Clearwire 2009 Annual Report Download - page 101

(1) The holders of Class B Common Stock hold an e
q
uivalent number of Clearwire Communications Class
B
C
ommon Interests.
Sprint and the Investors, other than Goo
g
le, Inc, which we refer to as Goo
g
le, own shares of Class B Common
S
tock, which have equal voting rights to Clearwire’s Class A,
$
0.0001 par value, common stock, which we refer t
o
as Class A Common Stock, but have onl
y
limited economic ri
g
hts. Unlike the holders of Class A Common Stock
,
t
he holders of Class B Common Stock, have no ri
g
ht to dividends and no ri
g
ht to an
y
proceeds on liquidation other
th
an t
h
e par va
l
ue o
f
t
h
eC
l
ass B Common Stoc
k
. Spr
i
nt an
d
t
h
e Investors, ot
h
er t
h
an Goog
l
e,
h
o
ld
t
h
e
i
r econom
ic
r
i
g
hts throu
g
h ownership of Clearwire Communications Class B Common Interests. Goo
g
le owns shares of Class
A
Common Stock
.
Un
d
er t
h
e Investment A
g
reement, C
l
earw
i
re comm
i
tte
d
to a r
igh
ts o
ff
er
i
n
g
, pursuant to w
hi
c
h
r
igh
ts t
o
p
urc
h
ase s
h
ares o
f
C
l
ass A Common Stoc
k
were
g
rante
d
to eac
hh
o
ld
er o
f
C
l
ass A Common Stoc
k
a
l
on
g
w
i
t
h
certain participatin
g
securities as of December 17, 2009, which we refer to as the Ri
g
hts Offerin
g
. We distributed
s
u
b
scr
i
pt
i
on r
i
g
h
ts exerc
i
sa
bl
e
f
or up to 93,903,300 s
h
ares o
f
C
l
ass A Common Stoc
k
. Eac
h
su
b
scr
i
pt
i
on r
i
g
ht
entitled a shareholder to purchase 0.4336 shares of Class A Common Stock at a subscription price of
$
7.33 pe
r
s
hare. The subscription ri
g
hts will expire if the
y
are not exercised b
y
June 21, 2010. The Participatin
g
Equit
y
holders
an
d
Goog
l
ewa
i
ve
d
t
h
e
i
r respect
i
ve r
i
g
h
ts to part
i
c
i
pate
i
nt
h
eR
i
g
h
ts O
ff
er
i
ng w
i
t
h
respect to s
h
ares o
f
C
l
ass A
Common Stoc
k
t
h
ey eac
hh
o
ld
as o
f
t
h
e app
li
ca
bl
e recor
dd
ate.
B
usiness
C
om
b
ination
s
O
n the Closin
g
, Old Clearwire and the Sprint WiMAX business combined to form a new independent
compan
y
, Clearwire. The Investors contributed a total of $3.2 billion of new equit
y
to Clearwire and Clearwir
e
Communications. In exchange for the contribution of the Sprint WiMAX business and the
$
3.2 billion, Sprint an
d
t
he Investors received an a
gg
re
g
ate of 25 million shares of Class A Common Stock, par value $0.0001 per share, an
d
5
05 million shares of Class B Common Stock,
p
ar value $0.0001
p
er share, and an e
q
uivalent number of Clearwir
e
Communications Class B Common Interests, at an initial share price of
$
20 per share
.
Th
e num
b
er o
f
s
h
ares
i
ssue
d
to t
h
e Investors was su
bj
ect to a post-c
l
os
i
n
g
a
dj
ustment
b
ase
d
on t
h
e tra
di
n
g
p
rices of the Class A Common Stock on NASDAQ Global Select Market over 1
5
randomly-selected trading days
d
ur
i
ng t
h
e 30-
d
ay per
i
o
d
en
di
ng on t
h
e 90t
hd
ay a
f
ter t
h
eC
l
os
i
ng, w
hi
c
h
we re
f
er to as t
h
eA
dj
ustment Date, w
i
t
ha
floor of
$
17.00 per share and a cap of
$
23.00 per share. The ad
j
ustment resulted in an additional 28,235,294 shares
b
ein
g
issued to the Investors on Februar
y
26, 2009. The ad
j
ustment did not affect the purchase consideration;
however it did result in an equity reallocation of
$
33.6 million to the non-controlling interests. On February 27
,
2
009, CW Investment Ho
ldi
ngs LLC, w
hi
c
h
we re
f
er to as CW Investment Ho
ldi
ngs, an a
ffili
ate o
f
Jo
h
n Stanton, a
director of Clearwire, contributed $10.0 million in cash in exchan
g
e for 588,235 shares of Class A Common Stock.
Concurrent w
i
t
h
t
h
eC
l
os
i
ng, we entere
di
nto commerc
i
a
l
agreements w
i
t
h
eac
h
o
f
t
h
e Investors, w
hi
c
h
esta
bli
s
h
t
he
f
ramewor
kf
or
d
eve
l
opment o
f
t
h
e com
bi
ne
d
W
i
MAX
b
us
i
nesses
.
T
he combination was accounted for as a
p
urchase and as a reverse ac
q
uisition with the S
p
rint WiMA
X
Business considered the accounting acquirer. As a result, the historical financial statements of the Sprint WiMA
X
Bus
i
ness
h
ave
b
ecome t
h
e
fi
nanc
i
a
l
statements o
f
C
l
earw
i
re e
ff
ect
i
ve as o
f
t
h
eC
l
os
i
n
g
.
Purc
h
ase Consi
d
eration
As a result of the Transactions, we ac
q
uired Old Clearwire’s net assets and each share of Old Clearwire Class
A
common stock was exchanged for one share of Class A Common Stock, and each option and warrant to purchas
e
sh
ares o
f
O
ld
C
l
earw
i
re C
l
ass A Common Stoc
k
an
d
eac
h
s
h
are o
f
restr
i
cte
d
stoc
k
was exc
h
an
g
e
df
or an opt
i
on o
r
w
arrant to
p
urc
h
ase t
h
e same num
b
er o
f
s
h
ares o
f
C
l
ass A Common Stoc
k
, or a restr
i
cte
d
s
h
are o
f
C
l
ass A Common
S
tock, as a
pp
licable.
91
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)