Clearwire 2008 Annual Report Download - page 129

Sp
rint Pre-C
l
osing Financing Amount an
d
Amen
d
e
d
Cre
d
it Agreement— As a resu
l
to
f
t
h
e Transact
i
ons
,
we assume
d
t
h
e
li
a
bili
ty to re
i
m
b
urse Spr
i
nt
f
or t
h
e Spr
i
nt Pre-C
l
os
i
ng F
i
nanc
i
ng Amount. We were requ
i
re
d
to pay
$
213.0 million, plus related interest of $4.5 million, to Sprint in cash on the first business da
y
after the Closin
g
, wit
h
the remainder added as the Sprint Tranche under the Amended Credit Agreement in the amount of
$
179.2 million.
Re
l
ations
h
i
p
s among Certain Stoc
kh
o
ld
ers, Directors, an
d
O
ff
icers o
f
C
l
earwire —Fo
ll
ow
i
ng t
h
e com-
p
letion of the Transactions and the post-closin
g
ad
j
ustments, Sprint, throu
g
h a wholl
y
-owned subsidiar
y
Sprint
HoldCo LLC, owned the lar
g
est interest in Clearwire with an effective votin
g
and economic interest in Clearwire of
approximately
5
1% and the Investors collectively owned a 31% interest in Clearwire. See Note 3 for discussio
n
r
e
g
ar
di
n
g
t
h
e post c
l
os
i
n
g
a
dj
ustment.
E
RH is the holder of 35,922,958 shares of our outstandin
g
Clearwire Class A Common Stock, whic
h
r
epresents an approximate
5
% ownership interest in Clearwire. Eagle River Inc, which we refer to as ERI, is the
m
anager of ERH. Each entity is controlled by Craig McCaw, a director of Clearwire. Mr. McCaw and his affiliates
h
ave s
ig
n
ifi
cant
i
nvestments
i
not
h
er te
l
ecommun
i
cat
i
ons
b
us
i
nesses, some o
f
w
hi
c
h
ma
y
compete w
i
t
h
us current
ly
or in the future. It is likel
y
Mr. McCaw and his affiliates will continue to make additional investments in
telecommunications businesses
.
As of December 31, 2008, ERH held warrants entitling it to purchase
6
13,333 shares of Clearwire Class A
Common Stock at an exercise price of
$
15.00 per share and warrants to purchase 375,000 shares of Clearwire
Class A Common Stock at an exercise price of $3.00 per share. As of December 31, 2008, the remainin
g
life of the
warrants was 4.9 years
.
C
erta
i
no
f
our o
ffi
cers an
ddi
rectors prov
id
ea
ddi
t
i
ona
l
serv
i
ces to ERH, ERI an
d
t
h
e
i
ra
ffili
ates
f
or w
hi
c
h
t
h
e
y
are separatel
y
compensated b
y
such entities. An
y
compensation paid to such individuals b
y
ERH, ERI and/or their
affiliates for their services is in addition to the compensation paid b
y
us
.
F
ollowin
g
the Closin
g
, Clearwire, Sprint, ERH and the Investors a
g
reed to enter into an equit
y
holders’
agreement, w
hi
c
h
set
f
ort
h
certa
i
nr
i
g
h
ts an
d
o
bli
gat
i
ons o
f
t
h
e equ
i
ty
h
o
ld
ers w
i
t
h
respect to governance o
f
C
l
earw
i
re, trans
f
er restr
i
ct
i
ons on our common stoc
k
,r
igh
ts o
ffi
rst re
f
usa
l
an
d
pre-empt
i
ve r
igh
ts, amon
g
ot
h
er
things. In addition, we have also entered into a number of commercial agreements with Sprint and the Investors
which are outlined below
.
Additionally, the wife of Mr. Salemme, our Executive Vice President, Strategy, Policy and External Affairs is
a
G
roup V
i
ce Pres
id
ent at T
i
me Warner Ca
bl
e. S
h
e was not
di
rect
ly i
nvo
l
ve
di
nan
y
o
f
our transact
i
ons w
i
t
h
T
i
me
W
arner Cable.
D
avis Wrig
h
t Tremaine LLP— The law firm of Davis Wri
g
ht Tremaine LLP serves as our primar
y
outsid
e
c
ounse
l
,an
dh
an
dl
es a var
i
ety o
f
corporate, transact
i
ona
l
, tax an
dli
t
i
gat
i
on matters. Mr. Wo
lff
, our Co-C
h
a
i
rman,
is
m
arr
i
e
d
to a partner at Dav
i
sWr
igh
t Trema
i
ne. As a partner, Mr. Wo
lff
’s spouse
i
s ent
i
t
l
e
d
to s
h
are
i
n a port
i
on o
f
the firm’s total profits, althou
g
h she has not received an
y
compensation directl
y
from us. For the
y
ear ende
d
D
ecember 31, 2008, we paid
$
907,000 to Davis Wright Tremaine for legal services. This does not include fees pai
d
b
yO
ld
C
l
earw
i
re
.
Master
S
ite Agreement
—
We entered into a master site a
g
reement with Sprint, or the Master Site A
g
reement,
p
ursuant to which Sprint and we will establish the contractual framework and procedures for the leasin
g
of tower
an
d
antenna co
ll
ocat
i
on s
i
tes to eac
h
ot
h
er. Leases
f
or spec
ifi
cs
i
tes w
ill b
e negot
i
ate
db
y Spr
i
nt an
d
us on request
by
t
h
e
l
essee. T
h
e
l
ease
d
prem
i
ses ma
yb
e use
dby
t
h
e
l
essee
f
or an
y
act
i
v
i
t
yi
n connect
i
on w
i
t
h
t
h
e prov
i
s
i
on o
f
wireless communications services, includin
g
attachment of antennas to the towers at the sites. The term of the
Master Site Agreement will be ten years from the Closing. The term of each lease for each specific site will be fiv
e
y
ears, but the lessee has the ri
g
ht to extend the term for up to an additional 20
y
ears. The basic fee is
$
600 per month
p
er s
i
te. T
h
e mont
hly f
ee w
ill i
ncrease 3% per
y
ear. T
h
e
l
essee
i
sa
l
so respons
ibl
e
f
or t
h
eut
ili
t
y
costs an
df
or certa
in
additional fees, such as an a
pp
lication fee of $1,000
p
er site
.
11
7
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)