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Verified_Complaint.pdf

Verified_Complaint.pdf

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Published by: LudwigGallet on Jun 18, 2013
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11/06/2013

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
SPRINT NEXTEL CORPORATION andSPRINT HOLDCO, LLC,Plaintiffs,v.DISH NETWORK CORPORATION andCLEARWIRE CORPORATION,Defendants.:::::::::::C.A. No. ______-___ 
VERIFIED COMPLAINT
Plaintiffs Sprint Nextel Corporation (“Sprint Nextel”) and Sprint HoldCo,LLC (“Sprint HoldCo” and, together and severally, with Sprint Nextel, “Sprint”), by andthrough their undersigned attorneys, as and for their complaint against DISH Network Corporation (“DISH”) and Clearwire Corporation (“Clearwire”), upon knowledge as tomatters relating to themselves and upon information and belief as to all other matters,alleges as follows:
NATURE OF THE ACTION
1. This action seeks declaratory, injunctive, compensatory and other relief arising from a tender offer launched by DISH for the stock of Clearwire (the “DISHTender Offer”). The DISH Tender Offer is structurally and actionably coercive and isconditioned upon an agreement with Clearwire that is set to be approved by the Clearwire board of directors (the “Clearwire Board”) that violates and converts the rights of Sprintand other Clearwire stockholders under Clearwire’s governing documents and Delaware
 
2law. This action also seeks compensatory relief for DISH’s tortious interference withClearwire’s performance of its merger agreement with Sprint.2. Sprint has been a substantial stockholder of Clearwire since its formationin 2008. After lengthy negotiations, on December 17, 2012, Sprint and Clearwireannounced a merger agreement whereby Sprint would acquire the outstanding Clearwirestock that it does not already own (the “Sprint Merger Agreement”). Sprint andClearwire also entered into a financing agreement under which Sprint would provideClearwire with much-needed financing (the “Interim Financing Agreement”).3. DISH wants spectrum. Clearwire has spectrum but has struggledfinancially. Before entering into the Sprint Merger Agreement, Clearwire sought toengage DISH in discussions, but DISH refused to negotiate and did not make ameaningful proposal. After the announcement of the Sprint Merger Agreement, however,DISH feared that by solving Clearwire’s financial problems, a combination of Sprint andClearwire would eliminate DISH’s negotiating leverage to acquire spectrum on thecheap, so DISH embarked on a plan to tank the merger.4. Because the Sprint Merger Agreement was conditioned on the approval of a majority of Clearwire’s minority shares, DISH’s strategy focused on foolingClearwire’s minority stockholders into believing they might obtain a better price from atransaction with DISH. Thus, starting in late December 2012, DISH began making aseries of public proposals to make tender offers for a minority position in Clearwire at prices higher than that offered under the Sprint Merger Agreement – in exchange for 
 
3Clearwire selling DISH key spectrum assets at a bargain price. DISH also insisted that itobtain substantial governance rights from Clearwire. The Clearwire Board rightlyrecognized that its fiduciary duties did not permit it to sell key assets at a discount inexchange for a tender offer that would benefit only a minority of stockholders, and alsorightly recognized that it could not grant DISH the governance rights DISH soughtwithout violating the rights of Sprint and other Clearwire stockholders under Clearwire’sgoverning documents and Delaware law. So Clearwire repeatedly rejected DISH’s proposals as “not actionable.” DISH appeared to give up on Clearwire and instead turnedits attention to making a public proposal to acquire Sprint. Nevertheless, DISH’srepeated public proposals to Clearwire had fooled many Clearwire minority stockholdersinto believing a higher price might be available from DISH.5. On May 29, 2013, just two days before Clearwire stockholders were set tovote on Sprint’s proposed merger with Clearwire (the “Sprint-Clearwire Merger”), DISHre-appeared with a publicly announced tender offer at a higher price – the DISH Tender Offer. The DISH Tender Offer was no longer conditioned upon a purchase of spectrumat a bargain price, but was still conditioned upon obtaining governance rights thatClearwire had previously recognized it had no power or right to give. Nevertheless, because DISH is successfully fooling Clearwire’s minority stockholders into votingagainst the Sprint-Clearwire Merger, leaving Clearwire with no solution to its loomingfinancial crisis, the Clearwire Board panicked and its changed position.

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