Dish Network 2015 Annual Report Download - page 50

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In addition, the FCC Wireless Bureau acknowledged that SNR Wireless’ nonpayment of those gross winning bid
amounts does not constitute action involving gross misconduct, misrepresentation or bad faith. Therefore, the FCC
concluded that such nonpayment will not affect the eligibility of SNR Wireless, its investors (including DISH Network)
or their respective affiliates to participate in future spectrum auctions (including Auction 1000 and any re-auction of the
AWS-3 Licenses retained by the FCC). At this time, DISH Network (through itself, a subsidiary or another entity in
which it may hold a direct or indirect interest) expects to participate in any re-auction of those AWS-3 Licenses.
If the winning bids from re-auction or other award of the AWS-3 Licenses retained by the FCC are greater than or equal
to the winning bids of SNR Wireless, no additional amounts will be owed to the FCC. However, if those winning bids
are less than the winning bids of SNR Wireless, then SNR Wireless will be responsible for the difference less any
overpayment of the SNR Interim Payment (which will be recalculated as 15% of the winning bids from re-auction or
other award) (the “SNR Re-Auction Payment”). For example, if the winning bids in a re-auction are $1, the SNR Re-
Auction Payment would be approximately $1.029 billion, which is calculated as the difference between $1.211 billion
(the SNR winning bid amounts) and $1 (the winning bids from re-auction) less the resulting $182 million overpayment
of the SNR Interim Payment. As discussed above, at this time, DISH Network (through itself, a subsidiary or another
entity in which it may hold a direct or indirect interest) expects to participate in any re-auction. We cannot predict with
any degree of certainty the timing or outcome of any re-auction or the amount of any SNR Re-Auction Payment.
Amendment to SNR Wireless Credit Agreement. On October 1, 2015, American III, SNR Wireless and SNR HoldCo
amended the First Amended and Restated Credit Agreement dated October 13, 2014, by and among American III, as
Lender, SNR Wireless, as Borrower, and SNR HoldCo, as Guarantor (as amended, the “SNR Credit Agreement”), to
provide, among other things, that: (i) the SNR Interim Payment and any SNR Re-Auction Payment will be made by
American III directly to the FCC and will be deemed as loans under the SNR Credit Agreement; (ii) the FCC is a third-
party beneficiary with respect to American III’s obligation to pay the SNR Interim Payment and any SNR Re-Auction
Payment; (iii) in the event that the winning bids from re-auction or other award of the AWS-3 Licenses retained by the
FCC are less than the winning bids of SNR Wireless, the purchaser, assignee or transferee of any AWS-3 Licenses from
SNR Wireless is obligated to pay its pro-rata share of the difference (and SNR Wireless remains jointly and severally
liable for such pro-rata share); and (iv) during the period between the due date for the payments guaranteed under the
FCC SNR Guaranty (as discussed below) and the date such guaranteed payments are paid, SNR Wireless’ payment
obligations to American III under the SNR Credit Agreement will be subordinated to such guaranteed payments.
DISH Network Guaranty in Favor of the FCC for Certain SNR Wireless Obligations. On October 1, 2015, DISH
Network entered into a guaranty in favor of the FCC (the “FCC SNR Guaranty,”) with respect to the SNR Interim
Payment (which was satisfied on October 1, 2015) and any SNR Re-Auction Payment. The FCC SNR Guaranty
provides, among other things, that during the period between the due date for the payments guaranteed under the FCC
SNR Guaranty and the date such guaranteed payments are paid: (i) SNR Wireless’ payment obligations to American III
under the SNR Credit Agreement will be subordinated to such guaranteed payments; and (ii) DISH Network or
American III will withhold exercising certain rights as a creditor of SNR Wireless.
Northstar Wireless is a wholly-owned subsidiary of Northstar Spectrum. Through American II, we own an 85% non-
controlling interest in Northstar Spectrum. Northstar Manager, LLC (“Northstar Manager”) owns a 15% controlling
interest in, and is the sole manager of, Northstar Spectrum. Northstar Spectrum is governed by a limited liability
company agreement by and between American II and Northstar Manager (the “Northstar Spectrum LLC Agreement”).
Pursuant to the Northstar Spectrum LLC Agreement, American II and Northstar Manager made pro-rata equity
contributions in Northstar Spectrum. As of October 1, 2015, the total equity contributions from American II and
Northstar Manager to Northstar Spectrum were approximately $750 million and $133 million, respectively. As of
October 1, 2015, the total loans from American II to Northstar Wireless under the Northstar Credit Agreement for
payments to the FCC related to the Northstar Licenses were approximately $5.070 billion.
SNR Wireless is a wholly-owned subsidiary of SNR HoldCo. Through American III, we own an 85% non-controlling
interest in SNR HoldCo. SNR Wireless Management, LLC (“SNR Management”) owns a 15% controlling interest in,
and is the sole manager of, SNR HoldCo. SNR HoldCo is governed by a limited liability company agreement by and
between American III and SNR Management (the “SNR HoldCo LLC Agreement”). Pursuant to the SNR HoldCo LLC
Agreement, American III and SNR Management made pro-rata equity contributions in SNR HoldCo. As of October 1,