Sprint - Nextel 2012 Annual Report Download - page 18

Table of Contents
purported stockholders of Clearwire have filed several stockholder class action complaints against Clearwire, its directors and Sprint, alleging, among
other things, that the Clearwire board of directors conducted an unfair sales process resulting in an unfair consideration to the Clearwire stockholders
in the Clearwire Acquisition. The complaints assert that members of Clearwire's board of directors breached their fiduciary duties in agreeing to the
Clearwire Acquisition and some of the complaints assert that Sprint breached fiduciary duties owed to Clearwire's non
- Sprint stockholders. The
lawsuits seek to enjoin the Clearwire Acquisition and seek unspecified monetary damages, and one lawsuit seeks to enjoin the SoftBank Merger. If the
Clearwire Acquisition is consummated, Sprint will assume Clearwire's potential liability under these lawsuits, including the obligation to defend the
lawsuits and indemnification obligations with respect to former Clearwire directors.
These actions could prevent or delay the completion of the SoftBank Merger or the Clearwire Acquisition, divert management attention
from operating Sprint's businesses and result in substantial costs to Sprint and New Sprint, including any costs associated with indemnification of
Sprint or Clearwire directors. The defense or settlement of any lawsuit or claim that remains unresolved at the time the SoftBank Merger or the
Clearwire Acquisition is completed may be costly and adversely affect New Sprint's business, financial condition or results of operation.
The SoftBank Merger and the Clearwire Acquisition are subject to various closing conditions, and uncertainties related to the SoftBank Merger
and the Clearwire Acquisition or the failure to complete the SoftBank Merger or the Clearwire Acquisition could negatively impact Sprint's
business or share price.
The SoftBank Merger and the Clearwire Acquisition are subject to the satisfaction of a number of conditions beyond Sprint's control, and
there is no assurance that the SoftBank Merger or the Clearwire Acquisition and the respective related transactions will occur on the terms and
timeline currently contemplated or at all, or that the conditions to the SoftBank Merger or the Clearwire Acquisition will be satisfied or waived in a
timely manner or at all. Any delay in completing the Clearwire Acquisition could cause Sprint not to realize, or delay the realization of, some or all of the
benefits that Sprint expects to achieve from the SoftBank Merger and Clearwire Acquisition. In addition, the efforts to satisfy the closing conditions of
the SoftBank Merger and the Clearwire Acquisition, including the regulatory approval process, may place a significant burden on Sprint's management
and internal resources. Any significant diversion of management attention away from ongoing business and any difficulties encountered in the
SoftBank Merger process could adversely affect Sprint's business, results of operations and financial condition.
The Merger Agreement with SoftBank limits Sprint's ability to pursue alternatives to the SoftBank Merger. These restrictions may prevent
Sprint from pursuing attractive business opportunities and making other changes to its business prior to the effective time of the SoftBank Merger or
termination of the Merger Agreement, and if the SoftBank Merger is not consummated, Sprint may not be able to fund its capital needs from external
resources on terms acceptable to it or without modifying its business plan. Sprint could also be subject to litigation related to any failure to complete
the SoftBank Merger.
Uncertainty about the completion and effect of the SoftBank Merger or the Clearwire Acquisition on Sprint, Clearwire or their respective
employees or customers may have an adverse effect on Sprint's share price and business, including as a result of attempts by other communications
providers to persuade Sprint's customers to change service providers, which could increase the rate of Sprint's subscriber churn and have a negative
impact on Sprint's subscriber growth, revenue and results of operations. These uncertainties may also impair Sprint's ability to preserve employee
morale and attract, retain and motivate key employees until the SoftBank Merger is completed. If key employees depart because of uncertainty about
their future roles and the potential complexities of the SoftBank Merger or a desire not to remain with the business after the completion of the SoftBank
Merger, Sprint's business could be harmed.
If the proposed SoftBank Merger or the Clearwire Acquisition is not completed, the share price of Sprint's common stock may decline to the
extent that the current market price of Sprint common stock reflects an assumption that the SoftBank Merger, the Clearwire Acquisition and the
respective related transactions will be completed. In addition, upon termination of the Merger Agreement, under specified circumstances (including in
connection with a superior offer), Sprint may be required to pay a termination fee of $600 million. Also, if the Merger Agreement is terminated because
Sprint stockholders do not approve the SoftBank Merger, subject to the provisions of the Merger Agreement, then Sprint may be required to
reimburse SoftBank for its fees and expenses incurred in connection with the Merger Agreement up to $75 million. See “
- The Merger Agreement
contains
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