Clearwire 2007 Annual Report Download - page 95

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them to purchase shares of the Company’s Class A common stock. The terms of the Warrants are substantially
identical to the original warrants. In August 2007, the Company fully retired the Senior Secured Notes.
Terms of the Warrants — Holders of Warrants issued in connection with the Notes and Additional Notes may
exercise their Warrants at any time at an exercise price of $15.00. The Company granted the holders of the Warrants
registration rights covering the shares subject to issuance under the Warrants. The Warrants expire on August 5,
2010.
In connection with the registration rights agreement, the Company filed a resale registration statement, which
was effective on August 28, 2007, on Form S-1 registering the resale of shares of Class A common stock issuable
upon the exercise of the Warrants. The Company must maintain the registration statement in effect (subject to
certain suspension periods) for at least two years. If the Company fails to meet its obligations to maintain that
registration statement, the Company will be required to pay to each affected Warrant holder an amount in cash equal
to 2% of the purchase price of such holder’s Warrants. In the event that the Company fails to make such payments in
a timely manner, the payments will bear interest at a rate of 1% per month until paid in full. This registration rights
agreement also provides for incidental registration rights in connection with follow-on offerings, other than
issuances pursuant to a business combination transaction or employee benefit plan. The Company does not consider
payment of any such penalty to be probable as of December 31, 2007, and has therefore not recorded a liability for
this contingency.
Interest Expense, net — Interest expense, net, included in the Company’s consolidated statements of oper-
ations, consists of the following for the years ended December 31, 2007, 2006 and 2005 (in thousands):
2007 2006 2005
Year Ended December 31,
Interest expense ..................................... $104,550 $ 69,116 $11,605
Amortization of deferred financing costs ................... 6,703 3,934 898
Amortization of long-term debt discount ................... 14,004 15,820 4,381
Capitalized interest ................................... (28,978) (16,590) (2,261)
$ 96,279 $ 72,280 $14,623
11. Commitments and Contingencies
The Company’s commitments for non-cancelable operating leases consist mainly of leased spectrum license
fees, office space, equipment and certain of its network equipment situated on leased sites, including land, towers
and rooftop locations. Certain of the leases provide for minimum lease payments, additional charges and escalation
clauses. Leased spectrum agreements have initial terms of up to 30 years. Other operating leases generally have
initial terms of five years with multiple renewal options for additional five-year terms totaling 20 to 25 years.
87
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)