Nortel Networks has reached a settlement with Motorola, which sued to prevent its former chief operating officer Mike Zafirovski from becoming Nortel’s next chief executive.

Motorola filed suit two weeks ago--three days after Zafirovski was named the new Nortel CEO--fearing he would apply to Nortel trade secrets he learned at Motorola. As part of the settlement, Zafirovski agreed not to share such trade secrets or to hire Motorola employees “under certain circumstances” for an undisclosed period of time, Nortel said in a statement issued today.

Zafirovski will also pay Motorola $11.5 million, for which Nortel will fully compensate him, Nortel said.

“The settlement also includes restrictions, until July 1, 2006, on Zafirovski's communications with certain specified companies, some of which are Nortel customers, and limitations on his ability to advise Nortel on competitive strategy or analysis relative to Motorola for a defined period,” Nortel said.

Zafirovski, who left Motorola in January, will officially become Nortel’s new CEO on November 15, 2005, as originally planned. He will be paid a base salary of $1.2 million.