Mike Zafirovski will take over as chief executive officer of Nortel on Nov. 15 as scheduled after a lawsuit over his hiring was settled on Monday.

Zafirovski, a former executive at Motorola, had been hired by Nortel two weeks ago to replace the departing Bill Owens. Motorola filed suit.

Under terms of the agreement worked out by the companies and Zafirovski, he must repay $11.5 million in severance he received from Motorola. Nortel in turn will reimburse him for that payment.

The agreement also places limits on Zafirovski in terms of hiring Motorola employees and talking with certain companies. He also cannot disclose Motorola trade secrets.

Motorola filed suit on Oct. 18 to block his move.

“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. “The Board selected Mike as we believe he is the best candidate to assume the role of president and CEO and we have every confidence in him. We look forward to a great future together.”

Zafirovski will also join Nortel’s board as a director.

“I am pleased that my full focus can now be applied to accelerating Nortel’s business momentum,” Zafirovski said in a statement. “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.”

In a statement, Nortel said that “there are no admissions by Zafirovski, Nortel or Motorola of any violations of law, breaches of any agreements, or any other improper conduct, which all parties deny.”

As spelled out by Nortel, the settlement agreement includes these specific points:

  • Zafirovski cannot disclose Motorola trade secrets or confidential information

  • Zafirovski and Nortel agreed for a specified period 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 specified companies, some of which are Nortel customers

  • Limitations were also placed on his ability to advise Nortel on competitive strategy or analysis relative to Motorola for a defined period.

  • Zafirovski will also repay Motorola $11.5 million, which was part of his separation payment from Motorola

  • Nortel has agreed to fully reimburse Zafirovski for the repayment.
  • Nortel: www.Nortel.com