Cricket Wireless 2011 Annual Report Download - page 128

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
common stock is exchanged for or converted into cash, securities or other property, in each case subject to
limitations and excluding in the case of (1) and (2) any merger or consolidation where at least 90% of the
consideration consists of shares of common stock traded on NYSE, ASE or NASDAQ, (3) a majority of the
members of Leap’s board of directors ceases to consist of individuals who were directors on the date of original
issuance of the notes or whose election or nomination for election was previously approved by the board of
directors, (4) Leap is liquidated or dissolved or holders of common stock approve any plan or proposal for its
liquidation or dissolution or (5) shares of Leap common stock are not listed for trading on any of the New York
Stock Exchange, the NASDAQ Global Market or the NASDAQ Global Select Market (or any of their respective
successors). Leap may not redeem the notes at its option.
Unsecured Senior Notes Due 2015
In June 2008, Cricket issued $300 million of 10.0% unsecured senior notes due 2015 in a private placement
to institutional buyers. The notes bear interest at the rate of 10.0% per year, payable semi-annually in cash in
arrears, which interest payments commenced in January 2009. 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 guarantees indebtedness for borrowed money 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
below, 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 STX Wireless and Cricket
Music) 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.
Prior to July 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 July 15, 2012 plus (2) all remaining required interest payments due on such notes through July 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 July 15, 2012, at a redemption price of 105.0% and 102.5% of the
principal amount thereof if redeemed during the twelve months beginning on July 15, 2012 and 2013,
respectively, or at 100% of the principal amount if redeemed during the twelve months beginning on July 15,
2014 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, 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.
Non-Negotiable Promissory Note Due 2015
Cricket service was previously offered in greater Chicago and Southern Wisconsin by Denali, an entity in
which the Company owned an 82.5% non-controlling membership interest. In December 2010, Cricket
purchased the remaining 17.5% controlling membership interest in Denali that it did not previously own. As part
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