January 18, 2006 Dear Mike:

 

         
(NORTEL LOGO)
  Exhibit 10.72   (LOGO)
January 18, 2006
Mr. Mike S. Zafirovski
1291 North Green Bay Road
Lake Forest, Illinois 60045

Dear Mike:
This letter will confirm our discussions concerning the terms and conditions on which NortelNetworks Corporation and/or Nortel Networks Limited (collectively or individually “Nortel”) willindemnify you, net of any tax benefits received by you, for the loss of certain of your severancebenefits provided for in the Motorola Separation Agreement (as defined below) by reason of youragreement to settle the legal proceeding commenced by Motorola, Inc. (“Motorola”) against you inthe Circuit Court of Cook County, Illinois, County Department, Chancery Division on October 18,2005 (the “Motorola Proceeding”) in response to your acceptance of Nortel’s offer of employment asthe president and chief executive officer of Nortel.
In consideration of the foregoing, Nortel hereby agrees with you as follows:
1.   Nortel will indemnify and hold you harmless for the full amount of your Indemnifiable Lossesnet of any Tax Benefits (as defined below).
 
    For the purposes of this agreement, “Indemnifiable Losses” means the $11.5 million which youpaid to Motorola pursuant to the terms of the Settlement Agreement.
 
    “Motorola Separation Agreement” means the Separation and Release Agreement between you andMotorola dated February 15, 2005.
 
    “Settlement Agreement” means the agreement between Motorola, Nortel and you dated October31, 2005.
         
2.
  (a)   If Nortel is required to withhold or deduct any amount for or on account of Taxes (asdefined below) from any payment to you on account of Indemnifiable Losses pursuant to Section1 hereof, Nortel will pay to you such additional amounts (the “Additional Amounts”), net ofany Tax Benefits, as may be necessary so that the net amount received by you (including theAdditional Amounts) after such withholding or deduction
Gordon A.Davies
General Counsel – Corporate
and Corporate Secretary
Nortel
8200 Dixie Road Suite 100 Brampton Ontario Canada L6T 5P6 T 905.863.1144 (ESN 333) F905.863.8386
nortel.com




 


 

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      will not be less than the amount youwould have received under Section 1 hereof if such Taxes had not been withheld or deducted,net of any Tax Benefits.
  (b)   Nortel will also indemnify and hold you harmless for:
  (i)   the full amount of any Taxes, net of any Tax Benefits, leviedor imposed and paid by you in connection with the receipt by you of any paymenton account of Indemnifiable Losses pursuant to Section 1 hereof to the extentsuch Taxes exceed the Additional Amounts paid to you pursuant to Section 2(a)hereof, and
 
  (ii)   any Taxes levied or imposed and paid by you with respect to anypayments made to you under clause (i) above and under this clause (ii).
  (c)   For the purposes of this agreement:
 
      “Tax Benefits” means a reduction in Taxes payable by you as a resultof a deduction in computing wages or taxable income, or a credit against Taxespayable by you, to which you are entitled as a result of a payment made by youto Motorola pursuant to the terms of the Settlement Agreement in respect to theIndemnifiable Losses. For greater certainty, Tax Benefits include but are notlimited to the following: i) the net reduction in taxes payable as a result ofyour Motorola W-2 wages being reduced by the amount of your repayment toMotorola (which was funded by Nortel), ii) the reduction in current, past orfuture taxes that may be created as a result of repayments you make to Nortelof other Tax Benefits (including non-operating losses created) and iii) foreigntax credits against current, future or past taxes payable, created fromCanadian taxes paid by Nortel as a result of the Indemnifiable Lossreimbursement to you.
 
      “Taxes” means all United States, Canada and other nations’ federal, provincial,state, local and foreign taxes, duties, assessments, social security taxes orgovernmental charges imposed or levied in respect to the relevant amounts referredto in this Section 2.
3.   Nortel further agrees to pay or reimburse you for the reasonable legal fees and expensesincurred by you in connection with the Motorola Proceeding and for the negotiation andpreparation of the Settlement Agreement and this agreement, and for advice and representationsince October 31, 2005 regarding your activities for Nortel under the Settlement Agreement.
 
4.   This agreement and the benefit of the obligations of Nortel hereunder shall inure to thebenefit of you, your heirs, estate, executors and administrators and shall be binding uponNortel’s successors and assigns.

 


 

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5.   This agreement shall in all respects be governed by and construed in accordance with the lawsof the Province of Ontario and the federal laws of Canada applicable therein, and alldisputes, claims or matters arising out of or under it shall be governed by such laws.
 
6.   All dollar amounts used herein are expressed in United States dollars.
If the foregoing is acceptable, please indicate your agreement to the above terms and conditions bysigning the enclosed copy of this letter and returning it to me.
Yours truly,
Nortel Networks Corporation
Nortel Networks Limited
         
By:
        /s/ Gordon A. Davies    
 
 
 

Gordon A. Davies

   
 
  General Counsel – Corporate and    
 
  Corporate Secretary    
The foregoing is accepted and agreed to by me this 26 day of January, 2006.
           
SIGNED AND DELIVERED
in the presence of
 

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/s/ D. L. Warnock

 

                Witness

  /s/ M. S. Zafirovski

 

                Mike Zafirovski