NORTEL NETWORKS CORP

On August 9, 2012, Nortel announced that the Canadian Monitor (defined below), after taking into account several factors arising from the advanced stage of the CCAA Proceedings (defined below), has determined that the expense and resources required to comply with NNC’s and NNL’s quarterly and annual public reporting requirements can no longer be justified from the standpoint of the best interest of their creditors. Consequently, NNC and NNL will no longer be able to comply with their periodic reporting requirements and will discontinue preparing and filing quarterly and annual financial statements and all other periodic disclosure documents under applicable Canadian and U.S. securities laws effective as of the filing deadlines for their third quarter reporting obligations, being November 14, 2012 in the United States and November 29, 2012 in Canada.

Generally, when an issuer ceases to file its periodic disclosure documents in circumstances such as NNC’s and NNL’s the Canadian Securities Administrators will issue orders prohibiting trading in securities of the relevant issuer, effective from and after the filing deadlines under Canadian securities laws. NNC and NNL will be making submissions to the Canadian Securities Administrators that cease trade orders expected to be issued in respect of NNC’s and NNL’s securities include certain permitted trading exceptions. However, there can be no assurance that the regulatory authorities will make such orders on the terms requested by NNC and NNL and, in particular, permit any trading exceptions.

On June 19, 2012, Nortel, NNL, and certain other Nortel entities including NNI, NNUK and NNSA entered into an Allocation Settlement Agreement (the “4^th Estate Agreement”) with Nortel entities in the Asia Pacific and CALA regions (“4th Estate Entities”) providing for, among other matters, a final allocation to the 4th Estate Entities from the sale proceeds of Nortel’s businesses. Under the terms of the 4^th Estate Agreement, a total of $45 from the sale proceeds held in escrow will be allocated among the 4th Estate Entities that participated in the various global business sales. The 4^th Estate Agreement further provides for acknowledgement and agreement on inter-company payables and receivables among the 4th Estate Entities as well as between the 4th Estate Entities and other Nortel entities party to the 4^th Estate Agreement, as at a certain date. The 4^th Estate Agreement was subject to court approvals in Canada and the U.S, which approvals were obtained on July 11, 2012 at a joint hearing. The 4^th Estate Agreement closed on August 7, 2012.

According to various claims filed by the trustee of the U.K. defined benefit pension plan and the PPF against certain Debtors, the U.K. defined benefit pension plan had a purported deficit estimated (on a buy-out basis) of £2,100 or $3,300 as at January 2009. In January 2010, the Pensions Regulator, purporting to act under the Pensions Act 2004 (U.K.) (“U.K. Statute”) issued a “warning notice” (“Warning Notice”) to certain Nortel entities, including, among others, the Canadian Debtors and the U.S. Debtors. The Pensions Regulator is a statutory agency charged with responsibility for regulating the operations and administration of occupational pension schemes in the U.K., such as the U.K. defined benefit pension plan. The Warning Notice is the first step in a process set forth under the U.K. Statute to enable the Pensions Regulator to issue a financial support direction (“FSD”) under the U.K. Statute directing affiliates of NNUK to provide financial support to eliminate the purported deficit. If a company to which a FSD is issued fails to comply with it, the Pensions Regulator may issue a contribution notice (“Contribution Notice”) to any one or more persons to whom the FSD was addressed stating that the person is liable to pay to the trustees of the pension scheme the sum specified in the Contribution Notice, where the Pensions Regulator considers it reasonable to impose the liability on the person to pay the specified sum. The sum specified may be the whole or a portion of the actual or estimated deficit of the pension scheme. In the Warning Notice, the Pensions Regulator identified certain Nortel entities, including, among others, NNC, NNL, NNI and NNCI, as targets of a procedure before the determinations panel of the Pensions Regulator (“Determinations Panel”) to determine whether to issue a FSD (“U.K. Pension Proceeding”). On February 26, 2010, the Canadian Debtors obtained an order of the Canadian Court, which included, among other things, (i) a declaration that the purported commencement of proceedings and exercise of rights by the Pensions Regulator breaches the Initial Order; and (ii) a declaration that any result obtained in the U.K. in breach of the stay under the CCAA Proceedings would not be recognized in the Canadian claims process. Also on February 26, 2010, the U.S. Debtors obtained an order of the U.S. Court enforcing the automatic stay under the U.S. Bankruptcy Code against the trustee of the U.K. defined benefit pension plan (“U.K. Pension Trustee”) and the PPF, which is fully applicable to the U.K. Pension Trustee’s and PPF’s participation against the U.S. Debtors in the U.K. Pension Proceeding. In addition, the order of the U.S. Court provided that with respect to the U.S. Debtors, such proceedings are deemed void and without force or effect. The Pensions Regulator appealed the decision of the Canadian Court which appeal was heard and dismissed on June 16, 2010, by the Ontario Court of Appeal. The Pensions Regulator submitted an application for leave to appeal the decision of the Ontario Court of Appeal to the Supreme Court of Canada, which application was dismissed on January 27, 2011. In addition, the U.K. Pension Trustee brought a motion before the Canadian Court to have the stay lifted, to allow the U.K. Pension Proceeding to go forward as a “permitted proceeding”, which motion was initially set for hearing on May 31, 2010, but was subsequently adjourned without date on the consent of all interested parties. The U.K. Pension Trustee and the PPF also appealed the decision of the U.S. Court enforcing the stay. That appeal was denied by the U.S. Court of Appeals for the Third Circuit (“U.S. Appeals Court”) on December 29, 2011 and on January 24, 2012 the U.S. Appeals Court denied a petition by the U.K. Pension Trustee and the PPF for a rehearing of the appeal. On April 20, 2012, the U.K. Pension Trustee and the PPF filed a petition for certiorari with the Supreme Court of the United States, requesting review of the U.S. Appeals Court’s December 29, 2011 decision, which was denied on June 25, 2012. The U.S. Debtors filed an objection to the claims and motion for a more definitive statement of claim on June 11, 2012. The U.S. Bankruptcy Court granted the motion on July 11, 2012, and ordered that the U.K. Pension Trustee and the PPF file a more definitive statement of their claims on or before September 5, 2012. Notwithstanding the orders of the Canadian Court and the U.S. Court and the dismissal of the Pension Regulator’s appeal by the Ontario Court of Appeal, the FSD proceedings commenced in the U.K. on June 2, 2010, and on June 25, 2010, the Determinations Panel issued a determination notice (“Determination Notice”) indicating that a FSD would be issued against certain Debtors including, among others, NNC, NNL, NNI and NNCI. On April 1, 2011, the Determinations Panel issued FSDs to NNC, NNL, NNI and NNCI requiring each of them to secure that financial support be put in place for the U.K. defined benefit pension plan within six calendar months of the date of the FSDs. The other Debtors that received the Determination Notice have exercised their right under the U.K. Statute to refer the Determinations Panel’s determination to the Pensions Regulator Tribunal established under the U.K. Statute for a further determination of the matter. Nortel is of the view that the Determination Notice and the FSD issued to NNC, NNL, NNI and NNCI are null and void given the court decisions noted above.

On August 9, 2012, we announced that the Canadian Monitor, after taking into account several factors arising from the advanced stage of the CCAA Proceedings, has determined that the expense and resources required to comply with our and NNL’s quarterly and annual public reporting requirements can no longer be justified from the standpoint of the best interest of their creditors. Consequently, we and NNL will no longer be able to comply with our periodic reporting requirements and will discontinue preparing and filing quarterly and annual financial statements and all other periodic disclosure documents under applicable Canadian and U.S. securities laws effective as of the filing deadlines for our third quarter reporting obligations, being November 14, 2012 in the United States and November 29, 2012 in Canada.

Generally, when an issuer ceases to file its periodic disclosure documents in circumstances such as our and NNL’s, the Canadian Securities Administrators will issue orders prohibiting trading in securities of the relevant issuer effective from and after the filing deadline under Canadian securities laws (so-called cease trade orders). We and NNL will be making submissions to the Canadian Securities Administrators that cease trade orders expected to be issued in respect of our and NNL’s securities include certain permitted trading exceptions. However, there can be no assurance that the regulatory authorities will make such orders on the terms requested by us and NNL and, in particular, permit any trading exceptions.

On June 19, 2012, we, NNL, and certain other Nortel entities including NNI, NNUK and NNSA entered into an Allocation Settlement Agreement (the 4^th Estate Agreement) with Nortel entities in the Asia Pacific (APAC) and CALA regions (4th Estate Entities) providing for, among other matters, a final allocation to the 4th Estate Entities from the sale proceeds of our businesses. Under the terms of the 4^th Estate Agreement, a total of $45 from the sale proceeds held in escrow will be allocated among the 4th Estate Entities that participated in the various global business sales. The 4^th Estate Agreement further provides for acknowledgement and agreement on inter-company payables and receivables among the 4th Estate Entities as well as between the 4th Estate Entities and other Nortel entities party to the 4^th Estate Agreement, as at a certain date. The 4^th Estate Agreement was subject to court approvals in Canada and the U.S, which approvals were obtained on July 11, 2012 at a joint hearing. The 4^th Estate Agreement closed on August 7, 2012.