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Ontario lawsuit. The plaintiffs in two of these proceedings in Quebec obtained court approval for discontinuances of their proceedings on
January 17, 2002. The motion to dismiss and/or stay the third proceeding was heard on November 6, 2001 and the court deferred any
determination on the motion to the judge who will hear the application for authorization to commence a class proceeding. On
December 6, 2001, the defendants filed a motion seeking leave to appeal that decision. The motion for leave to appeal was dismissed on
March 11, 2002. On October 16, 2001, an order in the Southern District of New York was filed consolidating twenty-five of the related
U.S. class action lawsuits into a single case, appointing class plaintiffs and counsel for such plaintiffs. The plaintiffs served a
consolidated amended complaint on January 18, 2002. On December 17, 2001, the defendants in the British Columbia action served
notice of a motion requesting the court to decline jurisdiction and to stay all proceedings on the grounds that British Columbia is an
inappropriate forum. The motion has been adjourned at the plaintiffs’ request to a future date to be set by the parties.
A class action lawsuit against Nortel Networks was also filed in the U.S. District Court for the Southern District of New York on behalf
of shareholders who acquired the securities of JDS between January 18, 2001 and February 15, 2001, alleging violations of the same U.S.
federal securities laws as the above-noted lawsuits.
On April 1, 2002, Nortel Networks filed a motion to dismiss both the above consolidated U.S. shareholder class action and the above JDS
shareholder class action complaints on the grounds that they failed to state a cause of action under U.S. federal securities laws. With
respect to the JDS shareholder class action complaint, Nortel Networks also moved to dismiss on the separate basis that JDS shareholders
lacked standing to sue Nortel Networks. On January 3, 2003, the District Court granted the motion to dismiss the JDS shareholder class
action complaint and denied the motion to dismiss the consolidated U.S. class action complaint. Plaintiffs appealed the dismissal of the
JDS shareholder class action complaint. On November 19, 2003, oral argument was held before the Second Circuit on the JDS
shareholders’ appeal of the dismissal of their complaint. On May 19, 2004, the Second Circuit issued an opinion affirming the dismissal
of the JDS shareholder class action complaint and on July 14, 2004 the Second Circuit denied plaintiffs’ motion for rehearing. On
October 12, 2004, the plaintiffs filed a petition for writ of certiorari in the U.S. Supreme Court. On November 12, 2004, the defendants
filed Brief for the Respondents in Opposition, and on November 22, 2004, the plaintiffs filed Reply to Brief in Opposition. With respect
to the consolidated U.S. shareholder class action, the plaintiffs served a motion for class certification on March 21, 2003. On May 30,
2003, the defendants served an opposition to the motion for class certification. Plaintiffs’ reply was served on August 1, 2003. The
District Court held oral arguments on September 3, 2003 and issued an order granting class certification on September 5, 2003. On
September 23, 2003, the defendants filed a motion in the Second Circuit for permission to appeal the class certification decision. The
plaintiffs’ opposition to the motion was filed on October 2, 2003. On November 24, 2003, the Second Circuit denied the motion. On
March 10, 2004, the District Court approved the form of notice to the class which was published and mailed.
On July 17, 2002, a new purported class action lawsuit (the “Ontario Claim”) was filed in the Ontario Superior Court of Justice,
Commercial List, naming Nortel Networks, certain of its current and former officers and directors and its auditors as defendants. The
factual allegations in the Ontario Claim are substantially similar to the allegations in the consolidated amended complaint filed in the U.S.
District Court described above. The Ontario Claim is on behalf of all Canadian residents who purchased Nortel Networks Corporation
securities (including options on Nortel Networks Corporation securities) between October 24, 2000 and February 15, 2001. The plaintiffs
claim damages of Canadian $5,000, plus punitive damages in the amount of Canadian $1,000, prejudgment and postjudgment interest and
costs of the action. On September 23, 2003, the Court issued an order allowing the plaintiffs to proceed to amend the Ontario Claim and
requiring that the plaintiffs serve class certification materials by December 15, 2003. On September 24, 2003, the plaintiffs filed a notice
of discontinuance of the original action filed in Ontario. On December 12, 2003, plaintiffs’ counsel requested an extension of time to
January 21, 2004 to deliver class certification materials. On January 21, 2004, plaintiffs’ counsel advised the Court that the two
representative plaintiffs in the action no longer wished to proceed, but counsel was prepared to deliver draft certification materials
pending the replacement of the representative plaintiffs. On February 19, 2004, the plaintiffs’ counsel advised the Court of a potential
new representative plaintiff. On February 26, 2004, the defendants requested the Court to direct the plaintiffs’ counsel to bring a motion
to permit the withdrawal of the current representative plaintiffs and to substitute the proposed representative plaintiff. On June 8, 2004,
the Court signed an order allowing a Second Fresh as Amended Statement of Claim that substituted one new representative plaintiff, but
did not change the substance of the prior claim.
A purported class action lawsuit was filed in the U.S. District Court for the Middle District of Tennessee on December 21, 2001, on
behalf of participants and beneficiaries of the Nortel Networks Long-Term Investment Plan (the “Plan”) at any time during the period of
March 7, 2000 through the filing date and who made or maintained Plan investments in Nortel Networks Corporation common shares,
under the Employee Retirement Income Security Act (“ERISA”) for Plan-wide relief and alleging, among other things, material
misrepresentations and omissions to induce Plan participants to continue to invest in and maintain investments in Nortel Networks
Corporation common shares in