Nortel Networks Corporation announced that Mike Zafirovski, Motorola, Inc. and Nortel have reached a settlement regarding the lawsuit filed October 18, 2005 against incoming Nortel President and Chief Executive Officer Mike Zafirovski.

"We worked in good faith to resolve this issue with Motorola and we are very pleased with the successful outcome," said Harry Pearce, chairman, Nortel Board of Directors. "The Board selected Mike as we believe he is the best candidate to assume the role of president and CEO and we have every confidence in him. We look forward to a great future together."

Zafirovski will begin his tenure as Nortel president and CEO, and director of the Boards of the Company and Nortel Networks Limited, on November 15, 2005, as originally planned and announced.

"I am pleased that my full focus can now be applied to accelerating Nortel's business momentum," said Mike Zafirovski, incoming Nortel president and CEO. "I am looking forward to working with Nortel's leadership team and its employees to create a new chapter of prosperity and prominence for the Company and its stakeholders."

Under the terms of the settlement, which is subject to confidentiality restrictions, there are no admissions by Zafirovski, Nortel or Motorola of any violations of law, breaches of any agreements, or any other improper conduct, which all parties deny.

The terms of the settlement provide that Zafirovski cannot disclose Motorola trade secrets or confidential information, and Zafirovski and Nortel have agreed for a specified period to refrain from hiring or recruiting Motorola employees under certain circumstances. The settlement also includes restrictions, until July 1, 2006, on Zafirovski's communications with certain specified companies, some of which are Nortel customers, and limitations on his ability to advise Nortel on competitive strategy or analysis relative to Motorola for a defined period. Zafirovski will also repay Motorola US $11.5 million, which is part of his separation payment from Motorola, and Nortel has agreed to fully reimburse Zafirovski for this repayment.