Clearwire 2007 Annual Report Download - page 106

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In exchange for the services, Clearwire historically paid ERI an annual advisory fee of $800,000 plus any out-
of-pocket expenses incurred by ERI. The annual advisory fee covered certain overhead expenses incurred by ERI on
behalf of Clearwire, including expenses related to providing administrative support and office space to
Messrs. McCaw, the Company’s Chairman, and Wolff, the Company’s Chief Executive Officer, and compensation
for services provided to Clearwire by certain personnel of ERI. During the years ended December 31, 2007, 2006
and 2005, the Company paid ERI fees of $67,000, $800,000 and $800,000, respectively, and expense reimburse-
ments of $278,000, $949,000 and $296,000, respectively, under this agreement. Beginning February 2007,
Mr. McCaw has received annual compensation directly from Clearwire in his capacity as the Company’s Chairman
of $300,000 per year, plus expense reimbursements.
Pursuant to the origination of the Advisory Services Agreement in 2003, Clearwire also issued to ERH
warrants to purchase 375,000 shares of the Company’s Class A common stock at an exercise price of $3.00 per
share, which may be exercised any time within 10 years of the issuance of the warrants. As of December 31, 2007,
the remaining life of the warrant was 5.9 years.
Nextel Undertaking — Clearwire and Mr. McCaw entered into an agreement and undertaking in November
2003, pursuant to which Clearwire agreed to comply with the terms of a separate agreement between Mr. McCaw
and Nextel Communications, Inc. (“Nextel”), so long as the Company was a “controlled affiliate” of Mr. McCaw as
defined therein, certain terms of which were effective until October 2006. Under the agreement with Mr. McCaw,
Nextel had the right to swap certain channels of owned or leased Broadband Radio Service (“BRS”) or Educational
Broadband Service (“EBS”) spectrum with entities controlled by Mr. McCaw, including Clearwire. While the
agreement was still effective, Nextel notified the Company of its request to swap certain channels, which is
currently pending. There were no payments made to Nextel under this agreement in the year ended December 31,
2007.
Intel Collaboration Agreement — On June 28, 2006, Clearwire entered into a collaboration agreement with
Intel, to develop, deploy and market a co-branded mobile WiMAX service offering in the United States, that will
target users of certain WiMAX enabled notebook computers, ultramobile PCs, and other mobile computing devices
containing Intel microprocessors. Both parties have committed to make certain contributions to the development,
promotion and marketing of this service, which will be available only over the Company’s mobile WiMAX
network.
The Company and Intel have agreed to share the revenues received from subscribers using Intel mobile
computing devices on the Company’s domestic mobile WiMAX network. Intel will also receive a one time fixed
payment for each new Intel mobile computing device activated on the Company’s domestic mobile WiMAX
network once the Company has successfully achieved substantial mobile WiMAX network coverage across the
United States. Through December 31, 2007, Clearwire has not been required to make any payments to Intel under
this agreement.
Motorola Agreements — Simultaneously with the sale of NextNet to Motorola, Clearwire and Motorola
entered into commercial agreements pursuant to which the Company agreed to purchase certain infrastructure and
supply inventory from Motorola. Under these agreements, Clearwire is committed to purchase no less than
$150.0 million of network infrastructure equipment, modems, PC cards and other products from Motorola on or
before August 29, 2008, subject to Motorola continuing to satisfy certain performance requirements and other
conditions. The Company is also committed to purchase certain types of network infrastructure products, modems
and PC cards it provides to its subscribers exclusively from Motorola for a period of five years and, thereafter, 51%
until the term of the agreement is completed on August 29, 2014, as long as certain conditions are satisfied. For the
years ended December 30, 2007 and 2006 total purchases from Motorola under these agreements were $73.0 million
and $25.4 million, respectively. The remaining commitment was $51.6 million at December 31, 2007.
HITN and its Affiliates — During 2004, the Company entered into two agreements with ITFS Spectrum
Advisors, LLC (“ISA”) and ITFS Spectrum Consultants LLS (“ISC”). The founder and president of HITN was
98
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)