TORONTO -- Nortel(x) (NYSE/TSX: NT) today announced that, as a result of the continuing discussions in the mediation process with respect to the previously announced agreement in principle for a proposed settlement of certain shareholder class action lawsuits with the lead plaintiffs in two significant class action lawsuits pending in the Southern District of New York, the Company and the lead plaintiffs have entered into stipulations and agreements of settlement in the two actions.

As previously announced, the proposed settlement was conditioned, among other things, on the resolution of related Canadian shareholder class actions. Nortel has now also reached agreement with the plaintiffs in those Canadian actions with respect to the global settlement as set forth in the stipulations and agreements of settlement.

These various settlement agreements encompass most pending and proposed shareholder class actions commenced against the Company and certain other defendants following the Company's announcement of revised financial guidance during 2001, and the Company's revisions of its 2003 financial results and restatement of other prior periods effected during the first half of 2005.

As previously announced, under the terms of the global settlement, subject to certain approvals, the Company would make a payment of US$575 million in cash, issue 628,667,750 of its common shares (representing approximately 14.5% of its equity), and contribute one-half of any recovery in the existing litigation by Nortel against Messrs. Frank Dunn, Douglas Beatty and Michael Gollogly, the Company's former senior officers who were terminated for cause in April 2004. The cash amount bears interest as of March 23, 2006 at a prescribed rate and was paid into escrow as of June 1, 2006 pending satisfactory completion of all conditions to the settlement. Further, previously announced settlement terms with respect to insurance and corporate governance related matters remain unchanged. The settlement contains no admission of wrongdoing by the Company or any of the other defendants.

Nortel Networks Ltd.