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June 4, 2001
Nortel Networks to Offer Stock Option Exchange Program for Employees
TORONTO – Nortel Networks* Corporation [NYSE/TSE: NT] announced that it will offer a voluntary stock option exchange program for its employees. Program documentation is expected to be delivered to eligible employees within the next 30 days upon commencement of the offer.
“Employees are the most important asset of Nortel Networks and a key factor in helping us serve our customers and achieve our long-term goals which will in turn enhance shareholder value,” said John Roth, president and chief executive officer, Nortel Networks. “Stock options are a key component of a competitive rewards package in the global technology industry where competition for the best talent is always fierce, even in a market downturn. This is an extraordinary step that is essential so we may continue to attract, retain and reward our talent in a highly competitive labor market,” Roth said. Under the planned program, eligible employees will be able to tender for cancellation stock options that were granted on or after November 12, 1999 under the Nortel Networks Corporation 1986 and 2000 Stock Option Plans for new options expected to be issued on a date which is at least six months plus one day from the date of cancellation of the tendered options. Board appointed officers and members of the board of directors of Nortel Networks will not be eligible to participate in the program. Eligible employees who elect to participate in the planned program will have to tender for cancellation all options granted on or after November 12, 1999. For options issued between November 12, 1999 and February 12, 2001, program participants will receive two new options for every three options cancelled. For options issued on or after February 13, 2001, program participants will receive three new options for every four options cancelled. The exercise price of the new options will be equal to 100 percent of the market price of one Nortel Networks common share on the grant date of the new options, in accordance with the terms of the applicable stock option plan. The terms and conditions of the new options, including the vesting schedules, will be substantially the same as the terms and conditions of the options that were tendered for cancellation. The Corporation has received all necessary regulatory approvals in Canada and the United States for the planned program. As of May 31, 2001, approximately 333 million options to purchase common shares of Nortel Networks were issued and outstanding. Approximately 33 percent of these options are expected to be eligible for the program. Nortel Networks is a global Internet and communications leader with capabilities spanning Optical, Wireless, Local, Personal Internet and eBusiness. The Company had 2000 U.S. GAAP revenues of US$30.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet, promising a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com. Following commencement of the offer, eligible employees will be sent a copy of the written “Offer to Exchange.” Eligible employees are urged to read the Offer to Exchange when it becomes available, because it will contain important information. Eligible employees will be able to obtain a free copy of the Schedule Tender Offer (“TO”) which when filed with the SEC, will contain the Offer to Exchange and other important information, as well as other filings containing information about us, at the SEC’s web site (www.sec.gov). Following commencement of the offer, eligible employees will also be able to obtain, without charge, copies of the Schedule TO and our SEC filings incorporated by reference in the Offer to Exchange directly from Nortel Networks Corporation. Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the impact of the credit risks of our customers; the entrance by Nortel Networks into an increased number of supply, turnkey, and outsourcing contracts which contain delivery, installation, and performance provisions, which, if not met, could result in Nortel Networks having to pay substantial penalties or liquidated damages; and the impact of increased provision of customer financing and commitments by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. *Nortel Networks, the Nortel Networks logo and the Globemark are trademarks of Nortel Networks.Contact for Press and Analysts:
Media:
Tina Warren
Nortel Networks
905-863-4702
tinawarr@nortel.com
Investors:
Nortel Networks
888-901-7286
905-863-6049
investor@nortel.com
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