Dish Network 1999 Annual Report Download - page 65

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–17
With the exception of certain de minimis domestic and foreign subsidiaries, the Seven and Ten Year Notes
are fully, unconditionally and jointly and severally guaranteed by all subsidiaries of DBS Corp, (collectively, the
“Seven and Ten Year Notes Guarantors”). The Seven and Ten Year Notes are general senior unsecured obligations
which: • rank pari passu in right of payment to each other and to all existing and future senior unsecured
obligations;
• rank senior to all existing and future junior obligations; and
• are effectively junior to secured obligations to the extent of the collateral securing such obligations,
including any borrowings under future secured credit facilities.
Except under certain circumstances requiring prepayment premiums, and in other limited circumstances, the
Seven and Ten Year Notes are not redeemable at DBS Corp’s option prior to February 1, 2003 and February 1, 2004,
respectively. Thereafter, the Seven Year Notes will be subject to redemption, at the option of DBS Corp, in whole or in
part, at redemption prices decreasing from 104.625% during the year commencing February 1, 2003 to 100% on or
after February 1, 2005, together with accrued and unpaid interest thereon to the redemption date. The Ten Year Notes
will be subject to redemption, at the option of DBS Corp, in whole or in part, at redemption prices decreasing from
104.688% during the year commencing February 1, 2004 to 100% on or after February 1, 2008, together with accrued
and unpaid interest thereon to the redemption date.
The indentures related to the Seven and Ten Year Notes (the “Seven and Ten Year Notes Indentures”)
contain restrictive covenants that, among other things, impose limitations on the ability of DBS Corp to:
• incur additional indebtedness;
• apply the proceeds of certain asset sales;
• create, incur or assume liens;
• create dividend and other payment restrictions with respect to DBS Corp’s subsidiaries;
• merge, consolidate or sell assets; and
• enter into transactions with affiliates.
In addition, DBS Corp may pay dividends on its equity securities only if no default shall have occurred or is
continuing under the Seven and Ten Year Notes Indentures; and after giving effect to such dividend and the incurrence
of any indebtedness (the proceeds of which are used to finance the dividend), DBS Corps’s ratio of total indebtedness
to cash flow (calculated in accordance with the Indentures) would not exceed 8.0 to 1.0. Moreover, the aggregate
amount of such dividends generally may not exceed the sum of the difference of cumulative consolidated cash flow
(calculated in accordance with the Indentures) minus 120% of consolidated interest expense of DBS Corp (calculated
in accordance with the Indentures), in each case from April 1, 1999 plus an amount equal to 100% of the aggregate net
cash proceeds received by DBS Corp and its subsidiaries from the issuance or sale of certain equity interests of DBS
Corp or EchoStar.
In the event of a change of control, as defined in the Seven and Ten Year Notes Indentures, DBS Corp will be
required to make an offer to repurchase all of the Seven and Ten Year Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase.
Convertible Notes
On December 2, 1999, EchoStar sold $1 billion principal amount of 4 7/8% Convertible Subordinated Notes
due 2007 (the “Convertible Notes”). Interest accrues at an annual rate of 4 7/8% on the Convertible Notes and is
payable semi-annually in cash, in arrears on January 1 and July 1 of each year, commencing July 1, 2000.
The Convertible Notes are general unsecured obligations, which rank junior in right of payment to:
• all existing and future senior obligations;
• all of EchoStar’s secured debts to the extent of the value of the assets securing those debts; and
• all existing and future debts and other liabilities or EchoStar’s subsidiaries.
Except under certain circumstances requiring prepayment premiums, and in other limited circumstances, the
Convertible Notes are not redeemable at EchoStar’s option prior to January 1, 2003. Thereafter, the Convertible Notes