S » Topics » Item 1.01 Entry into a Material Definitive Agreement.

This excerpt taken from the S 8-K filed Nov 1, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

On October 26, 2006, Sprint Nextel Corporation (the “Company”) entered into the First Amendment to Executive Agreement between the Company, Sprint/United Management Company and Len Lauer (the “Amended Agreement”), which modifies the calculation used to determine the amount of short-term incentive payments to which Mr. Lauer is entitled to receive during his 18-month severance period. Under the modified calculation set forth in the Amended Agreement, the Company agrees to pay Mr. Lauer an amount equal to the sum of (a) the lesser of the Actual Incentive Payout for 2007 under the Company’s Short-Term Incentive Plan or Mr. Lauer’s 2007 target payout of $1,262,800 (the “2007 Payout”), and (b) 2/12ths of the 2007 Payout. Mr. Lauer has signed a release of all claims and demands relating to or arising out of his employment with the Company.

The Amended Agreement is included as Exhibit 10.1 to this report and is incorporated herein by reference.

This excerpt taken from the S 8-K filed May 23, 2006.

Item 1.01 Entry into a Material Definitive Agreement

Effective at the time of the spin-off by Sprint Nextel Corporation (“Sprint Nextel”) of its local communications business, known as Embarq Corporation (“Embarq”), all outstanding options to purchase Sprint Nextel common stock held by employees of Embarq were cancelled and replaced with options to purchase Embarq common stock. Outstanding options to purchase Sprint Nextel common stock held by directors of Sprint Nextel and employees (including executive officers) who remained with Sprint Nextel were adjusted by multiplying the number of shares subject to the options by 1.0955 and dividing the exercise price by the same number. This number was obtained by dividing the “regular way” closing price of Sprint Nextel common stock on the New York Stock Exchange on May 17, 2006 by the “ex-dividend” closing price of Sprint Nextel common stock on the New York Stock Exchange on May 17, 2006.

Also effective at the time of the spin-off, outstanding deferred shares representing Sprint Nextel stock granted under the Nextel Incentive Equity Plan were adjusted by multiplying the number of shares by the same number, 1.0955. Cash will be paid to the holders of the deferred shares in lieu of fractional shares.

This excerpt taken from the S 8-K filed May 3, 2006.

Item 1.01 Entry into a Material Definitive Agreement

Separation and Distribution Agreement

On May 1, 2006, Sprint Nextel Corporation (“Sprint Nextel’) entered into a separation and distribution agreement with Embarq Corporation (“Embarq”) that contains the key provisions relating to the separation of Embarq’s business and the distribution of Embarq’s common stock to Sprint Nextel’s shareholders.

The separation and distribution agreement provides that, subject to the terms and conditions contained in the agreement and before the distribution,

 

    Sprint Nextel will effect a recapitalization of Embarq’s common stock;

 

    Sprint Nextel will contribute to Embarq the subsidiaries that comprise Sprint Nextel’s local telecommunications division;

 

    Embarq will enter into a senior credit facility;

 

    Embarq will transfer to Sprint Nextel shares of Embarq’s common stock and approximately $6.6 billion in the form of cash and senior notes in consideration for, and as a condition to, Sprint Nextel’s transfer of assets to Embarq;

 

    Sprint Nextel will assign or cause to be assigned, and Embarq will assume or cause to be assumed, certain contracts relating to Embarq’s business and Embarq will assign or cause to be assigned, and Sprint Nextel will assume or cause to be assumed, certain contracts relating to Sprint Nextel’s business;

 

    Sprint Nextel and Embarq will settle all inter-group indebtedness (except as otherwise agreed) on or before the distribution; and

 

    Sprint Nextel will transfer and Embarq will accept or assume certain assets and liabilities relating to Embarq’s business.

The separation and distribution agreement provides that the separation and the completion of the distribution will be subject to several conditions that must be satisfied or waived by Sprint Nextel, in its sole discretion, including:

 

    receipt of opinions to the effect that the distribution of Embarq shares by Sprint Nextel to its shareholders will qualify as a tax-free distribution;

 

    the private letter ruling issued to Sprint Nextel by the Internal Revenue Service regarding the tax-free status of the distribution continuing to be in effect;

 

    execution by Embarq, Sprint Capital Corporation, which is Sprint Nextel’s finance subsidiary, and certain underwriters of an underwriting agreement relating to Sprint Capital Corporation’s resale of the Embarq senior notes;

 

    completion of actions and filings necessary or appropriate to comply with federal and state securities laws and effectiveness of registration statements for Embarq’s shares and its senior notes;

 

    absence of any violation of law, breaches of agreements and legal or regulatory restraints with respect to the separation and distribution;

 

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    execution of ancillary agreements; and

 

    approximately $6.6 billion in cash and senior notes having been transferred to Sprint Nextel by Embarq.

In general, under the separation and distribution agreement, each party will indemnify the other against certain liabilities from third-party claims to the extent relating to, arising out of or resulting from:

 

    failure to discharge the party’s liabilities or agreements; and

 

    the operation of its business, whether before or after the distribution.

In addition, Embarq will indemnify Sprint Nextel for any untrue statement or alleged untrue statement of a material fact or material omission or alleged material omission in the registration statements filed in connection with the separation and distribution, other than certain information relating to Sprint Nextel as to which Sprint Nextel will indemnify Embarq.

The foregoing description of the separation and distribution agreement does not purport to be complete and is qualified in its entirety by reference to the separation and distribution agreement, which is filed as Exhibit 2 hereto and incorporated herein by reference.

Embarq 2006 Equity Incentive Plan

Also on May 1, 2006, Sprint Nextel, as the sole shareholder of Embarq, adopted and approved the Embarq 2006 Equity Incentive Plan (the “Embarq Plan”). The Embarq Plan provides for the grant of a wide range of awards related to Embarq common stock, including stock options, restricted stock awards and restricted stock unit awards. As previously reported in Sprint Nextel’s Current Report on Form 8-K filed December 16, 2005, employees of Sprint Nextel (including directors and executive officers) who hold shares of Sprint Nextel restricted stock and/or restricted stock units representing shares of Sprint Nextel common stock on the date of distribution of the Embarq common stock to Sprint Nextel shareholders will receive shares of Embarq restricted stock and restricted stock units representing shares of Embarq common stock. The restricted stock units representing shares of Embarq common stock will be granted under the Embarq Plan and the Embarq restricted stock will be subject to the terms of the Embarq Plan.

The foregoing description of the Embarq Plan does not purport to be complete and is qualified in its entirety by reference to the Embarq Plan, which is filed as Exhibit 10 hereto and incorporated herein by reference.

This excerpt taken from the S 8-K filed Feb 22, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

Integration Overachievement Plan Awards

On February 21, 2006, the Human Capital and Compensation Committee (the “Committee”) of the Board of Directors of Sprint Nextel Corporation (the “Company”) established performance measures and other terms of the Company’s 2006-2007 Integration Overachievement Plan for eligible participants. The two year program provides for an incentive payment to Company executives in specified target amounts if a 2007 adjusted OIBDA margin (as further defined in the plan, operating income plus depreciation, amortization and special items divided by service revenue) target is met. That target will be determined at the time that the Company’s Board of Directors approves the 2007 budget. The Committee has the discretion to adjust the targeted payout for all participants such that the actual payout can range from zero to 150% of the targeted payout based on its consideration of the following performance measures: (1) the Company’s actual performance compared to the 2007 adjusted OIBDA margin target, (2) the Company’s 2006-2007 free cash flow attributable to merger synergies, (3) integration costs incurred by the Company to achieve synergies, and (4) performance of the Company’s common stock relative to the Dow Jones U.S. Telecommunications Stock Index. The Committee may elect to make up to 50% of any payments under the plan in the form of restricted stock units that vest one year from the date of grant.

As disclosed in the Company’s Form 8-K dated August 18, 2005, the Company’s executive officers other than Timothy M. Donahue, Chairman, and Gary D. Forsee, President and Chief Executive Officer, have target incentive payment amounts under the plan that range from $300,000 to $1,500,000. On February 21, 2006, the Committee set target incentive payment amounts under the plan of $2.5 million for each of Messrs. Donahue and Forsee. As explained above, the actual incentive amounts paid under this program may be greater or less than the target amounts that have been established.

This excerpt taken from the S 8-K filed Feb 10, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

 

Short-Term Incentive Plan Awards

 

On February 6, 2006, the Human Capital and Compensation Committee (the “Committee”) of the Board of Directors of Sprint Nextel Corporation (the “Company”) established the performance objectives and other terms of the Company’s 2006 Short-Term Incentive Plan for officers and other eligible employees of the Company (the “2006 STI Plan”). The 2006 STI Plan provides for a payment of incentive compensation to officers and other eligible employees based on the achievement of specified results with respect to the following near-term performance objectives during 2006: wireless subscriber additions, adjusted OIBDA (operating income plus depreciation, amortization and special items) and post-paid wireless subscriber retention.

 

The award payments under the 2006 STI Plan will be determined based on the Company’s 2006 results using three variables: (1) the individual’s annual incentive target opportunity, which is based on a percentage of the individual’s base salary; (2) Company performance compared with each of the above-referenced performance objectives; and (3) relative weightings for the performance objectives. Each of the performance objectives will have a threshold, target and maximum level of payment opportunity with the maximum payment opportunity equal to 200% of the individual’s target opportunity, except for the OIBDA measure, which has no maximum. An eligible employee’s incentive target opportunity will be multiplied by the weightings and the payout results for the performance objectives to calculate a potential incentive award amount, which, under certain circumstances and subject to certain limitations, may be adjusted based on individual performance so that the employee receives a bonus payment of 0 to 120% of the potential incentive award amount. The determination of payments for certain executive officers will be made so as to comply with Section 162(m) of the Internal Revenue Code.

 

As disclosed in the Company’s joint proxy statement/prospectus dated June 10, 2005 and the Company’s Form 8-K dated August 18, 2005, the Company’s executive officers have short-term incentive target opportunities ranging between 50% and 170% of base salary. The actual incentive amounts paid under the 2006 STI Plan will be based on the Company’s actual results in 2006 in relation to the established performance objectives, and these payments may be greater or less than the target amounts that have been established.

 

Long-Term Incentive Plan Awards

 

On February 7, 2006, the Committee established the 2006 performance objectives and other terms of the Company’s 2006 Long-Term Incentive Plan (the “2006 LTI Plan”) for officers and other eligible employees of the Company. The 2006 LTI Plan is a one-year program that provides for incentive awards with a value based on a percentage of base salary. Fifty percent of the value of the award is made in the form of stock options, the number of which is based on the value of each option determined using the Black Scholes valuation model. The exercise price of each option is based on the fair market value of a share of the Company’s common stock on the grant date and the options vest ratably in three equal portions on each of the first, second and third anniversaries of the grant date. The remaining fifty percent of the value of the award is made in the form of restricted stock units that will be awarded following the planned spin-off of the Company’s local telecommunications business. The number of restricted stock units to be awarded under the 2006 LTI Plan will be based on the fair market value of the Company’s

 

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common stock, and will include a performance component, which could result in the number of restricted stock units being forfeited or increased, ranging from 0% to 200% of the number of restricted stock units originally awarded, based on the achievement of specified results with respect to the following performance objectives during 2006: wireless subscriber additions, adjusted OIBDA and post-paid wireless subscriber retention. The restricted stock unit awards would vest on the third anniversary of the Committee’s adoption of the 2006 LTI Plan and would be eligible to receive dividend payments as and to the extent declared with respect to the Company’s common stock. All awards will be made pursuant to the Company’s 1997 Long-Term Stock Incentive Program.

 

As disclosed in the Company’s Form 8-K dated August 18, 2005, the Company’s executive officers other than Messrs. Donahue and Forsee have long-term incentive target awards ranging between 150% and 721% of base salary. As disclosed in the Company’s joint proxy statement/prospectus dated June 10, 2005, Messrs. Donahue and Forsee have an annual long-term performance-based incentive opportunity with a $10 million target value for 2006, the first calendar year following completion of the Company’s merger with Nextel Communications, Inc. (the “Merger”) and a $10 million guideline target value for the second calendar year following the Merger. The actual incentive amounts paid under the 2006 LTI Plan will be based on the Company’s actual results in 2006 in relation to the established performance objectives, and these payments may be greater or less than the target amounts that have been established. The form of the award agreements for Messrs. Donahue, Forsee and Len J. Lauer, Chief Operating Officer, are attached as exhibits to this report.

 

MVP Fast Start Awards

 

On February 7, 2006, the Committee established terms of an interim incentive opportunity for Messrs. Donahue and Forsee under the Company’s MVP Fast Start Program, which established specified bonus opportunities based on the Company’s results in 2005 following the completion of the Merger. The program provides for a potential target bonus opportunity of up to 15% of the participant’s targeted annual short-term bonus amount, which was determined based on the existing short-term incentive plans of the Company and Nextel Communications, if specified wireless subscriber additions and adjusted OIBDA goals are met during the period from September 1 to December 31, 2005. The Committee established a potential target bonus opportunity of $122,500 for Mr. Donahue and $130,900 for Mr. Forsee. The actual incentive amounts paid under the MVP Fast Start Program will be based on actual results in relation to the established performance objectives, and these payments may be greater or less than the potential target bonus opportunities that have been established.

 

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Embarq Short-Term Incentive Plan Awards

 

On February 7, 2006, the Committee established the 2006 performance objectives and other terms of the 2006 Short-Term Incentive Plan (the “Embarq 2006 STI Plan”) for the executive officers and eligible employees of the local communications business of the Company, which we refer to as Embarq, that is expected to be spun-off in the second quarter of 2006. The Embarq 2006 STI Plan provides for a payment of incentive compensation to officers and eligible employees based on Embarq’s achievement of specified results with respect to the following near term performance objectives during 2006: revenue, EBITDA (earnings before interest, taxes, depreciation and amortization) and customer satisfaction. The awards under the Embarq 2006 STI Plan will be determined based on the performance of Embarq compared to these objectives and the relative weightings for the performance objectives. Each of the performance objectives will have a threshold, target and maximum level of payment opportunity with the maximum payment opportunity equal to 200% of the individual’s target opportunity. The individual’s incentive target will be multiplied by the weightings and the payout results for the objectives to calculate the actual incentive amount. Daniel R. Hesse, Chief Executive Officer of the Company’s Local Telecommunications Division, has an annual salary of $938,400 and a short-term incentive target of 120% of his annual salary. The actual incentive amounts paid under the Embarq 2006 STI Plan will be based on Embarq’s actual results in 2006 in relation to the established performance objectives, and such payments may be greater or less than the target opportunities that have been established.

 

This excerpt taken from the S 8-K filed Dec 21, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 19, 2005, Sprint Nextel Corporation (“Sprint Nextel”) and its wholly owned subsidiaries, Nextel Communications, Inc. (“Nextel”) and Sprint Capital Corporation, entered into a new credit agreement with a syndicate of banks. The new credit agreement includes a 5-year $6 billion revolving credit facility and a 364-day $3.2 billion term loan, and replaces the existing Nextel credit agreement, which included a $4 billion revolving credit facility and a $2.2 billion term loan. The new term loan was used to refinance the outstanding term loan and revolving credit loans under the Nextel credit agreement, which was terminated in connection with entering into the new credit agreement. The $2.5 billion of letters of credit that were outstanding under the Nextel credit agreement remain outstanding under the new $6 billion revolving credit facility.

 

The new revolving credit facility can be used to support commercial paper and for other general corporate purposes. The covenants in the new facility contemplate the proposed spin-off of the local telecommunications business.

 

The foregoing description of the new credit agreement does not purport to be complete and is qualified in its entirety by reference to the credit agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

 

In connection with the execution of the new credit agreement, on December 16, 2005, Sprint Nextel and Sprint Capital Corporation entered into an amendment of their existing $1 billion 364-day credit agreement in order to allow Nextel to participate in the new credit agreement.

 

The foregoing description of the amendment to the existing $1 billion 364-day credit agreement does not purport to be complete and is qualified in its entirety by reference to the amendment to this credit agreement, which is filed as Exhibit 10.2 hereto and incorporated herein by reference.

 

Sprint Nextel also announced its intention to terminate its two accounts receivable securitization facilities, which provide up to a total of $1.2 billion of borrowing capacity. One facility is secured by Wireless division accounts receivable. Approximately $440 million of funding was available under this facility at September 30, 2005. The other facility is secured by Long Distance division accounts receivable. Approximately $340 million of funding was available under this facility at September 30, 2005.

 

This excerpt taken from the S 8-K filed Dec 16, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

Treatment of Equity-Based Awards in New Local Company Spin-Off

On December 12, 2005, the Human Capital and Compensation Committee (the "Committee") of the board of directors of Sprint Nextel Corporation ("Sprint Nextel") approved a framework for the treatment of Sprint Nextel equity-based awards in connection with the contemplated spin-off (the "Spin-Off") of Sprint Nextel’s incumbent local telecommunications business that will be implemented through a dividend to Sprint Nextel shareholders of the equity interests of a newly formed subsidiary of Sprint Nextel that will own and operate that business (the "New Local Company"). The basic terms of this framework are as follows:

· Options to purchase shares of Sprint Nextel common stock held by a Sprint Nextel employee who becomes an employee of the New Local Company at the time of the Spin-Off would be converted into new options to purchase shares of New Local Company common stock. The framework approved by the Committee contemplates that the number of shares of New Local Company stock underlying the New Local Company options and the exercise price of those options will be adjusted so that the intrinsic value of the New Local Company options (i.e., the difference, at the time of the Spin-Off, between the value of the stock underlying the options and the aggregate exercise price of such options) will be approximately equal to that of the converted Sprint Nextel options before the Spin-off. Such adjustment, in an amount yet to be determined, will be based on the relative values of the Sprint Nextel and New Local Company equity interests at the time of the Spin-Off.

· The exercise price of, and number of shares of Sprint Nextel common stock underlying, options to purchase shares of Sprint Nextel common stock held by any other current or former Sprint Nextel employee would be adjusted, in an amount yet to be determined, to maintain the intrinsic value of such options, pursuant to the terms of the applicable Sprint Nextel equity incentive plans, taking into account the value of the Sprint Nextel stock immediately prior to and following the Spin-Off.

· Shares of Sprint Nextel restricted stock held by Sprint Nextel employees at the time of the Spin-Off (including those held by all Sprint Nextel employees who will become employees of the New Local Company) will be treated the same as other outstanding shares of Sprint Nextel common stock in the Spin-Off with the holder of the Sprint Nextel restricted stock entitled to receive a dividend of common stock of the New Local Company in the Spin-Off.

· Restricted stock units awarded pursuant to Sprint Nextel equity incentive plans and held by Sprint Nextel employees at the time of the Spin-Off (including those held by Sprint Nextel employees who will become employees of the New Local Company, with the exception of Daniel Hesse, Chief Executive Officer, Local Telecommunications Division, as described below) would be treated in a manner equivalent to the treatment of outstanding shares of Sprint Nextel common stock in the Spin-Off. In addition to continuing to hold restricted stock units representing the right to receive shares of Sprint Nextel common stock, the holder of restricted stock units will be entitled to receive, with respect to each unit, the number of restricted stock units in the New Local Company equivalent to the number of shares of New Local Company common stock that would be received with respect to a share of Sprint Nextel common stock in the Spin-Off. Restricted stock units held by Mr. Hesse will be converted entirely into restricted stock units of the New Local Company upon the Spin-Off as provided under his employment agreement.

New Local Company Compensation Program

The Committee approved a compensation program for those Sprint Nextel employees who will be part of the senior management team of the New Local Company at the time of the Spin-Off. This program will not include certain executive perquisites that previously had been provided to certain officers of Sprint Nextel. As part of this program, effective January 1, 2006, Mr. Hesse’s executive perquisites will be eliminated and the value of these perquisites will be added to his base salary. Giving effect to these changes, Mr. Hesse’s annual base salary for 2006 will be $938,400 and his annual target bonus opportunity for 2006 will be 120% of his base salary, or $1,126,080.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Sprint Nextel Corporation
          
December 16, 2005   By:   /s/ Gary D. Begeman
       
        Name: Gary D. Begeman
        Title: Vice President
This excerpt taken from the S 8-K filed Oct 14, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

On October 10, 2005, the Human Capital and Compensation Committee of the Board of Director of Sprint Nextel Corporation ("Sprint Nextel") approved a new deferred compensation plan, to be effective January 1, 2006. Eligible participants will be employees of Sprint Nextel and its subsidiaries at director level and above and outside directors of Sprint Nextel.

Eligible employees will be allowed to elect, in the year before the compensation is earned, to contribute up to 75% of base salary and up to 100% of incentive compensation, in increments of 1%. Outside directors will be allowed to contribute up to 100% of director fees in increments of 1%. All contributions, and earnings credited to contributions, will be 100% vested.

Investment options will be selected by the Employee Benefits Committee in a manner designed to offer diversification across an array of asset classes. The investment options will include phantom share units representing shares of Sprint Nextel’s common stock. All investments will be unfunded obligations of Sprint Nextel.

Participants will be able to transfer between investment options on any business day, but only four transfers may be made in each calendar year and three months must elapse between transfers.

Participants will be able to elect payment of benefits to begin on a specified date at least five (5) years in the future or on termination of the participant’s employment (subject to a six months delay to the extent required under Internal Revenue Code Section 409A), in the form of a lump sum or annual installments over two to fifteen years. Notwithstanding the participant’s election and subject to Internal Revenue Code Section 409A, benefits will be immediately distributed in a lump sum upon the participant’s death, termination of the participant’s employment if the aggregate account balance is less than $20,000, or termination of the participant’s employment within one year of a change in control of Sprint Nextel. In the event of a participant’s long-term disability, distribution will began immediately in a lump sum or installments as elected. All distributions will be made in cash.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Sprint Nextel Corporation
          
October 14, 2005   By:   Gary D. Begeman
       
        Name: Gary D. Begeman
        Title: Vice President
This excerpt taken from the S 8-K filed Sep 9, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

On September 2, 2005 the Human Capital and Compensation Committee of the board of directors of Sprint Nextel Corporation established an interim incentive opportunity for its eligible employees, including executive officers other than Gary D. Forsee and Timothy M. Donahue. The program provides for a potential bonus opportunity of up to 15% of the targeted annual bonus if specified wireless subscriber additions and EBITDA (earnings before interest, taxes, depreciation and amortization) targets of differing weightings for participants in the wireless and the local telecommunications business are met for the period from September 1 to December 31, 2005.

The following table sets forth the maximum bonus for the period from September 1 to December 31, 2005 for each executive officer of Sprint Corporation and Nextel Communications, Inc. that was named in each company’s summary compensation table for 2004, included in the joint proxy statement/prospectus, dated June 10, 2005, filed as part of our registration statement on Form S-4 (Registration Statement No. 333-123333), who is an executive officer of Sprint Nextel participating in the program.


Thomas N. Kelly, Jr., Chief Strategy Officer - $105,000

Leonard J. Kennedy, General Counsel - $ 50,625

Len J. Lauer, Chief Operating Officer - $168,000

Paul N. Saleh, Chief Financial Officer - $ 90,000

Barry J. West, Chief Technology Officer - $ 36,000






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Sprint Nextel Corporation
          
September 9, 2005   By:   Gary D. Begeman
       
        Name: Gary D. Begeman
        Title: Vice President
This excerpt taken from the S 8-K filed Aug 18, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

Founder’s Grants

 

On August 12, 2005, in connection with the completion of the merger (the “Merger”) of Nextel Communications, Inc. (“Nextel”) with and into S-N Merger Corp. (the “Surviving Corporation”), a wholly owned subsidiary of Sprint Corporation (“Sprint”) which changed its name to Sprint Nextel Corporation (“Sprint Nextel”), Sprint Nextel awarded to members of its board of directors and its employees 10 restricted stock units, which represent the right to receive 10 shares of Sprint Nextel common stock, par value $2.00 per share, one year from the date of the award. The award will vest immediately if an outside director ceases to be a member of the Sprint Nextel board of directors, or an employee becomes eligible for severance benefits under an applicable Sprint Nextel severance or change of control plan. Termination of employment for any other reason, including retirement, death or disability, will terminate the award. Awards to employees who become employees of the local telecommunications business expected to be spun-off from Sprint Nextel (the “New Local Company”) will continue, unless the New Local Company grants a similar award to its employees, in which case the awards to those employees will terminate. Holders of the awards are not eligible to receive any cash or non-cash dividends that may be declared on Sprint Nextel common stock until the underlying shares are delivered following vesting.

 

Acceleration of Option Vesting

 

On August 12, 2005, amendments to the option agreements of Thomas N. Kelly, Sprint Nextel’s Chief Strategy Officer and formerly Executive Vice President and Chief Operating Officer of Nextel, were adopted to provide for the immediate vesting of all such stock options, which represent the right to acquire 580,269 shares of Sprint Nextel common stock.

 

Amendment to the Supplemental Executive Retirement Plan

 

On August 12, 2005, amendments to the Sprint Supplemental Executive Retirement Plan (the “SERP”) were adopted, pursuant to which persons employed by Nextel prior to the merger were precluded from participation and accruals under all benefit formulas of the SERP will cease on December 31, 2005 for each participant, except for any participant who is specifically designated to provide services to Sprint Nextel in connection with the New Local Company or a participant to which Sprint Nextel is obligated to provide benefit accruals as of the date of the Merger under an employment agreement.

 

Outside Director Compensation

 

On August 12, 2005, the board of directors of Sprint Nextel approved a compensation program for outside directors of Sprint Nextel. Pursuant to the compensation program, outside directors will receive an annual cash retainer of $70,000 and board and committee meeting fees of $2,000 per meeting ($1,000 for telephonic meetings). The compensation program also provides that the chairs of the Audit Committee, Human Capital and Compensation Committee and other committees will receive additional annual retainers of $20,000, $15,000, and $10,000, respectively. In addition, the two co-lead independent directors will receive additional annual retainers of $75,000. Outside directors will also receive an annual grant of $100,000 in restricted stock units that vests one year after grant and telecommunications services and products.

 

Executive Compensation

 

On August 12, 2005, the Human Capital and Compensation Committee of the board of directors of Sprint Nextel established base salaries for 2006, short-term incentive/annual cash bonus (“STI”) targets for 2006, long-term incentive (“LTI”) targets for 2006 and synergy targets for the two-year period commencing January 1, 2006 for the executive officers of Sprint Nextel other than Messrs. Donahue, Forsee and Hesse.

 

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The base salary increases range from $8,800 to $150,000, the STI targets and the LTI targets range from 50% to 130% of base salary and 200% to 721% of base salary, respectively, and the synergy targets range from $300,000 to $1,500,000. The performance objectives for the STI, LTI and two-year synergy bonuses have yet to be established, but it is anticipated that such objectives will be based on the operating plans of Sprint Nextel following the Merger. It is anticipated that the actual incentive amounts paid under each of the STI, LTI and two-year synergy bonus programs will be based on actual results in relation to the established performance objectives, and such payments may be greater or less than the targets that have been established.

 

The following table includes specific information regarding each executive officer of Sprint and Nextel that was named in each company’s summary compensation table for 2004, included in the joint proxy statement/prospectus, dated June 10, 2005, filed as part of Sprint’s registration statement on Form S-4 (Registration Statement No. 333-123333), who is an executive officer of Sprint Nextel.

 

          2006

     

Name


  

Title


   Base Salary

   STI

    LTI

    Synergy Target
2006-2007


Thomas N. Kelly, Jr.

   Chief Strategy Officer    $ 750,000    110 %   560 %   $ 1,000,000

Leonard J. Kennedy

   General Counsel    $ 500,000    80 %   300 %   $ 500,000

Len J. Lauer

   Chief Operating Officer    $ 971,400    130 %   721 %   $ 1,500,000

Paul N. Saleh

   Chief Financial Officer    $ 750,000    125 %   667 %   $ 1,000,000

Barry J. West

   Chief Technology Officer    $ 425,000    100 %   375 %   $ 425,000

 

Guarantee Supplemental Indenture

 

The information reported below under Item 2.03 with respect to the Guarantee Supplemental Indenture (as defined below) is incorporated into this Item 1.01 by reference.

 

This excerpt taken from the S 8-K filed May 20, 2005.

Item 1.01    Entry into a Material Definitive Agreement.

 

On May 20, 2005, Sprint Corporation and Nextel Communications, Inc. entered into the First Amendment to the Agreement and Plan of Merger. The amendment was entered into primarily to change terms of the Agreement and Plan of Merger entered into by Sprint and Nextel on December 15, 2004 to:

 

    reflect recent changes to the terms of the outstanding Nextel preferred stock and a recent agreement with the holder of the outstanding shares of Nextel Class B common stock;

 

    refine the manner in which the allocation of stock and cash to be received by the holders of Nextel Class A common stock and Class B common stock in the merger is to be adjusted; and

 

    eliminate the proposed change to Sprint’s articles of incorporation that would have decreased the par value of the Sprint common stock from $2.00 per share to $0.01 per share.

 

The foregoing description of the amendment does not purport to be complete and is qualified in its entirety by reference to the merger agreement and the amendment, which are filed as Exhibits 2.1 and 2.2 and incorporated herein by reference.

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

 

A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments, in particular, information regarding the new company, including expected synergies resulting from the combination of Sprint and Nextel, combined operating and financial data, future technology plans, and whether and when the transactions contemplated by the merger agreement will be consummated. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from actual future experience involving any one or more of such matters. Such risks and uncertainties include: the failure to realize capital and operating expense synergies; the result of the review of the proposed merger by various regulatory agencies, and any conditions imposed on the new company in connection with consummation of the merger; approval of the merger by the stockholders of Sprint and Nextel and satisfaction of various other conditions to the closing of the merger contemplated by the merger agreement; and the risks that are described from time to time in Sprint’s reports filed with the SEC, including its annual report on Form 10-K/A for the year ended December 31, 2004 and quarterly report on Form 10-Q for the quarterly period ended March 31, 2005. This document speaks only as of its date, and Sprint disclaims any duty to update the information herein.

 

Additional Information and Where to Find It

 

Sprint Corporation has filed a registration statement on Form S-4 with the SEC (Reg. No. 333-123333) containing a joint proxy statement/prospectus regarding the proposed transaction. SHAREHOLDERS OF SPRINT AND SHAREHOLDERS OF NEXTEL ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMBINATION. The final joint proxy statement/prospectus will be mailed to shareholders of Sprint and shareholders of Nextel. Investors and security holders will be able to obtain the documents free of charge at the SEC’s web site, www.sec.gov, from Sprint Investor Relations at Sprint Corporation, 6200 Sprint Parkway, Overland Park, Kansas 66251, 800-259-3755, Option 1, or from Nextel Investor Relations at 2001 Edmund Halley Drive, Reston, Virginia 20191, 703-433-4300.

 

Participants in Solicitation

 

Sprint, Nextel and their respective directors and executive officers, other members of management and employees and the proposed directors and executive officers of the combined company may be deemed to be participants in the solicitation of proxies in respect of the combination. Information concerning the proposed directors and executive officers of the combined company, Sprint and Nextel’s respective directors and executive officers and other participants in the proxy solicitation, including a description of their interests, is included in the joint proxy statement/prospectus contained in the above-referenced Registration Statement on Form S-4.

 

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This excerpt taken from the S 8-K filed Mar 15, 2005.

Item 1.01 Entry into a Material Definitive Agreement

 

CEO Compensation

 

On March 15, 2005, the Compensation Committee (the “Committee”) of the Board of Directors of Sprint Corporation (“Sprint”) approved a second amendment to the employment agreement of Gary D. Forsee, Chairman and Chief Executive Officer of Sprint. This amendment will be effective upon the closing of the proposed merger of Sprint and Nextel Communications, Inc.

 

The amendment will increase Mr. Forsee’s annual base salary to $1.4 million from $1.2 million, as previously approved by the Committee. The amendment states his minimum target annual bonus opportunity under the Management Incentive Plan is no less than 170% of his base salary and his maximum bonus opportunity as 200% of his target bonus opportunity. Actual payout can range from 0-200% of the target opportunity. Mr. Forsee’s 2005 target annual bonus opportunity had been previously set at $2,040,000 (170% of base salary), with a maximum opportunity of 200% of the target. The Committee also determined that, if the merger closes in 2005, the target annual bonus opportunity for 2005 shall be the sum of $2,040,000 prorated for the portion of the year prior to the closing of the proposed merger and $2,380,000 (170% of $1.4 million) prorated for the portion of the year after such closing. 2005 performance under the Plan will be calculated (as described below with respect to performance based restricted stock units) with reference to the performance period prior to the closing of the proposed merger if the merger closes prior to the end of 2005. The amendment also provides for Mr. Forsee’s participation in a long term incentive plan with a minimum target value performance-based opportunity in the first year following the merger of $10 million and a $10 million guideline target value performance-based opportunity for the second year. The other terms and conditions of these awards will be governed by the Sprint 1997 Long-Term Stock Incentive Program.

 

The foregoing description of the amendment does not purport to be complete and is qualified in its entirety by reference to the form of amendment, which is filed as Exhibit 10.1 and incorporated herein by reference.

 

Equity Awards

 

On March 15, 2005, the Compensation Committee of the Board of Directors also granted new performance based equity awards to Mr. Forsee and Len J. Lauer, President and Chief Operating Officer, under the shareholder approved 1997 Long-Term Stock Incentive Program (the “1997 Program”). A combination of performance based restricted stock units (a target grant of 62,000 units for Mr. Forsee and 21,000 units for Mr. Lauer) and premium priced stock options (165,000 for Mr. Forsee and 55,000 for Mr. Lauer) were granted. The actual number of restricted stock units that will vest pursuant to these awards (1) is based upon targeted financial performance that must be achieved, irrespective of the intervention of the proposed merger with Nextel, (2) will be adjusted based on actual achievement of 2005 EVA performance measures calculated, in the event the proposed merger closes before the end of 2005, by dividing actual year-to-date performance through the most recent full month before the close of the merger by budgeted year-to-date performance for the same period and multiplying the quotient by the 2005 full year

 

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budget, (3) could vary between 0% and 200% of the number of units granted, (4) vest 100% on the third anniversary of the grant date and (5) is subject to discretionary review by the Committee to assure appropriate performance. Additionally, for the awards to vest fully, the proposed merger must be completed, as a threshold matter, and the executives must remain employed by the company for three years from the date of grant of the restricted stock units and four years from the date of grant of the options.

 

The exercise price for the stock options was equal to 110% of the market value on the grant date (the average of the high and low sales prices). The grant of options with an exercise price above market value ensures that stockholders benefit from stock appreciation before the executives. The options vest 25% per year on each of the first through fourth anniversaries of the grant date.

 

The terms of the stock options and the performance based restricted stock units are governed by the 1997 Program and the form of award agreement attached as Exhibit 10.2, which is incorporated herein by reference.

 

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