Related Party Transactions and Outside Related Director Information

EMBARQ Corporation (EQ)

5/11/2006 S/1A Information

Sprint Nextel engages a relocation company that, among other things, offers to purchase, based on two appraisals by third parties, the former residences of executive and professional level employees to facilitate relocations made at Sprint Nextel’s request. If the employee accepts the offer, the relocation company markets and sells the former residence on Sprint Nextel’s behalf, and Sprint Nextel receives any gain on the sale or reimburses the relocation company for any loss. If a buyer is identified before the employee accepts the offer, and the price equals or exceeds the relocation company’s offer, then the relocation company purchases the home from the employee and resells it to the identified buyer at that price. Sprint Nextel is also responsible for costs associated with the maintenance and sale of the residence, including payment of a service fee to the relocation company. As an incentive for employees to assist in identifying buyers, thereby reducing the risk or potential costs associated with taking a home into inventory, Sprint Nextel had a long-standing policy of paying the employee an amount equal to 2% of the sale price of the residence if (1) the employee reaches an agreement with a buyer before accepting the relocation company’s offer and (2) the agreed price equals or exceeds the relocation company’s offer.

In mid-2005, Mr. Hesse relocated to the Kansas City area in connection with his employment by Sprint. The relocation company purchased his former residence for $2,140,000 and resold the residence for the same amount, which exceeded the relocation company’s offer. Sprint reimbursed the relocation company approximately $224,000 for the brokerage, closing and other costs related to the sale of the home. Mr. Hesse received the incentive amount equal to 2% of the sale price. See “—Employment Contracts—Employment Contract with Mr. Hesse.”

For a description of commercial arrangements that we expect to enter into with Sprint Nextel, see “Agreements with Sprint Nextel.”