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FREQUENTLY ASKED QUESTIONS
FOR THE NORTEL I AND NORTEL II SETTLEMENTS

I. QUESTIONS RELATING TO BOTH SETTLEMENTS

II. QUESTIONS RELATING TO THE NORTEL I SETTLEMENT

III. QUESTIONS RELATING TO THE NORTEL II SETTLEMENT

IV. QUESTIONS RELATING TO THE DISTRIBUTION

I. QUESTIONS RELATING TO BOTH SETTLEMENTS

1. 1. Why were there two Settlements against Nortel Networks ("Nortel")?

Nortel was alleged to have misrepresented its financial condition during two separate time periods. One of the Settlements related to a class that purchased Nortel common stock or options during the period October 24, 2000 through February 15, 2001, inclusive (the "Nortel I Class"). The other Settlement related to a class that purchased Nortel common stock or options during the period April 24, 2003 through April 27, 2004 inclusive (the "Nortel II Class"). A person could have been a member of the Classes in both Settlements if that person had transactions in Nortel common or options during both time periods.

2. Where were these lawsuits filed?

An action covering members of the Nortel I Class wherever they reside was filed and litigated and certified in the United States District Court for the Southern District of New York. Actions on behalf of Nortel I Class members who resided only in certain Canadian Provinces were also commenced in the Ontario Superior Court of Justice, the Superior Court of Quebec District of Montreal, and the Supreme Court of British Columbia, respectively. The action commenced in Ontario was amended in connection with the settlement to include all other Canadian Provinces other than Quebec and British Columbia.

An action covering members of the Nortel II Class wherever they reside was filed and litigated in the United States District Court for the Southern District of New York. Actions on behalf of Nortel I Class members who resided only in certain Canadian Provinces were also commenced in the Ontario Superior Court of Justice, the Superior Court of Quebec District of Montreal, respectively. The action commenced in Ontario was amended in connection with the settlement to include all other Canadian Provinces other than Quebec.

3. What were these cases about?

TThe Complaints filed in connection with the Nortel I Settlement generally alleged that during the period, October 24, 2000 through and including February 15, 2001, the defendants materially misrepresented Nortel's revenues and earnings and the value of Nortel's receivables in public reports and statements disseminated to the investing public. These Complaints further alleged that, as a result of these statements, the price of Nortel common stock was artificially inflated during the Nortel I Class Period.

The complaints filed in connection with the Nortel II Settlement generally alleged that during the period, April 24, 2003 through and including April 27, 2004, the defendants perpetrated a fraud on the investing public by improperly accounting for the Company's reserve accounts, reversing millions of dollars into income to make the market believe that Nortel had returned to profitability, when in fact, it had not.

4. Who was eligible to participate in the Nortel I Settlement?

To participate in the Nortel I Settlement a Class Member must have purchased Nortel common stock, purchased call options on Nortel common stock or wrote (sold) put options on Nortel common stock during the period October 24, 2000 through February 15, 2001, inclusive, and have submitted a Proof of Claim form by December 5, 2007.

5. Who was eligible to participate in the Nortel II Settlement?

To participate in the Nortel II Settlement, a Class Member must have purchased Nortel common stock, purchased call options on Nortel common stock or sold put options on Nortel common stock during the period April 24, 2003 through April 27, 2004 inclusive, and have submitted a Proof of Claim form by December 5, 2007.

Note: It was possible to be a Class Member of both the Nortel I and Nortel II Settlements.

6. What securities were eligible?

Eligible transactions for both Settlements included purchases of Nortel common stock, purchases of call options on Nortel common stock, or the writing (sale) of put options on Nortel common stock during either class period.

7. Can I still file a claim?

No, the original filing deadline was November 20, 2006. The Courts allowed late claims submitted through December 5, 2007 but have ordered that no claim postmarked after December 5, 2007 will be accepted for any reason whatsoever.

II. QUESTIONS RELATING TO THE NORTEL I SETTLEMENT

1. What did the Settlement provide?

A Settlement Fund consisting of $438,667,428 in cash, plus accrued interest was established for the benefit of the Nortel I Class. In addition 314,333,875 shares of Nortel common stock (reduced to 31,433,387 shares by a 1 for 10 consolidation) were issued for the benefit of the Nortel I Class.

2. Are there more details about the Settlement?

Yes. The full terms and provisions of the Settlement were contained in the Stipulation, which is available by clicking here.

3. What was required to receive a payment?

In order to have qualified for a payment, a Class Member must have completed and submitted a Proof of Claim Form postmarked no later than December 5, 2007.

4. When were payments made?

The first distribution of cash payments to accepted class members was made on May 8, 2008. Accepted Class Members whose claims were large enough to be entitled to a distribution of Settlement Shares are also being mailed certificates for the number of shares to which their claims entitled them over the next few weeks. Class Members with questions regarding their distribution of cash payments or Nortel shares, may call the Claims Administrator at 1-866-881-7495.

Note: Certain claimants whose claims were rejected by the Claims Administrator have disputed the Claims Administrator’s determination rejecting their claims. Those claims are subject to further proceedings. Class Counsel are reviewing the disputes, and letters are being sent to the claimants requesting review advising them of the reasons why the claim was found to be ineligible, and seeking to resolve the dispute. To the extent that such claims are resolved in favor of the claimant they will be paid only in cash.

5. How was the amount distributed to the Accepted Claimant determined?

Benefits were calculated according to the Plan of Allocation summarized in the Notice. Nortel I Class Members who submitted acceptable Proofs of Claim were paid approximately 7% of their “Recognized Claim” amounts in cash and were also paid one Nortel Share for each $189 of their Recognized Claim amount.

6. Who were the lawyers in this case?

The following firms represented Class Members:

Lead Plaintiff's Counsel for the U.S. Action were Milberg LLP, assisted by Koskie Minsky LLP.

Counsel for the Ontario National Action was Rochon Genova LLP.

Counsel for the Quebec Action were Belleau Lapointe, S.A., assisted by Unterberg Labelle Lebeau s.e.n.c.

Counsel for the British Columbia Action was Klein Lyons.

Their complete mailing addresses can be found on page 11, question 16 of the Nortel I Notice.

7. How are the lawyers being paid?

All Counsel fees are payable from the cash and stock in the Settlement Fund.

The U.S. Court held that counsel fees of 3% of the cash and stock should be awarded to the law firms in the U.S. Action. Plaintiff’s Counsel in the US Action had requested fees of 8.5% and an appeal has been filed with respect to the fee award.

The Ontario Court awarded the law firms in the Ontario National Action fees of $2.5 million (CDN$) in fees and $214,138 (CDN$) in expenses.

The Quebec Court will determine the amount of lawyers' fees and expenses to be awarded to the law firms in the Quebec Action.

The British Columbia Court awarded the law firms in the British Columbia Action fees and expenses of $1,151,434.13 (CDN$)

You will not be separately charged for these lawyers. All lawyers' fees and expenses awarded by the respective Courts will be paid from the cash and stock in the Gross Settlement Fund.

III. QUESTIONS RELATING TO THE NORTEL II SETTLEMENT

1. What did the Settlement provide?

A Settlement Fund consisting of $370,157,418 in cash, plus accrued interest was established for the benefit of the Nortel II Class. In addition 314,333,875 shares of Nortel common stock (reduced to 31,433,387 shares by a 1 for 10 consolidation) were issued for the benefit of the Nortel II Class..

2. Are there more details about the Settlement?

Yes. The full terms and provisions of the Settlement were contained in the Stipulation, which is available by clicking here.

3. What was required to receive a payment?

In order to have qualified for a payment, a Class Member must have completed and submitted a Proof of Claim Form postmarked no later than December 5, 2007.

4. When were payments distributed?

The initial distribution of cash payments to accepted Class Members was made on May 8, 2008. On April 28, 2008, Accepted Class Members whose claims were large enough to be entitled to a distribution of Settlement Shares were mailed certificates for the number of shares to which their claims entitled them. Class Members with questions regarding their distribution of cash payments or Nortel shares may call the Claims Administrator at 1-866-881-7495.

Note: Certain claimants whose claims were rejected by the Claims Administrator have disputed the Claims Administrator’s determination rejecting their claims. Those claims are subject to further proceedings. Class Counsel are reviewing the disputes, and letters are being sent to the claimants requesting review advising them of the reasons why the claim was found to be ineligible, and seeking to resolve the dispute. To the extent that such claims are resolved in favor of the claimant they will be paid only in cash.

5. How was the amount distributed to the Accepted Claimant determined?

Benefits were calculated according to the Plan of Allocation summarized in the Notice. Nortel II Class Members who submitted acceptable Proofs of Claim were paid approximately 22% of their “Recognized Claim” amounts in cash and were also paid one Nortel Share for each $49 of their Recognized Claim amount.

6. Who were the lawyers in this case?

The following firms represented Class Members:
Lead Plaintiff's Counsel for the U.S. Action is Bernstein Litowitz Berger & Grossmann LLP, together with Lowenstein Sandler P.C.

Counsel for the Ontario National Action is Rochon Genova LLP and Lerners LLP.

Counsel for the Quebec Action is Trudel & Johnston s.e.n.c.

Their complete mailing addresses can be found on page 10, question 16 of the Nortel II Notice.

7. How are the lawyers being paid?

All Counsel fees are payable from the cash and stock in the Settlement Fund.

The U.S. Court held that counsel fees of 8% of the cash and stock should be awarded to the law firms in the Nortel II U.S. Action.

The Ontario Court awarded the law firms in the Nortel II Ontario National Action fees of $2.5 million (CDN$) in fees and $214,138 (CDN$) in expenses.

The Quebec Court will determine the amount of lawyers' fees and expenses to be awarded to the law firms in the Quebec Action.

You will not be separately charged for these lawyers. All lawyers' fees and expenses awarded by the respective Courts have been or will be paid from the cash and stock in the Gross Settlement Fund.

IV. QUESTIONS RELATING TO THE DISTRIBUTION

1. When were the checks mailed?

On May 8, 2008, the Claims Administrator began issuing checks to those claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation.

2. When were the Nortel share certificates mailed?

On April 28, 2008, Nortel’s Transfer Agent began issuing Nortel share certificates to those Nortel II claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation large enough to be entitled to a distribution of Settlement Shares. On May 9, 2008 Nortel’s Transfer Agent began issuing Nortel share certificates to those Nortel I claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation large enough to be entitled to a distribution of Settlement Shares."

3. What is the total amount of the Distribution?

In Nortel I, $394,103,000 and 30,412,470 in shares; In Nortel II, $314,500,000 and 28,864,376 in shares;

4. What is the value of the shares?

As share value changes on a daily basis, the distributed shares are subject to current market value.

5. I cannot sell/transfer my stock certificate in the name in which it was issued, how can I request that it be reissued?

1. Send a reissue request that references the exact name which appears on your certificate, as well as the exact name that should be printed on the reissued certificate. Your certificate number must be referenced in your request. You may email this request to:

certificates@nortelsecuritieslitigation.com (preferred), fax it to the attention of "Certificate Reissue" at 631-940-6550, or mail it to the address below:

Nortel Securities Litigation
c/o The Garden City Group, Inc.
.Attn: Certificate Reissue
105 Maxess Road
Melville, NY 11747

2. Mail the original certificate to the address referenced below. We recommend that stock certificates be sent by registered mail with return receipt requested, or courier with signature required. Please also keep a copy of the share certificate for your records.

Computershare Trust Company of Canada
Attn: Florence Smith
100 University Avenue, 8th Floor
Toronto, ON M5J 2Y1

6. I cannot cash/negotiate my settlement check, how can I request that it be reissued?

If you need to request that your check be re-issued, you must submit a request in writing. Please include your full name, address, claim number (if available), and daytime telephone number with the best time of day to reach you. In addition, please include a statement explaining the need for re-issue, and mail to:

Nortel I Securities Litigation
c/o The Garden City Group, Inc.
Claims Administrator
P.O. Box 9000 #6445
Merrick, NY 11566-9000

or

Nortel II Securities Litigation
c/o The Garden City Group, Inc.
Claims Administrator
P.O. Box 9083
Dublin, OH 43017-0983

7. I received a check for a deceased family member, how can I request that it be reissued in my name?

If you received a check for a deceased family member and need to request that the check be re-issued, you must submit a request in writing. Please include your full name, address, claim number (if available), and daytime telephone number with the best time of day to reach you. Please be advised you must include a copy of the death certificate and appropriate documentation to support the name in which the check should be re-issued, and mail to:

Nortel I Securities Litigation
c/o The Garden City Group, Inc.
Claims Administrator
P.O. Box 9000 #6445
Merrick, NY 11566-9000

8. How should I report this distribution on my taxes?

The tax treatment of this distribution varies based upon the individual circumstances and tax status of each Claimant. Accordingly, the Claims Administrator is not able to determine the appropriate tax reporting for any Claimant. You should consult with your tax advisor to determine the tax consequences, if any, that the distribution of the Net Settlement Funds may have to you.

As Stated in the cover letter sent with cash distributions, the Nortel Securities Litigation Settlement Funds are each a "Qualified Settlement Fund", as defined in Treas. Reg. Section 1.468B-1 through 5. The regulations provide in part that "whether a distribution from a Qualified Settlement Fund is included in the claimant's gross income is generally determined by reference to the claim in respect of which the distribution is made and as if the distribution were made directly by the transferor." The claims upon which the Nortel Securities Litigation were based involved allegations that members of the Settlement Class were misled into purchasing Nortel common stock or call options on Nortel common stock, or selling put options of Nortel common stock during the Class Period at artificially inflated prices in violation of the federal securities laws. The tax treatment of this distribution varies based upon the recipient’s tax status and treatment of his, her or its investments and is the responsibility of each recipient. We cannot determine the appropriate tax reporting for all recipients and therefore cannot provide individual tax advice. Please consult your tax advisor to determine the tax consequences, if any, of this distribution to you.