Clearwire 2007 Annual Report Download - page 84

Subscription Agreement — Clearwire and Motorola signed a Subscription Agreement on June 30, 2006, under
which Motorola agreed to purchase 16,666,666 shares of Clearwire’s Class A common stock at $18.00 per share for
a purchase price of $300.0 million. The agreement with Motorola includes certain limited anti-dilution features.
The transaction closed on August 29, 2006.
Common Stock Purchase Agreement — Clearwire and Intel Capital Corporation (“Intel Capital”), a Delaware
corporation and wholly owned subsidiary of Intel Corporation (“Intel”), signed a Common Stock Purchase
Agreement on June 28, 2006, under which Intel Capital agreed to purchase a total of 33,333,333 shares of
Clearwire’s Class A and Class B common stock, 23,427,601 shares and 9,905,732 shares, respectively, at $18.00 per
share for a total purchase price of $600.0 million. The agreement includes certain limited anti-dilution features
which would terminate upon the closing of the Company’s initial public offering. The transaction closed on
August 29, 2006.
Concurrently with the Common Stock Purchase Agreement, Clearwire and Intel entered into a mobile
WiMAX network Collaboration Agreement (“Collaboration Agreement”). Under the Collaboration Agreement,
Clearwire agreed to use commercially reasonable efforts to develop and deploy a mobile WiMAX network in the
United States, and Intel agreed to use commercially reasonable efforts to cause certain WiMAX capable end user
devices to be compatible for use on Clearwire’s network.
Preemptive Rights Exercises — In August 2006, in connection with the exercise of preemptive rights triggered
by the sale of common stock to Intel and Motorola described above, Clearwire entered into subscription agreements
with the holders of its outstanding stock of the sale of an aggregate of 8,603,116 shares of Clearwire’s Class A
Common Stock at $18.00 per share for an aggregate purchase price of $154.9 million. The agreements include
certain limited anti-dilution features. The transactions closed in August and October of 2006.
Agreements with Bell Canada — In March 2005, Bell Canada (“Bell”), a Canadian telecommunications
company which is a subsidiary of BCE Inc. (“BCE”), purchased 8,333,333 shares of Clearwire’s Class A common
stock for $100.0 million. At the time of Bell’s investment in Clearwire, Bell, Clearwire and Eagle River Holdings,
LLC (“ERH”) also entered into a separate agreement and Bell and BCE Nexxia Corporation (“BCE Nexxia”), an
affiliate of Bell, entered into a Master Supply Agreement (“Master Supply Agreement”) dated March 16, 2005 with
Clearwire.
Under the Master Supply Agreement, Bell and BCE Nexxia provide or arrange for the provision of hardware,
software, procurement services, management services and other components necessary for Clearwire to provide
Voice over Internet Protocol (“VoIP”) services to their subscribers in the United States and provide day-to-day
management and operation of the components and services necessary for Clearwire to provide these VoIP services.
Clearwire has agreed to use Bell Canada and BCE Nexxia exclusively to provide such service unless such
agreement violates the rights of third parties under its existing agreements. Bell and BCE Nexxia are Clearwire’s
and its affiliates’ preferred providers of these services and applications in markets beyond the United States, to the
extent permitted under its existing agreements. In addition to these services, the Master Supply Agreement grants
Bell and BCE Nexxia certain rights with respect to future service offerings by Clearwire and its affiliates. Under the
Master Supply Agreement, BCE Nexxia and Bell will be compensated by Clearwire either in shares of Clearwire’s
Class A common stock or cash. Total fees paid for new subscribers under the Master Supply Agreement were
$112,000, $0 and $0 for the years ended December 31, 2007, 2006 and 2005, respectively. Amounts paid for
supplies, equipment and other services purchased through Bell Canada or BCE were $6.0 million, $7.5 million and
$15.4 million for the years ended December 31, 2007, 2006 and 2005, respectively. The Master Supply Agreement
can be terminated for convenience on twelve months notice by either party at any time beginning on or after
October 1, 2007. On October 29, 2007, the Company delivered a notice of termination of the Master Supply
Agreement to BCE Nexxia and the agreement should terminate on October 29, 2008, unless it is extended by the
parties.
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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)