Sprint - Nextel 2012 Annual Report Download - page 209

Table of Contents
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Sprint Commitment Agreement
- In November 2011, we entered into a commitment agreement with Sprint and Sprint HoldCo, which we refer to
as the Commitment Agreement. As part of the agreement, should we consummate an equity offering which generates gross proceeds of at least $400.0
million , Sprint HoldCo agreed to exercise its pre - emptive rights under the Equityholders' Agreement to purchase securities representing Sprint
HoldCo's pro rata share of the securities issued in such an offering up to
$700.0 million . On December 13, 2011, we closed an offering of 201,250,000
shares of Class A Common Stock for $402.5 million in an underwritten public offering. Pursuant to the Commitment Agreement, on December 13, 2011,
Sprint Holdco exercised its pre
- emptive rights and purchased 173,635,000 shares of Class B Common Stock and a corresponding number of Class B
Common Interests for proceeds of approximately
$331.4 million .
Under the terms of the Commitment Agreement, Sprint provided us an aggregate principal amount of
$150.0 million on January 3, 2012, pursuant
to a promissory note issued by Clearwire Communications, which we refer to as the Sprint Promissory Note. The Sprint Promissory Note bears interest
of
11.5% per annum with an aggregate principal amount of $75.0 million maturing on January 2, 2013, and the remaining $75.0 million principal amount
maturing on January 2, 2014. If not previously paid, Sprint may offset the amounts payable by us under the Sprint Promissory Note, including interest,
against payments then due by Sprint to Clearwire Communications under the November 2011 4G MVNO Amendment. Because the Sprint Promissory
Note was entered into in conjunction with the November 2011 4G MVNO Amendment, and amounts due may be offset against payments due under the
November 2011 4G MVNO Amendment, it will be treated as deferred revenue for accounting purposes, and associated interest costs will be recorded
as a reduction to the
$925.9 million payable by Sprint for unlimited WiMAX service in calendar years 2012 and 2013. On January 2, 2013, we offset
$83.6 million to principal and related accrued interest to reduce the principal amount we owe to Sprint under the promissory note to $75.0 million . The
Sprint Promissory Note provides for certain events of default including, among other things, default in the payment of principal or interest; any
material breach by Clearwire Communications in respect of its obligations to Sprint Spectrum under the November 2011 4G MVNO Amendment;
termination or cancellation of the November 2011 4G MVNO Amendment at any time prior to January 2, 2014; and certain customary bankruptcy
-
related events. Upon the occurrence of any event of default, Sprint may offset and apply the Sprint Promissory Note against any and all deposits and
any other credits, indebtedness payment obligations, property, or claims owing to Clearwire Communications or affiliates by Sprint.
In addition, under the terms of the Commitment Agreement, if we successfully consummated an equity offering, we agreed to use commercially
reasonable best efforts to consummate an offering of first
- priority senior secured debt in an amount equal to approximately 50% of the net cash
proceeds of any such equity offering, at the earliest practicable time thereafter. In January 2012, Clearwire Communications completed an offering of
2016 Senior Secured Notes with a par value of
$300.0 million . See Note 10, Long - term Debt, Net, for a discussion of the issuance of debt.
3G MVNO Agreement — We entered into a non
- exclusive 3G MVNO agreement with Sprint Spectrum, which we refer to as the 3G MVNO
Agreement, whereby Sprint agrees to sell its code division multiple access and mobile voice and data communications service for the purpose of resale
to our retail customers. The data communications service includes Sprint
’ s existing core network services, other network elements and information that
enable a third party to provide services over the network, or core network enablers, and subject to certain limitations and exceptions, new core network
services, core network enablers and certain customized services. For the years ended December 31, 2012, 2011 and 2010, we paid $4.4 million, $17.8
million, and $9.7 million, respectively to Sprint for 3G wireless services provided by Sprint to us.
Sprint Master Site Agreement — In November 2008, we entered into a master site agreement with Sprint, which we refer to as the Master Site
Agreement, pursuant to which Sprint and we established the contractual framework and procedures for the leasing of tower and antenna collocation
sites to each other. Leases for specific sites will be negotiated by Sprint and us on request by the lessee. The leased premises may be used by the
lessee for any activity in connection with the provision of wireless communications services, including attachment of antennas to the towers at the
sites. The term of the Master Site Agreement is ten years from the date the agreement was signed. The term of each lease for each specific site will be
five years, but the lessee has the right to extend the term for up to an additional 20 years. The monthly fee will increase 3% per year. The lessee is also
responsible for the utility costs and for certain additional fees. During the years ended December 31, 2012, 2011 and 2010, we made rent payments
under this agreement of $59.6 million, $55.8 million and $53.1 million, respectively.
Master Agreement for Network Services — In November 2008, we entered into a master agreement for network services, which we refer to as
the Master Agreement for Network Services, with various Sprint affiliated entities, which we refer to as the Sprint Entities, pursuant to which the Sprint
Entities and we established the contractual framework and procedures for us to purchase network services from Sprint Entities. We may order various
services from the Sprint Entities, including IP network transport services, data center co
- location, toll - free services and access to the following
business platforms: voicemail, instant
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