Dish Network 2008 Annual Report Download - page 112

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-30
3% Convertible Subordinated Note due 2011
The 3% Convertible Subordinated Note, which was sold to CenturyTel Service Group, LLC (“CTL”) in a
privately negotiated transaction, matures August 25, 2011 and is convertible into 398,724 shares of our Class
A common stock at the option of CTL at $62.70 per share, subject to adjustment in certain circumstances.
Effective as of close of business on January 15, 2008, the conversion price was adjusted to $51.88 per share
(481,881 shares) as a result of the Spin-off. Interest accrues at an annual rate of 3% and is payable semi-
annually in cash, in arrears on June 30 and December 31 of each year.
The 3% Convertible Subordinated Note due 2011 is:
x a general unsecured obligation;
x ranked junior in right of payment with all of our existing and future senior debt;
x ranked equal in right of payment to our existing convertible subordinated debt; and
x ranked equal in right of payment to all other existing and future indebtedness whenever the
instrument expressly provides that such indebtedness ranks equal with the 3% Convertible
Subordinated Note due 2011.
The indenture related to the 3% Convertible Subordinated Note due 2011 contains certain restrictive
covenants that do not impose material limitations on us.
In the event of a change of control, as defined in the related indenture, we would be required to make an
offer to repurchase all or any part of the holder’s 3% Convertible Subordinated Note due 2011 at a
purchase price equal to 100% of the aggregate principal amount thereof, together with accrued and unpaid
interest thereon, to the date of repurchase. Commencing August 25, 2009, we may redeem, and CTL may
require us to purchase, all or a portion of the note without premium. Therefore, during the third quarter
2008, this note was reclassified to current liabilities on our Consolidated Balance Sheets.
6 5/8% Senior Notes due 2014
The 6 5/8% Senior Notes mature October 1, 2014. Interest accrues at an annual rate of 6 5/8% and is payable
semi-annually in cash, in arrears on April 1 and October 1 of each year.
The 6 5/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100%
of their principal amount plus a “make-whole” premium, as defined in the related indenture, together with
accrued and unpaid interest.
The 6 5/8% Senior Notes are:
x general unsecured senior obligations of DDBS;
x ranked equally in right of payment with all of DDBS’ and the guarantors’ existing and future
unsecured senior debt; and
x ranked effectively junior to our and the guarantors’ current and future secured senior
indebtedness up to the value of the collateral securing such indebtedness.
The indenture related to the 6 5/8% Senior Notes contains restrictive covenants that, among other things,
impose limitations on the ability of DDBS and its restricted subsidiaries to:
x incur additional indebtedness or enter into sale and leaseback transactions;
x pay dividends or make distribution on DDBS’ capital stock or repurchase DDBS’ capital stock;
x make certain investments;
x create liens;
x enter into transactions with affiliates;
x merge or consolidate with another company; and
x transfer and sell assets.