NORTEL NETWORKS SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN CONTENTS

EXHIBIT 10.2

FINAL – October 23, 2002

NORTEL NETWORKS

SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN

CONTENTS

NORTEL NETWORKS
SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN

1.  PURPOSE OF PLAN

     The Nortel Networks Supplementary Executive Retirement Plan, together with other employer sponsored retirement plans, is designed to provide eligible Executives of Nortel Networks with retirement benefits.

2.  DEFINITIONS

     In the Plan,

     “Accumulated Percentage” means, in respect of the determination of the SERP III Benefit pursuant to section 4(c) hereof, the sum of Percentage Credits attributed to the Executive’s Actual Years of Service.

     “Actual Years of Service” means years and months of service with Nortel Networks, including periods of extended salary continuance paid as a severance benefit, measured from the date that the Executive becomes a member of the Canadian Pension Plan (including any additional service credits that may be granted due to service bridging) or, if the Executive is first hired by a U.S. subsidiary or affiliate of Nortel Networks and is a member of the U.S. Pension Plan or the Canadian Pension Plan, the Executive’s employment date in the U.S. Any part of a month of service will be considered a full month for purposes of this definition.

     “Actuarial Equivalent” means a benefit that has the equivalent value of another Total Retirement Benefit payable under the Plan, determined by using the actuarial tables and other methods and assumptions that are used by the Corporation in actuarial equivalency determinations under the Pension Plan under which an Executive is or was a Participant, provided that the interest assumption on which the calculation of equivalent value is based shall be six percent (6%) compounded annually.

     For greater certainty, in determining the Actuarial Equivalent lump sum of a Total Retirement Benefit under the Plan as at any particular time, the fact that the Plan does not benefit from the same favorable tax treatment as is afforded to the Pension Plan shall not be taken into account.

     The Actuarial Equivalent of any Total Retirement Benefit or part thereof, the payment of which is within the discretion of the Corporation, shall be deemed to be nil.

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     “Age + Service Points” means the sum of the Executive’s age and Service Points as of the determination date. “Age” for this purpose is the age on the Executive’s birthday during the calendar year that contains the determination date.

     “Board of Directors” means the Board of Directors of Nortel Networks Limited;

     “Capital Accumulation and Retirement Program” means the employee benefit program established as of May 1, 2000 by Nortel Networks for certain of its employees in the United States and Canada. Such program includes options concerning pension benefit plans for such employees. The options available for selection under that program are referred to as the “traditional”, “balanced” and “investor” options (“Traditional Option”, “Balanced Option”, and “Investor Option”).

     “Committee” means the Joint Leadership Resources Committee of the Board of Directors or its predecessors and successors;

     “Corporation” means Nortel Networks Limited or its successors;

     “Earnings” of an Executive for a particular month means the base pay of the Executive for that month, plus the incentive award or bonus, if any, granted to the Executive for such month under the SUCCESS Plan or one of its predecessors (including the Senior Management Incentive Award Plan or the Executive Management Incentive Plan) and commissions. Bonuses and/or commissions are taken into account in the year in which they are paid or would have been paid if the Executive had not elected a deferral of such payment.

     The inclusion of bonuses and commissions in the definition of Earnings is subject to the following limitations:

     With respect to calculation of a SERP I Benefit under section 4(a) hereof for an Executive:

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     With respect to calculation of a SERP II or III Benefit under section 4 hereof for an Executive who was classified as a Band 12 or higher under the Nortel Networks employment classification system as of December 31, 1998 or whose base salary is at least equal to either one of the following table amounts as of the corresponding stated date, then one hundred percent (100%) of the bonus or commission shall be included in Earnings. (Amounts in the table are stated in the currency of the Executive’s country of employment at the date indicated). Otherwise, then fifty percent (50%) of the bonus or commission shall be included in Earnings:

     However, the bonus or commission will not be included for a given year to the extent that it exceeds sixty percent (60%) of the final base pay of the Executive effective as of the last day of that calendar year.

     “Excess Plan Benefit” means the annual benefit payable upon Retirement to the Executive under the pension benefit plan that pays the difference between the amount determined under the applicable formula under the Pension Plan that applies to the Executive and the actual amount paid to the Executive under such Pension Plan after taking into consideration regulatory restrictions on maximum amounts that may be paid from such Pension Plan. For U.S. Executives, such pension benefit plan is the Nortel Networks Restoration Plan. For Canadian Executives, such pension benefit plan is the Nortel Networks Excess Plan.

     “Executive” means an employee of Nortel Networks who is a participant in the Plan pursuant to section 3;

     “Final Average Earnings” means (a) with respect to the calculation of a SERP I and SERP II Benefit, the average of the three (3) highest consecutive years of Earnings of the Executive; or (b) with respect to the calculation of a SERP III benefit, the average of the three (3) highest consecutive years of the Earnings of the Executive during the last ten (10) years of the Executive’s employment with Nortel Networks.

     “Nortel Networks” means Nortel Networks Limited and its subsidiaries and affiliates in the United States and Canada that have adopted the Nortel Networks

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Retirement Income Plan or the Nortel Networks Managerial and Non-Negotiated Pension Plan for the benefit of their employees;

     “Pension Plan” in respect of an Executive means the Pension Service Plan portion of the Nortel Networks Retirement Income Plan (the “U.S. Pension Plan”) or the Nortel Networks Managerial and Non-Negotiated Pension Plan, Parts I and II (the “Canadian Pension Plan”) from which the Executive becomes entitled to receive a benefit upon Retirement;

     “Pension Plan Benefit” in respect of an Executive means the amount of the annual pension payable upon Retirement to the Executive under the Pension Plan;

     “Percentage Credit” means the credit attributed to a year granted to the Executive based on the Executive’s Age + Service Points for that year. For each year of Pension Plan membership, including the extended salary continuance period, an Executive shall be credited with a Percentage Credit determined from the following chart. The Percentage Credit awarded shall be based on the Executive’s Age + Service Points in that calendar year:

     An Executive’s Percentage Credit for a particular calendar year shall be prorated if the Executive has less than a full year of Actual Years of Service in that calendar year.

     “Plan” means the Supplementary Executive Retirement Plan (SERP) as set forth herein and as may be modified from time to time;

     “Retirement” and “Retired” in respect of an Executive means the termination of employment of the Executive in circumstances where the Executive is not re-employed by Nortel Networks, provided the Executive satisfies one of the following conditions. However, satisfaction of the conditions described in subsections (d) and (e) below shall not qualify an Executive for a SERP I Benefit:

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     “SERP Benefit” in respect of an Executive shall have the meaning set forth in section 5;

     “Service Points” means the number of years of the Executive’s continuous service with Nortel Networks that the Executive would have completed on his employment anniversary date that occurred in that calendar year, regardless of whether the Executive remains employed to such anniversary date in that calendar year that contains the determination date.

     Service Points will be granted for service with Nortel Networks in a country other than Canada and the U.S. if the Executive qualifies for a benefit under the U.S. Pension Plan or the Canadian Pension Plan.

     “Special Pension Credits” means, for Executives hired after attaining age thirty five (35) and prior to January 1, 1999 and for purposes of this Plan only, additional years of service calculated as thirty five (35) subtracted from the Executive’s attained age on his date of hire by Nortel Networks. Such Special Pension Credits are only taken into account for purposes of this Plan if the Executive retires or his employment is otherwise terminated on or after attaining age sixty (60).

     “Special Pension Credit Plan Benefit” means the benefit that is payable to the Executive upon his retirement under the terms of the Nortel Networks Special Pension Credit Plan.

     “Spouse” of an Executive means an individual who at the time of Retirement and death of the Executive is the person who otherwise qualifies as a spouse under the Pension Plan;

     “Survivor Benefit” means the benefit payable under the Plan to an Executive’s Spouse as described in section 7;

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     “Total Retirement Benefit” shall have the meaning set forth in section 4;

     “Years of Credited Service” in respect of an Executive means Actual Years of Service plus fifty percent (50%) of Special Pension Credits. For an Executive hired at age fifty one (51) or greater, Years of Credited Service may not exceed two (2) times the Executive’s Actual Years of Service, with a minimum of five (5) years of actual service required. Special Pension Credits are only taken into account for purposes of this Plan if the Executive retires or his employment is otherwise terminated on or after attaining age sixty (60).

     “Years of Eligible Retirement Service” in respect of an Executive means the Executive’s actual years of service recognized under the Pension Plan for purposes of eligibility for benefits, plus Special Pension Credits, if applicable.

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3.  ELIGIBILITY TO PARTICIPATE IN THE PLAN

     The following employees are Executives who may be entitled to benefits from the Plan:

     To qualify as an Executive, such an employee must also be a participant in the Traditional Option. An employee becomes an Executive with respect to the Plan upon his or her attainment of such criteria and does not cease to be an Executive prior to his or her Retirement or death (even if the employee ceases to meet the definition of an Executive). However, no employee shall become an “Executive” after December 31, 1999.

     Executives and their Spouses shall be entitled to receive benefits under the Plan only in the event the conditions for entitlement to such benefit (as described in the Plan) have been satisfied.

4.  TOTAL RETIREMENT BENEFIT

     “Total Retirement Benefit” in respect of an Executive

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     SERP Benefits shall be calculated as follows:

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5.  SERP BENEFIT

     Upon Retirement, an Executive shall receive a benefit under this Plan (herein referred to as the “SERP Benefit”) which is the excess, if any, of the amount determined as the Executive’s Total Retirement Benefit under Section 4 hereof with respect to the Actual Years of Service in each country, over the Executive’s Pension Plan Benefit, Excess Plan Benefit, and Special Pension Credit Plan Benefit, if any, in each country, in accordance with the administrative practice established by Nortel Networks for such offset calculations. The determination of the amount of such SERP Benefit shall be subject to the terms of Section 6 hereof, however, with respect to an Executive who receives both a U.S. Pension Plan benefit and a Canadian Pension Plan benefit.

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6.    TRANSFERS

6.1  Transfers Prior to May 1, 2000

       In determining the SERP Benefit for an Executive who transferred between employment with a U.S. Nortel Networks subsidiary or affiliate and a Canadian Nortel Networks subsidiary or affiliate prior to May 1, 2000, the following provisions shall apply rather than the provisions that would otherwise apply to the determination of the SERP Benefit for the Executive if there had been no such transfer:

6.2  Transfers after April 30, 2000

       In determining the SERP Benefit for an Executive who transferred between employment with a U.S. Nortel Networks subsidiary or affiliate and a Canadian Nortel Networks subsidiary or affiliate after April 30, 2000, the following provisions shall apply rather than the provisions that would otherwise apply to the determination of the SERP Benefit for the Executive if there had been no such transfer:

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7.  SURVIVOR BENEFIT

     In the event of the death of an Executive after payment of the SERP Benefit payable at Retirement to such Executive has commenced, the Executive’s Spouse, if any, shall be paid an annual amount under this Plan during his or her lifetime equal to sixty percent (60%) of the SERP Benefit that was payable to the Executive. However, if the Executive was receiving a Pension Plan benefit under the U.S. Pension Plan or under the Canadian Pension Plan, Part II, and elects the lump sum option (and a fifteen (15) year payment is applicable, as referenced in section 8.1) then payment of the SERP Benefit shall continue to the Spouse until the completion of the fifteen (15) year term that began on the Executive’s Retirement Date or, if there is no Spouse, the actuarial value of the remaining payments under the annuity shall be paid to the Executive’s estate.

8.    PAYMENT OF BENEFITS

8.1  Mode of Payment

       (a)  Canadian Pension Plan, Part I Benefit

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be prorated. Payment of the benefit in respect of the month the Executive dies shall be made as if the Executive survived until the end of the month.

     (b)  Canadian Pension Plan, Part II Benefit

     (c)  U.S. Pension Plan Benefit

8.2 Company Effecting Payment

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       The SERP Benefit payable under the Plan shall be paid by the Corporation and/or any subsidiary or affiliate of the Corporation, as may be determined by the Corporation in its sole discretion.

8.3  Currency

       All benefits payable under the Plan in respect of an Executive shall be payable in the same currency as benefits are payable under the Pension Plan from which the Executive Retired, provided that where the Executive is entitled to receive a pension from more than one pension plan established by Nortel Networks, benefits shall generally be payable in the currency of the country where the Executive earned the service attributable to the benefit, or portion of the benefit, in question. Currency conversion shall occur in accordance with established administrative guidelines under the Plan. However, the Committee shall have the sole discretion to alter the provisions of this section as it deems appropriate.

9.    ADMINISTRATION

9.1  Committee

       The Plan shall be administered by the Committee, which shall have full and exclusive power to interpret the Plan, to adopt such rules, regulations and guidelines as it may deem necessary or proper and to make all determinations necessary or desirable for the administration of the Plan. Any such interpretation, rule, determination or other act of the Committee shall be conclusively binding upon all persons.

       The Committee shall have the authority to modify any provision of the Plan in respect of any Executive including the granting of additional service for purposes of calculating Years of Credited Service or Years of Eligible Retirement Service, waiving early retirement reductions, and waiving the bonus recognition limitations of the Plan.

       The Committee may delegate to any person or persons any power or authority it deems appropriate.

9.2  Limitation of Liability

       Neither the Corporation, its subsidiaries or affiliates nor any member of the Committee or the Board of Directors shall be liable for any action or determination made in good faith pursuant to the Plan. To the full extent permitted by law, the Corporation 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 of Directors and, as such, is or was required to take action pursuant to the terms of the Plan.

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9.3  Evidence of Entitlement to Benefits

       Every person eligible for a benefit under the Plan shall, on request, provide the Committee evidence, including evidence by way of affidavit, declaration or certificate, and including but not limited to proof of age, satisfactory to the Committee, as it may require to determine the entitlement to or the amount of such benefit.

10.  EFFECTIVE DATE OF PLAN

       The Plan was adopted by the Board of Directors on April 29, 1983 effective January 1, 1983 and was subsequently amended by the Board of Directors on July 23, 1998, and on September 24, 1998 effective January 1, 1999. The Plan was subsequently amended by the Committee on December 16, 1999 effective January 1, 2000, on April 25, 2001 with immediate effect and a restated version of the Plan was adopted by the Committee on October 25, 2001 with immediate effect. The Plan was subsequently amended by the Committee on October 23, 2002 with immediate effect.

       Any subsequent amendments to the Plan shall become effective upon their adoption by the Committee.

11.  AMENDMENT, TERMINATION

       The Committee reserves the right to amend, suspend or terminate the Plan at any time without the consent of any Executive or Spouse, provided that no such action affects amounts in payment under the Plan nor affects the right of an Executive or Spouse to receive any benefit which such person is eligible to receive at the time of such amendment, suspension, or termination.

12.   GENERAL PROVISIONS

12.1 Assignment

        No right of a person and no benefit payable under the Plan shall be capable of or may be assigned, alienated, charged, pledged or given as security and no such benefit shall confer upon any Executive, Spouse, personal

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representative or dependent, or other person, any right or interest therein that is capable of being assigned, alienated, charged, pledged or given as security, except as required by law.

12.2  No Right to Continuation of Employment

         This Plan shall not be construed as giving an Executive any right to continue in the employment of Nortel Networks or affect the right of Nortel Networks to terminate the employment of an Executive without regard to the effect such action might have upon the Executive’s rights under the Plan.

12.3  No Additional Rights to benefits under Pension Plan

         Nothing herein shall entitle an Executive or any other person to any benefit under a Pension Plan or a Restoration Plan to which such Executive or other person is not otherwise entitled pursuant to the provisions of the Pension Plan.

12.4  Funding

         All benefits payable hereunder shall be payable from the general funds of Nortel Networks and Nortel Networks shall have no liability whatsoever to segregate any assets or establish any special funding arrangements to provide for payment of amounts payable under the Plan.

12.5  Tax Treatment

         No representations are made regarding the tax treatment under any jurisdiction of amounts paid as a benefit under this Plan. No additional payments will be made to compensate an Executive or an Executive’s Spouse for any tax effect or for the lack of availability of any preferred tax-favored treatment of such benefit.

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