Nortel Networks Corporation – 136

December 4, 2009

There have been recent discussions and news reports surrounding Nortel’s employee incentive and retention bonus plans.

We are working to understand the proposed incentive programs, and to consider their overall effect. We do not have confirmation on the accuracy of the figures cited in recent news reports. We also do not know how these figures were obtained, or how they relate to Nortel’s CCAA proceedings. From what we understand, the figures cited in these reports have not yet been brought before the Court for approval.

It is the responsibility of the Court to monitor employee compensation, and to approve compensation that is appropriate. KM and the court-appointed representatives want to ensure that these incentive programs are necessary and appropriate and that they do not come at the expense of payments owed to the retiree, severed and disabled employees. If necessary, we will object to the payments when Court-approval is sought.

We continue to address the situation and will report accordingly.

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