Acknowledgement of Tax Gross-Up Extension Agreement between Nortel Networks Limited and Nicholas J. DeRoma

Summary

This agreement is between Nortel Networks Limited and Nicholas J. DeRoma. It confirms that Nortel will continue to adjust ("gross-up") Mr. DeRoma's base salary and annual incentive award to offset additional taxes, ensuring his after-tax compensation matches that of a Connecticut resident. The gross-up is capped at 9% of his base salary and incentive award, effective from June 1, 2000, to March 1, 2002. Nortel will review this arrangement annually to decide if it will continue.

EX-10.4 6 t06646ex10-4.txt ACKNOWLEDGEMENT EFFECTIVE AS OF JUNE 1, 2000 Exhibit 10.4 NORTEL NETWORKS LIMITED 8200 Dixie Road, Suite 100 Brampton, Ontario L6T 5P6 Canada February 28, 2002 PERSONAL AND CONFIDENTIAL Nicholas J. DeRoma, Esq. One Chedington Place, Suite 8D North York, Ontario M4N 3R4 Dear Nick: Reference is made to your employment agreement with Nortel Networks Limited (formerly Northern Telecom Limited, the "Company") dated April 27, 1997 (the "Employment Agreement"). This will confirm that the Company has extended the terms of Section 3 of the Employment Agreement so that the Company will continue to "gross-up" your base salary and annual incentive award such that your after-tax compensation will be the same as if you were a resident of the State of Connecticut to an annual maximum of nine percent of your base salary and annual incentive award (the "Gross-up"). The Gross-up will be effective from June 1, 2000 until March 1, 2002. The Company will review the payment of the "Gross-up" on an annual basis and will determine whether the "Gross-up" shall continue for the next calendar year. Yours truly, "WILLIAM J. DONOVAN" William J. Donovan Senior Vice-President, Human Resources I Acknowledge and Agree to the terms and conditions as outlined in this document. "NICHOLAS J. DEROMA" ------------------------------------- Nicholas J. Deroma