Cricket Wireless 2011 Annual Report Download - page 85

Convertible Senior Notes Due 2014
In June 2008, Leap issued $250 million of unsecured convertible senior notes due 2014 in a private
placement to institutional buyers. The notes bear interest at the rate of 4.50% per year, payable semi-annually in
cash in arrears, which interest payments commenced in January 2009. The notes are Leap’s general unsecured
obligations and rank equally in right of payment with all of Leap’s existing and future senior unsecured
indebtedness and senior in right of payment to all indebtedness that is contractually subordinated to the notes.
The notes are structurally subordinated to the existing and future claims of Leap’s subsidiaries’ creditors,
including under the secured and unsecured senior notes described above and below. The notes are effectively
junior to all of Leap’s 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.
Holders may convert their notes into shares of Leap common stock at any time on or prior to the third
scheduled trading day prior to the maturity date of the notes, July 15, 2014. If, at the time of conversion, the
applicable stock price of Leap common stock is less than or equal to approximately $93.21 per share, the notes
will be convertible into 10.7290 shares of Leap common stock per $1,000 principal amount of the notes (referred
to as the “base conversion rate”), subject to adjustment upon the occurrence of certain events. If, at the time of
conversion, the applicable stock price of Leap common stock exceeds approximately $93.21 per share, the
conversion rate will be determined pursuant to a formula based on the base conversion rate and an incremental
share factor of 8.3150 shares per $1,000 principal amount of the notes, subject to adjustment.
Leap may be required to repurchase all outstanding notes in cash at a repurchase price of 100% of the
principal amount of the notes, plus accrued and unpaid interest thereon to the repurchase date if (1) any person
acquires beneficial ownership, directly or indirectly, of shares of Leap’s capital stock that would entitle the
person to exercise 50% or more of the total voting power of all of Leap’s capital stock entitled to vote in the
election of directors, (2) Leap (i) merges or consolidates with or into any other person, another person merges
with or into Leap, or Leap conveys, sells, transfers or leases all or substantially all of its assets to another person
or (ii) engages in any recapitalization, reclassification or other transaction in which all or substantially all of Leap
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.
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