The following are some questions that you, as a stockholder of Clearwire, may have regarding the Transactions and the answers to those questions. Clearwire urges you to read carefully the remainder of this proxy statement/prospectus, including the annexes, because the information in this section does not provide all of the information that might be important to you with respect to the Transactions and how to vote your shares. In this proxy statement/prospectus, unless the context requires otherwise, references to “Clearwire” refer to Clearwire Corporation and its consolidated subsidiaries before the completion of the Transactions, references to “New Clearwire” refer to New Clearwire Corporation and its consolidated subsidiaries following the completion of the Transactions, and references to the “Company,” “we,” “our,” or “us” refer to Clearwire Corporation and its consolidated subsidiaries, before completion of the Transactions, or New Clearwire Corporation and its consolidated subsidiaries, after the completion of the Transactions, as the context requires. Throughout this proxy statement/prospectus we refer to the combined company as New Clearwire; however, following the completion of all of the Transactions described in this proxy statement/prospectus, the newly combined company will be renamed Clearwire Corporation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You may also cast your vote in person at the special meeting.

 

 

 

You may also obtain additional information from documents filed with the Securities and Exchange Commission, which we refer to as the SEC, by following the instructions in the section titled “Where You Can Find Additional Information” beginning on page 274 of this proxy statement/prospectus.

TRADEMARKS AND TRADE NAMES

 

We own, have rights or will own or acquire rights to trademarks, service marks, copyrights and trade names that we use in conjunction with the operation of our business including, without limitation, Clearwire^® and XOHM^tm. This proxy statement/prospectus also includes trademarks, service marks and trade names of other companies, including, without limitation, Sprint^®, iDEN^® and Boost Mobile^®. Each trademark, service mark or trade name of any other company appearing in this proxy statement/prospectus belongs to its holder. Use or display by us of other parties’ trademarks, service marks or trade names is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of the trademark, service mark or trade name owner. See “Risk Factors — Risks Related to New Clearwire’s Business after the Transactions — We could be subject to claims that we have infringed on the proprietary rights of others, which claims would likely be costly to defend, could require us to pay damages and could limit our ability to use necessary technologies in the future.”

 

The following summary highlights information contained elsewhere in this proxy statement/prospectus. It may not contain all the information that may be important to you. You should read this entire proxy statement/prospectus carefully, including the sections titled “Risk Factors,” “Clearwire Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Sprint WiMAX Business,” our historical consolidated financial statements and related notes and the Sprint WiMAX Business’ financial statements and related notes, all included elsewhere in this proxy statement/prospectus.

 

The Companies (see page 62)

 

Clearwire Corporation

 

Clearwire, a Delaware corporation, builds and operates next generation wireless broadband networks that enable fast, simple, portable, reliable and affordable Internet communications. Clearwire’s wireless broadband networks cover entire communities and deliver a high-speed Internet connection that creates a new communications path into the home or office, and anywhere within its coverage area. Clearwire’s services consist primarily of providing wireless broadband connectivity to more than 16.8 million people in the United States and Europe in 50 markets, ranging from major metropolitan areas to small, rural communities. Clearwire conducts its operations through its domestic and international subsidiaries. Clearwire also offers Voice-over-Internet Protocol, which we refer to as VoIP, telephony services in most of its domestic markets. As it evolves its existing networks and services, Clearwire plans to deploy the standards-based mobile WiMAX service in its new markets. Clearwire holds approximately 15.8 billion MHz-POPs (defined as the product of the number of megahertz, which we refer to as MHz, associated with a spectrum license multiplied by the estimated population of the license’s service area, which we refer to as POPs) of owned or leased spectrum, including spectrum subject to pending acquisition or leases, in the United States, and is subject to regulation by the Federal Communications Commission, which we refer to as the FCC. Clearwire also holds 8.7 billion MHz-POPs in Europe. Clearwire’s principal executive offices are located at 4400 Carillon Point, Kirkland, Washington 98033, telephone: (425) 216-7600. Clearwire’s website address is http://www.clearwire.com. Information on or accessed through Clearwire’s website is not incorporated into this proxy statement/prospectus and is not a part of this proxy statement/prospectus.

 

Shares of Clearwire Class A Common Stock are traded on NASDAQ under the symbol “CLWR.”

 

New Clearwire Corporation

 

New Clearwire, a Delaware corporation, was formed by Clearwire for the purpose of engaging in the Transactions. New Clearwire will also act as the managing member of Clearwire Communications. Immediately after the completion of the Transactions, New Clearwire’s equity capital will consist solely of the New Clearwire Class A Common Stock and New Clearwire Class B Common Stock issued pursuant to the Transactions. The New Clearwire Class A Common Stock and New Clearwire Class B Common Stock each will have one vote per share and will vote together as a single class on all matters. Subject to restrictions imposed by the amended and restated operating agreement governing Clearwire Communications, which we refer to as the Operating Agreement, holders of New Clearwire Class B Common Stock will have the right to exchange one share of New Clearwire Class B Common Stock and one Clearwire Communications Class B Common Interest for one share of New Clearwire Class A Common Stock. New Clearwire Class B Common Stock will have only nominal economic rights. Unlike the holders of New Clearwire Class A Common Stock, the holders of New Clearwire Class B Common Stock will have no right to dividends and no right to any proceeds on liquidation other than the par value of the New Clearwire Class B Common Stock. New Clearwire’s corporate governance is outlined in the New Clearwire Charter and the equityholders’ agreement to be entered into at the Closing among Sprint, Eagle River and the Investors, which we refer to as the Equityholders’ Agreement. The New Clearwire Charter and the Equityholders’ Agreement are attached as Annex B and Annex C, respectively, to this proxy statement/prospectus. New Clearwire will be renamed Clearwire Corporation following completion of the Transactions.

Sprint Nextel Corporation

 

Sprint, a Kansas corporation, offers a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government customers. Sprint is widely recognized for developing, engineering and deploying innovative technologies, including two wireless networks serving nearly 52 million customers at the end of the second quarter of 2008; industry-leading mobile data services; instant national and international walkie-talkie capabilities; and a global Tier 1 Internet backbone. Sprint operates its WiMAX broadband assets under the XOHM^tm brand name. The Sprint WiMAX Business, including the XOHM^tm name, will be contributed to New Clearwire as part of the Transactions.

 

Sprint Sub

 

Sprint Sub LLC, which we refer to as Sprint Sub, a Delaware limited liability company, will be formed by Sprint as a direct, wholly-owned subsidiary of Sprint HoldCo LLC, which we refer to as Sprint HoldCo, for the purpose of engaging in the Transactions. Before the Closing, its assets will consist of the Sprint WiMAX Business, including XOHM, which is currently a division of Sprint that is developing a nationwide advanced wireless broadband network designed to mobilize the Internet, bring wireless innovation to devices and deliver new mobile multimedia applications to consumer, business and government customers. The equity interests of Sprint Sub and its subsidiaries, including the Sprint WiMAX Business and the XOHM^tm name, will be contributed to New Clearwire as part of the Transactions.

 

The Investors

 

As part of the Transactions, Comcast, Time Warner Cable, Bright House Networks, Intel and Google will invest an aggregate of $3.2 billion in New Clearwire and its subsidiaries.

 

Comcast Corporation

 

Comcast, a Pennsylvania corporation, is the nation’s leading provider of entertainment, information and communications products and services. With approximately 24.6 million cable customers, 14.4 million high-speed Internet customers, and 5.6 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable systems and in the delivery of programming content.

 

Comcast’s content networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, ten Comcast SportsNet networks and Comcast Interactive Media, which develops and operates Comcast’s Internet business. Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia.

 

Time Warner Cable Inc.

 

Time Warner Cable, a Delaware corporation, together with its subsidiaries, is the second-largest cable operator in the United States, with technologically advanced, well-clustered systems located mainly in New York, the Carolinas, Ohio, southern California and Texas. As of June 30, 2008, Time Warner Cable served approximately 14.7 million customers who subscribe to one or more of its video, high-speed data and voice services.

 

Bright House Networks, LLC

 

Bright House Networks, a Delaware limited liability company, is the nation’s sixth largest multiple systems operator with approximately 2.4 million customers in several large markets, including Bakersfield, California, Birmingham, Alabama, Detroit, Michigan, Indianapolis, Indiana, Orlando, Florida and Tampa, Florida, along with several other smaller systems in Alabama and the Florida Panhandle. Bright House Networks provides cable programming, digital phone, high-speed data and other similar cable, voice and data services.

Intel Corporation

 

Intel, a Delaware corporation, is the world’s largest semiconductor chip manufacturer, based on revenue, and a developer of advanced integrated digital technology products, primarily integrated circuits, for industries such as computing and communications. Intel also develops platforms, defined as integrated suites of digital computing technologies that are designed and configured to work together to provide an optimized user computing solution compared to ingredients that are used separately. Intel offers products at various levels of integration to allow customers flexibility to create advanced computing and communications systems and products. Intel Capital Corporation, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital Corporation invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing and cleantech.

 

Google Inc.

 

Google, a Delaware corporation, is a global technology leader focused on improving the ways people connect with information. Google’s innovations in web search and advertising have made its web site a top Internet destination and its brand one of the most recognized in the world. Google maintains the largest, most comprehensive index of web sites and other online content, and it makes this information freely available to anyone with an Internet connection. Google’s automated search technology helps people obtain nearly instant access to relevant information from its vast online index.

 

The Transactions (see page 62)

 

On May 7, 2008, Clearwire entered into the Transaction Agreement with Sprint, Comcast, Time Warner Cable, Bright House Networks, Google and Intel to combine Clearwire’s and Sprint’s WiMAX wireless broadband businesses, with the Investors contributing an aggregate of $3.2 billion in capital to the new company. Clearwire and Sprint believe that the combination of their WiMAX wireless broadband businesses, in conjunction with the contribution of capital from the Investors, will provide the potential for substantial strategic and financial benefits to their stockholders, customers and the communities they serve.

 

The Transactions will be governed by the terms of the Transaction Agreement and the other agreements related to the Transactions that are attached as annexes to this proxy statement/prospectus or as exhibits to the registration statement of which this proxy statement/prospectus is a part. For more information on the Transaction Agreement, see the section titled “The Transaction Agreement” and the Transaction Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Transaction Agreement, including the exhibits thereto, carefully and in its entirety.

 

The voting agreement entered into on May 7, 2008 among Eagle River, Clearwire, Sprint and the Investors, which we refer to as the Eagle River Voting Agreement, and the voting agreement entered into on May 7, 2008 among Intel, Intel Capital Corporation, Intel Capital (Cayman) Corporation, Clearwire, Sprint and the Strategic Investors, which we refer to as the Intel Voting Agreement, provide, among other things, that each outstanding share of Clearwire Class B Common Stock held by Eagle River and Intel and certain of its affiliates, respectively, will be converted into one share of Clearwire Class A Common Stock before the Merger (but after the vote of the Clearwire stockholders at the special meeting). The Eagle River Voting Agreement and the Intel Voting Agreement are attached as Annex D and Annex E, respectively, to this proxy statement/prospectus.

 

The Transaction Agreement provides that, on the terms and subject to the conditions set forth in the Transaction Agreement, among other things:

 

 

 

 

 

 

 

The number of shares of New Clearwire Class A Common Stock and Clearwire Communications Class B Common Interests, as applicable, that the Investors receive pursuant to the Transaction Agreement will initially be based on a purchase price of $20.00 per share or interest, as applicable, but is subject to a post-closing adjustment based on the trading prices of New Clearwire Class A Common Stock on NASDAQ over 15 randomly-selected trading days during the 30-trading day period ending on the 90th day after the Closing date. The final price per share or interest, as applicable, will be based on the volume weighted average price on those randomly selected days, and is subject to a cap of $23.00 per share or interest, as applicable, and a floor of $17.00 per share or interest, as applicable. The aggregate number of shares or interests, as applicable, that each Investor ultimately receives for its investment in New Clearwire and Clearwire Communications, as applicable, will be equal to its investment amount divided by the volume weighted average price per share of New Clearwire Class A Common Stock. The number of shares of New Clearwire Class B Common Stock ultimately received by each Investor other than Google will be equal to the number of the Investor’s Clearwire Communications Class B Common Interests, as so adjusted. The number of Clearwire Communications Class B Common Interests and shares of New Clearwire Class B Common Stock received by Sprint HoldCo in connection with the Contribution and the Class B Purchase, respectively, will not be adjusted.

As the New Clearwire Class B Common Stock has only nominal economic rights, immediately after the Closing, Sprint and the Investors, other than Google, will hold their economic rights in the combined WiMAX business through the ownership of Clearwire Communications Class B Common Interests. At Closing, the initial members will hold in the aggregate 100% of the economic rights in Clearwire Communications, which will be allocated as follows: New Clearwire will hold 29% to 31%, Sprint will hold 49% to 52% and the Investors, other than Google, will hold 17% to 21%.

New Clearwire Structure

 

The following is a diagram illustrating the structure of New Clearwire, its subsidiaries and its stockholders on completion of the Transactions:

 

 

 

¹ With respect to the shares of New Clearwire Class B Common Stock and the Clearwire Communications Interests purchased by Intel as part of the Transactions.

 

² Includes Eagle River, Motorola, Bell and Intel (with respect to the Clearwire Common Stock held by Intel before the Closing).

 

³ Sprint will hold its equity interests in New Clearwire and Clearwire Communications through Sprint HoldCo.

 

The following table shows the amount each Investor has agreed to contribute to New Clearwire or Clearwire Communications as part of the Transactions, along with its respective ownership percentage of New Clearwire after the Closing (dollars in millions):

 

 

 

 

 

Under the terms of the Transaction Agreement, before the Closing, Clearwire must operate its business in the ordinary course and, among other things, must not engage in certain actions related to its business and its assets unless it obtains the consent of Sprint and a 75% majority in interest of the Investors, based on the amount to be invested by the Investors at the Closing. The Sprint WiMAX Business is subject to substantially similar pre-Closing operational restrictions.

 

New Clearwire Charter; New Clearwire Common Stock (see page 174)

 

Following the completion of the Merger, the New Clearwire Charter will govern the rights of the holders of New Clearwire Common Stock. For a summary of the differences in the rights of Clearwire stockholders compared to those of New Clearwire stockholders, see the section titled “Comparison of Stockholder Rights and Corporate Governance Matters” beginning on page 149 of this proxy statement/prospectus.

 

In general, the New Clearwire Charter will provide that the approval of the holders of at least a majority of all of the votes cast by the stockholders present and entitled to vote at a stockholder meeting at which a quorum is present will be required for corporate action that requires a stockholder vote. However, the New Clearwire Charter will provide that the approval of the holders of at least 75% of all of the outstanding shares of capital stock of New Clearwire entitled to vote in the election of directors, voting together as a single class, will be required to approve certain actions constituting a change of control of New Clearwire or Clearwire Communications.

 

Under the New Clearwire Charter, holders of New Clearwire Common Stock will be subject to certain transfer restrictions. In addition, a holder of New Clearwire Class B Common Stock will be able to exchange one share of New Clearwire Class B Common Stock together with one Clearwire Communications Class B Common Interest for one share of New Clearwire Class A Common Stock. If any holder of New Clearwire Class B Common Stock attempts to transfer a share of New Clearwire Class B Common Stock without a corresponding Clearwire Communications Class B Common Interest, that share of New Clearwire Class B Common Stock will be redeemed by New Clearwire for its par value.

 

Recommendations to Clearwire Stockholders (see pages 60 and 74)

 

The Clearwire board of directors has approved the Transaction Agreement, the New Clearwire Charter and the New Clearwire Stock Plan, and has determined that the Transaction Agreement and the Transactions, including the Merger and the issuance of shares of New Clearwire Common Stock as contemplated by the Transaction Agreement, the New Clearwire Charter and the New Clearwire Stock Plan, are advisable, fair to, and in the best interests of Clearwire and its stockholders, and recommends that Clearwire stockholders vote “FOR” the approval and adoption of the Transaction Agreement, including the issuance of shares of New Clearwire Common Stock, “FOR” the adoption of the New Clearwire Charter and “FOR” the approval and adoption of the New Clearwire Stock Plan.

 

Opinion of Clearwire’s Financial Advisor (see page 78)

 

Morgan Stanley & Co. Incorporated, which we refer to as Morgan Stanley, on May 5, 2008, rendered its oral opinion to the Clearwire board of directors (subsequently confirmed in writing) that, as of that date and based on and subject to the assumptions, qualifications and limitations discussed in such opinion, the consideration to be

received by holders of shares of Clearwire Class A Common Stock pursuant to the Merger was fair, from a financial point of view, to such holders. The full text of the written opinion of Morgan Stanley, dated May 7, 2008, which discusses, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken in connection with the opinion, is attached as Annex G to this proxy statement/prospectus. Clearwire stockholders are urged to read this opinion carefully in its entirety.

 

The Morgan Stanley opinion is directed to the Clearwire board of directors and addresses only the fairness, from a financial point of view, of the consideration to be received by the holders of Clearwire Class A Common Stock pursuant to the Merger to such holders as of the date of the opinion. The Morgan Stanley opinion does not constitute a recommendation to any Clearwire stockholder as to how any such stockholder should vote at the special meeting. The opinion also does not address the prices at which shares of New Clearwire Class A Common Stock will trade following the completion of the Merger or at any other time.

 

As compensation for its services in connection with the Transactions, Clearwire has agreed to pay Morgan Stanley a fee of $30 million, of which $24 million is contingent upon the consummation of the Transactions. Clearwire has also agreed to reimburse Morgan Stanley for certain expenses incurred by Morgan Stanley, including fees of outside legal counsel, and to indemnify Morgan Stanley and related parties against certain liabilities and expenses arising out of Morgan Stanley’s engagement.

 

Regulatory Matters (see page 85)

 

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, the Transactions cannot be completed until we have made required notification filings and provided certain information and materials to the Federal Trade Commission, which we refer to as the FTC, and the Antitrust Division of the United States Department of Justice and until specified waiting periods have expired without the imposition of a Burdensome Condition. In addition, the step of the Transactions related to the transfer of the Sprint WiMAX Business is subject to, and the parties’ obligations to effect the transfer are conditioned on, approval by the FCC without the imposition of a Burdensome Condition. The FCC approval process includes a public comment period, which ended on August 11, 2008, and, as of the date of this proxy statement/prospectus, each of Clearwire and Sprint is awaiting FCC approval. The waiting period required under the HSR Act expired on July 11, 2008. As of the date of this proxy statement/prospectus, each of Clearwire and Sprint is in the process of seeking the remaining required approvals.

 

No Appraisal Rights (see page 86)

 

Clearwire stockholders do not have any right to an appraisal of the value of their shares in connection with the Transactions under Section 262 of the Delaware General Corporation Law, which we refer to as the DGCL.

 

Listing of New Clearwire Common Stock (see page 87)

 

We will apply for listing of New Clearwire Class A Common Stock on NASDAQ under the trading symbol “CLWR.” If the Transactions are completed, (1) shares of New Clearwire Class A Common Stock are expected to be traded on NASDAQ immediately following the completion of the Transactions and (2) Clearwire Class A Common Stock will cease to be listed on NASDAQ and will be deregistered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act.

 

Additional Interests of Clearwire’s Directors and Officers in the Transactions (see page 92)

 

When Clearwire stockholders consider Clearwire’s board of directors’ recommendation that they vote in favor of the Transaction Agreement proposal, the New Clearwire Charter proposal and the New Clearwire Stock Plan proposal, Clearwire stockholders should be aware that Clearwire’s executive officers and directors may have interests in the Transactions that may be different from, or in addition to, the interests of Clearwire’s stockholders. Those interests include, among other things, the accelerated vesting of equity-based awards, specified severance benefits payable under certain circumstances, grants of awards under the New Clearwire Stock Plan and the appointment of directors and officers of Clearwire to the New Clearwire board of directors and management team. As a result, the directors and officers of Clearwire may be more likely to recommend

the approval of the Transaction Agreement proposal, the New Clearwire Charter proposal and the New Clearwire Stock Plan proposal than if they did not have these interests.

 

Benjamin G. Wolff, Clearwire’s Chief Executive Officer, John A. Butler, Clearwire’s Chief Financial Officer and Executive Vice President, Craig O. McCaw, Clearwire’s Chairman, Perry S. Satterlee, Clearwire’s Chief Operating Officer, R. Gerard Salemme, Clearwire’s Executive Vice President — Strategy, Policy and External Affairs, Scott Richardson, Clearwire’s Chief Strategy Officer and Executive Vice President, John Saw, Clearwire’s Chief Technology Officer and Vice President, Hope F. Cochran, Clearwire’s Senior Vice President, Finance and Treasurer, Broady R. Hodder, Clearwire’s Vice President, General Counsel and Secretary, and Robert M. DeLucia, Clearwire’s Chief Accounting Officer, would be entitled upon a change in control and in the event of a termination of their employment under certain circumstances following a change of control, to the benefits set forth below. Completion of the Transactions will be a change in control for these purposes.

 

The following table sets forth estimates of the amounts to which each executive officer would be entitled (1) on the Closing and (2) on termination of the executive’s employment following the Closing under certain circumstances set forth in Clearwire’s Change in Control Severance Plan and certain of the executives’ employment agreements. See “Additional Interests of Clearwire’s Directors and Officers in the Transactions” beginning on page 92 of this proxy statement/prospectus. These estimates assume (1) that the Closing occurred on June 30, 2008, (2) that, for the second case, the executive’s employment is terminated immediately following the Closing and (3) a closing price as of June 30, 2008 of $12.96 with respect to each share underlying the executive’s outstanding equity awards.

 

 

 

 

Clearwire’s board of directors was aware of these interests and considered them, among other matters, in approving the Transaction Agreement and the Transactions contemplated thereby. Clearwire’s stockholders should consider these and other interests of Clearwire’s directors and executive officers that are described in this proxy statement/prospectus. See the section titled “Additional Interests of Clearwire’s Directors and Officers in the Transactions” beginning on page 92 of this proxy statement/prospectus.

 

Sprint Pre-Closing Financing (see page 98)

 

Sprint has agreed to provide certain financing for the operations of the Sprint WiMAX Business between April 1, 2008 and the Closing. Subject to certain exceptions, before the Contribution, the liability for the total amount of this financing, up to a limit specified in a budget shared by Sprint with the Investors, will be assumed by Sprint Sub, which will be a wholly-owned subsidiary of New Clearwire after the Closing. Sprint Sub will repay, or cause to be repaid, this amount in full on the first business day after the Closing, in part via a cash payment to Sprint and in part by the issuance of a secured promissory note to Sprint or its subsidiaries.

 

Conditions to the Completion of the Transactions (see page 102)

 

Completion of the Transactions is subject to various conditions, including, among other customary closing conditions, the approval and adoption of the Transaction Agreement by Clearwire’s stockholders, the adoption of the New Clearwire Charter by Clearwire’s stockholders, the effectiveness of a registration statement relating to the registration of the New Clearwire Class A Common Stock to be issued in the Merger, the maintenance by Clearwire and Sprint of a minimum number of MHz-POPs coverage from their respective and combined spectrum holdings, the receipt of the consent of the FCC to certain of the Transactions without the imposition of a Burdensome Condition (please see the section titled “The Transaction Agreement — Government Approvals” beginning on page 106 of this proxy statement/prospectus for an explanation of the term “Burdensome Condition”) on any party to the Transaction Agreement, the expiration or termination of applicable waiting periods under the HSR Act (this condition has been satisfied as of July 11, 2008), receipt by Clearwire of the required tax opinion relating to the treatment of the Conversion and the Merger as a tax-free reorganization for federal income tax purposes, receipt by Clearwire Communications of the required tax opinion relating to its classification following the Closing as a partnership for federal income tax purposes, the consent of the lenders under Clearwire’s senior term loan facility to the Transactions or the refinancing of the senior term loan facility, and contribution by the Investors of at least $3.1 billion.

 

Clearwire Non-Solicitation (see page 107)

 

Clearwire has agreed that it and its subsidiaries will not, among other things, authorize or permit any of its or their officers, directors or other representatives to, directly or indirectly:

 

 

However, as more fully described under “The Transaction Agreement — Clearwire Non-Solicitation” below, the Transaction Agreement does not prohibit Clearwire, prior to the receipt of its stockholders’ approval of the Transactions, from considering and engaging in negotiations or discussions with any person or group that has made an unsolicited bona fide Acquisition Proposal if Clearwire’s board of directors determines in good faith, after consultation with its outside advisors, that:

 

 

Please see the section titled “The Transaction Agreement — Clearwire Non-Solicitation” beginning on page 107 of this proxy statement/prospectus for an explanation of the terms “Acquisition Proposal” and “Superior Proposal.”

 

Sprint Non-Solicitation (see page 109)

 

Sprint has agreed that it and its subsidiaries will not authorize or permit any of its or their officers, directors or other representatives to, directly or indirectly:

 

 

Termination of the Transaction Agreement (see page 110)

 

The Transaction Agreement may be terminated at any time before the Closing:

 

 

 

 

 

 

 

 

Termination Fee (see page 111)

 

Clearwire has agreed to pay Sprint a termination fee of $60 million if:

 

 

 

 

Equityholders’ Agreement (see page 113)

 

In connection with the Transactions, Clearwire has agreed to cause New Clearwire to enter into, at the Closing, the Equityholders’ Agreement with Sprint, Eagle River and the Investors. The Equityholders’ Agreement will provide that, among other things:

 

 

 

 

 

 

 

 

 

The Equityholders’ Agreement will also provide for certain restrictions on transfers of shares of New Clearwire by Sprint, Eagle River, the Investors and their permitted transferees and designees under the Equityholders’ Agreement, which we refer to collectively as the Equityholders, and each individually as an Equityholder. In addition, the Equityholders’ Agreement will provide a right of first offer related to certain transfers of New Clearwire equity securities, as well as preemptive rights and tag-along rights. Under the Equityholders’ Agreement, the Equityholders will not be able to purchase any New Clearwire Common Stock for at least five years after the Closing, subject to certain exceptions, including the acquisition by an Equityholder of 100% of the outstanding New Clearwire Common Stock that has been approved by a majority of the disinterested directors and a majority of the disinterested stockholders of New Clearwire.

 

Voting Agreements (see page 118)

 

In connection with the Transactions, Eagle River entered into the Eagle River Voting Agreement with Clearwire, Sprint and the Investors. Pursuant to the Eagle River Voting Agreement, Eagle River has agreed, subject to certain conditions, to vote shares of Clearwire Common Stock representing not less than 40% of the total voting power of all capital stock of Clearwire outstanding as of May 7, 2008 (on a non-fully diluted basis), as follows:

 

 

The Eagle River Voting Agreement also provides that Eagle River will convert its shares of Clearwire Class B Common Stock into shares of Clearwire Class A Common Stock immediately before completion of the Merger.

 

In addition, Intel, Intel Capital Corporation and Intel Capital (Cayman) Corporation entered into the Intel Voting Agreement with Clearwire, Sprint and the Strategic Investors. Pursuant to the Intel Voting Agreement, each Intel party has agreed that at the special meeting (or any adjournment, postponement or continuation thereof) it will vote its shares of Clearwire Common Stock in the same proportion as the Clearwire stockholders (excluding each Intel party and its affiliates, Eagle River and its affiliates and any director or executive officer of Clearwire); provided, that such vote in favor of approval of the Transactions will only be required if a majority of Clearwire stockholders (excluding each Intel party and its affiliates, Eagle River and its affiliates and any director or executive officer of Clearwire) has voted in favor of the approval of the Transactions.

 

The Intel Voting Agreement also provides that each of Intel, Intel Capital Corporation and Intel Capital (Cayman) Corporation will convert its shares of Clearwire Class B Common Stock into shares of Clearwire Class A Common Stock immediately before completion of the Merger.

 

The Eagle River Voting Agreement and the Intel Voting Agreement are attached as Annex D and Annex E, respectively, to this proxy statement/prospectus.

 

Registration Rights Agreement (see page 120)

 

In connection with the Transactions, Clearwire has agreed to cause New Clearwire to enter into, at the Closing, a registration rights agreement with Sprint, Eagle River and the Investors, which we refer to as the Registration Rights Agreement. A copy of the Registration Rights Agreement is filed as an exhibit to the registration statement on Form S-4 of which this proxy/statement prospectus is a part. The Registration Rights Agreement will grant certain customary registration rights, including demand registration rights and piggyback

registration rights, with respect to the shares of New Clearwire Common Stock held by Sprint, Eagle River and the Investors. The Registration Rights Agreement also governs how registration expenses will be paid on exercise of the rights granted.

 

Operating Agreement (see page 122)

 

In connection with Clearwire’s entry into the Transaction Agreement, Clearwire has also agreed to cause Clearwire Communications to be governed by the Operating Agreement, pursuant to which the business and operations of Clearwire Communications will be managed by New Clearwire, as managing member. Among other things, the Operating Agreement will contain certain pre-emptive rights, rights of first offer and tag-along rights with respect to, as well as certain restrictions on transfer of, Clearwire Communications equity securities. In general, under the Operating Agreement, Clearwire Communications may make distributions to its members, including New Clearwire, from time to time at the discretion of New Clearwire, in its capacity as managing member of Clearwire Communications. Such distributions generally will be made to the members, including New Clearwire, on a pro rata basis in proportion to the number of Clearwire Communications Common Interests held by each member at the record date for the distribution. Clearwire Communications generally may not make any distributions, other than tax distributions, to its members unless a corresponding distribution or dividend is paid by New Clearwire to its stockholders contemporaneously with the distributions made to the members of Clearwire Communications.

 

Commercial Agreements among New Clearwire, Clearwire Communications, Sprint, Intel and the Strategic Investors (see page 125)

 

In connection with Clearwire’s entry into the Transaction Agreement, Clearwire has also agreed to cause New Clearwire and Clearwire Communications to enter into, at the Closing, several commercial agreements with Sprint and certain of the Investors relating to, among other things, access rights to towers that Sprint owns or leases, resales by Clearwire Communications and certain Investors of bundled second generation wireless communications, which we refer to as 2G, and third generation wireless communications, which we refer to as 3G, services from Sprint, resales by Sprint and certain Investors of Clearwire Communications’s fourth generation wireless communications, which we refer to as 4G, services, most favored reseller status with respect to economic and non-economic terms of certain service agreements, collective development of new 4G wireless communications services, creation of desktop and mobile applications on the New Clearwire network, the embedding of WiMAX chips into various New Clearwire network devices and the development of Internet services and protocols.

 

Share Ownership of Clearwire’s Directors and Executive Officers (see page 264)

 

On          , 2008, which is the record date for determining those Clearwire stockholders who are entitled to vote at the special meeting, the directors and executive officers of Clearwire and their affiliates beneficially owned shares of Clearwire Class A Common Stock, representing approximately     % of the shares of Clearwire Class A Common Stock and     % of the aggregate voting power of Clearwire outstanding on the record date, and shares of Clearwire Class B Common Stock, representing approximately     % of the shares of Clearwire Class B Common Stock and     % of the aggregate voting power of Clearwire outstanding on the record date. Subject to the terms of the Intel Voting Agreement and the Eagle River Voting Agreement, to Clearwire’s knowledge, the directors and executive officers of Clearwire and their affiliates intend to vote their Clearwire Common Stock in favor of the Transaction Agreement proposal, in favor of the New Clearwire Charter proposal and in favor of the New Clearwire Stock Plan proposal.

 

Treatment of Clearwire Stock Options, Warrants and Other Equity-Based Awards (see page 96)

 

On completion of the Merger, all outstanding stock options or warrants to purchase Clearwire Class A Common Stock, and all other Clearwire equity-based awards, will be converted into awards that relate to shares of New Clearwire Class A Common Stock that will vest on, and otherwise be subject to, the same terms and conditions as the corresponding Clearwire award. The number of shares of New Clearwire Class A Common Stock underlying the New Clearwire stock option, warrant or other equity-based award, as

applicable, will equal the number of shares of Clearwire Class A Common Stock underlying the corresponding Clearwire stock option, warrant or other equity-based award, as applicable. The per share exercise price of each New Clearwire stock option, warrant or other equity-based award, as applicable, will equal the exercise price of the corresponding Clearwire stock option, warrant or other equity-based award, as applicable.

 

Market Prices and Dividends and Other Distributions

 

Market Prices

 

The table below presents the closing sales price per share of Clearwire Class A Common Stock, which trades on NASDAQ under the symbol “CLWR.” These prices are presented on two dates:

 

 

 

 

We urge you to obtain current market quotations for Clearwire Class A Common Stock. We cannot give any assurance as to the future prices or markets for Clearwire Class A Common Stock or New Clearwire Class A Common Stock.

 

Sprint Sub’s equity interests are not listed for trading on any exchange or automated quotation service.

 

Dividends and Other Distributions

 

Neither Clearwire nor New Clearwire has paid any dividends on its respective shares of Class A Common Stock and New Clearwire does not plan to pay dividends on the New Clearwire Class A Common Stock for the foreseeable future. All decisions regarding the declaration and payment of dividends will be at the discretion of New Clearwire’s board of directors and will be evaluated from time to time by the board of directors in light of New Clearwire’s financial condition, earnings, cash flows, growth prospects, funding requirements, applicable law and other factors that New Clearwire’s board of directors deems relevant.

 

Sprint Sub has not paid any dividends on its equity interests and does not plan to pay dividends on its equity interests for the foreseeable future.

 

The following table sets forth selected consolidated financial data for Clearwire. The selected financial information set forth below under the captions “Statement of Operations Data” and “Other Financial Data” for the years ended December 31, 2007, 2006 and 2005 and the “Balance Sheet Data” as of December 31, 2007 and 2006 are derived from our audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The selected financial information set forth below under the captions “Statement of Operations Data” and “Other Financial Data” for the six months ended June 30, 2008 and 2007, and the “Balance Sheet Data” as of June 30, 2008 are derived from our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. The “Statement of Operations Data” and “Other Financial Data” for the year ended December 31, 2004 and for the period from October 27, 2003 (inception) to December 31, 2003 and the “Balance Sheet Data” as of December 31, 2005, 2004 and 2003 are derived from our audited consolidated financial statements not included in this proxy statement/prospectus. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary to state fairly our results of operations as of and for the periods presented. Historical results are not necessarily indicative of results to be expected for future periods.

 

The selected historical consolidated financial data should be read in conjunction with “Clearwire Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus.

 

 

 

 

 

 

 

 

The following table sets forth selected financial data for the Sprint WiMAX Business, a development stage enterprise. The selected financial data for the Sprint WiMAX Business represent the collective assets, related liabilities and activities of the Sprint WiMAX Business, including any allocations from Sprint and other non-WiMAX Sprint entities that have acted on behalf of the Sprint WiMAX Business. The acquisition of the Sprint WiMAX Business’ assets was funded by Sprint and includes significant amounts of FCC licenses. Principal operations did not commence until January 1, 2007, at which time the Sprint WiMAX Business qualified as a business.

 

The selected financial information set forth below under the caption “Statement of Operations Data” for the year ended December 31, 2007 and the “Balance Sheet Data” as of December 31, 2007 are derived from the Sprint WiMAX Business’ audited financial statements included elsewhere in this proxy statement/prospectus. The selected financial information set forth below under the caption “Statement of Operations Data” for the six months ended June 30, 2008 and 2007 and the “Balance Sheet Data” as of June 30, 2008 are derived from the Sprint WiMAX Business’ unaudited financial statements included elsewhere in this proxy statement/prospectus. In the opinion of management of the Sprint WiMAX Business, the financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary to state fairly our results of operations as of and for the periods presented. Historical results are not necessarily indicative of results to be expected for future periods.

 

The selected historical financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Sprint WiMAX Business” and the Sprint WiMAX Business’ financial statements and related notes included elsewhere in this proxy statement/ prospectus.

 

 

 

The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2008 and for the year ended December 31, 2007 give effect to the Transactions as if they were consummated on January 1, 2007 and includes all adjustments that give effect to events that are directly attributable to the Transactions, expected to have a continuing impact, and that are factually supportable. The unaudited pro forma condensed combined balance sheet as of June 30, 2008 gives effect to the Transactions as if they had been consummated on June 30, 2008 and includes all adjustments which give effect to events that are directly attributable to the Transactions and that are factually supportable. The pro forma adjustments are based on the information available at the time of the preparation of this proxy statement/prospectus. See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” on page 133.

 

The unaudited pro forma condensed combined financial information that follows is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that would have been reported had the Transactions been completed as of January 1, 2007 or June 30, 2008, and should not be taken as representative of the future consolidated results of operations or financial position of New Clearwire.

 

 

 

The following table shows per share data regarding losses from continuing operations and book value per share for Clearwire and New Clearwire on a historical and pro forma combined basis, respectively. The pro forma book value per share information was computed as if the Transactions had been completed on June 30, 2008. The pro forma loss from continuing operations information was computed as if the Transactions had been completed on January 1, 2007. These amounts do not necessarily reflect future per share amounts of earnings (losses) from continuing operations and book value per share of New Clearwire.

 

The following unaudited comparative per share data is derived from the historical consolidated financial statements of Clearwire and the unaudited pro forma condensed combined financial information of New Clearwire. The information below should be read in conjunction with the financial statements and accompanying notes of Clearwire, which are included in this proxy statement/prospectus. We urge you also to read the section titled “Selected Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 28 of this proxy statement/prospectus. Per share data for the Sprint WiMAX Business has not been presented as the entity does not have a historical equity structure.