Clearwire 2009 Annual Report Download - page 38

Th
e Equ
i
ty
h
o
ld
ers’ Agreement a
l
so conta
i
ns prov
i
s
i
ons re
l
ate
d
to restr
i
ct
i
ons on trans
f
er o
f
C
l
ass A Common
S
tock and Class B Common Stock, ri
g
hts of first offer and preemptive ri
g
hts.
As a result, Sprint, the Investors and Eagle River may be able to prevent the taking of actions that align with
y
our
b
est
i
nterests as a stoc
kh
o
ld
er. T
h
e
i
nterests o
f
Spr
i
nt, t
h
e Investors an
d
Ea
gl
eR
i
ver ma
y
con
fli
ct w
i
t
hy
ou
r
i
nterests as a stockholder
.
C
learwire and its subsidiaries may be considered subsidiaries of Sprint under certain of Sprint’
s
ag
reements relatin
g
to its indebtedness
.
Sprint owned approximately 56.4% of the voting power of Clearwire as of December 31, 2009. As a result,
C
l
earw
i
re an
di
ts su
b
s
idi
ar
i
es may
b
e cons
id
ere
d
su
b
s
idi
ar
i
es o
f
Spr
i
nt un
d
er certa
i
no
f
Spr
i
nt’s agreements re
l
at
i
ng
t
o its indebtedness. Those a
g
reements
g
overn the incurrence of indebtedness and certain other activities of Sprint’
s
s
u
b
s
idi
ar
i
es. T
h
us, our act
i
ons may resu
l
t
i
nav
i
o
l
at
i
on o
f
covenants
i
n Spr
i
nt’s
d
e
b
to
bli
gat
i
ons, w
hi
c
h
may cause
S
pr
i
nt’s
l
en
d
ers to
d
ec
l
are
d
ue an
d
paya
bl
ea
ll
o
f
Spr
i
nt’s outstan
di
ng
l
oan o
bli
gat
i
ons, t
h
ere
b
y severe
l
y
h
arm
i
ng
S
print’s financial condition, operations and prospects for
g
rowth. The determination of whether or not we would b
e
c
ons
id
ere
d
asu
b
s
idi
ary un
d
er Spr
i
nt’s
d
e
b
t agreements
i
s comp
l
ex an
d
su
bj
ect to
i
nterpretat
i
on. Un
d
er t
he
E
qu
i
ty
h
o
ld
ers’ Agreement,
if
we
i
nten
d
to ta
k
e any act
i
on t
h
at may
b
e pro
hibi
te
d
un
d
er t
h
e terms o
f
certa
i
n Spr
i
n
t
d
e
b
ta
g
reements, t
h
en Spr
i
nt w
ill b
eo
blig
ate
d
to
d
e
li
ver to us an o
ffi
cer’s cert
ifi
cate, w
hi
c
h
we re
f
er to as
a
Compliance Certificate, and legal opinion from a nationally recognized law firm stating that our proposed action
s
do not violate those debt agreements. If Sprint notifies us that it cannot deliver the Compliance Certificate and legal
op
i
n
i
on, Spr
i
nt w
ill b
eo
blig
ate
d
to ta
k
e certa
i
n act
i
ons to ensure t
h
at C
l
earw
i
re
i
sno
l
on
g
er cons
id
ere
d
asu
b
s
idi
ar
y
under its debt a
g
reements. These actions ma
y
include surrenderin
g
board seats and votin
g
stock of Clearwire. The
unusual nature of this arrangement may make it more difficult for us to obtain financing on favorable terms or at all.
M
oreover, re
g
ar
dl
ess o
f
w
h
et
h
er we rece
i
ve a Comp
li
ance Cert
ifi
cate an
dl
e
g
a
l
op
i
n
i
on as
d
escr
ib
e
d
a
b
ove, we
c
annot be sure our actions will not violate S
p
rint’s debt covenants, and, if there is a violation, that S
p
rint’s lenders
w
ill waive such non-compliance and forbear from enforcin
g
their ri
g
hts, which could include accelerated collection
o
f
Spr
i
nt’s o
bli
gat
i
ons.
We wi
ll
incur signi
f
icant ex
p
ense in com
ply
ing wit
h
t
h
e terms o
f
our 4G w
h
o
l
esa
l
e agreements, an
d
w
e
m
a
y
not recognize t
h
e
b
ene
f
its we ex
p
ect i
f
S
p
rint an
d
certain o
f
t
h
eot
h
er Investors are not success
f
u
l
i
n
r
eselling our services to their customers, which would adversely affect our business prospects and results.
Un
d
er our 4G w
h
o
l
esa
l
e agreements, w
hi
c
h
we a
l
so re
f
er to as 4G mo
bil
ev
i
rtua
l
networ
k
operator, w
hi
c
h
we
r
e
f
er to as MVNO, agreements, w
hi
c
h
we re
f
er to 4G MVNO Agreements,
i
nt
hi
s
fili
ng, Spr
i
nt an
d
certa
i
no
f
t
h
e
other Investors have the ri
g
ht to resell services over our networks to their customers, and for an
y
of their customers
t
hat purchase services over our network, Sprint and these Investors are required to pay us certain fees. However,
n
ot
hi
ng
i
nt
h
e 4G MVNO Agreement requ
i
res Spr
i
nt or any o
f
t
h
eot
h
er Investors to rese
ll
any o
f
t
h
ese serv
i
ces, an
d
th
e
y
ma
y
e
l
ect not to
d
o so or to curta
il
suc
h
sa
l
es act
i
v
i
t
i
es
if
t
h
e
i
re
ff
orts prove unsuccess
f
u
l
.Int
h
e course o
f
i
mplementing the terms of the 4G MVNO Agreement, we expect to incur significant expense in connection with
designing billing, distribution and other systems which are necessary to facilitate such sales, and we may elect t
o
d
ep
l
o
y
our networ
k
s
i
n mar
k
ets requeste
dby
Spr
i
nt an
d
t
h
eot
h
er Investors w
h
ere we wou
ld
not ot
h
erw
i
se
h
ave
launched. If S
p
rint and the other Investors fail to resell services offered over our network in the amount we ex
p
ect o
r
at all, our business prospects and results of operations would be adversel
y
affected
.
A
number of our significant business arrangements are between us and parties that have an investmen
t
in or a
f
i
d
uciar
yd
ut
y
to us, an
d
t
h
e terms o
f
t
h
ose arrangements ma
y
not
b
e
b
ene
f
icia
l
to us
.
We are party to a num
b
er o
f
serv
i
ces,
d
eve
l
opment, supp
l
yan
dli
cens
i
ng agreements w
i
t
h
part
i
es t
h
at
h
ave an
ownership or fiduciar
y
relationship with us, includin
g
the various commercial a
g
reements with Sprint and the othe
r
Investors
d
escr
ib
e
d
e
l
sew
h
ere
i
nt
hi
s
fili
ng. T
h
ese re
l
at
i
ons
hi
ps may create actua
l
or potent
i
a
l
con
fli
cts o
fi
nterest,
an
d
may cause t
h
e part
i
es to t
h
ese arrangements to ma
k
e
d
ec
i
s
i
ons or ta
k
e act
i
ons t
h
at
d
o not re
fl
ect our
b
es
t
i
nterests
.
28