Cricket Wireless 2011 Annual Report Download - page 51

Our Directors and Affiliated Entities Have Substantial Influence over Our Affairs, and Our Ownership Is
Highly Concentrated. Sales of a Significant Number of Shares by Large Stockholders May Adversely
Affect the Market Price of Leap Common Stock.
Our directors and entities affiliated with them beneficially owned in the aggregate approximately 31% of
Leap common stock as of February 1, 2012. Moreover, our five largest stockholders and entities affiliated with
them beneficially owned in the aggregate approximately 66% of Leap common stock as of February 1, 2012.
These stockholders have the ability to exert substantial influence over all matters requiring approval by our
stockholders. These stockholders will be able to influence the election and removal of directors and any merger,
consolidation or sale of all or substantially all of Leap’s assets and other matters. This concentration of
ownership could have the effect of delaying, deferring or preventing a change in control or impeding a merger or
consolidation, takeover or other business combination.
Our resale shelf registration statements register for resale 15,537,869 shares of Leap common stock held by
entities affiliated with one of our directors, or approximately 20% of Leap’s outstanding common stock as of
February 1, 2012. We have also agreed to register for resale any additional shares of common stock that these
entities or their affiliates acquire, and subsequent to such agreement, such entities acquired additional shares
which constitute approximately 10% of Leap’s outstanding common stock as of February 1, 2012. We are unable
to predict the potential effect that sales into the market of any material portion of such shares, or any of the other
shares held by our other large stockholders and entities affiliated with them, may have on the then-prevailing
market price of Leap common stock. If any of Leap’s stockholders cause a large number of securities to be sold
in the public market, these sales could reduce the trading price of Leap common stock. These sales could also
impede our ability to raise future capital.
We Could Elect to Raise Additional Equity Capital Which Could Dilute Existing Stockholders.
During the second quarter of 2009 we sold 7,000,000 shares of Leap common stock in an underwritten
public offering. We could raise additional capital in the future, as market conditions permit, to enhance our
liquidity and to provide us with additional flexibility to pursue business investment initiatives. Any additional
capital we could raise could be significant and could consist of debt, convertible debt or equity financing from
the public and/or private capital markets. To provide flexibility with respect to any future capital raising
alternatives, we filed a universal shelf registration statement with the SEC to register various debt, equity and
other securities, including debt securities, common stock, preferred stock, depository shares, rights and warrants.
The securities under this registration statement may be offered from time to time, separately or together, directly
by us or through underwriters, at amounts, prices, interest rates and other terms to be determined at the time of
any offering. This universal shelf registration statement is scheduled to expire in March 2012, and we expect to
file a similar registration statement in the near future to register various debt, equity and other securities. To the
extent that we were to elect to raise equity capital, this financing may not be available in sufficient amounts or on
terms acceptable to us and could be dilutive to existing stockholders. In addition, these sales could reduce the
trading price of Leap common stock and impede our ability to raise future capital.
Your Ownership Interest in Leap Will Be Diluted upon Issuance of Shares We Have Reserved for Future
Issuances, and Future Issuances or Sales of Such Shares May Adversely Affect the Market Price of Leap
Common Stock.
As of February 1, 2012, 79,191,212 shares of Leap common stock were issued and outstanding, and
5,058,248 additional shares of Leap common stock were reserved for issuance, including 3,019,230 shares
reserved for issuance upon the exercise of outstanding stock options and deferred stock units under our 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan, as amended, 1,539,914 shares of common stock
available for future issuance under our 2004 Stock Option, Restricted Stock and Deferred Stock Unit Plan,
175,657 shares reserved for issuance upon the exercise of outstanding stock options under our 2009 Employment
Inducement Equity Incentive Plan,107,193 shares of common stock available for future issuance under our 2009
Employment Inducement Equity Incentive Plan, and 216,254 shares available for future issuance under our
Employee Stock Purchase Plan.
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