Nortel Networks offers select, key executives the opportunity to participate in the Key Contributor Stock Option Program under the Nortel Networks Corporation Stock Option Plan.
Initial options become exercisable five years after they are granted.
At the time of exercise, executives have two choices. First, they can choose to exercise the initial options and sell the related stock, forfeiting the opportunity to exercise replacement options in the future. Second, they can choose to exercise the initial options and hold the related common shares, thereby gaining the ability to exercise replacement options three years later. Executives who choose the second course of action are only permitted to sell sufficient common shares to cover the exercise costs, brokerage fees and applicable taxes associated with the exercise of the initial options. In completing their transactions, Mr. Conner increased his direct holdings of Nortel Networks common shares by 122,950 to 136,494, while Mr. Bolouri increased his holdings by 76,600 to 99,099.