Clearwire 2008 Annual Report Download - page 119

n
umber of warrants outstanding at December 31, 2008 was 17,806,220. The warrants expire on August 5, 2010, bu
t
th
e term
i
ssu
bj
ect to extens
i
on
i
n certa
i
nc
i
rcumstances.
I
n connect
i
on w
i
t
h
t
h
ere
gi
strat
i
on r
igh
ts a
g
reement, O
ld
C
l
earw
i
re
fil
e
d
a resa
l
ere
gi
strat
i
on statement, w
hi
c
h
was effective on Au
g
ust 28, 2007, on Form S-1 re
g
isterin
g
the resale of shares of Old Clearwire Class A Commo
n
S
tock issuable upon the exercise of the warrants. We are required to also file a re
g
istration statement within 120 da
y
s
a
f
ter t
h
eC
l
os
i
ng, w
hi
c
h
must
b
e
d
ec
l
are
d
e
ff
ect
i
ve w
i
t
hi
n 180
d
ays a
f
ter C
l
os
i
ng. Once t
h
e reg
i
strat
i
on statement
i
s
e
ffective, we must maintain such re
g
istration statement in effect (sub
j
ect to certain suspension periods) as lon
g
a
s
t
he warrants remain outstandin
g
. If we fail to meet our obli
g
ations to maintain that re
g
istration statement, we will b
e
r
equ
i
re
d
to pay to eac
h
a
ff
ecte
d
warrant
h
o
ld
er an amount
i
n cas
h
equa
l
to 2% o
f
t
h
e purc
h
ase pr
i
ce o
f
suc
hh
o
ld
er’
s
warrants. In the event that we fail to make such pa
y
ments in a timel
y
manner, the pa
y
ments will bear interest at a rat
e
of 1% per month until paid in full. This re
g
istration ri
g
hts a
g
reement also provides for incidental re
g
istration ri
g
ht
s
i
n connect
i
on w
i
t
hf
o
ll
ow-on o
ff
er
i
ngs, ot
h
er t
h
an
i
ssuances pursuant to a
b
us
i
ness com
bi
nat
i
on transact
i
on o
r
e
mp
l
o
y
ee
b
ene
fi
tp
l
an. We
d
o not cons
id
er pa
y
ment o
f
an
y
suc
h
pena
l
t
y
to
b
e pro
b
a
bl
easo
f
Decem
b
er 31, 2008,
and have therefore not recorded a liabilit
y
for this contin
g
enc
y
.
As of December 31, 2008, Ea
g
le River Holdin
g
s, LLC held warrants entitlin
g
it to purchase 613,333 shares o
f
Clearwire Class A Common Stock at an exercise
p
rice of $15.00
p
er share and warrants to
p
urchase 375,000 shares
of Clearwire Class A Common Stock at an exercise price of
$
3.00 per share. As of December 31, 2008, the
r
emainin
g
life of the warrants was 4.9
y
ears.
14.
S
hare-Based Pa
y
ments
I
n connection with the Closin
g
, we assumed the Old Clearwire 2008 Stock Compensation Plan, which we refe
r
t
oast
h
e 2008 P
l
an, t
h
eO
ld
C
l
earw
i
re 2007 Stoc
k
Compensat
i
on P
l
an, w
hi
c
h
we re
f
er to as t
h
e 2007 P
l
an, an
d
t
he
O
ld Clearwire 2003 Stock Option Plan, which we refer to as the 2003 Plan. Share
g
rants under the 2008 Pla
n
g
enerall
y
vest ratabl
y
over four
y
ears and expire no later than seven
y
ears after the date of
g
rant. Grants to be
awar
d
e
d
un
d
er t
h
e 2008 P
l
an w
ill b
ema
d
eava
il
a
bl
eatt
h
e
di
scret
i
on o
f
t
h
e Compensat
i
on Comm
i
ttee o
f
t
h
e Boar
d
of Directors from authorized but unissued shares, authorized and issued shares reacquired and held as treasur
y
s
hares, or a combination thereof. At December 31, 2008, there were 78,8
5
9,000 shares available for
g
rant under th
e
2008 P
l
an, w
hi
c
h
aut
h
or
i
zes us to grant
i
ncent
i
ve stoc
k
opt
i
ons, non-qua
lifi
e
d
stoc
k
opt
i
ons, stoc
k
apprec
i
at
i
o
n
righ
ts, restr
i
cte
d
stoc
k
, restr
i
cte
d
stoc
k
un
i
ts, an
d
ot
h
er stoc
k
awar
d
s to our emp
l
o
y
ees,
di
rectors an
d
consu
l
tants.
S
ince the adoption of the 2008 Plan, no additional stock options will be
g
ranted under the 2007 Plan or the 200
3
P
lan.
We appl
y
SFAS No. 123(R) to new awards and to awards modified, repurchased, or cancelled. Share-base
d
c
ompensat
i
on expense
i
s
b
ase
d
on t
h
e est
i
mate
d
grant-
d
ate
f
a
i
rva
l
ue an
di
s recogn
i
ze
d
net o
f
a
f
or
f
e
i
ture rate o
n
t
hose shares expected to vest over a
g
raded vestin
g
schedule on a strai
g
ht-line basis over the requisite service perio
d
f
or eac
h
separate
l
y vest
i
ng port
i
on o
f
t
h
e awar
d
as
if
t
h
e awar
d
was,
i
n-su
b
stance, mu
l
t
i
p
l
e awar
d
s
.
Stock Option
s
I
n connect
i
on w
i
t
h
t
h
e Transact
i
ons, a
ll
O
ld
C
l
earw
i
re stoc
k
opt
i
ons
i
ssue
d
an
d
outstan
di
ng at t
h
eC
l
os
i
n
g
were exchan
g
ed on a one-for-one basis for stock options with equivalent terms. The fair value of the vested an
d
p
roportionatel
y
vested stock options exchan
g
ed of $38.0 million (see Note 3) is included in the calculation of
p
urchase consideration using the Black-Scholes option pricing model with a share price of
$
6.62. Following th
e
Closin
g
,we
g
ranted options to certain officers and emplo
y
ees under the 2008 Plan. All options vest over a four-
y
ea
r
p
eriod. Under SFAS No. 123(R), the fair value of option
g
rants is estimated on the date of
g
rant usin
g
the Black-
S
c
h
o
l
es opt
i
on pr
i
c
i
ng mo
d
e
l
.
107
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)