##### 








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##### 



Mike Zafirovski
 2




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##### 



Introduction
to the Code
    
    
    5Why Nortel has a Code of Conduct
    
    
    5Responsibilities under the Code
    
    
    5Reporting Violations or Requesting Advice
    
    
    6Violation of a Provision of the Code
    
    
    7Limitations to the Code
    
    
    7Waivers of the Code
    
    
    8Our
Commitment to our Customers and to Fair Competition
    
    
    9Competition Laws
    
    
    10Agreements
with Competitors
    
    
    10Agreements
with Suppliers and Customers
    
    
    10Other Sales and Marketing Standards
    
    
    11Bribery and Corruption
    
    
    11Foreign
Bribery and Corrupt Practices
    
    
    11Gifts,
Entertainment, and Third Party Travel
    
    
    13Giving and Receiving Gifts Generally
    
    
    13Receiving Gifts and Entertainment from Companies Doing Business or
Seeking to Do Business with Nortel
    
    
    13Providing Gifts and Entertainment to Government Employees
    
    
    14Paid Speaking Engagements
    
    
    14Business Travel Involving Third Parties
    
    
    14Information about Competitors
    
    
    15Quality
    
    
    16Selling to the Government
    
    
    16Money Laundering and Exchange Control
    
    
    16Our
Commitment to Our Company
    
    
    17Financial Reporting
    
    
    18Obligations
of All Employees
    
    
    18Additional Obligations of All Employees with Financial or
Accounting Responsibilities
    
    
    18Senior Financial Managers
    
    
    19Recording and Reporting Other Types of Information
    
    
    19Maintaining Information
    
    
    19Conflicts of Interest
    
    
    20Avoidance and Disclosure of Conflicts of Interest
    
    
    20Interest in Contracts or Transactions
    
    
    20Corporate Opportunities
    
    
    20Relationships with Other Companies
    
    
    21Managerial Relationships with Family Members and Close Personal Friends
    
    
    22Receiving Gifts, Entertainment, and Third Party Travel
    
    
    22Loans and Guarantees of Indebtedness
    
    
    22Conflicts Disclosure Process
    
    
    22
  Continued
 3




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##### 



 Continued
 Use of Company Assets
    
    
    23Safeguarding Company Property
    
    
    23Use of Nortel Name, Facilities, and Relationships
    
    
    23Travel and Living Expenses
    
    
    23Computer and Network Use
    
    
    24Contractual Commitments
    
    
    24Conducting Research
    
    
    24Nortels Confidential Information
    
    
    25Employee Duties Regarding Nortels Confidential Information
    
    
    25Confidential Information Received from Third Parties
    
    
    26Protecting Intellectual Property  Nortels and Others
    
    
    27Copyright Protection
    
    
    27Inside Information
    
    
    28Communications with Media and Speaking on Nortels Behalf
    
    
    29Responding to Legal Proceedings
    
    
    30Our
Commitment to Each Other
    
    
    31Nortel Forbids Discrimination and Harassment
    
    
    32Nortel Promotes Diversity
    
    
    32Drugs and Alcohol
    
    
    33Workplace Health and Safety
    
    
    33Privacy
    
    
    34Our
Commitment in Doing Business Globally
    
    
    35Export Control
    
    
    36Customs
    
    
    37U.S. Anti-Boycott Act
    
    
    37Foreign Bribery and Corrupt Practices
    
    
    37Our
Commitment to Our Communities
    
    
    38Corporate Citizenship
    
    
    39Environmental Responsibility
    
    
    40Political Involvement
    
    
    40Contact
Information for Compliance Resources
    
    
    41Index
    
    
    42
 4




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##### 



Why Nortel has a Code of Conduct
  Responsibilities under the Code
  
    
    Abiding by the Code and Nortel policies and procedures.
    
    Requesting advice from a manager, Human Resources, the Law Department,
Compliance, the Compliance ActionLine, or the Compliance ActionWeb
Tool when an ethical issue arises.
    
    Promptly reporting any known or suspected violations of the Code, laws
and regulations, and Nortel policies and procedures or requests that might
constitute violations using the reporting procedures set forth in this Code.
    
    Challenging any business practice or behavior that may undermine the
principles in this Code and the integrity of our Company.
    
    Cooperating in internal investigations about a reported violation.
  
    
    Create an atmosphere that promotes ethical behavior and encourages
employees to ask questions and raise concerns.
    
    Make sure that employees are aware of the principles contained in the Code.
    
    Answer employees questions about the Code or direct them to an
appropriate source for information.
    
    Demonstrate a commitment to the Code through their words and actions.
    
    Use reasonable care to prevent and detect violations of the Code.
    
    Report any compliance risks or Code violations and promptly seek guidance
on how to implement appropriate remedial measures.
    
    Handle all employee reports promptly, confidentially, and in a manner
consistent with Company policy.
 Q & A:
 Q:
 A.
 5




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##### 



Q & A:
 Q.
 A.
 Reporting Violations or Requesting Advice
  1)
    
    Discuss the issue with your manager (unless you are uncomfortable doing
so or believe that the issue will not be satisfactorily resolved). Or discuss
the issue with Human Resources, the Law Department, Compliance,
Corporate Security, or Internal Audit. If however you are uncomfortable
with the resolution of the issue, you should report the issue using one of
the following options.2)
    
    Call the confidential Compliance ActionLine: ESN 333-3014 or (905)
863-3014 (worldwide); 1-800-683-3503 (North America only) or use the
Compliance ActionWeb Tool. Your identity will not be revealed when you
use either of these reporting tools, if you choose. (However, identifying
yourself may assist the Company in investigating your report.) You also
have the option of reporting financial concerns directly to the Audit
Committee of the Board of Directors.3)
    
    Contact Chief Compliance Officer Bob Bartzokas by telephone
(972-684-9530 or ESN 444-9530) or email (rboffice@nortel.com) or send
a written communication marked Private and Confidential  Complaint
to him at Nortel, 2221 Lakeside Boulevard, Richardson, TX 75082. Or you
may contact any other member of Compliance. Contact information can be
found on page 41.4)
    
    Contact one of the Compliance representatives in your region as listed on
the Corporate Compliance web page under Contact Us.5)
    
    You may also communicate your concerns directly to the Nortel Board of
Directors, the Chairman of the Board, or any individual director, including
the Chairman of the Audit Committee, by writing to him or her in care
of the Corporate Secretary at Nortel headquarters at 195 The West Mall,
Toronto, Ontario, Canada M9C 5K1. Mark your envelope Private and
Confidential  Complaint. All such correspondence will be forwarded
to the director to whom your correspondence is addressed.6)
    
    Members of the Board should consult with the Chairman, the President
and Chief Executive Officer, the Chief Financial Officer, the Chief Legal
Officer, the Corporate Secretary, or the Chief Compliance Officer.
  6




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##### 



Violation of a Provision of the Code
  
    
    Violating the Code, Nortel policy or procedure, or applicable law
or regulation.
    
    Requesting or permitting others to violate the Code, Nortel policy or
procedure, or applicable law or regulation.
    
    Assisting another person in violating the Code, Nortel policy or procedure,
or applicable law or regulation.
    
    Failing to promptly report a known or suspected violation of the Code,
law or regulation, or Nortel policy or procedure.
    
    Failing to cooperate fully with Nortel investigations or audits.
    
    Retaliating against another employee or a third party for reporting a
violation or for cooperating with a Nortel investigation.
    
    For managers and supervisors, failing to use reasonable care to prevent or
detect a violation.
 Limitations to the Code
    Q & A:
 Q. Action Action
 A. Action Action
 Q & A:
 Q.
 A.
 7




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##### 



Questions to Ask
  
    
    Would the action feel right?
    
    Would the action be honest
in all respects?
    
    How would the action affect
others?
    
    Would the action embarrass
me if it became known to
my customers, co-workers,
professional colleagues,
family, or friends?
    
    How would I feel seeing my
action reported in a newspaper?
    
    Would additional advice or
information help me in resolving
this issue?
   Action Action
 Waivers of the Code
   8




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##### 



We always compete vigorously. However, we must take care to avoid
any unlawful or unethical conduct; such conduct undermines the
trust that our customers place in Nortel, and their trust is the
foundation of our success.
 
    
    Competition Laws
    
    Other Sales and Marketing Standards
    
    Bribery and Corruption
    
    Gifts, Entertainment, and Third Party Travel
    
    Information about Competitors
    
    Quality
    
    Selling to the Government
    
    Money Laundering and Exchange Control
 9




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##### 



Competition Laws
  Agreements
with Competitors
  
    
    Price-fixing.
    
    Dividing or allocating customers, bids, markets, or territories.
    
    Refusing to sell to particular customers or to buy from particular suppliers.
    
    Exchanging non-public sales, cost, profit, or price information.
 
  Agreements with Suppliers and Customers
   (See also, Other Sales and Marketing Standards.)
 10




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##### 



Other Sales and Marketing Standards
 
 
    
    Mislead customers or prospective customers regarding Nortel products
and services.
    
    Make false or misleading comments about our competitors or their products
and services. Any comparisons to competitors and their products and
services must be substantiated, accurate, and not misleading.
    
    Urge a company to violate a contract it has with a competitor.
 (See also, Competition Laws and Quality.)
  Maintaining the Trust of Our Customers
     Bribery and Corruption
  
    
    Countries generally prohibit the bribery of their government officials,
and it is Nortel policy to comply strictly with all such laws.
    
    Giving bribes and kickbacks to employees of private businesses and entities,
as well as government employees, is prohibited.
    
    This prohibition applies even if you believe that such conduct is
commonplace in a given location or market.
 Foreign Bribery and Corrupt Practices
  Q & A:
 Q.
 A.
 11




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##### 



Be Alert about Using Agents
and Other Third Parties
  
    
    Do not engage as a Nortel agent
any individual with a reputation
for paying bribes or engaging in
other unlawful practices.
    
    Beware of individuals with family
or other relationships that could
improperly influence the decision
of a customer or government
official.
    
    Beware of a demand for a cash
payment prior to an award
decision.
    
    Beware of requests to make
payments in countries or to
entities not related to the
transaction.
    
    Do not agree to pay a commission
that is disproportionate to the
services the individual provides.
   
    
    Providing anything of value  not just monetary payments  as
consideration for an act or omission. For example, gifts and other forms
of entertainment could be considered unlawful, as could loans, services,
or using ones influence to benefit the official.
    
    Improper payments made by representatives, agents, sales consultants, and
other third parties on behalf of Nortel, if Nortel has actual knowledge of
such conduct or acts with conscious disregard or deliberate ignorance of
the impropriety. Thus, when a representative, agent, or sales consultant is
retained, a clear record of reasonable due diligence and resolution of any
red flags is essential to demonstrate compliance with applicable law.
 Guidelines for Gifts, Entertainment, and Third Party Travel (See also, Financial Reporting, Gifts, Entertainment,
and Third Party Travel, Selling to the Government, Conflicts of Interest, and
Political Involvement.)
  Related
Policies and Procedures:
 200.09
 Anti-Corruption
 209.01  Appointment of Representatives, Agents and
Consultants to Facilitate Sales
    12




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Gifts, Entertainment, and Third Party Travel
  Guidelines for Gifts,
Entertainment, and Third Party Travel
  
    
    Comply with applicable law and the policies of the employer of the
other party;
    
    Contribute to the business relationship and be consistent with business
goals; and
    
    Not be of such a nature that they could embarrass Nortel if they
were publicly disclosed. Adult entertainment, for instance, is
always inappropriate.
    
    
    Cash, gift certificates, or any other cash equivalent
    
    Stock, stock options, or friends and family stock
    
    Discounts not generally available to the public
   Guidelines for Gifts, Entertainment, and
Third Party Travel
 Q & A:
 Q.
 A.
 13




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##### 



Q & A:
 Q.
 A.
 Receiving
gifts in special circumstances
 Guidelines for Gifts, Entertainment, and Third Party Travel
  Guidelines for Gifts, Entertainment, and Third Party Travel
  (See also,
Communications with Media and Speaking on Nortels Behalf.)
  Guidelines
for Gifts, Entertainment, and Third Party Travel
 (See also, Bribery and Corruption, Selling to the Government, and
Conflicts of Interest.)
 14




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##### 



Information about Competitors
    (See also, Nortels Confidential Information.)
 Related Policies and Procedures:
 200.17
 Collection and Retention of Competitive Information
 252.05  Review and Approval of the Collection and Retention of Competitive Information
 400.02  Handling Unsolicited Disclosure of Ideas from Other Parties
 401.03  Handling Unsolicited Disclosure of Ideas from Other Parties
 712.04
 Supply Agreements
 Confidential Information: What Is It?
  Confidential Information
of Competitors:
 When Do Issues Arise?
  
    
    When we work with Nortel
employees who previously
worked for competitors.
    
    When customers, suppliers,
channels, or others offer
to provide price or other
information about competitors.
    
    During competitive bids.
    
    In a merger, acquisition, or
divesture context.
  15




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Employees Should Watch
Out for Transactions...
 
    
    That are inconsistent with your
knowledge of the customers
business and its sources of
funds.
    
    Involving transfers of funds to or
from third parties, or countries,
unrelated to the transaction.
    
    Involving locations identified as
bank secrecy havens.
    
    Involving complex or multiple
transactions in unusual patterns
that have no clear purpose.
    
    Involving a shell bank
incorporated in a place where
it has no physical presence
and that is unaffiliated with a
regulated financial group or
unlicensed money remitters or
currency exchangers or nonbank
financial intermediaries.
    
    Where the customer seeks
to avoid record-keeping or
reporting requirements, through
multiple transactions below a
threshold amount that would
trigger a reporting requirement,
or through other means.
    
    Involving payments in cash or
cash equivalents.
 Quality
 (See also, Other Sales and Marketing Standards.)
 Selling to the Government
   
    
    Improperly seeking or accepting confidential bid information belonging
to another party (such as the government or a competitor).
    
    Noncompliance with applicable government pricing, billing, and other
procurement rules.
 (See also, Bribery and Corruption and Gifts, Entertainment
and Business Travel.)
 Money Laundering and Exchange Control
  
    
    If you have any concern about the source of a customers funds, you must
err on the side of caution and escalate the issue using the reporting
procedures set forth in this Code or consult with the Law Department.
    
    Be aware of and comply with laws requiring that the receipt or importing
of specified amounts of cash or cash equivalents be reported to the
appropriate authorities.
  16




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We
must be guided by what is best for Nortel in all aspects of our
work.
 
    
    Financial Reporting
    
    Recording and Reporting Other Types of Information
    
    Maintaining Information
    
    Conflicts of Interest
    
    Use of Company Assets
    
    Nortels Confidential Information
    
    Communications with Media and Speaking on Nortels Behalf
    
    Responding to Legal Proceedings
 17




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##### 



Be Alert for Inaccurate
Financial Reporting:
  
    
    Inaccurate or unrecorded expense,
revenue, asset, or liability entries.
    
    Financial records that do not
accurately reflect the nature of
the transaction or do not match
underlying performance.
    
    Pressure to produce certain
accounting results.
    
    Efforts to avoid standard review
and control processes.
    
    Failure to perform required
reviews of financial practices,
records, and results.
    
    Estimates or reserves that are
not supported by facts or
appropriate documentation.
    
    Transactions that do not appear
to have a reasonable business
purpose.
 Financial Reporting
    
    
    Record transactions accurately, completely, consistently, and in a timely
manner.
    
    Maintain books, accounts, and records using sufficient detail to reflect
Nortel transactions accurately and fairly.
    
    Never mislead an internal or external auditor through false, incomplete, or
non-responsive information.
    
    Maintain the confidentiality of Company information and disclose records
and information as authorized by Company policy.
    
    Report any pressure to inappropriately influence reporting of financial
results.
    
    Challenge any business practice or behavior that may undermine the
principles in this Code and the integrity of our Company.
   
    
    Fairly and accurately record all transactions and maintain records in
accordance with U.S. Generally Accepted Accounting Principles
(U.S. GAAP).
    
    Ensure there is adequate and appropriate review and approval of all
transactions recorded in accordance with U.S. GAAP and other applicable
principles and standards.
    
    Communicate unfavorable as well as favorable information and provide
professional judgments and/or opinions.
    
    Maintain awareness of and perform their duties in a manner consistent with
finance and accounting-related laws, regulations, and professional standards
and request appropriate professional advice as required.
    
    Be alert for and cognizant of potential violations of law and Nortel policies
and procedures that may become apparent in the course of their work
through financial data processing and knowledge of business operations
and report these as appropriate.
    
    Retain financial records according to Company record retention policy.
 18




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Senior Financial Managers
 
    
    Ensure that financial and accounting staff have the appropriate level of
functional expertise and resources to accomplish operational objectives and
maintain professional standards.
    
    Support and promote continuous training and development of financial
and accounting staff and ensure appropriate transition of duties to new
personnel.
    
    Prevent and detect any pressure on financial or accounting personnel,
with respect to accounting judgments and estimates, for the purpose of
inappropriately influencing the reporting of financial results.
    
    Take all other steps necessary to ensure that the reports and other
documents filed with government agencies, including the Canadian
Securities commissions and the U.S. Securities and Exchange Commission,
and all other public accounting and finance-related communications are
accurate and complete in every respect and are filed in a timely manner.
 (See also, Bribery and Corruption.)
 Related
Policies and Procedures:
 100.22  Disclosure of Material Information
 101.01  Disclosure of Material Information
 300.33  Financial Reporting
 300.34  Internal Audit Services
 301.06  Internal Audit Report Follow-up Process
 301.07  Internal Audit Implementation Procedure
 GB 001  Payment and Reporting of Taxable Benefits
 US 003  International Boycotts and IRS Boycott Reporting Requirements
 300.03  Travel, Living and Entertainment Expenses
 303.23  Travel, Living and Entertainment Expenses
 Recording and Reporting Other Types
of Information
  Maintaining Information
  19




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##### 



Special considerations
applicable to serving on a
board of directors or technical
advisory board or otherwise
advising another company
that does not and is not
likely to do business with or
compete against Nortel.
  (See also, Responding to Legal
Proceedings.)
 Related
Policies and Procedures:
 205.04  Protection of Confidential Information
 252.01  Retention, Storage, and Destruction of Company Records
 Conflicts of Interest
    
    
    Prevents you from effectively and efficiently performing your regular duties.
    
    Causes you to compete against the Company.
    
    Influences your judgment when acting on behalf of Nortel in a way that
could hurt the Company.
    
    Causes you to misuse Company resources.
       20




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##### 



Relationships
with other Companies
 Working for, serving as a director or advisor to, or having investments in
competitors or companies with which Nortel has or is likely to have a business
relationship,
 
    
    Serve as directors, officers, employees, advisors, contractors, or
consultants to any company that does or is likely to do business with
or compete against Nortel.
    
    Have any direct or indirect investment in any such company (with the
exception of a public company when the investment does not exceed
one percent of the issued shares.)
  Doing part-time work for, or running, an outside business that is not, or is
not likely to become, a competitor or have a business relationship
with Nortel.
 
    
    You interact with some of the same people as in your Nortel job;
    
    You use skills or tools paid for or developed by Nortel;
    
    You do the same or similar work for Nortel; or
    
    Your work prevents you from performing your Nortel job effectively
and efficiently.
  Family
and close personal relationships
  Q & A:
 Q.
 A.
 21




---



##### 



Managerial Relationships with Family Members and Close
Personal Friends
  Receiving
Gifts, Entertainment, and Third Party Travel
 (See, page 13.)
 Loans
and Guarantees of Indebtedness
  Conflicts
Disclosure Process
     22




---



##### 



(See also, Bribery and Corruption and Gifts, Entertainment, and
Third Party Travel.)
 Related Policies and Procedures:
 200.01  Ethical Business Practices
 200.13  Representation on Unaffiliated Boards of Directors
 201.07  Compliance Program
 Use of Company Assets
  Related Policies and Procedures:
 200.05  Corporate Security
 200.19  Appropriate Use of Nortels Network
 205.04  Protection of Confidential Information
 206.01  Systems Security
 300.01  Risk Management
 300.03  Travel, Living and Entertainment Expenses
 320.28  Use of Undisclosed Material Information
 303.23  Travel, Living and Entertainment Expenses
 400.03  Possession and Use of Third Party Software
 901.05  Network Data (Recording and Use)
 Safeguarding
Company Property
  Use of
Nortel Name, Facilities, and Relationships
  Travel
and Living Expenses
  Related Policies and Procedures:  300.33  Financial Reporting
 23




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##### 



Computer
and Network Use
  
    
    Interfere with or adversely affect your job performance or that of any other
employee.
    
    Interfere with or impede the intended operation of the computer and
associated network access provided to you or others. (For instance, music
and games can consume significant storage capacity.)
    
    Be for personal business or the business of another person or company.
    
    Support any unlawful or other purpose that could cause embarrassment
to the Company or otherwise adversely affect its interests.
    
    Be disruptive or offensive, involving, for instance, sexually explicit
materials or materials that are discriminatory, hateful, or threatening
to others. Nortel computers may not be used to access pornographic or
other offensive web sites.
 (See also, Nortel Forbids Discrimination and Harassment.)
  
 Related Policies and Procedures:
 200.05  Corporate Security
 200.19  Appropriate Use of Nortels Network
 205.04  Protection of Confidential Information
 206.01  Systems Security
 901.05  Network Data (Recording and Use)
 Contractual
Commitments
  Conducting
Research
  24




---



##### 



Nortels Confidential Information
     Related Policies and Procedures:  205.04  Protection of Confidential Information
  
    
    Ensure that information under your control is properly
classified and
safeguarded in accordance with Nortel policies and procedures.
    
    Be careful when you discuss or transmit confidential information:
 
    
    Outside Nortel (for instance, on cell phones or in public places);
    
    In situations where third parties are on Nortel premises. (For example,
do not leave confidential information visible on an unattended computer
monitor);
    
    In emails. Use encryption technology if feasible, as defined in Nortel policies and procedures; and
    
    In faxes that may be seen by third parties.
 25




---



##### 




    
    Safeguard the confidentiality of information provided to third parties, such
as suppliers or customers, pursuant to applicable Company policies and
procedures. For example, when engaging in discussions or negotiations that
involve disclosing Nortel confidential information to third parties under
a non-disclosure agreement, make sure that no statement, agreement, or
transfer of technology is made that inadvertently grants the party a license or
rights to use Nortel intellectual property. Prior to Nortel receiving any oral
or written confidential information a non-disclosure agreement will usually
need to be executed by Nortel and the other party. If you think a nondisclosure
agreement may not be required in a particular case you should
discuss this with the Law Department.
    
    Report any actual or suspected unauthorized release of confidential
information, whether intentional or unintentional, to the Law Department
immediately.
    
    If you see Nortel confidential information left unattended or otherwise
made accessible to people who should not have it (even other Nortel
employees), report this immediately to your manager. Discuss confidential
information only with those employees who have a legitimate need to know.
    
    Make sure that tangible and electronic copies of Nortel confidential
information are clearly and consistently marked as required by applicable
corporate procedures.
  Related Policies and Procedures:
 100.22  Disclosure of Material Information
 101.01  Disclosure of Material Information
 205.04  Protection of Confidential Information
 300.28  Use of Undisclosed Material Information
 320.28  Use of Undisclosed Material Information
    
    
    Nortel does not want third-party confidential information unless having
such information is necessary in the context of a business transaction
(such as a request for proposal or bid request, evaluation of a component
or product to be incorporated into a Nortel system design, service for a
customers system, or due diligence for a potential transaction).
 26




---



##### 




    
    Prior to Nortel receiving any oral or written confidential information, ask
the Law Department if a non-disclosure agreement must first be signed and
delivered by Nortel and the other party.
    
    If you accept third-party confidential information under a non-disclosure
agreement, be sure an appropriate process has been established to meet our
obligations and that the information is used only for the purposes permitted
under the agreement.
    
    Do not accept or review an unsolicited disclosure of ideas (such as concepts,
technologies, patent applications, invention disclosures, or license or
marketing offers) from a person outside the Company. Instead, report the
matter immediately to the Law Department.
 (See also, Confidential Information of Competitors and Privacy.)
 Related Policies and Procedures:
 200.17  Collection and Retention of Competitive Information
 252.05  Review and Approval of the Collection and Retention of Competitive Information
 400.02  Handling Unsolicited Disclosure of Ideas from Other Parties
 401.03  Handling Unsolicited Disclosure of Ideas from Other Parties
      27




---



##### 



(See also, Computer and Network Use.)
 Related
Policies and Procedures:
 501.02
 Intellectual Property
 501.03  Inventions by Employees  Patents, Industrial Designs and Invention Disclosures
 400.06  External Publication of Technology Information
 401.02  Review and Approval Process for External Publication or Presentation of Technology Information
      
    
    There is a substantial likelihood that a reasonable investor would consider
it important in deciding whether to make an investment in a security or
would view the information as having significantly altered the total mix
of information available about the security or the company that issues it;
and/or
    
    Public disclosure of such information would reasonably be expected to have
a significant impact on the market price or value of the security.
   28




---



##### 



(See also, Communications with Media and Speaking on Nortels Behalf.)
 Related
Policies and Procedures:
 300.28
 Use of Undisclosed Material Information
 320.28
 Use of Undisclosed Material Information
 Communications with Media and  Speaking on Nortels Behalf
   (See also, Inside
Information.)
 29




---



##### 



Responding to Legal Proceedings
   
    
    Destroy, alter, or conceal any documents in anticipation of or following
a request for those documents from any government agency or a court or
in connection with any pending or threatened litigation, investigation, or
official proceeding.
    
    Lie or make misleading statements in connection with, or fail to respond
fully to, any government or other investigation or any legal proceeding, or
cause another employee to do so.
 (See also, Maintaining Information.)
 Related Policies and Procedures:   252.01  Retention, Storage, and Destruction of Company Records
 30




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Our Commitment to Each Other
 Nortel employees have an obligation to treat each other with dignity and
respect and to maintain a safe and healthy work environment.
 
    
    Nortel Forbids Discrimination and Harassment
    
    Nortel Promotes Diversity
    
    Drugs and Alcohol
    
    Workplace Health and Safety
    
    Privacy
 31




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##### 



Nortel Forbids Discrimination and Harassment
    (See also, Computer and Network Use.)
 Related Policies and Procedures:
 800.25
 Chronic Medical Conditions
 802.19  Sexual Harassment
 CA.003  Workplace Harassment
 CA.005  Equal Employment Opportunity
 US.008  Equal Employment Opportunity/Affirmative Action
 AU.001  Australia Discrimination, Harassment and Equal Employment Opportunity
 HK.001
 Discrimination, Harassment and Equal Employment Opportunity
(Hong Kong)
 EMEA.001  Harassment
 Nortel Promotes Diversity
   Related
Policies and Procedures:
 800.25  Chronic Medical Conditions
 802.19  Sexual Harassment
 CA.005  Equal Employment Opportunity
 CA.003
 Workplace Harassment
 US.008  Equal Employment Opportunity/Affirmative Action
 32




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##### 



Drugs and Alcohol
    Related
Policies and Procedures:
 800.24
 Drugs, Alcohol and Smoking in the Workplace
 US.006  Drugs and Alcohol
 Workplace Health and Safety
   Related
Policies and Procedures:
 100.02  Crisis Communications
 200.10  Travel by Nortel Directors, Officers and Employees
 200.16  Protection of Key Corporate Employees
 204.01  Crisis Management
 800.01  Environment, Health and Safety
 803.14  Emergency Response
 803.15  EHS Management Systems
 33




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##### 



Privacy
   (See also, Nortels Confidential Information.)
 Related
Policies and Procedures:
 800.29
 Privacy and Data Protection
 802.20
 Privacy and Data Protection
 AU.002  Australia Workplace Surveillance
 34




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Our Commitment in Doing Business
Globally
 Because Nortel is a global company, it is subject to laws that govern
 commerce between nations, as well as local laws and regulations in the
 countries where we operate.
 
    Export Control
    Customs
    U.S. Anti-Boycott Act
    Foreign Corrupt Practices
 35




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Export Control
       
    
    You follow applicable international trade control regulations, including
licensing, shipping documentation, import documentation, reporting, and
record retention requirements, of all countries in which we conduct business
or in which our business is located. In some cases, these restrictions will
apply to international trade in goods, technology, software, and services
as well as to financial transactions.
    
    Employees and third parties who are citizens or residents of countries subject
to export control restrictions have access to our network only if and to the
extent permitted by applicable law.
    
    All international transactions are processed through Nortels trade and
compliance shipping systems, which are designed to help manage Nortels
export control compliance. (Many but not all SAP-generated international
orders are automatically reviewed for export control compliance at the time
an order is placed with Nortel or at the time of shipment.) To determine
whether an international transaction has been reviewed, employees should
consult one of the ECC Contacts listed on Nortels Export Control
Compliance web page (see above).
 36




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##### 



Related Policies and Procedures:
 400.06  External Publication of Technology Information
 400.04  Export Control and Trade Compliance
 402.01  Export Control and Trade Compliance Procedure
 Customs
  U.S. Anti-Boycott Act
  Foreign Bribery and Corrupt Practices
 (See also,
Bribery and Corruption, Gifts, Entertainment, and Third Party Travel, and
Selling to the Government.)
 37




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Our Commitment to Our Communities
 Our work for Nortel touches many communities. We must respect
 them by working to conduct Company business in a socially responsible
 manner, as well as by obeying laws dealing with the environment and the
 political process.
 
    
    Corporate Citizenship
    
    Environmental Responsibility
    
    Political Involvement
 38




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Corporate Citizenship
  
    
    We encourage recruiting qualified local personnel and purchasing local
materials and services, where practical.
    
    We do not use forced labor or child labor and will not work with suppliers
that do.
    
    We expect suppliers to observe our social responsibility standards, as set
forth in the Supplier Code of Conduct.
     Related Policies and Procedures:
 100.04  Corporate Contributions for Community Relations
 251.01  Corporate Contributions for Community Relations
 800.27  Support for Education
 39




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Environmental Responsibility
   Related Policies and Procedures:
 700.06  Environmental Procurement
 712.17  Environmental Procurement
 800.01  Environment, Health and Safety
 803.14  Emergency Response
 850.02  EHS Audits, Compliance Assessments and Management Reviews
 Political Involvement
  
    
    Employees involved in lobbying and other work for Nortel within the political
process must ensure that they are aware of and comply with all applicable laws.
    
    All contacts for Nortel between employees of Nortel and members of government,
other than direct sales contacts with technical or procurement officials, contacts with
the patent or copyright offices, contacts by or authorized by the Law Department,
and those required by statute, shall be coordinated through Government Relations.
    
    When you speak about political issues, always make it clear that your views and
actions are your own and not those of Nortel.
    
    While Nortel encourages employees to participate in political activity, employees
shall not contribute Company or subsidiary funds, property, resources, or employee
work time to any political party or candidate unless approved by their manager and
Government Relations. Strict laws govern corporate political contributions.
    
    If you plan to seek elective office or political appointment, you should notify your
manager.
 (See also, Bribery and Corruption.)
 Related Policies and Procedures:
 100.05  Direct Governmental Financial Assistance
 100.07  Federal Government Relations
 207.03  Political Involvement by Employees
 207.04  Visits by Elected Representatives, Political Candidates and Government Officials
 40




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Contact Information for Compliance Resources
  1)
    
    Discuss the issue with your manager (unless you are uncomfortable doing so or
believe that the issue will not be satisfactorily resolved). Or discuss the issue with Human
Resources, the Law Department, Compliance, Corporate Security, or Internal Audit.2)
    
    Call the Compliance Action Line:(Operates 24 hours a day, 7 days a week, in many languages.)ESN 333-3014 or (905) 863-30141-800-683-3503 (toll free within North America)(Your name and number are not displayed when you call these lines.)This also gives you the option of reporting financial concerns directly to the
Audit Committee of the Board of Directors.3)
    
    Submit your concern/question via the Compliance Action web tool:www.nortel.com/ethicsaction4)
    
    Send an E-mail: compliance@nortel.com(Please note that your e-mail address appears on the message. Alternatively, you may send
an email marked Private and Confidential  Complaint directly to the Chief Compliance
Officer, at rboffice@nortel.com.)5)
    
    Send a written communication:You may also send a written communication marked Private and Confidential 
Complaint directly to Chief Compliance Officer Bob Bartzokas at Nortel,
2221 Lakeside Boulevard, Richardson, TX 75082, or another member of his staff.6)
    
    Call any member of Compliance directly, including:Bob Bartzokas, Chief Compliance Officer . . . . ESN 444-9530 or (972) 684-9530
Rob Timberg, Director, Ethics . . . . . . . . . . . . . . ESN 333-1246 or (905) 863-12467)
    
    Communicate your concerns to the Nortel Board of Directors:You may communicate directly with the Board of Directors, the Chairman of the
Board, or an individual Director, including the Chairman of the Audit Committee,
by writing to his or her attention in care of the Corporate Secretary at:Nortel Networks Corporation195 The West MallToronto, OntarioCanada M9C 5K1
  41




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Index
 AAbout the Nortel Code of Conduct
    
    
    5Accounting or auditing matters
    
    
    18Accurate books and records
    
    
    18Advertising
    
    
    11Agents, hiring overseas
    
    
    10,12,36Alcohol
    
    
    33Anonymously raising concerns
    
    
    6,41Anti-Boycott Act
    
    
    37Antitrust
    
    
    10Application of Code
    
    
    5Asking questions and raising concerns
    
    
    18Assets, protecting
    
    
    23BBid rigging
    
    
    10Board members, compliance with the Code
    
    
    5Board of directors, serving on
    
    
    21Books and records
    
    
    18Boycotts
    
    
    37Bribery
    
    
    11,15,16,19,23,37,40CCalling the Compliance Action Line
    
    
    6Candidates for political office
    
    
    40Canadian Corruption of Public Officials Act
    
    
    12Cash gifts
    
    
    13Cash transactions, reporting
    
    
    16,18Child labor
    
    
    39Close relatives
    
    
    21,22Commercial bribery
    
    
    11Communities and society
    
    
    39Competing with Company
    
    
    20Competition Law
    
    
    10Competitors, criticizing and disparaging
    
    
    11Competitors, discussions and meetings with
    
    
    10Competitors, information and information about
    
    
    10,15Competitors, ownership interest in
    
    
    21Competitors, working for
    
    
    21Compliance Action Line
    
    
    5-8, 41Computer systems
    
    
    15,24,25,28Confidential Company information
    
    
    25Confidential information of others
    
    
    10,26Confidentiality
    
    
    6,15,25,27Conflicts of interest
    
    
    20Consequences of violations
    
    
    7Contributions for political campaigns
    
    
    40Copyright
    
    
    27Corporate opportunities
    
    
    20Corrupt business practices
    
    
    11Cultural events, accepting invitations to
    
    
    13,14Customers, ownership interest in
    
    
    21Customers
    
    
    5, 8-12, 14-16, 20-21, 25-26, 28, 32-33, 36-37, 40DDirectors
    
    
    5,6,8,20,22,28,29,39,41Disability
    
    
    32Discipline for retaliation
    
    
    7Disclosing proprietary information
    
    
    25-29Discrimination in workplace
    
    
    32Disparagement of competitors
    
    
    11Diversity
    
    
    32Dividing customers or markets
    
    
    10Drugs
    
    
    33EEmail
    
    
    10,25Employee confidentiality
    
    
    34Employee records
    
    
    34Employment discrimination
    
    
    32Employment outside of Company
    
    
    21Employment with competitors or suppliers
    
    
    21Entertainment, offering or receiving
    
    
    13,14Environment
    
    
    40Exchange Control
    
    
    16Exclusive dealing
    
    
    10Export controls
    
    
    36FFair competition
    
    
    9,10Family members and close personal relationships,
doing business with
    
    
    21,22Finance managers, responsibility
    
    
    5,6,18,19Financial disclosure and reporting
    
    
    18Fixing prices
    
    
    10Forced labor
    
    
    39Foreign Corrupt Practices Act
    
    
    12,37Foreign countries and boycotts
    
    
    37Foreign laws
    
    
    8,11,16Foreign officials
    
    
    11Fraud:Accounting, financial reporting
    
    
    18Bid rigging
    
    
    10Bribery
    
    
    11Company funds
    
    
    18,19Company resources
    
    
    23Company time
    
    
    24Employee fraud
    
    
    23Fraudulent financial reporting
    
    
    18Fundraising, political
    
    
    40Government contracts
    
    
    16Government inquiries
    
    
    20,30Records, false or misleading
    
    
    18Statements about competitors
    
    
    11Friends and family stock
    
    
    13GGender discrimination, workplace
    
    
    32Generally Accepted Accounting Principles
    
    
    18Gifts, offering or receiving
    
    
    13Government customers, dealing with
    
    
    14,16Government employees, discussing employment with
    
    
    16Government investigations
    
    
    20,30Gratuities, offering or receiving
    
    
    13,14Guarantees of debtors
    
    
    22Guidelines for Gifts, Entertainment, and Third Party Travel
    
    
    11-14
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HHarassment
    
    
    32Harassment, reporting
    
    
    32Health and safety
    
    
    33Hiring government personnel
    
    
    16Hotline
    
    
    5-8, 41IIndustry association
    
    
    10Information gathering, competitive
    
    
    15Inside information
    
    
    28Insider trading
    
    
    28Intellectual property
    
    
    27Internet
    
    
    27Investigations
    
    
    5,7,18,20,30Investment analysts, contacts by
    
    
    29Investments in other companies
    
    
    21Investor Relations
    
    
    29JJob offers to government employees
    
    
    16Job, outside Company
    
    
    21LLobbying
    
    
    40MManagement, responsibilities of
    
    
    5,6,18,19Market allocation
    
    
    10Material information
    
    
    28Meals, accepting or offering
    
    
    13,14Media, contacts by
    
    
    29Money laundering
    
    
    16Monopolistic conduct
    
    
    10NNetwork security
    
    
    24News media, contact by
    
    
    29OOff-books accounts prohibited
    
    
    18Offering gifts and entertainment
    
    
    13Outside employment
    
    
    21,22Overseas laws
    
    
    8,11,16Ownership in competitors and suppliers
    
    
    21,22PPersonal data, records
    
    
    24,34Personal use of company resources
    
    
    24Personnel data
    
    
    34Political activities
    
    
    40Political fund-raising
    
    
    40Political office, running for
    
    
    40Political parties, contributions to
    
    
    40Previous employers information
    
    
    15Price fixing
    
    
    10Privacy
    
    
    34Proprietary information, Company
    
    
    25,27Proprietary information, others
    
    
    26,27Public office, employees holding or running for
    
    
    40QQuality
    
    
    16RRacial discrimination
    
    
    32Record-keeping
    
    
    19Relatives, conflicts of interest involving
    
    
    20-22Relatives, doing business with
    
    
    21,22Religious beliefs and practices, discrimination
    
    
    32Reporting suspected violations or problems
    
    
    5,6,41Retaliation
    
    
    7SSafe workplace
    
    
    33Safety
    
    
    33Sales practice
    
    
    11Security
    
    
    6,24,29,33,36Sexual harassment
    
    
    32Sexual orientation, discrimination, workplace
    
    
    32Software
    
    
    10,25,27,28,36Sporting events, accepting invitations to
    
    
    13,14Supervisors, responsibilities
    
    
    5Supplier Code of Conduct
    
    
    39Suppliers, ownership interest in
    
    
    21Suppliers, working for
    
    
    21Suspicious transactions
    
    
    11,12,16,18,36TTipping, violation of securities law
    
    
    28Third-party payments
    
    
    11Trade associations
    
    
    10Trade restrictions
    
    
    28Trade secrets
    
    
    10,25,26Transshipments
    
    
    36Tying products or services
    
    
    10UUnfair business practices
    
    
    10Unrecorded funds
    
    
    16Unsavory entertainment
    
    
    13Unsolicited ideas
    
    
    26,27WWaivers
    
    
    8Where to go for help
    
    
    6,41Who the Code applies to
    
    
    5Who to contact
    
    
    6,41Window period for securities trading
    
    
    29Working for another company
    
    
    21Workplace harassment
    
    
    32Workplace safety
    
    
    33
 43




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##### 



In the United States:
    
    In Europe:Nortel
    
    Nortel35 Davis Drive Research Triangle
Park, NC 27709 USA
    
    Maidenhead Office Park, Westacott Way
Maidenhead Berkshire SL6 3QH UK
Phone: 00 800 8008 9009In Canada:Nortel
    
    In Asia:195 The West Mall
    
    NortelToronto, Ontario M9C 5K1 Canada
    
    United Square101 Thomson RoadIn Caribbean and Latin America:
    
    Singapore 307591Nortel
    
    Phone: (65) 6287 28771500 Concorde TerraceSunrise, FL 33323 USA
 www.nortel.com www.nortel.com/news