Reliant FORM 10-K manual Plan a

On June 30, 2001 the shareholders meeting of Nortel Networks France approved a dividend payment of 61,812 payable in EADS Telecom shares that resulted in the reduction of retained earnings of 21,912 and minority interest of 27,816. An amount of 12,084 was paid to other companies pooled by Nortel Networks S.A.

On June 25, 2001 the shareholders meeting of Nortel Networks France approved a dividend payment of €35,275 payable in cash that resulted in the reduction of retained earnings of 13,861, and the reduction of minority interest of 15,874. An amount of 5,540 was paid to other companies pooled by Nortel Networks S.A.

15.Stock-based compensation plans Stock options

Nortel Networks Corporation grants options to purchase€Nortel Networks€Corporation common shares€€under two existing€stock€option plans, Nortel Networks Corporation 2000 Stock Option Plan (the “2000 Plan”) and Nortel Networks Corporation 1986 Stock Option Plan As Amended and Restated (the “1986 Plan”). Under these two plans, options to purchase Nortel Networks Corporation common shares may be granted to employees, and under the 2000 Plan, options may be granted to directors of Nortel Networks that entitle the holders to purchase one common share at a subscription price of not less than 100 percent of market value on the effective date of the grant. Subscription prices are stated and payable in U.S. dollars for U.S. options and in Canadian dollars for Canadian options. Generally options granted prior to 2003 vest 33 1/3 percent on the anniversary date of the grant for three years. Options granted in 2003 generally vest 25 percent each year over a four year period on the anniversary date of the grant. The committee of the Board of Directors of Nortel Networks that administers both plans has the discretion to vary the period during which the holder has the right to exercise options and, in certain circumstances, may accelerate the right of the holder to exercise options, but in no case shall the exercise period exceed ten years.

Options granted under the 2000 Plan and 1986 Plan may be granted with or without a SAR. A SAR entitles the holder to receive payment of an amount equivalent to the excess of the market value of a common share at the time of exercise of the SAR over the subscription price of the common share to which the option relates. Options with SARs may be granted on a cancellation basis, in which case the exercise of one causes the cancellation of the other, or on a simultaneous basis, in which case the exercise of one causes the exercise of the other.

As of December 31, 2003, the maximum number of common shares authorized by the shareholders and reserved for issuance by the Board of Directors of Nortel Networks Corporation under the 1986 Plan and 2000 Plan is as follows:

(number of common shares in thousands)	Maximum
1986 Plan(a)
Issuable to employees(b)	469,718
2000 Plan(a)
Issuable to non-employee directors	500
Issuable to employees	94,000

(a)In January 1995, a key contributor stock option program (the “Key Contributor Program”) was established. Under the terms of the Key Contributor Program, participants are granted an equal number of initial options and replacement options. The initial options generally vest after five years and expire after ten years. The replacement options are granted concurrently with the initial options and also expire after ten years. No Key Contributor Program options were granted for the years ended December 31, 2003, 2002 and 2001, respectively, under both stock option plans.

(b)As of December 31, 2003, the maximum number of Nortel Networks Corporation common shares with respect to which options may be granted in any given year under the 1986 Plan is three percent of Nortel Networks Corporation common shares issued and outstanding at the commencement of the year, subject to certain adjustments.

Nortel Networks S.A. assumed stock options plans in connection with the acquisition of various companies and granted options to purchase Nortel Networks Corporation common shares. The vesting periods for these assumed plans may differ from the 2000 Plan and 1986 Plan, but are not considered to be significant to Nortel Networks overall use of stock-based compensation.

On June 20, 2001, NNC commenced a voluntary stock option exchange program (the “Exchange Program”) for Nortel Networks S.A. employees allowing employees to exchange certain outstanding stock options for new stock options, based on a prescribed formula. The terms of the Exchange Program required that the new grants of options would be made at least six months and a day from the cancellation date of the options tendered for exchange, which was July 27, 2001. Nortel Networks Corporation then Board of Directors and its then board appointed officers were not eligible to participate in the Exchange Program.

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