exv10w1



 






Exhibit 10.1




AMENDMENT NO. 1

TO

EMPLOYMENT AGREEMENT AND LETTER AGREEMENT




     This is Amendment No. 1, dated as of March 15, 2005 (the “Amendment”), to the Employment
Agreement dated as of July 1, 2003 (the “Employment Agreement”) by and among Nextel Communications,
Inc. (“Nextel”) and Timothy M. Donahue (the “Executive”), and to the letter agreement, dated
December 15, 2004 (the “Letter Agreement”) between Nextel and the Executive. Capitalized terms, if
not otherwise defined herein, have the meanings set forth in or provided by the Employment
Agreement.



     WHEREAS, pursuant to the Agreement and Plan of Merger entered into as of December 15, 2004 by
and among Nextel, Sprint Corporation (“Sprint”) and S-N Merger Corp. (the “Merger Agreement”),
Nextel will merge with and into a wholly-owned subsidiary of Sprint; and



     WHEREAS, in connection with the execution of the Merger Agreement, Nextel and the Executive
entered into the Letter Agreement, in which the Executive agreed that, during the period commencing
at the “Effective Time” (as defined in the Merger Agreement) and ending six months following the
Effective Time, he shall not claim that his having the titles and duties assigned to the “Chairman”
in Exhibit D to the Merger Agreement is a basis to claim that a Good Reason has occurred; and



     WHEREAS, it is contemplated by Nextel and the Executive that this Amendment will be effective
only upon and following the Effective Time; and



     WHEREAS, as required pursuant to Section 6.7(e) of the Merger Agreement and the section of the
“Nextel Disclosure Schedule” (as defined in the Merger Agreement) relating thereto, the
Compensation Committee of Sprint has approved the Amendment; and



     WHEREAS, pursuant to Section 6.7(e) of the Merger Agreement, Sprint will assume the rights and
obligations of Nextel under the Employment Agreement, as amended hereby, at and following the
Effective Time.



     NOW, THEREFORE, in consideration of the premises and of the covenants and agreements set forth
herein and for other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, Nextel and the Executive agree as follows, conditioned upon and subject to the
occurrence of the Effective Time:



     1.     The Letter Agreement shall be amended by adding at the end of the first paragraph thereof
(but before the period) the following:




, and (iii) the Company’s Change of Control Retention Bonus and Severance
Pay Plan (the “Severance Plan”)



 









 





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     2.     The second paragraph of the Letter Agreement is hereby amended to read in its entirety as
follows:




Notwithstanding anything in the Employment Agreement or the
Severance Plan to the contrary, this will confirm that my having
the titles and duties assigned to the “Chairman” in Exhibit D to
the Merger Agreement (the “Chairman Duties and Responsibilities”)
will serve as a basis to claim that a “Good Reason” (as defined
in the Employment Agreement and the Severance Plan) has occurred
only in connection with a resignation by me which is effective
during the period commencing on the first anniversary of the
“Effective Time” (as defined in the Merger Agreement) and ending
on the day prior to the second anniversary of the Effective Time
(the “Transaction Good Reason Period”), and nothing contained in
the Employment Agreement or the Severance Plan shall be
interpreted as preventing such a resignation on such basis during
the Transaction Good Reason Period. This does not constitute a
waiver of my right, if any, to claim that any other action of or
inaction by the “Company” (for this purpose meaning as such term
is used in the Employment Agreement and the Severance Plan,
respectively) constitutes Good Reason (including but not limited
to any action or inaction described in Section 9(f)(ii) of the
Employment Agreement or Section 3(h)(i) of the Severance Plan
which occurs on or following the Effective Time, with the
Chairman Duties and Responsibilities being the baseline against
which such action or inaction is tested), whether occurring
before, during or after the Transaction Good Reason Period.



     3.     Unless the context otherwise requires, following the Effective Time, “Sprint Nextel” shall
be inserted in lieu of “Nextel” and the “Company” wherever “Nextel” or the “Company” is used in the
Employment Agreement.



     4.     The Executive acknowledges that, notwithstanding anything in the Employment Agreement to
the contrary, on and following the Effective Time he shall have the titles and duties assigned to
the “Chairman” in Exhibit D to the Merger Agreement.



     5.     The first sentence of Section 4 of the Employment Agreement is hereby amended to read in
its entirety as follows:




During the Employment Term, the Company shall pay to the Executive
a base salary of not less than one million dollars ($1,000,000)
per annum (the “Base Salary”), payable at the times and in the
manner consistent with the



 









 





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Company’s general policies regarding compensation of senior
executive employees; provided, however, that the Base Salary shall
be increased to one million four hundred thousand dollars
($1,400,000) per annum effective as of the “Effective Time,” as
defined in the Agreement and Plan of Merger, entered into as of
December 15, 2004, by and among the Company, Sprint Corp. and S-N
Merger Corp. (the “Merger Agreement”).



     6.     Section 4(b)(i) of the Employment Agreement is hereby amended to read in its entirety as
follows:




During the Employment Term, the Executive shall be entitled
to participate in an annual bonus plan (the “Bonus Plan”),
with such opportunities as may be determined by the
Compensation Committee (“Target Bonuses”); provided,
however, that for the bonus year ending December 31, 2003,
and (subject to the following) thereafter during the
Employment Term, the Executive will participate in the Bonus
Plan at an annual Target Bonus opportunity of not less than
150% of his Base Salary and shall be entitled to receive
full payment of any award under the Bonus Plan determined
pursuant to such Bonus Plan (a “Bonus Award”). The
Executive’s Target Bonus opportunity with respect to the
bonus year in which the Effective Time occurs shall be the
sum of $1,800,000 prorated for the portion of the year
through the Effective Time and $2,380,000 prorated for the
portion of the year subsequent to the Effective Time, and
his maximum Bonus Award opportunity for such bonus year
shall be 200% of such target. The Executive’s Target Bonus
opportunity with respect to each bonus year after the bonus
year in which the Effective Time occurs shall be no less
than 170% of Base Salary, and his maximum Bonus Award
opportunity for each such bonus year shall be 200% of such
Target Bonus opportunity. Notwithstanding the preceding two
sentences, the Executive’s Bonus Award for the bonus years
in which the first and second anniversaries of the Effective
Time occurs shall be identical to that earned by the
Company’s Chief Executive Officer.



     7.     Section 4(b)(ii) of the Employment Agreement is hereby amended to read in its entirety as
follows:



 









 






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(ii) Long-Term Incentives. The Executive shall be
entitled to participate in the Nextel Long-Term Incentive
Plan effective January 1, 2002, or any successor cash-based
long-term incentive bonus plan, program, agreement or
arrangement (the “LTIP”) during the Employment Term and
through the LTIP performance period in which the Effective
Time occurs, with such opportunities, if any, as may be
determined by the Compensation Committee (“Target Award
Opportunities”); provided, however, that for the 2004-2005
LTIP performance period, the Executive will participate in
the LTIP at a minimum of two million seven hundred thousand
dollars ($2,700,000). At the time of the first annual
long-term incentive compensation grant to the Company’s
senior executives which occurs on or following the Effective
Time (anticipated to be on or about February 1, 2006), the
Executive will receive a long-term performance-based
incentive compensation award (in the form of cash
opportunity and/or equity-based awards) in an amount and
with terms and conditions established by the Compensation
Committee, but with a minimum target value to the Executive
of not less than ten million dollars ($10,000,000). At the
time of the second annual long-term incentive compensation
grant to the Company’s senior executives which occurs on or
following the Effective Time (anticipated to be on or about
February 1, 2007), the Executive will receive a similar
long-term performance-based incentive compensation award in
an amount and with terms and conditions established by the
Compensation Committee by using a guideline target value to
the Executive of ten million dollars ($10,000,000). The
long-term incentive compensation awards referred to in the
preceding two sentences shall be referred to herein as the
“Post-Effective Time LTI Awards.” Notwithstanding the
foregoing, and other than as otherwise provided in this
Agreement, the actual amount, character (i.e., cash
opportunity vs. equity awards, and character of equity
awards) and terms and conditions of the Post-Effective Time
LTI Awards granted to the Executive shall be identical to
those of the similar awards provided to the Company’s Chief
Executive Officer.



 









 





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     8.     The second sentence of Section 9(a) of the Employment Agreement is hereby amended by adding
the phrase “(which shall not include for this purpose any awards granted as part of the
Post-Effective Time LTI Awards)” after the word “Opportunity,” and Section 9(a) of the Employment
Agreement is further amended by adding to the end thereof the following:




Notwithstanding the above, if the Executive resigns without
Good Reason on or following the second anniversary of the
Effective Time, any outstanding Post-Effective Time LTI
Awards shall be treated in the same manner as if the
Executive had resigned with Good Reason under Section 9(b).



     9.     Section 9(b)(iv) of the Employment Agreement is hereby amended by adding the phrase “(which
shall not include for this purpose any awards granted as part of the Post-Effective Time LTI
Awards)” after the word “Opportunity”.



     10.    Section 9(b)(v) of the Employment Agreement is hereby amended by adding the phrase “(which
shall not include for this purpose restricted shares and stock options granted as part of the
Post-Effective Time LTI Awards)” after the word “options” the first time such word appears in such
provision.



     11.    The last sentence of Section 9(b) of the Employment Agreement is hereby amended to read in
its entirety as follows:




In addition to the foregoing, if the Executive’s employment is terminated by
the Company without Cause or the Executive terminates his employment for Good
Reason, conditioned upon the Executive delivering to the Company a release in
a form reasonably satisfactory to the Company with all periods for revocation
expired, and notwithstanding any provision in the terms of any incentive
compensation plan or agreement to the contrary, (i) any Post-Effective Time
LTI Awards, consisting of stock options, shall become fully vested and
nonforfeitable as of the time of such termination and shall remain
exercisable for three years following such termination, (ii) any
Post-Effective Time LTI Awards, other than stock options, which vest solely
based on continued service, shall become fully vested and nonforfeitable as
of the time of such termination and (iii) any Post-Effective Time LTI Awards,
other than stock options, which vest based wholly or partially on the
attainment of a performance goal, shall remain outstanding and, at the end of
the applicable performance period, the amount or number of such awards which
the Executive shall receive shall be equal to the amount or number earned
based on actual performance for the entire performance period multiplied by a
fraction, the numerator of which shall be the number of days in the
applicable performance period through the date of such termination and the
denominator of



 









 





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which shall be the number of days in such performance period. If the
Executive’s employment is terminated by the Executive on or following the
first anniversary of the Effective Time solely on account of Good Reason
consisting of the Executive having the titles and duties assigned to the
“Chairman” in Exhibit D to the Merger Agreement as contemplated by the
“Letter Agreement” (as defined in Section 18), the preceding sentence shall
not apply in respect of the second Post-Effective Time LTI Award and, to the
extent not otherwise vested at the time of such termination, such second
Post-Effective Time LTI Award shall be forfeited.



     12.    Section 9(c)(iii) of the Employment Agreement is hereby amended by adding the phrase
“(which shall not include for this purpose awards granted as part of the Post-Effective Time LTI
Awards)” after the word “Opportunity” the first time such word appears in such provision.



     13.    Section 9(c)(iv) of the Employment Agreement is hereby amended by adding the phrase
“(which shall not include for this purpose restricted shares and stock options granted as part of
the Post-Effective Time LTI Awards)” after the word “options” the first time such word appears in
such provision.



     14.    Section 9(c) of the Employment Agreement is hereby amended by adding to the end thereof
the following:




In addition to the foregoing, if the Executive dies or
becomes Disabled, any Post-Effective Time LTI Awards shall
be treated as if the Executive had been terminated by the
Company without Cause; provided that the post-termination
exercise period of any stock options shall be one year
instead of three years.



     15.    Section 18 of the Employment Agreement is hereby amended by adding to the end thereof the
following:




Notwithstanding anything contained in this Section 18, the letter agreement
entered into between the Company and the Executive dated December 15, 2004,
as amended by Amendment No. 1 thereto dated as of March 15, 2005 (the “Letter
Agreement”), shall remain in full force and effect.



     16.     Section 30 is added to the Employment Agreement to read in its entirety as follows:




Compliance with Section 409A. It is the intent of the parties that
the compensation arrangements under this Agreement be in full compliance with
Section 409A of the Internal Revenue Code (“409A”). To the extent any
provision contained in this Agreement



 









 






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is or will be in violation of 409A, the Agreement shall be amended in such
manner as the parties may agree such that the Agreement is or remains in
compliance with 409A and the intent of the parties is maintained to the
maximum extent possible.


*signature page to follow this page*


 









 





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     IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, to be effective as
provided in the recitals hereto.



Nextel Communications, Inc.



By: /s/ William E. Conway, Jr.                    

Title: Chairman of the Board



/s/ Timothy M. Donahue                              

Timothy M. Donahue