<Jeff Pinkham was representing Plaintree in the UK in 1997>
Plaintree up 3/4 to 2 today on heavy volume. Coincidence?
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Nortel (Northern Telecom) and Plaintree Systems Forge Strategic Relationship
Nortel to Acquire 19% Equity Stake
OTTAWA, June 3 /PRNewswire/ -- Nortel (Northern Telecom), a leading global designer, builder and integrator of
communications products, systems and networks, and Plaintree Systems Inc. [Nasdaq:LANPF - news], a leader in multi-layer
gigabit switching for LANs, announced today that they have reached agreement to form a strategic business relationship, which
includes Nortel's Cdn $9 million equity investment in Plaintree (subject to regulatory approval).
In a Memorandum of Understanding, Plaintree has granted to Nortel an option to license its technology for use in data switching
products, and will provide certain consulting and development services to Nortel. As part of the strategic relationship, Nortel and
Plaintree will work together to develop Nortel's data switching products targeted for the carrier market. Nortel and Plaintree have
agreed to negotiate in good faith an agreement to distribute Plaintree's products to telecommunications carriers whereby Nortel is
granted worldwide rights for this market, subject to existing relationships. In addition, Nortel may now integrate Plaintree products
into Nortel's end-to-end network solutions for any of its customers.
To further strengthen the alliance, Nortel has agreed to purchase a Cdn $9 million equity interest in Plaintree. Nortel will purchase
9,000 7% Convertible Preferred Shares, Series II in a private placement transaction. The 9,000 Preferred Shares carry voting
rights and are convertible into 4,186,047 common shares of Plaintree (at Cdn$2.15 per common share), representing approximately
a 19% equity stake. Of the Cdn $9 million investment, Cdn $4 million will be held in escrow, pending execution of definitive
distribution, consulting and development, and technology licensing agreements in accordance with the signed Memorandum of
Understanding.
''Access to Plaintree's technologies and resources will expedite the availability of Nortel's IP-optimized network solutions for our
carrier customers'' said David Mann, vice-president, Technology, Broadband Networks.
''The strategic alliance with Nortel will allow us to significantly strengthen Plaintree's position in the data market,'' said Bruce
Walter, president and chief executive officer of Plaintree. ''Communications networks will experience revolutionary changes over
the next several years, fueled by the convergence of voice, video and data into integrated networks and the explosive growth of
Internet/Intranet applications. Plaintree is looking forward to working with Nortel to develop the products which will serve these
new, demanding requirements.''
Nortel works with customers in more than 150 countries and territories to design, build and integrate their communications
products and advanced digital networks. Customers include public and private institutions; Internet services providers; local,
long-distance, cellular mobile and PCS communications companies; cable television companies; and utilities.
Nortel's research capabilities around the world include a network of research and development facilities, affiliated joint ventures,
and other collaborations fostering innovative product development and advanced design research in 16 countries.
Nortel had 1997 revenues of $US 15.5 billion and has approximately 73,000 employees.
Plaintree Systems Inc. develops, manufactures, and markets switching products that improve the performance and simplify the
management of enterprise local area networks. Founded in 1988, Plaintree maintains its U.S. headquarters in Newton, MA, with
research, development and manufacturing based in Ottawa, Canada.
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