Clearwire 2010 Annual Report Download - page 104

proceed before a single arbitrator, but no arbitrator has been appointed yet and no final hearing dates have been
scheduled. Finally, while not part of this arbitration action, the parties have served on each other various notices
preserving their rights to arbitrate certain invoices relating to multi-mode devices submitted by both parties under
the 3G MVNO and 4G MVNO Agreements. But no arbitration action has been commenced with regard to any of
those invoices at this time. The process is in the early stages, and its outcome is unknown.
On November 15, 2010 a purported class action was filed by Angelo Dennings against Clearwire in the
U.S. District Court for the Western District of Washington. The complaint generally alleges we slow network speeds
when network demand is highest and that such network management violates our agreements with subscribers and
is contrary to the company’s advertising and marketing claims. Plaintiffs also allege that subscribers do not review
the Terms of Service prior to subscribing, and when subscribers cancel service due to network management, we
charge an ETF or restocking fee that they claim is unconscionable under the circumstances. The claims asserted
include violations of the Computer Fraud and Abuse Act, breach of contract, breach of the covenant of good faith
and fair dealing and unjust enrichment. Plaintiffs seek class certification; unspecified damages and restitution; a
declaratory judgment that Clearwire’s ETF and restocking fee are unconscionable under the alleged circumstances;
an injunction prohibiting Clearwire from engaging in alleged deceptive marketing and from charging ETFs;
interest; and attorneys’ fees and costs. Plaintiff had indicated that it will file an Amended Complaint adding
additional class representatives by March 3, 2011. If the Amended Complaint is filed, Clearwire’s responsive
motions are due March 31, 2011. This case is in the early stages of litigation, its outcome is unknown and an
estimate of any potential loss cannot be made at this time.
In addition to the matters described above, we are often involved in certain other proceedings which seek
monetary damages and other relief. Based upon information currently available to us, none of these other claims are
expected to have a material adverse effect on our business, financial condition or results of operations.
Indemnification agreements — We are currently a party to indemnification agreements with certain officers
and each of the members of our Board of Directors. No liabilities have been recorded in the consolidated balance
sheets for any indemnification agreements, because they are not probable nor estimable.
13. Share-Based Payments
In connection with the Closing, we assumed the Old Clearwire 2008 Stock Compensation Plan, which we refer
to as the 2008 Plan, the Old Clearwire 2007 Stock Compensation Plan, which we refer to as the 2007 Plan, and the
Old Clearwire 2003 Stock Option Plan, which we refer to as the 2003 Plan. Share grants generally vest ratably over
four years and expire no later than ten years after the date of grant. Grants to be awarded under the 2008 Plan will be
made available at the discretion of the Compensation Committee of the Board of Directors from authorized but
unissued shares, authorized and issued shares reacquired, or a combination thereof. At December 31, 2010, there
were 55,324,492 shares available for grant under the 2008 Plan, which authorizes us to grant incentive stock
options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other
stock awards to our employees, directors and consultants. With the adoption of the 2008 Plan, no additional stock
options will be granted under the 2007 Plan or the 2003 Plan.
Share-based compensation expense is based on the estimated grant-date fair value of the award and is
recognized net of estimated forfeitures on those shares expected to vest over a graded vesting schedule on a straight-
line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-
substance, multiple awards.
Restricted Stock Units
In connection with the Transactions, all Old Clearwire restricted stock units, which we refer to as RSUs, issued
and outstanding at the Closing were exchanged on a one-for-one basis for RSUs with equivalent terms. Following
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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)