Cricket Wireless 2012 Annual Report Download - page 86

proceeds we received in connection with the issuance of the notes has been recorded in long-term debt, net in the
consolidated financial statements and is being accreted as an increase to interest expense over the term of the
notes. At December 31, 2012, the effective interest rate on the notes was 7.92%, 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 commenced in November 2009. The notes are guaranteed on a senior secured basis by Leap and each
of its existing and future domestic subsidiaries (other than Cricket, which is the issuer of the notes) that
guarantees any indebtedness of Leap, Cricket or any subsidiary guarantor. The notes and the guarantees are
Leap’s, Cricket’s and the guarantors’ senior secured obligations and are equal in right of payment with all of
Leap’s, Cricket’s and the guarantors’ existing and future unsubordinated indebtedness.
The notes and the guarantees are effectively senior to all of Leap’s, Cricket’s and the guarantors’ existing
and future unsecured indebtedness (including Cricket’s $1,600 million aggregate principal amount of unsecured
senior notes and, in the case of Leap, Leap’s $250 million aggregate principal amount of convertible senior
notes), as well as to all of Leap’s, Cricket’s and the guarantors’ obligations under any permitted junior lien debt
that may be incurred in the future, in each case to the extent of the value of the collateral securing the notes and
the guarantees.
The notes and the guarantees are secured on a first-priority basis, equally and ratably with the Credit
Agreement and 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). Under the senior secured notes
indenture, Leap, Cricket and the guarantors are permitted to incur debt under existing and future secured credit
facilities in an aggregate principal amount outstanding (including the aggregate principal amount outstanding of
the notes and under the Credit Agreement) of up to the greater of $1,500 million and 2.5 times Leap’s
consolidated cash flow (excluding the consolidated cash flow of STX Wireless and Cricket Music) for the prior
four fiscal quarters.
The notes and the guarantees are effectively junior to all of Leap’s, Cricket’s and the guarantors’ obligations
under any permitted priority debt that may be incurred in the future (up to the lesser of 0.30 times Leap’s
consolidated cash flow (excluding the consolidated cash flow of STX Wireless and Cricket Music) for the prior
four fiscal quarters and $300 million in aggregate principal amount outstanding), to the extent of the value of the
collateral securing such permitted priority debt, 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 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.
The notes may be redeemed, in whole or in part, at any time at a redemption price of 103.875% and
101.938% of the principal amount thereof if redeemed during the twelve months beginning on May 15, 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.
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
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