Sprint - Nextel 2010 Annual Report Download - page 122

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
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
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