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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LEAP WIRELESS INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4812 33-0811062
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
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10307 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
(858) 882-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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AGENT FOR SERVICE: COPIES TO:
HARVEY P. WHITE SCOTT N. WOLFE, ESQ.
CHIEF EXECUTIVE OFFICER BARRY M. CLARKSON, ESQ.
LEAP WIRELESS INTERNATIONAL, INC. LATHAM & WATKINS
10307 PACIFIC CENTER COURT 701 B STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92122 SAN DIEGO, CALIFORNIA 92101
(858) 882-6000 (619) 236-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
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Common Stock, par value $0.0001
per share(2).................. 163,076 $65.75 $10,722,247 $2,831
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based on the average of the high and low
reported sales prices on the Nasdaq National Market on August 3, 2000.
(2) Each share of common stock, par value $0.0001 per share ("Common Stock"),
includes a right to purchase one one-thousandth of a share of Series A
Junior Participating preferred stock, par value $0.0001 per share.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
PROSPECTUS (SUBJECT TO COMPLETION, DATED AUGUST 9, 2000)
[LEAP WIRELESS LOGO]
Leap Wireless International, Inc.
163,076 Shares of Common Stock
-------------------------
This prospectus relates to the offer and sale of up to 163,076 shares of
Leap Wireless International, Inc. common stock by the selling security holder
identified in this prospectus. The shares offered by this prospectus were
originally issued by us to the selling security holder in connection with our
acquisition of PCS Devco, Inc. Under the terms of the acquisition agreement, we
agreed to register the shares of our common stock offered by this prospectus and
bear the expenses of registration of the shares. We will not receive any of the
proceeds from the sale of shares of common stock by the selling security holder.
Our common stock is quoted on the Nasdaq National Market under the symbol
"LWIN."
On August 8, 2000, the reported last sale price of our common stock on the
Nasdaq National Market System was $68.19 per share.
BEFORE INVESTING IN THE SHARES OF OUR COMMON STOCK, PLEASE REFER TO THE
SECTION IN THIS PROSPECTUS ENTITLED "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2000.
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Special Note Regarding Forward-Looking Statements........... 13
Use of Proceeds............................................. 13
Selling Security Holder..................................... 14
Plan of Distribution........................................ 15
Description of Leap Capital Stock........................... 18
Legal Matters............................................... 22
Experts..................................................... 22
Where to Find Additional Information........................ 22
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THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT LEAP WIRELESS INTERNATIONAL, INC. AND ITS SUBSIDIARIES THAT IS NOT
INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE
WITHOUT CHARGE TO SECURITY HOLDERS UPON WRITTEN OR ORAL REQUEST.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS.
Cricket(R) is a registered trademark of Leap. Pegaso(MR) is a registered
service mark of Servicios Admnistrativos Pegaso, S.C. All other brand names,
trademarks and service marks appearing in this prospectus are the property of
their respective holders.
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PROSPECTUS SUMMARY
This summary highlights some information from this prospectus, and it may
not contain all of the information that is important to you. It is qualified in
its entirety by the more detailed information and consolidated financial
statements, including the notes to the consolidated financial statements,
incorporated by reference in this prospectus. You should read the full text of,
and consider carefully the more specific details contained in or incorporated by
reference into this prospectus. When used in this prospectus, the terms "Leap,"
"we," "our" and "us" refer to Leap Wireless International, Inc. and its
subsidiaries, unless the context requires otherwise, and not to the selling
security holder.
OUR BUSINESS
Leap is a wireless communications carrier that is deploying unique,
low-cost, simple wireless services designed to accelerate the transformation of
mobile wireless into a mass consumer product. We generally seek to address a
much broader population segment than incumbent wireless operators have addressed
to date. In the United States, we are offering wireless service under the brand
name "Cricket." Our innovative Cricket strategy is to extend the benefits of
mobility to the mass market by offering wireless service that is as simple to
understand and use as, and priced competitively with, traditional landline
service. We are also currently involved in developing and operating a nationwide
digital wireless network in Mexico. In each of our markets, we are deploying
100% digital, Code Division Multiple Access, or CDMA, networks that provide
higher capacity and more efficient deployment of capital than competing
technologies. This, when combined with our efforts to streamline operation and
distribution systems, allows us to be a low-cost provider of wireless services
in each of our markets.
The Cricket vision is different from the typical cellular or PCS provider.
The Cricket service is based on what we believe the mass market wants wireless
service to be: predictable, affordable and as simple to understand and use as
traditional landline telephone service, but with the benefits of mobility. We
believe that many potential customers have avoided traditional wireless service
because they perceive it to be expensive and complicated. We believe that a
large number of consumers make the majority of their calls within the local
areas in which they live, work and play. The Cricket service allows customers to
make and receive virtually unlimited calls only within a local calling area for
a low, flat monthly rate. The fixed price eliminates consumer cost uncertainty
related to higher than expected monthly bills and the billing and service
complexity associated with multiple rate plans and roaming charges.
We believe that the Cricket service will help transform mobile voice and
data wireless service from a luxury product into a mass consumer product. The
Cricket service was introduced in Chattanooga, Tennessee in March 1999. We
believe the initial results demonstrate the appeal of the Cricket service. As a
part of the Cricket Strategy we intend to:
- attract new customers more quickly than other wireless providers that
offer complex pricing plans with peak/off-peak rates, roaming charges and
expensive "extra" minutes;
- maintain lower customer acquisition costs by offering one simple service
plan with a choice of only one or two handsets, and distributing our
product through company stores and multiple points of sale where the mass
market shops;
- sustain lower operating costs per customer compared to other wireless
providers through streamlined billing procedures, reduced customer care
expenses, lower credit investigation costs and reduced bad debt; and
- deploy our capital more efficiently by building our networks to cover
only the urban and suburban areas of our markets where our potential
customers live, work and play, while avoiding rural areas and corridors
between distant markets.
We originally licensed Cricket in December 1998 to Chase
Telecommunications, Inc., a company that we acquired in March 2000. The Cricket
service was launched under an agreement that required the management of Chase
Telecommunications to control the business until our acquisition received all
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necessary governmental approvals. In Chattanooga, the network covers
approximately 315,000 of the approximately 550,000 potential customers in the
license area, concentrated in an area that is similar to Chattanooga's local
calling area for conventional landline telephone service. The Cricket service
was launched in Nashville, Tennessee in late January 2000.
We have been designated under FCC rules to be eligible to hold C-Block and
F-Block licenses. As a "designated entity" we can acquire these licenses, which
many large incumbent wireless providers cannot hold, at generally attractive
prices and terms. We recently acquired 36 licenses in the federal government's
1999 re-auction of C-Block licenses, three F-Block PCS licenses from AirGate
Wireless, L.L.C. and 11 C-Block licenses from Chase Telecommunications. We also
have entered into definitive agreements to purchase other wireless licenses, and
are considering the purchase of additional licenses in other U.S. markets. Our
target markets generally are self-contained metropolitan communities in which
our potential customers tend to live, work and play within one local urban and
suburban area. These target communities are areas where roaming beyond the local
area is less important and the Cricket low-cost, local-only service may be
particularly attractive to potential customers.
Internationally, we are focusing our efforts in markets in the Americas
where we believe the combination of unfulfilled demand and our attractive
wireless service offerings will fuel rapid growth. We target markets that offer
relatively low penetration of landline and wireless telephony combined with
relatively stable political and economic climates.
In Mexico, we were a founding shareholder and have invested $100 million in
Pegaso Telecomunicaciones, S.A. de C.V., a joint venture with Grupo Pegaso and
Grupo Televisa, the largest media company in the Spanish-speaking world. As of
July 15, 2000, we owned 22.4% of Pegaso, which is deploying the first 100%
digital wireless communications network in Mexico. Pegaso holds wireless
licenses generally in the 1900 MHz band to provide nationwide service covering
nearly 100 million potential customers. Pegaso launched commercial service in
Tijuana in February 1999 and extended its coverage area with launches in
Mexico's three largest cities, Mexico City, Guadalajara and Monterrey, in
December, September and August 1999, respectively. Pegaso is continuing its
network expansion and plans to build networks in additional metropolitan areas
throughout Mexico. Sprint PCS recently invested approximately $200 million by
purchasing shares from Pegaso and shareholders other than Leap.
On June 2, 2000, we completed the sale of our Chilean operating subsidiary,
Smartcom, S.A., to Endesa, S.A., a Spanish utility company. Under the terms of
our agreement with Endesa, Endesa purchased all of the outstanding capital stock
of Smartcom from our subsidiary, Inversiones Leap Wireless Chile, S.A., and its
designated shareholder nominee (who held one share of the Series A preferred
stock of Smartcom in order to comply with Chilean law which requires two
shareholders for each Chilean sociedad anonima) in exchange for gross
consideration of approximately $381.5 million, consisting of cash, three
promissory notes and the release of cash collateral. In addition, the sale of
the Smartcom shares resulted in the removal of approximately $191.4 million of
Smartcom liabilities from our consolidated balance sheet.
BUSINESS STRATEGY
Our business strategy is to bring innovative wireless communications
products and services to markets with strong growth potential in the U.S. and
elsewhere in the Americas. Key elements of this strategy include:
- Enhancing the Mass Market Appeal of Wireless Service. We are working to
remove the price and complexity barriers that we believe have prevented
many potential customers from using wireless service. We believe that
large segments of the population do not use wireless service because they
view wireless service as an expensive luxury item, believe they cannot
control the cost of service, or find existing service plans too
confusing. Our service plans are designed to offer appealing value in
simple formats that customers can understand and budget for.
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- Offering an Appealing Value Proposition. Specific service plans will
differ among our operations and ventures; however, we strive to provide
service offerings that combine high quality and advanced features with
simplicity and attractive pricing to create a "high value/reasonable
price" proposition and broaden the market for wireless services. These
offerings include, for example, the Cricket flat rate service plan in the
U.S. and such innovative features as a fully-functioning phone
out-of-the-box and per-second billing in our Mexican operations.
- Controlling and Minimizing Costs. To become one of the lowest-cost
providers in the wireless industry, we are deploying advanced network
technology to minimize capital costs and streamlining marketing
distribution and back-office procedures.
- Leveraging CDMA Technology. We are deploying state-of-the-art CDMA
networks that provide higher capacity at a lower capital cost and can be
easily upgraded to support enhanced capacity. We believe this enables us
to operate superior networks that support rapid customer growth and high
usage with lower costs per unit than other wireless carriers. In
addition, we believe our CDMA networks will provide a better platform to
expand into data and other services based on advances in second
generation systems and on third generation digital technology in the
future.
- Expanding Our Service Through Acquisitions of Domestic Licenses. As a
designated entity under the FCC rules, we intend to expand the Cricket
service to selected metropolitan areas in the U.S. through the
acquisition of additional wireless licenses. We believe that our
designated entity status gives us opportunities that are not available to
many of our larger competitors to acquire additional wireless licenses at
generally attractive prices.
- Investing Selectively in New Foreign Ventures. While our current emphasis
is on our U.S.-based operations, we plan to selectively pursue wireless
ventures in foreign markets with strong growth potential. When investing
in foreign ventures, we generally seek investment partners that provide
familiarity and marketing know-how in their local markets, financial and
technical resources, or other attributes that can contribute to building
a successful wireless business. We expect to be actively involved in the
operations of each foreign venture in which we participate.
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Leap was formed as a Delaware corporation in June 1998 as a subsidiary of
Qualcomm Incorporated. In September 1998, Qualcomm distributed all of the common
stock of Leap to Qualcomm's stockholders as a taxable dividend, and Leap entered
into various agreements with Qualcomm. Our executive offices are located at
10307 Pacific Center Court, San Diego, CA 92121. Our telephone number is (858)
882-6000.
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RISK FACTORS
An investment in the common stock offered in connection with this
prospectus involves a high degree of risk. In addition to the other information
in this prospectus, you should carefully consider the following risks before
making an investment decision.
WE HAVE A LIMITED OPERATING HISTORY
We have only operated as an independent company since September 1998.
Because we are at an early stage of development, we face risks generally
associated with establishing a new business enterprise. When considering our
prospects, investors must consider the risks, expenses and difficulties
encountered by companies in their early stages of development. These risks
include possible disruptions and inefficiencies associated with rapid growth and
workplace expansion, the difficulties associated with raising money to finance
new enterprises and the difficulties of establishing a significant presence in
highly competitive markets.
THE CRICKET BUSINESS STRATEGY IS UNPROVEN
Our business strategy in the United States, marketed under the brand name
Cricket, is to offer consumers a service plan that allows them to make and
receive virtually unlimited local calls for a low, flat monthly rate. This
strategy, which has been introduced in only a few markets, is a new approach to
marketing wireless services and may not prove to be successful. Our marketing
efforts may not draw the volume of customers necessary to sustain our business
plan, our capital and operating costs may exceed planned levels, and we may be
unable to compete effectively with landline and other wireless service providers
in our markets. In addition, potential customers may perceive the Cricket
service to be less appealing than other wireless plans, which offer more
features and options, including the ability to roam outside of the home service
area. If our business strategy proves to be successful, other wireless providers
are likely to adopt similar pricing plans and marketing approaches. Should our
competitors choose to adopt a strategy similar to the Cricket strategy, some of
them may be able to price their services more aggressively or attract more
customers because of their stronger market presence and geographic reach and
their larger financial resources.
THE FCC'S DECISION THAT WE ARE QUALIFIED TO HOLD C-BLOCK AND F-BLOCK LICENSES IS
SUBJECT TO REVIEW AND APPEAL
Our business plan anticipates and depends on our acquisition and operation
of C-Block and F-Block licenses in the U.S. We believe that currently C-Block
and F-Block licenses are generally more available and are less expensive to
obtain than licenses in other FCC auction blocks, partly because a licensee may
hold these licenses only if it qualifies as a "designated entity" under FCC
rules.
In July 1999, the FCC issued an opinion and order that found that we were
entitled to acquire C-Block and F-Block licenses. The order approved our
acquisition of the 36 C-Block licenses for which we were the highest bidder in
the FCC's 1999 spectrum re-auction, and the transfer of three F-Block licenses
from AirGate to one of our subsidiaries which cover portions of North Carolina,
in each case subject to the fulfillment of certain conditions. In October 1999,
the FCC issued to us the 36 re-auctioned licenses. In addition, in March 1999,
the FCC approved the transfer to us of 11 C-Block licenses from Chase
Telecommunications and one C-Block license from PCS Devco.
Each of the conditions imposed by the FCC has been satisfied. We have a
continuing obligation, during the designated entity holding period for our
C-Block and F-Block licenses, to limit our debt to Qualcomm to 50% or less of
our outstanding debt and to ensure that persons who are or were previously
officers or directors of Qualcomm do not comprise a majority of our board of
directors or a majority of our officers. If we fail to continue to meet any of
the conditions imposed by the FCC or otherwise fail to maintain our
qualification to own C-Block and F-Block licenses, that failure would have a
material adverse effect on our business and financial condition.
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Various parties previously challenged our qualification to hold C-Block and
F-Block licenses, which challenges were rejected in the FCC's July 1999 order.
One of these parties, a wireless operating company, has requested that the FCC
review its order, as well as the order consenting to the transfer of licenses to
us from Chase Telecommunications and PCS Devco, and has opposed all of our
pending assignment or transfer applications at the FCC. In July 2000, the FCC
affirmed its July 1999 order as well as the order consenting to the transfer of
licenses to us from Chase Telecommunications and PCS Devco. In addition, Nextel
Communications, Inc. has opposed one of our pending applications, alleging that
we may no longer be compliant with C- and F-Block "total asset" eligibility
requirements. Further judicial review of the FCC's orders granting us licenses
is possible.
We may not prevail in connection with any such appeal and we may not remain
qualified to hold C-Block or F-Block licenses. If the FCC determines that we are
not qualified to hold C-Block or F-Block licenses, it could take the position
that all of our licenses should be divested, cancelled or reauctioned.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE FUTURE LOSSES
Leap experienced net losses of approximately $32.2 million in the third
quarter of fiscal 2000, $83.0 million in the second quarter of fiscal 2000,
$46.3 million in the first quarter of fiscal 2000, $164.6 million in fiscal
1999, $46.7 million in fiscal 1998 and $5.2 million in fiscal 1997. According to
generally accepted accounting principles, Leap must recognize some or all of its
subsidiaries' losses. These losses are likely to be significant for the next
several years as we launch service in new markets and seek to increase our
customer bases in new and existing markets. We may not generate profits in the
short term or at all. If we fail to achieve profitability, that failure could
have a negative effect on the market value of our common stock.
LEAP MAY FAIL TO RAISE REQUIRED CAPITAL
We require significant additional capital to build-out and operate planned
networks and for general working capital needs. We also require additional
capital to invest in any new wireless opportunities, including capital for
license acquisition costs. Capital markets have recently been volatile and
uncertain. These markets may not improve, and we may not be able to access these
markets to raise additional capital. Developing companies in emerging markets
such as Latin America have found it particularly difficult to raise capital. If
we fail to obtain required new financing, that failure would have a material
adverse effect on our business and our financial condition. For example, if we
are unable to access capital markets, we may have to restrict our activities or
sell our interests in one or more of our subsidiaries or other ventures earlier
than planned or at a "distressed sale" price.
YOUR OWNERSHIP INTEREST IN LEAP WILL BE DILUTED UPON ISSUANCE OF SHARES WE HAVE
RESERVED FOR FUTURE ISSUANCE
On August 1, 2000, 26,743,136 shares of our common stock were outstanding,
and 16,323,608 additional shares of our common stock were reserved for issuance.
The issuance of these additional shares will reduce your percentage ownership in
Leap.
The following shares were reserved for issuance as of August 1, 2000:
- 4,500,000 shares reserved for issuance upon exercise of a warrant issued
to Qualcomm in connection with the spin-off of Leap, which is exercisable
in whole or in part at any time between now and September 2008;
- 5,214,017 shares reserved for issuance upon exercise of options to
purchase Leap common stock granted to holders of Qualcomm options in
connection with the distribution of Leap's common stock to the
stockholders of Qualcomm;
- 3,174,043 shares reserved for issuance upon the exercise of options or
awards granted or available for grant to employees, officers, directors
and consultants under Leap's equity incentive plans;
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- 403,128 shares reserved for issuance upon consummation of our pending
acquisitions of a wireless license in Denver and three wireless licenses
in Albany, Columbus and Macon, Georgia, which acquisitions are subject to
FCC approval and other conditions;
- 202,566 shares of common stock reserved for issuance upon exercise of a
warrant held by Chase Telecommunications Holdings, Inc.; and
- 2,829,854 shares of common stock reserved for issuance upon exercise of
the warrants issued in connection with our February 2000 units offering.
Dilution of the outstanding number of shares of our common stock could
adversely affect prevailing market prices for our common stock and our ability
to raise capital through an offering of equity securities.
HIGH LEVELS OF DEBT COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL CONDITION
We have obtained and expect to continue to obtain much of our required
capital through debt financing. A substantial portion of the debt financing,
including all of our vendor financing, bears or is likely to bear interest at a
variable rate, exposing us to interest rate risk.
Our high leverage could have important consequences, including the
following:
- our ability to obtain additional financing may be impaired;
- a substantial portion of our future cash flows from operations must be
dedicated to the servicing of our debt, thus reducing the funds available
for operations and investments;
- our leverage may reduce our ability to adjust rapidly to changing market
conditions and may make us more vulnerable to future downturns in the
general economy; and
- high levels of debt may reduce the value of stockholders' investments in
Leap because debt holders have priority regarding our assets in the event
of a bankruptcy or liquidation.
We may not have sufficient future cash flows to meet our debt payments or
may not be able to refinance any of our debt at maturity. We also face
additional risks with respect to our financing arrangements with vendors. These
equipment financings depend on meeting planned levels of performance such as
meeting specific target levels for potential and actual customers. If we fail to
meet performance requirements, our equipment financing may be restricted or
cancelled.
OUR DEBT INSTRUMENTS CONTAIN PROVISIONS AND REQUIREMENTS THAT COULD LIMIT OUR
ABILITY TO PURSUE BORROWING OPPORTUNITIES
The restrictions contained in the indenture governing the notes issued in
our February 2000 units offering, and the restrictions contained in the senior
debt of our subsidiaries, may limit our ability to implement our business plan,
finance future operations, respond to changing business and economic conditions,
secure additional financing, if needed, and engage in opportunistic
transactions, such as the acquisition of wireless licenses. Such senior debt,
among other things, restricts our ability and the ability of our subsidiaries
and our future subsidiaries to do the following:
- create liens;
- make certain payments, including payments of dividends and distributions
in respect of capital stock;
- consolidate, merge and sell assets;
- engage in certain transactions with affiliates; and
- fundamentally change our business.
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In addition, such senior debt requires us to maintain certain ratios,
including:
- leverage ratios;
- interest coverage ratios; and
- fixed charges ratios;
and to satisfy certain tests, including tests relating to:
- minimum covered population in order to incur additional indebtedness; and
- minimum number of subscribers to our services in order to incur
additional indebtedness.
We may not satisfy the financial ratios and tests under our senior debt due
to events that are beyond our control. If we fail to satisfy any of the
financial ratios and tests, we could be in default under our senior debt or may
be limited in our ability to access additional funds under our senior debt,
which could result in our being unable to make payments on our outstanding
notes.
ADVERSE REGULATORY CHANGES COULD IMPAIR OUR ABILITY TO MAINTAIN EXISTING
LICENSES AND OBTAIN NEW LICENSES
We must maintain our existing telecommunications licenses and those we
acquire in the future to continue offering wireless telecommunications services.
Changes in regulations or failure to comply with the terms of a license or
failure to have the license renewed could result in a loss of the license,
penalties and fines. For example, we could lose a license if we fail to
construct or operate a wireless network as required by the license. If we lose a
license, that loss could have a material adverse effect on our business and
financial condition.
State regulatory agencies, the FCC, the U.S. Congress, the courts and other
governmental bodies regulate the operation of wireless telecommunications
systems and the use of licenses in the U.S. The FCC, Congress, the courts or
other federal, state or local bodies having jurisdiction over our operating
companies may take actions that could have a material adverse effect on our
business and financial condition.
The FCC has announced plans to hold a reauction of C-Block and F-Block
licenses in July 2000. In connection with this reauction, a number of large
carriers, including SBC Communications, Inc., Nextel Communications, Inc.,
BellSouth Corporation, Bell Atlantic Corporation and AT&T Wireless Services,
Inc. have requested that the FCC, via waiver or a rulemaking proceeding, relax
the eligibility rules for acquiring C-Block and F-Block licenses, so that these
and possibly other large companies would be able to compete with us and other
designated entities and small businesses in acquiring C-Block and F-Block
licenses. The FCC has, in response to these petitions and requests, initiated an
expedited rulemaking proceeding to examine the issue, as well as other rules
related to the holding or transfer of C-Block or F-Block licenses. While we have
vigorously opposed the relaxation of the designated eligibility rules, FCC
action relaxing them could have a material adverse effect on our business and
financial condition, including our ability to continue acquiring C-Block and
F-Block licenses.
Foreign governmental authorities regulate the operation of wireless
telecommunications systems and the use of licenses in the foreign countries in
which we operate. In some cases, the regulatory authorities also operate our
competitors. Changes in the current regulatory environment of these markets
could have a negative effect on us. In addition, the regulatory frameworks in
some of these countries are relatively new, and the interpretation of
regulations is uncertain.
We believe that acquiring new telecommunications licenses will be highly
competitive. If we are not able to obtain new licenses, or could not otherwise
participate in companies that obtain new licenses, our ability to expand our
operations would be limited.
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WE HAVE ENCOUNTERED RELIABILITY PROBLEMS DURING THE INITIAL DEPLOYMENT OF OUR
NETWORKS
As is typical with newly-constructed networks, we have experienced
reliability problems with respect to network infrastructure equipment in our
initial years of operation. We are working with equipment suppliers to address
these problems. Chase Telecommunications is in the process of replacing the
majority of its network infrastructure in Chattanooga with equipment from a
different vendor that we believe is better suited to the high usage patterns of
the Cricket service. Replacing system components requires significant
expenditures and diverts management's attention from other matters. If our
network infrastructure equipment ultimately fails to perform as expected, that
failure could have a material adverse effect on our business and financial
condition.
WE MAY EXPERIENCE DIFFICULTIES IN CONSTRUCTING AND OPERATING OUR
TELECOMMUNICATIONS NETWORKS
We will need to construct new telecommunications networks and expand
existing networks. We will heavily depend on suppliers and contractors to
successfully complete these complex construction projects. We may experience
quality deficiencies, cost overruns and delays on these construction projects,
including deficiencies, overruns and delays not within our control or the
control of our contractors. In addition, the construction of new
telecommunications networks requires the receipt of permits and approvals from
numerous governmental bodies including municipalities and zoning boards. Failure
to receive these approvals in a timely fashion can delay system rollouts and can
raise the costs of completing construction projects. Pegaso's launch of
commercial service in Mexico City was delayed several months due to delays in
obtaining the required permits from local authorities for cell site
construction.
We may not complete construction projects within budget or on a timely
basis. A failure to satisfactorily complete construction projects could
jeopardize wireless licenses and customer contracts. As a result, a failure of
this type could have a material adverse effect on our business and financial
condition.
Even if we complete construction in a timely and cost effective manner, we
will also face challenges in managing and operating our telecommunications
systems. These challenges include operating and maintaining the
telecommunications operating equipment and managing the sales, advertising,
customer support, billing and collection functions of the business. Our failure
in any of these areas could undermine customer satisfaction, increase customer
turnover, reduce revenues and otherwise have a material adverse effect on our
business and financial condition.
IF WE EXPERIENCE A HIGH RATE OF CUSTOMER TURNOVER, OUR COSTS COULD INCREASE
Many providers in the U.S. personal communications services, or PCS,
industry have experienced a high rate of customer turnover as compared to
cellular industry averages. The rate of customer turnover may be the result of
several factors, including limited network coverage, reliability issues such as
blocked or dropped calls, handset problems, inability to roam onto cellular
networks, affordability, customer care concerns and other competitive factors.
Our strategy to address customer turnover may not be successful, or the rate of
customer turnover may be unacceptable. If our competitors choose to provide a
service plan with pricing similar to the Cricket service, competitive factors
could also cause increased customer turnover. A high rate of customer turnover
could reduce revenues and increase marketing costs in order to attract the
minimum number of replacement customers required to sustain our business plan,
which, in turn, could have a material adverse effect on our business and
financial condition.
CALL VOLUME UNDER CRICKET FLAT PRICE PLANS COULD EXCEED THE CAPACITY OF OUR
WIRELESS NETWORKS
Our Cricket strategy in the U.S. is to offer consumers a service plan that
allows them to make virtually unlimited local calls for a low, flat monthly
rate. Our business plans for this strategy assume that Cricket customers will
use their wireless phones for substantially more minutes per month than
customers who purchase service from other providers under more traditional
plans. We intend to design our U.S. networks to accommodate the expected high
call volume. Although we believe CDMA-based networks will be well suited to
support high call volumes, if wireless use by Cricket customers exceeds the
capacity of our future networks, service quality may suffer, and we may be
forced to raise the price of Cricket service
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to reduce volume or otherwise limit the number of new customers. If our planned
networks cannot handle the call volumes they experience, our competitive
position and business prospects in the U.S. could be materially adversely
affected.
RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS COULD ADVERSELY AFFECT OUR
BUSINESS
We face many risks from our international activities. Pegaso in Mexico
largely depends on the Mexican economy. The Mexican market is subject to rapid
fluctuations in currency exchange rates, consumer prices, inflation, employment
levels and gross domestic product.
Mexico's currency and financial markets continue to experience volatility.
The impact on the Mexican economy of the economic crisis that began in Asia and
then spread to Eastern Europe and Brazil has affected the ability of Mexican
companies to access the capital markets. The ability of Mexican companies to
access the capital markets may not improve and may deteriorate further in the
future. The economy of Mexico historically is affected by fluctuations in the
price of oil and petroleum products. Fluctuations in the prices of these
products and continuing political tensions in Mexico could negatively impact our
prospects in Mexico.
In addition, foreign laws and courts govern many of the agreements of
Pegaso. Other parties may breach or may make it difficult to enforce these
agreements.
OUR RESULTS OF OPERATIONS MAY BE HARMED BY FOREIGN CURRENCY FLUCTUATIONS
We are exposed to risk from fluctuations in foreign currency rates, which
could impact our results of operations and financial condition. Although we
report our financial statements in U.S. dollars, Pegaso reports its results in
Mexican pesos. Consequently, fluctuations in currency exchange rates between the
U.S. dollar and the applicable local currency will affect our results of
operations as well as the value of our ownership interest in Pegaso and other
future foreign ventures. We do not currently hedge against foreign currency
exchange rate risks.
Generally, our international ventures generate revenues that are paid in
their local currency. However, many of these ventures' major contracts,
including financing agreements and contracts with equipment suppliers, are
denominated in U.S. dollars. As a result, a significant change in the value of
the U.S. dollar against the national currency of an international venture could
significantly increase the venture's expenses and could have a material adverse
effect on our business and financial condition. For example, our international
ventures may be unable to satisfy their obligations under equipment supply
agreements denominated in U.S. dollars in the event of currency devaluations. In
some developing countries, including Mexico, significant currency devaluations
relative to the U.S. dollar have occurred and may occur again in the future. In
such circumstances, Leap and its international ventures may experience economic
loss with respect to the collectability of payments from their business partners
and customers and the recoverability of their investments.
WE FACE SIGNIFICANT COMPETITION
The wireless telecommunications industry generally is very competitive and
competition is increasing. Unlike many wireless providers, we also intend to
compete directly with landline service providers in the telecommunications
industry. Many competitors have substantially greater resources than we have,
and we may not be able to compete successfully.
In the U.S., we will compete directly with other wireless providers and
traditional landline carriers in each of our markets, many of whom have greater
resources than we do and entered the market before us. A few of our competitors
operate wireless telecommunications networks covering most of the U.S.
Competitors' earlier entry and broader presence in the U.S. telecommunications
market may have a negative effect on our ability to successfully implement our
strategy. Furthermore, the FCC is actively pursuing policies designed to
increase the number of wireless competitors in each of our markets. The FCC will
soon auction licenses that will authorize the entry of two additional wireless
providers in each
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market. In addition, other wireless providers in the U.S. could attempt to
implement our domestic strategy of providing unlimited local service at a low,
flat monthly rate if our strategy proves successful. The landline services with
which we will compete are already used by some of our potential customers, and
we may not be successful in our efforts to persuade potential customers to adopt
our wireless service in addition to, or in replacement of, their current
landline service.
Although the deployment of advanced telecommunications services is in its
early stages in many developing countries, we believe competition is increasing
as businesses, and foreign governments realize the market potential of
telecommunications services. In Mexico, a number of international
telecommunications companies, including Bell Atlantic, AT&T, MCI, Motorola,
Nextel and SBC, as well as local competitors such as Telmex and other Mexican
telecommunications companies, continue to actively engage in developing
telecommunications services. Pegaso also competes against landline carriers,
including government-owned telephone companies. We also expect the prices that
Pegaso may charge for its products and services in some regions will decline
over the next few years as competition increases in its markets. Our competitors
in Mexico have greater financial resources and more established operations than
Pegaso. Pegaso is at an early stage of development and may not be able to
compete successfully.
We compete with companies that use other communications technologies,
including paging and digital two-way paging, enhanced specialized mobile radio
and domestic and global mobile satellite service. These technologies may have
advantages over the technology we use and may ultimately be more attractive to
customers. We may compete in the future with companies who offer new
technologies and market other services, including cable television access,
landline telephone service and Internet access, that we do not currently intend
to market. Some of our competitors offer these other services together with
their wireless communications service, which may make their services more
attractive to customers. In addition, we expect that, over time, providers of
wireless communications services will compete more directly with providers of
traditional landline telephone services as do we, energy companies, utility
companies and cable operators who expand their services to offer communications
services.
THE TECHNOLOGIES THAT WE USE MAY BECOME OBSOLETE, WHICH WOULD LIMIT OUR ABILITY
TO COMPETE EFFECTIVELY
We have employed digital wireless communications technology based on CDMA
technology. We are required under an agreement entered into with Qualcomm in
connection with our spin-off to use only cdmaOne systems in international
operations through January 2004. Other digital technologies may ultimately prove
to have greater capacity or features and be of higher quality than CDMA. If
another technology becomes the preferred industry standard in any of the
countries in which we operate, we may be at a competitive disadvantage, and
competitive pressures may require us to change our digital technology at
substantial cost. We may not be able to respond to those pressures or implement
new technology on a timely basis, or at an acceptable cost. If CDMA technology
becomes obsolete at some time in the future, and we are unable to effect a
cost-effective migration path, it could materially and adversely affect our
business and financial condition.
IF WIRELESS HANDSETS POSE HEALTH AND SAFETY RISKS, WE MAY BE SUBJECT TO NEW
REGULATIONS, AND DEMAND FOR OUR SERVICES MAY DECREASE
Media reports have suggested that certain radio frequency emissions from
wireless handsets may be linked to various health concerns, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. Concerns over radio frequency emissions may have the effect
of discouraging the use of wireless handsets, which would decrease demand for
our services. In recent years, the FCC has updated the guidelines and methods it
uses for evaluating radio frequency emissions from radio equipment, including
wireless handsets. In addition, interest groups have requested that the FCC
investigate claims that digital technologies pose health concerns and cause
interference with hearing aids and other medical devices. There also are some
safety risks associated with the use of wireless handsets while driving.
Concerns over these safety risks and the effect of any legislation that may be
adopted in response to these risks could limit our ability to market and sell
our wireless service.
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THE LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS
We believe our success depends on the contributions of a number of our key
personnel. These key personnel include Harvey P. White, Chairman of the Board
and Chief Executive Officer of Leap, and Susan G. Swenson, President and Chief
Operating Officer of Leap and Chief Executive Officer of our Cricket
Communications subsidiary. If we lose the services of key personnel, that loss
could materially harm our business. We do not maintain "key person" life
insurance on any employee.
OUR STOCK PRICE IS VOLATILE
The stock market in general, and the stock prices of telecommunications
companies and other technology-based companies in particular, have experienced
significant volatility that often has been unrelated to the operating
performance of any specific public companies. The market price of Leap common
stock has fluctuated widely in the past quarter and is likely to continue to
fluctuate in the future. Factors that may have a significant impact on the
market price of Leap common stock include:
- future announcements concerning Leap or its competitors, including the
announcement of joint development efforts;
- changes in the prospects of our business partners or equipment suppliers;
- quality deficiencies in our networks;
- results of technological innovations;
- government regulation, including the FCC's review of our acquisition of
wireless licenses;
- changes in recommendations of securities analysts and rumors that may be
circulated about Leap or its competitors; and
- public perception of risks associated with our international operations.
Our future earnings and stock price may be subject to significant
volatility, particularly on a quarterly basis. Shortfalls in our revenues or
earnings in any given period relative to the levels expected by securities
analysts could immediately, significantly and adversely affect the trading price
of Leap common stock. In the past, following periods of volatility in the market
price of a company's securities, class action litigation has often been
instituted against the subject company. Litigation of this type could result in
substantial costs and a diversion of our management's attention and resources
which could, in turn, have a material adverse effect on our business and
financial condition.
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. The terms of the indenture governing the notes issued in our
February 2000 units offering restrict our ability to declare or pay dividends.
We intend to retain future earnings to fund our growth. Accordingly, you will
not receive a return on your investment in our common stock through the payment
of dividends in the foreseeable future and may not realize a return on your
investment even if you sell your shares. Any future payment of dividends to our
stockholders will depend on decisions that will be made by our board of
directors and will depend on then existing conditions, including our financial
condition, contractual restrictions, capital requirements and business
prospects.
A DETERMINATION THAT LEAP IS AN INVESTMENT COMPANY COULD ADVERSELY AFFECT OUR
BUSINESS
Our ownership interest in Pegaso was 22.4% as of July 15, 2000, and we
expect that future investments in ventures will include ownership interests of
less than 50% and that our interests will vary over time as the ventures raise
additional capital. As a result, we could be subject to the registration
requirements of the Investment Company Act of 1940. The Investment Company Act
of 1940 requires registration of companies that engage primarily in the business
of investing in stock. Because we intend to actively participate in the business
operations of our subsidiaries and other ventures, we do not believe that
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<PAGE> 15
we are primarily engaged in the business of investing in stock. We intend to
monitor and adjust our interests in our ventures to the extent practical to
avoid being subject to the Investment Company Act of 1940. In addition, to
clarify our status under the Investment Company Act of 1940, in September 1998
we filed a request for an exemptive order from the SEC declaring Leap to be
primarily engaged in a business other than investing in stock. The SEC has not
yet ruled on our application and we are in the process of responding to their
comments. The requested exemptive order may not be granted. If we must register
as an investment company under the Investment Company Act of 1940, compliance
with these regulations will negatively impact our business.
WE HAVE IMPLEMENTED OR ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS THAT COULD
PREVENT OR DELAY AN ACQUISITION OF LEAP THAT IS BENEFICIAL TO ITS STOCKHOLDERS
Leap's charter and bylaws could make it more difficult for a third party to
acquire us, even if doing so would benefit our stockholders. Our charter and
bylaw provisions could diminish the opportunities for a stockholder to
participate in tender offers. The charter and bylaws may also restrain
volatility in the market price of Leap common stock resulting from takeover
attempts. In addition, our board of directors may issue preferred stock that
could have the effect of delaying or preventing a change in control of Leap. The
issuance of preferred stock could also negatively affect the voting power of
holders of Leap common stock. The provisions of the charter and bylaws may have
the effect of discouraging or preventing an acquisition of Leap or a sale of its
businesses. In addition, Section 203 of the Delaware General Corporation Law
imposes restrictions on mergers and other business combinations between us and
any holder of 15% or more of our common stock.
We have adopted a rights plan that could discourage, delay or prevent an
acquisition of Leap at a premium price. The rights plan provides for preferred
stock purchase rights attached to each share of Leap common stock which will
cause substantial dilution to a person or group acquiring 15% or more of Leap's
stock if the acquisition is not approved by our board of directors.
The transfer restrictions imposed on the U.S. wireless licenses we own also
adversely affect the ability of third parties to acquire us. Our licenses may
only be transferred with prior approval by the FCC. In addition, we are
prohibited from voluntarily assigning or transferring control of our C-Block and
F-Block licenses for five years after grant date except to assignees or
transferees that satisfy the financial criteria established by the FCC for
designated entities. Accordingly, the number of potential transferees of our
licenses is limited, and any acquisition, merger or other business combination
involving Leap would be subject to regulatory approval.
In addition, the documents governing our indebtedness contain limitations
on our ability to enter into a change of control transaction. Under these
documents, the occurrence of a change of control transaction, in some cases
after notice and grace periods, would constitute an event of default permitting
acceleration of the indebtedness.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions about
Leap, including, among other things:
- the ability to successfully deploy wireless networks;
- the ability to raise sufficient funds to finance such deployment;
- the ability to control costs relating to constructing, expanding and
operating the networks;
- the ability to close pending asset acquisitions and dispositions;
- the ability to attract new subscribers and the rate of growth of the
subscriber base;
- the usage and revenue generated from subscribers;
- the range of services offered;
- the ability to effectively manage growth and the intense competition in
the wireless communications industry, as well as conditions governing the
use of network licenses set by various government and regulatory
authorities; and
- developments in current or future litigation.
You can identify these forward-looking statements by forward-looking words
such as "believe," "may," "could," "will," "estimate," "continue," "anticipate,"
"intend," "seek," "plan," "expect," "should," "would" and similar expressions in
this prospectus.
We have described other risks concerning Leap elsewhere in this prospectus
under the heading "Risk Factors." We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
prospectus may not occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling security
holder of the common stock.
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SELLING SECURITY HOLDER
The following table sets forth, as of August 4, 2000, information with
respect to the shares owned by the selling security holder. Under the rules of
the Securities and Exchange Commission, beneficial ownership includes shares
over which the indicated beneficial owner exercises voting and/or investment
power. The information regarding shares beneficially owned after the offering
assumes the sale of all shares offered by the selling security holder.
The selling security holder has not held a position or office or had a
material relationship with us or any of our affiliates within the past three
years other than as a result of the ownership of Leap common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES SHARES BENEFICIALLY OWNED
BENEFICIALLY AFTER OFFERING
OWNED PRIOR TO NUMBER OF SHARES --------------------------
NAME THE OFFERING BEING OFFERED NUMBER PERCENTAGE
---- ---------------- ---------------- --------- -------------
<S> <C> <C> <C> <C>
Robert Martin...................... 163,076 163,076 -- --
</TABLE>
The selling security holder has represented to us that he has purchased his
shares for his own account, for investment only and not with a view toward
publicly selling or distributing them, except in sales either registered under
the Securities Act of 1933 or exempt from registration. In recognition of the
fact that the selling security holder, even though purchasing his shares for
investment, may wish to be legally permitted to sell his shares when he deems
appropriate, we agreed with the selling security holder to file a registration
statement to register the shares for resale and to prepare and file all
amendments and supplements necessary to keep the registration statement
effective for a period ending upon the earlier of July 18, 2001 or such time as
the selling security holder advises us that he has completed his resale of the
shares of common stock being offered by this prospectus.
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PLAN OF DISTRIBUTION
RESALES BY THE SELLING SECURITY HOLDER
Leap is registering the shares on behalf of the selling security holder.
The selling security holder may offer the shares from time to time, either in
increments or in a single transaction. The selling security holder may also
decide not to sell any or all of the shares allowed to be sold under this
prospectus. The selling security holder will act independently of Leap in making
decisions with respect to the timing, manner and size of each sale.
DONEES, PLEDGEES AND DISTRIBUTEES
The term "selling security holder" includes donees, persons who receive
shares from the selling security holder after the date of this prospectus by
gift. The term also includes pledgees, persons who, upon contractual default by
the selling security holder, may seize shares which the selling security holder
pledged to such persons. The term also includes distributees who receive shares
from the selling security holder after the date of this prospectus as a
distribution to members or partners of the selling security holder.
COST AND COMMISSIONS
Leap will pay all costs, expenses and fees in connection with the
registration of the shares being offered by this prospectus. The selling
security holder will pay all brokerage commissions and similar selling expenses,
if any, attributable to the sale of shares.
TYPES OF SALE TRANSACTIONS
The selling security holder will act independently of Leap in making
decisions with respect to the timing, manner and size of each sale. The selling
security holder may sell his shares in one or more types of transactions (which
may include block transactions):
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including the
Nasdaq National Market;
- in negotiated transactions;
- in the over-the-counter market;
- through the writing of options on shares;
- by pledge to secure debts and other obligations;
- in hedge transactions and in settlement of other transactions;
- in short sales; or
- through any combination of the above methods of sale.
The shares may be sold at a fixed offering price, which may be changed, or
at market prices prevailing at the time of sale, or at negotiated prices.
SALES TO OR THROUGH BROKER-DEALERS
The selling security holder may either sell shares directly to purchasers,
or sell shares to, or through, broker-dealers. These broker-dealers may act
either as an agent of the selling security holder, or as a principal for the
broker-dealer's own account. These transactions may include transactions in
which the same broker acts as an agent on both sides of the trade. Such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the selling security holder and/or the purchasers of shares.
This compensation may be received both if the broker-dealer acts as an agent or
as a principal. This compensation might also exceed customary commissions.
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The selling security holder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling security holder.
The selling security holder also may sell shares short and re-deliver the shares
to close out such short positions. The selling security holder may enter into
options or other transactions with broker-dealers which require the delivery to
the broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling security holder
also may loan or pledge the shares to a broker-dealer. The broker-dealer may
sell the shares so loaned, or upon a default the broker-dealer may sell the
pledged shares pursuant to this prospectus.
DISTRIBUTION ARRANGEMENTS WITH BROKER-DEALERS
If the selling security holder notifies Leap that any material arrangement
has been entered into with a broker-dealer for the sale of shares through:
- a block trade,
- a special offering,
- an exchange distribution or secondary distribution, or
- a purchase by a broker or dealer,
then Leap will file, if required, a supplement to this prospectus under Rule
424(b) of the Securities Act.
The supplement will disclose, to the extent required:
- the name of the selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
- any other facts material to the transaction.
DEEMED UNDERWRITING COMPENSATION
The selling security holder and any broker-dealers that act in connection
with the sale of his shares might be deemed to be "underwriters" within the
meaning of Section 2(a)(11) of the Securities Act. Any commissions received by
such broker-dealers, and any profit on the resale of shares sold by them while
acting as principals, could be deemed to be underwriting discounts or
commissions under the Securities Act.
INDEMNIFICATION
The selling security holder may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of his shares
against certain liabilities, including liabilities arising under the Securities
Act. Under our agreement with the selling security holder, we and the selling
security holder will be indemnified by the other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with these liabilities.
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PROSPECTUS DELIVERY REQUIREMENTS
Because a selling security holder may be deemed an underwriter, the selling
security holder must deliver this prospectus and any supplements to this
prospectus in the manner required by the Securities Act.
SALES UNDER RULE 144
The selling security holder may also resell all or a portion of the shares
offered by this prospectus in open market transactions in reliance upon Rule 144
under the Securities Act. To do so, the selling security holder must meet the
criteria and comply with the requirements of Rule 144.
COMPLIANCE WITH STATE LAW
In jurisdictions where the state securities laws require it, the selling
security holder's shares offered by this prospectus may be sold only through
registered or licensed brokers or dealers. In addition, in some states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and has been complied with.
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DESCRIPTION OF LEAP CAPITAL STOCK
The following description of our capital stock is intended as a summary
only and is qualified in its entirety by reference to our certificate of
incorporation and our by-laws. For information on obtaining a copy of our
certificate of incorporation and by-laws, see the section of this prospectus
captioned "Where To Find Additional Information."
Under our charter, the total number of shares of all classes of stock that
we have authority to issue is 85,000,000, consisting of 10,000,000 shares of
preferred stock and 75,000,000 shares of common stock.
COMMON STOCK
As of August 1, 2000, we had 26,743,136 shares of common stock outstanding.
The holders of our common stock are entitled to one vote for each share on all
matters voted on by stockholders. The holders of our common stock possess all
voting power, except as otherwise required by law or provided in any resolution
adopted by our board of directors regarding any series of preferred stock.
Subject to any preferential or other rights of any outstanding series of our
preferred stock that may be designated by our board, the holders of our common
stock will be entitled to such dividends as may be declared from time to time by
our board from available funds and upon liquidation will be entitled to receive
pro rata all of our assets available for distribution to the holders. The terms
of the indenture governing the notes restrict our ability to declare or pay
dividends.
PREFERRED STOCK
Our board of directors is authorized to issue shares of preferred stock, in
one or more series, and to determine, regarding any series, the terms and rights
of the series, including the following:
- the designation of the series;
- the rate and time of, and conditions and preferences regarding,
dividends, and whether the dividends are cumulative;
- the voting rights, if any, of shares of the series;
- the price, timing and conditions regarding the redemption of shares of
the series and whether a sinking fund should be established for the
series;
- the rights and preferences of shares of the series in the event of our
voluntary or involuntary dissolution, liquidation or winding up of our
affairs; and
- the right, if any, to convert or exchange shares of the series into or
for stock or securities of any other series or class.
We believe that the availability of the preferred stock will provide us
with increased flexibility in structuring possible future financings and
acquisitions, and in meeting other corporate needs which might arise. Having
authorized shares available for issuance will allow us to issue shares of
preferred stock without the expense and delay of a special stockholders'
meeting. The authorized shares of preferred stock, as well as shares of our
common stock, will be available for issuance without further action by our
stockholders, unless action is required by applicable law or the rules of any
stock exchange on which our securities may be listed or unless we are restricted
by the preferred stock.
WARRANTS
In connection with the spin-off of Leap from Qualcomm, we issued a warrant
to purchase 5,500,000 shares of our common stock to Qualcomm at an exercise
price of approximately $6.11 per share. In March 1999, in exchange for
consideration valued at $5.4 million, Qualcomm agreed to amend the warrant to
reduce the number of shares which may be acquired upon exercise to 4,500,000.
The warrant is exercisable during the 10 years following the spin-off of Leap.
The warrant provides that Qualcomm may not exercise the warrant if, as a result,
Qualcomm, together with its officers and directors, would own
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equity securities of Leap in an amount that would disqualify Leap from being a
"designated entity" under FCC rules.
The warrant issued to Qualcomm includes three types of registration rights
which require Leap to register the shares of Leap common stock issuable upon
exercise of the warrant. First, the warrant provides for a one-time "demand"
registration right which permits Qualcomm to require Leap to register a minimum
of $5 million of Leap common stock issuable upon exercise of the warrant.
Second, the warrant provides for "piggy-back" registration rights which require
Leap to notify Qualcomm of its intention to register shares of Leap common stock
with the SEC and, upon request, to include Qualcomm's shares issuable upon
exercise of the warrant in the registration. If Qualcomm exercises its
piggy-back or demand registration rights and the offering is underwritten, the
shares to be registered may be reduced by the underwriters based on market
conditions. However, after Leap's first firm commitment underwritten public
offering of common stock, the shares to be registered may be reduced to no less
than 30% of the shares requested to be registered. The registration rights in
the warrant may be assigned by Qualcomm with any transfer of the warrant. Third,
the warrant provides for "Form S-3" registration rights which generally permit
Qualcomm to require Leap to register a minimum of $5 million of shares issuable
upon exercise of the warrant if Form S-3, a short-form registration statement,
is available for the proposed registration. Qualcomm has agreed to waive its
piggy-back registration rights with respect to this offering. We will be able to
suspend the effectiveness of such registration statement under certain
circumstances.
In connection with our February 2000 units offering, we issued warrants to
purchase an aggregate of 2,829,854 shares of our common stock. The terms and
conditions of the warrants issued in the senior unit and senior discount unit
offerings are described in a registration statement on Form S-3 filed with the
Securities and Exchange Commission on July 24, 2000.
In connection with our acquisition of Chase Telecommunications in March
2000, we issued a warrant to Chase Telecommunications Holdings to purchase
643,068 shares of the common stock of our subsidiary, Cricket Communications,
for an aggregate warrant exercise price of $1,000,000. In connection with the
June 2000 merger of Cricket Communications into a wholly owned subsidiary of
ours, the warrant was converted into the right to purchase an aggregate of
202,566 shares of Leap common stock at an exercise price of $4.9367 per share.
The aggregate warrant exercise price of $1,000,000 remains unchanged.
LEAP COMMON STOCK RESERVED FOR ISSUANCE
Future sales of substantial amounts of our common stock in the public
market could adversely affect the trading price of our common stock. As of
August 1, 2000, we had 26,743,136 shares of common stock outstanding, the large
majority of which were freely tradable without restriction or further
registration under the Securities Act of 1933. Also, as of August 1, 2000, we
had reserved for issuance 16,323,608 shares of our common stock as follows:
4,500,000 shares reserved for issuance upon exercise of a warrant held by
Qualcomm; 5,214,017 shares of common stock reserved for issuance upon the
exercise of options or awards granted or available for grant to employees,
officers, directors and consultants under Leap equity incentive plans; 3,174,043
shares of common stock reserved for issuance upon exercise of options granted in
connection with the spin-off of Leap to holders of options for Qualcomm common
stock (including our employees who were former employees of Qualcomm); 403,128
shares reserved for issuance upon consummation of our pending acquisitions of a
wireless license in Denver and three wireless licenses in Albany, Columbus and
Macon, Georgia, which acquisitions are subject to FCC approval and other
conditions; 202,566 shares of common stock reserved for issuance upon exercise
of a warrant held by Chase Telecommunications Holdings, Inc.; and 2,829,854
shares of common stock reserved for issuance upon exercise of the warrants
issued in connection with our February 2000 units offering. We have agreed to
file registration statements to register for resale the 403,128 shares reserved
for issuance upon consummation of our pending acquisitions of wireless licenses.
19
<PAGE> 23
NO PREEMPTIVE RIGHTS
No holder of any stock of Leap has any preemptive right to subscribe for
any securities of Leap of any kind or class.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is Computershare
Investor Services LLC.
DELAWARE LAW AND CHARTER PROVISIONS
We must comply with the provisions of Section 203 of the Delaware General
Corporation Law, an anti-takeover law. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or other transaction resulting in a
financial benefit to the stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns at the time of the business
combination (or within three years prior, did own) 15% or more of the
corporation's voting stock.
Our charter also requires that any required or permitted action by our
stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in writing. In addition,
special meetings of our stockholders may be called only by a majority of the
authorized number of directors, the Chairman of the Board or the President of
Leap. The charter also provides for a classified board of directors consisting
of three classes as nearly equal in number as possible with the directors in
each class serving staggered three-year terms. In addition, the charter provides
that the authorized number of directors may be changed only by resolution of our
board of directors. Our bylaws require advance notice by a stockholder of a
proposal or director nomination which such stockholder desires to present at the
annual meeting of stockholders. Our charter and bylaws also require that the
holders of at least 66 2/3% of our voting stock must approve any amendment to
either the charter or bylaws affecting certain provisions. These provisions may
have the effect of deterring hostile takeovers or delaying changes in control or
management of Leap.
RIGHTS PLAN
On September 9, 1998, our board of directors adopted a shareholder rights
plan. Under the rights plan, a dividend of one preferred share purchase right
was declared for each outstanding share of our common stock. The common stock
currently trades with a right to purchase Series A Junior Participating
preferred stock. A preferred share purchase right will be attached to each share
of common stock issued during the term of the rights plan. Each right entitles
shareholders to buy one one-thousandth of a share of our Series A preferred
stock at an exercise price of $350.00, subject to anti-dilution adjustments,
upon the triggering event of a person acquiring, or making a tender or exchange
offer for, 15% or more of our outstanding common stock. Each right entitles its
holder, other than the person acquiring 15% or more of the outstanding common
stock, to purchase shares of our common stock with a market value of twice the
right's exercise price. Ownership of our common stock in excess of the 15%
threshold by Qualcomm as a result of its warrant to purchase 4,500,000 shares of
our common stock or the warrants purchased by Qualcomm in our February 2000
units offering entitling it to purchase 771,450 shares of our common stock,
however, will not trigger the rights plan, unless and until Qualcomm acquires
one or more additional shares of our common stock. In addition, if a company
acquires us in a merger or other business combination, or if we sell more than
50% of our consolidated assets or earning power, these rights will entitle our
shareholders, other than the acquirer, to purchase, for the exercise price,
shares of the common stock of the acquiring company having a market value of two
times the exercise price. At any time prior to these events, the board of
directors may redeem the rights at one cent per right.
The rights plan is intended to protect shareholders in the event of an
unsolicited attempt to acquire us. The right is transferred automatically with
the transfer of the common stock until separate rights
20
<PAGE> 24
certificates are distributed upon the occurrence of certain events. The rights
plan could have the effect of delaying, deferring or preventing a person from
acquiring us or accomplishing a change in control of the board of directors.
This description of the rights plan is intended as a summary only and is
qualified in its entirety by reference to a rights agreement dated as of
September 14, 1998, as amended, between Leap and Harris Trust Company of
California. To obtain a copy of the rights agreement, as amended, see the
section of this prospectus captioned "Where To Find Additional Information."
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are covered by the provisions of the Delaware
General Corporation Law (DGCL), the charter, the bylaws, individual
indemnification agreements with us and insurance policies which serve to limit,
and, in some instances, to indemnify them against, liabilities which they may
incur in such capacities. These various provisions are described below.
Elimination of Liability in Certain Circumstances. The DGCL authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach of
directors' fiduciary duty of care. This duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all significant information reasonably available to them.
Absent the limitations authorized by the DGCL, directors are accountable to
corporations and their stockholders for monetary damages for conduct
constituting negligence or gross negligence in the exercise of their duty of
care. Although the statute does not change directors' duty of care, it enables
corporations to limit available relief to equitable remedies such as injunction
or rescission. Our charter limits the liability of directors to Leap or our
stockholders (in their capacity as directors but not in their capacity as
officers) to the fullest extent permitted by the Delaware statute. Specifically,
our directors will not be personally liable for monetary damages for breach of a
director's fiduciary duty as director, except for liability:
- for any breach of the director's duty of loyalty to Leap or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for unlawful payments of dividends or unlawful share repurchases or
redemptions as provided in Section 174 of the DGCL; or
- for any transaction from which the director derived an improper personal
benefit.
Indemnification and Insurance. Under the DGCL, we have the power, under
specified circumstances generally requiring the directors or officers to have
acted in good faith and in a manner they reasonably believe to be in or not
opposed to our best interests, to indemnify our directors and officers in
connection with actions, suits or proceedings brought against them by a third
party or in our name, by reason of the fact that they were or are such directors
or officers; and against expenses, judgments, fines and amounts paid in
settlement in connection with any such action, suit or proceeding. The bylaws
generally provide for mandatory indemnification of our directors and officers to
the full extent provided by Delaware corporate law. In addition, we have entered
into indemnification agreements with our directors and officers which generally
provide for indemnification of the officers and directors to the fullest extent
permitted under the DGCL, including under circumstances for which
indemnification would otherwise be discretionary under Delaware law.
We have purchased and intend to maintain insurance on behalf of any person
who is or was a director or officer of Leap, or is or was a director or officer
of Leap serving at our request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not we would have the power or obligation to indemnify him or her
against such liability under the provisions of our charter or bylaws.
21
<PAGE> 25
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling pursuant
to the foregoing provisions, those provisions are, in the opinion of the SEC,
against public policy as expressed in the Securities Act of 1933 and are
therefore unenforceable.
LEGAL MATTERS
Latham & Watkins in San Diego, California will pass upon the validity of
the securities offered under this prospectus and certain other legal matters.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Leap Wireless International, Inc.
for the year ended August 31, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The audited historical consolidated financial statements of Chase
Telecommunications Holdings, Inc. included on page 7 of Leap Wireless
International, Inc.'s Current Report on Form 8-K/A Amendment No. 1 dated March
17, 2000 (which contains an explanatory paragraph relating to the Company's sale
of substantially all of its assets as described in Note 1 to the consolidated
financial statements) have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements as of December 31, 1999 and 1998 and for the year
ended December 31, 1999 and for the period from June 24, 1998 (inception) to
December 31, 1998 of Pegaso Telecomunicaciones, S.A. de C.V. incorporated in
this prospectus by reference to the Annual Report on Form 10-K/A Amendment No. 2
of Leap Wireless International, Inc. for the year ended August 31, 1999 have
been so incorporated in reliance on the report of PricewaterhouseCoopers,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE TO FIND ADDITIONAL INFORMATION
Leap is subject to the informational requirements of the Securities
Exchange Act of 1934, and files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, proxy statements and other information we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
SEC's regional offices at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the SEC at 1-800-SEC-0300 for further
information on the public reference rooms. You may also access filed documents
at the SEC's Web site at www.sec.gov.
We are incorporating by reference some information about us that we file
with the SEC. We are disclosing important information to you by referencing
those filed documents. Any information that we reference this way is considered
part of this prospectus.
We incorporate by reference the following documents we have filed, or may
file, with the SEC:
- Our Annual Report on Form 10-K for the fiscal year ended August 31, 1999
filed with the SEC on October 20, 1999, Amendment No. 1 thereto filed on
Form 10-K/A with the SEC on December 13, 1999 and Amendment No. 2 thereto
filed on Form 10-K/A with the SEC on June 28, 2000;
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended November
30, 1999 filed with the SEC on January 14, 2000;
22
<PAGE> 26
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended February
29, 2000 filed with the SEC on April 14, 2000;
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended May 31,
2000 filed with the SEC on July 17, 2000;
- Our Current Report on Form 8-K dated March 17, 2000 filed with the SEC on
April 3, 2000 and Amendment No. 1 thereto filed on form 8-K/A with the
SEC on May 25, 2000;
- Our Current Report on Form 8-K dated June 2, 2000 filed with the SEC on
June 19, 2000 and Amendment No. 1 thereto filed on Form 8-K/A with the
SEC on June 28, 2000;
- Our Proxy Statement for the 1999 Annual Meeting of Stockholders filed
with the SEC on November 2, 1999; and
- All documents filed by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and before the expiration of the effectiveness of the related
registration statement.
A statement contained in a document incorporated by reference herein shall
be deemed to be modified or superceded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is also incorporated herein modifies or replaces such statement.
Any statements so modified or superceded shall not be deemed, except as so
modified or superceded, to constitute a part of this prospectus.
You may request a free copy of any of the documents incorporated by
reference in this prospectus by writing or telephoning us at the following
address:
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, California 92121
(858) 882-6000
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the dates on the front of these documents.
23
<PAGE> 27
[LEAP WIRELESS INTERNATIONAL, INC. LOGO]
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered in connection with this
registration statement. All amounts shown are estimates, other than the SEC
registration fee. All of these expenses are being paid by Leap.
<TABLE>
<S> <C>
Registration fee............................................ $ 2,831
Legal fees and expenses..................................... 10,000
Accounting fees and expenses................................ 10,000
Printing and mailing costs.................................. 1,000
Miscellaneous............................................... 1,169
-------
Total..................................................... $25,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Officers and directors of Leap are covered by the provisions of the DGCL,
the charter, the bylaws, individual indemnification agreements with Leap and
insurance policies which serve to limit, and, in some instances, to indemnify
them against, certain liabilities which they may incur in such capacities. These
various provisions are described below.
Elimination of Liability in Certain Circumstances. In June 1986, Delaware
enacted legislation which authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. This duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all significant information
reasonably available to them. Absent the limitations now authorized by such
legislation, directors are accountable to corporations and their stockholders
for monetary damages for conduct constituting negligence or gross negligence in
the exercise of their duty of care. Although the statute does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The charter limits the
liability of Directors to Leap or its stockholders (in their capacity as
directors but not in their capacity as officers) to the fullest extent permitted
by such legislation. Specifically, the directors of Leap will not be personally
liable for monetary damages for breach of a director's fiduciary duty as
director, except for liability:
- for any breach of the director's duty of loyalty to Leap or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for unlawful payments of dividends or unlawful share repurchases or
redemptions as provided in Section 174 of the DGCL; or
- for any transaction from which the director derived an improper personal
benefit.
Indemnification and Insurance. As a Delaware corporation, Leap has the
power, under specified circumstances generally requiring the directors or
officers to have acted in good faith and in a manner they reasonably believe to
be in or not opposed to Leap's best interests, to indemnify its directors and
officers in connection with actions, suits or proceedings brought against them
by a third party or in the name of Leap, by reason of the fact that they were or
are such directors or officers, against expenses, judgments, fines and amounts
paid in settlement in connection with any such action, suit or proceeding. The
bylaws generally provide for mandatory indemnification of Leap's directors and
officers to the full extent provided by Delaware corporate law. In addition,
Leap has entered into indemnification agreements with its directors and officers
which generally provide for indemnification of the officers and directors to the
fullest
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<PAGE> 29
extent permitted under Delaware law, including under circumstances for which
indemnification would otherwise be discretionary under Delaware law.
Leap has purchased and intends to maintain insurance on behalf of any
person who is or was a director or officer of Leap, or is or was a director or
officer of Leap serving at the request of Leap as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not Leap would have the power or obligation to
indemnify him or her against such liability under the provisions of its charter
or bylaws.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.1(1) Form of Common Stock Certificate.
4.2.1(2) Letter, dated as of May 5, 1999, from Qualcomm Incorporated
(Qualcomm) to the Registrant.
4.2.2(3) Superceding Warrant, dated as of August 9, 1999, issued to
Qualcomm.
4.2.3(3) Form of Voting Agreement, dated as of April 1, 1999, between
the Registrant and various officers and directors of
Qualcomm.
4.2.4(3) Amended and Restated Agreement Concerning Share Ownership,
dated as of August 4, 1999, between the Registrant and
Qualcomm.
4.3.1(4) Rights Agreement, dated as of September 14, 1998, between
the Registrant and Harris Trust Company of California.
4.3.2(5) First Amendment to Rights Agreement, dated as of February 8,
2000, between Leap Wireless International, Inc. and Harris
Trust Company of California.
4.3.3(5) Second Amendment to Rights Agreement, dated as of March 30,
2000, between Leap Wireless International, Inc. and Harris
Trust Company of California.
4.4(6) Warrant Agreement, dated as of February 23, 2000, by and
between the Registrant and State Street Bank and Trust
Company (including Form of Warrant Certificate).
4.5(6) Warrant Registration Rights Agreement, dated as of February
23, 2000, by and between the Registrant and Morgan Stanley &
Co. Incorporated.
5.1 Opinion of Latham & Watkins.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2 Consent of PricewaterhouseCoopers, independent accountants.
23.3 Consent of Latham & Watkins. Reference is made to Exhibit
5.1.
24.1 Power of Attorney (included on signature page).
</TABLE>
-------------------------
(1) Filed as an exhibit to Leap's Registration Statement on Form 10, as amended
(File No. 0-29752), and incorporated herein by reference.
(2) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1999, as filed with the SEC on April 14, 1999, and
incorporated herein by reference.
(3) Filed as an exhibit to Leap's Post-Effective Amendment No. 2 to Registration
Statement on Form S-1 (File No. 333-64459), and incorporated herein by
reference.
(4) Filed as an exhibit to Leap's Current Report on Form 8-K dated September 14,
1998, and incorporated herein by reference.
(5) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended May 31, 2000, as filed with the SEC on July 17, 2000, and incorporated
herein by reference.
(6) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended February 29, 2000, as filed with the SEC on April 14, 2000, and
incorporated herein by reference.
II-2
<PAGE> 30
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in this registration
statement;
provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the SEC by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to existing provisions or otherwise, the registrant has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that
II-3
<PAGE> 31
a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, County of San Diego, State of
California, on August 9, 2000.
By: /s/ THOMAS D. WILLARDSON
------------------------------------
Thomas D. Willardson
Senior Vice President, Finance and
Treasurer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harvey P. White and James E. Hoffmann and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this Registration Statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, which relates to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Under the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ HARVEY P. WHITE Chief Executive Officer and August 9, 2000
----------------------------------------------------- Director
Harvey P. White
/s/ THOMAS D. WILLARDSON Senior Vice President, Finance August 9, 2000
----------------------------------------------------- and Treasurer
Thomas D. Willardson
/s/ THOMAS J. BERNARD Vice Chairman, President -- August 9, 2000
----------------------------------------------------- International Business Division
Thomas J. Bernard and Director
/s/ SUSAN G. SWENSON President, Chief Operating August 9, 2000
----------------------------------------------------- Officer and Director
Susan G. Swenson
Director August , 2000
-----------------------------------------------------
Alejandro Burillo Azcarraga
/s/ ANTHONY R. CHASE Director August 9, 2000
-----------------------------------------------------
Anthony R. Chase
</TABLE>
II-5
<PAGE> 33
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ ROBERT C. DYNES Director August 9, 2000
-----------------------------------------------------
Robert C. Dynes
/s/ SCOT B. JARVIS Director August 9, 2000
-----------------------------------------------------
Scot B. Jarvis
Director August , 2000
-----------------------------------------------------
John J. Moores
/s/ MICHAEL B. TARGOFF Director August 9, 2000
-----------------------------------------------------
Michael B. Targoff
Director August , 2000
-----------------------------------------------------
Jeffrey P. Williams
</TABLE>
II-6
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.1(1) Form of Common Stock Certificate.
4.2.1(2) Letter, dated as of May 5, 1999, from Qualcomm Incorporated
(Qualcomm) to the Registrant.
4.2.2(3) Superceding Warrant, dated as of August 9, 1999, issued to
Qualcomm.
4.2.3(3) Form of Voting Agreement, dated as of April 1, 1999, between
the Registrant and various officers and directors of
Qualcomm.
4.2.4(3) Amended and Restated Agreement Concerning Share Ownership,
dated as of August 4, 1999, between the Registrant and
Qualcomm.
4.3.1(4) Rights Agreement, dated as of September 14, 1998, between
the Registrant and Harris Trust Company of California.
4.3.2(5) First Amendment to Rights Agreement, dated as of February 8,
2000, between Leap Wireless International, Inc. and Harris
Trust Company of California.
4.3.3(5) Second Amendment to Rights Agreement, dated as of March 30,
2000, between Leap Wireless International, Inc. and Harris
Trust Company of California.
4.4(6) Warrant Agreement, dated as of February 23, 2000, by and
between the Registrant and State Street Bank and Trust
Company (including Form of Warrant Certificate).
4.5(6) Warrant Registration Rights Agreement, dated as of February
23, 2000, by and between the Registrant and Morgan Stanley &
Co. Incorporated.
5.1 Opinion of Latham & Watkins.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2 Consent of PricewaterhouseCoopers, independent accountants.
23.3 Consent of Latham & Watkins. Reference is made to Exhibit
5.1.
24.1 Power of Attorney (included on signature page).
</TABLE>
-------------------------
(1) Filed as an exhibit to Leap's Registration Statement on Form 10, as amended
(File No. 0-29752), and incorporated herein by reference.
(2) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1999, as filed with the SEC on April 14, 1999, and
incorporated herein by reference.
(3) Filed as an exhibit to Leap's Post-Effective Amendment No. 2 to Registration
Statement on Form S-1 (File No. 333-64459), and incorporated herein by
reference.
(4) Filed as an exhibit to Leap's Current Report on Form 8-K dated September 14,
1998, and incorporated herein by reference.
(5) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended May 31, 2000, as filed with the SEC on July 17, 2000, and incorporated
herein by reference.
(6) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended February 29, 2000, as filed with the SEC on April 14, 2000, and
incorporated herein by reference.
