have the meaning assigned thereto in Section 8 hereof.

“Quarter” means any of the four quarters of any financial year of Nortel Limited as may be adopted
from time to time and, until the financial year of Nortel Limited is changed, shall mean the
quarters ending March 31, June 30, September 30 and December 31.

“Quarterly Fee” shall mean the Fees earned for services rendered by an Eligible Director in the
applicable Quarter.

“Reference Date” shall mean, with respect to any Quarter, the date used to determine the Market
Value of a Common Share for purposes of determining the number of Share Units to be credited in
respect of such Quarter to a Participant’s account and the Canadian dollar equivalent of the
Quarterly Fee in respect to such Quarter pursuant to Section 4 hereof; which date shall be, unless
otherwise determined by the Committee and approved by the Board,

	 	(i)	 	the last trading day of such Quarter on which the Market Value of a Common
Share may be determined and on which the Bank of Canada published a noon rate of
exchange for U.S. dollars, or

 

 

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	 	(ii)	 	the Resignation Date of such Participant, if the Settlement Date with respect
to a Participant occurs during the Quarter prior to the last trading day of such
Quarter; provided that, if such Resignation Date is not a trading day on which the
Market Value of a Common Share or, if required, a day on which the Bank of Canada noon
rate of exchange for U.S. dollars may be determined, the Reference Date shall be the
immediately preceding trading day on which such Market Value and, if required, the Bank
of Canada noon rate of exchange for U.S. dollars may be determined.

“Resignation Date” shall mean, in respect of a Participant, the earliest date on which both of the
following conditions are met:

	(a)	 	the Participant has ceased to be a member of the Board for any reason whatsoever, including
the death of the Participant; and

	(b)	 	the Participant is neither an employee nor a member of the board of directors of any Nortel
Networks Company.

“Settlement Date” shall mean, unless otherwise determined by the Committee for the purpose of
Section 8, the date on which Common Shares shall be delivered in settlement of Share Units in
accordance with Section 8 hereof.

“Share Unit” shall mean a unit credited to a Participant’s account in accordance with the terms and
conditions of the Plan.

“Subsidiary” shall mean a body corporate that is a subsidiary of Nortel Limited or Nortel
Corporation within the meaning of Section 2(5) of the CBCA.

3. ADMINISTRATION OF THE PLAN

Except as herein otherwise specifically provided, the Plan shall be administered by the Committee
in accordance with its terms, the whole subject to applicable law. The Committee shall have full
and complete authority to interpret the Plan, to prescribe such rules and regulations and to make
such other determinations as it deems necessary or desirable for the administration of the Plan.
The Committee may from time to time, subject to the terms of the Plan, delegate to officers or
employees of a Nortel Networks Company or to third parties, including an Administrator if one is
appointed, the whole or any part of the administration of the Plan and shall determine the scope
and terms and conditions of such delegation, including the authority to prescribe rules and
regulations. Any interpretation, rule, regulation or determination made or other act of the
Committee shall be final and binding on the Participants and their beneficiaries and legal
representatives and Nortel Limited and its shareholders.

No member of the Committee or the Board shall be liable for any action or determination made in
good faith pursuant to the Plan. To the full extent permitted by law, Nortel Limited shall
indemnify and save harmless each person made, or threatened to be made, a party to any action or
proceeding by reason of the fact that such person is or was a member of the Committee or is or was
a member of the Board and, as such, is or was required or entitled to take action pursuant to the
terms of the Plan.

 

 

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Except as Participants may otherwise be advised by prior written notice of at least thirty (30)
days, all costs of the Plan, including any administration fees and reasonable brokerage fees
related to the purchase of Common Shares pursuant to Section 8, shall be paid by Nortel Limited.
For greater certainty, Nortel Limited shall not pay or be responsible for brokerage or other fees
incurred by Participants in respect of the disposition of any Common Shares.

4. PARTICIPATION

All Eligible Directors shall participate in the Plan. Each Eligible Director shall be paid one
hundred percent (100%) of his or her Fees in the form of cash, unless the Eligible Director elects
prior to the beginning of a calendar year to receive between 0-100% of his or her Fees for the next
calendar year (and each calendar year thereafter unless and until such Eligible Director changes
such election with respect to Fees payable for the calendar year commencing after such change in
election is made) in the form of Share Units, with the remainder of such Fees to be paid in cash.
Fees payable to an Eligible Director in the calendar quarter in which such Eligible Director is
first appointed or elected to the Board shall be paid one hundred percent (100%) in the form of
cash, unless such Eligible Director elects prior to, or within 30 days of, becoming an Eligible
Director to receive, effective on the later of (i) the date he or she becomes an Eligible Director
or (ii) the date of his or her election during such 30-day period, between 0-100% of his or her
Fees for the remainder of such calendar year (and future calendar years) in the form of Share
Units, with the remainder of such Fees to be paid in cash. The Board may, in its sole discretion,
permit an Eligible Director who is not subject to income tax under the US Internal Revenue Code of
1986, as amended, to elect at a time other than the times specified in this paragraph to receive
between 0-100% of his of her Fees in the form of Share Units, with the remainder of such Fees to be
paid in cash.

The number of Share Units (including fractional Share Units rounded to four decimal places) to be
credited on a quarterly basis with effect on the last day of each Quarter to an Eligible Director’s
account under Section 9 hereof with respect to each Quarter shall be equal to the quotient
determined by dividing: (i) the entire amount, expressed in U.S. dollars, of the Eligible
Director’s Quarterly Fee for such Quarter which is to be paid in Share Units, converted into
Canadian dollars at the noon rate of exchange of the Bank of Canada on the Reference Date for such
Quarter; by (ii) the Market Value of a Common Share on the Reference Date for such Quarter,
expressed in Canadian dollars.

A Participant who becomes an employee of a Nortel Networks Company or who, as a result of a
determination by the Committee, shall no longer be eligible to continue to participate in the Plan,
shall not be entitled to receive Share Units under this Section 4 in respect of any of his or her
future Fees. Share Units already credited to any such Participant’s account shall remain governed
by the Plan and the Election Form and Agreement, and such Participant shall be entitled to continue
to receive Share Units under Section 7 until such Participant’s Settlement Date.

5. SHARES SUBJECT TO THE PLAN

Neither Nortel Limited nor Nortel Corporation shall be required to cause to be delivered Common
Shares or certificates evidencing Common Shares pursuant to the Plan unless and until

 

 

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such delivery is in compliance with all applicable laws, regulations, rules, orders of governmental
or regulatory authorities and the requirements of any stock exchange upon which shares of Nortel
Corporation are listed or traded. Neither Nortel Corporation nor Nortel Limited shall in any event
be obligated to the Participants to take any action to comply with any such laws, regulations,
rules, orders or requirements. Subject to the foregoing, Nortel Limited may from time to time
provide a Broker with funds on the Settlement Date as herein provided to purchase Common Shares on
behalf of Participants on the open market or by private transaction as required in order to
administer the Plan in accordance with its terms.

In the event Nortel Limited or Nortel Corporation determines that Common Shares or certificates
evidencing Common Shares shall not be delivered to a Participant or Participants in accordance with
the foregoing, the Participant shall be entitled to receive from Nortel Limited, in cash, an amount
equal to the Market Value of the Common Shares that would otherwise be delivered in settlement of
Share Units on the Settlement Date, less any amounts withheld by Nortel Limited in accordance with
Section 14 in respect of taxes payable or other source deductions in respect of such cash payment.

6. EXECUTION OF ELECTION FORM AND AGREEMENT

Each Eligible Director shall, in accordance with Section 4 and the Plan or at such other times as
Nortel Limited deems appropriate, enter into an Election Form and Agreement in writing with Nortel
Limited and, if applicable, the Administrator with respect to his or her participation in the Plan.
Such Election Form and Agreement shall set out certain rights and obligations of the parties
thereto pursuant to and in accordance with the Plan, and shall remain in full force and effect
until all such Share Units credited to the account of such Participant shall have been settled
and/or cancelled.

7. DIVIDENDS AND RELATED AMOUNTS

A Participant shall, from time to time during such Participant’s period of participation under the
Plan, including the period following the Resignation Date and until the Settlement Date referred to
in Section 8 hereof, be credited on each dividend payment date in respect of Common Shares with
additional Share Units, the number of which shall be equal to the quotient determined by dividing:
(i) the product determined by multiplying (a) one hundred percent (100%) of each dividend declared
and paid by Nortel Corporation on its Common Shares on a per share basis (excluding stock dividends
payable in Common Shares, but including dividends which may be paid in cash or in shares at the
option of the shareholder), which, if declared in U.S. dollars, shall be converted into Canadian
dollars at the noon rate of exchange of the Bank of Canada on the dividend payment date for such
dividend, or if on such dividend payment date a noon rate of exchange of the Bank of Canada is not
available, converted into Canadian dollars at the noon rate of exchange of the Bank of Canada on
the immediately preceding day on which such exchange rate may be determined, by (b) the number of
Share Units recorded in the Participant’s account on the record date for the payment of any such
dividend, by (ii) the Market Value of a Common Share on the dividend payment date for such
dividend, in each case, with fractions computed to four decimal places.

 

 

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8. SETTLEMENT OF SHARE UNITS

Except as may be otherwise determined by the Committee or except as set forth below in this Section
8, the settlement date (“Settlement Date”) for a Participant with respect to whom a Resignation
Date shall have occurred shall be the fourth trading day following the release of Nortel
Corporation’s quarterly or annual financial results immediately following the Resignation Date with
respect to such Participant, provided that, if such Resignation Date occurs on the same date as the
release of Nortel Corporation’s financial results, the Settlement Date shall, in such a case, be
the fifth trading day immediately following such release of Nortel Corporation’s financial results.
A Participant shall receive, in full satisfaction of the number of Share Units recorded in the
Participant’s account on the Settlement Date, a whole number of Common Shares equal to the whole
number of Share Units then recorded in the account of the Participant (or as may be adjusted
pursuant to Section 16 hereof), reduced to reflect the amount of any applicable withholding taxes
and other source deductions withheld by Nortel Limited in connection with the satisfaction of the
Participant’s Share Units in accordance with Section 14. Any entitlement to fractional Common
Shares shall be paid in cash by Nortel Limited based on the Price per Common Share (as defined
below) on the Settlement Date.

If the Settlement Date would otherwise fall between the record date for a dividend on the Common
Shares and the related dividend payment date, the Settlement Date shall be the day immediately
following the date of payment of such dividend for purposes of recording in the account of the
Participant the additional Share Units referred to in Section 7 hereof and making the calculation
of Share Units recorded in the Participant’s account pursuant to this Section 8. Notwithstanding
any other provision of the Plan, the Settlement Date shall not be later than the last day of the
first calendar year that begins after the Resignation Date.

In the event that Nortel Limited is unable, by a Participant’s Settlement Date, to compute the
final number of Share Units credited to such Participant’s account by reason of the fact that any
of the data required in order to compute the Market Value of a Common Share is not available to
Nortel Limited, then the Settlement Date shall be the next following trading day on which such data
is available to Nortel Limited.

On the Settlement Date, Nortel Limited shall notify the Broker as to the number of Common Shares to
be purchased by the Broker on behalf of the Participant on the TSE, the NYSE, or any other stock
exchange approved by the Committee. As soon as practicable thereafter, the Broker shall purchase
the number of Common Shares which Nortel Limited has requested the Broker to purchase on behalf of
the Participant and shall notify the Participant and Nortel Limited of:

	(a)	 	the aggregate purchase price (“Aggregate Purchase Price”) of the Common Shares;
	 
	(b)	 	the purchase price per Common Share or, if the Common Shares were purchased at different
prices, the average purchase price (computed on a weighted average basis) per Common Share
(“Price per Common Share”);
	 
	(c)	 	the amount of any reasonable brokerage commission related to such purchase of Common Shares;
and
	 
	(d)	 	the Settlement Date for such purchase of Common Shares.

 

 

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On such Settlement Date, upon payment of the Aggregate Purchase Price and related reasonable
brokerage commission by Nortel Limited, the Broker shall deliver to the Participant, or to his
designated representative, the certificate representing the Common Shares purchased on behalf of
such Participant or shall cause such Common Shares to be transferred electronically to an account
designated by such Participant.

If a Participant is a citizen or resident of a country other than Canada, Nortel Limited shall have
the right, in its sole discretion, to pay entirely in cash on the Settlement Date an amount equal
to the Market Value of the Common Shares as of the Settlement Date that would otherwise be
delivered in settlement of Share Units (less any applicable tax withholdings or required source
deductions), should it deem it desirable to do so in light of the regulatory or other requirements
of the applicable foreign jurisdiction associated with the purchase of, or payment in, Common
Shares.

9. PARTICIPANT’S ACCOUNT

Nortel Limited shall maintain or cause to be maintained in its records an account for each
Participant recording at all times the number of Share Units credited to the Participant. Upon
payment in satisfaction of Share Units pursuant to Section 8 herein, such Share Units shall be
cancelled. A written notification of the balance in the account maintained for each Participant
shall be mailed by Nortel Limited or by an Administrator on behalf of Nortel Limited to each
Participant at least annually. A Participant shall not be entitled to any certificate or other
document evidencing the Share Units.

10. PURCHASES ON THE OPEN MARKET

Purchases of Common Shares pursuant to the Plan shall be made on the open market by a broker
independent from Nortel Corporation and Nortel Limited designated by the Participant and who is a
member of the TSE, the NYSE, or any such other stock exchange as may be determined by the Committee
from time to time (the “Broker”). Any such designation of a Broker may be changed from time to
time. Upon designation of a Broker or at any time thereafter, Nortel Limited may elect to provide
the designated Broker with a letter agreement to be executed by the Broker, the Participant and
Nortel Limited, setting forth, inter alia:

	(a)	 	the Broker’s agreement with being so designated, to acting for the Participant’s account in
accordance with customary usage of the trade with a view to obtaining the best share price for
the Participant in respect of the Common Shares to be purchased for the Participant, and to
delivering to the Participant, or his or her representative, the share certificate for, or to
transferring electronically to an account designated by the Participant, the Common Shares
purchased upon receipt from Nortel Limited of payment of the Aggregate Purchase Price and
related reasonable brokerage commission; and

	(b)	 	Nortel Limited’s agreement to notify the Broker of the number of Common Shares to be
purchased and to pay the Aggregate Purchase Price and the related reasonable brokerage
commission,

provided, however, that none of the terms of such letter agreement shall have the effect of making
the Broker or deeming the Broker to be an affiliate of, or not independent from, Nortel

 

 

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Corporation or Nortel Limited for purposes of any applicable corporate, securities or stock
exchange requirement.

The Share Units, and any related Common Shares that may be delivered under the Plan, have not been
registered under the U.S. Securities Act of 1933, as amended, as of the effective date of the Plan
and neither Nortel Corporation nor Nortel Limited has any obligation to register such Share Units
or Common Shares. Accordingly, the Common Shares delivered under the Plan may not be offered or
sold in the United States unless they become registered or an exemption from registration is
otherwise available.

11. RIGHTS OF PARTICIPANTS

Except as specifically herein provided or provided in the Election Form and Agreement, no Eligible
Director, Participant or other person shall have any claim or right to any Common Shares to be
delivered in settlement of Share Units credited pursuant to the Plan. Nothing herein shall provide
any Participant with an entitlement or right to be elected or appointed a director of Nortel
Limited.

Under no circumstances shall Share Units be considered Common Shares nor shall they entitle any
Participant to exercise voting rights or any other rights attaching to the ownership or control of
Common Shares, nor shall any Participant be considered the owner of any Common Shares to be
delivered under the Plan until after the date of purchase of such Common Shares for the account of
such Participant as specifically provided herein.

12. DEATH OF PARTICIPANT

In the event of a Participant’s death, any and all Share Units then credited to the Participant’s
account shall become payable to a dependant or relation of the Participant designated in writing by
the Participant and provided to Nortel Limited, failing which to the Participant’s legal
representative.

13. COMPLIANCE WITH APPLICABLE LAWS

Any obligation of Nortel Limited with respect to Common Shares pursuant to the terms of the Plan is
subject to compliance with all applicable laws, regulations, rules, orders of governmental or
regulatory authorities and the requirements of any stock exchange upon which shares of Nortel
Corporation are listed or traded. Should Nortel Limited, in its sole discretion, determine that it
is not desirable or feasible to provide for the settlement of Share Units in Common Shares pursuant
to Section 8 hereof, including by reason of any such laws, regulations, rules, orders or
requirements, such obligation shall be satisfied by means of a cash payment by Nortel Limited equal
to the Market Value of the Common Shares that would otherwise be delivered to a Participant in
settlement of Share Units on the Settlement Date (less any applicable tax withholdings or required
source deductions). Each Participant shall comply with all such laws, regulations, rules, orders
and requirements, and shall furnish Nortel Limited with any and all information and undertakings as
may be required to ensure compliance therewith.

 

 

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14. WITHHOLDING TAXES

Nortel Limited may withhold from any payment to or for the benefit of a Participant any amount
required to comply with the applicable provisions of any federal, provincial, state or local law
relating to the withholding of tax or the making of any other source deductions, including on the
amount, if any, included in income of a Participant and may adopt and apply such rules and
regulations that in its opinion will ensure that Nortel Limited will be able to so comply.

15. TRANSFERABILITY

The rights or interests of a Participant under the Plan, including the Share Units, shall not be
assignable or transferable, otherwise than in case of death as set out in the Plan, and such rights
or interests shall not be encumbered.

16. ALTERATION OF NUMBER OF SHARE UNITS SUBJECT TO THE PLAN

In the event that:

	(a)	 	a dividend shall be declared upon the Common Shares or other securities of Nortel Corporation
payable in Common Shares or other securities of Nortel Corporation (other than a dividend
which may be paid in cash or in Common Shares at the option of the shareholder);

	(b)	 	the outstanding Common Shares shall be changed into or exchanged for a different number or
kind of shares or other securities of Nortel Corporation or of another corporation, whether
through an arrangement, plan of arrangement, amalgamation or other similar statutory
procedure, or a share recapitalization, subdivision or consolidation or otherwise;

	(c)	 	there shall be any change, other than those specified in paragraphs (a) and (b) of this
Section 16, in the number or kind of outstanding Common Shares or of any shares or other
securities into which such Common Shares shall have been changed or for which they shall have
been exchanged; or

	(d)	 	there shall be a distribution of assets or shares to shareholders of Nortel Corporation out
of the ordinary course of business,

then, if the Board shall in its sole discretion determine that such change equitably requires an
adjustment in the number of Share Units credited to Participants pursuant to the Plan but not yet
settled and cancelled, and/or a substitution, for each Common Share, of the kind of securities into
which each outstanding Common Share has been so changed or exchanged and/or any other adjustment,
then such adjustment and/or substitution shall be made by the Board and shall be effective and
binding for all purposes.

In the case of any such substitution, change or adjustment as provided for in this Section 16, the
variation shall generally require that the dollar value of the Share Units then recorded in the
Participant’s account prior to such substitution, change or adjustment will be proportionately and

 

 

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appropriately varied so that it shall be approximately equal to such dollar value after the
variation.

No adjustment provided for in this Section shall entitle a Participant to receive a fractional
Common Share or other security and the total adjustment with respect to each Share Unit shall be
limited accordingly.

In the event that, at the time contemplated for the purchase of Common Shares under the Plan, there
is no public market for the Common Shares or for securities substituted therefor as provided by
this Section 16, the obligations of Nortel Limited under the Plan shall be met by a payment in cash
on the Settlement Date in such amount as is reasonably determined by the Committee to be fair and
equitable in the circumstances, but shall always be established in relation to the fair market
value of a Common Share within the period that begins one year before the Resignation Date and ends
on the Settlement Date.

17. UNSECURED PLAN

Unless otherwise determined by the Committee, the obligations of Nortel Limited under the Plan
shall be general unsecured obligations of Nortel Limited.

18. EFFECTIVE DATE OF THE PLAN

The Plan was originally effective with respect to certain fees payable to Eligible Directors on or
after June 30, 1998. The Plan was amended and restated on April 27, 2000, effective as of May 1,
2000; was suspended on May 25, 2000, effective April 27, 2000; was amended and restated on June 9,
2000, effective May 1, 2000; was amended and restated and the suspension lifted on January 24,
2002, effective January 1, 2002; and was amended and restated on May 29, 2003. The Plan was
amended and restated on December 18, 2003, effective immediately. The Plan was amended on June 29,
2005 and restated effective June 29, 2005. The Plan was amended on December 7, 2005 and restated
effective June 29, 2005.

19. AMENDMENTS TO, SUSPENSION OR TERMINATION OF, THE PLAN

The Board may from time to time amend, suspend or terminate, in whole or in part, the Plan or amend
the terms of Share Units credited in accordance with the Plan. If any such amendment will
materially adversely affect the rights of a Participant with respect to Share Units credited to
such Participant or under any Election Form and Agreement, the written consent of such Participant
to such amendment shall be obtained. Notwithstanding the foregoing, the obtaining of the written
consent of any Participant to an amendment which materially adversely affects the rights of such
Participant with respect to any credited Share Unit or under any Election Form and Agreement shall
not be required if such amendment is required to comply with applicable laws, regulations, rules,
orders of governmental or regulatory authorities or the requirements of any stock exchange on which
shares of Nortel Corporation are listed or traded.

If the Board terminates the Plan, Share Units previously credited to Participants shall, at the
discretion of the Board, either (a) become immediately payable in accordance with the terms of

 

 

13

the Plan in effect at such time, or (b) remain outstanding and in effect and settled subject to and
in accordance with their applicable terms and conditions.

20. GOVERNING LAW

Consent to membership on the Board and the resulting participation in the Plan by any Participant
shall be construed as acceptance of the terms and conditions of the Plan by the Participant and as
to the Participant’s agreement to be bound thereby. The Plan shall be construed in accordance with
and governed by the laws of the Province of Ontario.exv10w75

 

Exhibit 10.75

CONFIDENTIAL-SPECIAL HANDLING

February 21,
2006

Mr. Pascal Debon

15190 Prestonwood Blvd.

Dallas, Texas 75248

U.S.A.

Dear Pascal:

This letter (“Agreement”) records the arrangements between you and Nortel Networks Inc.
(“Corporation”) concerning the cessation of your employment. The Agreement shall bind and inure to
the benefit of each party and their respective heirs, successors and assigns.

	1.	 	As used in this Agreement, the term “Corporation” shall mean Nortel Networks Inc., its
parent, subsidiaries, affiliates (including, but not limited to, Nortel Networks Corporation,
Nortel Networks Limited, Nortel Networks UK Limited and Nortel Networks S.A.), predecessors,
successors and assigns and all past and present officers, directors, employees and agents (in
their individual and representative capacities only) of Nortel Networks Inc., its parent,
subsidiaries, affiliates, predecessors, successors and assigns, in every case individually and
collectively.
	 
	2.	 	Your employment relationship with the Corporation ceased on December 23, 2005 (“Employment
Termination Date”). It is agreed and understood that as of the close of business on December
23, 2005, you were no longer expected to perform any duties or responsibilities on behalf of
the Corporation. All previous external responsibilities which you had were or will be assumed
by a person designated by the Corporation, including any participation in industry or other
associations representing the Corporation. You ceased to act as an Officer and/or Director of
any and all entities referred to in paragraph 1, above, as of Employment Termination Date, and
the Corporation has taken steps to remove you from all such positions.
	 
	3.	 	You acknowledge that you received this document on or about December 21, 2005, and have been
provided twenty-one (21) days commencing on or about December 21, 2005, at your discretion, to
consider this Agreement. In addition, you shall have seven

William J. Donovan

Senior-Vice President

Human Resources

Nortel

8200 Dixie Road Suite 100 Brampton ON Canada L6T 5P6 T 905.863.1100 F 905.863.8412 E billdono@nortel.com

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 2
	 	

(7) calendar days following your execution of this document to revoke this Agreement by written
notice. To be valid, the letter of revocation must be received by William J. Donovan (“me”)
at Nortel Networks, 4006 E. Chapel Hill-Nelson Highway, Research Triangle Park, North Carolina
27709, not later than the close of business seven (7) calendar days after you sign this
Agreement. The terms and conditions of this Agreement shall become operative seven (7) days
after you execute and deliver this Agreement to me, provided that you are in compliance with
all terms and conditions of this Agreement and that you have not revoked this Agreement
pursuant to the provisions set forth above in this paragraph.

	4.	 	The Corporation will provide you the applicable payments and benefits as set forth in
paragraphs 5 and 8 of this Agreement. Conditional only upon (i) your compliance with all
terms and conditions of this Agreement; and (ii) you not revoking this Agreement pursuant to
paragraph 3 above, the Corporation will:

	 	(a)	 	pay you the equivalent of two (2) years’ base salary as a salary continuance
benefit commencing with a lump sum payment of Two Hundred Ninety-Four Thousand Nine
Hundred Ninety-Nine and 90/100 ($294,999.90) United States Dollars (“Dollars”) to be made on June 24, 2006 and equal bi-weekly payments
thereafter of Twenty-Two Thousand Six Hundred Ninety-Two and 30/100 ($22,692.30)
Dollars through and including December 28, 2007 (collectively, “Severance Pay”).
The period during which your Severance Pay is calculated, from December 24, 2005
through December 28, 2007, is referred to in this Agreement as the “Severance
Period”. Your Severance Pay is an individually negotiated amount to be paid in a
different manner than and in lieu of any severance allowance benefit payable under
the Nortel Networks Enhanced Severance Allowance Plan. By this Agreement you
expressly waive any right to receive a benefit under the terms of the Nortel
Networks Enhanced Severance Allowance Plan;
	 
	 	(b)	 	allow you to elect to: (i) continue during the Severance Period, all group
life insurance (basic and optional employee and optional spouse and dependent), health
coverages (medical, dental, vision, hearing, Employee Assistance Program and Health
Care Reimbursement Account (“HCRA”) and AD&D coverage in which you and your covered
eligible dependents, if any, are enrolled on the Employment Termination Date pursuant
to the terms and conditions of such coverages; or (ii) revoke all such coverages. If
you elect (i), your coverages will continue at the active employee contribution rate,
which shall be deducted from Severance Pay set forth in paragraph 4(a). The
Corporation shall have the right to change coverages, upon notice provided to

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 3
	 	

you in
the same manner as to employees generally, only to the extent that it is generally
changing its coverages for senior executive employees occupying positions similar to
that you occupied in your most senior position with the Corporation. Upon termination
of coverages, only continued health coverage will be offered, as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for a period
generally extending for 18 months from your Employment Termination Date, minus the
period of coverage at active contribution rates during the Severance Period. If you
elect (ii), your life and AD&D coverages will terminate effective 12:01 a.m. on
January 1, 2006 and your health coverages, with the exception of HCRA, will terminate
at the end of the month in which your employment relationship ceases (December, 2005),
with an opportunity for continued health coverage under COBRA. If you decline the
opportunity to continue HCRA coverage under COBRA, only eligible expenses incurred on
or prior to the Employment Termination Date will be considered for reimbursement.
Irrespective if you select (i) or (ii) above, at the time your group life insurance
coverages terminate, you may convert appropriate coverages to applicable individual
policies. AD&D cannot be converted to an individual policy. Please make your
election in the space provided at the end of this Agreement concerning your
decision to elect or decline the benefits set forth in this paragraph 4(b);

	 	(c)	 	consider you ineligible for consideration for any future grant(s) of stock
options or Restricted Stock Units (RSUs). Stock options and RSUs previously granted
to you will continue to vest during the Severance Period in accordance with the
provisions of the plan under which the stock options or RSUs were granted and the
instrument of grant evidencing the grant. Your right, if any, to exercise any vested
Nortel Networks stock options or RSUs after the Employment Termination Date (including
during the Severance Period) will be determined in accordance with the provisions of
the stock option or RSU plan under which the stock options or RSUs were granted and
the instrument of grant evidencing the options or RSUs;
	 
	 	(d)	 	make available to you during the Severance Period, should you elect,
executive outplacement services to assist you in securing new employment and pay the
professional fees for such services as are reasonably incurred;
	 
	 	(e)	 	with respect to any monies or monetary equivalents to be paid hereunder, in
its reasonable discretion withhold appropriate amounts concerning any and all
applicable federal, state or local tax withholding;

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 4
	 	

	 	(f)	 	pay you, on June 24, 2006, 2007 and 2008, a lump sum amount equal to the
actual cost, not to exceed Ten Thousand ($10,000) Dollars per payment, of personal
income tax preparation by a service provider selected by the Corporation for the tax
years 2005, 2006 and 2007, respectively;
	 
	 	(g)	 	pay you, on June 24, 2006, a lump sum amount of Eight Thousand Eight Hundred
Forty-Nine and 10/100 ($8,849.10) Dollars for the cost of your housing and furniture
rental to the conclusion of the term of your existing lease on February 28, 2006 for
the apartment located at 15190 Prestonwood Blvd., Dallas, Texas 75248, with respect to
the months of January and February 2006;
	 
	 	(h)	 	arrange and pay during the Severance Period for the shipment of your
household goods from the apartment in Dallas to your permanent residence in France,
subject to the terms, limits and exclusions of the Nortel Networks International
Assignment Long-Term Program; and
	 
	 	(i)	 	pay you, on June 24, 2006, a lump sum amount equivalent to the portion of the
cost of your continued life insurance coverage, as described in Section 4(b), which
would have been paid by the Corporation for the period of January through June of
2006.

	5.	 	The following payments and benefits shall be provided to you by the Corporation, as
applicable, without the requirement that you sign and comply with this Agreement:

	 	(a)	 	you shall be eligible for applicable benefits, pursuant to the terms and
conditions of the Nortel Networks Pension Service Plan and the Supplementary Executive
Retirement Plan (SERP), calculated on a basis consistent with the estimate of benefits
dated as of December 22, 2005, provided by the Corporation and attached hereto as
Exhibit A;
	 
	 	(b)	 	you will be allowed to elect to: (i) continue applicable health coverages, as
required by COBRA, for a period generally extending for 18 months following the
Employment Termination Date from the Corporation; (ii) convert your group life
insurance to an individual policy without a medical examination within 31 days of the
termination of that coverage; and (iii) to commence coverage under the Nortel Networks
Retiree Medical Plan and the Nortel Networks Retiree Life Plan pursuant to the terms
and conditions of those plans;

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 5
	 	

	 	(c)	 	the Corporation will consider you ineligible for consideration for any future
grant(s) of stock options or RSUs. Your right, if any, to exercise any vested Nortel
Networks stock options or RSUs before, on or after the Employment Termination Date
will be determined in accordance with the provisions of the stock option or RSU plan
under which the stock options or RSUs were granted and the instrument of grant
evidencing the options or RSUs;
	 
	 	(d)	 	contributions made by you and any amounts that have vested in your Nortel
Networks Long-Term Investment Plan (“LTIP”) account will be maintained or distributed
pursuant to your direction(s) as permitted by the terms and conditions of the LTIP;
	 
	 	(e)	 	the Corporation will distribute any amounts in your account in the Nortel
Networks U.S. Deferred Compensation Plan (“NNDP”) pursuant to your directions(s) as
permitted by the terms and conditions of the NNDP;
	 
	 	(f)	 	the Corporation will pay you, on or before the next regular payroll date
following your execution of this Agreement, a lump sum amount of One Hundred Thirteen
Thousand Four Hundred Sixty-One and 52/100 ($113,461.52) Dollars, which is the
equivalent of 10 weeks of base salary representing your current accrued but unused
vacation benefit, with no further vacation accrual subsequent to Employment
Termination Date, offset by the amount of housing and furniture rental, with respect
to the apartment described in paragraph 4(g) above, for the months of January and
February 2006, which was paid by the Corporation on your behalf and will be deemed to
be repaid by you as of the date of this Agreement, and also offset by the portion of
the cost of your continued life insurance coverage, as described in Section 4(b),
which has or would have been paid by the Corporation for the period of January through
June of 2006, and which will be deemed to be paid by you for such period; and
	 
	 	(g)	 	any shares in your account in the Nortel Networks Stock Purchase Plan
(“NNSPP”) will be distributed to you. If your account has not been closed within 90
days of the Employment Termination Date, it will automatically be closed by Mourant
Equity Compensation Solutions and all shares will be sold at the current market value.

	6.	 	The parties accept the following additional obligations:

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 6
	 	

	 	(a)	 	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 thirty (30)
days after your execution of this Agreement.
	 
	 	(b)	 	You shall continue to maintain the confidentiality of all of the
Corporation’s trade secrets and confidential or 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 (whether or not a trade secret) relating to an
activity of the Corporation.
	 
	 	(c)	 	The parties agree that this Agreement and all the terms and conditions
expressed herein, is subject to either party’s right or obligation to disclose this
Agreement in accordance with applicable securities laws or as may be necessary to
enforce this Agreement.
	 
	 	(d)	 	Upon the occurrence of any contingency which may affect 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 and/or the
commencement of coverage under a new employer’s benefit plan(s), you shall, within ten
(10) days of such occurrence, give written notice to the Corporation of that event.
Such notice shall be sent in writing to me.
	 
	 	(e)	 	So long as you are receiving the payments and benefits set forth in paragraph
4, you shall be generally available, upon reasonable notice, to assist the Corporation
with any matters with which you are personally familiar. 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, but not including attorneys’ or other
professional fees incurred without the prior approval of the Nortel Networks
Corporation Chief Legal Officer; except that the Corporation acknowledges that
attorneys’ fees and associated expenses are reimbursable if the assistance you provide
is related to the subject matter of the Investigation and/or any Investigation
Indemnified Matter as defined below.
	 
	 	(f)	 	You have returned to the Corporation any and all property of the Corporation
that was in your possession and/or subject to your control, whether such

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 7
	 	

	 	 	 	material shall be written instruments or tapes in electronic and/or recorded
format.
	 
	 	 	 	The Corporation’s 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 the Corporation
is the property of the Corporation. Therefore, all information, (however recorded
or stored) (“Information”) in your possession and/or that you have created in the
course of your employment with the Corporation (whether or not currently in your
possession or control) is the property of the Corporation. “Information” does not
include copies in your possession of your records of employment and/or financial
dealings between you and the Corporation.
	 
	 	 	 	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. The
Corporation 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
took affirmative steps to preserve all Information in your possession, custody and
control (including information controlled by your assistant, if any), have left all
such Information in the possession and custody of the Corporation, and do not have
any Information in your possession or custody.
	 
	 	 	 	The Information will be used by the Corporation for general business purposes and
may also be provided by the Corporation to regulatory authorities in response to
their requests or disclosed in any relevant private litigation to which the
Corporation is a party. Also, the Information may be used by and provided to other
entities within the Nortel Networks group and/or the Corporation’s 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 the Corporation to Nortel Networks entities, third parties and
regulatory authorities within and outside of your geographic area for the purposes
set out above.

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 8
	 	

	 	 	 	The commitments of this section 6(f) shall not apply to documents previously
furnished to your counsel in connection with the Investigation as defined below,
and you agree that you and your counsel shall use such Information solely for the
purpose of representing you in connection with Investigation Indemnified Matters as
defined below and not for any other purpose, without the express written consent of
the Corporation.
	 
	 	(g)	 	You hereby agree that you shall not during the Severance Period whether on
your own behalf or jointly with others, and whether as an employee, director,
principal, agent, consultant or in any other capacity in competition with the
Corporation, be directly or indirectly (i) employed or engaged in, or (ii) perform
services in respect of, or (iii) be otherwise concerned with:

	 	(i)	 	the research into, development, manufacture, supply or
marketing of any product which is of the same or substantially similar type to
any product researched, or developed, or manufactured, or supplied, or
marketed by the Corporation during the twelve months immediately preceding the
Employment Termination Date; or
	 
	 	(ii)	 	the development or provision of any services (including but
not limited to technical and product support, or consultancy or customer
services) which are of the same or substantially similar type to any services
provided by the Corporation during the twelve months immediately preceding the
Employment Termination Date;

	 	 	 	without the prior written consent of the Corporation, which consent shall not be
unreasonably withheld;
	 
	 	 	 	provided that, the provisions of this paragraph shall apply only in respect of
products or services with which you were either personally concerned or for which
you were responsible while employed by the Corporation during the twelve months
immediately preceding the Employment Termination Date; and
	 
	 	 	 	provided further that, the provisions of this paragraph shall not restrict you from
accepting employment with a company or other entity that provides products or
services that are in competition with products or services offered by the
Corporation, so long as you are not in the course of such employment during the
Severance Period involved in activities related to such competitive products or
services with which you were either personally concerned or for

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 9
	 	

	 	 	 	which you were responsible while employed by the Corporation during the twelve
months immediately preceding the Employment Termination Date.
	 
	 	 	 	You hereby agree that you shall not for the Severance Period whether on your own
behalf or in conjunction with or, on behalf of any other entity, whether as an
employee, director, principal, agent, consultant or in any other capacity directly
or indirectly, for the purpose of providing or attempting to provide products or
services that compete with products or services offered by the Corporation as of
the Employment Termination Date, (i) solicit or, (ii) assist in soliciting, or
(iii) accept, or (iv) facilitate the acceptance of, or (v) deal with, customers or
prospective customers:

	 	(i)	 	with whom you had personal contact or dealings on behalf of
the Corporation during the twelve months immediately preceding the Employment
Termination Date; or
	 
	 	(ii)	 	for whom you were, in a client-management capacity on behalf
of the Corporation, directly responsible during the twelve months immediately
preceding the Employment Termination Date,

	 	 	 	without the prior written consent of the Corporation, which consent shall not be
unreasonably withheld.
	 
	 	 	 	You hereby agree that, you will not for the Severance Period either on your own
account or in conjunction with or on behalf of any other person, company, business
entity, or other organization and whether as an employee, principal, agent,
consultant or in any other capacity directly or indirectly (i) induce, or (ii)
solicit, or (iii) entice or (iv) procure, any person who is an employee of the
Corporation to leave the Corporation’s or any associated company’s employment (as
applicable) where that person is an employee of the Corporation on the Employment
Termination Date;
	 
	 	 	 	provided that, this provision shall neither (i) prohibit you from hiring, or
causing an organization for which you perform services to hire, any person who
initially approaches you and/or such organization to inquire about employment
without having been solicited by you to do so, nor (ii) be construed to apply to
the placement of general advertisements for employment on websites, in print
publications or in other appropriate media.

 

 

			
	Mr. Pascal Debon
February 21, 2006
Page 10
	 	

	 	(h)	 	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 on the Employment
Termination Date. Notwithstanding the fact that you 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 were required to
amend your insider profile within 10 days of your Employment 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.

	7.	 	You agree to complete such documentation/forms and paperwork necessary to commence benefits
under paragraphs 4. or 5. of this Agreement. All company benefits not expressly extended to
you pursuant to and/or preserved by, this Agreement shall be terminated effective 12:01 a.m.,
on the day after the Employment Termination Date.
	 
	8.	 	Regardless of whether you comply with this Agreement:

	 	(a)	 	The Corporation shall indemnify you, and advance any reasonable legal fees
and expenses, to the extent permitted by, and in accordance with section 124 of the
Canada Business Corporations Act (the “CBCA”) and the Corporation’s By-Laws (the
“By-Laws”). You shall repay such fees and expenses if and to the extent it is
determined that you do not fulfill the conditions set forth in subsection 124(3) of
the CBCA or the By-Laws.
	 
	 	(b)	 	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 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

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 11
	 	

	 	 	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 non-normal course defense costs without obtaining the Corporation’s prior
consent, which consent will not be unreasonably withheld.

	 	(c)	 	With respect to the subject matter of (1) the investigation being conducted
by the United States Securities and Exchange Commission (“SEC”) pursuant to formal
order of private investigation in In the Matter of Nortel Networks Corporation
(SEC File No. H-9799); (2) the related investigation being conducted by the
Ontario Securities Commission; and (3) any other investigation by any law enforcement
authority, governmental body or self-regulatory organization in connection with any
fact, circumstance, situation, transaction, event or other source of liability related
to the subject matter referenced in the immediately foregoing items (1) and (2) or
referenced in the Corporation’s October 23, 2003 8K filing with the SEC (all of the
foregoing, collectively, the “Investigation”), you have retained separate counsel
independent of any duty to the Corporation (Latham & Watkins LLP and Fasken Martineau
DuMoulin LLP) and the Corporation will continue to advance monies to pay your
reasonable legal fees and expenses associated with the Investigation and all
proceedings such as may arise from it (collectively, the “Investigation Indemnified
Matters”). For clarification, Investigation Indemnified Matters include civil
litigation of related subject matter. The Corporation acknowledges that the
requirement set forth in this paragraph not to settle any Matter without the
Corporation’s prior consent does not apply to any Investigation Indemnified Matters.
The Corporation’s determination to advance such reasonable legal fees and expenses is
subject to section 124 of the CBCA and the By-Laws and you shall repay such fees and
expenses if it is determined that you do not fulfill the conditions set forth in
subsection 124(3) of the CBCA or the By-Laws. The Corporation will also timely
provide to your counsel reasonable access to or copies of any and all documents you
generated and/or received during the time period covered by the Investigation, and/or
as are relevant to any Investigation Indemnified Matter, as your counsel reasonably
requests.

	9.	 	With the exception of the Application filed in Ontario Superior Court of Justice in the
matter of Indiana Electrical Workers Pension Trust Fund IBEW and Laborers 100 and 397 Pension
Fund v. Nortel Networks Corporation, the Corporation represents that it has no knowledge as of
February 21, 2006 of any claims or legal action in favor of the Corporation against you in any
forum, whether for legal, equitable or administrative relief, and further represents that it
has no present intention to bring

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 12
	 	

	 	 	any such claims. The Corporation further agrees that in the event the Corporation brings
any such legal action, other than to enforce the terms of this Agreement, the release of
claims given by you in paragraph 10. of this Agreement shall be null and void.

RELEASE

	10.	 	IN CONSIDERATION OF THE FOREGOING PAYMENTS AND BENEFITS DETAILED ABOVE, FOR WHICH YOU
WOULD OTHERWISE BE INELIGIBLE, YOU HEREBY FULLY AND UNCONDITIONALLY RELEASE AND FOREVER
DISCHARGE THE CORPORATION (EXCEPT FOR THE PROMISES AND COMMITMENTS CONTAINED OR PRESERVED
HEREIN) TO THE EXTENT PERMITTED BY LAW, FROM ANY AND ALL CLAIMS ARISING FROM OR CONNECTED WITH
THE EMPLOYEE’S EMPLOYMENT WITH THE CORPORATION OR THE TERMINATION THEREOF FOR SALARY,
INCENTIVE COMPENSATION, VACATION PAY, SEVERANCE PAY UNDER THE NORTEL NETWORKS EXECUTIVE
MANAGEMENT TEAM SEVERANCE ALLOWANCE PLAN, NORTEL NETWORKS ENHANCED SEVERANCE ALLOWANCE PLAN,
NORTEL NETWORKS CORPORATION SPECIAL RETENTION PLAN, COMMISSIONS, PENSION OR OTHER BENEFITS OR
OTHER COMPENSATION AND PERQUISITES AND ANY AND ALL REAL OR PRETENDED CLAIMS, CAUSES OF ACTION,
OR DEMANDS ARISING FROM OR CONNECTED WITH THE EMPLOYEE’S EMPLOYMENT WITH THE CORPORATION OR
THE TERMINATION THEREOF,
INCLUDING, WITHOUT LIMITATION, THOSE FROM RIGHTS UNDER ANY FEDERAL, STATE, AND LOCAL LAW,
INCLUDING, WITHOUT LIMITATION, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT
(“WARN”) AND THOSE PROHIBITING DISCRIMINATION ON ANY BASIS, INCLUDING SEX, AGE, RELIGION,
SEXUAL ORIENTATION, DISABILITY, RACE, NATIONAL ORIGIN, AS MAY BE PROHIBITED UNDER SUCH LAWS
AS THE AGE DISCRIMINATION ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT (OWBPA),
THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT, THE EQUAL PAY ACT AND
THE FAMILY AND MEDICAL LEAVE ACT, INCLUDING ANY AMENDMENTS TO THOSE LAWS (INCLUDING, BUT
NOT LIMITED TO, YOUR RIGHT TO MAKE A CLAIM IN YOUR OWN RIGHT OR THROUGH A SUIT BROUGHT BY
ANY THIRD PARTY ON YOUR BEHALF) OR ANY COMMON LAW CLAIMS ARISING FROM OR CONNECTED WITH THE
EMPLOYEE’S EMPLOYMENT WITH THE CORPORATION OR THE TERMINATION THEREOF OF ANY KIND,
INCLUDING, BUT NOT LIMITED TO, CONTRACT,

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 13
	 	

TORT, AND PROPERTY RIGHTS INCLUDING, BUT NOT LIMITED TO, BREACH OF CONTRACT, FRAUD, DECEIT,
NEGLIGENCE, NEGLIGENT MISREPRESENTATION, DEFAMATION, NEGLIGENT SUPERVISION, BREACH OF
PRIVACY, MISREPRESENTATION, WRONGFUL TERMINATION, INVASION OF PRIVACY, INTENTIONAL OR
NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS, BREACH OF FIDUCIARY DUTY, VIOLATION OF PUBLIC
POLICY AND ANY OTHER COMMON LAW CLAIM OF ANY KIND WHATSOEVER AS OF THE DATE OF THIS
AGREEMENT WHICH YOU EVER HAD OR NOW HAVE, DIRECTLY OR INDIRECTLY, BASED UPON ANY FACT,
MATTER, EVENT OR CAUSE, WHETHER KNOWN OR UNKNOWN, ARISING OUT OF OR RELATING TO YOUR
EMPLOYMENT BY THE CORPORATION AND YOUR SEPARATION THEREFROM, OR YOUR RELATIONSHIP WITH THE
CORPORATION OR THE TERMS OF ANY WRITTEN OR ORAL EMPLOYMENT ARRANGEMENTS OR THE LIKE THAT
YOU MAY HAVE ENTERED INTO WITH THE CORPORATION. THIS AGREEMENT MAY NOT BE USED TO
INTERFERE WITH YOUR RIGHT TO FILE A CHARGE OR PARTICIPATE IN AN INVESTIGATION OR PROCEEDING
CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION OR ANY OTHER APPROPRIATE AGENCY.
HOWEVER, YOU UNDERSTAND AND AGREE THAT THE CORPORATION WILL USE THIS AGREEMENT AS A DEFENSE
TO ANY SUCH CHARGE YOU FILE, INVESTIGATION OR PROCEEDING IN WHICH YOU PARTICIPATE, OR
REMEDY WHICH YOU SEEK. YOU AGREE 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 AGREEMENT
AND THAT YOU UNDERSTAND ALL OF ITS TERMS AND EXECUTE IT VOLUNTARILY WITH FULL KNOWLEDGE OF
ITS SIGNIFICANCE AND THE CONSEQUENCES THEREOF. FURTHER, YOU ACKNOWLEDGE THAT YOU HAVE HAD
AN ADEQUATE OPPORTUNITY TO REVIEW AND CONSIDER THE TERMS OF THIS AGREEMENT, INCLUDING AT
YOUR DISCRETION, THE RIGHT TO DISCUSS THIS AGREEMENT WITH LEGAL COUNSEL OF YOUR CHOICE.
YOU HEREBY ACKNOWLEDGE THAT YOU INTEND TO GRANT TO THE CORPORATION A FULL AND FINAL RELEASE
AS SET FORTH HEREIN. FINALLY, YOU UNDERSTAND AND AGREE THAT THE CORPORATION MAY DEDUCT
FROM ANY PAYMENT PROVIDED TO YOU UNDER THIS AGREEMENT ANY AMOUNTS (INCLUDING, BUT NOT
LIMITED TO, ANY ADVANCE, LOANS, OVERPAYMENT, TAX

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 14
	 	

EQUALIZATION PAYMENTS OR OTHER MONIES) THAT THE CORPORATION DETERMINES IN GOOD FAITH THAT
YOU OWE THE CORPORATION. IN THE EVENT THAT THE CORPORATION MAKES ANY DEDUCTIONS IN
ACCORDANCE WITH THE PRECEDING SENTENCE, THE CORPORATION SHALL PROMPTLY PROVIDE TO YOU, UPON
YOUR REQUEST, AN ACCOUNTING OF THE BASIS FOR THE DECISION AND THE AMOUNTS WITHHELD.

	11.	 	This Agreement constitutes the entire understanding of the parties with respect to your prior
employment, including termination thereof, and there are no promises, understandings or
representations other than those expressly set forth or preserved herein. This Agreement may
be modified only with a written instrument duly executed by you and the Corporation.
	 
	12.	 	This Agreement shall be governed by the laws of Texas without regard to any provisions
concerning conflict of laws. This Agreement may be delivered by facsimile and executed in
counterparts, all of which, taken together, shall constitute one and the same original
instrument.
	 
	13.	 	The parties agree that should any provision of this Agreement be declared or be determined by
any court to be illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby and said illegal or invalid part, term, or provision shall be
deemed not to be a part of this Agreement.
	 
	14.	 	Nothing in this Agreement shall be construed to prevent the Corporation from providing you or
your prospective employer, as applicable, with an appropriate positive reference or letter of
recommendation relating to your employment with the Corporation.
	 
	15.	 	Nothing in this Agreement shall affect the rights and obligations of any of the parties to
the Escrow Agreement, dated March 1, 2005, by and among the signatory Officers, Nortel
Networks Corporation, and Computershare Trust Company of Canada.
	 
	16.	 	This agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, with the same effect as if each party had signed the same document.
All such counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument. Telecopied or scanned signature pages shall be deemed
an original and shall be sufficient to bind the parties to this Agreement.

 

 

			
	Mr. Pascal Debon

February 21, 2006

Page 15
	 	

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

Yours truly,

/s/ William J. Donovan

William J. Donovan

Senior Vice President,

Human Resources

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement as set
forth below.

	 	 	 	 	 
	 

	 	 	 	PLEASE INDICATE BELOW YOUR

ELECTIONS REGARDING:
	 
	 	 	 	 
	 

	 	•
	 	Insurance Benefits 
	 

	 	 	 	I elect the provisions of (CIRCLE ONE)

paragraph
4(b)(i) or 4(b)(ii)

	 	 	 	 	 
	 

	 	PD
 

	 	 
	 

	 	INITIALS	 	 

	 	 	 	 	 	 	 	 	 	 	 
	NORTEL NETWORKS INC.	 	 	 	PASCAL DEBON	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ William J. LaSalle	 	 	 	/s/ P. Debon	 	 
	 	 	 	 	 	 	 	 	 
	 
	Title:

	 	Secretary
	 	 	 	Date:

	 	22/Feb/06

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]