Cricket Wireless 2010 Annual Report Download - page 127

The notes and the guarantees are secured on a first-priority basis, equally and ratably with any future parity lien
debt, by liens on substantially all of the present and future personal property of Leap, Cricket and the guarantors,
except for certain excluded assets and subject to permitted liens (including liens on the collateral securing any future
permitted priority debt).
Prior to May 15, 2012, Cricket may redeem up to 35% of the aggregate principal amount of the notes at a
redemption price of 107.750% of the principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date, from the net cash proceeds of specified equity offerings. Prior to May 15, 2012, Cricket may
redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the
applicable premium and any accrued and unpaid interest thereon to the redemption date. The applicable premium is
calculated as the greater of (i) 1.0% of the principal amount of such notes and (ii) the excess of (a) the present value
at such date of redemption of (1) the redemption price of such notes at May 15, 2012 plus (2) all remaining required
interest payments due on such notes through May 15, 2012 (excluding accrued but unpaid interest to the date of
redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (b) the principal
amount of such notes. The notes may be redeemed, in whole or in part, at any time on or after May 15, 2012, at a
redemption price of 105.813%, 103.875% and 101.938% of the principal amount thereof if redeemed during the
twelve months beginning on May 15, 2012, 2013 and 2014, respectively, or at 100% of the principal amount if
redeemed during the twelve months beginning on May 15, 2015 or thereafter, plus accrued and unpaid interest,
thereon to the redemption date.
If a “change of control” occurs (which includes the acquisition of beneficial ownership of 35% or more of
Leap’s equity securities (other than a transaction where immediately after such transaction Leap will be a wholly-
owned subsidiary of a person of which no person or group is the beneficial owner of 35% or more of such person’s
voting stock), a sale of all or substantially all of the assets of Leap and its restricted subsidiaries and a change in a
majority of the members of Leap’s board of directors that is not approved by the board), each holder of the notes
may require Cricket to repurchase all of such holder’s notes at a purchase price equal to 101% of the principal
amount of the notes, plus accrued and unpaid interest thereon to the repurchase date.
Unsecured Senior Notes Due 2020
In November 2010, Cricket issued $1,200 million of 7.75% unsecured senior notes due 2020 in a private
placement to institutional buyers at an issue price of 98.323% of the principal amount, which were exchanged in
January 2011 for identical notes that had been registered with the SEC. The $20.1 million discount to the net
proceeds the Company received in connection with the issuance of the notes has been recorded in long-term debt in
the consolidated financial statements and is being accreted as an increase to interest expense over the term of the
notes. At December 31, 2010, the effective interest rate on the notes was 7.9%, which includes the effect of the
discount accretion.
The notes bear interest at the rate of 7.75% per year, payable semi-annually in cash in arrears, which interest
payments will commence in April 2011. The notes are guaranteed on an unsecured senior basis by Leap and each of
its existing and future domestic subsidiaries (other than Cricket, which is the issuer of the notes) that guarantee
indebtedness of Leap, Cricket or any subsidiary guarantor. The notes and the guarantees are Leap’s, Cricket’s and
the guarantors’ general senior unsecured obligations and rank equally in right of payment with all of Leap’s,
Cricket’s and the guarantors’ existing and future unsubordinated unsecured indebtedness. The notes and the
guarantees are effectively junior to Leap’s, Cricket’s and the guarantors’ existing and future secured obligations,
including those under the senior secured notes described above, to the extent of the value of the assets securing such
obligations, as well as to existing and future liabilities of Leap’s and Cricket’s subsidiaries that are not guarantors
(including Denali, LCW Wireless and STX Wireless) and Savary Island and their respective subsidiaries. In
addition, the notes and the guarantees are senior in right of payment to any of Leap’s, Cricket’s and the guarantors’
future subordinated indebtedness.
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)