November 2, 2005

Motorola confirmed that it has settled a lawsuit with its former president and CEO, Mike Zafirovski and Nortel Networks.

The move clears the way for Zafirovski to take the top seat at Nortel Nov. 15 as planned.

Motorola had alleged that Zafirovski's move to Nortel was set to create a breeding ground for misappropriation of trade secrets and breaches of multiple non-compete, confidentiality and no-solicitation agreements Zafirovski signed with Motorola.

The lawsuit sought an injunction to stop Zafirovski from joining Nortel for two years.

Motorola said it will dismiss the lawsuit filed Oct. 18 in the Circuit Court of Cook County, Ill. in exchange for "court jurisdiction of the matter to enforce the terms of the settlement."

Under the settlement, Zafirovski will repay Motorola $11.5 million, which was part of his separation payment from Motorola. Nortel said it plans to fully reimburse Zafirovski for his repayment to Motorola.

Nortel said the terms of the settlement provide that Zafirovski cannot disclose Motorola trade secrets or confidential information. In addition, Nortel said that Zafirovski and Nortel have agreed 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 companies, some of which are Nortel customers, and limitations on his ability to advise Nortel on competitive strategy or analysis relative to Motorola.

The companies did not disclose which companies were named in the settlement.

"We worked in good faith to resolve this issue with Motorola and we are very pleased with the successful outcome," said Harry Pearce, chairman of Nortel's board of directors.

"I am pleased that my full focus can now be applied to accelerating Nortel's business momentum," said Zafirovski. "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."

"For Nortel's sake, I am glad to see an end to this crisis.

Now, with the financial issues solved and a new CEO in place, the company can finally look forward and see what kind of future then can carve out for themselves," said Jeff Kagan, a telecom and wireless industry analyst.

"As the telecom marketplace goes through the major talk of reinventing itself, we will likely see more of this kind of issue. Telecom companies who used to compete in single sectors, are now finding they are competing in several sectors. This makes a potentially sticky situation out of many moves."

Source: RCR News