Reliant FORM 10-K manual Certain employment arrangements

Table II

Total Earnings

$600,000 700,000 800,000 900,000 1,000,000 1,100,000 1,200,000 1,300,000 1,400,000 1,500,000 1,600,000 1,700,000 1,800,000 1,900,000 2,000,000

5

$10,330 12,051 13,773 15,494 17,216 18,938 20,659 22,381 24,103 25,824 27,546 29,267 30,989 32,711 34,432

10

$20,659 24,102 27,546 30,989 34,432 37,875 41,318 44,762 48,205 51,648 55,091 58,534 61,978 65,421 68,864

15

$30,989 36,153 41,318 46,483 51,648 56,813 61,977 67,142 72,307 77,472 82,636 87,801 92,966 98,131 103,296

Years of Service

20

$41,318 48,204 55,091 61,977 68,863 75,750 82,636 89,522 96,409 103,295 110,181 117,068 123,954 130,840 137,727

25

$51,648 60,256 68,864 77,472 86,080 94,688 103,296 111,904 120,512 129,120 137,728 146,336 154,944 163,552 172,160

30

$61,978 72,307 82,637 92,967 103,296 113,626 123,956 134,285 144,615 154,945 165,274 175,604 185,933 196,263 206,593

35

$72,308 84,359 96,411 108,462 120,513 132,565 144,616 156,667 168,719 180,770 192,821 204,873 216,924 228,975 241,027

On April 27, 2004, the Company and Nortel Networks Limited terminated for cause the employment of each of their then president and chief executive officer, chief financial officer and controller. On August 19, 2004, the Company announced that seven individuals with, or who had, significant responsibilities for financial reporting at the line of business and regional levels were terminated for cause and that Nortel Networks will demand repayment of payments made under bonus plans in respect of 2003. As a result, where applicable and permitted under applicable law, the pension benefits for the terminated executives were recalculated to include base salary only in 2003.

As a result of the termination of Mr. Dunn’s employment for cause on April 27, 2004, he was no longer eligible for any SERP benefit that would have otherwise applied as a result of his past election to remain in Part I of the pension plan. Upon the termination of his employment for cause, Mr. Dunn received Cdn$2,416,517.18 representing the commuted value of the pension benefits accrued pursuant to the Nortel Networks Limited Managerial and Non-Negotiated Pension Plan. The payment was calculated based on Mr. Dunn’s 27.92 years of service in accordance with the Part I formula described under “Defined Benefit Pension Plan — Canada”.

Certain employment arrangements

On August 31, 2004, the Company and Nortel Networks Limited entered into an employment agreement with William A. Owens confirming Mr. Owens’ appointment as President and Chief Executive Officer of the Company and Nortel Networks Limited as of April 27, 2004. The agreement provides that Mr. Owens will receive a base salary of $1,000,000 and will be eligible for a targeted annual bonus of 170% of base salary under the Nortel Networks Limited SUCCESS Incentive Plan. Under the agreement, Mr. Owens will receive a special pension benefit that will accrue ratably over the first five years of his employment as President and Chief Executive Officer. Assuming retirement at the end of such five years, Mr. Owens will receive an estimated monthly pension benefit of $33,540, payable over the five year period following his retirement.

Mr. Owens is based at the registrant’s offices in Ontario, Canada. In connection with his relocation to Ontario, Mr. Owens will be eligible for certain benefits under the Nortel Networks-International Assignment Relocation program, in accordance with the generally applicable terms of such program and consistent with his senior executive position.

Mr. DeRoma entered into an employment agreement in April 1997, prior to commencing employment as Vice-President and Deputy General Counsel. Pursuant to the agreement, the Company agreed to make a gross-up payment to Mr. DeRoma for calendar years 1997 through 2000. The gross-up payment was intended to place Mr. DeRoma in the same after-tax position with respect to his base salary and any annual incentive award as if he were a resident of the State of Connecticut and a taxpayer in the United States. After June 2000, this gross-up was subject to annual review by the joint

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