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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934  Date of Report (Date of earliest event reported)
    
    OCTOBER 4, 2005
 NORTEL NETWORKS LIMITED    CANADA(State or other jurisdictionof incorporation)
    
    000-30758(CommissionFile Number)
    
    62-12-62580(IRS EmployerIdentification No.)8200 DIXIE ROAD, SUITE 100, BRAMPTON, ONTARIO, CANADA(Address of principal executive offices)
    
    L6T 5P6(Zip Code)
  Registrants telephone number, including area code
    
    905-863-0000
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):  o
    
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)o
    
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)o
    
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))o
    
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




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Item 1.01     Entry
into a Material Definitive Agreement On October 4, 2005, the registrant entered into a letter
agreement (the Agreement) with Stephen C. Pusey, Executive Vice-President and President, Eurasia
of the registrant and Nortel Networks Corporation (NNC), in support of his continued employment,
providing for the payment to Mr. Pusey of a bonus of
£525,000 (the Special Bonus) in the event he
remains with the registrant and NNC for a defined two-year period. The Special Bonus will be paid
in two equal installments, the first of which will be paid within
thirty (30) days of August 1,
2006 and the second of which will be paid within (30) days of
August 1, 2007. In addition to the
satisfaction of certain performance and other requirements upon which the payment of the Special
Bonus is conditional, the two installments will only be paid if
Mr. Pusey remains in active
employment from August 1, 2005 through July 31, 2006 (in the case of the first installment) and
from August 1, 2005 through July 31, 2007 (in the case of the second
installment). A pro rata
portion of the Special Bonus, calculated based on the number of days of active service during the
two-year retention period, will be paid in certain situations where
Mr. Puseys employment is
terminated involuntarily without cause or due to death or if an approved leave of absence occurs. NNC owns all of the
registrants common shares and the registrant is NNCs principal direct operating subsidiary.




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NORTEL NETWORKS LIMITEDBy:
    /s/ Gordon A. DaviesGordon A. DaviesGeneral Counsel  Corporateand Corporate SecretaryBy:

/s/
William J. DonovanWilliam J. DonovanSenior Vice-President,
Human Resources Dated: October 5, 2005