Sprint - Nextel 2012 Annual Report Download - page 29

Table of Contents
maintenance of property and payment of taxes of Clearwire. As an affiliate of Sprint, transactions involving Sprint and Clearwire would be subject to
certain related party transaction and asset sale restrictions under certain of Sprint's credit agreements and Clearwire's agreements, which could restrict
integration efforts. Further, while Clearwire is currently not permitted to guarantee Sprint's indebtedness under Clearwire's agreements now in effect, as
a subsidiary of Sprint, Clearwire will be required to guarantee certain Sprint indebtedness if permitted under such agreements.
In addition, on December 11, 2012, Sprint purchased all of Eagle River's equity interest in Clearwire, causing Sprint's economic and voting
interest in Clearwire to exceed 50%. As a result of this acquisition, certain of the above referenced provisions, including the cross
- default, relating to
Clearwire as a subsidiary and affiliate of Sprint may already be applicable to Sprint and Clearwire regardless of whether the Clearwire Acquisition is
consummated (provided that Clearwire would not be considered a subsidiary of Sprint under certain Sprint debt agreements or be required to
guarantee Sprint's indebtedness unless, among other things, it became a wholly owned subsidiary of Sprint).
Additional review by regulatory agencies of the SoftBank Merger, together with the proposed Clearwire Acquisition, could result in delays in the
regulatory approvals needed to close the SoftBank Merger.
Sprint and SoftBank, and Sprint and Clearwire, have made various filings and taken other actions, and will continue to take actions,
necessary to obtain governmental approvals in connection with the SoftBank Merger and the Clearwire Acquisition, respectively, and related
transactions. Several governmental agencies may elect to review the Clearwire Acquisition together with the SoftBank Merger, which could have the
effect of delaying approval for, and closing of, the SoftBank Merger. While Sprint and SoftBank believe that required regulatory approvals for both the
SoftBank Merger and the Clearwire Acquisition will ultimately be obtained, these approvals are not assured.
Continued investment by Sprint in Clearwire exposes Sprint to risks because Sprint does not currently control the board, determine the strategies,
manage operations or control management, including decisions relating to the operation and build
- out of its 4G networks, and the value of
Sprint's investment in Clearwire or Sprint's financial performance may be adversely affected by decisions made by Clearwire or other large
investors in Clearwire that are adverse to Sprint's interests.
Sprint has historically been exposed to risk with respect to control and management of Clearwire, and this risk will continue during the
period prior to the closing of the Clearwire Acquisition and longer if the Clearwire Acquisition does not close. While Sprint has the right to appoint up
to seven of Clearwire's 13 directors, Sprint does not currently control Clearwire's board, nor does it manage the operations of Clearwire or control
management. Clearwire has a group of investors that are represented on Clearwire's board of directors. These investors may have interests that diverge
from Sprint's or Clearwire's. Differences in views among the large investors could result in delayed decisions by Clearwire's board of directors or failure
to agree on major issues. Any such delay or failure to agree with respect to the operation of Clearwire could have a material adverse effect on the value
of Sprint's investment in Clearwire or, because some of Sprint's subscribers use Clearwire's 4G network, Sprint's business, financial condition, results of
operations or cash flows.
In addition, the corporate opportunity provisions in Clearwire's certificate of incorporation provide that unless a director is an employee of
Clearwire, the person does not have a duty to present to Clearwire a corporate opportunity of which the director becomes aware, except where the
corporate opportunity is expressly offered to the director in his or her capacity as a director of Clearwire. This could enable certain Clearwire
stockholders to benefit from opportunities that may otherwise be available to Clearwire, which could adversely affect Clearwire's business and Sprint's
investment in Clearwire.
Clearwire's certificate of incorporation also expressly provides that certain stockholders and their affiliates may, and have no duty not to,
engage in any businesses that are similar to or competitive with those of Clearwire, do business with Clearwire's competitors, subscribers and
suppliers, and employ Clearwire's employees or officers. These stockholders or their affiliates may deploy competing wireless broadband networks or
purchase broadband services from other providers. Any such actions could have a material adverse effect on Clearwire's business, financial condition,
results of operations or prospects and the value of Sprint's investment in Clearwire.
Moreover, although as part of Network Vision Sprint has launched Sprint's own LTE network in limited markets, Sprint currently relies on
Clearwire to operate its WiMAX 4G network. In addition, Clearwire has
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