Cricket Wireless 2010 Annual Report Download - page 87

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.
Prior to October 15, 2013, Cricket may redeem up to 35% of the aggregate principal amount of the notes at a
redemption price of 107.75% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the
redemption date, from the net cash proceeds of specified equity offerings. Prior to October 15, 2015, 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, if any, 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 October 15, 2015 plus (2) all
remaining required interest payments due on such notes through October 15, 2015 (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
October 15, 2015, at a redemption price of 103.875%, 102.583% and 101.292% of the principal amount thereof if
redeemed during the twelve months beginning on October 15, 2015, 2016 and 2017, respectively, or at 100% of the
principal amount if redeemed during the twelve months beginning on October 15, 2018 or thereafter, plus accrued
and unpaid interest, if any, 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, if any, thereon to the repurchase date.
The indenture governing the notes limits, among other things, our ability to: incur additional debt; create liens
or other encumbrances; place limitations on distributions from restricted subsidiaries; pay dividends; make
investments; prepay subordinated indebtedness or make other restricted payments; issue or sell capital stock of
restricted subsidiaries; issue guarantees; sell assets; enter into transactions with our affiliates; and make acquisitions
or merge or consolidate with another entity.
In connection with the private placement of the notes, we entered into a registration rights agreement with the initial
purchasers of the notes in which we agreed, under certain circumstances, to use reasonable best efforts to offer registered
notes in exchange for the notes or to cause a shelf registration statement covering the resale of the notes to be declared
effective by the SEC and to pay additional interest if such registration obligations were not performed. We filed a
Registration Statement on Form S-4 with the SEC on December 3, 2010 pursuant to this registration rights agreement,
the registration statement was declared effective on December 15, 2010 and the exchange offer was consummated on
January 21, 2011. Accordingly, we have no further obligation to pay additional interest on the notes.
LCW Operations Senior Secured Credit Agreement
As of September 30, 2010, LCW Operations had a senior secured credit agreement, as amended, consisting of two
term loans with an aggregate outstanding principal amount of approximately $12.1 million. On October 28, 2010, LCW
Operations repaid all amounts outstanding under the senior secured credit agreement, and the agreement was terminated.
Fair Value of Financial Instruments
As more fully described in Note 4 to our consolidated financial statements included in “Item 8. Financial
Statements” of this report, we apply the authoritative guidance for fair value measurements to our assets and
liabilities. The guidance defines fair value as an exit price, which is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The
degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of
pricing observability. Assets and liabilities with readily available, actively quoted prices or for which fair value can
be measured from actively quoted prices in active markets generally have more pricing observability and less
judgment utilized in measuring fair value. Conversely, assets and liabilities rarely traded or not quoted have less
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