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FREQUENTLY ASKED QUESTIONS I. QUESTIONS RELATING TO BOTH SETTLEMENTS II. QUESTIONS RELATING TO THE NORTEL II SETTLEMENT III. QUESTIONS RELATING TO THE DISTRIBUTION I. QUESTIONS RELATING TO BOTH SETTLEMENTS 1. 1. Why were there two Settlements against Nortel Networks ("Nortel")? Nortel was alleged to have misrepresented its financial condition during two separate time periods. One of the Settlements related to a class that purchased Nortel common stock or options during the period October 24, 2000 through February 15, 2001, inclusive (the "Nortel I Class"). The other Settlement related to a class that purchased Nortel common stock or options during the period April 24, 2003 through April 27, 2004 inclusive (the "Nortel II Class"). A person could have been a member of the Classes in both Settlements if that person had transactions in Nortel common or options during both time periods. 2. Where were these lawsuits filed? An action covering members of the Nortel I Class wherever they reside was filed and litigated and certified in the United States District Court for the Southern District of New York. Actions on behalf of Nortel I Class members who resided only in certain Canadian Provinces were also commenced in the Ontario Superior Court of Justice, the Superior Court of Quebec District of Montreal, and the Supreme Court of British Columbia, respectively. The action commenced in Ontario was amended in connection with the settlement to include all other Canadian Provinces other than Quebec and British Columbia. An action covering members of the Nortel II Class wherever they reside was filed and litigated in the United States District Court for the Southern District of New York. Actions on behalf of Nortel I Class members who resided only in certain Canadian Provinces were also commenced in the Ontario Superior Court of Justice, the Superior Court of Quebec District of Montreal, respectively. The action commenced in Ontario was amended in connection with the settlement to include all other Canadian Provinces other than Quebec. 3. What were these cases about? The Complaints filed in connection with the Nortel I Settlement generally alleged that during the period, October 24, 2000 through and including February 15, 2001, the defendants materially misrepresented Nortel's revenues and earnings and the value of Nortel's receivables in public reports and statements disseminated to the investing public. These Complaints further alleged that, as a result of these statements, the price of Nortel common stock was artificially inflated during the Nortel I Class Period. 4. Who was eligible to participate in the Nortel I Settlement? To have participated in the Nortel I Settlement a Class Member must have purchased Nortel common stock, purchased call options on Nortel common stock or wrote (sold) put options on Nortel common stock during the period October 24, 2000 through February 15, 2001, inclusive, and have submitted a Proof of Claim form by December 5, 2007. This claim filing deadline has passed. 5. Who was eligible to participate in the Nortel II Settlement? If you are a member in the Nortel II Settlement, a Class Member must have purchased Nortel common stock, purchased call options on Nortel common stock or sold put options on Nortel common stock during the period April 24, 2003 through April 27, 2004 inclusive, and have submitted a Proof of Claim form by December 5, 2007. This claim filing deadline has passed.
6. What securities were eligible? Eligible transactions for both Settlements included purchases of Nortel common stock, purchases of call options on Nortel common stock, or the writing (sale) of put options on Nortel common stock during either class period. 7. Can I still file a claim? No, the original filing deadline was November 20, 2006. The Courts allowed late claims submitted through December 5, 2007 but have ordered that no claim postmarked after December 5, 2007 will be accepted for any reason whatsoever. II. QUESTIONS RELATING TO THE NORTEL II SETTLEMENT 1. What did the Settlement provide? A Settlement Fund consisting of $370,157,418 in cash, plus accrued interest was established for the benefit of the Nortel II Class. In addition, 314,333,875 shares of Nortel common stock (reduced to 31,433,387 shares by a 1 for 10 consolidation) were issued for the benefit of the Nortel II Class. 2. Are there more details about the Settlement? Yes. The full terms and provisions of the Settlement were contained in the Stipulation, which is available by clicking here. 3. What was required to receive a payment? In order to have qualified for a payment, a Class Member must have completed and submitted a Proof of Claim Form postmarked no later than December 5, 2007. This claim filing deadline has passed. 4. When were payments distributed? The initial distribution of cash payments to accepted Class Members was made on May 8, 2008. On April 28, 2008, Accepted Class Members whose claims were large enough to be entitled to a distribution of Settlement Shares were mailed certificates for the number of shares to which their claims entitled them. Class Members with questions regarding their distribution of cash payments or Nortel shares may call the Claims Administrator at 1-866-881-7495. 5. How was the amount distributed to the Accepted Claimant determined? Benefits were calculated according to the Plan of Allocation summarized in the Notice. Nortel II Class Members who submitted acceptable Proofs of Claim were paid approximately 22% of their “Recognized Claim” amounts in cash and were also paid one Nortel Share for each $49 of their Recognized Claim amount. 6. Who were the lawyers in this case? The following firms represented Class Members: 7. How are the lawyers being paid? All Counsel fees were paid from the cash and stock in the Settlement Fund. III. QUESTIONS RELATING TO THE DISTRIBUTION 1. When were the checks mailed? On May 8, 2008, the Claims Administrator began issuing checks to those claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation. 2. When were the Nortel share certificates mailed? On April 28, 2008, Nortel’s Transfer Agent began issuing Nortel share certificates to those Nortel II claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation large enough to be entitled to a distribution of Settlement Shares. On May 9, 2008 Nortel’s Transfer Agent began issuing Nortel share certificates to those Nortel I claimants who filed a valid Proof of Claim form and had a Recognized Loss pursuant to the Plan of Allocation large enough to be entitled to a distribution of Settlement Shares." 3. What is the total amount of the Distribution? In Nortel I, $394,103,000 and 30,412,470 in shares; In Nortel II, $314,500,000 and 28,864,376 in shares. 4. What is the value of the shares? As share value changes on a daily basis, the distributed shares are subject to current market value. 5. I cannot cash/negotiate my settlement check; how can I request that it be reissued? If you need to request that your check be re-issued, you must submit a request in writing. Please include your full name, address, claim number (if available), and daytime telephone number with the best time of day to reach you. In addition, please include a statement explaining the need for re-issue, and mail to:
Nortel II Securities Litigation 6. I received a check for a deceased family member, how can I request that it be reissued in my name? If you received a check for a deceased family member and need to request that the check be re-issued, you must submit a request in writing. Please include your full name, address, claim number (if available), and daytime telephone number with the best time of day to reach you. Please be advised you must include a copy of the death certificate and appropriate documentation to support the name in which the check should be re-issued, and mail to:
Nortel II Securities Litigation 7. How should I report this distribution on my taxes? The tax treatment of this distribution varies based upon the individual circumstances and tax status of each Claimant. Accordingly, the Claims Administrator is not able to determine the appropriate tax reporting for any Claimant. You should consult with your tax advisor to determine the tax consequences, if any, that the distribution of the Net Settlement Funds may have to you. As Stated in the cover letter sent with cash distributions, the Nortel Securities Litigation Settlement Funds are each a "Qualified Settlement Fund", as defined in Treas. Reg. Section 1.468B-1 through 5. The regulations provide in part that "whether a distribution from a Qualified Settlement Fund is included in the claimant's gross income is generally determined by reference to the claim in respect of which the distribution is made and as if the distribution were made directly by the transferor." The claims upon which the Nortel Securities Litigation were based involved allegations that members of the Settlement Class were misled into purchasing Nortel common stock or call options on Nortel common stock, or selling put options of Nortel common stock during the Class Period at artificially inflated prices in violation of the federal securities laws. The tax treatment of this distribution varies based upon the recipient’s tax status and treatment of his, her or its investments and is the responsibility of each recipient. We cannot determine the appropriate tax reporting for all recipients and therefore cannot provide individual tax advice. Please consult your tax advisor to determine the tax consequences, if any, of this distribution to you. |