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The holders of the Exchangeable Notes have the right to exchange their notes for Clearwire Corporation’s Class A
common stock, which we refer to as Class A Common Stock, at any time, prior to the maturity date. We have the right to settle
the exchange by delivering cash or shares of Class A Common Stock, subject to certain conditions. The initial exchange rate for
each note is 141.2429 shares per $1,000 note, equivalent to an initial exchange price of approximately $7.08 per share, subject
to adjustments upon the occurrence of certain corporate events. Upon exchange, we will not make additional cash payment or
provide additional shares for accrued or unpaid interest, make-whole premium or additional interest.
The holders of the Exchangeable Notes have the right to require us to repurchase all of the notes upon the occurrence of a
fundamental change event at a price of 100% of the principal amount plus any unpaid accrued interest to the repurchase date.
The holders who elect to exchange the Exchangeable Notes in connection with the occurrence of a fundamental change will be
entitled to additional shares that are specified based on the date on which such event occurs and the price paid per share of
Class A Common Stock in the fundamental change, with a maximum number of shares issuable per note not to exceed
169.4915 shares. The holders of the Exchangeable Notes have the option to require us to repurchase for cash the Exchangeable
Notes on December 1, 2017, 2025, 2030 and 2035 at a price equal to 100% of the principal amount of the notes plus any unpaid
accrued interest to the repurchase date. On or after December 1, 2017, we may, at our option, redeem all or part of the
Exchangeable Notes at a price equal to 100% of the principal amount of the notes plus any unpaid accrued interest to the
redemption date.
Our payment obligations under the Exchangeable Notes are guaranteed by certain domestic subsidiaries in the same
priority as the Second-Priority Secured Notes.
Upon issuance of the Exchangeable Notes, we recognized a derivative liability representing the embedded exchange
feature with an estimated fair value of $231.5 million and an associated debt discount on the Exchangeable Notes. The discount
is accreted over the expected life, approximately 7 years, of the Exchangeable Notes using the effective interest rate method.
See Note 10, Derivative Instruments, for additional discussion of the derivative liability.
Vendor Financing Notes
During 2010, we entered into a vendor financing facility allowing us to obtain up to $160.0 million of financing by
entering into notes, which we refer to as Vendor Financing Notes, until January 31, 2011. The Vendor Financing Notes have a
coupon rate based on the 3-month LIBOR plus a spread of 5.50% which are due quarterly and mature in 2014. We utilized
$60.3 million of this vendor financing facility in 2010.
On January 31, 2011, the vendor financing facility was amended to allow us to obtain up to an additional $95.0 million of
financing until January 31, 2012. The coupon rate and terms of the notes under the amended facility are identical to those of the
original Vendor Financing Notes except that they mature in 2015.
Capital Lease Obligations
During 2010, we have entered into capital lease facilities which allow us to obtain up to $99.0 million of financing with
4 year terms, until August 16, 2011. In addition, we also lease certain network construction equipment under capital leases with
12 year lease terms.
As of December 31, 2010, approximately $132.4 million of our outstanding debt, comprised of Vendor Financing Notes
and capital lease obligations, is secured by assets classified as network and base station equipment.
Future Payments — For future payments on our long-term debt see Note 12, Commitments and Contingencies.
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
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