Nortel has agreed to pay $11.5 million as part of a settlement with Motorola over the hiring of Motorola's former president and COO, Mike Zafirovski.

Motorola filed the lawsuit earlier this month, just days after Nortel announced that it had picked Zafirovski to be its new CEO. Citing non-compete agreements, Motorola sought to prevent Zafirovski from working at Nortel for two years and to block him from hiring Motorola employees.

Under the terms of the settlement, Zafirovski and Nortel have agreed not to recruit Motorola employees and to limit Zafirovski's communications with certain unnamed companies, some of which are Motorola customers. The settlement also limits Zafirovski's ability to advise Nortel "on competitive strategy or analysis relative to Motorola," Nortel said in a statement.

Zafirovski must also repay his former employer $11.5 million in separation money. Nortel said it will reimburse its new CEO this sum.

The settlement clears the way for Zafirovski to succeed Nortel president and CEO Bill Owens. He will be taking over a company struck by a downturn in the telecommunications equipment market and a financial scandal that led to the firing of a number of Nortel's top executives, including former CEO Frank Dunn.