<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended February 29, 2000 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from __________ to________
Commission file number: 0-29752
LEAP WIRELESS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 33-0811062
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10307 PACIFIC CENTER COURT, SAN DIEGO, CA 92121-2779
(Address of Principal Executive Offices) (Zip Code)
(858) 882-6000
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past ninety days. Yes [X] No [ ]
THE NUMBER OF SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING ON APRIL
10, 2000 WAS 25,336,100.
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LEAP WIRELESS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents .......................................... $ 599,935 $ 26,215
Restricted cash equivalents and short-term investments ............. 58,667 --
Accounts receivable, net ........................................... 6,354 2,726
Inventories ........................................................ 5,379 5,410
Recoverable taxes .................................................. 8,034 3,907
Other current assets ............................................... 6,181 1,926
---------- --------
Total current assets ........................................... 684,550 40,184
Property and equipment, net ........................................ 136,777 116,947
Investments in and loans receivable from unconsolidated
wireless operating companies .................................. 71,676 94,429
Wireless licenses and other intangible assets, net ................. 94,626 73,944
Restricted investments ............................................. 49,811 --
Deferred financing costs and other assets .......................... 16,223 9,827
---------- --------
Total assets ................................................... $1,053,663 $335,331
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities ........................... $ 21,361 $ 16,372
Loans payable to banks ............................................. 32,007 17,225
Other current liabilities .......................................... 1,618 --
---------- --------
Total current liabilities ...................................... 54,986 33,597
Long-term debt ..................................................... 552,876 221,812
Other long-term liabilities ........................................ 10,120 8,504
---------- --------
Total liabilities .............................................. 617,982 263,913
---------- --------
Commitments and contingencies (Notes 2, 3, 8 and 10)
Minority interest in consolidated subsidiary ....................... -- 518
---------- --------
Stockholders' equity:
Preferred stock - authorized 10,000,000 shares
$.0001 par value, no shares issued and outstanding ............. -- --
Common stock - authorized 75,000,000 shares;
$.0001 par value, 24,841,412 shares issued and outstanding ..... 3 2
Additional paid-in capital ....................................... 787,887 291,189
Accumulated deficit .............................................. (346,134) (216,896)
Accumulated other comprehensive loss ............................. (6,075) (3,395)
---------- --------
Total stockholders' equity ..................................... 435,681 70,900
---------- --------
Total liabilities and stockholders' equity ..................... $1,053,663 $335,331
========== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 3
LEAP WIRELESS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Operating revenues .................................................... $ 8,799 $ -- $ 14,283 $ --
-------- -------- --------- --------
Operating expenses:
Cost of operating revenues ......................................... (15,078) -- (22,462) --
Selling, general and administrative ................................ (19,503) (4,044) (33,041) (8,284)
Depreciation and amortization ...................................... (5,073) (141) (10,248) (265)
-------- -------- --------- --------
Total operating expenses ....................................... (39,654) (4,185) (65,751) (8,549)
-------- -------- --------- --------
Operating loss ................................................... (30,855) (4,185) (51,468) (8,549)
Equity in net loss of unconsolidated wireless operating companies ..... (33,866) (19,379) (50,059) (35,408)
Interest income ....................................................... 1,180 1,363 1,577 1,825
Interest expense ...................................................... (13,946) (862) (21,120) (1,913)
Foreign currency transaction gains (losses) ........................... 1,398 -- (1,396) --
Minority interest ..................................................... 394 -- 518 --
Other income (expense), net ........................................... (2,860) -- (2,868) --
-------- -------- --------- --------
Loss before extraordinary item ................................... (78,555) (23,063) (124,816) (44,045)
Extraordinary loss on early extinguishment of debt .................... (4,422) -- (4,422) --
-------- -------- --------- --------
Net loss ......................................................... $(82,977) $(23,063) $(129,238) $(44,045)
======== ======== ========= ========
Other comprehensive income (loss):
Foreign currency translation gains (losses) ........................ (1,752) 425 (2,680) (162)
-------- -------- --------- --------
Comprehensive loss ............................................... $(84,729) $(22,638) $(131,918) $(44,207)
======== ======== ========= ========
Basic and diluted net loss per common share:
Loss before extraordinary item ................................. $ (3.79) $ (1.30) $ (6.31) $ (2.49)
Extraordinary loss ............................................. (0.21) -- (0.22) --
-------- -------- --------- --------
Net loss ........................................................... $ (4.00) $ (1.30) $ (6.53) $ (2.49)
======== ======== ========= ========
Shares used to calculate basic and diluted net loss per common share .. 20,720 17,770 19,788 17,717
======== ======== ========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 4
LEAP WIRELESS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------
FEBRUARY 29, FEBRUARY 28,
2000 1999
------------ ------------
(RESTATED)
<S> <C> <C>
Operating activities:
Net cash used in operating activities ................................ $ (35,019) $ (13,572)
--------- ---------
Investing activities:
Purchase of property and equipment ................................. (14,784) (2,950)
Investments in and loans to unconsolidated wireless operating
companies ........................................................ (17,009) (93,552)
Proceeds from liquidation of discontinued foreign venture .......... 9,794 --
Loan receivable to related party ................................... -- (17,500)
Repayment of loan receivable from related party .................... -- 17,500
Restricted cash equivalents and investments ........................ (108,478) --
Purchase of wireless licenses ...................................... (13,396) (689)
--------- ---------
Net cash used in investing activities ................................ (143,873) (97,191)
--------- ---------
Financing activities:
Proceeds from issuance of senior discount notes .................... 325,102 --
Proceeds from issuance of senior notes ............................. 225,000 --
Proceeds from loans payable to banks ............................... 14,000 6,720
Borrowings under Qualcomm credit agreement ......................... 92,672 31,888
Repayment of borrowings under Qualcomm credit agreement ............ (226,708) (17,500)
Payments of debt financing costs ................................... (13,758) --
Net proceeds from issuance of common stock ......................... 332,916 459
Other financing for purchase of property and equipment ............. 1,634 --
Former parent company's investment ................................. -- 95,268
--------- ---------
Net cash provided by financing activities ............................ 750,858 116,835
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents .............................................. 1,754 --
--------- ---------
Net increase in cash and cash equivalents ............................ 573,720 6,072
Cash and cash equivalents at beginning of period ..................... 26,215 --
--------- ---------
Cash and cash equivalents at end of period ........................... $ 599,935 $ 6,072
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest ............................................. $ 14,653 $ --
Supplemental disclosure of non-cash investing
and financing activities:
Loans to unconsolidated wireless operating company converted
to equity investment .......................................... $ -- $ 28,196
Long-term financing for loans to unconsolidated wireless
operating company ............................................. $ 20,759 $ --
Long-term financing to purchase assets ............................. $ 52,934 $ --
Long-term financing to purchase wireless licenses .................. $ 9,601 $ --
Facility fee due on long-term debt ................................. $ -- $ 5,300
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 5
LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BACKGROUND AND BASIS OF PRESENTATION
THE COMPANY AND NATURE OF BUSINESS
Leap Wireless International, Inc., a Delaware corporation, and its
wholly owned and majority-owned subsidiaries (the "Company" or "Leap") is a
wireless communications carrier that deploys, owns and operates networks in
domestic and international markets. Through its operating companies, Leap has
launched all-digital wireless networks in the United States, Chile and Mexico.
The Company was incorporated on June 24, 1998 as a wholly owned subsidiary of
Qualcomm Incorporated ("Qualcomm"). On September 23, 1998, Qualcomm distributed
all of the outstanding shares of common stock of the Company to Qualcomm's
stockholders as a taxable dividend (the "Distribution"). In connection with the
Distribution, one share of Company common stock was issued for every four shares
of Qualcomm common stock outstanding on September 11, 1998. Following the
Distribution, the Company and Qualcomm operate as independent companies. The
condensed consolidated financial statements reflect the Company as if it were a
separate entity for all periods presented.
INTERIM FINANCIAL STATEMENTS
The accompanying interim condensed consolidated financial statements
have been prepared by the Company without audit, in accordance with the
instructions to Form 10-Q and, therefore, do not include all information and
footnotes necessary for a fair presentation of its financial position, results
of operations, cash flows and stockholders' equity in accordance with generally
accepted accounting principles. In the opinion of management, the unaudited
financial information for the interim periods presented reflects all adjustments
(which include only normal, recurring adjustments) necessary for a fair
presentation. These condensed consolidated financial statements and notes
thereto should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company's Annual Report to Shareholders for
the Fiscal Year Ended August 31, 1999 incorporated by reference in the Company's
1999 Annual Report on Form 10-K. Operating results for interim periods are not
necessarily indicative of operating results for an entire fiscal year. The
accounts of Smartcom S.A. ("Smartcom"), the Company's Chilean subsidiary, have
been consolidated using a two-month lag.
The condensed consolidated financial statements are prepared using
generally accepted accounting principles. These principles require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates. Certain prior period amounts have been reclassified to conform
to the current period presentation.
RESTATEMENT
The Company adopted the equity method of accounting for its investment
in Chase Telecommunications Holdings, Inc. ("Chase Telecommunications Holdings")
in the third quarter of fiscal 1999. Prior to that time, the Company accounted
for its investment in Chase Telecommunications Holdings under the cost method.
Accordingly, all prior periods presented in these condensed consolidated
financial statements have been adjusted retroactively in accordance with
generally accepted accounting principles.
RESTRICTED CASH EQUIVALENTS AND INVESTMENTS
Restricted cash equivalents and investments are debt securities which
have been pledged to provide for the payment of the first seven scheduled
interest payments on long-term notes payable and to secure the Company's
obligations under a letter of credit with a bank. Management determines the
appropriate classification of its investment in debt securities at the time of
purchase and re-evaluates such designation as of each balance sheet date. At
February 29, 2000, the Company's restricted cash equivalents and restricted
investments, consisting of U.S. government securities classified as
held-to-maturity and carried at amortized cost, which approximates fair value,
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Restricted cash equivalents................................ $ 28,942
Restricted short-term investments.......................... 29,725
Restricted long-term investments........................... 49,811
--------
$108,478
========
</TABLE>
6
<PAGE> 6
BASIC AND DILUTED NET LOSS PER COMMON SHARE
Basic and diluted net loss per common share for the three and six months
ended February 29, 2000 was calculated by dividing the net loss for each of the
periods by the weighted average number of common shares outstanding for each of
the periods of 20,719,751 and 19,788,203, respectively. Basic and diluted net
loss per common share for the three and six months ended February 28, 1999 was
calculated by dividing the net loss for each of the periods by the weighted
average number of common shares outstanding for each of the periods of
17,770,465 and 17,717,486, respectively. The weighted average number of common
shares outstanding assumes that the 17,647,685 shares issued at Distribution
were outstanding for the periods prior to Distribution. Stock options for
5,451,746 common shares and the exercise of a warrant issued to Qualcomm for
4,500,000 shares of the Company's common stock have not been considered in
calculating basic and diluted net loss per common share because their effect
would be anti-dilutive. As a result, the Company's basic and diluted net loss
per common share are the same. The conversion of Qualcomm's Trust Convertible
Preferred Securities into the Company's common stock was completed during the
three months ended February 29, 2000.
FUTURE ACCOUNTING REQUIREMENTS
In June 1998, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which the Company will be required to adopt for fiscal year 2001.
This statement establishes a new model for accounting for derivatives and
hedging activities. Under SFAS No. 133, all derivatives must be recognized as
assets and liabilities and measured at fair value. The Company does not expect
that the adoption of SFAS No. 133 will have a material impact on its
consolidated financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarized certain of the staff's interpretations in
applying generally accepted accounting principles to revenue recognition. The
provisions of SAB No. 101 are effective for the Company's quarter ending May 31,
2000. Management is currently assessing the impact of the adoption of SAB No.
101.
NOTE 2. ACQUISITION AND PENDING ACQUISITIONS OF WIRELESS LICENSES
ACQUISITION OF WIRELESS LICENSES
In January 2000, the Company purchased three wireless licenses covering
markets in North Carolina from AirGate Wireless, L.L.C. ("AirGate") for $25.0
million. The purchase price consisted of the Company assuming $11.1 million of
notes due to the Federal Communications Commission ("FCC") related to the
licenses and the remainder in cash.
PENDING ACQUISITIONS OF WIRELESS LICENSES
In September 1999, the Company agreed to purchase a wireless license
covering the Dayton, Ohio market from PCS Devco, Inc. ("PCS Devco") for $3.5
million. The purchase price consists of the Company assuming a $1.1 million,
6.25% per annum note due July 2007 to the FCC related to the license and the
remainder payable in cash. The Company is required to make PCS Devco's payments
on the FCC note during the period prior to the closing of the transaction,
reducing the remaining cash payment to PCS Devco. In addition, the Company will
transfer to PCS Devco one of the 36 wireless licenses it acquired in the federal
government's April 1999 reauction of PCS spectrum. In February 2000, the FCC
consented to the transfer of PCS Devco's license to the Company, although the
decision has not yet become a final order and as a result of a challenge by a
third party, is currently subject to further administrative review. Because the
decision did not become a final order prior to March 2000, the agreement now may
be terminated by either party at its discretion.
In January 2000, the Company agreed to acquire two wireless licenses
covering the Pittsburgh, Pennsylvania and Denver, Colorado markets from
Radiofone PCS, L.L.C ("Radiofone"). The purchase price for the Pittsburgh
license is $18.4 million in cash and the purchase price for the Denver license
is 232,754 shares of the Company's common stock and $3.4 million in cash less
the amount of debt owed by Radiofone to the FCC related to the license which
will be assumed by the Company at the closing. As of February 29, 2000, the
outstanding principal amount of the FCC debt was approximately $1.5 million. The
amounts owed to the FCC must be repaid in quarterly installments of principal
and interest through April 2007.
7
<PAGE> 7
In February 2000, the Company agreed to purchase all of the outstanding
stock of three subsidiaries of Zuma PCS, LLC, which own three wireless licenses
covering markets in Albany, Columbus and Macon, Georgia. The purchase price
consists of 170,374 shares of the Company's common stock.
Each of these transactions is subject to FCC approval and other
conditions prior to closing. Accordingly, there can be no assurance that these
transactions will ultimately be consummated.
NOTE 3. INVESTMENTS AND LOANS TO UNCONSOLIDATED WIRELESS OPERATING COMPANIES
The Company has equity interests in companies that directly or
indirectly operate wireless telecommunications networks. Its participation in
each company differs and the Company does not have majority interests in such
companies. The Company accounts for these equity interests under the equity
method. The Company accounts for its investments in foreign operating companies
using a two-month lag. The Company's ability to withdraw funds, including
dividends, from its participation in such investments is dependent in many cases
on receiving the consent of lenders and the other participants, over which the
Company has no control.
Commencing with the fourth quarter of fiscal 1999, the Company began
accounting for Smartcom as a consolidated entity. Prior to the fourth quarter of
fiscal 1999, Smartcom was accounted for under the equity method. The Company
recorded equity losses from Smartcom of $4.1 million and $7.5 million during the
three months and six months ended February 28, 1999, respectively.
Condensed combined financial information for the Leap operating
companies accounted for under the equity method is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
----------- ----------
(UNAUDITED)
<S> <C> <C>
Current assets ......................................... $ 58,637 $ 140,899
Non-current assets ..................................... 649,299 576,765
Current liabilities .................................... (227,096) (112,539)
Non-current liabilities ................................ (398,037) (347,590)
--------- ---------
Total stockholders' capital ......................... 82,803 257,535
Other stockholders' share of capital ................... 28,733 146,059
--------- ---------
Company's share of capital ............................. 54,070 111,476
Lag period loans and advances .......................... 17,606 10,195
Write-down in investments .............................. -- (27,242)
--------- ---------
Investments in and loans receivable from
unconsolidated wireless operating companies ...... $ 71,676 $ 94,429
========= =========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED & (UNAUDITED) (UNAUDITED &
RESTATED) RESTATED)
<S> <C> <C> <C> <C>
Operating revenues ................................... $ 7,853 $ 1,301 $ 11,354 $ 6,123
-------- -------- --------- --------
Operating losses ..................................... (77,554) (39,011) (127,873) (52,153)
Other income (expense), net .......................... (13,493) 1,055 (22,380) (4,379)
Foreign currency transaction gains (losses) .......... (4,932) (4,450) 994 (4,024)
-------- -------- --------- --------
Net loss .......................................... (95,979) (42,406) (149,259) (60,556)
Other stockholders' share of net loss ................ (61,364) (20,927) (97,126) (22,604)
-------- -------- --------- --------
Company's share of net loss .......................... (34,615) (21,479) (52,133) (37,952)
Amortization of excess cost of investment ............ -- (65) -- (309)
Elimination of intercompany transactions ............. 749 2,165 2,074 2,853
-------- -------- --------- --------
Equity in net loss of unconsolidated wireless
operating companies ............................ $(33,866) $(19,379) $ (50,059) $(35,408)
======== ======== ========= ========
</TABLE>
8
<PAGE> 8
CHASE TELECOMMUNICATIONS HOLDINGS
In December 1996, the Company purchased $4.0 million of Class B Common
Stock of Chase Telecommunications Holdings, representing 7.2% of the outstanding
capital stock. The Company has also provided a working capital facility to Chase
Telecommunications Holdings, which was increased from $50.0 million to $65.0
million in February 2000. At February 29, 2000, borrowings under the facility
totaled $59.6 million, including $6.1 million of accrued interest. However,
because the facility is the only source of working capital for Chase
Telecommunications Holdings, the carrying value of the Company's investment and
the loans under the facility have been reduced to zero as the Company has
recognized 100% of the net losses of Chase Telecommunications Holdings to the
extent of its investment and loans. The Company recorded equity losses from
Chase Telecommunications Holdings of $14.7 million and $20.2 million during the
three and six months ended February 29, 2000, respectively, and $2.6 million and
$11.2 million during the three and six months ended February 28, 1999,
respectively.
In December 1998, the Company agreed to acquire substantially all the
assets of Chase Telecommunications Holdings, including wireless licenses,
subject to FCC approval and other conditions. The purchase price includes
approximately $6.3 million in cash, the assumption of principal amounts of
liabilities that totaled approximately $139.0 million at February 29, 2000, a
warrant to purchase 1% of the common stock of the Company's subsidiary Cricket
Communications Holdings, Inc. ("Cricket Communications Holdings") at an exercise
price of $1.0 million, and contingent earn-out payments of up to $41.0 million
(plus certain expenses) based on the earnings of the business acquired during
the fifth full year following the closing of the acquisition. The liabilities to
be assumed include approximately $78.8 million in principal amounts owed to the
FCC associated with the wireless licenses that bear interest at the rate of 7.0%
per annum and must be repaid in quarterly installments of principal and interest
through January 2007. In March 2000, the Company completed its acquisition of
substantially all the assets of Chase Telecommunications Holdings.
PEGASO
At February 29, 2000, the Company had a 28.6% interest in Pegaso
Telecommunicaciones S.A. de C.V. ("Pegaso"), a Mexican corporation that is
deploying the first 100% digital wireless communications network in Mexico. The
Company invested $100.0 million in Pegaso from June to September 1998 as a
founding shareholder. The Company recorded equity losses from Pegaso of $19.2
million and $29.9 million during the three and six months ended February 29,
2000, respectively, and $8.1 million and $8.7 million during the three and six
months ended February 28, 1999, respectively. In March 2000, Pegaso reached a
definitive agreement with Sprint PCS ("Sprint") that gives Sprint a governance
role on Pegaso's board of directors through a $200.0 million investment in
Pegaso. Once the transaction is completed the Company's percentage interest in
Pegaso will decrease to 22.4%.
NOTE 4. BALANCE SHEET COMPONENTS
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ACCOUNTS RECEIVABLE, NET:
Trade accounts receivable ........... $ 5,905 $2,197
Other accounts receivable ........... 1,623 1,112
------- ------
7,528 3,309
Allowance for doubtful accounts ..... (1,174) (583)
------- ------
$ 6,354 $2,726
======= ======
INVENTORIES:
Handsets ............................ $ 4,381 $4,320
Accessories ......................... 998 1,090
------- ------
$ 5,379 $5,410
======= ======
</TABLE>
NOTE 5. LOANS PAYABLE TO BANKS
In February 2000, the Company renewed its loans with banks in Chile,
including capitalized and accrued interest. The renewed loans of $10.3 million
and $7.6 million at February 29, 2000, bear interest at rates of 8.2% and 7.85%
per annum, respectively, and are due to be repaid in September 2000.
9
<PAGE> 9
In November 1999, the Company and Smartcom entered into a loan
arrangement with a bank. Pursuant to the arrangement, Leap acts as account party
to cause the bank to issue letters of credit to secure the loan to Smartcom. At
February 29, 2000, Leap has deposited funds with the bank totaling $28.9 million
and pledged such funds as cash collateral to secure its obligation under the
letters of credit. These funds are recorded as restricted cash equivalents in
the condensed consolidated balance sheet. At February 29, 2000, borrowings from
the bank totaled $14.1 million, bear interest at the weighted-average rate of
7.01% per annum and are due to be repaid in July 2000.
NOTE 6. LONG-TERM DEBT
Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 29,
2000
------------
(UNAUDITED)
<S> <C>
12.5% senior notes, due 2010, effective interest rate of 15.8% ........... $156,606
14.5% senior discount notes, face amount $668.0 million, due 2010, 229,331
effective interest rate of 16.3% ........................................
Smartcom deferred payment and credit agreements .......................... 119,484
Lucent credit agreement .................................................. 21,027
U.S. government financing ................................................ 9,346
Note payable to Telex-Chile, net of discount ............................. 17,082
--------
$552,876
========
</TABLE>
UNITS OFFERING
In February 2000, the Company completed an offering of 225,000 senior
units, each senior unit consisting of one 12.5% senior note due 2010 (" Senior
Note") and one warrant to purchase the Company's common stock, and 668,000
senior discount units, each senior discount unit consisting of one 14.5% senior
discount note due 2010 ("Senior Discount Note") and one warrant to purchase the
Company's common stock. The total gross proceeds from the sale of the senior
units and senior discount units were $225.0 million and $325.1 million,
respectively, and $164.4 million of the total proceeds were allocated to the
fair value of the warrants, estimated using the Black-Scholes option pricing
model. In addition, the Company capitalized certain debt issuance costs of $13.5
million, consisting of underwriting, printing, legal and accounting fees. A
portion of the net proceeds from the units offering were used for the repayment
of borrowings under the Company's credit agreement with Qualcomm. The remaining
proceeds from the units offering will be used for capital expenditures,
acquisitions of wireless licenses, strategic investments, sales and marketing
activities, and working capital and general corporate purposes.
Interest on the Senior Notes will be payable on April 15 and October 15
of each year, beginning on April 15, 2000. The Company used $79.5 million of the
proceeds from the Senior Notes to purchase and pledge, for the benefit of the
holders of the Senior Notes, certain U.S. Government securities to provide for
the payment of the first seven scheduled interest payments on the Senior Notes.
The remaining unpaid portion of such amounts is classified as restricted cash
equivalents and investments in the accompanying condensed consolidated balance
sheet.
Each Senior Discount Note has an initial accreted value of $486.68 and a
principal amount at maturity of $1,000. The Senior Discount Notes will not begin
to accrue cash interest until April 15, 2005. Interest on the Senior Discount
Notes will be payable on April 15 and October 15 of each year, beginning on
October 15, 2005.
The Company may redeem any of the notes beginning April 15, 2005. The
initial redemption price of the Senior Notes is 106.25% of their principal
amount plus accrued interest. The initial redemption price of the Senior
Discount Notes is 107.25% of their principal amount at maturity plus accrued
interest. In addition, before April 15, 2003, the Company may redeem up to 35%
of both the Senior Notes and the Senior Discount Notes using proceeds from
certain qualified equity offerings of the Company's common stock at 112.5% of
their principal amount and 114.5% of their accreted value, respectively.
The notes rank equally with the Company's other unsecured senior
indebtedness. The notes are effectively subordinate to all of the Company's
secured indebtedness. The notes are guaranteed by the Company's domestic
subsidiary, Cricket Communications Holdings. The terms of the notes include
certain covenants that restrict the Company's ability to, among other things,
incur additional indebtedness, create liens, pay dividends, make investments,
sell assets and effect a consolidation or merger. The Company is obligated to
consummate an exchange offer for the notes pursuant to an effective registration
statement or cause to become effective a shelf registration statement for
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resales of the notes. If one of these events does not occur within 180 days
after the closing of the units offering, interest on the notes will increase by
0.5% per annum until the exchange offer is consummated or such shelf
registration statement becomes effective.
Each warrant included as part of the senior units is initially
exercisable to purchase 5.146 shares (1,157,850 shares in aggregate) of the
Company's common stock at an exercise price of $96.80 per share. Each warrant
included as part of the senior discount units is initially exercisable to
purchase 2.503 shares (1,672,004 shares in aggregate) of the Company's common
stock at an exercise price of $96.80 per share. The warrants may be exercised at
any time on or after February 23, 2001 and prior to April 15, 2010. The Company
is obligated to file a shelf registration statement covering the resale of the
warrants and related common stock issuable upon exercise of the warrants within
180 days after the closing of the units offering.
QUALCOMM CREDIT AGREEMENT
The Company entered into a secured credit facility (the "Qualcomm Credit
Agreement") with Qualcomm on September 23, 1998. The Qualcomm Credit Agreement
consisted of two sub-facilities. The working capital sub-facility enabled the
Company to borrow up to $35.2 million from Qualcomm for working capital needs.
The investment capital sub-facility enabled the Company to borrow up to $229.8
million from Qualcomm for strategic capital investments. In February 2000, the
Company used a portion of the net proceeds of the units and equity offerings to
repay in full $226.7 million outstanding under the Qualcomm Credit Agreement. In
connection with the repayment of the Qualcomm Credit Agreement, the related
unamortized debt issue costs of $4.4 million were written off and reported as an
extraordinary loss in the accompanying condensed consolidated statements of
operations.
LUCENT CREDIT AGREEMENT
In September 1999, Cricket Communications, Inc., ("Cricket
Communications") an indirect subsidiary of the Company, entered into an
agreement with Lucent Technologies, Inc. ("Lucent") for the purchase of $330.0
million of infrastructure products and services. Lucent agreed to finance these
purchases plus additional working capital under a credit facility (the "Lucent
Credit Agreement"). The Lucent Credit Agreement permits up to $641.0 million in
total borrowings with borrowing availability based on total amounts of equipment
purchased, subject to various covenants and conditions typical for a loan of
this type, including minimum levels of customers and covered potential customers
which must increase over time, limits on annual capital expenditures and
dividend restrictions and other financial ratio tests. The obligations under the
Lucent Credit Agreement are secured by all of the stock of Cricket
Communications and its subsidiaries, all of their respective assets, the assets
of Cricket Communications Holdings and the stock of each special purpose
subsidiary of Leap formed to hold wireless licenses. Borrowings under the Lucent
Credit Agreement accrue at an interest rate equal to LIBOR plus 3.5% to 4.25% or
a bank base rate plus 2.5% to 3.25%, in each case with the specific rate based
on certain financial ratios. Cricket Communications must pay Lucent a commitment
fee equal to 1.25% per annum on the unused commitment under the facility,
decreasing to 0.75% per annum. Principal payments are scheduled to begin after
three years with a final maturity after eight years. Repayment is weighted to
the later years of the repayment schedule. At February 29, 2000, the Company had
$21.0 million outstanding under the Lucent Credit Agreement, including $0.3
million in accrued and capitalized interest.
SMARTCOM DEFERRED PAYMENT AND CREDIT AGREEMENTS
Smartcom has entered into a Deferred Payment Agreement, as amended and
restated (the "Deferred Payment Agreement"), with Qualcomm related to Smartcom's
purchase of equipment, software and services from Qualcomm. Under the Deferred
Payment Agreement, Qualcomm has agreed to defer collection of amounts up to a
maximum of $115.7 million including capitalized interest. The obligations under
the Deferred Payment Agreement are secured by all of the assets of Smartcom. A
Leap subsidiary has agreed to pledge its shares in Smartcom as collateral for
its guarantee of Smartcom's obligations to Qualcomm under the agreement. The
Deferred Payment Agreement requires Smartcom to meet certain financial and
operating covenants, including a debt to equity ratio and restrictions on
Smartcom's ability to pay dividends and to distribute assets. As a result,
substantially all the net assets of Smartcom are restricted from distribution to
Leap. The deferred payments bear interest at a rate equal to LIBOR plus 5.0% to
6.5% or a bank base rate plus 4.0% to 5.5%, in each case with the specific rate
based on certain financial ratios. Accrued interest may be added to the
outstanding principal amount of the applicable borrowing until September 2001.
Amounts deferred under the agreement must be repaid by September 2006. At
February 29, 2000, the Company had $95.3 million outstanding under the Deferred
Payment Agreement.
In February 2000, Smartcom and Qualcomm entered into an agreement (the
"Equipment Credit Agreement") related to Smartcom's equipment supply and service
agreements with a vendor. The Equipment Credit Agreement permits up to $38.5
million in borrowings, including capitalized interest. The Equipment Credit
Agreement provides
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for certain financial and operating covenants similar to the Deferred Payment
Agreement. Borrowings under the Equipment Credit Agreement accrue at an interest
rate equal to LIBOR plus 5.0% to 7.0% or a bank base rate plus 4.0% to 6.0%, in
each case with the specific rate based on certain financial ratios. Principal
payments are scheduled to begin in March 2002 with a final maturity of September
2006. At February 29, 2000, Smartcom had financed amounts totaling $18.6 million
under the Equipment Credit Agreement.
In February 2000, Smartcom and Qualcom entered into an agreement (the
"Subscriber Deferred Payment Agreement") related to Smartcom's purchase of
handsets and accessories and test equipment from Qualcomm. Under the terms of
the agreement, Qualcomm has agreed to defer collection of amounts up to a
maximum of $11.2 million, including capitalized interest. The Subscriber
Deferred Payment Agreement provides for certain financial and operating
covenants similar to the Deferred Payment Agreement. Borrowings under the
Subscriber Deferred Payment Agreement accrue at an interest rate equal to LIBOR
plus 3.5% to 5.0% or a bank base rate plus 2.5% to 4.0%, in each case with the
specific rate based on certain financial ratios. Principal outstanding is due at
maturity in September 2001. At February 29, 2000, Smartcom had financed amounts
totaling $5.6 million under the Subscriber Deferred Payment Agreement.
U.S. GOVERNMENT FINANCING
As part of the consideration for three wireless licenses acquired from
AirGate, the Company assumed $11.1 million ($9.6 million, net of discount) of
U.S. Government financing with the FCC. The terms of the notes include an
interest rate of 6.25% per annum and quarterly principal and interest payments
until maturity in April 2007. The notes were discounted using management's best
estimate of the prevailing market interest rate to the Company at the time of
purchase of the wireless licenses of 10.75% per annum.
NOTE 7. EQUITY OFFERING
In February 2000, the Company completed a public equity offering of
4,000,000 shares of common stock at a price of $88.00 per share. Net of
underwriters' discounts and commissions, the Company received $82.72 per share,
or $330.9 million in the aggregate. The Company expects to pay approximately
$0.9 million of expenses related to the equity offering, and these costs have
been recorded as reductions to additional paid-in capital. A portion of the net
proceeds from the equity offering was used for the repayment of the Qualcomm
Credit Agreement. The remaining proceeds from the equity offering will be used
for capital expenditures, acquisitions of wireless licenses, strategic
investments, sales and marketing activities and working capital and general
corporate purposes.
NOTE 8. COMMITMENTS AND CONTINGENCIES
PEGASO
In May 1999, Pegaso entered into a $100 million loan agreement with
several banks with credit support from Qualcomm. The Company guaranteed 33% of
Pegaso's obligations under this loan agreement in the event of Pegaso's default.
In December 1999, as a condition of the guarantee, the Company received an
option to subscribe for and purchase up to 243,090 limiting voting series "N"
treasury shares of Pegaso. The number of shares to be purchased by the Company
under the option will be calculated to provide a total internal rate of return
on the average outstanding balance of the bridge loan of 20%. The options have
an exercise price of $0.01 per share and expire 10 years from the date of
issuance. The options are exercisable at any time after the date on which all
amounts under the loan agreement are paid in full.
LITIGATION
In September 1999, the Company announced that it had stopped funding
loans to Metrosvyaz Limited ("Metrosvyaz"), a company in which Leap has a 35%
indirect interest, because Metrosvyaz had not satisfied certain conditions
required for funding and was in default under its loan agreement with the
Company. In addition, the Company had been prevented from securing full
reporting an documentation of performance, results and expenditures of
Metrosvyaz despite repeated efforts to obtain that information. Preliminary
results of a special investigation of Metrosvyaz disclosed serious
irregularities, including unaccounted for funds and questionable contracts and
payments. On September 29, 1999, the Company issued a demand for arbitration
seeking a full accounting and damages from Metrosvyaz and one of its directors
with respect to these matters. Management cannot determine the likely outcome of
the arbitration.
In December 1999, Metrosvyaz filed suit against the Company and certain
of its officers in the U.S. District Court for the Central District of
California. The Metrosvyaz suit alleges claims for libel, trade libel,
intentional and negligent
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interference with prospective advantage and breach of fiduciary duty. The suit
seeks compensatory damages in excess of $100 million as well as punitive damages
and injunctive relief. In March 2000, the Metrosvyaz suit in the United States
District Court, Central District of California was dismissed and a substantially
similar action was filed by Metrosvyaz against Leap and certain of its officers
in the United States District Court, Southern District of California. The
Company believes the Metrosvyaz claims are without merit and will vigorously
defend against them. The Company cannot, however, be certain of the final
outcome of this litigation. If Metrosvyaz prevails in its claims, it could have
a material adverse effect on the Company's business and financial condition.
Various other claims arising in the course of business, seeking monetary
damages and other relief, are pending. The amount of the liability, if any, from
such claims cannot be determined with certainty; however, in the opinion of
management, the ultimate liability for such claims will not have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows.
NOTE 9. SEGMENT DATA
The Company's current reportable segments are countries in which it
manages, supports, operates and otherwise participates in wireless
communications business ventures. These reportable segments are evaluated
separately because each geographic region presents different marketing
strategies and operational issues, as well as distinct economic climates and
regulatory constraints. The Company's reportable segments are comprised of its
consolidated and unconsolidated United States subsidiaries, and Leap's operating
companies in Mexico and Chile.
Summary information by segment is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- -------------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
UNITED STATES
Revenues ................................................. $ 3,201 $ 225 $ 5,288 $ 824
Operating loss ........................................... (27,420) (4,455) (42,918) (8,887)
Operating loss before depreciation and amortization ...... (9,889) (3,530) (15,699) (7,087)
Capital expenditures ..................................... (23,754) (3,497) (27,683) (7,019)
Purchase of wireless licenses ............................ (23,489) -- (23,489) --
Total assets ............................................. 152,636 85,786 152,636 85,786
1,076 1,284
CHILE
Revenues.................................................. 8,763 14,211
Operating loss ........................................... (23,176) (5,559) (37,501) (10,983)
Operating loss before depreciation and amortization ...... (18,313) (2,340) (27,622) (5,922)
Capital expenditures ..................................... (27,287) (22,302) (30,186) (39,397)
Total assets ............................................. 214,574 139,283 214,574 139,283
MEXICO
Revenues ................................................. 4,652 -- 6,066 --
Operating loss ........................................... (53,509) (24,284) (91,533) (24,818)
Operating loss before depreciation and amortization ...... (48,482) (24,222) (84,134) (24,740)
Capital expenditures ..................................... (66,067) (71,208) (102,346) (131,552)
Purchase of wireless licenses ............................ -- -- -- (175,864)
Total assets ............................................. 597,566 412,489 597,566 412,489
</TABLE>
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A reconciliation of the total of the Company's segment revenues,
operating losses and operating losses before depreciation and amortization to
the corresponding consolidated amounts is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ---------------------------
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total segment revenues .................................. $ 16,616 $ 1,301 $ 25,565 $ 2,108
Revenues of unconsolidated wireless
operating companies ................................ (7,853) (1,301) (11,354) (2,108)
Other revenues .......................................... 36 -- 72 --
--------- -------- --------- --------
Consolidated revenues .............................. $ 8,799 $-- $ 14,283 $--
========= ======== ========= ========
Total segment operating losses .......................... $(104,105) $(34,298) $(171,952) $(44,688)
Operating losses of unconsolidated wireless
operating companies ................................ 77,554 39,011 127,873 52,153
Discontinued foreign ventures ........................... -- (6,146) -- (9,898)
Corporate and eliminations .............................. (4,304) (2,752) (7,389) (6,116)
--------- -------- --------- --------
Consolidated operating loss ........................ $ (30,855) $ (4,185) $ (51,468) $ (8,549)
========= ======== ========= ========
Total segment operating losses before depreciation ...... $ (76,684) $(30,092) $(127,455) $(37,749)
and amortization
Operating losses before depreciation and amortization
of unconsolidated wireless operating companies ..... 55,045 34,805 93,304 45,214
Discontinued foreign ventures ........................... -- (6,146) -- (9,898)
Corporate and eliminations .............................. (4,143) (2,611) (7,069) (5,851)
--------- -------- --------- --------
Consolidated operating losses before depreciation
and amortization ................................... $ (25,782) $ (4,044) $ (41,220) $ (8,284)
========= ======== ========= ========
</TABLE>
Revenues and long-lived assets related to operations in the United
States and other foreign countries are as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
------------ ------------ ------------ ------------
2000 1999 2000 1999
REVENUES: (UNAUDITED)
<S> <C> <C> <C> <C>
United States ...................... $ 36 $-- $ 72 $--
Other foreign countries ............ 8,763 -- 14,211 --
------ --- ------- ---
Total consolidated revenues ..... $8,799 $-- $14,283 $--
====== === ======= ===
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
LONG-LIVED ASSETS: (UNAUDITED)
<S> <C> <C>
United States................................... $ 64,638 $ 23,599
Other foreign countries......................... 240,411 264,369
-------- --------
Total consolidated long-lived assets......... $305,049 $287,968
======== ========
</TABLE>
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NOTE 10. SUBSEQUENT EVENTS
STOCKHOLDER RIGHTS PLAN
In March 2000, the Company's Board of Directors approved an amendment to
the Company's Stockholder Rights Plan that increases the purchase price from $90
to $350 for each one one-thousandth share of Series A Junior Participating
Preferred Stock.
PENDING WIRELESS LICENSE ACQUISITIONS
In March 2000, the Company agreed to acquire three wireless licenses
covering the Phoenix, Arizona, Reno, Nevada and Roswell, New Mexico markets from
Beta Communications, L.L.C. The purchase price for the licenses is $33.3 million
in cash. In April 2000, the Company agreed to acquire a wireless license
covering the Omaha, Nebraska market from CM PCS, LLC. The purchase price for the
license is $14.2 million in cash plus the assumption of approximately $0.6
million in indebtedness to the FCC related to the license. Also in April 2000,
the Company agreed to acquire a wireless license covering the Lincoln, Nebraska
market from Center Point PCS. The purchase price for the wireless license is
$4.3 million in cash. These transactions are subject to FCC approval and other
conditions prior to closing. Accordingly, there can be no assurance that the
transactions will ultimately be consummated.
* * * *
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FORWARD-LOOKING STATEMENTS; CAUTIONARY STATEMENT
Except for the historical information contained herein, this document
contains forward-looking statements reflecting management's current forecast of
certain aspects of the Company's future. It is based on current information
which we have assessed but which by its nature is dynamic and subject to rapid
and even abrupt changes. The Company's actual results could differ materially
from those stated or implied by such forward looking statements due to risks and
uncertainties associated with the Company's business. Factors that could cause
or contribute to such differences, including factors relating to joint ventures
and other entities in which the Company has interests, include, but are not
limited to: 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
attract new subscribers and the rate of growth of the subscriber base; the usage
and revenue generated from subscribers; the level of airtime and equipment
prices; the rate of churn of 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. The forward looking statements should be
considered in the context of these and other risk factors detailed in the
Company's Amendment No. 2 to Form S-3 Registration Statement filed with the
Securities and Exchange Commission (File No. 333-93073), under the heading "Risk
Factors." Investors and prospective investors are cautioned not to place undue
reliance on such forward-looking statements. We disclaim any obligation to
update the forward-looking statements contained herein to reflect future events
or developments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following information should be read in conjunction with the
condensed consolidated financial statements and notes thereto included in Item 1
of this Quarterly Report and the audited consolidated financial statements and
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the Company's Registration Statement on
Form S-3 Amendment No. 2 (File No. 333-93073).
As used in this report, the terms "we," "our" or "us" refer to Leap
Wireless International, Inc. and its subsidiaries unless the context suggests
otherwise.
OVERVIEW
Leap is a wireless communications carrier with a unique approach to
providing digital wireless service that is designed to appeal to the mass
market. We intend to transform wireless into a mass consumer product by
deploying customer-oriented, low-cost, simple wireless services. We generally
seek to address a much broader population segment than incumbent wireless
operators have addressed to date. In the United States, we are employing a
unique business strategy to extend the benefits of mobility to the mass market
by offering wireless service under the brand name Cricket that is as simple as,
and priced at rates competitive with, traditional landline service. Chase
Telecommunications, Inc., a company we acquired in March 2000, introduced
Cricket service in Chattanooga and Nashville, Tennessee in March 1999 and
January 2000, respectively. To expand the Cricket service, we currently have
acquired or agreed to acquire wireless licenses covering approximately 38
million potential customers.
Internationally, we currently are involved in developing and operating
nationwide digital wireless systems in Mexico and Chile. We plan to focus our
efforts in markets primarily in the Americas where we believe the combination of
unfulfilled demand and our attractive wireless service offerings will fuel rapid
growth. In Mexico, we were a founding shareholder and have invested $100 million
in Pegaso, a joint venture with Grupo Pegaso and Grupo Televisa, the largest
media company in the Spanish-speaking world. We currently own 28.6% 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 all of Mexico, with approximately 99 million
potential customers. In March 2000, Pegaso signed an agreement with Sprint PCS
under which Sprint PCS will invest $200 million in the Mexican wireless carrier.
Once the transaction is completed, our percentage interest in Pegaso will
decrease to 22.4%.
In Chile, in April 1999, we acquired the 50% of our wireless venture
that we did not already own, and in November 1999, we re-launched the venture's
service under a new brand name and corporate identity, SMARTCOM PCS. Smartcom
holds a nationwide wireless license in the 1900 MHz band and operates a
nationwide digital wireless system. Smartcom's network is the only CDMA-based
network in the country, and it covers approximately 12 million potential
customers representing 80% of Chile's total population.
We are in the early stages of development and our financial results
continue to reflect the considerable investment associated with completion of
our network build-outs and the initial launch of commercial service in new
markets. As
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<PAGE> 16
we continue to expand our operations, our net operating losses and our
proportionate share of the losses in our unconsolidated wireless operating
companies is expected to grow.
The term "operating company" refers to Cricket Communications, Chase
Telecommunications, Pegaso and Smartcom.
RECENT OR PENDING ACQUISITIONS
Chase Telecommunications. In March 2000, we completed the acquisition
of substantially all of the assets of Chase Telecommunications Holdings,
including wireless licenses. The purchase price included approximately $6.3
million in cash, the assumption of principal amounts of liabilities that totaled
approximately $139.0 million at February 29, 2000, a warrant to purchase 1% of
the common stock of our subsidiary Cricket Communications Holdings at an
exercise price of $1.0 million, and contingent earn-out payments of up to $41.0
million (plus certain expenses) based on the earnings of the business acquired
during the fifth full year following the closing of the acquisition. The
liabilities assumed included approximately $78.8 million in principal amounts
owed to the FCC associated with the wireless licenses that bear interest at the
rate of 7.0% per annum and must be repaid in quarterly installments of principal
and interest through September 2006.
Other Wireless Licenses. In September 1999, we agreed to acquire a
wireless license covering the Dayton, Ohio market from PCS Devco for a purchase
price of approximately $2.4 million in cash and the assumption of principal
amounts of approximately $1.1 million in debt obligations to the FCC. Amounts
owed to the FCC bear interest at the rate of 6.25% per annum and must be repaid
in quarterly installments of principal and interest through July 2007. In
addition, Leap has agreed to transfer to PCS Devco a wireless license that
covers 135,000 potential customers. Until closing, Leap is required to make PCS
Devco's payments under its FCC debt, with any payments made by Leap reducing the
cash payment to PCS Devco. In February 2000, the FCC consented to the transfer
of PCS Devco's license to us, although the decision has not yet become a final
order and as a result of a challenge by a third party, is currently subject to
further administrative review. Because the decision did not become a final order
prior to March 2000, the agreement now may be terminated by either party at its
discretion.
In January 2000, we acquired three wireless licenses covering markets in
North Carolina from AirGate for a purchase price of approximately $13.9 million
in cash and the assumption of principal amounts of approximately $11.1 million
in debt obligations to the FCC. Amounts owed to the FCC bear interest at the
rate of 6.25% per annum and must be repaid in quarterly installments of
principal and interest through April 2007.
Also in January 2000, we agreed to acquire two wireless licenses
covering the Pittsburgh, Pennsylvania and Denver, Colorado markets from
Radiofone. The purchase price for the Pittsburgh license is approximately $18.4
million in cash and the purchase price for the Denver license is 232,754 shares
of our common stock and approximately $3.4 million in cash, less the amount of
debt owed by Radiofone to the FCC associated with the Denver license which will
be assumed by Leap at the closing. As of February 29, 2000, the outstanding
principal amount owed to the FCC associated with the Denver license was
approximately $1.5 million. The amounts owed to the FCC must be repaid in
quarterly installments of principal and interest through April 2007. As a
condition to closing the purchase of the Denver license, we must file and have
declared effective a resale shelf registration statement with the SEC covering
the shares of our common stock to be issued to the seller, subject to certain
"lock-up" restrictions on resale. The transaction is subject to FCC approval and
other conditions. Either party may terminate the Radiofone agreement in October
2000 if the transactions are not consummated by such date.
In February 2000, we agreed to acquire all of the outstanding stock of
three subsidiaries of Zuma, which own wireless licenses covering markets in
Albany, Columbus and Macon, Georgia for an aggregate purchase price of 170,374
shares of our common stock. The merger agreement provides that these
corporations will have no indebtedness or other liabilities at the closing. The
merger agreement also provides that we must file and have declared effective a
resale shelf registration statement with the SEC covering the shares of our
common stock issued to the seller as soon as reasonably practicable after the
closing of the transaction, subject to certain "lock-up" restrictions on resale.
The transaction is subject to FCC approval and other conditions. Either party
may terminate the merger agreement in February 2001 if the transaction is not
consummated by such date.
In March 2000, we agreed to acquire three wireless licenses covering the
Phoenix, Arizona, Reno, Nevada and Roswell, New Mexico markets from Beta
Communications, L.L.C. The purchase price for the licenses is $33.3 million in
cash. The transaction is subject to FCC approval and other conditions. Our
agreement with Beta Communications may be terminated in September 2000 if the
transaction is not consummated by such date, subject to certain rights to extend
the agreement to December 2000.
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<PAGE> 17
In April 2000, we agreed to acquire a wireless license covering the
Omaha, Nebraska market from CM PCS, Inc. The purchase price for the license is
$14.2 million in cash plus the assumption of approximately $0.6 million in
indebtedness to the FCC related to the license. Also in April 2000, agreed to
acquire a wireless license covering the Lincoln, Nebraska market from Center
Point PCS. The purchase price for the wireless license is $4.3 million in cash.
These transactions are subject to FCC approval and other conditions prior to
closing. Accordingly, there can be no assurance that the transactions will
ultimately be consummated. These agreements may be terminated by either party if
the transaction is not consummated by April 2001.
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 January 2000, the FCC
released an order consenting to the transfer of control of wireless licenses
from ChaseTel Licensee Corp. to us, the assignment of a wireless license from
us to PCS Devco.
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 the July 1999 order. In March 2000, the same party filed an
application for review of the FCC's January 2000 order. In addition, further
judicial review of the FCC's orders 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.
RESULTS OF OPERATIONS
The results of operations discussed below include period-to-period
comparisons that may not reflect the character of our future results of
operations because of the following events:
- the liquidation of the Transworld Companies;
- the initial launch of the Cricket service in the U.S.;
- our acquisition of wireless licenses from AirGate and agreements to
acquire the wireless licenses of PCS Devco, Radiofone, Zuma, Beta
Communications, CM PCS and Center Point PCS;
- the consolidation of Smartcom with Leap after our purchase of the
remaining 50% interest in Smartcom that we did not already own;
- the purchase and consolidation of Chase Telecommunications with Leap
in March 2000; and
- the expected decrease in our percentage interest in Pegaso which will
result from the consummation of Sprint PCS's agreement in March 2000
to invest $200 million in the Mexican wireless carrier.
THREE AND SIX MONTHS ENDED FEBRUARY 29, 2000 COMPARED TO THREE AND SIX MONTHS
ENDED FEBRUARY 28, 1999
We incurred a net loss of $83.0 million and $129.2 million,
respectively, during the three and six month periods ended February 29, 2000
compared to a net loss of $23.1 million and $44.0 million, respectively, in the
corresponding periods of the prior fiscal year. The increase relates primarily
to the launch of network service in new markets. Pegaso launched operations in
Tijuana, Guadalajara and Monterrey in February through September 1999 and in
Mexico City in December 1999. Cricket wireless service was launched in
Nashville, Tennessee in late January 2000. In addition, in November 1999 we
re-launched service in Chile under a new brand name and corporate identity. As a
result, total subscribers on our networks reached approximately 311,000
subscribers at February 29, 2000 (37,000 in the U.S., 92,000 in Chile and
182,000 in Mexico), compared to a total subscriber base of approximately 32,000
subscribers at February 29, 1999.
As a direct result of the consolidation of Smartcom, we recorded $8.8
million and $14.2 million of operating revenues, $15.1 million and $22.5 million
of cost of operating revenues, $12.0 million and $19.4 million of additional
selling, general and administrative expenses, $4.9 million and $9.9 million of
additional depreciation and amortization, $2.5 million and $5.4 million of
additional net interest expense, and $1.4 million of foreign currency
transaction gains and $1.4 million of foreign currency transaction losses during
the three and six month periods ended February 29, 2000, respectively.
Smartcom's net loss of $26.4 million and $47.1 million recognized during the
three and six month periods ended February 29, 2000, respectively, before
intercompany eliminations, compares to $4.1 million and $7.5 million that we
recognized under the equity method for our 50% interest in the corresponding
periods of the prior fiscal year. During the first half of fiscal 1999, we did
not report any operating revenues because all of our operating companies were
accounted for under the equity method of accounting. Our operating companies did
not generate material revenues in the first half of fiscal 1999.
We incurred $19.5 million and $33.0 million of selling, general and
administrative expenses during the three and six month periods ended February
29, 2000, respectively, compared to $4.0 million and $8.3 million in the
corresponding periods of the prior fiscal year. The increase includes $12.0
million and $19.4 million, respectively, from the consolidation of Smartcom.
Excluding Smartcom, selling, general and administrative expenses increased by
$3.5 million and $5.3 million, respectively, over the corresponding three and
six month periods of the prior fiscal year due to increased staffing and
business development activities related to our domestic subsidiary, Cricket
Communications.
We incurred an operating loss of $30.9 million and $51.5 million during
the three and six month periods ended February 29, 2000, respectively, compared
to operating losses of $4.2 million and $8.5 million in the corresponding
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periods of the prior fiscal year. The $26.7 million and $43.0 million respective
increases primarily reflect the consolidation of Smartcom. We expect substantial
growth in subscribers, operating revenues and operating expenses as a result of
our acquisition and consolidation of Chase Telecommunications commencing in the
third quarter of fiscal 2000 and the planned development and launch of Cricket
service in multiple U.S. markets. We also expect substantial growth in Pegaso's
subscribers, operating revenues and operating expenses; however, because Pegaso
is accounted for under the equity method, its operating revenues and expenses
are not fully consolidated.
Equity in net loss of unconsolidated wireless operating companies was
$33.9 million and $50.1 million during the three and six month periods ended
February 29, 2000, respectively, compared to $19.4 million and $35.4 million in
the corresponding periods of the prior fiscal year. During the first half of the
current fiscal year, our equity share in the net loss of our unconsolidated
wireless operating companies related to Pegaso and Chase Telecommunications.
During the corresponding period of fiscal 1999, our equity share in the net loss
of our unconsolidated wireless operating companies also included Smartcom (prior
to Leap's acquisition of the remaining 50 percent interest) and our Russian
investments which have been subsequently written-down, liquidated or are in the
process of liquidation.
Interest expense was $13.9 million and $21.1 million during the three
and six month periods ended February 29, 2000, respectively, compared to $0.9
million and $1.9 million in the corresponding periods of the prior fiscal year.
Interest expense related primarily to borrowings under our credit agreement with
Qualcomm and Smartcom's financing of its wireless communications network. We
expect interest expense to increase substantially in the future due to senior
notes and senior discount notes borrowings and expected borrowings used to fund
the construction of wireless networks in various markets across the United
States.
Foreign currency transaction gains (losses) of $1.4 million and $(1.4)
million during the three and six month period ended February 29, 2000,
respectively, reflected unrealized foreign exchange gains (losses) recognized by
Smartcom on U.S. dollar denominated loans as a result of changes in the exchange
rate between the U.S. dollar and the Chilean peso.
During the three month period ended February 29, 2000, in connection
with the repayment of the Qualcomm Credit Agreement, we wrote-off and reported
as an extraordinary loss $4.4 million in related unamortized debt issue costs.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
Over the next twelve months, we have budgeted a total of approximately
$670.3 million for the following capital requirements:
- approximately $500.0 million for capital expenditures for the
build-out of our first 17 Cricket networks in our initial phase of
development and to fund operating losses expected to be incurred by
Cricket Communications;
- approximately $75.0 million for capital expenditures for the build-out
of Smartcom's networks in Chile and operating losses expected to be
incurred by Smartcom;
- approximately $78.3 million in connection with our acquisition of
Chase Telecommunications and pending acquisitions of wireless licenses
from Radiofone, Beta Communications, CM PCS, LLC. and Center Point
PCS; and
- approximately $17.0 million for general corporate overhead and other
expenses.
Our actual expenditures may vary significantly depending upon whether we
purchase additional wireless licenses, the progress of the build-out of our
networks and other factors, including unforeseen delays, cost overruns,
unanticipated expenses, regulatory expenses, engineering design changes and
other technological risks.
As of February 29, 2000, we have a total of approximately $1,229.9
million in unused capital resources for our future cash needs as follows:
- approximately $599.9 million in consolidated cash and cash equivalents
on hand; and
- approximately $630.0 million in commitments under vendor financing
arrangements with Lucent Technologies and Qualcomm, with availability
subject to the total amounts of equipment purchased.
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Accordingly, we believe that if we do not make any additional license
acquisitions or any investments in new ventures, we have adequate capital
resources to fund our operations for the next twelve months.
We expect to incur significant operating losses and to generate
significant negative cash flow from operating activities in the future while we
continue to build-out our networks and build our customer base. Our ability to
satisfy our debt repayment obligations and covenants depends upon our future
performance, which is subject to a number of factors, many of which are beyond
our control. We cannot guarantee that we will generate sufficient cash flow from
our operating activities to meet our debt service and working capital
requirements, and we may need to refinance our indebtedness. However, our
ability to refinance our indebtedness will depend on, among other things, our
financial condition, the state of the public and private debt and equity
markets, the restrictions in the instruments governing our indebtedness and
other factors, some of which may be beyond our control. In addition, if we do
not generate sufficient cash flow to meet our debt service requirements or if we
fail to comply with the covenants governing our indebtedness, we may need
additional financing in order to service or extinguish our indebtedness. We may
not be able to obtain financing or refinancing on terms that are acceptable to
us, or at all.
Although we are unable to predict the amount of expenditures that we
will make beyond fiscal 2000, we may need to raise additional capital to fund
and expand our business operations. We also may need to raise additional capital
if we decide to acquire additional licenses or businesses. We are exploring
other debt and equity financing alternatives, including the sale from time to
time of convertible preferred stock, convertible debentures and other debt and
equity securities. However, we may not be able to raise additional capital on
terms that are acceptable to us, or at all.
We expect that we will require $875 million over the next several years
to substantially complete the build-out of our planned wireless networks in the
U.S. and Chile, not including the acquisition of additional licenses and the
build-out of markets related to additional licenses. These capital requirements
include license acquisition costs, capital expenditures for network
construction, operating cash flow losses and other working capital costs, debt
service and closing fees and expenses. As is typical for start-up
telecommunications networks, we expect our networks to incur operating expenses
significantly in excess of revenues in their early years of operations. We
intend to finance the construction and operation of Cricket networks primarily
through the proceeds of existing equipment financing agreements, cash on hand
and additional financings.
We intend to finance the planned upgrade and expansion and the operation
of Smartcom's network in fiscal 2000 through the proceeds of equipment financing
agreements in connection with planned equipment purchases by Smartcom and
additional financings. Smartcom recently entered into a new equipment purchase
agreement with Ericsson. In addition, Smartcom has engaged an investment banker
to assist it in selling equity and is exploring other capital raising
alternatives. Smartcom may not conclude a sale of equity or other financing
transaction or obtain additional vendor funding. If Smartcom does not obtain
additional financing in fiscal 2000, we expect to delay or reduce the scope of
Smartcom's planned expansion.
We have no direct obligation to fund the operations of Pegaso, our
venture in Mexico, and expect Pegaso to be funded independently. Although Pegaso
has raised or obtained commitments for debt and equity capital in excess of $1.2
billion, Pegaso will need to obtain substantial additional capital to complete
the build-out, launch and operation of its planned networks. As a result,
Pegaso is seeking additional debt and equity financing, including additional
vendor financing.
In February 2000, we completed a public equity offering of 4,000,000
shares of common stock at a price of $88.00 per share. Net of underwriters'
discounts and commissions, the Company received $82.72 per share, or $330.9
million in the aggregate. The Company expects to pay approximately $0.9 million
of expenses related to the equity offering, and these costs have been recorded
as reductions to additional paid-in capital. A portion of the net proceeds from
the equity offering was used for the repayment of the Qualcomm Credit Agreement.
The remaining proceeds from the equity offering will be used for capital
expenditures, acquisitions of wireless licenses, strategic investments, sales
and marketing activities and working capital and general corporate purposes.
CREDIT FACILITIES AND OTHER FINANCING ARRANGEMENTS
Units Offering
In February 2000, we completed an offering of 225,000 senior units, each
senior unit consisting of one 12.5% senior note due 2010 (Senior Note) and one
warrant to purchase our common stock, and 668,000 senior discount units, each
senior discount unit consisting of one 14.5% senior discount note due 2010
(Senior Discount Note) and one warrant to purchase our common stock. The total
gross proceeds from the sale of the senior units and senior discount units were
$225.0 million and $325.1 million, respectively, and $164.4 million of the total
proceeds were allocated to
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the fair value of the warrants, estimated using the Black-Scholes option pricing
model. In addition, we capitalized certain debt issuance costs of $13.5 million,
consisting of underwriting, printing, legal and accounting fees. A portion of
the net proceeds from the units offering were used for the repayment of
borrowings under the Qualcomm Credit Agreement. The remaining proceeds from the
units offering will be used for capital expenditures, acquisitions of wireless
licenses, strategic investments, sales and marketing activities and working
capital and general corporate purposes.
Interest on the Senior Notes will be payable on April 15 and October 15
of each year, beginning on April 15, 2000. We used $79.5 million of the proceeds
from the Senior Notes to purchase and pledge, for the benefit of the holders of
the Senior Notes, certain U.S. Government securities to provide for the payment
of the first seven scheduled interest payments on the Senior Notes. The
remaining unpaid portion of such amounts is classified as restricted cash
equivalents and investments in the accompanying condensed consolidated balance
sheet.
Each Senior Discount Note has an initial accreted value of $486.68 and a
principal amount at maturity of $1,000. The Senior Discount Notes will not begin
to accrue cash interest until April 15, 2005. Interest on the Senior Discount
Notes will be payable on April 15 and October 15 of each year, beginning on
October 15, 2005.
We may redeem any of the notes beginning April 15, 2005. The initial
redemption price of the Senior Notes is 106.25% of their principal amount plus
accrued interest. The initial redemption price of the Senior Discount Notes is
107.25% of their principal amount at maturity plus accrued interest. In
addition, before April 15, 2003, we may redeem up to 35% of both the Senior
Notes and the Senior Discount Notes using proceeds from certain qualified equity
offerings of our common stock at 112.5% of their principal amount and 114.5% of
their accreted value, respectively.
The notes rank equally with our other unsecured senior indebtedness. The
notes are effectively subordinate to all of our secured indebtedness. The notes
are guaranteed by our domestic subsidiary, Cricket Communications Holdings. The
terms of the notes include certain covenants that restrict our ability to, among
other things, incur additional indebtedness, create liens, pay dividends, make
investments, sell assets and effect a consolidation or merger. We are obligated
to consummate an exchange offer for the notes pursuant to an effective
registration statement or cause to become effective a shelf registration
statement for resales of the notes. If one of these events does not occur within
180 days after the closing of the units offering, interest on the notes will
increase by 0.5% per annum until the exchange offer is consummated or such shelf
registration statement becomes effective.
Each warrant included as part of the Senior Units is initially
exercisable to purchase 5.146 shares (1,157,850 shares in aggregate) of our
common stock at an exercise price of $96.80 per share. Each warrant included as
part of the Senior Discount Units is initially exercisable to purchase 2.503
shares (1,672,004 shares in aggregate) of our common stock at an exercise price
of $96.80 per share. The warrants may be exercised at any time on or after
February 23, 2001 and prior to April 15, 2010. We are obligated to file a shelf
registration statement covering the resale of the warrants and related common
stock issuable within 180 days after the closing of the units offering.
Lucent Equipment Financing. Cricket Communications has agreed to
purchase $330.0 million of infrastructure products and services from Lucent
Technologies. The Lucent Credit Agreement is subject to early termination at
Cricket Communications's convenience subject to payments for equipment
purchased. Lucent agreed to finance these purchases plus additional working
capital under a credit facility. The credit facility permits up to $641.0
million in total borrowings by Cricket Communications with borrowing
availability based on total amounts of equipment purchased, subject to various
covenants and conditions typical for a loan of this type, including minimum
levels of customers and covered potential customers which must increase over
time, limits on annual capital expenditures and dividend restrictions and other
financial ratio tests. Borrowings under the Lucent credit facility accrue at an
interest rate equal to LIBOR plus 3.5% to 4.25% or a bank base rate plus 2.5% to
3.25%, in each case with the specific rate based on the ratio of total
indebtedness to EBITDA. Cricket Communications must pay a commitment fee equal
to 1.25% per annum of the commitments under the credit facility until the
aggregate principal amount of borrowings equals $175 million, at which time the
rate decreases to 1.0% until the aggregate principal amount equals $350 million,
at which time the rate further decreases to 0.75%. Principal payments are
scheduled to begin after three years with a final maturity after eight years.
Repayment is weighted to the later years of the repayment schedule. The
obligations under the Lucent credit agreement are secured by all of the stock of
Cricket Communications and its subsidiaries, all of their respective assets, the
assets of Cricket Communications Holdings and the stock of each special purpose
subsidiary of Leap formed to hold wireless licenses. At February 29, 2000,
Cricket Communications had $21.0 million outstanding under the Lucent Credit
Agreement, including $0.3 million in accrued and capitalized interest.
Ericsson Equipment Financing. Cricket Communications also has agreed to
purchase $330.0 million of next-generation infrastructure products that are
currently in development and related services from Ericsson. Purchases from
Ericsson will be on substantially similar terms to the Lucent agreement,
including a credit facility providing for
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borrowings up to $495.0 million with borrowing availability based on a ratio of
total amounts of equipment purchased. The commitment of funds by Ericsson is
subject to the development of the next generation equipment, the negotiation of
definitive documentation and the approval of Ericsson's board of directors.
Obligations to the FCC. We have assumed $11.1 million and $78.8 million
in debt obligations to the FCC as part of the purchase price for the wireless
licenses from AirGate and Chase Telecommunications in January and March 2000,
respectively. We also will assume additional debt obligations to the FCC in the
aggregate principal amount of approximately $3.2 million as part of the purchase
price for the pending acquisitions of wireless licenses from PCS Devco,
Radiofone and CM PCS.
Smartcom Deferred Payment Agreements. Smartcom has entered into a
Deferred Payment Agreement, as amended and restated, with Qualcomm related to
Smartcom's purchase of equipment, software and services from Qualcomm. Under the
terms of the Deferred Payment Agreement, Qualcomm has agreed to defer collection
of principal amounts up to a maximum of $115.7 million including capitalized
interest. The obligations under the Deferred Payment Agreement are secured by
all of the assets of Smartcom. A Leap subsidiary has agreed to pledge its shares
in Smartcom as collateral for its guarantee of Smartcom's obligations to
Qualcomm under the agreement. The Deferred Payment Agreement requires Smartcom
to meet certain financial and operating covenants, including a debt to equity
ratio and restrictions on Smartcom's ability to pay dividends and to distribute
assets. As a result, substantially all the net assets of Smartcom are restricted
from distribution to Leap. The deferred payments bear interest at a rate equal
to LIBOR plus 5.0% to 6.5% or a bank base rate plus 4.0% to 5.5%, in each case
with the specific rate based on certain financial ratios. Accrued interest may
be added to the outstanding principal amount of the applicable borrowing until
September 2001. Amounts deferred under the agreement must be repaid by September
2006. At February 29, 2000, the Company had $95.3 million outstanding under the
Deferred Payment Agreement.
In February 2000, Smartcom and Qualcomm entered into an Equipment Credit
Agreement related to Smartcom's equipment supply and service agreements with a
vendor. The Equipment Credit Agreement permits up to $38.5 million in
borrowings, including capitalized interest. The Equipment Credit Agreement
provides for certain financial and operating covenants similar to the Deferred
Payment Agreement. Borrowings under the Equipment Credit Agreement accrue at an
interest rate equal to LIBOR plus 5.0% to 7.0% or a bank base rate plus 4.0% to
6.0%, in each case with the specific rate based on certain financial ratios.
Principal payments are scheduled to begin in March 2002 with a final maturity of
September 2006. At February 29, 2000, Smartcom had financed amounts totaling
$18.6 million, including capitalized interest, under the Equipment Credit
Agreement.
In February 2000, Smartcom and Qualcom entered into a Subscriber
Deferred Payment Agreement related to Smartcom's purchase of handsets and
accessories and test equipment from Qualcomm. Under the terms of the agreement,
Qualcomm has agreed to defer collection of amounts up to a maximum of $11.2
million, including capitalized interest. The Subscriber Deferred Payment
Agreement provides for certain financial and operating covenants similar to the
Deferred Payment Agreement. Borrowings under the Subscriber Deferred Payment
Agreement accrue at an interest rate equal to LIBOR plus 3.5% to 5.0% or a bank
base rate plus 2.5% to 4.0%, in each case with the specific rate based on
certain financial ratios. Principal outstanding is due at maturity in September
2001. At February 29, 2000, Smartcom had financed amounts totaling $5.6 million
under the Subscriber Deferred Payment Agreement.
PEGASO FINANCING
Qualcomm and another equipment vendor have agreed to provide
approximately $580.0 million of secured equipment financing to Pegaso, a portion
of which has already been advanced to the venture. The shares of Pegaso
Communicaciones y Sistemas, S.A. de C.V., Pegaso's subsidiary that holds
wireless licenses, serve as collateral for Pegaso's obligations under the
equipment financing.
In addition, in May 1999, Pegaso entered into a loan agreement with
several banks with credit support from Qualcomm. We guaranteed 33% of Pegaso's
obligations under the initial commitment from the lenders of $100 million. In
December 1999, as a condition of the guarantee, Leap received an option to
subscribe for and purchase up to 243,090 limiting voting series "N" treasury
shares of Pegaso. The number of shares to be purchased by Leap under the option
will be calculated to provide a total internal rate of return on the average
outstanding balance of the bridge loan of 20%. The options have an exercise
price of $0.01 per share and expire ten years from the date of issuance. The
options are exercisable at any time after the date on which all amounts under
the loan agreement are paid in full.
In July 1999, several existing investors contributed $50.0 million to
Pegaso as previously planned. In March 2000, Pegaso signed an agreement with
Sprint PCS under which Sprint PCS will invest $200.0 million in the Mexican
wireless carrier. Pegaso expects to fund a large portion of its development and
operating activities in fiscal 2000 with
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cash from operations, proceeds of the $50 million investment from several
existing investors and the investment from Sprint PCS, and borrowings under the
$100 million loan agreement. Several other existing investors are committed to
contribute $50.0 million in additional equity capital to Pegaso by August 2000.
In addition, Pegaso is seeking additional debt and equity financing, including
additional vendor financing.
OPERATING ACTIVITIES
We used $35.0 million in cash for operating activities during the six
month period ended February 29, 2000 compared to $13.6 million in the
corresponding period of the prior fiscal year. The increase is primarily
attributable to increased marketing and other customer acquisition costs
associated with launching new markets, as well as the effect of the full
consolidation of Smartcom. We expect that cash used in operating activities will
increase substantially in the future as a result of our acquisition and
consolidation of Chase Telecommunications and other activities related to the
launch of our U.S. networks.
INVESTING ACTIVITIES
Cash used in investing activities was $143.9 million during the six
month period ended February 29, 2000 compared to $97.2 million in the
corresponding period of the prior fiscal year. Investments during the six month
period ended February 29, 2000 consisted of $108.5 million of restricted cash
equivalents and investments, which have been pledged to provide for the payment
of the first seven scheduled interest payments on the senior notes payable and
to secure our obligations under a letter of credit with a bank, loans to Chase
Telecommunications of $17.0 million, the purchase of wireless licenses totaling
$13.4 million and capital expenditures, primarily by Smartcom, of $13.8 million,
offset by $9.8 million of proceeds received from the liquidation of the
Transworld Companies. Investments in the corresponding period of the prior
fiscal year consisted primarily of a $60.7 million capital contribution to
Pegaso, loans and advances of $32.8 million to our operating companies and a
$17.5 million loan, net of repayments of $7.5 million, provided to a related
party. In the remainder of fiscal 2000, Leap and its subsidiaries expect to make
significant investments in capital assets, including network equipment and
wireless communications licenses.
FINANCING ACTIVITIES
Cash provided by financing activities during the six month period ended
February 29, 2000, primarily from proceeds of our public equity offering, units
offering, borrowings under the credit agreement with Qualcomm and from banks,
was $750.9 million. Cash provided by financing activities in the corresponding
period of the prior fiscal year was $116.8 million, representing $95.3 million
of funding from Qualcomm for our operating and investing activities prior to the
distribution of our common stock to Qualcomm's stockholders in September 1998,
and $21.1 million of net borrowings under the credit agreement and from banks.
CURRENCY FLUCTUATION RISKS
We report our financial statements in U.S. dollars. Our international
operating companies report their results in local currencies. 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 interests in our operating companies.
Generally, our international operating companies generate revenues that
are paid in their local currency. However, many of these operating companies'
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 operating
company could result in a significant increase in the operating company's
expenses and could have a material adverse effect on the operating company and
on us. In some emerging markets, including Mexico, significant devaluations of
the local currency have occurred and may occur again in the future.
We do not currently hedge against foreign currency exchange rate or
interest rate risks.
INFLATION
Inflation has had and may continue to have negative effects on the
economies and securities markets of emerging market countries and could have
negative effects on our operating companies and any new start-up project in
those countries, including their ability to obtain financing. Chile and Mexico,
for example, have periodically experienced relatively high rates of inflation.
The operating companies, where permitted and subject to competitive pressures,
intend to increase their tariffs to account for the effects of inflation.
However, in those jurisdictions where tariff rates are regulated or specified in
the wireless license, the operating companies may not successfully mitigate the
impact of inflation on their operations.
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YEAR 2000 ISSUE
We have recently begun our operations and have designed and built our
wireless communications networks and support systems with the Year 2000 issue in
mind. To date, we have not incurred any material costs in support of the Year
2000 issue. The recent acquisition of network equipment and software does not
guarantee, however, that such equipment and software are Year 2000 compliant
(i.e., able to distinguish 21st century dates from 20th century dates).
As of April 14, 2000, our systems have operated without any apparent
Year 2000 related problems and appear to be Year 2000 compliant. All of our
financial and operational systems were available over the millennium changeover
and the integrity of the historical information contained within those systems
has not been affected. Further, we are not aware that any of our primary vendors
or systems maintained by third parties (such as landline, long-distance and
power systems) have experienced significant Year 2000 compliance problems.
However, while no such problem has been discovered as of the date indicated
above, Year 2000 issues may not become apparent immediately and therefore, we
may be affected in the future. We will continue to monitor the issue and work to
remediate any Year 2000 issues that may arise.
FUTURE ACCOUNTING REQUIREMENTS
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which we must adopt for fiscal year 2001. This statement
establishes a new model for accounting for derivatives and hedging activities.
Under FAS 133, all derivatives must be recognized as assets and liabilities and
measured at fair value. We do not expect that the adoption of this new
accounting standard will have a material impact on our consolidated financial
position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements". SAB
No. 101 summarized certain of the staff's interpretations in applying generally
accepted accounting principles to revenue recognition. The provisions of SAB No.
101 are effective for the Company's quarter ending May 31, 2000. Management is
currently assessing the impact of the adoption of SAB No. 101.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
INTEREST RATE RISK
Our exposure to market risk for changes in interest rates relates
primarily to our variable rate long-term debt obligations. For a description of
our long-term debt obligations, see Note 6 to the Condensed Consolidated
Financial Statements which are included elsewhere herein. The general level of
U.S. interest rates and/or LIBOR affect the interest expense that we recognize
on our variable rate long-term debt obligations. As of February 29, 2000, the
principal amounts of our variable rate long-term debt obligations amounted to
approximately $140.5 million. An increase of 10% in interest rates would
increase our interest expense for the next twelve months by approximately $1.7
million. This hypothetical amount is only suggestive of the effect of changes in
interest rates on our results of operations for the next twelve months.
FOREIGN EXCHANGE MARKET RISK
The long-term debt obligations of our wholly owned Chilean subsidiary,
Smartcom, which are denominated in U.S. dollars, are subject to the effects of
currency fluctuations and may affect reported earnings and losses. A significant
change in the value of U.S. dollars against the Chilean peso could result in a
significant increase in our consolidated expenses. As of February 29, 2000,
Smartcom's long-term debt obligations that were denominated in U.S. dollars
amounted to approximately $136.6 million. Our results of operations would be
negatively impacted by approximately $12.0 million for the next twelve months if
U.S. dollars were to appreciate against the Chilean peso by 10%. This
hypothetical amount is only suggestive of the effect of currency fluctuations on
our results of operations for the next twelve months.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In September 1999, the Company announced that it had stopped funding
loans to Metrosvyaz Limited ("Metrosvyaz"), a company in which Leap has a 35%
indirect interest, because Metrosvyaz had not satisfied certain conditions
required for funding and was in default under its loan agreement with the
Company. In addition, the company had been prevented from securing full
reporting an documentation of performance, results and expenditures of
Metrosvyaz despite repeated efforts to obtain that information. Preliminary
results of a special investigation of Metrosvyaz disclosed serious
irregularities, including unaccounted for funds and questionable contracts and
payments. On September 29, 1999, the Company issued a demand for arbitration
seeking a full accounting and damages from Metrosvyaz and one of its directors
with respect to these matters. Management cannot determine the likely outcome of
the arbitration.
In December 1999, Metrosvyaz filed suit against the Company and certain
of its officers in the U.S. District Court for the Central District of
California. The Metrosvyaz suit alleges claims for libel, trade libel,
intentional and negligent interference with prospective advantage and breach of
fiduciary duty. The suit seeks compensatory damages in excess of $100 million as
well as punitive damages and injunctive relief. In March 2000, the Metrosvyaz
suit in the United States District Court, Central District of California was
dismissed and a substantially similar action was filed by Metrosvyaz against
Leap and certain of its officers in the United States District Court, Southern
District of California. The Company believes the Metrosvyaz claims are without
merit and will vigorously defend against them. The Company cannot, however, be
certain of the final outcome of this litigation. If Metrosvyaz prevails in its
claims, it could have a material adverse effect on the Company's business and
financial condition.
Various other claims arising in the course of business, seeking monetary
damages and other relief, are pending. The amount of the liability, if any, from
such claims cannot be determined with certainty; however, in the opinion of
management, the ultimate liability for such claims will not have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On February 23, 2000, we completed a private placement of 225,000 senior
units and 668,000 senior discount units (collectively, the "Units") pursuant to
an exemption from registration under Rule 144A promulgated under the Securities
Act of 1933, as amended. Each senior unit consisted of one 12.5% senior note due
2010 (Senior Note) and one warrant to purchase our common stock, and each senior
discount unit consisted of one 14.5% senior discount note due 2010 (Senior
Discount Note) and one warrant to purchase our common stock. The Units were
placed with qualified institutional buyers (as defined under Rule 144A(a)(1)),
and Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Bear Stearns & Co. Inc., ABN AMRO Incorporated and Credit Suisse
First Boston Corporation acted as placement agents in the transaction.
The Senior Units were sold at the aggregate offering price of $225.0
million less accompanying underwriting discounts and commissions of
approximately $6.8 million. The Senior Discount Units were sold at the aggregate
offering price of $325.1 million less underwriting discounts and commissions of
approximately $6.1 million. Approximately $164.4 million of the total proceeds
were allocated to the fair value of the warrants, estimated using the
Black-Scholes option pricing model and the underwriting discounts and
commissions were capitalized. In addition, we capitalized certain debt issuance
costs of approximately $0.6 million, consisting of printing, legal and
accounting fees. A portion of the net proceeds from the Units offering were used
for the repayment of borrowings under the Qualcomm credit agreement. The
remaining proceeds from the Units offering will be used for capital
expenditures, acquisitions of wireless licenses, strategic investments, sales
and marketing activities and working capital and general corporate purposes.
Interest on the Senior Notes will be payable on April 15 and October 15
of each year, beginning on April 15, 2000. We used $79.5 million of the proceeds
from the Senior Notes to purchase and pledge, for the benefit of the holders of
the Senior Notes, certain U.S. Government securities to provide for the payment
of the first seven scheduled interest payments on the Senior Notes. The
remaining unpaid portion of such amounts is classified as restricted cash
equivalents and investments in the accompanying condensed consolidated balance
sheet.
25
<PAGE> 25
Each Senior Discount Note has an initial accreted value of $486.68 and a
principal amount at maturity of $1,000. The Senior Discount Notes will not begin
to accrue cash interest until April 15, 2005. Interest on the Senior Discount
Notes will be payable on April 15 and October 15 of each year, beginning on
October 15, 2005.
We may redeem any of the notes beginning April 15, 2005. The initial
redemption price of the Senior Notes is 106.25% of their principal amount plus
accrued interest. The initial redemption price of the Senior Discount Notes is
107.25% of their principal amount at maturity plus accrued interest. In
addition, before April 15, 2003, we may redeem up to 35% of both the Senior
Notes and the Senior Discount Notes using proceeds from certain qualified equity
offerings of our common stock at 112.5% of their principal amount and 114.5% of
their accreted value, respectively.
The notes rank equally with our other unsecured senior indebtedness. The
notes are effectively subordinate to all of our secured indebtedness. The notes
are guaranteed by our domestic subsidiary, Cricket Communications Holdings. The
terms of the notes include certain covenants that restrict our ability to, among
other things, incur additional indebtedness, create liens, pay dividends, make
investments, sell assets and effect a consolidation or merger. We are obligated
to consummate an exchange offer for the notes pursuant to an effective
registration statement or cause to become effective a shelf registration
statement for resales of the notes. If one of these events does not occur within
180 days after the closing of the units offering, interest on the notes will
increase by 0.5% per annum until the exchange offer is consummated or such shelf
registration statement becomes effective.
Each warrant included as part of the Senior Units is initially
exercisable to purchase 5.146 shares (1,157,850 shares in aggregate) of our
common stock at an exercise price of $96.80 per share. Each warrant included as
part of the Senior Discount Units is initially exercisable to purchase 2.503
shares (1,672,004 shares in aggregate) of our common stock at an exercise price
of $96.80 per share. The warrants may be exercised at any time on or after
February 23, 2001 and prior to April 15, 2010. We are obligated to file a shelf
registration statement covering the resale of the warrants and related common
stock issuable upon exercise of the warrants within 180 days after the closing
of the units offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's Annual Meeting of Stockholders held on December 10,
1999, the Company's stockholders elected three directors to the Company's Board
of Directors, approved the prior adoption of the 1998 Stock Option Plan,
approved the prior adoption of the 1999 Stock Option Plan of Cricket
Communications Holdings, Inc. and ratified the selection of
PricewaterhouseCoopers, LLP as the Company's independent accountants. Certain
information regarding these matters is reported under Item 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1999 and is
incorporated herein by reference.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index to Exhibits:
<TABLE>
<CAPTION>
<S> <C>
4.1* Indenture, dated as of February 23, 2000, by and among Leap Wireless International, Inc.,
Cricket Communications Holdings, Inc. and State Street Bank and Trust Company (including Forms
of Notes).
4.2* Pledge Agreement, dated as of February 23, 2000, by and between Leap Wireless International,
Inc. and State Street Bank and Trust Company.
4.3* Warrant Agreement, dated as of February 23, 2000, by and between Leap Wireless International,
Inc. and State Street Bank and Trust Company (including Form of Warrant Certificate).
4.4* Registration Rights Agreement, dated as of February 23, 2000, by and among Leap Wireless
International, Inc., Cricket Communications Holdings, Inc. and Morgan Stanley & Co. Incorporated.
4.5* Warrant Registration Rights Agreement, dated as of February 23, 2000, by and between Leap
Wireless International, Inc. and Morgan Stanley & Co. Incorporated.
10.22.1* Amendment No. 1 to 1999 Stock Option Plan of Cricket Communications, Inc. (now known as Cricket
Communications Holdings, Inc.).
</TABLE>
26
<PAGE> 26
<TABLE>
<S> <C>
10.26.10* First Amendment dated as of November 24, 1999 to the Credit Agreement dated as of September 20,
1999, among Cricket Communications, Inc., Cricket Wireless Communications, Inc., and Lucent
Technologies, Inc., as Administrative Agent. Portions of this exhibit (indicated by asterisks)
have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934.
10.26.11* Second Amendment dated as of January 27, 2000 to the Credit Agreement dated as of September 20,
1999, among Cricket Communications Holdings, Inc., Cricket Communications, Inc., the lenders
party thereto and Lucent Technologies, Inc., as Administrative Agent. Portions of this exhibit
(indicated by asterisks) have been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
10.26.12* First Amendment dated as of January 27, 2000 to the Parent Agreement, dated as of September 17,
1999, between Leap Wireless International, Inc. and Lucent Technologies, Inc., as Administrative
Agent.
10.29(1) Executive Officer Deferred Stock Plan.
10.30(2) License Purchase Agreement, dated September 11, 1998, by and between the Registrant and
Airgate Wireless, L.L.C.
10.31(2) First Amendment to License Purchase Agreement, dated December 17, 1999, by and between
Cricket Holdings, Inc. and Airgate Wireless, L.L.C.
10.32(2) Agreement to Purchase and Sale of Licenses, dated January 7, 2000, by and between Radiofone
PCS, L.L.C. and the Registrant
10.33* Placement Agreement, dated as of February 16, 2000, by and among Leap Wireless International,
Inc., Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation,
Bear, Stearns & Co. Inc., ABN AMRO Incorporated and Credit Suisse First Boston Corporation.
27.1* Financial Data Schedule.
</TABLE>
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* Filed herewith.
(1) Filed as an exhibit to Leap's Registration Statement on Form S-8 (File No.
333-94389) dated January 11, 2000, and incorporated herein by reference.
(2) Filed as an exhibit to Leap's Amendment No. 2 to Form S-3 (File 333-93073)
dated February 16, 2000, and incorporated herein by reference.
(b) Reports on Form 8-K.
A Current Report on Form 8-K was filed on February 17, 2000 announcing
Leap's sale of (i) senior units consisting of $225.0 million aggregate
principal amount of 12.5% senior notes due 2010 and accompanying
warrants to purchase common stock and (ii) senior discount units
consisting of $668.0 million aggregate principal amount of 14.5% senior
discount notes due 2010 and accompanying warrants to purchase common
stock.
A Current Report on Form 8-K was filed on April 3, 2000 announcing the
completion of Leap's acquisition of substantially all the assets of
Chase Telecommunications Holdings, Inc. and a recent amendment to the
Company's stockholder rights plan.
27
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEAP WIRELESS INTERNATIONAL, INC.
Date: April 14, 2000 By: /s/ HARVEY P. WHITE
-------------------------------------
Harvey P. White
Chairman and Chief Executive Officer
Date: April 14, 2000 By: /s/ STEPHEN P. DHANENS
-------------------------------------
Stephen P. Dhanens
Vice President, Corporate Controller
(Chief Accounting Officer)
28
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
DATED AS OF FEBRUARY 23, 2000
AMONG
LEAP WIRELESS INTERNATIONAL, INC.,
ISSUER,
CRICKET COMMUNICATIONS HOLDINGS, INC.
AS GUARANTOR
AND
STATE STREET BANK AND TRUST COMPANY
AS TRUSTEE
------------------
UP TO $225,000,000
12 1/2% SENIOR NOTES DUE 2010, SERIES A
12 1/2% SENIOR NOTES DUE 2010, SERIES B
UP TO $668,000,000
14 1/2% SENIOR DISCOUNT NOTES DUE 2010, SERIES A
14 1/2% SENIOR DISCOUNT NOTES DUE 2010, SERIES B
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ---------
<S> <C>
Section 310(a) ..................................................................... 7.03; 7.10; 13.01
(b)...................................................................... 7.03; 7.10; 13.01; 13.02
(c)...................................................................... 7.03; 13.01
Section 311(a) ..................................................................... 7.11; 13.01
(b)...................................................................... 7.11; 13.01
(c)...................................................................... 13.01
Section 312(a) ..................................................................... 13.01
(b)...................................................................... 13.01; 13.03
(c)...................................................................... 13.01; 13.03
Section 313(a) .................................................................... 7.06; 13.01
(b)(1)................................................................... 13.01
(b)(2)................................................................... 7.06; 7.07; 13.01
(c)...................................................................... 7.06; 13.01; 13.02
(d)...................................................................... 7.06; 13.01
Section 314(a) ..................................................................... 13.01; 13.02
(b)...................................................................... 13.01
(c)...................................................................... 13.01
(d)...................................................................... 13.01
(e)...................................................................... 13.01
(f)...................................................................... 13.01
Section 315(a) ..................................................................... 13.01
(b)...................................................................... 13.01; 13.02
(c)...................................................................... 13.01
(d)...................................................................... 13.01
(e)...................................................................... 13.01
Section 316(a)(1)(A)................................................................ 6.05; 13.01
(a)(1)(B)................................................................ 13.01
(a)(2)................................................................... 13.01
(b)...................................................................... 13.01
(c)...................................................................... 13.01
Section 317 ..................................................................... 13.01
</TABLE>
- --------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions ....................................................................................1
SECTION 1.02 Incorporation by Reference of Trust Indenture Act...............................................20
SECTION 1.03 Rules of Construction...........................................................................21
ARTICLE TWO
THE SECURITIES
SECTION 2.01 Form and Dating.................................................................................21
SECTION 2.02 Execution and Authentication....................................................................22
SECTION 2.03 Registrar and Paying Agent......................................................................23
SECTION 2.04 Paying Agent to Hold Assets in Trust............................................................24
SECTION 2.05 Holder Lists ...................................................................................24
SECTION 2.06 Transfer and Exchange...........................................................................24
SECTION 2.07 Replacement Securities..........................................................................25
SECTION 2.08 Outstanding Securities..........................................................................25
SECTION 2.09 Treasury Securities.............................................................................25
SECTION 2.10 Temporary Securities............................................................................26
SECTION 2.11 Cancellation ...................................................................................26
SECTION 2.12 Defaulted Interest..............................................................................26
SECTION 2.13 CUSIP Number ...................................................................................27
SECTION 2.14 Deposit of Moneys...............................................................................27
SECTION 2.15 Book-Entry Provisions for Global Securities.....................................................27
SECTION 2.16 Registration of Transfers and Exchanges.........................................................28
ARTICLE THREE
REDEMPTION
SECTION 3.01 Notices to Trustee..............................................................................32
SECTION 3.02 Selection of Securities to Be Redeemed..........................................................32
SECTION 3.03 Notice of Redemption............................................................................33
SECTION 3.04 Effect of Notice of Redemption..................................................................33
SECTION 3.05 Deposit of Redemption Price.....................................................................34
SECTION 3.06 Securities Redeemed in Part.....................................................................34
SECTION 3.07 Optional Redemption.............................................................................34
ARTICLE FOUR
COVENANTS
SECTION 4.01 Payment of Securities...........................................................................35
SECTION 4.02 Maintenance of Office or Agency.................................................................35
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
SECTION 4.03 Limitations on Transactions with Stockholders and Affiliates....................................36
SECTION 4.04 Limitation on Indebtedness......................................................................36
SECTION 4.05 Limitation on Asset Sales.......................................................................39
SECTION 4.06 Limitation on Restricted Payments...............................................................40
SECTION 4.07 Compliance with Laws............................................................................44
SECTION 4.08 Payment of Taxes and Other Claims...............................................................44
SECTION 4.09 Notice of Defaults..............................................................................44
SECTION 4.10 Maintenance of Properties and Insurance.........................................................44
SECTION 4.11 Compliance Certificate..........................................................................45
SECTION 4.12 Reports to Holders..............................................................................45
SECTION 4.13 Waiver of Stay, Extension or Usury Laws.........................................................46
SECTION 4.14 Repurchase of Notes upon a Change of Control....................................................46
SECTION 4.15 Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries.................47
SECTION 4.16 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.........47
SECTION 4.17 Limitation on Liens.............................................................................48
SECTION 4.18 Corporate Existence.............................................................................49
SECTION 4.19 Limitation on Sale-Leaseback Transactions.......................................................49
SECTION 4.20 Designation of Restricted Subsidiaries and Unrestricted Subsidiaries............................49
SECTION 4.21 Limitation on Issuances of Guarantees by Restricted Subsidiaries................................50
SECTION 4.22 Additional Holding Companies....................................................................50
SECTION 4.23 Future Subsidiary Guarantors....................................................................50
ARTICLE FIVE
CONSOLIDATIONS MERGER AND ASSET SALES; SUCCESSORS
SECTION 5.01 Consolidation Merger, and Sale of Assets........................................................51
SECTION 5.02 Successor Substituted...........................................................................52
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01 Events of Default...............................................................................52
SECTION 6.02 Acceleration ...................................................................................54
SECTION 6.03 Other Remedies .................................................................................54
SECTION 6.04 Waiver of Past Default..........................................................................55
SECTION 6.05 Control by Majority.............................................................................55
SECTION 6.06 Limitation on Suits.............................................................................55
SECTION 6.07 Rights of Holders to Receive Payment............................................................56
SECTION 6.08 Collection Suit by Trustee......................................................................56
SECTION 6.09 Trustee May File Proofs of Claim................................................................56
SECTION 6.10 Priorities .....................................................................................56
SECTION 6.11 Undertaking for Costs...........................................................................57
SECTION 6.12 Notice of Defaults..............................................................................57
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
ARTICLE SEVEN
TRUSTEE
SECTION 7.01 Duties of Trustee...............................................................................58
SECTION 7.02 Certain Rights of Trustee.......................................................................59
SECTION 7.03 Individual Rights of Trustee....................................................................60
SECTION 7.04 Trustee's Disclaimer............................................................................60
SECTION 7.05 Notice of Defaults..............................................................................60
SECTION 7.06 Reports by Trustee to Holders of the Securities.................................................60
SECTION 7.07 Compensation and Indemnity......................................................................61
SECTION 7.08 Replacement of Trustee..........................................................................62
SECTION 7.09 Successor Trustee by Merger, Etc................................................................63
SECTION 7.10 Eligibility; Disqualification...................................................................63
SECTION 7.11 Preferential Collection of Claims Against Company...............................................63
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Termination of the Company's Obligations........................................................63
SECTION 8.02 Legal Defeasance and Covenant Defeasance........................................................65
SECTION 8.03 Conditions to Legal Defeasance or Covenant Defeasance...........................................66
SECTION 8.04 Application of Trust Money......................................................................67
SECTION 8.05 Repayment to Company............................................................................68
SECTION 8.06 Reinstatement ..................................................................................68
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01 In General .....................................................................................68
SECTION 9.02 Without Consent of Holders......................................................................69
SECTION 9.03 With Majority Consent of Holders................................................................69
SECTION 9.04 Compliance with Trust Indenture Act.............................................................70
SECTION 9.05 Revocation and Effect of Consents...............................................................70
SECTION 9.06 Notation on or Exchange of Securities...........................................................71
SECTION 9.07 Trustee to Sign Amendments, etc.................................................................71
ARTICLE TEN
GUARANTEE
SECTION 10.01 Unconditional Guarantee.........................................................................72
SECTION 10.02 Severability ...................................................................................72
SECTION 10.03 Limitation of Guarantor's Liability.............................................................72
SECTION 10.04 Execution of Guarantee..........................................................................73
SECTION 10.05 Release of Guarantor from Subsidiary Guarantee..................................................73
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
ARTICLE ELEVEN
SECURITY
SECTION 11.01 Pledge Agreement................................................................................73
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls....................................................................75
SECTION 12.02 Notices ........................................................................................75
SECTION 12.03 Communications by Holders with Other Holders....................................................77
SECTION 12.04 Certificate and Opinion as to Conditions Precedent..............................................77
SECTION 12.05 Statements Required in Certificate or Opinion...................................................77
SECTION 12.06 Rules by Trustee, Paying Agent, Registrar.......................................................77
SECTION 12.07 Governing Law ..................................................................................78
SECTION 12.08 No Recourse Against Others......................................................................78
SECTION 12.09 Successors .....................................................................................78
SECTION 12.10 Counterpart Originals...........................................................................78
SECTION 12.11 Severability ...................................................................................78
SECTION 12.12 No Adverse Interpretation of Other Agreements...................................................78
SECTION 12.13 Legal Holidays .................................................................................78
SECTION 12.14 No Personal Liability of Incorporators, Stockholders, Officers, Directors, Officers,
Employees and Stockholders...................................................................78
SIGNATURES ....................................................................................................S-1
EXHIBIT A Form of Series A Security....................................................................A-1
EXHIBIT B Form of Series B Security....................................................................B-1
EXHIBIT C Form of Legend for Global Securities.........................................................C-1
EXHIBIT D Form of Transfer Certificate.................................................................D-1
EXHIBIT E Form of Transfer Certificate for Institutional Accredited Investors..........................E-1
EXHIBIT F Form of Supplemental Indenture...............................................................F-1
EXHIBIT G Form of Officer's Certificate................................................................G-1
</TABLE>
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NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-iv-
<PAGE> 7
INDENTURE dated as of February 23, 2000, among LEAP WIRELESS
INTERNATIONAL, INC., a Delaware corporation (the "Company"), as issuer, the
GUARANTOR named herein and State Street Bank and Trust Company, a state
chartered trust company organized under the laws of the Commonwealth of
Massachusetts, as trustee (the "Trustee").
The Company has executed that certain Purchase Agreement, dated as of
February 16, 2000, by and among the Company, the guarantor listed therein and
the Placement Agents (the "Purchase Agreement"). The Company has also executed
that certain Registration Rights Agreement, dated as of the date hereof, by and
among the Company, the guarantor listed therein and the Placement Agents (the
"Registration Rights Agreement") and that certain Pledge Agreement (as defined
herein) dated as of the date hereof by and between the Company and the Trustee.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Accreted Value" means, as of any date prior to April 15, 2005, an
amount per $1,000 principal amount at maturity of the Senior Discount Notes that
is equal to the sum of (a) the initial offering price ($486.68 per $1,000
principal amount at maturity of the Senior Discount Notes) of such Senior
Discount Notes and (b) the portion of the excess of the principal amount of such
Senior Discount Notes over such initial offering price which shall have been
amortized through such date, such amount to be so amortized on a daily basis and
compounded semiannually on each April 15 and October 15 at the rate of 14 1/2%
per annum from the date of original issue of the Senior Discount Notes through
the date of determination computed on the basis of a 360-day year of twelve
30-day months, and as of any date on or after April 1, 2005, the principal
amount of each Senior Discount Note.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period determined in conformity with GAAP; provided that the following items
shall be excluded in computing Adjusted Consolidated Net Income (without
duplication):
(i) the net income of any Person that is not a Restricted Subsidiary,
except to the extent of the amount of dividends or other distributions actually
paid to the Company or any of its Restricted Subsidiaries by such other Person
during such period;
(ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
Section 4.06 (and in such case, except to the extent includable pursuant to
clause (i) above), the net income (or loss) of any Person accrued prior to the
date it
<PAGE> 8
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries;
(iii) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of such net income is not at the time of determination permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary;
(iv) any gains or losses (on an after-tax basis) attributable to sales
of assets of the Company or any Restricted Subsidiary other than in the ordinary
course of business;
(v) solely for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of Section 4.06,
any amount paid or accrued as dividends on Preferred Stock of the Company or any
Restricted Subsidiary owned by Persons other than the Company and any of its
Restricted Subsidiaries;
(vi) all extraordinary gains and extraordinary losses;
(vii) any compensation expense paid or payable solely with Capital Stock
(other than Disqualified Capital Stock) of the Company or any options, warrants
or other rights to acquire Capital Stock (other than Disqualified Capital Stock)
of the Company; and
(viii) the cumulative effect of a change in accounting principles.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), excluding write-ups of
capital assets (other than write-ups of tangible assets in connection with
accounting for acquisitions made in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, copyrights, organizational and developmental expenses,
unamortized debt discount and expense, unamortized deferred charges and other
like intangibles (other than FCC license acquisition costs), all as set forth on
the most recent quarterly or annual consolidated balance sheet of the Company
and its Restricted Subsidiaries, prepared in conformity with GAAP and filed with
the Trustee pursuant to Section 4.12.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such
2
<PAGE> 9
Person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company or
any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company
or any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (a) all or any of the Capital Stock of any Restricted
Subsidiary, (b) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (c) any other property and assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of this Indenture applicable to mergers, consolidations and sales of all or
substantially all of the assets of the Company; provided that "Asset Sale" shall
not include:
(i) sales or other dispositions of inventory, receivables and other
current assets;
(ii) sales, transfers or other dispositions of assets constituting a
Restricted Payment permitted to be made under Section 4.06.
(iii) sales or other dispositions of assets for consideration at least
equal to the fair market value of the assets sold or disposed of (as determined
by the Board of Directors whose good faith determination shall be conclusive and
evidenced by a Board Resolution), provided that the consideration received
consists of property or assets (other than current assets) of a nature or type
or that are used in a business (or a company having property or assets of a
nature or type, or engaged in a business) similar or related to the nature or
type of the property and assets of, or business of, the Company and its
Restricted Subsidiaries existing on the date of such sale or other disposition;
or
(iv) sales or other dispositions of assets with a fair market value not
in excess of $1,000,000 per year (as certified in an Officer's Certificate).
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state
or foreign law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as
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such term is used in Section 13(d)(3) of the Exchange Act), such "person" shall
be deemed to have beneficial ownership of all securities that such "person" has
the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York or the city in which the
principal corporate trust office of the Trustee is located are not required to
be open.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Closing Date, including, without limitation, all Common Stock
and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, Personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Section 13(d) or 14(d)(2) under the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of the Company on a
fully diluted basis; or (ii) individuals who on the Closing Date constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non voting) of such Person's equity, other than Preferred Stock of
such Person, whether now outstanding or issued after the Closing Date, including
without limitation, all series and classes of such common stock.
"Company" has the meaning ascribed to such term in the introductory
paragraphs to this Indenture.
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"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income (i) Consolidated Interest Expense,
(ii) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets), (iii) depreciation expense, (iv) amortization expense, and (v) all
other non-cash items reducing Adjusted Consolidated Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; provided that,
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (a) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(b) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes, all as determined on a consolidated basis
(without taking into account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio
of (i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters for which financial statements of the Company have been filed
with the Trustee pursuant to Section 4.12 (such four fiscal quarter period being
the "Reference Period"); provided that, in making the foregoing calculation, (a)
pro forma effect shall be given to any Indebtedness that is to be Incurred or
repaid on the Transaction Date as if such Incurrence or repayment had occurred
on the first day of such Reference Period; (b) pro forma effect shall be given
to Asset Dispositions and Asset Acquisitions (including giving pro forma effect
to the application of proceeds of any Asset Disposition) that occur during such
Reference Period or thereafter but on or prior to the Transaction Date as if
they had occurred and such proceeds had been applied on the first day of such
Reference Period; and (c) pro forma effect shall be given to asset dispositions
and asset acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition) that have been made by any Person that has
become a Restricted Subsidiary or has been merged with or into the Company or
any Restricted Subsidiary during such Reference Period or thereafter but on or
prior to the Transaction Date and that would have constituted Asset Dispositions
or Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period, provided that to the extent that clause (b) or (c) of this
sentence requires that pro forma
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<PAGE> 12
effect be given to an Asset Acquisition or Asset Disposition, such pro forma
calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed for which financial information is
available and shall be prepared in good faith by the Company on a basis
consistent with Regulation S-X under the Securities Act.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
filed with the Trustee pursuant to Section 4.12 (which shall be as of a date not
more than 90 days prior to the date of such computation, and which shall not
take into account Unrestricted Subsidiaries), less any amounts attributable to
Disqualified Stock or any equity security convertible into or exchangeable for
Indebtedness, the cost of treasury stock and the principal amount of any
promissory notes receivable from the sale of the Capital Stock of the Company or
any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office at the date hereof is located at Goodwin Square,
23rd floor, 225 Asylum Street, Hartford, CT 06103, except that, with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.
"Covenant Defeasance" has the meaning provided in Section 8.02(c).
"Cricket Communications Holdings" means Cricket Communications Holdings,
Inc.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in the form of
one or more Global Securities, DTC or another Person designated as Depositary by
the Company, which must be a clearing agency registered under the Exchange Act.
"Disinterested Director" means, with respect to any transaction,
including an acquisition of FCC wireless licenses, a member of the Board of
Directors who is not an officer or employee of the Company and would not be a
party to, or have a financial interest in, such transaction. For purposes of
this definition, no person would be deemed not to be a Disinterested Director
solely because such person holds Capital Stock of the Company.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the
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<PAGE> 13
Notes or (iii) convertible into or exchangeable for Capital Stock referred to in
clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to
the Stated Maturity of the Notes; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Notes shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are no more favorable to the holders of such Capital Stock than the provisions
contained in Sections 4.05 and 4.14 and such Capital Stock specifically provides
that such Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to Sections 4.05 and 4.14.
"DTC" means The Depository Trust Company.
"Event of Default" see Section 6.01.
"Excess Proceeds" see Section 4.05(A).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Exchange Offer" has the meaning provided in the Registration Rights
Agreement.
"Exchange Securities" means the 12 1/2% Senior Notes due 2010, Series B
and the 14 1/2% Senior Discount Notes due 2010, Series B, to be issued in
exchange for the Initial Securities pursuant to the Registration Rights
Agreement.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution; provided that the fair market
value of any FCC wireless licenses for purposes of the definition of "Qualified
Proceeds" shall be as determined in good faith by the Board of Directors,
including a majority of the Disinterested Directors, which determination shall
be conclusive if evidenced by a Board Resolution.
"FCC" means the Federal Communications Commission.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in the Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Notes and (ii) except
as otherwise provided, the amortization of any amount required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
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<PAGE> 14
"Global Securities" means one or more Reg. S Global Securities and 144A
Global Securities.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly Guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Guarantees" mean any unconditional and irrevocable Guarantees by the
Guarantors of the due and punctual payment of the principal of, premium, if any,
and interest on the Notes, on an unsecured basis in accordance with the terms of
Indenture, a form of which is attached hereto as part of Exhibit A and Exhibit
B.
"Guarantor" means any Subsidiary of the Company that executes a
Guarantee in accordance with the provisions of the Indenture and their
respective successors and assigns.
"Holder" means the record holder of a Note.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "Incurrence" of Indebtedness by reason of a Person
becoming a Restricted Subsidiary; provided that neither the accrual of interest
nor the accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(i) all indebtedness of such Person for borrowed money;
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit (including
trade letters of credit) securing obligations (other than obligations described
in (i) or (ii) above or (v), (vi) or (vii) below) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later
than the third Business Day following receipt by such Person of a demand for
reimbursement);
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more than
six months after the date of placing such property in service or taking delivery
and title thereto or the completion of such services, except Trade Payables;
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<PAGE> 15
(v) all Capitalized Lease Obligations;
(vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (a) the
fair market value of such asset at such date of determination and (b) the amount
of such Indebtedness;
(vii) all Indebtedness of other Persons guaranteed by such Person to the
extent such Indebtedness is guaranteed by such Person; and
(viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date (or in the case of a revolving credit or other
similar facility, the total amount of funds outstanding and/or available on the
date of determination) of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation; provided (1) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the unamortized
portion of the original issue discount of such Indebtedness at the time of its
issuance as determined in conformity with GAAP, (2) money borrowed at the time
of the Incurrence of any Indebtedness in order to pre-fund the payment of
interest on such Indebtedness shall be deemed not to be "Indebtedness" so long
as such money is held to secure the payment of such interest, (3) contingent
obligations arising in connection with the acquisition of any business or
Person, based on the future performance of such business or Person, shall not
constitute Indebtedness except to the extent such obligations are not paid
within seven business days of the date such contingency is resolved under GAAP
and are recorded as a liability on the books of the Company and its Subsidiaries
and (4) liabilities for federal, state, local or other taxes shall not
constitute Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Initial Securities" means the 12 1/2% Senior Notes due 2010, the
14 1/2% Senior Discount Notes due 2010, the warrants to purchase 5.146 shares of
common stock of the Company, issued in connection with the Senior Notes and the
warrants to purchase 2.503 shares of common stock of the Company issued in
connection with the Senior Discount Notes.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date on
April 15 and October 15 of each year, commencing April 15, 2000 for the Senior
Notes and commencing October 15, 2005 for the Senior Discount Notes.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
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<PAGE> 16
"Interest Record Date" for the interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the April 15 or
October 1 (whether or not a Business Day), as the case may be, immediately
preceding such Interest Payment Date.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of guarantee or
similar arrangement; but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (iii) of Section 4.15. For purposes of the
definition of "Unrestricted Subsidiary" and Section 4.06, (a) the amount of or a
reduction in an Investment shall be equal to the fair market value thereof at
the time such Investment is made or reduced and (b) in the event the Company or
any Restricted Subsidiary makes an Investment by transferring assets to any
Person and as part of such transaction receives Net Cash Proceeds, the amount of
such Investment shall be the fair market value of the assets less the amount of
Net Cash Proceeds so received, provided that the Net Cash proceeds are applied
in accordance with Section 4.05(A)(2)(a) and (A)(2)(b).
"License Subsidiary" means a Wholly Owned Subsidiary of the Company
directly owned by the Company formed for the purpose of holding wireless
licenses granted by the FCC.
"Licensed Domestic POPS" means the number of potential customers in the
geographic areas within the United States covered by wireless licenses granted
by the FCC and owned by the Company or any of its domestic Restricted
Subsidiaries based on population statistics published in a recognized
demographic data source using as a basis for its population estimates the most
recent U.S. Census Bureau Data.
"Lien" means any mortgage, pledge, security interest, encumbrance lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement, or lease in the nature thereof any agreement to
give any security interest.)
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (i) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (a) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (b) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (c) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (1) is
secured by a Lien on the property or assets sold or (2) is required to be paid
as a result of such sale and (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and
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other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (ii) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal, but
not interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary of the Company) and
proceeds from the conversion of other property received when converted to cash
or cash equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Notes" means the Company's 12 1/2% Senior Notes due 2010 and 14 1/2%
Senior Discount Notes due 2010.
"Offer to Purchase" means an offer by the Company to purchase Notes from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating:
(i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date");
(iii) that any Note not tendered will continue to accrue interest or
original issue discount pursuant to its terms;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest or original issue discount on and after the Payment
Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
Note completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day immediately preceding the Payment
Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; provided that each Note purchased shall be in an integral
multiple of $1,000 of the principal amount at maturity of the Notes and each new
Note issued shall be in a principal amount at maturity of $1,000 or integral
multiples thereof.
On the Payment Date, the Company shall: (a) accept for payment on a pro
rata basis Notes or portions thereof validly tendered pursuant to an Offer to
Purchase; (b) deposit with the Paying Agent
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<PAGE> 18
money sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (c) deliver, or cause to be delivered, to the Trustee all Notes or
portions thereof so accepted together with an Officer's Certificate specifying
the Notes or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail to the Holders of Notes so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered; provided that each Note purchased shall be in
an integral multiple of $1,000 of the principal amount at maturity of the Notes
and each new Note issued shall be in a principal amount at maturity of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase. To the extent that the provisions of any applicable federal
or state securities laws or regulations conflict with the provision of the
Indenture relating to an Offer to Purchase, the Company will comply with such
laws or regulations and will not be deemed to have breached such provisions of
the Indenture by virtue thereof.
"Officer" of any Person means the Chairman of the Board, the President,
any Executive Vice President, Senior Vice President or Vice President (whether
or not such title is preceded or followed by one or more words or phrases), the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of such Person.
"Officer's Certificate" of any Person means a certificate signed on
behalf of such Person by the principal executive officer, the principal
accounting officer or the principal financial officer of such Person.
"144A Global Security" means a permanent global security in registered
form representing the aggregate principal amount or aggregate principal amount
at maturity, as the case may be, of Securities sold in reliance on Rule 144A.
"Opinion of Counsel" means, except as provided in Section 2.16, a
written opinion in form and substance reasonably satisfactory to the Trustee
from legal counsel who is reasonably acceptable to the Company. The counsel may
be an employee of or counsel to the Company or the Trustee.
"Participant" has the meaning set forth in Section 2.15(a).
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Cricket Holdings Shares and Options" means the issuance by
Cricket Communications Holdings, Inc. of (i) shares of its common stock upon the
exercise of that certain warrant to be issued to Chase Telecommunications
Holdings, Inc. for a number of shares not to exceed 1% of its outstanding common
stock and (ii) options for common stock issued pursuant to stock option plans of
Cricket Communications Holdings, which have been approved by the Board of
Directors and shares of common stock issued upon exercise of such options.
"Permitted Investment" means:
(i) an Investment in the Company or a domestic Restricted Subsidiary or
a Person which will, upon the making of such Investment, become a domestic
Restricted Subsidiary or be merged or
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consolidated with or into or transfer or convey all or substantially all its
assets to, the Company or a domestic Restricted Subsidiary; provided that such
person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
Investment;
(ii) Temporary Cash Investments;
(iii) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses in
accordance with GAAP;
(iv) stock, obligations or securities received in satisfaction of
judgments;
(v) Investments in prepaid expenses, negotiable instruments held for
collection, and lease, utility and worker's compensation, performance and other
similar deposits made in the ordinary course of business;
(vi) Interest Rate Agreements and Currency Agreements designed solely to
protect the Company and its Restricted Subsidiaries against fluctuations in
interest rates or foreign currency exchange rates;
(vii) loans or advances to officers or employees of the Company or any
Restricted Subsidiary that do not in the aggregate exceed $3 million at any time
outstanding;
(viii) Investments in Restricted Subsidiaries of the Company in Chile
not to exceed $100 million in the aggregate after the Closing Date;
(ix) Investments existing on the Closing Date;
(x) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with Section 4.05;
and
(xi) Investments in securities received in satisfaction of accounts
receivable pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy of the obligor on such accounts receivable.
"Permitted Liens" means:
(i) Liens for taxes, assessments, governmental charges or claims that
are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made;
(ii) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made;
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(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security;
(iv) Liens incurred or deposits made (including deposits made to the
FCC) to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and
similar charges, encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of the Company or any
of its Restricted Subsidiaries;
(vi) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Closing Date; provided that (a) such Lien
is created solely for the purpose of securing Indebtedness Incurred, in
accordance with Section 4.04, (1) to finance the cost (including the cost of
design, development, acquisition, construction, installation, integration or
improvement) of the item of property or assets subject thereto and such Lien is
created prior to, at the time of or within six months after the later of the
acquisition, the completion of construction or the commencement of full
operation of such property or (2) to refinance any Indebtedness previously so
secured, (b) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of such cost and (c) any such Lien shall not extend to or cover
any property or assets other than such item of property or assets and any
improvements on such item;
(vii) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and its Restricted
Subsidiaries, taken as a whole;
(viii) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease;
(ix) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(x) Liens on property of, or on shares of Capital Stock or Indebtedness
of, any Person existing at the time such Person becomes, or becomes a part of,
any Restricted Subsidiary; provided that such Liens do not extend to or cover
any property or assets of the Company or any Restricted Subsidiary other than
the property or assets acquired;
(xi) Liens in favor of the Company or any Restricted Subsidiary;
(xii) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary of the Company that does not
give rise to an Event of Default;
(xiii) Liens securing reimbursement obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof;
(xiv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
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(xv) Liens encumbering customary initial deposits and margin deposit,
and other Liens that are either within the general parameters customary in the
industry and incurred in the ordinary course of business, in each case, securing
Indebtedness under Interest Rate Agreements and Currency Agreements and forward
contracts, options, future contracts, futures options or similar agreements or
arrangements designed solely to protect the Company or any of its Restricted
Subsidiaries from fluctuations in interest rates, currencies or the price of
commodities;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business;
(xvii) Liens on or sales of receivables;
(xviii) Liens on wireless licenses issued by the FCC to secure
obligations in favor of the FCC;
(xix) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in either case
to the extent such cash or government securities prefund the payment of interest
on such Indebtedness and are held in an escrow account or similar arrangement to
be applied for such purpose;
(xx) Liens on the Capital Stock of License Subsidiaries to secure
Indebtedness under credit facilities with any vendor, supplier or contractor (or
any financial institution providing financing arranged by or on behalf of such
vendor, supplier or contractor) permitted to be incurred under Section 4.04;
(xxi) Liens on promissory notes evidencing intercompany loans from the
Company to Restricted Subsidiaries to secure Indebtedness under credit
facilities with any vendor, supplier or contractor (or any financial institution
providing financing arranged by or on behalf of such vendor, supplier or
contractor) permitted to be Incurred under Section 4.04; and
(xxii) Liens that secure Indebtedness with an aggregate principal amount
not in excess of $10 million at any time outstanding.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated association, government or any agency political subdivision
thereof or any other entity.
"Physical Securities" means one or more certificated Securities in
registered form.
"Placement Agents" means, collectively, Morgan Stanley & Co.
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Bear Sterns &
Co., Inc., ABN AMRO Incorporated and Credit Suisse First Boston, each a
"Placement Agent."
"Pledge Account" means an account established with a securities
intermediary for the benefit of the Trustee pursuant to the terms of the Pledge
Agreement for the deposit of certain of the net cash proceeds from the Senior
Notes and the Pledged Securities to be purchased by the Company with such net
cash proceeds and all proceeds therefrom.
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"Pledge Agreement" means the Collateral Pledge and Security Agreement,
dated as of the Closing Date, made by the Company in favor of the Trustee
governing the security interest in, and the disbursement of funds from, the
Pledge Account, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"Pledged Securities" means the U.S. Government Obligations to be
purchased by the Company with a portion of the proceeds from the issuance and
sale of the Senior Notes and held by the Trustee in the Pledge Account in
accordance with the Pledge Agreement.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
now outstanding or issued after the Closing Date, including, without limitation,
all series and classes of such preferred stock or preference stock.
"principal" of a debt security, including the Notes, means the principal
amount due at maturity of the security, plus, when appropriate, the premium, if
any, on the security.
"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.
"Purchase Agreement" has the meaning ascribed to such term in the
introductory paragraphs to this Indenture.
"Qualified Equity Offering" means an underwritten primary public
offering or private placement of Capital Stock (other than Disqualified Stock)
of the Company resulting in aggregate Net Cash Proceeds to the Company of $50
million or more; provided, however, that no public offering or private placement
consummated on, or within 180 days after, the Closing Date shall constitute a
Qualified Equity Offering.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.
"Qualified Proceeds" means (i) Net Cash Proceeds received by the Company
on or after the Closing Date from the issuance and sale of its Capital Stock
(other than Disqualified Stock) to a Person that is not a Subsidiary of the
Company and (ii) 80% of the fair market value on the date of acquisition of FCC
wireless licenses acquired by the Company or its Restricted Subsidiaries after
the Closing Date to the extent the consideration paid therefor is Capital Stock
of the Company (other than Disqualified Stock).
"Redemption Date" when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"redemption price" when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as set forth in the form of Security annexed hereto as Exhibit A.
"Registrar" see Section 2.03.
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"Registration" means a registered exchange offer for the Securities by
the Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Date" see Section 4.12.
"Registration Rights Agreement" has the meaning ascribed to such term in
the introductory paragraphs to this Indenture.
"Responsible Officer" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Payment" see Section 4.06.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether or not any Security constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Group, a division of the
McGraw-Hill Companies.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities, the Transfer
Restricted Securities and the Unrestricted Securities treated as a single class
of securities, as amended or supplemented from time to time in accordance with
the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto.
"Senior Discount Notes" means the Company's 14 1/2% Senior Discount
Notes due 2010.
"Senior Notes" means the Company's 12 1/2% Senior Notes due 2010.
"Shelf Registration Statement" has the meaning provided in the
Registration Rights Agreement.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and
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payable and (ii) with respect to any scheduled installment of principal of or
interest on any debt security, the date specified in such debt security as the
fixed date on which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following:
(i) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United States
of America or any agency thereof, in each case (other than with respect to
Pledged Securities) maturing within one year after the date of acquisition;
(ii) time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States, and which bank or trust company has capital, surplus and undivided
profits aggregating in excess of $50 million (or the foreign currency equivalent
thereof) and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distribution;
(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with a bank meeting the qualifications described in clause (ii) above;
(iv) commercial paper, maturing not more than 270 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America, any
state thereof or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's or "A-1" (or higher) according to S&P; and
(v) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
Moody's.
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Indenture (except as provided in Section 9.03) until such time
as this Indenture is qualified under the TIA, and thereafter as in effect on the
date on which this Indenture is qualified under the TIA.
"Trade Payables" means, with respect to any Person, any accounts payable
or any other indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
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"Transfer Restricted Securities" means the Transfer Restricted
Securities as defined in the Registration Rights Agreement and any similar
securities issued in compliance with Section 2.02 in accordance with any other
registration rights agreement.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
"Trust Officer" means any officer within corporate trust administration
(or any successor group of the Trustee), and also means, with respect to a
particular corporate trust matter, any other officer to whom such trust matter
is referred because of his knowledge of and familiarity with the particular
subject, or in the case of a successor trustee, an officer assigned to the
department, division or group performing the corporation trust work of such
successor and assigned to administer this Indenture.
"United States Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Units" means 225,000 senior units consisting of $225,000,000 aggregate
principal amount of Senior Notes and Warrants and (ii) 668,000 senior discount
units consisting of $668,000,000 aggregate principal amount at maturity of
Senior Discount Notes and Warrants.
"Unrestricted Securities" means one or more Securities that do not and
are not required to bear the Private Placement Legend in the form set forth in
Exhibit A hereto, including, without limitation, the Exchange Securities and any
Securities registered under the Securities Act pursuant to and in accordance
with the Registration Rights Agreement.
"Unrestricted Subsidiary" means
(i) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and
(ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Restricted Subsidiary
(including any newly acquired or newly formed Subsidiary of the Company) to be
an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided that (a) any guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company
or such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (b) either (1) the Subsidiary to be so designated has total assets
of $1,000 or less or (2) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under Section 4.06 and (c) if applicable, the
Incurrence of Indebtedness and the Investment referred to in clause (a) of this
proviso would be permitted under Sections 4.04 and 4.06. The Board of Directors
may designate any Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that immediately after giving effect to such designation (x) all Liens
and Indebtedness of such Unrestricted Subsidiary outstanding immediately after
such designation would, if Incurred at such time, have been permitted to be
Incurred (and shall be deemed to have been Incurred) for all purposes of the
Indenture and (y) no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the
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Trustee a copy of the Board Resolution giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which full faith and credit of the United States of America is pledged and which
are not callable at the Company's option.
"Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Warrants" means the Warrants included as part of the Units issued on
the Closing Date.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person. Notwithstanding the foregoing Cricket Communications Holdings shall be
deemed Wholly Owned by the Company as long as the Company owns not less than 85%
of its outstanding Capital Stock on a fully diluted basis.
SECTION 1.02 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities and the Guarantees.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, a Guarantor or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in effect from
time to time, and any other reference in this Indenture to "generally accepted
accounting principles" refers to GAAP;
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(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act, the
Exchange Act, the TIA or any other applicable law shall be deemed to include
substitute, replacement of successor sections or rules adopted by the SEC from
time to time;
(7) references to any contract, instrument or agreement shall be deemed
to include any amendments, modifications or supplements thereto; and
(8) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01 Form and Dating.
(1) General. The Initial Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Trustee's certificate of authentication thereof
shall be substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rules or
usage. The Company shall approve the forms of the Securities and any notation,
legend or endorsement on them. Each Security shall be dated the date of its
issuance and shall show the date of its authentication. The Securities shall be
in denominations of $1,000 in principal amount at maturity and integral
multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of the Securities or Subsidiary Guarantee conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling. Global Securities shall bear the legend set
forth in Exhibit C hereto. The aggregate principal amount or aggregate principal
amount at maturity, as the case may be, of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, as hereinafter provided.
(2) Global Securities. Each Global Security shall represent such of the
outstanding Exchange Securities as shall be specified therein and each shall
provide that it shall represent the aggregate principal amount or aggregate
principal amount at maturity, as the case may be, of outstanding Exchange
Securities from time to time endorsed thereon and that the aggregate principal
amount or aggregate principal amount at maturity, as the case may be, of
outstanding Exchange Securities represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a
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Global Security to reflect the amount of any increase or decrease in the
aggregate principal amount or aggregate principal amount at maturity, as the
case may be, of outstanding Exchange Securities represented thereby shall be
made by the Trustee or the Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
SECTION 2.02 Execution and Authentication.
One Officer shall sign the Securities of the Company by manual or
facsimile signature.
If such Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. Such
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture. A Security shall be dated the date of its authentication.
The Trustee shall authenticate (i) Senior Notes issued by the Company
for original issue in an aggregate principal amount not to exceed $225 million
in one or more series and Senior Discount Notes issued by the Company for
original issue in an aggregate principal amount at maturity not to exceed $668
million in one or more series; provided that the aggregate principal amount of
Senior Notes on the Closing Date shall not exceed $225 million and the aggregate
principal amount at maturity of the Senior Discount Notes on the Closing Date
shall not exceed $668 million; and provided further that the Company complies
with Section 4.04, (ii) upon cancellation of the Initial Securities issued by
the Company, Exchange Securities issued by the Company for original issue in an
aggregate amount not to exceed $225 million in one or more series of Senior
Notes and $668 million in one or more series of Senior Discount Notes; provided
that the aggregate principal amount at maturity of Exchange Securities on the
date of exchange of Initial Securities to Exchange Securities shall not exceed
$225 million for the Senior Notes and $668 million for the Senior Discount
Notes, and provided further that the Company complies with Section 4.04, (iii)
Transfer Restricted Securities from time to time only in exchange for a like
principal amount of the same type of Initial Securities and (iv) Unrestricted
Securities from time to time (A) in exchange for a like principal amount of the
same type of Initial Securities or a like principal amount of the same type of
Transfer Restricted Securities or (B) as the Company may determine in accordance
with this Indenture, in each case upon a written order of the Company in the
form of an Officer's Certificate. Each such written order shall specify the
amount of and the type of Securities to be authenticated and the date on which
the Securities are to be authenticated, whether the Securities are to be Initial
Securities, Exchange Securities, Transfer Restricted Securities or Unrestricted
Securities and whether the Securities are to be issued as Physical Securities or
Global Securities and such other information as the Trustee may reasonably
request. The aggregate principal amount of Senior Notes outstanding at any time
may not exceed $225 million and the aggregate principal amount at maturity of
Senior Discount Notes outstanding at any time may not exceed $668 million,
except as provided in Sections 2.07 and 2.08.
In the event that the Company shall issue and the Trustee shall
authenticate any Securities issued under this Indenture subsequent to the
Closing Date pursuant to clauses (ii) and (iii) of the first sentence of the
immediately preceding paragraph, the Company shall use its reasonable best
efforts to obtain the same "CUSIP" number for such Securities as is printed on
the Securities outstanding at such time; provided, however, that if any series
of Securities issued under this Indenture subsequent to the Closing Date is
determined, pursuant to an Opinion of Counsel of the Company, to be a different
class of security than
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the Securities outstanding at such time for federal income tax purposes, the
Company may obtain a "CUSIP" number for such Securities that is different than
the "CUSIP" number printed on the Securities then outstanding.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Company and Affiliates of the
Company.
The Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange (the "Registrar"), (b)
Securities may be presented or surrendered for payment (the "Paying Agent") and
(c) notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the Trustee, may appoint one
or more co-Registrars and one or more additional Paying Agents. The term "Paying
Agent" includes any additional Paying Agent and the term "Registrar" includes
any co-Registrar. Except as provided herein, the Company or any Guarantor may
act as Paying Agent, Registrar or co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall promptly notify the Trustee of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee as Registrar and Paying Agent
until such time as the Trustee has resigned or a successor has been appointed.
The Company initially appoints DTC to act as Depositary with respect to the
Global Securities. The Company may appoint a successor Registrar and/or Paying
Agent without prior notice to the Holders and the Company or any of its
Subsidiaries may act as Paying Agent or Registrar.
SECTION 2.04 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any
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time during the continuance of any payment Default, upon written request to a
Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent (if other than the Company), the Paying Agent shall have no further
liability for such assets. If the Company or any Guarantor or any of their
respective Affiliates acts as Paying Agent, it shall, on or before each due date
of the principal of or interest on the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay the
principal or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
SECTION 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least five days before each Interest Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.06 Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities are
presented to the Registrar with a request to register the transfer of such
Securities or to exchange such Securities for an equal principal amount or
principal amount at maturity, as the case may be, of Securities of other
authorized denominations of the same series, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Securities surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Securities (and each of the Guarantors shall
execute a Guarantee thereon) at the Registrar's written request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith payable by the
transferor of such Securities (other than any such transfer taxes or other
governmental charge payable upon exchanges or transfers pursuant to Section
2.10, 3.06, 4.05, 4.14 or 9.06). The Registrar shall not be required to register
the transfer or exchange of any Security (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three
hereof, except the unredeemed portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any Agent shall treat the person in whose
name the Security is registered as the owner thereof for all purposes whether or
not the Security shall be overdue, and neither the Company, the Trustee nor any
Agent shall be affected by notice to the contrary. Any Holder of a beneficial
interest in a Global Security shall, by acceptance of such beneficial interest
in a Global Security, agree that transfers of beneficial interests in such
Global Security may be effected only through a book-entry system maintained by
the Depositary (or its agent), and that ownership of a beneficial interest in a
Global Security shall be required to be reflected in a book entry.
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SECTION 2.07 Replacement Securities.
If evidence of a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements for replacement of Securities
are met. If required by the Company or the Trustee, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee and any Agent from
any loss which any of them may suffer if a Security is replaced. The Company may
charge such Holder for its reasonable expenses in replacing a Security,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Company
and the Guarantors.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because the
Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date, Payment Date or the Stated Maturity the Paying
Agent holds money sufficient to pay all of the principal and interest due on the
Securities payable on that date, and is not prohibited from paying such money to
the Holders pursuant to the terms of this Indenture, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, a Guarantor or any of their respective Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned shall
be disregarded.
The Company shall promptly notify the Trustee, in writing, when the
Company, a Guarantor or any of their respective Affiliates repurchases or
otherwise acquires Securities and of the aggregate principal amount, or
aggregate principal amount at maturity, as the case may be, of such Securities
so repurchased or otherwise acquired.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities as soon as
practicable upon receipt of a written order of the Company in the form of an
Officer's Certificate. The Officer's Certificate shall specify the amount of
temporary Securities to be authenticated and the date on which the temporary
Securities are to be authenticated.
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Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate as soon as practicable upon receipt of a written
order of the Company pursuant to Section 2.02 definitive Securities in exchange
for temporary Securities. Holders of temporary Securities shall be entitled to
the benefits of this Indenture.
SECTION 2.11 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Company,
dispose of and deliver evidence of such disposal of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Company may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If the Company or any Guarantor shall
acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest.
The Company shall pay interest on overdue principal from time to time on
demand at the applicable rate of interest then borne by the Securities. The
Company shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the rate of
interest then borne by the Securities.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day preceding the date
fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(ii) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13 CUSIP Number.
The Company in issuing the Securities will use a "CUSIP" number and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company shall
promptly notify the Trustee of any changes in CUSIP numbers.
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SECTION 2.14 Deposit of Moneys.
Prior to 10:00 a.m., New York time, on each Interest Payment Date,
Redemption Date, Payment Date and the Stated Maturity, the Company shall deposit
with the Paying Agent in immediately available funds money sufficient to make
cash payments, if any, due on such Interest Payment Date, Redemption Date,
Payment Date or Stated Maturity, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Redemption Date, Asset Sale Offer Payment Date or Stated Maturity,
as the case may be; provided, however, with respect to the first seven scheduled
interest payments due on the Senior Notes, the Pledged Securities held pursuant
to the Pledge Agreement may satisfy the requirements of this Section 2.14.
SECTION 2.15 Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the name
of the Depositary or the nominee of such Depositary, (ii) be delivered to the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depositary ("Participants") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and Participants, the operation of customary practices governing the exercise of
the rights of a beneficial holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depositary and the provisions of Section 2.16; provided,
however, that Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for any Global Security and a successor Depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depositary to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety
to beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global
Securities shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall upon written instructions
from the Company authenticate and deliver, to each beneficial owner identified
by the Depositary in exchange for its beneficial interest in the Global
Securities, an equal aggregate principal amount, or aggregate principal amount
at maturity, as the case may be, of Physical Securities of authorized
denominations.
(d) Any Physical Security constituting a Restricted Security delivered
in exchange for an interest in a Global Security pursuant to paragraph (b) of
this Section 2.15 shall, except as otherwise provided by Section 2.16, bear the
Private Placement Legend.
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(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities.
SECTION 2.16 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal principal
amount of Physical Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.16 for such
transactions are met; provided, however, that the Physical Securities presented
or surrendered for Registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Registrar,
duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(II) in the case of Physical Securities the offer and
sale of which have not been registered under the Securities Act,
such Physical Securities shall be accompanied, in the sole
discretion of the Company, by the following additional
information and documents, as applicable:
(A) if such Physical Security is being delivered to the
Registrar by a Holder for Registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect (substantially in the form of
Exhibit D hereto); or
(B) if such Physical Security is being transferred to a QIB
in accordance with Rule 144A, a certification to that
effect (substantially in the form of Exhibit D hereto);
or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a
certification to that effect (substantially in the form
of Exhibit D hereto) and a transferee letter of
representation substantially in the form of Exhibit E
hereto and, at the option of the Company, an Opinion of
Counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being transferred in
reliance on Rule 144 under the Securities Act, delivery
of a certification to that effect (substantially in the
form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in
compliance with the Securities Act; or
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(E) if such Physical Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (substantially in the form of Exhibit D
hereto) and, at the option of the Company, an Opinion of
Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the
Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security, the offer and sale of which
has not been registered under the Securities Act, may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Registrar, together with:
(A) certification, substantially in the form of Exhibit D
hereto, that such Physical Security is being transferred
(I) to a QIB or (II) to an Institutional Accredited
Investor and, with respect to (II), at the option of the
Company, an Opinion of Counsel reasonably acceptable to
the Company to the effect that such transfer is in
compliance with the Securities Act; and
(B) written instructions directing the Registrar to make, or
to direct the Depositary to make, an endorsement on the
applicable Global Security to reflect an increase in the
aggregate amount of the Securities represented by the
Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depositary to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Registrar, the principal amount of
Securities represented by the applicable Global Security to be increased
accordingly. If no Global Security is then outstanding, the Company shall,
unless either of the events in the proviso to Section 2.15(b) have occurred and
are continuing, issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate such a Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor. Upon receipt by the Registrar of written instructions, or such other
instruction as is customary for the Depositary, from the Depositary or its
nominee, requesting the Registration of transfer of an interest in a Global
Security to another type of Global Security, together with the applicable Global
Securities (or, if the applicable type of Global Security required to represent
the interest as requested to be transferred is not then outstanding, only the
Global Security representing the interest being transferred), the Registrar
shall cancel such Global Securities (or Global Security) and the Company shall
issue and the Trustee shall, upon written instructions from the Company in
accordance with Section 2.02, authenticate new Global Securities of the types so
canceled (or the type so canceled and applicable type required to represent the
interest as requested to be transferred) reflecting the applicable increase and
decrease of the principal amount of Securities represented by such types of
Global Securities, giving effect to such transfer. If the applicable type of
Global Security required to represent the interest as requested to be
transferred is not outstanding at the time of such request, the Company shall
issue and the Trustee shall, upon written instructions from the Company in
accordance with Section 2.02, authenticate a new Global Security of such type in
principal amount equal to the principal amount of the interest requested to be
transferred.
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(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.
(i) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical Security;
provided, however, that prior to the Registration, a transferee that is a QIB or
Institutional Accredited Investor may not exchange a beneficial interest in a
Global Security for a Physical Security. Upon receipt by the Registrar of
written instructions, or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any Person (subject
to the previous sentence) having a beneficial interest in a Global Security and
upon receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depositary or the Person designated by the
Depositary as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a beneficial
interest in Securities the offer and sale of which have not been registered
under the Securities Act, the following additional information and documents:
(A) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act, delivery
of a certification to that effect (substantially in the
form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(B) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (substantially in the form of Exhibit D
hereto) and, at the option of the Company, an Opinion of
Counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the
Securities Act,
then the Registrar will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar, the aggregate
principal amount, or aggregate principal amount at maturity, as the case may be,
of the applicable Global Security to be reduced and, following such reduction,
the Company will execute and, upon receipt of an authentication order in the
form of an Officer's Certificate in accordance with Section 2.02, the Trustee
will authenticate and deliver to the transferee a Physical Security in the
appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Registrar in writing. The Registrar shall deliver such Physical
Securities to the Persons in whose names such Physical Securities are so
registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Private Placement Legend. Upon the transfer, exchange or replacement
of Securities not bearing the Private Placement
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Legend, the Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar shall deliver only
Securities that bear the Private Placement Legend unless, and the Trustee is
hereby authorized to deliver Securities without the Private Placement Legend if,
(i) there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act; (ii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act (including pursuant to a Registration); or (iii) the date of such
transfer, exchange or replacement is two years after the later of (x) the
Closing Date and (y) the last date that the Company or any affiliate (as defined
in Rule 144 under the Securities Act) of the Company was the owner of such
Securities (or any predecessor thereto).
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture. Subject to the provisions of the Warrant Agreement, each Note
and Warrant will trade as a Unit.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Participants or
beneficial owners of interest in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable prior written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01 Notices to Trustee.
If the Company wants to redeem Securities of one or both series pursuant
to paragraph 7 or 8 of the Securities at the applicable redemption price set
forth thereon, it shall notify the Trustee in writing of the Redemption Date and
the principal amount of Securities to be redeemed, together with an Officer's
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.02 Selection of Securities to Be Redeemed.
If less than all of the Securities of one or both series are to be
redeemed at any time, the Trustee will select Securities for redemption as
follows:
(1) if the Securities are listed, in compliance with the
requirements of the principal national securities exchange on which the
Securities are listed; or
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(2) if the Securities are not so listed, on a pro rata basis or
by such method as the Trustee shall deem appropriate.
No Securities of $1,000 or less in principal amount or Accreted Value
shall be redeemed in part. Notices of redemption shall be mailed by first class
mail at least 30 but not more than 60 days before the Redemption Date to each
Holder to be redeemed at its registered address. Notices of redemption may not
be conditional.
If any Security is to be redeemed in part only, the notice of redemption
that relates to that Security shall state the portion of the principal amount or
Accreted Value thereof to be redeemed. A new Security in principal amount or
Accreted Value equal to the unredeemed portion of the original Security will be
issued in the name of the Holder thereof upon cancellation of the original
Security. Securities called for redemption become due on the date fixed for
redemption. On and after the Redemption Date, interest ceases to accrue on
Securities or portions of them called for redemption.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address.
Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:
(1) the paragraph of the Securities pursuant to which the
Securities are being redeemed;
(2) the Redemption Date;
(3) the redemption price;
(4) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;
(5) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to
the Paying Agent; and
(7) if any Security is being redeemed in part, the portion of
the principal amount or Accreted Value of such Security to be redeemed
and that, after the Redemption Date, upon surrender of such Security, a
new Security or Securities in principal amount or Accreted Value equal
to the unredeemed portion thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense; provided that the Company shall give notice
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of redemption to the Trustee at least 25 days before the date the notice of
redemption is requested by the Company to be mailed to the Holders (unless a
shorter notice period shall be agreed to by the Trustee in writing).
SECTION 3.04 Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price, plus accrued interest thereon, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date. The Trustee or Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amount necessary to pay the redemption price of, and
accrued and unpaid interest on, all Securities to be redeemed.
SECTION 3.05 Deposit of Redemption Price.
Prior to 10:00 a.m., New York time, on the Redemption Date, the Company
shall deposit with the Paying Agent (or if the Company is Paying Agent, shall,
on or before the Redemption Date, segregate and hold in trust) money sufficient
to pay the redemption price of and accrued interest, if any, on all Securities
to be redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Company to the Trustee
for cancellation.
If the Company complies with the provisions of the preceding paragraph,
on and after the Redemption Date, interest shall cease to accrue on the
Securities or the portions of Securities called for redemption. If a Security is
redeemed on or after an Interest Record Date but on or prior to the related
Interest Payment Date, then any accrued and unpaid interest shall be paid to the
person in whose name such Security was registered at the close of business on
such record date. Upon surrender of a Security for redemption in accordance with
the notice given pursuant to Section 3.03 hereof, such Security shall be
purchased by the Company at the redemption price, together with accrued and
unpaid interest to the Redemption Date.
If any Security surrendered for redemption in the manner provided in the
Securities shall not be so paid on the Redemption Date due to the failure of the
Company to deposit with the Paying Agent money sufficient to pay the redemption
price thereof, the principal and accrued and unpaid interest, if any, thereon
shall, until paid or duly provided for, bear interest as provided in Sections
2.12 and 4.01 with respect to any payment default.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company shall
issue and, upon receipt of the Company's request, the Trustee shall as soon as
practicable authenticate for the Holder a new Security equal in principal amount
or Accreted Value, as the case may be, to the unredeemed portion of the Security
surrendered.
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SECTION 3.07 Optional Redemption.
(a) At any time prior to April 15, 2003, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of the
Senior Notes and/or up to 35% of the aggregate principal amount at maturity of
the Senior Discount Notes originally issued under the Indenture at a redemption
price (i) for the Senior Notes, of 112.50% (expressed as a percentage of
principal amount), and (ii) for the Senior Discount Notes, of 114.50% (expressed
as a percentage of Accreted Value on the Redemption Date), in either case plus
accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date), with the
net cash proceeds of one or more Qualified Equity Offerings; provided that:
(1) at least 65% of the aggregate principal amount of the Senior
Notes and/or at least 65% of the aggregate principal amount at maturity
of Senior Discount Notes issued on the Closing Date remains outstanding
immediately after the occurrence of such redemption (excluding
Securities held by the Company and its Subsidiaries); and
(2) notice of such redemption must be given within 60 days after
consummation of such Qualified Equity Offering.
(b) Except as set forth in paragraph (a) of this Section 3.07, the
Securities will not be redeemable at the Company's option prior to April 15,
2005. On or after April 15, 2005, the Company may redeem the Securities of one
or both series, in whole or from time to time in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices set forth below plus accrued
and unpaid interest thereon, if any, to the applicable Redemption Date (subject
to the right of Holders of record on the relevant Regular Record Date that is
prior to the Redemption Date to receive interest due on an Interest Payment
Date), if redeemed during the twelve-month period beginning on April 15 of the
years indicated below:
<TABLE>
<CAPTION>
SENIOR DISCOUNT NOTE
REDEMPTION PRICE
SENIOR NOTE REDEMPTION PRICE (EXPRESSED AS
(EXPRESSED AS PERCENTAGES OF PERCENTAGES OF PRINCIPAL
YEAR PRINCIPAL AMOUNT) AMOUNT AT MATURITY)
---- ---------------------------- ------------------------
<S> <C> <C>
2005 ................................. 106.250% 107.250%
2006 ................................. 104.167% 104.833%
2007 ................................. 102.083% 102.417%
2008 and thereafter .................. 100.000% 100.000%
</TABLE>
ARTICLE FOUR
COVENANTS
SECTION 4.01 Payment of Securities.
The Company shall pay the principal of and interest, if any, on the
Securities in the manner provided in the Securities and the Registration Rights
Agreement. An installment of principal or interest shall
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<PAGE> 41
be considered paid on the date due if the Trustee or Paying Agent (other than
the Company, a Guarantor or any of their respective Affiliates) (i) holds on
that date money designated for and sufficient to pay the installment in full and
(ii) is not prohibited from paying such money to the Holders of the Securities
pursuant to the terms of this Indenture or the Notes.
The Company shall pay cash interest on overdue principal at the same
rate per annum borne by the applicable Securities. The Company shall pay cash
interest on overdue installments of interest at the same rate per annum borne by
the applicable Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.03. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 12.02.
The Company hereby initially designates the Trustee's corporate trust office at
61 Broadway, New York, New York 10006 as its office or agency in the Borough of
Manhattan, The City of New York, for such purposes.
SECTION 4.03 Limitations on Transactions with Stockholders and Affiliates.
(A) The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of any class of Capital Stock of the
Company or with any Affiliate of the Company or any Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or, if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
(B) The foregoing limitation does not limit, and shall not apply to (i)
transactions (a) approved by a majority of the Disinterested Directors or (b)
for which the Company or a Restricted Subsidiary delivers to the Trustee a
written opinion of a nationally recognized investment banking firm stating that
the transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view; (ii) any transaction solely between the Company and any
of its Wholly Owned Restricted Subsidiaries or solely between Wholly Owned
Restricted Subsidiaries; (iii) the payment of reasonable and customary regular
fees to directors of the Company who are not employees of the Company; (iv) any
payments or other transactions pursuant to any tax-sharing agreement between the
Company and any other Person with which the Company files a consolidated tax
return or with which the Company is part of a consolidated group for tax
purposes; or (v) any Restricted Payments not prohibited by Section 4.06.
Notwithstanding the foregoing, any transaction covered by the first paragraph of
this Section 4.03 and not covered by clauses (ii) through (v) of this paragraph,
(1) must be approved in the manner provided for in clause (i)(a) above and a
certified Board Resolution to such effect delivered to the Trustee, if the
aggregate amount of such transaction exceeds $2 million, and (2) must be
determined fair in the manner provided for in clause (i)(b) above, if the
aggregate amount of such transaction exceeds $10 million.
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<PAGE> 42
SECTION 4.04 Limitation on Indebtedness.
(A) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes issued on the
Closing Date and Indebtedness existing on the Closing Date); provided that the
Company may Incur Indebtedness if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Consolidated Leverage Ratio would be greater than zero and less than 6 to 1.
(B) Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following.
(i) Indebtedness under one or more credit facilities in an aggregate
principal amount not to exceed $300 million, less any amount of such
Indebtedness permanently repaid as provided under the Section 4.05;
(ii) Indebtedness owed (a) by a Restricted Subsidiary to the Company
or (b) by the Company or a Restricted Subsidiary to any Restricted Subsidiary;
provided that (1) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness shall be evidenced by a promissory note
expressly subordinated to the Notes and any Guarantees and if any Restricted
Subsidiary is the obligor on any such Indebtedness to the Company or a Guarantor
such Indebtedness shall be evidenced by a promissory note which is
unsubordinated except to secured Indebtedness permitted under the Indenture, and
(2) any event which results in any Restricted Subsidiary which is an obligor on
such Indebtedness ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi), (viii) or (x) of this
paragraph) and any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and expenses);
provided that Indebtedness the proceeds of which are used to refinance or refund
the Notes or Indebtedness that is pari passu with, or subordinated in right of
payment to, the Notes or the Guarantees shall only be permitted under this
clause (iii) if (a) in case the Notes are refinanced in part or the Indebtedness
to be refinanced is pari passu with the Notes or any Guarantees, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes or such
Guarantees, (b) in case the Indebtedness to be refinanced is subordinated in
right of payment to the Notes and the Guarantees, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made subordinate in
right of payment to the Notes and the Guarantees at least to the extent that the
Indebtedness to be refinanced is subordinated to the Notes and the Guarantees
and (c) such new Indebtedness, determined as of the date of Incurrence of such
new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company or any Guarantor be refinanced by means of any
Indebtedness of any Restricted Subsidiary that is not a Guarantor pursuant to
this clause (iii);
(iv) Indebtedness (a) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (b) under Currency Agreements
and Interest Rate Agreements;
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<PAGE> 43
provided that such agreements (1) are designed solely to protect the Company or
its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (2) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; or (c) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary of the Company (other than guarantees
of Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary of the Company for the purpose of
financing such acquisition), in a principal amount not to exceed the gross
proceeds actually received by the Company or any Restricted Subsidiary in
connection with such disposition;
(v) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (a) used to purchase Notes tendered in an Offer to Purchase
made as a result of a Change in Control or (b) deposited to defease the Notes as
described below under Section 8.02;
(vi) Guarantees of the Notes and guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the guarantee of such Indebtedness
is permitted by and made in accordance with Section 4.21;
(vii) Indebtedness (including guarantees of such indebtedness)
Incurred to finance the cost (including the cost of design, development, site
acquisition, construction, installation, integration or improvement) of
equipment, inventory or telecommunications network assets acquired (including by
way of Capital Lease and acquisitions of Capital Stock of a Person that becomes
a Restricted Subsidiary to the extent of the fair market value of the equipment,
inventory or network assets so acquired) by the Company or any Restricted
Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times Qualified Proceeds received by the Company to the extent
such Qualified Proceeds have not been used pursuant to clause (C)(2) of the
first paragraph of, or clauses (iii), (iv), (vii), (viii) or (ix) of the second
paragraph, of Section 4.06 to make a Restricted Payment; provided that such
Indebtedness does not mature prior to the Stated Maturity of the Notes and has
an Average Life longer than the Notes;
(ix) Acquired Indebtedness of Restricted Subsidiaries of the Company
to the extent that the Company could have Incurred such Indebtedness in
accordance with the first paragraph of this covenant on the date such
Indebtedness becomes Acquired Indebtedness of such Restricted Subsidiary; and
(x) Indebtedness Incurred by the Company not otherwise permitted to
be Incurred pursuant to clauses (i) through (ix) above, which together with all
other Indebtedness Incurred pursuant to this clause (x), has an aggregate
principal amount not in excess of $20 million at any time outstanding.
(C) Notwithstanding any other provisions of this Section 4.04, (i) the
Company and its domestic Restricted Subsidiaries may not Incur Indebtedness
pursuant to paragraph (a) or clauses (i) through (x) of Section 4.04(B), if
after giving effect to the Incurrence of such Indebtedness, the aggregate
principal amount of Indebtedness of the Company and its domestic Restricted
Subsidiaries would exceed the sum of (1) the product of $75.00 multiplied by
Licensed Domestic POPS plus (2) the principal amount of Indebtedness
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<PAGE> 44
Incurred on or after the Closing Date, the proceeds of which are used to make
Investments which constituted Permitted Investments pursuant to clause (viii) of
the definition of "Permitted Investments" in an aggregate principal amount not
to exceed $100 million (such sum being the "Aggregate Limitation"), provided
that the Company and its domestic Restricted Subsidiaries may Incur Indebtedness
pursuant to paragraph (a) or clauses (i) through (x) of Section 4.04(B) in
excess of the Aggregate Limitation in an aggregate principal amount not to
exceed the product of $10.00 multiplied by Licensed Domestic POPS, to the extent
the payment of principal of, premium if any, interest and other payment
obligations in respect of such Indebtedness is expressly subordinate to the
prior payment in full in cash of the Notes or any Guarantee, as the case may be,
and any other Indebtedness of the Company or its domestic Restricted
Subsidiaries, as the case may be, permitted to be Incurred under the Indenture
and designated by the Company or such Restricted Subsidiary as senior
indebtedness; and (ii) Cricket Communications Holdings may not Incur any
Indebtedness other than the Guarantee of the Notes and guarantees of (1)
Indebtedness of Cricket Communications, Inc. and (2) Indebtedness of the Company
to the extent the proceeds of such Indebtedness are contributed to Cricket
Communications Holdings.
(D) Notwithstanding any other provision of this Section 4.04, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.04 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness, due solely to the result of
fluctuations in the exchange rates of currencies.
(E) For purposes of determining any particular amount of Indebtedness
under this Section 4.04, (i) guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (ii) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.17
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.04, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify and from time to
time may reclassify such item of Indebtedness and only be required to include
the amount and type of such Indebtedness in one of such clauses.
SECTION 4.05 Limitation on Asset Sales.
(A)(1) The Company will not, and will not permit any Restricted
Subsidiary to, consummate any Asset Sale, unless (i) the consideration received
by the Company or such Restricted Subsidiary is at least equal to the fair
market value of the assets sold or disposed of as evidenced by a Board
Resolution filed with the Trustee, and (ii) at least 75% of the consideration
received consists of cash or Temporary Cash Investments, provided that the
amount of any (a) liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Guarantee) that are assumed by the
transferee of any such assets pursuant to an agreement that irrevocably releases
the Company or such Restricted Subsidiary from further liability shall be deemed
to be cash for purposes of this provision.
(2) In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Trustee pursuant to Section 4.12), then the Company shall or
shall cause the relevant Restricted Subsidiary to (i) within 12 months after the
date Net Cash Proceeds
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<PAGE> 45
so received exceed 10% of Adjusted Consolidated Net Tangible Assets (a) apply an
amount equal to such excess Net Cash Proceeds to permanently repay
unsubordinated Indebtedness of the Company or any Guarantor or Indebtedness of
any other Restricted Subsidiary, in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (b) invest an equal amount, or
the amount not so applied pursuant to clause (a) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and (ii) apply
(no later than the end of the 12-month period referred to in clause (i)) such
excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as
provided in the following paragraph of this Section 4.05. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such twelve-month period as set forth in clause (i) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
(3) If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this Section 4.05 totals at least $10,000,000, the Company must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount of the Senior Notes or
Accreted Value of the Senior Discount Notes, plus, in each case, accrued
interest (if any) to the Payment Date.
On or before 10:00 a.m., New York time, on the Payment Date, the Company
shall (i) accept for payment Securities or portions thereof validly tendered
pursuant to the Offer to Purchase which are to be purchased in accordance with
this Section 4.05, (ii) deposit with the Paying Agent United States Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities to be purchased and (iii) deliver to the Trustee Securities so
accepted together with an Officer's Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Securities so accepted payment in an amount equal to the
purchase price plus accrued interest, if any. For purposes of this Section 4.05,
the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to an
Offer to Purchase shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to an Offer to Purchase. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.05, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.05 by virtue thereof.
SECTION 4.06 Limitation on Restricted Payments.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly:
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<PAGE> 46
(i) declare or pay any dividend or make any distribution on or with
respect to the Company's or such Restricted Subsidiary's Capital Stock (other
than (a) dividends or distributions payable solely in shares of the Company's or
such Restricted Subsidiary's Capital Stock of the same class (other than
Disqualified Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock and (b) pro rata dividends or distributions on Common Stock
of any Restricted Subsidiary held by minority interest holders) held by Persons
other than the Company or any of its Restricted Subsidiaries;
(ii) purchase, call for redemption or redeem, retire or otherwise
acquire for value any shares of Capital Stock of (a) the Company or any
Guarantor or any Unrestricted Subsidiary (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Person or (b) a
Restricted Subsidiary other than a Guarantor (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any Affiliate of
the Company (other than a Wholly Owned Restricted Subsidiary) or any holder (or
any Affiliate of such holder) of 5% or more of the Capital Stock of the Company;
(iii) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or retirement
for value, of Indebtedness of the Company or any Guarantor that is subordinated
in right of payment to the Notes or any Guarantee; or
(iv) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (i) through (iv)
being collectively "Restricted Payments") if, at the time of, and after giving
effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing, or would result from such Restricted Payment;
(B) after giving pro forma effect to such Restricted Payment as
if such Restricted Payment had been made at the beginning of the
applicable four-fiscal quarter period, the Company could not Incur at
least $1.00 of Indebtedness pursuant to Section 4.04(A); or
(C) the aggregate amount of all Restricted Payments (the amount,
if other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) made after the Closing Date shall exceed the sum of:
(1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of
assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during
the period (taken as one accounting period) beginning on the
first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal
quarter preceding the Transaction Date for which reports have
been filed with the Trustee pursuant to Section 4.12; plus
(2) the aggregate Qualified Proceeds received by the
Company (except to the extent such Qualified Proceeds are used
to Incur Indebtedness pursuant to clause (viii) under Section
4.04(B) or from the issuance to a Person who is not a Subsidiary
of the Company of any options, warrants or other rights to
acquire Capital Stock of the Company (in each case, exclusive of
any Disqualified Stock or any options, warrants or other rights
that
40
<PAGE> 47
are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Notes); plus
(3) an amount equal to the net reduction in Investments
(other than reductions in Permitted Investments) in any Person
resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets,
in each case to the Company or any Restricted Subsidiary or from
the Net Cash Proceeds from the sale of any such Investment
(except, in each case, to the extent any such payment or
proceeds are included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed, in
each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition
or retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (iii) of Section 4.04(B);
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company (or options, warrants or other rights to acquire
such Capital Stock) in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other
than Disqualified Stock) of the Company other than to a Subsidiary of
the Company;
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company or any Guarantor which is subordinated in
right of payment to the Notes or the Guarantees in exchange for, or out
of the proceeds of, a substantially concurrent offering of, shares of
the Capital Stock of the Company (other than Disqualified Stock);
(v) payments or distributions to dissenting stockholders that
are not Affiliates of the Company or any of its Subsidiaries pursuant to
applicable law pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of the Company;
(vi) the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of Capital Stock of the Company to
the extent necessary in the good faith judgment of the Board of
Directors of the Company, to prevent the loss or secure the renewal or
reinstatement of any material license or franchise held by the Company
or any Restricted Subsidiary from any governmental agency;
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<PAGE> 48
(vii) the purchase, redemption, retirement or other acquisition
for value of Capital Stock of the Company or Cricket Communications
Holdings, or options to purchase such shares, held by directors,
employees or former directors or employees of the Company or any
Restricted Subsidiary (or their donees, trusts for their benefit or the
benefit of their family members, their estates or beneficiaries under
their estates) upon death, disability, retirement, termination of
employment or pursuant to the terms of any agreement under which such
shares of Capital Stock or options were issued; provided that the
aggregate consideration paid for such purchase, redemption, acquisition,
cancellation or other retirement of such shares of Capital Stock or
options after the Closing Date does not exceed (a) $2 million in any
fiscal year or (b) $5 million in the aggregate, plus in the case of each
of clause (a) and clause (b), the aggregate Net Cash Proceeds received
by the Company from the issuance of Capital Stock to directors,
employees or former directors or employees of the Company or any
Restricted Subsidiary, provided that the amount of any such Net Cash
Proceeds that are utilized for any such purchase, redemption, retirement
or other acquisition shall be excluded from clause (C)(2) of the first
paragraph of this Section 4.06;
(viii) Investments in any Person that is primarily engaged in a
business that is related, ancillary or complementary to the business of
the Company and its Restricted Subsidiaries on the date of such
Investment; provided that the aggregate amount of such Investments
(after taking into account the amount of all other Investments made
pursuant to this subclause (viii)) does not exceed the sum of (a)
$10,000,000 and (b) the amount of Qualified Proceeds received by the
Company, except to the extent such Qualified Proceeds are used to Incur
Indebtedness pursuant to clause (viii) under Section 4.04(B) or to make
Restricted Payments pursuant to clause (C)(2) of the first paragraph, or
clauses (iii), (iv) or (vii) of this paragraph, of this Section 4.06;
(ix) Investments acquired in exchange for Capital Stock (other
than Disqualified Capital Stock) of the Company;
(x) the redemption by the Company of any of the Warrants
pursuant to the mandatory disposition or redemption provisions thereof
or any purchase of any fractional share of Common Stock (or other
Capital Stock of the Company issuable upon exercise of the Warrants) in
connection with an exercise of the Warrants;
(xi) repurchases of Capital Stock deemed to occur upon the
exercise of stock options or warrants if such Capital Stock represents a
portion of the exercise price thereof;
(xii) other Restricted Payments in an aggregate amount not to
exceed $10 million; provided that, except in the case of clauses (i) and
(iii), no Default or Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set
forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof and an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof, or an Investment referred to in clause (ix)
thereof or repurchases of Capital Stock referred to in clause (xi) thereof), and
the Qualified Proceeds from any issuance of Capital Stock referred to in clauses
(iii), (iv) and (viii), shall be included in calculating whether the conditions
of clause (C) of the first paragraph of this Section 4.06 have been met with
respect to any subsequent Restricted Payments. In the event the proceeds of an
issuance of Capital Stock of the Company are used for the redemption, repurchase
or other acquisition of the Notes, or Indebtedness that is pari passu with the
Notes, then the Qualified Proceeds of such issuance shall be included in clause
(C) of the first paragraph of
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this Section 4.06 only to the extent such proceeds are not used for such
redemption, repurchase or other acquisition of Indebtedness.
In making the computations required by this Section 4.06, (i) the
Company may use audited financial statements for the portions of the relevant
period for which audited financial statements are available on the date of
determination and unaudited financial statements and other current financial
data based on the books and records of the Company for the remaining portion of
such period and (ii) the Company will be permitted to rely in good faith on the
financial statements and other financial data derived from its books and records
that are available on the date of determination. If the Company makes a
Restricted Payment that, at the time of the making of such Restricted Payment,
would in the good faith determination of the Company be permitted under the
requirements of this Indenture, such Restricted Payment will be deemed to have
been made in compliance with this Indenture notwithstanding any subsequent
adjustments made in good faith to the Company's financial statements which
adjustments affect any of the financial data used to make the calculations with
respect to such Restricted Payment.
SECTION 4.07 Compliance with Laws.
The Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Restricted Subsidiaries, taken
as a whole.
SECTION 4.08 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (2) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, might by law become a material
liability, or Lien upon the property, of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate provision has been made.
SECTION 4.09 Notice of Defaults.
Upon becoming aware of any Default or Event of Default, the Company
shall promptly (and in any event within 5 Business Days) deliver an Officer's
Certificate to the Trustee specifying the Default or Event of Default and what
action the Company is proposing to take with respect thereto.
SECTION 4.10 Maintenance of Properties and Insurance.
(a) Subject to Article Five, the Company shall cause all material
properties owned by or leased to it or any Restricted Subsidiary and used or
useful in the conduct of its business or the business of any Restricted
Subsidiary to be maintained and kept in normal condition, repair and working
order (other than ordinary wear and tear) and supplied with all necessary
equipment and shall cause to be made all necessary
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repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 4.10 shall prevent the Company
or any Restricted Subsidiary from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or the Restricted Subsidiary concerned, or of an Officer (or other agent
employed by the Company or of any Restricted Subsidiary) of the Company or such
Restricted Subsidiary having managerial responsibility for any such property,
desirable in the conduct of the business of the Company or any Restricted
Subsidiary.
(b) The Company shall maintain, and shall cause the Restricted
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions as, in the judgment of the Company, may be
necessary.
SECTION 4.11 Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after the close
of each fiscal year a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company
stating that a review of the activities of the Company and its Restricted
Subsidiary has been made under the supervision of the signing officers with a
view to determining whether a Default or Event of Default has occurred and
whether or not the signers know of any Default or Event of Default by the
Company that occurred during such fiscal year and is continuing. If they do know
of such a Default or Event of Default, the certificate shall describe all such
Defaults or Events of Default, their status and the action the Company is taking
or proposes to take with respect thereto. The first certificate to be delivered
by the Company pursuant to this Section 4.11 shall be for the fiscal year ending
[December 31], 2000.
SECTION 4.12 Reports to Holders.
The Company will furnish to each of the Holders of the Notes within the
time period specified in the SEC's rules and regulations:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on forms 10-Q and form
10-K as if the Company were required to file such financial information,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" that describes the financial condition and results of
operations of the Company and any consolidated Subsidiaries and, with respect to
the annual information only, reports thereon by the Company's independent public
accountants (which shall be firms of established national reputation) and
(ii) all information that will be required to be filed with the SEC on
form 8-K as if the Company were required to file such reports.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, or if any of the Company's Subsidiaries are not Guarantors, then
the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of the Company and its
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Restricted Subsidiaries that are Guarantors separate from the financial
condition and results of operations of the Subsidiaries that are not Guarantors
and the Unrestricted Subsidiaries of the Company.
In addition, whether or not required by the SEC, the Company will file a
copy of all of the information and reports referred to in clauses (i) and (ii)
of this Section 4.12 with the SEC for public availability within the time
periods specified in the SEC rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request for as long as any Notes remain
outstanding.
The Company will also be required (a) to supply the Trustee and each
Holder of Securities, or supply to the Trustee for forwarding to each such
Holder, without cost to such Holder, copies of such reports and other documents
within 15 days after the date on which the Company files such reports and
documents with the Commission or the date on which the Company would be required
to file such reports and documents if the Company were so required and (b) if
filing such reports and documents with the Commission is not accepted by the
Commission or is prohibited under the Exchange Act, to supply at the Company's
cost copies of such reports and documents to any prospective Holder of
Securities promptly upon written request. In addition, the Company shall furnish
to the Holders and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
SECTION 4.13 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law, which would prohibit or forgive the
Company or such Guarantor from paying all or any portion of the principal of
and/or interest, if any, on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company and each Guarantor hereby expressly waive all
benefit or advantage of any such law, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.14 Repurchase of Notes upon a Change of Control.
The Company must commence, within 30 days of the occurrence of a Change
of Control, and consummate an offer to Purchase for all Notes then outstanding,
at a purchase price in cash equal to 101% of the principal amount of the Senior
Notes or Accreted Value of the Senior Discount Notes, plus accrued and unpaid
interest (if any) to the Payment Date.
On or before 10:00 a.m., New York time, on the Payment Date, the Company
shall (i) accept for payment Securities or portions thereof validly tendered
pursuant to the Offer to Purchase, (ii) deposit with the Paying Agent an amount
equal to the purchase price in respect of all Securities or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Securities so
accepted together with
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an Officer's Certificate stating the aggregate principal amount, or aggregate
principal amount at maturity, as the case may be, of Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so tendered the purchase price for such securities,
and the Trustee shall promptly authenticate and mail (or cause to be transferred
by book entry) to such Holders new Securities equal in principal amount or
principal amount at maturity to any unpurchased portion of the Securities
surrendered, if any; provided that each such new security will be in a principal
amount or principal amount at maturity of $1,000 or an integral multiple
thereof. Any Securities not so accepted shall be promptly mailed by the Company
to the Holder thereof. For purposes of this Section 4.14, the Trustee shall act
as the Paying Agent.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to an Offer to Purchase.
The provisions described above that require the Company to make an Offer
to Purchase following a Change of Control will be applicable regardless of
whether or not any other provisions of this Indenture are applicable.
SECTION 4.15 Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries.
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to the Company or a Wholly
Owned Restricted Subsidiary; (ii) issuances of director's qualifying shares or
sales to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) Permitted Cricket
Holdings Shares and Options; (iv) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary, provided any Investment in such Person remaining after
giving effect to such issuance or sale would have been permitted to be made
under Section 4.06, if made on the date of such issuance or sale, or (iv)
issuances and sales of Common Stock of any Restricted Subsidiary, provided that
the Company or such Restricted Subsidiary applies the Net Cash Proceeds of any
such sale in accordance with Section 4.05(A)(2)(a) or (A)(2)(b).
SECTION 4.16 Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
(a) The Company will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make
loans or advances to the Company or any other Restricted Subsidiary or (iv)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary.
(b) The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in this Indenture, the Pledge
Agreement or any other agreements in effect on the Closing Date, and any
amendments, extensions, refinancings, renewals or replacements of such
agreements; provided that the encumbrances and restrictions in any such
amendments, extensions, refinancings, renewals or replacements
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are no less favorable in any material respect to the Holders than those
encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted
Subsidiary, existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person so acquired;
(iv) in the case of Section 4.16(a)(iv), (a) that restrict in a
customary manner the subletting, assignment or transfer of any property
or asset that is a lease, license, conveyance or contract or similar
property or asset, (b) existing by virtue of any transfer of, agreement
to transfer, option or right with respect to, or Lien on, any property
or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by the Indenture or (c) arising or agreed to in the ordinary
course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed pursuant
to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary; or
(vi) contained in the terms of any Indebtedness of a Restricted
Subsidiary, or any agreement pursuant to which such Indebtedness was
issued, if the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant
contained in such Indebtedness or agreement, if the encumbrance or
restriction is not materially more disadvantageous to the Holders of the
Notes than is customary in comparable financings (as determined by the
Company) and if the Company determines that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes.
Nothing contained in this Section 4.16 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any liens otherwise permitted in Section 4.17 or (2) restricting the sale
or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.17 Limitation on Liens.
The Company will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Notes and the Guarantees and all other amounts due under the Indenture to be
directly secured equally and ratably with (or, if the obligation or liability to
be secured by such Lien is subordinated in right of payment to the Notes, prior
to) the obligation or liability secured by such Lien.
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The foregoing limitation does not apply to (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is permitted to be
Incurred under clause (i) of Section 4.04(B); (v) Liens securing Indebtedness
which is Incurred to refinance secured Indebtedness which is permitted to be
Incurred under clause (iii) of Section 4.04(B); provided that such Liens do not
extend to or cover any property or assets of the Company or any Restricted
Subsidiary other than the property or assets securing the Indebtedness being
refinanced; (vi) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary (or
obligations in respect thereof) or Indebtedness of any Restricted Subsidiary
guaranteed by such Restricted Subsidiary permitted under Section 4.04; or (vii)
Permitted Liens.
Notwithstanding the foregoing, the Company will not create, incur or
suffer to exist any Lien on the capital stock of Cricket Communications
Holdings.
In the event that the Lien the existence of which gives rise to a Lien
securing the Note or a Subsidiary Guarantee pursuant to the provisions of this
covenant ceases to exist, the Lien securing the Notes or such Subsidiary
Guarantee required by this covenant shall automatically be released and the
Trustee shall execute appropriate documentation.
SECTION 4.18 Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each Restricted Subsidiary and the rights (charter
and statutory) of the Company and each of its Restricted Subsidiaries.
SECTION 4.19 Limitation on Sale-Leaseback Transactions.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby the Company or a
Restricted Subsidiary sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which the Company or such Restricted Subsidiary, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if (i) the lease is for a period, including renewal rights, of not
in excess of three years; (ii) the lease secures or relates to industrial
revenue or pollution control bonds; (iii) the transaction is solely between the
Company and any Wholly Owned Restricted Subsidiary or solely between Wholly
Owned Restricted Subsidiaries; or (iv) the Company or such Restricted
Subsidiary, within twelve months after the sale or transfer of any assets or
properties is completed, applies an amount not less than the net proceeds
received from such sale in accordance with Section 4.05(A)(2)(a) or (A)(2)(b).
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SECTION 4.20 Designation of Restricted Subsidiaries and Unrestricted
Subsidiaries.
The Board of Directors of the Company may designate any Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default to be
continuing immediately after such designation. If a Subsidiary is designated as
an Unrestricted Subsidiary, all outstanding Investments owned by the Company and
its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be
an Investment made as of the time of such designation and will either reduce the
amount available for Restricted Payments under the first paragraph Section 4.06
or reduce the amount available for future Investments under one or more clauses
of the definition of "Permitted Investments" in Section 1.01. All such
outstanding Investments will be valued at their fair market value at the time of
such designation. That designation will only be permitted if such Restricted
Payment would be permitted at that time and if such Restricted Subsidiary
otherwise meets the definition of an "Unrestricted Subsidiary" as described in
Section 1.01. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default to
be continuing immediately after such designation.
SECTION 4.21 Limitation on Issuances of Guarantees by Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to guarantee any Indebtedness of the Company or any Guarantor
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary (a) is a
Guarantor or (b) simultaneously executes and delivers a supplemental indenture
to the Indenture providing for a Guarantee of payment of the Notes by such
Restricted Subsidiary and (ii) such Restricted Subsidiary waives, and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; provided that this paragraph shall
not be applicable to (a) any guarantee by a Restricted Subsidiary existing on
the Closing Date or in respect of Indebtedness Incurred pursuant to clause (i)
or (vii) of Section 4.04(B) or (b) any guarantee of any Restricted Subsidiary
that existed at the time such Person became a Restricted Subsidiary and was not
Incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary. If the Guaranteed Indebtedness is (1) pari passu with the
Notes or any Guaranty, then the guarantee of such Guaranteed Indebtedness shall
be pari passu with, or subordinated to, the Guarantee or (2) subordinated to the
Notes or any Guaranty, then the guarantee of such Guaranteed Indebtedness shall
be subordinated to the Guarantee at least to the extent that the Guaranteed
Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any Guarantee executed by a Restricted
Subsidiary pursuant to this provision shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by the Indenture) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
SECTION 4.22 Additional Holding Companies.
The Company shall not create any subsidiary which directly or indirectly
owns (i) Capital Stock of Cricket Communications Holdings or (ii) Capital Stock
of Cricket Communications, Inc., other than Cricket Communications Holdings.
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SECTION 4.23 Future Subsidiary Guarantors.
The Company will cause each domestic Restricted Subsidiary other than
any direct or indirect Subsidiary of Cricket Communications Holdings or any
License Subsidiary to execute and deliver a Guarantee and a supplemental
indenture substantially in the form of Exhibit F pursuant to which each such
Subsidiary will, jointly and severally, Guarantee irrevocably and
unconditionally all principal, premium, if any, and interest on the Notes on an
unsecured basis. In connection with the delivery of the supplemental indenture
referenced above, the Company shall deliver an Officer's Certificate
substantially in the form of Exhibit G attached hereto.
ARTICLE FIVE
CONSOLIDATIONS MERGER AND ASSET SALES; SUCCESSORS
SECTION 5.01 Consolidation Merger, and Sale of Assets.
(A) The Company will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
surviving or continuing Person, or the Person (if other than the Company) formed
by such consolidation or into which the Company is merged or that acquired or
leased such property and assets of the Company shall be a corporation organized
and validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company on
all of the Notes and under the Indenture; (ii) immediately after giving effect
to such transaction on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing; (iii) immediately after giving effect to such
transaction on a pro forma basis, the Company or any Person becoming the
successor obligor of the Notes shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of the Company immediately prior to such
transaction, provided that this clause (iii) shall only apply to a sale of less
than all of the assets of the Company; (iv) immediately after giving effect to
such transaction on a pro forma basis the Company, or any Person becoming the
successor obligor of the Notes, as the case may be, could Incur at least $1.00
of Indebtedness pursuant to Section 4.04(A); provided that this clause (iv)
shall not apply to a consolidation or merger or sale of all (but not less than
all) of the assets of the Company if all Liens and Indebtedness of the Company
or any Person becoming the successor obligor on the Notes, as the case may be,
and its Restricted Subsidiaries outstanding immediately after such transaction
would, if Incurred at such time, have been permitted to be Incurred (and all
such Liens and Indebtedness, other than Liens and Indebtedness of the Company
and its Restricted Subsidiaries outstanding immediately prior to such
transaction, shall be deemed to have been Incurred) for all purposes of the
Indenture; (v) if the Company is not the surviving or continuing Person, each
Guarantor shall have delivered a written instrument in form satisfactory to the
Trustee confirming its Guarantee; and (vi) the Company delivers to the Trustee
an Officer's Certificate (attaching the arithmetic computations to demonstrate
compliance with clauses (iii) and (iv)) and an Opinion of Counsel, in each case
stating that such consolidation, merger or transfer and such supplemental
indenture, if any, complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; provided, however, that clauses (iii) and (iv) above do not apply if, in
the good faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company; and
provided, further that any such transaction shall not have as one of its
purposes the evasion of the foregoing limitations.
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For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(B) The Company will not permit any Guarantor (other than any Guarantor
whose Guarantee is to be released in accordance with the terms of the Guarantee
and the Indenture in connection with any transaction complying with the
provisions described in Section 4.05 to, in a single transaction or a series of
related transactions, (i) consolidate with or merge with or into any other
Person (other than a Guarantor which is a Wholly Owned Restricted Subsidiary) or
(ii) directly or indirectly, transfer, sell, lease or otherwise dispose of all
or substantially all of its assets, unless: (a) the Guarantor shall be the
surviving or continuing Person, or the Person (if other than the Guarantor)
formed by such consolidation or into which the Guarantor is merged or that
acquired or leased such property and assets of the Guarantor shall be organized
under the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed and delivered to
the Trustee, all of the Guarantor's obligations under the Indenture; (b)
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred and be continuing; (c)
immediately after giving effect to such transaction on a pro forma basis, the
Company or any Person becoming a successor obligor on the Notes, as the case may
be, could Incur at least $1.00 of additional Indebtedness pursuant to Section
4.04(A); and (d) the Company shall have delivered to the Trustee an Officer's
Certificate (attaching the arithmetic computations to demonstrate compliance
with clause (c)) and an Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture, if any,
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been complied with.
SECTION 5.02 Successor Substituted.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the foregoing,
in which the Company is not the continuing corporation, the successor Person
formed by such consolidation or into which the Company is merged or to which
such conveyance, lease or transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
and the Securities with the same effect as if such surviving entity had been
named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01 Events of Default.
Each of the following is an Event of Default:
(i) default in the payment of principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(ii) default in the payment of interest on any Note when the
same becomes due and payable, and such default continues for a period of
30 days; provided that a failure to make any of the
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first seven scheduled interest payments on the Senior Notes on the
applicable Interest Payment Date will constitute an Event of Default if
such default continues for a period of three days;
(iii) failure by the Company or any Guarantor to comply with the
provisions of the Indenture relating to mergers, consolidations and
transfers of all or substantially all of the assets of the Company or
the failure to make or consummate an Offer to Purchase in accordance
with Section 4.05 or Section 4.14;
(iv) the Company or any Restricted Subsidiary fails to perform
or breaches any other covenant or agreement of the Company in the
Indenture, in the Notes or in the Pledge Agreement (other than a default
specified in clause (i), (ii) or (iii) above) and such default or breach
continues for a period of 30 consecutive days after written notice by
the Trustee or the Holders of 25% or more in aggregate principal amount
of the Senior Notes or the Holders of 25% or more of the aggregate
principal amount at maturity of the Senior Discount Notes, as the case
may be;
(v) there occurs with respect to any issue or issues of
Indebtedness of the Company or any Restricted Subsidiary having an
outstanding principal amount of $5 million or more in the aggregate for
all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (1) an event of default that has
caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (2) the failure to
make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or
extended within 30 days of such payment default;
(vi) any final judgment or order (not covered by insurance) for
the payment of money in excess of $5 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Restricted Subsidiary and shall not
be paid or discharged, and there shall be any period of 60 consecutive
days following entry of the final judgment or order that causes the
aggregate amount for all such final judgments or orders outstanding and
not paid or discharged against all such Persons to exceed $5 million
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(vii) a court having jurisdiction in the premises enters a
decree or order for (1) relief in respect of the Company or any
Restricted Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
(2) appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Restricted
Subsidiary or for all or substantially all of the property and assets of
the Company or any Restricted Subsidiary or (3) the winding up or
liquidation of the affairs of the Company or any Restricted Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 30 consecutive days;
(viii) the Company or any Restricted Subsidiary (1) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in elect, or consents to the entry of an
order for relief in an involuntary case under any such law, (2) consents
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Company or any Restricted Subsidiary or for all or substantially
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all of the property and assets of the Company or any Restricted
Subsidiary or (3) effects any general assignment for the benefit of
creditors;
(ix) the Pledge Agreement shall cease to be in full force and
effect or enforceable in accordance with its terms, other than in
accordance with its terms;
(x) except upon the release of any Guarantee in accordance with
the Indenture, (1) any Guarantee ceases to be in full force and effect
or is declared null and void or (2) any Guarantor denies that it has any
further liability under the Guarantee or gives notice to that effect; or
(xi) there shall have occurred any loss, suspension, revocation
or non-renewal of the wireless licenses of the Company and its
Restricted Subsidiaries covering 50% or more of the total potential
customers covered by all of the wireless licenses of the Company and its
Restricted Subsidiaries.
SECTION 6.02 Acceleration.
If an Event of Default (other than an Event of Default specified in
Section 6.01(vii) or (viii) above that occurs with respect to the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Senior Notes or the Holders of at least 25% in
aggregate principal amount at maturity of the Senior Discount Notes, as the case
may be, then outstanding, by written notice to the Company (and to the Trustee
if such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of all outstanding Senior Notes or the
Accreted Value of all outstanding Senior Discount Notes, as the case may be,
together with premium, if any, and all accrued and unpaid interest thereon to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest shall be immediately due and payable.
In the event of a declaration of acceleration because an Event of Default set
forth in Section 6.01(v) above has occurred and is continuing, such declaration
of acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to Section 6.01(v) shall be
remedied or cured by the Company or the relevant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto.
If an Event of Default specified in Section 6.01(vii) or (viii) above
occurs with respect to the Company, the principal of, premium, if any, and
accrued interest on the Notes then outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in principal amount of the outstanding Senior
Notes or the Holders of at least a majority in aggregate principal amount at
maturity of the outstanding Senior Discount Notes by written notice to the
Company and to the Trustee, may waive all past defaults and rescind and annul a
declaration of acceleration and its consequences if (i) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
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SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy maturing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.04 Waiver of Past Default.
The Holders of a majority in aggregate principal amount of the
Securities or the Holders of a majority in aggregate principal amount at
maturity of the Securities, as the case may be, then outstanding by notice to
the Trustee may on behalf of the Holders of all of the Securities waive any
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Securities.
SECTION 6.05 Control by Majority.
The Holders of at least a majority in aggregate principal amount of the
outstanding Senior Notes or Holders of at least a majority in aggregate
principal amount at maturity of the outstanding Senior Discount Notes, as the
case may be, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may result in the
incurrence of liability by the Trustee, or that the Trustee determines in good
faith may be unduly prejudicial to the rights of Holders of Notes not joining in
the giving of such direction and may take any other action it deems proper that
is not inconsistent with any such direction received from Holders of Notes.
A Holder may not pursue any remedy unless: (i) the Holder gives the
Trustee written notice of a continuing Event of Default; (ii) the Holders of at
least 25% in aggregate principal amount of outstanding Senior Notes or the
Holders of at least a majority in aggregate principal amount at maturity of the
outstanding Senior Discount Notes, as the case may be, make a written request to
the Trustee to pursue the remedy; (iii) such Holder or Holders offer the Trustee
indemnity satisfactory to the Trustee against any costs, liability or expense;
(iv ) the Trustee does not comply with the request within 60 days after receipt
of the request and the offer of indemnity; and (v) during such 60-day period,
the Holders of a majority in aggregate principal amount of the outstanding
Senior Notes or the Holders of at least a majority in aggregate principal amount
at maturity of the outstanding Senior Discount Notes, as the case may be, do not
give the Trustee a direction that is inconsistent with the request. However,
such limitations do not apply to the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, which right shall not be impaired or affected without
the consent of the Holder.
SECTION 6.06 Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or the
Securities unless:
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(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of the outstanding Senior Notes or the Holders of at least 25% in
aggregate principal amount at maturity of the outstanding Senior
Discount Notes, as the case may be, make a written request to the
Trustee to pursue a remedy;
(iii) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and premium, if any or interest on a
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified in
Section 6.01(i) or (ii) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest overdue on principal
and to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company or any other obligor upon the
Securities, their respective creditors or their respective property and shall be
entitled and empowered to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and
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advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10 Priorities.
(A) If the Trustee collects any money or property pursuant to this
Article Six (except as provided for in Section 6.10(B)), it shall pay out the
money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
(B) If an Event of Default has occurred under this Article 6 and
is continuing and the Senior Notes have been accelerated, the Trustee
shall apply the funds in the Pledge Account in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Senior
Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Notes for
interest; and
Third: to Holders for amounts due and unpaid on the Senior Notes
for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Notes for
principal.
(C) The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to Holders pursuant
to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 shall not apply to a suit by the Trustee, a suit by
a Holder or group of Holders of more than 10% in aggregate principal amount of
the outstanding Senior Notes or the Holders of at least 10% in aggregate
principal amount at maturity of the outstanding Senior Discount Notes, as the
case may be, or to any suit instituted by any Holder for the enforcement or the
payment of the principal or interest on any Securities on or after the
respective due dates expressed in the Security.
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SECTION 6.12 Notice of Defaults.
The Company shall deliver to the Trustee annually a statement regarding
compliance with the Indenture. Upon becoming aware of any Default or Event of
Default, the Company shall also deliver promptly to the Trustee a statement
specifying such Default or Event of Default.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(c) the Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02, 6.04 or 6.05.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (e) and (f) of this Section 7.01 and Section 7.02.
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(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Indenture at the request, order or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against any loss, liability or expense that might be incurred
by the Trustee in compliance with such request, order or direction.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 Certain Rights of Trustee.
(a) The Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any document, certificate, opinion,
report, notice, request, direction, order, note or other evidence of
indebtedness, whether in its original or facsimile form, believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice or opinion of such counsel with respect
to legal matters relating in any way to this Indenture and the Securities shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; provided, however, that the
Trustee's conduct does not constitute willful misconduct or gross negligence.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) Except with respect to Section 4.01, the Trustee shall have no duty
to inquire as to the performance of the Company's covenants in Article Four
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(i), 6.01(ii) and 4.01 or (ii) any Default or Event of Default
of which a Responsible Officer of the Trustee shall have received written
notification at the Corporate Trust Office of the Trustee and such notice
references the Securities and this Indenture or obtained actual knowledge.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
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(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(i) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
(j) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03 Individual Rights of Trustee.
The Trustee may become the owner or pledgee of Securities and may
otherwise deal with the Company or any Affiliate of the Company with the same
rights it would have if it were not Trustee. However, the Trustee must comply
with Sections 7.10 and 7.11 of this Indenture. In addition, if the Trustee has
any conflicting interest within the meaning of Section 310 of the TIA it must
eliminate such conflict within 90 days, or resign. Any Agent may do the same
with like rights and duties.
SECTION 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture, the Pledge Agreement or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee, and it shall not be responsible for any statement or recital herein or
any statement in the Securities or any other document in connection with the
sale of the Securities or pursuant to this Indenture other than its certificate
of authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to each Holder of Securities a notice of the Default or Event of Default within
60 days after such Default or Event of Default becomes known to the Trustee.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Security, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Securities.
SECTION 7.06 Reports by Trustee to Holders of the Securities.
As promptly as practicable after each May 15th beginning with the May
15th following the date of the Indenture and for so long as the Securities
remain outstanding, and in any event prior to July 15 of
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each year, the Trustee shall mail to the Holders of the Securities a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Securities shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Securities are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee whenever the Securities
become listed on any stock exchange or delisted therefrom.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee such reasonable compensation, as
the Company and the Trustee shall from time to time agree in writing, for its
acceptance of this Indenture and its performance of services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Except as otherwise provided herein, in addition to
compensating the Trustee for its services, the Company shall reimburse the
Trustee promptly upon request for all reasonable out-of-pocket expenses incurred
or made by it in accordance with any provision of this Indenture (except any
such expenses as may be attributable to the Trustee's negligence or bad faith).
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company and the Guarantor jointly and severally shall indemnify each
of the Trustee, any predecessor Trustee and its agents, employees, officers,
directors and shareholders for and hold the same harmless against, any and all
losses, liabilities or expenses (including, without limitation, reasonable
attorneys' fees and expenses and taxes other than taxes based upon the income of
the Trustee) incurred by it in connection with the acceptance or administration
of its duties under this Indenture, including the costs and expenses of
enforcing this Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim with counsel reasonably acceptable to the Trustee, and the Trustee shall
cooperate in the defense at the Company's expense. The Trustee may have separate
counsel of its selection and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own negligence or bad faith. In addition, the Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company and the Guarantor under this Section 7.07
shall survive the resignation or removal of the Trustee and/or the satisfaction
and discharge or termination of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust, pursuant to the Pledge
Agreement or otherwise, to pay principal and interest on particular Securities.
Such Lien shall survive resignation or removal of the Trustee and/or the
satisfaction and discharge or termination of this Indenture.
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When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 6.01(iv) hereof, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under the
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders constituting a
majority in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate principal amount of the then outstanding Securities
may, at the expense of the Company, appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, the
Holders owning at least 10% in aggregate principal amount of the then
outstanding Senior Notes or the Holders owning at least 10% in aggregate
principal amount at maturity of the then outstanding Senior Discount Notes may,
at the expense of the Company, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Security who
has been a Holder of a Security for at least six months, fails to comply with
Section 7.10, such Holder of a Security may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Securities. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
all
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sums owing to the Trustee (including its agents and counsel) hereunder have been
paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements and comply with
Sections 310(a) and (b) of the TIA. Each successor Trustee shall be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision or
examination by Federal or state authorities and that has a combined capital and
surplus of at least $50.0 million as set forth in its most recent published
annual report of condition, subject to supervision or examination by Federal or
state authority; provided, however, that if Section 310(a) of the TIA or the
rules and regulations of the Commission under the TIA at any time permit a
corporation organized and doing business under the laws of any other
jurisdiction to serve as trustee of an indenture qualified under the TIA, this
Section 7.10 shall be automatically deemed amended to permit a corporation
organized and doing business under the laws of any such jurisdiction to serve as
Trustee hereunder. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company may serve as Trustee. If
at any time the Trustee with respect to any series of Securities shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to and comply with TIA Section 311 to the extent
required thereby.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Termination of the Company's Obligations.
(A) The Company may terminate its obligations under the Securities and
this Indenture, except those obligations referred to in Section 8.01(B), if all
Securities previously authenticated and delivered (other than destroyed, lost or
stolen Securities which have been replaced or paid or Securities for whose
payment United States Legal Tender or non-callable U.S. Government Obligations,
or a combination thereof,
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has theretofore been deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of the
redemption of all of the Securities under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Securities have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under the
terms of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds in trust solely for the benefit of the Holders for
that purpose, United States Legal Tender or non-callable U.S. Government
Obligations, or a combination thereof, in such amount as is sufficient without
consideration of reinvestment of such interest, to pay principal and interest on
the outstanding Securities to maturity or redemption, as well as the Trustee's
fees and expenses; provided that the Trustee shall have been irrevocably
instructed to apply such United States Legal Tender to the payment of said
principal and interest with respect to the Securities; provided, further, that
no deposits made pursuant to this Section 8.01(A)(b) shall cause the Trustee to
have a conflicting interest as defined in and for the purposes of the TIA; and
provided, further, that, as confirmed by an Opinion of Counsel, no such deposit
shall result in the Company, the Trustee or the trust becoming or being deemed
to be an "investment company" under the Investment Company Act of 1940;
(c) no Default or Event of Default with respect to this Indenture or the
Securities shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit and such deposit will not result in a
breach or violation of, or constitute a default under, any material instrument
to which the Company is a party or by which it is bound (other than a Default or
Event of Default resulting from the Incurrence of Indebtedness, all or a portion
of which will be used to defease the Securities concurrently with such
incurrence);
(d) the Company shall have paid all other sums payable by it hereunder;
and
(e) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Securities and this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and discharge
does not result in a default under any agreement or instrument then known to
such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.04, 8.05 and 8.06 shall
survive until the Securities are no longer outstanding pursuant to the last
paragraph of Section 2.08. After the Securities are no longer outstanding, the
Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
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(B) The Company may not discharge any of its obligations with regard to
outstanding Securities or discharge any of the obligations of the Guarantors
with regard to the Subsidiary Guarantees that relate to:
(a) the rights of Holders of outstanding Securities to receive payments
in respect of the principal of, premium, if any, and interest on such Securities
when such payments are due from the trust referred to below;
(b) the Company's obligations with respect to the Securities concerning
issuing temporary Securities, registration of Securities, mutilated, destroyed,
lost or stolen Securities and the maintenance of an office or agency for payment
and money for security payments held in trust;
(c) the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's obligations in connection therewith; and
(d) the Legal Defeasance obligations contained in this Article Eight.
SECTION 8.02 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option and at any time, elect to have either
paragraph (b) or (c) below be applied to all outstanding Securities upon
compliance with the conditions set forth in Section 8.03.
(b) Upon exercise under paragraph (a) hereof of the option applicable to
this paragraph (b), the Company and, if it so selects, each of the Guarantors,
shall, subject to the satisfaction of the conditions set forth in Section 8.03,
be deemed to have been discharged from its obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Securities, which shall thereafter be deemed to
be "outstanding" only for the purposes of Section 8.04 hereof and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following provisions,
which shall survive until otherwise terminated or discharged hereunder:
(i) the rights of Holders of outstanding Securities to receive
solely from the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the principal of
and interest on such Securities when such payments are due;
(ii) the Company's obligations with respect to such Securities
under Article Two and Section 4.02 hereof;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith;
and
(iv) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) hereof.
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(c) Upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.03 hereof, be released from its
obligations under the covenants contained in Sections 4.03 through 4.06,
inclusive, Sections 4.15 through 4.17, inclusive, Sections 4.21, 4.22 and 4.23,
and Sections 5.01(A)(iii) and (iv) hereof with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Securities shall
not be deemed outstanding for accounting purposes). For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Securities, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event or Default under Section 6.01(iii) and (iv) hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. In addition, upon the Company's exercise under
paragraph (a) hereof of the option applicable to this paragraph (c), subject to
the satisfaction of the conditions set forth in Section 8.03 hereof, Sections
6.01(v) and 6.01(vi) shall not constitute Events of Default.
SECTION 8.03 Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company has deposited with the Trustee, in trust, money and/or
U.S. Government Obligations that through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, and accrued interest
on the Notes on the Stated Maturity of such payments in accordance with the
terms of the Indenture and the Notes; provided the Company and the Guarantors
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Senior Notes and/or the Senior Discount Notes on the 123rd day
after the deposit referred to in this Section 8.03(a);
(b) in the case of Legal Defeasance, the Company has delivered to the
Trustee (1) either (i) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
the Company's exercise of its option under this Section 8.03 and will be subject
to federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge had
not occurred, which Opinion of Counsel must be based upon (and accompanied by a
copy of) a ruling of the Internal Revenue Service to the same effect unless
there has been a change in applicable federal income tax law after the Closing
Date such that a ruling is no longer required or (ii) a ruling directed to the
Trustee received from the Internal Revenue Service to the same effect as the
aforementioned Opinion of Counsel and (2) an Opinion of Counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit
(except with respect to any trust funds for the account of any Holder who may be
deemed an "insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit); the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code or Section 15 of the New
York Debtor and Creditor Law;
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(c) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that (i) the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and after
the passage of 123 days following the deposit (except with respect to any trust
funds for the account of any Holder who may be deemed an "insider" for purposes
of the United States Bankruptcy Code, after one year following the deposit); the
trust funds will not be subject to the effect of Section 547 of the United
States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law and
(ii) Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge had
not occurred
(d) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or during the period ending on the 123rd day after the
date of such deposit, and such deposit shall not result in a breach or violation
of, or constitute a default under, any other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound; and
(e) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge.
Notwithstanding the foregoing, the Opinion of Counsel required by clause
(b) above with respect to a Legal Defeasance need not be delivered if all
Securities not theretofore delivered to the Trustee for cancellation (x) have
become due and payable, (y) will become due and payable on the maturity date
within one year or (z) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense of, the Company.
SECTION 8.04 Application of Trust Money.
The Trustee or Paying Agent shall hold in trust United States Legal
Tender or U.S. Government Obligations deposited with it pursuant to this
Indenture, and shall apply the deposited United States Legal Tender and the
money from U.S. Government Obligations in accordance with this Indenture to the
payment of principal of and interest, if any, on the Securities. The Trustee
shall be under no obligation to invest said United States Legal Tender or U.S.
Government Obligations except as it may agree with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Legal Tender or
U.S. Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any United States Legal Tender or U.S. Government Obligations held by it
as provided in Section 8.03 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
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SECTION 8.05 Repayment to Company.
Subject to this Article Eight, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess United States Legal Tender
or U.S. Government Obligations held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest (other than money held by the Trustee
pursuant to the Pledge Agreement) that remains unclaimed for two years; provided
that the Trustee or such Paying Agent, before being required to make any
payment, may at the expense of the Company cause to be published once in a
newspaper of general circulation in The City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to such
money must look to the Company for payment as general creditors unless an
applicable law designates another Person.
SECTION 8.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
Legal Tender or U.S. Government Obligations in accordance with this Article
Eight by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Eight until such time as the Trustee or Paying Agent is
permitted to apply all such United States Legal Tender or U.S. Government
Obligations in accordance with this Article Eight; provided that if the Company
has made any payment of interest on or principal of any Securities because of
the reinstatement of their obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the United
States Legal Tender or U.S. Government Obligations held by the Trustee or Paying
Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01 In General.
Except as provided in Sections 9.02, 9.03 and 9.04, this Indenture or
the Securities may be amended, supplemented or otherwise modified with the
consent of the Company and the Holders of at least a majority in aggregate
principal amount of the outstanding Senior Notes or the Holders of at least a
majority in aggregate principal amount at maturity of the outstanding Senior
Discount Notes (including consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the Notes), and any existing Default or
Event of Default or compliance with any provision of the Indenture or the
Securities may be waived with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Senior Notes or the Holders of at
least a majority in aggregate principal amount at maturity of the outstanding
Senior Discount Notes (including consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Notes.)
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SECTION 9.02 Without Consent of Holders.
The Company and each Guarantor, when authorized by a resolution of their
respective Boards of Directors, and the Trustee may amend, supplement, waive or
otherwise modify provisions of this Indenture, the Securities or the Guarantees
without notice to or consent of any Holder:
(a) to cure any ambiguity, to correct or supplement any provision in
this Indenture that may be defective or inconsistent with any other provisions
in this Indenture, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such actions taken
pursuant to this clause (a) do not, in the opinion of the Trustee, adversely
affect the interests of the Holders in any material respect;
(b) to evidence the succession of another Person to the Company or any
Guarantor and the assumption by any such successor of the covenants of the
Company or any Guarantor in this Indenture and in the Securities in the case of
a merger or consolidation or sale of all or substantially all of the Company's
assets;
(c) to add to the covenants of the Company or any Guarantor for the
benefit of the Holders, or to surrender any right or power herein conferred upon
the Company or any Guarantor or to make any change that does not adversely
affect the legal rights under the Indenture of any such Holder;
(d) to provide for uncertificated Securities in addition to or in place
of the certificated Securities;
(e) to evidence and provide for the acceptance of appointment under this
Indenture by a successor Trustee;
(f) to comply with any requirements of the Commission in order to effect
and maintain the qualification of this Indenture under the TIA;
(g) to release any Guarantor from its Guarantee (including in connection
with a sale of all of the Capital Stock or all or substantially all of the
assets of such Guarantor) pursuant to the requirements of Section 10.05 or to
add a Guarantor pursuant to the requirements of Section 4.23; or
(h) to provide for the issuance of Securities subsequent to the Closing
Date pursuant to Section 2.02;
provided, however, that the Company deliver to the Trustee an Opinion of
Counsel stating that such amendment or supplement does not adversely affect the
rights of any Holder and otherwise complies with the provisions of this Section
9.02.
In formulating its opinion on the matters in clause (a), the Trustee
will be entitled to rely on such evidence as it deems appropriate, including,
without limitation, solely on an Opinion of Counsel.
SECTION 9.03 With Majority Consent of Holders.
Subject to Sections 6.07 and 9.01, the Company and each Guarantor, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may amend or supplement this Indenture,
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the Pledge Agreement or the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Securities), or
waive any existing default or compliance with any provision hereof or thereof,
with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Senior Notes or the Holders of at least a
majority in aggregate principal amount at maturity of the outstanding Senior
Discount Notes, as the case may be (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Securities); provided, however, that no such modification or amendment may,
without the consent of each Holder affected thereby:
(i) change the Stated Maturity of the principal of, or any installment
of interest on, any Note,
(ii) reduce the principal of, or premium, if any, or interest on, any
Note,
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note,
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption, on or
after the Redemption Date) of any Note,
(v) reduce the above-stated percentage of outstanding Notes the consent
of whose Holders is necessary to modify or amend the Indenture,
(vi) waive a default in the payment of principal of, premium, if any, or
interest on the Notes or
(vii) reduce the percentage or aggregate principal amount of outstanding
Senior Notes or aggregate principal amount at maturity of the outstanding Senior
Discount Notes, the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.03 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.03 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 9.04 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.05 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Security or portion of that Security
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that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. Subject to the following
paragraph, any such Holder or subsequent Holder may revoke the consent as to
such Holder's Security or portion of such Security by notice to the Trustee or
the Company received before the date on which the Trustee receives an Officer's
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (i)
through (vii) of Section 9.03. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 9.06 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determine, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.07 Trustee to Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture and that such amendment, supplement or
waiver constitutes the legal, valid and binding obligation of the Company and
each Guarantor, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
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ARTICLE TEN
GUARANTEE
SECTION 10.01 Unconditional Guarantee.
Each Guarantor, jointly and severally, hereby unconditionally and
irrevocably guarantees on an unsecured basis to each Holder of a Security
authenticated by the Trustee and to the Trustee and its successors and assigns
that the principal of, premium, if any, and interest on the Securities will be
promptly paid in full when due, subject to any applicable grace period, whether
at maturity, by acceleration or otherwise, and interest on the overdue
principal, premium, if any, and interest on any overdue interest on the
Securities and all other obligations of the Company to the Holders or the
Trustee hereunder or under the Securities will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; subject,
however, to the limitations set forth in Section 10.03. Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of such Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that the Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture. If any Holder or the
Trustee is required by any court or otherwise to return to the Company or any
Guarantor or any custodian, trustee, liquidator or other similar official acting
in relation to the Company or a Guarantor, any amount paid by the Company or a
Guarantor to the Trustee or such Holder, the Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor further agrees that, as between such Guarantor, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six for
the purpose of the Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall become due and payable by such Guarantor for the purpose of the Guarantee.
SECTION 10.02 Severability.
In case any provision of this Article Ten shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.03 Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
Guarantee does not constitute a fraudulent transfer or conveyance for purposes
of Title 11 of the United States Code, as amended, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S. Federal
or state or other applicable law. To effectuate the foregoing intention, each
Holder and each Guarantor hereby irrevocably agree that the obligations of a
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving
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effect to all other contingent and fixed liabilities of such Guarantor, and
after giving effect to any collections from or payments made by or on behalf of
such Guarantor in respect of the obligations of such Guarantor pursuant to
Section 10.04, result in the obligations of such Guarantor not constituting such
a fraudulent transfer or conveyance.
SECTION 10.04 Execution of Guarantee.
Each Guarantor hereby agrees to execute a guarantee to be endorsed on
and made a part of each Security ordered to be authenticated and delivered by
the Trustee. Each Guarantor hereby agrees that its guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a guarantee. Each such guarantee shall be signed on
behalf of each Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
guarantee on behalf of such Guarantor. Such signature upon the guarantee may be
a manual or facsimile signature of such officer and may be imprinted or
otherwise reproduced on the guarantee, and in case such officer who shall have
signed the guarantee shall cease to be such officer before the Security on which
such guarantee is endorsed shall have been authenticated and delivered by the
Trustee or disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the Person who signed the
guarantee had not ceased to be such officer of such Guarantor.
SECTION 10.05 Release of Guarantor from Subsidiary Guarantee.
If no Event of Default has occurred and is continuing, concurrently with
any sale or disposition of all of the Capital Stock of any Guarantor or all or
substantially all of the assets of any Guarantor to any Person that is not an
Affiliate of the Company, which sale or disposition is in compliance with
Section 4.05, or upon the designation of any Guarantor as an Unrestricted
Subsidiary in accordance with Section 4.20, such Guarantor will automatically
and unconditionally be released from all obligations under its Guarantee.
ARTICLE ELEVEN
SECURITY
SECTION 11.01 Pledge Agreement.
The Trustee will establish the Pledge Account on or before the Closing
Date in connection with the issuance of the Senior Notes. On the Closing Date,
the Company will deposit in the Pledge Account, for the benefit of the Holders
of the Senior Notes, an amount from the net proceeds of the offering of the
Senior Notes sufficient to acquire Pledged Securities in an amount as will be
sufficient upon receipt of scheduled interest and principal payments on such
Pledged Securities to provide payment in full when due of the first seven
scheduled interest payments due on the Senior Notes. The Pledged Securities will
be acquired and deposited in the Pledge Account on the Closing Date.
All amounts deposited in the Pledge Account and the Pledged Securities
will be pledged by the Company to the Trustee for the benefit of the Holders of
the Senior Notes pursuant to the Pledge Agreement. Pursuant to the Pledge
Agreement, immediately prior to an Interest Payment Date for the Senior Notes,
the Company may either deposit with the Trustee from funds otherwise available
to the Company cash sufficient to pay the interest scheduled to be paid on such
date or the Company may direct the Trustee to
72
<PAGE> 79
release from the Pledge Account proceeds sufficient to pay interest then due on
the Senior Notes. In the event the Company exercises the former option, the
Company may direct the Trustee to release a like amount of proceeds from the
Pledge Account. The Pledged Securities and Pledge Account also secure the
repayment of the principal amount and premium on the Senior Notes.
Each Holder, by its acceptance of a Note, consents and agrees to the
terms of the Pledge Agreement (including, without limitation, the provisions
providing for foreclosure and release of the Pledged Securities) as the same may
be in effect or may be amended from time to time in accordance with its terms,
and authorizes and directs the Trustee to enter into the Pledge Agreement and to
perform its respective obligations and exercise its respective rights thereunder
in accordance therewith. The Company will do or cause to be done all such acts
and things as may be necessary or as may be required by the provisions of the
Pledge Agreement, to assure and confirm to the Trustee the security interest in
the Pledged Securities contemplated hereby, by the Pledge Agreement or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Senior Notes secured
by the Pledge Agreement, according to the intent and purposes herein expressed.
The Company shall take, or shall cause to be taken, upon request of the Trustee,
any and all actions reasonably required to cause the Pledge Agreement to create
and maintain (to the maximum extent permitted by law), as security for the
obligations of the Company under this Indenture and the Senior Notes, valid and
enforceable first priority liens in and on all the Pledged Securities, in favor
of the Trustee, superior to and prior to the rights of third persons and subject
to no other Liens.
The release of any Pledged Securities pursuant to the Pledge Agreement
will not be deemed to impair the security under this Indenture in contravention
of the provisions hereof if and to the extent the Pledged Securities are
released pursuant to this Indenture and the Pledge Agreement. To the extent
applicable, the Company shall cause TIA Section 314(d) relating to the release
of property or securities from the Lien and security interest of the Pledge
Agreement and relating to the substitution therefore of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company, except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be selected by the Company.
The Company shall cause TIA Section 314(b), relating to opinions of
counsel regarding the Lien under the Pledge Agreement, to be complied with. The
Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such instruments.
The Trustee may, in its sole discretion and without the consent of the
Holders, on behalf of the Holders, take all actions it deems necessary or
appropriate in order to (i) enforce any of the terms of the Pledge Agreement and
(ii) collect and receive any and all amounts payable in respect of the
obligations of the Company thereunder. The Trustee shall have power to institute
and to maintain such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Pledged Securities (including the power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders or of the Trustee).
73
<PAGE> 80
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are required
to be a part of any indenture subject to the TIA. If any provision of this
Indenture modifies any TIA provision that may be so modified, such TIA provision
shall be deemed to apply to this Indenture as so modified. If any provision of
this Indenture excludes any TIA provision that may be so excluded, such TIA
provision shall be excluded from this Indenture.
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
SECTION 12.02 Notices.
Any notice or communication shall be sufficiently given if in writing
and delivered in person, by facsimile and confirmed by overnight courier, or
mailed by first-class mail addressed as follows:
if to the Company and the Guarantors:
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, California 92121
Attention: James E. Hoffmann
Thomas D. Willardson
Facsimile: (858) 882-6010
Telephone: (858) 882-6000
with copies to:
Latham & Watkins
701 "B" Street, Suite 2100
San Diego, CA 92101
Attention: Barry M. Clarkson
Facsimile: (619) 236-1234
Telephone: (619) 696-7419
74
<PAGE> 81
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Peter M. Labonski
Facsimile: (212) 751-4864
Telephone: (212) 906-1200
if to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street, 23rd Floor
Hartford, CT 06103
Attention: Michael M. Hopkins
Facsimile: (860) 244-1889
Telephone: (860) 244-1820
with copies to:
Brown Rudnick Freed & Gesmer, P.C.
City Place I
Hartford, Connecticut 06103-3402
Attention: James E. Rosenbluth
Facsimile: (860) 509-6501
Telephone: (860) 509-6500
Each party by notice to the others may designate additional or different
addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage prepaid, to a
Holder, including any notice delivered in connection with TIA ss. 310(b), TIA
ss. 313(c), TIA ss. 314(a) and TIA ss. 315(b), shall be mailed to such Holder at
the address as set forth on the list maintained pursuant to Section 2.05 and
shall be sufficientlY given to him if so mailed within the time prescribed. To
the extent required by the TIA, any notice or communication shall also be mailed
to any Person described in TIA ss. 313(c).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. Except for a
notice to the Trustee, which is deemed given only when received, if a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
75
<PAGE> 82
SECTION 12.03 Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or
refrain from taking any action under this Indenture after the date hereof, the
Company shall furnish to the Trustee at the request of the Trustee:
(1) an Officer's Certificate in form and substance satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with, and such
other opinions as the Trustee may reasonably require.
SECTION 12.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officer's Certificate or certificates of public officials.
SECTION 12.06 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
76
<PAGE> 83
SECTION 12.07 Governing Law.
This Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
SECTION 12.08 No Recourse Against Others.
No director, officer, employee, stockholder or member of the Company, as
such, shall have any liability for any obligations of the Company under the
Securities or this Indenture, the Pledge Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 12.09 Successors.
All agreements of a party to this Indenture contained in this Indenture
shall bind such party's successors.
SECTION 12.10 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.11 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
SECTION 12.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.13 Legal Holidays.
If a payment date is a not a Business Day at a place of payment, payment
may be made at that place on the next succeeding Business Day, and no interest
shall accrue for the intervening period.
SECTION 12.14 No Personal Liability of Incorporators, Stockholders,
Officers, Directors, Officers, Employees and Stockholders.
No incorporate, stockholder, officer, director, employee or controlling
person of the Company or of any successor Person thereof, shall have any
liability for any obligations of the Company or the Guarantors under the
Securities, the Indenture, the Pledge Agreement, the Subsidiary Guarantees or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by
77
<PAGE> 84
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities. The waiver
may not be effective to waive liabilities under the federal securities laws.
[Remainder of page intentionally left blank; signature pages follow]
78
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
[ADDITIONAL GUARANTORS]
COMPANY:
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ James E. Hoffmann
-----------------------------------
Name: James E. Hoffmann
Title: Sr. Vice President
GUARANTOR:
CRICKET COMMUNICATIONS HOLDINGS, INC.
By: /s/ James E. Hoffmann
-----------------------------------
Name: James E. Hoffmann
Title: Assistant Secretary
TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
-----------------------------------
Name: Elizabeth C. Hammer
Title: Vice President
Exh. F-3
<PAGE> 86
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO
UNDER RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF
SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO LEAP
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT AT MATURITY OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO LEAP THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) TO A PERSON OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND LEAP SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
Exh A-1
<PAGE> 87
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE [INDENTURE/WARRANT AGREEMENT] CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
Exh. A-2
<PAGE> 88
LEAP WIRELESS INTERNATIONAL, INC.
[12 1/2% Senior Note
due 2010, Series A]
[14 1/2% Senior Discount Note
due 2010, Series A]
CUSIP Number: __________
No. _____ $__________
LEAP WIRELESS INTERNATIONAL, INC., a Delaware corporation (the
"Company", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of
____________________ ($____________), on __________ __, 2010.
Interest Payment Dates: April 15 and October 15, commencing on [April
15, 2000]* [October 15, 2005].**
Interest Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Security contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-3
<PAGE> 89
(REVERSE OF SECURITY)
LEAP WIRELESS INTERNATIONAL, INC.
[12 1/2% Senior Note
due 2010, Series A]
[14 1/2% Senior Discount Note
due 2010, Series A]
1. Interest.
[The Company promises to pay interest on the principal amount of this
Security at the rate per annum shown above. Cash interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from February 23, 2000. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing April 15,
2000. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.]*
[This Security will accrete (representing the amortization of original
issue discount) on a semiannual bond equivalent basis using a 360-day year
comprised of twelve 30-day months such that the Accreted Value shall be equal to
the full principal amount at maturity of the Security on April 15, 2005 (the
"Full Accretion Date"). No interest is payable in cash on the Security prior to
the Full Accretion Date, other than interest payable as a result of an increase
in interest as provided for in the Registration Rights Agreement. Beginning on
the Full Accretion Date, the Security will accrue interest at the rate per annum
shown above from the Full Accretion Date or from the most recent Interest
Payment Date to which interest has been paid. The Company will pay interest
semi-annually in arrears on each Interest Payment Date.]**
In addition, the Company shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
The Securities are not entitled to the benefit of any mandatory sinking
fund.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. If a Holder has given wire
instructions to the Company, the Company will
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-4
<PAGE> 90
make all principal, premium, if any, and interest payments on such Securities in
accordance with such instructions. All other principal of, premium, if any, and
interest on the Securities will be payable, and the Securities may be exchanged
or transferred, at the office or agency of the Company maintained for such
purpose in the Borough of Manhattan, the City of New York (which initially will
be the corporate trust office of the Trustee at 61 Broadway, New York, New York
10006); provided that, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses as they appear in the
Security Register. The Company shall pay principal and interest in United States
Legal Tender (as defined in the Indenture referred to below).
3. Paying Agent and Registrar.
Initially, State Street Bank and Trust Company (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
February 23, 2000 (the "Indenture"), by and among the Company, the Guarantor and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Security is one of a duly authorized issue
of Securities of the Company designated as its [12 1/2% Senior Notes]* [14 1/2%
Senior Discount Notes]** due 2010 issued under the Indenture. [The aggregate
principal amount of Senior Notes which may be issued under the Indenture is
initially limited (except as otherwise provided in the Indenture) to $225
million in one or more series]* [the aggregate principal amount at maturity of
Senior Discount Notes which may be issued under the Indenture is initially
limited (except as otherwise provided in the Indenture) to $668 million in one
or more series]**; provided that the aggregate principal amount of Senior Notes
on the Closing Date shall not exceed $225 million and the aggregate principal
amount at maturity of Senior Discount Notes on the Closing Date shall not exceed
$668 million. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "TIA"), as in effect on the date of the Indenture (except
as otherwise indicated in the Indenture) until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and holders of Securities
are referred to the Indenture and the TIA for a statement of them.
5. Ranking.
The Securities are senior, unsecured [except to the extent described
herein]* obligations of the Company and will rank equally in right of payment
with all of our existing and future unsecured indebtedness and will be senior in
right of payment to all future subordinated indebtedness of the Company. [On the
Closing Date, the Company will deposit in the Pledge Account an amount from the
net proceeds of the offering sufficient to acquire Pledged Securities in an
amount sufficient to provide payment in full when due of the first seven
scheduled interest payments due on the Senior Notes.]*
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-5
<PAGE> 91
6. Guarantee.
The obligations of the Company hereunder are guaranteed on a senior
unsecured basis by the Guarantors.
7. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after April 15, 2005, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
[(expressed as percentages of the principal amount thereof)]* [(expressed as
percentages of principal amount at maturity)]* if redeemed during the
twelve-month period commencing on April 15, of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
<TABLE>
<CAPTION>
[YEAR REDEMPTION PRICE
----- ----------------
<S> <C>
2005 ........................................ 106.250%
2006 ........................................ 104.167%
2007 ........................................ 102.083%
2008 and thereafter ......................... 100.000%,]*
=======
</TABLE>
<TABLE>
<CAPTION>
[YEAR REDEMPTION PRICE
----- ----------------
<S> <C>
2005 ........................................ 107.250%
2006 ........................................ 104.833%
2007 ........................................ 102.417%
2008 and thereafter ......................... 100.000%,]**
=======
</TABLE>
8. Optional Redemption upon Qualified Equity Offerings.
At any time, or from time to time, on or prior to April 15, 2003, the
Company may, at its option, use the net cash proceeds of one or more Qualified
Equity Offerings (as defined below) to redeem up to 35% of the aggregate
principal amount [at maturity]** of Securities originally issued, at a
redemption price [(expressed as a percentage of principal amount)] * [(expressed
as a percentage of Accreted Value on the Redemption Date)] ** equal to
[112.50%]* [114.50%]** plus accrued and unpaid interest to the Redemption Date
(subject to the rights of Holders of record on the relevant Interest Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date); provided that at least 65% of the initial
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-6
<PAGE> 92
aggregate principal amount [(expressed as a percentage of principal amount)]*
[(expressed as a percentage of Accreted Value on the Redemption Date)]** of
Securities originally issued remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of any
Qualified Equity Offering, the Company shall give such notice of redemption to
the Holders not more than 60 days after the consummation of any such Qualified
Equity Offering.
As used in the preceding paragraph, "Qualified Equity Offering" means an
underwritten primary public offering or private placement of Capital Stock
(other than Disqualified Stock) of the Company resulting in aggregate Net Cash
proceeds to the Company of $50 million or more; provided, however, that no
public offering or private placement consummated on, or within 180 days after,
the Closing Date shall constitute a Qualified Equity Offering.
9. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be redeemed at
any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Securities are listed or, if such Securities are
not then listed on a national securities exchange, on a pro rata basis or by
such other method as the Trustee in its sole discretion shall deem fair and
appropriate; provided, however, that no Securities in [principal amount]*
[Accreted Value]** of $1,000 or less shall be redeemed in part; provided,
further, that if a partial redemption is made with the proceeds of a Qualified
Equity Offering, selection of the Securities or portions thereof for redemption
shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to DTC procedures), unless such method is
otherwise prohibited. Notice of redemption shall be mailed by first-class mail
at least 30 but not more than 60 days before the redemption date to each Holder
of Securities to be redeemed at its registered address. If any Security is to be
redeemed in part only, the notice of redemption that relates to such Security
shall state the portion of the [principal amount]* [Accreted Value]** thereof to
be redeemed. A new Security in a [principal amount]* [Accreted Value]** equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the redemption date,
interest will cease to accrue on Securities or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
10. Change of Control Offer.
Following the occurrence of a Change of Control, the Company shall,
within 30 days, make an Offer to Purchase for all Securities then outstanding at
a purchase price in cash equal to 101% of the [principal amount]* [Accreted
Value]** thereof, plus accrued and unpaid interest thereon, if any, to the
Payment Date (subject to the right of Holders of record on the relevant Interest
Record Date to receive interest due on the relevant Interest Payment Date).
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-7
<PAGE> 93
11. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase for Securities at a purchase price equal to 100% of the
[principal amount]* [Accreted Value]** thereof, plus accrued and unpaid interest
thereon, if any, to the Payment Date (subject to the right of Holders of record
on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
12. Denominations; Transfer; Exchange.
The Securities are in registered, global form, without coupons, in
denominations of $1,000 of principal amount at maturity and integral multiples
thereof. A Holder shall register the transfer of or exchange of Securities in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Securities or portions thereof selected for
redemption, except the unredeemed portion of any Security being redeemed in
part.
13. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
14. Unclaimed Funds.
If funds for the payment of principal or interest (other than funds held
by the Trustee pursuant to the Pledge Agreement) remain unclaimed for two years,
the Trustee and the Paying Agent will repay the funds to the Company at its
written request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
15. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
16. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Senior Notes or the Holders of not
less than a majority in aggregate principal amount at maturity of the Senior
Discount Notes then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Senior Notes or the Holders of not
less than a majority in aggregate principal amount at maturity of the Senior
Discount Notes then outstanding. Without notice to or consent of any Holder, the
Company and the Trustee may amend or supplement the Indenture, the Pledge
Agreement and the Securities to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the
Exh. A-8
<PAGE> 94
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
17. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to Incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Company must report quarterly to the Trustee on compliance with such
limitations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Senior Notes or the
Holders of at least 25% in aggregate principal amount at maturity of the Senior
Discount Notes then outstanding may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Securities unless it has received indemnity satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Senior Notes or Holders of a
majority in aggregate principal amount at maturity of Senior Discount Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of certain continuing
Defaults or Events of Default if it determines that withholding notice is in
their interest.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company or its respective Affiliates as if it were not the Trustee.
20. No Recourse Against Others.
No incorporator, stockholder, officer, director, employee or controlling
person of the Company or any Guarantor, as such, shall have any liability for
any obligation of the Company or the Guarantors under the Securities, the
Indenture, the Subsidiary Guarantees, the Pledge Agreement or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
Exh. A-9
<PAGE> 95
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a [12 1/2% Senior Note due 2010, Series B]* [14 1/2% Senior
Discount Note due 2010, Series B]**, of the Company which has been registered
under the Securities Act, having terms identical in all material respects to the
Initial Securities. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
25. Governing Law.
The Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
[Remainder of page intentionally left blank; signature page follows]
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-10
<PAGE> 96
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
LEAP WIRELESS INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
Dated: [ ]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [12 1/2% Senior Notes]* [14 1/2% Senior Discount
Notes]** due 2010, Series A, described in the within-mentioned Indenture.
Dated: [ ]
STATE STREET BANK AND TRUST COMPANY
as Trustee
By:
------------------------------------
Authorized Signatory
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. A-11
<PAGE> 97
[FORM OF GUARANTEE]
SENIOR UNSECURED GUARANTEE
The Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Security upon which this notation
is endorsed) hereby unconditionally guarantees on a senior unsecured basis (such
guaranty being referred to herein as the "Guarantee") the due and punctual
payment of the principal of, premium, if any, and interest on the Securities,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal, premium and interest on the Securities,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Ten of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, to
the extent and in the manner provided in Article Ten of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:
------------------------------------
Name:
Title:
Exh. A-12
<PAGE> 98
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint ___________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Dated:___________________ Signed: ___________________________
(Signed exactly as name
appears on the other side
of this Security)
Signature Guarantee:
___________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
Exh. A-13
<PAGE> 99
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to [Section 4.05] or [Section 4.14] of the Indenture, check the
appropriate box:
[Section 4.05 [ ]]
[Section 4.14 [ ]]
If you want to elect to have only part of this Security purchased by the
Company pursuant to [Section 4.05] or [Section 4.14] of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature: ___________________________
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
___________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Exh. A-14
<PAGE> 100
EXHIBIT B
[FORM OF SERIES B SECURITY]
LEAP WIRELESS INTERNATIONAL, INC.
[12 1/2% Senior Note
due 2010, Series B]
[14 1/2% Senior Discount Note
due 2010, Series B]
CUSIP Number: ___________
No. ___ $___________
LEAP WIRELESS INTERNATIONAL, INC., a Delaware corporation (the
"Company", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of
________________________ ($_____________), on _________ __, 2010.
Interest Payment Dates: April 15 and October 15, commencing on [April
15, 2000]* [October 15, 2005].**
Interest Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Security contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-1
<PAGE> 101
(REVERSE OF SECURITY)
LEAP WIRELESS INTERNATIONAL, INC.
[12 1/2% Senior Note
due 2007, Series B]
[14 1/2% Senior Discount Note
due 2007, Series B
1. Interest.
[The Company promises to pay interest on the principal amount of this
Security at the rate per annum shown above. Cash interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from February 23, 2000. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing April 15,
2000. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.]*
[This Security will accrete (representing the amortization of original
issue discount) on a semiannual bond equivalent basis using a 360-day year
comprised of twelve 30-day months such that the Accreted Value shall be equal to
the full principal amount at maturity of the Security on April 15, 2005 (the
"Full Accretion Date"). No interest is payable in cash on the Security prior to
the Full Accretion Date, other than interest payable as a result of an increase
in interest as provided for in the Registration Rights Agreement. Beginning on
the Full Accretion Date, the Security will accrue interest at the rate per annum
shown above from the Full Accretion Date or from the most recent Interest
Payment Date to which interest has been paid. The Company will pay interest
semi-annually in arrears on each Interest Payment Date.]**
In addition, the Company shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
The Securities are not entitled to the benefit of any mandatory sinking
fund.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-2
<PAGE> 102
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. If a Holder has given wire
instructions to the Company, the Company will make all principal, premium, if
any, and interest payments on such Securities in accordance with such
instructions. All other principal of, premium, if any, and interest on the
Securities will be payable, and the Securities may be exchanged or transferred,
at the office or agency of the Company maintained for such purpose in the
Borough of Manhattan, the City of New York (which initially will be the
corporate trust office of the Trustee at 61 Broadway, New York, New York 10006);
provided that, at the option of the Company, payment of interest may be made by
check mailed to the Holders at their addresses as they appear in the Security
Register. The Company shall pay principal and interest in United States Legal
Tender (as defined in the Indenture referred to below).
3. Paying Agent and Registrar.
Initially, State Street Bank and Trust Company (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
February 23, 2000 (the "Indenture"), by and among the Company, the Guarantor and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Security is one of a duly authorized issue
of Securities of the Company designated as its [12 1/2% Senior Notes]* [14 1/2%
Senior Discount Notes]** due 2010 issued under the Indenture. [The aggregate
principal amount of Senior Notes which may be issued under the Indenture is
initially limited (except as otherwise provided in the Indenture) to $225
million in one or more series]* [the aggregate principal amount at maturity of
Senior Discount Notes which may be issued under the Indenture is initially
limited (except as otherwise provided in the Indenture) to $668 million in one
or more series]**; provided that the aggregate principal amount of Senior Notes
on the Closing Date shall not exceed $225 million and the aggregate principal
amount at maturity of Senior Discount Notes on the Closing Date shall not exceed
$668 million. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "TIA"), as in effect on the date of the Indenture (except
as otherwise indicated in the Indenture) until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and holders of Securities
are referred to the Indenture and the TIA for a statement of them.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-3
<PAGE> 103
5. Ranking.
The Securities are senior, unsecured [except to the extent described
herein]* obligations of the Company and will rank equally in right of payment
with all of our existing and future unsecured indebtedness and will be senior in
right of payment to all future subordinated indebtedness of the Company. [On the
Closing Date, the Company will deposit in the Pledge Account an amount from the
net proceeds of the offering sufficient to acquire Pledged Securities in an
amount sufficient to provide payment in full when due of the first seven
scheduled interest payments due on the Senior Notes.]*
6. Guarantee.
The obligations of the Company hereunder are guaranteed on a senior
unsecured basis by the Guarantors.
7. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after April 15, 2005, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
[(expressed as percentages of the principal amount thereof)]*[(expressed as
percentages of principal amount at maturity)]** if redeemed during the
twelve-month period commencing on April 15, of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
<TABLE>
<CAPTION>
[YEAR REDEMPTION PRICE
----- ----------------
<S> <C>
2005 .................................. 106.250%
2006 .................................. 104.167%
2007 .................................. 102.083%
2008 and thereafter ................... 100.000%]*
</TABLE>
<TABLE>
<CAPTION>
[YEAR REDEMPTION PRICE
----- ----------------
<S> <C>
2005 .................................. 107.250%
2006 .................................. 104.833%
2007 .................................. 102.417%
2008 and thereafter ................... 100.000%]**
</TABLE>
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-4
<PAGE> 104
8. Optional Redemption upon Qualified Equity Offerings.
At any time, or from time to time, on or prior to April 15, 2003, the
Company may, at its option, use the net cash proceeds of one or more Qualified
Equity Offerings (as defined below) to redeem up to 35% of the aggregate
principal amount [at maturity]** of Securities originally issued, at a
redemption price [(expressed as a percentage of principal amount)]* [(expressed
as a percentage of Accreted Value on the Redemption Date)]** equal to [112.50%]*
[114.50%]** plus accrued and unpaid interest to the Redemption Date (subject to
the rights of Holders of record on the relevant Interest Record Date that is
prior to the Redemption Date to receive interest due on an Interest Payment
Date); provided that at least 65% of the initial aggregate principal amount
[(expressed as a percentage of principal amount)] [(expressed as a percentage of
Accreted Value on the Redemption Date)] of Securities originally issued remains
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Qualified Equity Offering, the
Company shall give such notice of redemption to the Holders not more than 60
days after the consummation of any such Qualified Equity Offering.
As used in the preceding paragraph, "Qualified Equity Offering" means an
underwritten primary public offering or private placement of Capital Stock
(other than Disqualified Stock) of the Company resulting in aggregate Net Cash
proceeds to the Company of $50 million or more; provided, however, that no
public offering or private placement consummated on, or within 180 days after,
the Closing Date shall constitute a Qualified Equity Offering.
9. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be redeemed at
any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Securities are listed or, if such Securities are
not then listed on a national securities exchange, on a pro rata basis or by
such other method as the Trustee in its sole discretion shall deem fair and
appropriate; provided, however, that no Securities in [principal amount]*
[Accreted Value]** of $1,000 or less shall be redeemed in part; provided,
further, that if a partial redemption is made with the proceeds of a Qualified
Equity Offering, selection of the Securities or portions thereof for redemption
shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to DTC procedures), unless such method is
otherwise prohibited. Notice of redemption shall be mailed by first-class mail
at least 30 but not more than 60 days before the redemption date to each Holder
of Securities to be redeemed at its registered address. If any Security is to be
redeemed in part only, the notice of redemption that relates to such Security
shall state the portion of the [principal amount]* [Accreted Value]** thereof to
be redeemed. A new Security in a [principal amount]* [Accreted Value]** equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the redemption date,
interest will cease to accrue on Securities or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-5
<PAGE> 105
10. Change of Control Offer.
Following the occurrence of a Change of Control, the Company shall,
within 30 days, make an Control Offer to Purchase for all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate
[principal amount]* [Accreted Value]** thereof, plus accrued and unpaid interest
thereon, if any, to the Payment Date (subject to the right of Holders of record
on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date).
11. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase for Securities at a purchase price equal to 100% of the
[principal amount]* [Accreted Value]** thereof, plus accrued and unpaid interest
thereon, if any, to the Payment Date (subject to the right of Holders of record
on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
12. Denominations; Transfer; Exchange.
The Securities are in registered, global form, without coupons, in
denominations of $1,000 of principal amount at maturity and integral multiples
thereof. A Holder shall register the transfer of or exchange of Securities in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Securities or portions thereof selected for
redemption, except the unredeemed portion of any Security being redeemed in
part.
13. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
14. Unclaimed Funds.
If funds for the payment of principal or interest (other than funds held
by the Trustee pursuant to the Pledge Agreement) remain unclaimed for two years,
the Trustee and the Paying Agent will repay the funds to the Company at its
written request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
15. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
16. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-6
<PAGE> 106
the Senior Notes or the Holders of not less than a majority in aggregate
principal amount at maturity of the Senior Discount Notes then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Senior Notes or the Holders of not less than a majority in
aggregate principal amount at maturity of the Senior Discount Notes then
outstanding. Without notice to or consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture, the Pledge Agreement and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
17. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to Incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Company must report quarterly to the Trustee on compliance with such
limitations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Senior Notes or the
Holders of not less than 25% in aggregate principal amount at maturity of the
Senior Discount Notes then outstanding may declare all the Securities to be due
and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Securities unless it has received indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Senior Notes or the Holders
of a majority in aggregate principal amount at maturity of the Senior Discount
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company or its respective Affiliates as if it were not the Trustee.
20. No Recourse Against Others.
No incorporator, stockholder, officer, director, employee or controlling
person of the Company or any Guarantor, as such, shall have any liability for
any obligation of the Company or the Guarantors under the Securities, the
Indenture, the Subsidiary Guarantees, the Pledge Agreement or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
Exh. B-7
<PAGE> 107
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Governing Law.
The Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect of
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
[Remainder of page intentionally left blank; signature page follows]
Exh. B-8
<PAGE> 108
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
LEAP WIRELESS INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
Dated: [ ]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [12 1/2% Senior Notes]* [14 1/2 Senior Discount
Notes]** due 2010, Series B, described in the within-mentioned Indenture.
Dated: [ ]
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------------------
Authorized Signatory
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. B-9
<PAGE> 109
[FORM OF GUARANTEE]
SENIOR UNSECURED GUARANTEE
The Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Security upon which this notation
is endorsed) hereby unconditionally guarantees on a senior unsecured basis (such
guaranty being referred to herein as the "Guarantee") the due and punctual
payment of the principal of, premium, if any, and interest on the Securities,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal, premium and interest on the Securities,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Ten of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth to
the extent and in the manner provided in Article Ten of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:
------------------------------------
Name:
Title:
Exh. B-10
<PAGE> 110
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated:___________________ Signed: ___________________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
___________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
Exh. B-11
<PAGE> 111
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to [Section 4.05] or [Section 4.14] of the Indenture, check the
appropriate box:
[Section 4.05 [ ]]
[Section 4.14 [ ]]
If you want to elect to have only part of this Security purchased by the
Company pursuant to [Section 4.05] or [Section 4.14] of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature: _________________________
(Signed exactly as name appears
on the other side of
this Security)
Signature Guarantee:
___________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Exh. B-12
<PAGE> 112
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, AND TRANSFERS OF INTERESTS IN THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE.
Exh. C-1
<PAGE> 113
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: [12 1/2% Senior Note due 2010]
[14 1/2% Senior Discount Note due 2010]
(the "Securities")
Leap Wireless International, Inc.
This Certificate relates to $_______ principal amount [at maturity]** of
Securities held in the form of* ___ a beneficial interest in a Global Security
or* _______ Physical Securities by ______ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Physical Security or Physical Securities in definitive, registered
form of authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
[ ] has requested by written order that the Registrar exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "Act"), because*:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
[ ] Such Security is being transferred in reliance on Rule 144 under the
Act. An Opinion of Counsel to the effect that such transfer does not require
Registration under the Securities Act accompanies this certification.
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." An Opinion of Counsel to the effect that such transfer
does not require Registration under the Securities Act accompanies this
certification.
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
Exh. D-1
<PAGE> 114
------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------------
[Authorized Signatory]
Date:
--------------------------------
Exh. D-2
<PAGE> 115
EXHIBIT E
Form of Transferee Letter of Representation
Attention: Corporate Trust Division
Dear Sirs:
This certificate is delivered to request a transfer of $________
principal amount [at maturity]** of the [12 1/2% Senior Notes]* [14 1/2% Senior
Discount Notes]** due 2010 of Leap Wireless International, Inc. (the "Company")
and any guarantee thereof (the "Securities"). Upon transfer, the Securities
would be registered in the name of the new beneficial owner as follows:
Name:
---------------------------
Address:
------------------------
Taxpayer ID Number:
-------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date which is two years after the later of
the date of original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective under
the Securities Act, (c) in a transaction complying with the requirements of Rule
144A under the Securities Act, to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own account
or for the account of a QIB and to whom notice is given that the transfer is
being made in reliance on Rule 144A, (d) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, that is purchasing for its own account or for the account of
such an institutional "accredited investor," in each case in a minimum principal
amount of Securities of $250,000 or (e) pursuant to any other
- -----------------------
* Insert for Senior Note.
** Insert for Senior Discount Note.
E-1
<PAGE> 116
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (d) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities Act.
The Company and the Trustee reserve the right prior to any offer, sale or other
transfer prior to the Resale Restriction Termination Date of the Securities
pursuant to clause (d) or (e) above to require the delivery of an opinion of
counsel, certificates and/or other information satisfactory to the Company and
the Trustee.
Dated:
----------------------- TRANSFEREE:
By:
------------------------------------
Exh. E-2
<PAGE> 117
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of
______ __, ____ between [Additional Guarantor(s)] (collectively, the "ADDITIONAL
GUARANTORS"), Leap Wireless International, Inc., a Delaware corporation (the
"COMPANY"), Cricket Communications Holdings, Inc., a Delaware corporation, (the
"GUARANTOR") and State Street Bank and Trust Company, a __________ banking
corporation, as trustee under the indenture referred to below (the "TRUSTEE").
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "INDENTURE"), dated as of February
23, 2000, providing for the issuance of an aggregate principal amount at
maturity of $225,000,000 of 12 1/2% Series A and Series B Senior Notes due 2010
and $668,000,000 14 1/2% Series A and Series B Senior Discount Notes due 2010;
WHEREAS, Section 4.23 of the Indenture provides that under certain
circumstances the Company and the Guarantors are required to cause the
Additional Guarantors to execute and deliver to the Trustee a supplemental
indenture pursuant to which the Additional Guarantors shall unconditionally
guarantee all of the Company's Obligations under the Indenture and the
Securities pursuant to a guarantee (the "ADDITIONAL GUARANTEE") on the terms and
conditions of the Guarantee by the Guarantors in Article 10 of the Indenture and
on the other terms and conditions set forth herein; and
WHEREAS, pursuant to Section 7.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Additional Guarantors hereby agree,
jointly and severally with all other guarantors, to guarantee the Company's
Obligations under the Indenture and the Securities on the terms and subject to
the conditions set forth herein and in Article 10 of the Indenture (including
the obligation to pay Liquidated Damages under the provisions of the
Registration Rights Agreement) and to be bound by all other applicable
provisions of the Indenture. Pursuant to Section 10.01 of the Indenture, the
Additional Guarantors agree that the Subsidiary Guarantees set forth in Article
10 of the Indenture, as supplemented by its agreement to guarantee contained
herein shall remain in full force and effect and apply to all of the Securities
notwithstanding any failure by the Additional Guarantors to endorse on such
Securities a notation of the Subsidiary Guarantor.
3. RELEASE OF ADDITIONAL GUARANTOR. In the event that the holders of any
of the Company's other Indebtedness which is guaranteed by the Additional
Guarantors release the Additional Guarantors from its guarantee in respect of
such other Indebtedness, except a discharge or release by or as a result of any
payment under the guarantee of such other Indebtedness by the Additional
Guarantors, the
Exh. F-1
<PAGE> 118
Additional Guarantors shall be automatically and unconditionally released and
discharged from its obligations under this Additional Guarantee; provided
however, if, after such release, any guarantee under such other Indebtedness is
subsequently reincurred or reinstated, then such Additional Guarantors
reincurring or reinstating such guarantee under such other Indebtedness shall
execute and reinstate its Additional Guarantee hereunder.
Upon receipt of an Officer's Certificate, the Trustee shall execute any
documents reasonably requested by the Company, the Guarantors or the Additional
Guarantors in order to evidence the release of such Additional Guarantors from
its obligations under the Additional Guarantee.
4. NO RECOURSE AGAINST OTHERS. No direct or indirect stockholder,
employee, officer or director, as such, past, present or future of the Company,
the Guarantors or the Additional Guarantors or any successor entity shall have
any personal liability for any Obligations of the Company, the Guarantors or the
Additional Guarantors or any successor entity under the Additional Guarantee, by
reason of his or its status as such stockholder, employee, officer or director.
Each Holder by accepting a Security waives and releases all such
liability, and such waiver and release is part of the consideration for the
issuance of the Securities.
5. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
6. COUNTERPARTS. This Supplemental Indenture may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
7. EFFECT OF THE HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
Exh. F-2
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
[ADDITIONAL GUARANTORS]
COMPANY:
LEAP WIRELESS INTERNATIONAL, INC.
By:
----------------------------------------
Name:
Title:
GUARANTOR:
CRICKET COMMUNICATIONS HOLDINGS, INC.
By:
----------------------------------------
Name:
Title:
TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
By:
----------------------------------------
Name:
Title:
Exh. F-3
<PAGE> 120
EXHIBIT G
LEAP WIRELESS INTERNATIONAL, INC.
OFFICERS' CERTIFICATE
[Name], [title(s)] of Leap Wireless International, Inc., a Delaware
corporation (the "Company"), and [name], [title(s)] of the Company, hereby
certify pursuant to [Section(s) [4.23]] [and ______] of the Indenture, dated as
of February 23, 2000 (the "Indenture"), between the Company the Guarantor named
therein and State Street Bank and Trust Company, as trustee (the "Trustee"),
that:
(i) he or she has read and understands the provisions of the Indenture
and the definitions relating thereto, (ii) the statements made in this Officer's
Certificate are based upon an examination of the provisions of the Indenture and
upon the relevant books and records of the company, (iii) in is or her opinion,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not the covenants and
conditions of the Indenture relating to the [execution of the Supplemental
Indenture] [OTHER] have been complied with and (iv) in his or her opinion, such
covenants and conditions have been complied with; and
(ii) the execution of the Supplemental Indenture is authorized and
permitted by the Indenture.
IN WITNESS WHEREOF, each of the undersigned has executed this
Certificate on this ___ day of __________, ___________.
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
Exh. G-1
<PAGE> 1
EXHIBIT 4.2
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Pledge Agreement") is made and entered into
as of February 23, 2000 by LEAP WIRELESS INTERNATIONAL, INC., a Delaware
corporation (the "Company"), having its registered office at 10307 Pacific
Center Court, San Diego, California, in favor of State STREET BANK AND TRUST
Company ("State Street"), a state chartered trust company organized under the
laws of the Commonwealth of Massachusetts, having an office at 22 Asylum Street,
Hartford Connecticut 06103, as (i) trustee (the "Trustee") for the holders (the
"Holders") of the Notes (as defined herein) issued by the Company under the
Indenture referred to below and (ii) in its individual capacity, as securities
intermediary (in such capacity, the "Collateral Securities Intermediary").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Indenture.
W I T N E S S E T H
WHEREAS, the Company and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), pursuant to which the
Company is issuing on the date hereof (i) $225,000,000 in aggregate principal
amount of 12 1/2% Senior Notes due 2010 (the "Senior Notes") and (ii)
$668,000,000 in aggregate principal amount at maturity of 14 1/2% Senior
Discount Notes due 2010 (the "Senior Discount Notes" and together with the
Senior Notes, the "Notes"); and
WHEREAS, the Trustee has opened a collateral account (the "Pledge
Account") with ___________, at its office at __________, Reference:
"____________," Account No. __________, in the name, and under the sole control
and dominion, of the Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, the Company has agreed pursuant to the Indenture to deposit in
the Pledge Account, for the benefit of the Holders of the Senior Notes, an
amount from the net proceeds of the offering of the Senior Notes sufficient to
acquire Pledged Securities (as defined herein) in an amount as will be
sufficient upon receipt of scheduled interest and principal payments on such
Pledged Securities to provide payment in full when due of the first seven
scheduled interest payments due on the Senior Notes; and
WHEREAS, to secure the obligations of the Company under the Indenture and
the Senior Notes to pay in full each of the first seven scheduled interest
payments on the Senior Notes and to secure repayment of the principal, premium
(if any) and interest on the Senior Notes in the event that the Senior Notes
become due and payable prior to such time as the first seven scheduled interest
payments thereon shall have been paid in full (collectively, the "Obligations"),
the Company has agreed (i) to pledge to the Trustee for its benefit and the
ratable benefit of the Holders of the Senior Notes, a security interest in all
cash, if any, held in the Pledge Account, the Pledged Securities and related
collateral and (ii) to execute and deliver this Pledge Agreement in order to
secure the payment and performance by the Company of all the Obligations; and
<PAGE> 2
WHEREAS, it is a condition precedent to the initial purchase of the Senior
Notes by the initial Holders thereof that the Company shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Pledge Agreement; and
WHEREAS, unless otherwise defined herein or in the Indenture, terms used
in Articles 8 or 9 of the Uniform Commercial Code ("UCC") as in effect in the
State of New York are used herein as therein defined.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and in order to induce the Holders of the Senior Notes to purchase the Senior
Notes, the Company hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Senior Notes, as
follows:
Section 1. PLEDGE AND GRANT OF SECURITY INTEREST. The Company hereby
assigns and pledges to the Trustee for its benefit and for the ratable benefit
of the Holders of the Senior Notes, and hereby grants to the Trustee for its
benefit and for the ratable benefit of the Holders of the Senior Notes, a
continuing first priority security interest in and to all of the Company's
right, title and interest in, to and under the following (whether consisting of
investment securities, book-entry securities or other securities, security
entitlements, financial assets or other investment property, accounts, general
intangibles, instruments or documents, securities accounts, deposit accounts or
other bank, trust or cash collateral accounts, or other property, assets or
rights), whether now owned or hereafter acquired, wherever located and whether
now or hereafter existing (hereinafter collectively referred to as the
"Collateral"):
(a) the Pledge Account, all financial assets from time to time
credited to the Pledge Account (including, without limitation, any Pledged
Securities from time to time credited to the Pledge Account), and all dividends,
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such financial assets;
(b) any and all applicable security entitlements to any of the
financial assets credited from time to time to the Pledge Account (including,
without limitation, to any Pledged Securities from time to time credited to the
Pledge Account);
(c) any and all related securities accounts in which security
entitlements to any of the financial assets credited from time to time to the
Pledge Account (including, without limitation, to any Pledged Securities from
time to time credited to the Pledge Account);
(d) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Trustee for or on behalf of the Company in
substitution for or in addition to any or all of the then existing Collateral;
(e) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Collateral; and
2
<PAGE> 3
(f) all proceeds (including, without limitation, cash
proceeds) of any and all of the foregoing Collateral (including, without
limitation, proceeds that constitute property of types described in clauses (a)
through (e) of this Section 1).
Section 2. SECURITY FOR OBLIGATION. This Pledge Agreement and the grant of
a security interest in the Collateral secure the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all the Obligations, whether for principal, interest, fees or otherwise, now
or hereafter existing, under this Pledge Agreement, the Senior Notes or the
Indenture (all such Obligations being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Pledge Agreement and the grant of
a security interest in the Collateral hereunder secure the payment of all
amounts that constitute part of the Secured Obligations and would be owed by the
Company to the Trustee or the Holders under the Senior Notes or the Indenture
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Company.
Section 3. MAINTAINING THE COLLATERAL ACCOUNT. Prior to or concurrently
with the execution and delivery hereof and for so long as any Secured Obligation
shall remain outstanding,
(a) the Trustee shall establish and maintain (and the
Collateral Securities Intermediary shall maintain and administer in accordance
with this Pledge Agreement) the Pledge Account with the Collateral Securities
Intermediary at its office at 225 Asylum Street, Hartford, Connecticut, 06103 in
accordance with the terms of this Pledge Agreement. The Pledge Account shall at
all times be segregated from any other custodial or collateral account
maintained by the Trustee.
(b) the Collateral Securities Intermediary and the Trustee
shall cause the Pledge Account to be, and the Pledge Account shall be, separate
from all other accounts held by or under the control and dominion of the
Trustee, the Collateral Securities Intermediary or State Street. It shall be a
term and condition of the Pledge Account, notwithstanding any term or condition
to the contrary in any other agreement relating to the Pledge Account, and
except as otherwise provided by the provisions of Section 5 and Section 17.9 of
this Pledge Agreement, that no amount shall be paid or released to or for the
account of, or withdrawn by or for the account of, the Company or any other
Person from the Pledge Account.
(c) the Pledge Account shall be subject to such applicable
laws, and such applicable regulations of any appropriate banking or governmental
authority, as may now or hereafter be in effect, including, without limitation,
any applicable regulations of the Board of Governors of the Federal Reserve
System.
(d) subject to the provisions of this Pledge Agreement, the
Pledge Account shall be under the sole dominion and control of the Trustee. The
Trustee shall have the sole right to make withdrawals from the Pledge Account
and to exercise all rights (including the delivery of entitlement orders) with
respect to the Collateral from time to time therein. All Collateral delivered to
or held by or on behalf of, and not released by, the Trustee pursuant hereto
shall be held in the Pledge Account in accordance with the provisions hereof.
3
<PAGE> 4
(e) if any earnings of the Collateral held in the Pledge
Account are subject to non-U.S. withholding taxes, the Trustee shall cooperate
in good faith with the Company to reduce or eliminate such withholding taxes,
including, without limitation, through changing the location of the Pledge
Account or through establishing an additional Pledge Account at a different
location to hold the affected Collateral, provided that after giving effect to
any such change of location or establishment of an additional Pledge Account,
the Trustee's security interest in the affected Collateral shall continue to
constitute a valid and perfected first priority security interest in such
Collateral.
(f) all Collateral shall be retained in the Pledge Account
pending disbursement pursuant to the terms of this Pledge Agreement.
(g)
Section 4. INTENTIONALLY OMITTED
Section 5. DISBURSEMENTS.
(a) Immediately prior to the due date of any of the first
seven scheduled interest payments on the Senior Notes, the Company may (i)
pursuant to written instructions given by the Company to the Trustee (an "Issuer
Order"), direct the Trustee to release from the Pledge Account and pay to the
Holders of the Senior Notes proceeds sufficient to provide for payment in full
of such interest then due on the Senior Notes or (ii) deposit with the Trustee
from funds otherwise available to the company cash sufficient to pay the
interest scheduled to be paid on such date. Upon receipt of an Issuer Order, the
Trustee will release funds in an amount sufficient to provide for the payment in
full of such interest then due on the Senior Notes in accordance with such
Issuer Order and the payment provisions of the Indenture to the Holders of the
Senior Notes from (and to the extent of) proceeds of the Pledged Securities in
the Pledge Account. Nothing in this Section 5 shall affect the Trustee's rights
to apply the Collateral to the payments of amounts due on the Senior Notes upon
acceleration thereof.
(b) If the Company makes any interest payment or portion of an
interest payment pursuant to Section 5(a)(ii) from a source of funds other than
the Pledge Account ("Pledgor Funds"), the Company may, after payment in full of
such interest payment, direct the Trustee pursuant to an Issuer Order to release
to the Company or to another party at the direction of the Company (the
"Pledgor's Designee") proceeds from the Pledge Account in an amount less than or
equal to the amount of Company Funds applied to such interest payment. Upon
receipt by the Trustee of (i) such Issuer Order and (ii) payment in full of such
interest payment, the Trustee shall pay over to the Company or the Company's
Designee, as the case may be, proceeds from the Pledge Account in accordance
with such Issuer Order as soon as practicable.
(c) If at any time the principal of and interest on the
Pledged Securities exceeds 100% of the amount sufficient, in the written opinion
of an internationally recognized firm of independent accountants selected by the
Company and delivered to the Trustee, to provide for payment in full of the
remaining first seven scheduled interest payments due on the Senior Notes, the
Company may direct the Trustee to release any such excess amount to the
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Company or to the Company's Designee. Upon receipt of an Issuer Order (which
shall include a certificate from such internationally recognized firm of
independent accountants stating the amount by which the Pledged Securities
exceeds the amount required to be held in the Pledge Account) the Trustee shall
pay over to the Company or the Company's Designee, as the case may be, any such
excess amount.
(d) Upon payment in full of the first seven scheduled interest
payments on the Senior Notes, the security interest in the Collateral evidenced
by this Pledge Agreement will automatically terminate and be of no further force
and effect and the Collateral shall promptly be paid over and transferred to the
Company or the Company's Designee, as the case may be. Furthermore, upon the
release of any Collateral from the Pledge Account in accordance with the terms
of this Pledge Agreement, whether upon release of Collateral to Holders as
payment of interest or otherwise, the security interest evidenced by this Pledge
Agreement in such released Collateral will automatically terminate and be of no
further force and effect.
(e) At least three Business Days prior to the due date of each
of the first seven scheduled interest payments on the Senior Notes, the Company
shall give the Trustee notice (by Issuer Order) as to whether such interest
payment will be made pursuant to Section 5(a)(i) or 5(a)(ii) above and the
respective amounts of interest that will be paid from the Pledge Account and
from Company Funds. Any Company Funds to be used to make any interest payment
shall be delivered to the Trustee, in immediately available funds, prior to
10:00 A.M. (New York City time) on such interest payment date. If no such notice
is given or such Company Funds have not been so delivered, the Trustee will act
pursuant to Section 5(a) above as if it had received an Issuer Order pursuant
thereto for the payment in full of the interest then due from the Pledge
Account.
(f) If on any interest payment date there are insufficient
funds in the Pledge Account to make any scheduled payment of interest (after
taking into account any Company Funds delivered to the Trustee as provided in
Section 5(a)(ii) above), the Trustee shall liquidate Collateral in the Pledge
Account to the extent necessary to pay, in full, such scheduled payment of
interest.
(g) Nothing contained in this Pledge Agreement shall (i)
afford the Company any right to issue entitlement orders with respect to any
security entitlement to the Pledged Securities or any securities account in
which any such security entitlement may be carried, or otherwise afford the
Company control of any such security entitlement or (ii) otherwise give rise to
any rights of the Company with respect to the Pledged Securities, any security
entitlement thereto or any securities account in which any such security
entitlement may be carried, other than the Company's rights under this Pledge
Agreement as the beneficial owner of collateral pledged to and subject to the
exclusive dominion and control (except as expressly provided in Sections 5(a),
(b), (c), (d), (e) and (f) hereof) of the Trustee in its capacity as such (and
not as a securities intermediary). The Company acknowledges, confirms and agrees
that the Trustee holds a security interest to the Pledged Securities solely as
Trustee for the Holders of the Senior Notes and not as a securities
intermediary.
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Section 6. CASH DEPOSIT; INVESTMENTS.
(a) On the date hereof, the Company shall deposit (or cause to
be deposited) cash proceeds sufficient to purchase direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which full faith and credit of the United States of America is
pledged and which are not callable at the Company's option (the "Pledged
Securities") on the date hereof.
(b) In the event that the Company shall have deposited (or
cause to be deposited) cash proceeds pursuant to clause (a) above, the Trustee
shall, on the date hereof, use such cash proceeds to invest in the Pledged
Securities, at which time such Pledged Securities shall be promptly credited to
the Pledge Account. Until such time as any cash proceeds are invested in the
Pledged Securities as provided above, such cash proceeds shall be deposited and
held in a deposit account with __________ in the name of the Trustee and under
the sole control and dominion of the Trustee, such deposit account to be deemed
to constitute part of the Pledge Account.
Section 7. DELIVERY AND CONTROL OF COLLATERAL; COLLATERAL ACCOUNTS;
INTEREST; SECURITIES INTERMEDIARY.
Notwithstanding anything to the contrary contained in this Pledge
Agreement (it being understood that in the event of any conflict between the
provisions of this Section 7 and any other provisions of this Pledge Agreement,
the provisions of this Section 7 shall control) State Street, as Collateral
Securities Intermediary, hereby represents and warrants to, and agrees with the
Company and the Trustee as follows:
(a) It is a securities intermediary as of the date hereof and
for so long as this Pledge Agreement remains in effect shall remain in effect
and State Street is acting as the Collateral Securities Intermediary hereunder,
it shall remain a securities intermediary and shall act as such with respect to
the Company, the Trustee, the Pledge Account, all financial assets credited
thereto (including without limitation the Pledged Securities), all related
securities entitlements and all other Collateral.
(b) The Pledge Account is and will be maintained as a
securities account and Trustee is the entitlement holder in respect of the
Pledge Account, all financial assets credited thereto (including without
limitation the Pledged Securities) and all related securities entitlements and
the Collateral Securities Intermediary shall so note the same in its records
with respect to the Pledge Account, all financial assets credited thereto
(including without limitation the Pledged Securities) and all related securities
entitlements.
(c) It is the securities intermediary with respect to any
assets, property or other items credited to the Pledge Account from time to time
(including without limitation the Pledged Securities).
(d) All financial assets in registered form or payable to or
to the order of and credited to the Pledge Account shall be registered in the
name of, payable to or to the order of, or endorsed to, the Collateral
Securities Intermediary or in blank and in no case during
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the term of this Pledge Agreement will any financial asset credited to the
Pledge Account be registered in the name of, payable to or to the order of, or
endorsed to, the Company, except to the extent the foregoing have been
subsequently endorsed by the Company to the Collateral Securities Intermediary
or in blank.
(e) It shall, upon written direction from the Trustee and
without further consent from the Company, (i) comply with all instructions,
entitlement orders and directions of any kind originated by the Trustee
concerning the Collateral, including entitlement orders to liquidate or
otherwise dispose of the Collateral as and to the extent directed by the Trustee
and pay over to the Trustee all proceeds and other value therefrom or otherwise
distributed with respect thereto without any set-off or deduction, and (ii)
except as otherwise directed by the Trustee, not to comply with the
instructions, entitlement orders or directions of the Company or any other
person, in each case it being the intention that Trustee shall have control of
the Pledge Account, all financial assets credited thereto (including without
limitation the Pledged Securities) and all related securities entitlements.
(f) Each item of property (whether cash, a security,
investment property, instrument or obligation, share, participation, interest or
other property whatsoever, including without limitation the Pledged Securities)
credited to the Pledge Account shall be treated as a financial asset.
(g) Except for the claims and interests of the Trustee and the
Company in the Pledge Account, all financial assets credited thereto (including
without limitation the Pledged Securities) and all related securities
entitlements, it does not know of any claim to or security interest or other
interest in the Pledged Account, any financial assets credited thereto
(including without limitation the Pledged Securities) or any related securities
entitlements and, except for such claims and interests of the Trustee and the
Company, the Trustee also does not know of any such claims or interests.
(h) It hereby waives its rights to set off any obligations of
the Company to it against the Pledged Account, any financial assets credited
thereto (including without limitation the Pledged Securities) or any related
securities entitlements, and hereby agrees that any and all liens, encumbrances,
claims or security interests which it may have against the Pledged Account, any
financial assets credited thereto (including without limitation the Pledged
Securities) or any related securities entitlements, either now or in the future
are and shall be subordinate and junior to the prior payment in full of all
obligations of the Company now or hereafter existing under the Indenture, Senior
Notes and all other documents related thereto whether for principal, interest
(including, without limitation, interest as provided in the Senior Notes,
whether or not such interest accrues after the filing of such petition for
purposes of the Bankruptcy Code or is an allowed claim in such proceeding),
indemnities, fees, premiums, expenses or otherwise.
(i) It shall not agree with any third party to comply with any
instructions, entitlement orders or directions of any kind concerning the
Pledged Account, any financial assets credited thereto (including without
limitation the Pledged Securities) or any related securities entitlements
originated by such third party without the prior written consent of the Trustee.
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(j) It shall maintain the Pledged Account so that all items of
income, gain, expense and loss recognized in the Pledged Account shall be
reported to the Internal Revenue Service and all state and local taxing
authorities under the name and taxpayer identification number of the Company and
the Company shall execute a Substitute Form W-9 or such other documents as may
be requested by the Trustee to provide that the Company shall not be subject to
the backup withholding requirements of the Internal Revenue Code of 1986, as
amended.
(k) Its jurisdiction for purposes of the UCC with respect to
the Pledged Account, all financial assets credited thereto (including without
limitation the Pledged Securities) and all related securities entitlements is
and shall always be the State of New York.
Section 8. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants that:
(a) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Pledge Agreement will
not contravene any provision of applicable law or the Articles of Incorporation
of the Company or any material agreement or other material instrument binding
upon the Company or any of its subsidiaries or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Company or
any of its subsidiaries, or result in the creation or imposition of any Lien on
any assets of the Company, except for the security interests granted under this
Pledge Agreement.
(b) No consent of any other person and no approval,
authorization, order of, action by or qualification with, any governmental
authority, regulatory body, agency or other third party is required (i) for the
execution, delivery or performance by the Company of its obligations under this
Pledge Agreement or (ii) for the grant by the Company of the security interests
created by this Pledge Agreement or for the pledge by the Company of the
Collateral pursuant to this Pledge Agreement, except, in each case, for such
consents, approvals, authorizations, orders, actions and qualifications which
the failure to obtain, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the properties, assets, financial
condition or results of operations of the Company. No consent of any other
person and no approval, authorization, order of, action by or qualification
with, any governmental authority, regulatory body, agency or other third party
is required for the exercise by the Trustee of the rights provided for in this
Pledge Agreement or the remedies in respect of the Collateral pursuant to this
Pledge Agreement, except for any such consents, approvals, authorizations or
orders required to be obtained by the Trustee (or the Holders) for reasons other
than the consummation of this transaction.
(c) The Company is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except for the
security interests created by this Pledge Agreement). The Company has not at
time transferred any of the Collateral to third parties nor encumbered such
Collateral with any third party rights. No financing statement or instrument
similar in effect covering all or any part of the Company's interest in the
Pledged
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Securities is on file in any public or recording office, other than the
financing statements filed pursuant to this Pledge Agreement. The Company has no
trade names.
(d) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as (i) the enforceability hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, preference, reorganization, moratorium or
similar laws now or hereafter in effect relating to or affecting creditors'
rights or remedies generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability, (iii) the exculpation
provisions and rights to indemnification hereunder may be limited by U.S.
federal and state securities laws and public policy considerations and (iv) the
waiver of rights and defenses contained in Section 14(a) and (b), Section 17.11
and Section 17.15 of this Pledge Agreement may be limited by applicable law.
(e) Upon the crediting of any Collateral to the Pledged
Account in accordance with Sections 3 and 6 above, the pledge and grant of a
security interest in the Collateral pursuant to this Pledge Agreement for the
benefit of the Trustee and the Holders of the Senior Notes will constitute a
valid and perfected first priority security interest in such Collateral,
securing the payment of the Secured Obligations enforceable as such against all
creditors of the Company (and any persons purporting to purchase any of the
Collateral from the Company).
(f) There are no legal or governmental proceedings pending or,
to the best of the Company's knowledge, threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the Company
or any such subsidiary is subject that would materially adversely affect the
power or ability of the Company to perform its obligations under this Pledge
Agreement or to consummate the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation (including,
without limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System) applicable to the Company.
(h) No Event of Default exists.
Section 9. FURTHER ASSURANCES.
(a) The Company agrees that from time to time, at the expense
of the Company, the Company will, promptly including upon reasonable request by
the Trustee, execute and deliver or cause to be executed and delivered, or use
its reasonable commercial efforts to procure, all assignments, instruments and
other documents, all in form and substance reasonably satisfactory to the
Trustee, deliver any instruments to the Trustee and take any other actions that
may be necessary or, in the reasonable opinion of the Trustee, desirable to
perfect, continue the perfection of, or protect the first priority of the
Trustee's security interest in and to the Collateral, to protect the Collateral
against the rights, claims, or interests of third persons (other than any such
rights, claims or interests created by or arising through the Trustee) or to
effect the purposes of this Pledge Agreement.
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(b) The Company hereby authorizes the Trustee to file any
financing or continuation statements in the United States with respect to the
Collateral without the signature of the Company (to the extent permitted by
applicable law); provided, however, that the Company shall not be relieved of
any of its obligations under Section 9(a) hereof. A photocopy or other
reproduction of this Pledge Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) The Company will furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
(d) The Company will promptly pay all costs reasonably
incurred in connection with any of the foregoing within 30 days of receipt of an
invoice therefor. The Company also agrees, whether or not requested by the
Trustee, to take all actions that are necessary to perfect or continue the
perfection of, or to protect the first priority of, the Trustee's security
interest in and to the Collateral, including the filing of all necessary
financing and continuation statements, and to protect the Collateral against the
rights, claims or interests of third persons (other than any such rights, claims
or interests created by or arising through the Trustee).
Section 10. COVENANTS.
The Company covenants and agrees with the Trustee and the Holders of
the Senior Notes that from and after the date of this Pledge Agreement until the
earlier of payment in full in cash of (x) each of the first seven scheduled
interest payments due on the Senior Notes under the terms of the Indenture and
(y) all obligations due and owing under the Indenture and the Senior Notes in
the event such obligations become due and payable prior to the payment in full
of the first seven scheduled interest payments on the Senior Notes:
(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to, any of the
Collateral or its beneficial interest therein, and (ii) it will not create or
permit to exist any Lien or other adverse interest in or with respect to its
beneficial interest in any of the Collateral (except for the security interests
granted under this Pledge Agreement); and
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or inhibit the
Trustee's rights or remedies hereunder, including, without limitation, the
Trustee's right to sell or otherwise dispose of the Collateral or (ii) fail to
pay or discharge any tax, assessment or levy of any nature with respect to its
beneficial interest in the Collateral not later than five days prior to the date
of any proposed sale under any judgment, writ or warrant of attachment with
respect to such beneficial interest.
Section 11. POWER OF ATTORNEY.
In addition to all of the powers granted to the Trustee pursuant to
the Indenture, the Company hereby appoints and constitutes the Trustee as the
Company's attorney-in-fact (with full power of substitution), with full
authority in the place and stead of the Company and in
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the name of the Company or otherwise, from time to time in the Trustee's
reasonable discretion to take any action and to execute any instrument that the
Trustee may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above,
(c) to file any claims or take any action or institute any
proceedings that the Trustee may reasonably deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Trustee with respect to any of the Collateral, and
(d) to pay or discharge taxes or Liens levied or placed upon
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Trustee in its sole reasonable
discretion, and such payments made by the Trustee to become part of the
Obligations of the Company to the Trustee, due and payable immediately upon
demand; provided, however, that the Trustee shall have no obligation to perform
any of the foregoing actions. The Trustee's authority under this Section 11
shall include, without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Collateral in the name of the
Company, execute and give receipt for any certificate of ownership or any
document constituting Collateral, transfer title to any item of Collateral, sign
the Company's name on all financing statements (to the extent permitted by
applicable law) or any other documents reasonably deemed necessary or
appropriate by the Trustee to preserve, protect or perfect the security interest
in the Collateral and to file the same, prepare, file and sign the Company's
name on any notice of Lien, and to take any other actions arising from or
incident to the powers granted to the Trustee in this Pledge Agreement. This
power of attorney is coupled with an interest and is irrevocable by the Company.
Section 12. NO ASSUMPTION OF DUTIES; REASONABLE CARE.
The rights and powers conferred on the Trustee hereunder are solely
to preserve and protect the security interest of the Trustee and the Holders of
the Senior Notes in and to the Collateral granted hereby and shall not be
interpreted to, and shall not impose any duties on the Trustee in connection
therewith other than those expressly provided herein or imposed under applicable
law. Except as provided by applicable law or by the Indenture, the Trustee shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Trustee accords similar property held by
the Trustee for its own account, it being understood that the Trustee in its
capacity as such shall not have any responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities or other
matters relative to any Collateral, whether or not the Trustee has or is deemed
to have knowledge of such matters, (b) taking any necessary steps to preserve
rights against any parties with respect to any Collateral or (c) investing or
reinvesting any of the Collateral or any loss on any investment.
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Section 13. INDEMNITY.
The Company shall indemnify, hold harmless and defend the Trustee,
the Collateral Securities Intermediary and each of their respective directors,
officers, agents and employees, from and against any and all claims, actions,
obligations, liabilities and expenses, including reasonable defense costs,
reasonable investigative fees and costs, and reasonable legal fees and damages
arising from their execution of or performance under this Pledge Agreement,
except to the extent that such claim, action, obligation, liability or expense
is directly attributable to the bad faith, gross negligence or willful
misconduct of such indemnified person. This indemnification shall survive the
termination of this Pledge Agreement.
Section 14. REMEDIES UPON EVENT OF DEFAULT.
If any Event of Default shall have occurred and be continuing:
(a) The Trustee and the Holders of the Senior Notes may
exercise, in addition to all other rights given by law or by this Pledge
Agreement or the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party under the UCC in effect in the State of New York
at that time and also may (i) require the Company to, and the Company hereby
agrees that it will at its expense and upon request of the Trustee forthwith,
assemble all or part of the Collateral as directed by the Trustee and make it
available to the Trustee at a place to be designated by the Trustee that is
reasonably convenient to both parties and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at any broker's board or at public or private sale, in one or more sales or
lots, at any of the Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Trustee may deem commercially
reasonable. The Company agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Company of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The purchaser of any
or all Collateral so sold shall thereafter hold the same absolutely, free from
any claim, encumbrance or right of any kind whatsoever created by or through the
Company. Any sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property similar to the
Collateral shall be deemed to be commercially reasonable. The Trustee or any
Holder of Senior Notes may, in its own name or in the name of a designee or
nominee, buy any of the Collateral at any public sale and, if permitted by
applicable law, at any private sale. All expenses (including court costs and
reasonable attorneys' fees, expenses and disbursements) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Collateral.
(b) All cash proceeds received by the Trustee in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral may, following the payment of the fees and expenses of the Trustee,
be held by the Trustee as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Trustee
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pursuant to Section 15): first, to the Holders for amounts due and unpaid on the
Senior Notes for interest, ratably, without preference or priority of any kind;
and second, to the Holders for amounts due and unpaid on the Senior Notes for
principal, ratably, without preference or priority of any kind. Any surplus of
such cash or cash proceeds held by the Trustee and remaining after payment in
full of all the Secured Obligations shall be paid over to the Company or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The Trustee may, without notice to the Company except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the Pledged
Account or any part thereof.
(d) The Company further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 14 valid
and binding and in compliance with any and all other applicable requirements of
law. The Company further agrees that a breach of any of the covenants contained
in this Section 14 will cause irreparable injury to the Trustee and the Holders
of the Senior Notes, that the Trustee and the Holders of the Senior Notes have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 14 shall be specifically
enforceable against the Company, and the Company hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is continuing.
Section 15. EXPENSES.
The Company will upon demand pay to the Trustee and the Collateral
Securities Intermediary the amount of any and all reasonable expenses,
including, without limitation, the reasonable fees, expenses and disbursements
of its counsel, experts and agents retained by the Trustee or the Collateral
Securities Intermediary, as the case may be, that the Trustee or the Collateral
Securities Intermediary, as the case may be, may incur in connection with (a)
the review, negotiation and administration of this Pledge Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (c) the exercise or enforcement of any
of the rights of the Trustee and the Holders of the Senior Notes hereunder or
(d) the failure by the Company to perform or observe any of the provisions
hereof.
Section 16. SECURITY INTEREST ABSOLUTE.
All rights of the Trustee and the Holders of the Senior Notes and
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
Senior Notes or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture;
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(c) any taking, exchange, surrender, release or non-perfection
of any Liens on any other collateral for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Secured Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Company;
(e) any change, restructuring or termination of the corporate
structure or existence of the Company; or
(f) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Secured Obligations or of this
Pledge Agreement.
Section 17. MISCELLANEOUS PROVISIONS.
Section 17.1 NOTICES. Any notice or communication given hereunder
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows:
IF TO THE COMPANY:
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, California 92121
Fax: ___________
IF TO THE TRUSTEE OR THE COLLATERAL SECURITIES INTERMEDIARY:
[____________________________]
______________________________
______________________________
Fax: ________________________
Attention: __________________
All such notices and other communications shall, when mailed, delivered or
telecopied, respectively, be effective when deposited in the mails, delivered or
telecopied, respectively, addressed as aforesaid.
Section 17.2 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Company or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
Section 17.3 SEVERABILITY. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that
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jurisdiction only such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Pledge Agreement in any jurisdiction.
Section 17.4 HEADINGS. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 17.5 COUNTERPART ORIGINALS. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
Section 17.6 BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Senior Notes, any
benefit or any legal or equitable right, remedy or claim under this Pledge
Agreement. The rights of the Company in the Collateral and the rights and
obligations of the Company hereunder may be assigned (an "ASSIGNMENT") to any
direct or indirect Wholly Owned Subsidiary of the Company (an "ASSIGNEE");
provided that such Assignee furnishes the Trustee with an Opinion of Counsel to
the effect that such Assignment is valid, binding and enforceable against such
Assignee and that after such Assignment the Trustee shall have a perfected
security interest in the Collateral, securing the payment of the Secured
Obligations, and addressing such other related matters as the Trustee may
reasonably request. The Trustee shall cooperate in good faith with the Company
to effect any proposed Assignment. Upon the effectiveness of any such
Assignment, the Assignee shall become the Company hereunder for all purposes of
this Pledge Agreement, and the prior Company shall be released from its
obligations hereunder (other than its obligations under Sections 13 and 15).
Section 17.7 AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Pledge Agreement and any consent to any
departure by the Company from any provision of this Pledge Agreement shall be
effective only if made or duly given in compliance with all of the terms and
provisions of the Indenture, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Neither the Trustee nor any Holder of Senior Notes shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Event of Default or in any breach of any
of the terms and conditions hereof. Failure of the Trustee or any Holder of
Senior Notes to exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Trustee or any
Holder of Senior Notes of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the Trustee or such
Holder of Senior Notes would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
Section 17.8 INTERPRETATION OF AGREEMENT. To the extent a term or
provision of this Pledge Agreement conflicts with the Indenture, the Indenture
shall control with
15
<PAGE> 16
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Pledge Agreement
shall not be relevant to determine the meaning of this Pledge Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
Section 17.9 CONTINUING SECURITY INTEREST; TERMINATION.
(a) This Pledge Agreement shall create a continuing security
interest in and to the Collateral and shall, unless otherwise provided in this
Pledge Agreement, remain in full force and effect until the payment in full in
cash of the Secured Obligations. This Pledge Agreement shall be binding upon the
Company, its transferees, successors and assigns, and shall inure, together with
the rights and remedies of the Trustee hereunder, to the benefit of the Trustee,
the Holders of the Senior Notes, the Collateral Securities Intermediary and
their respective successors, transferees and assigns.
(b) This Pledge Agreement (other than Company's obligations
under Sections 13 and 15) shall terminate upon the earlier of (i) the payment in
full in cash of the Secured Obligations and (ii) the payment in full in cash of
the first seven scheduled interest payments on all of the Senior Notes. At such
time, the Trustee shall, pursuant to an Issuer Order, reassign and redeliver to
the Company all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Trustee in accordance with the terms of this Pledge
Agreement and the Indenture and take all actions that are necessary to release
the security interest created by this Pledge Agreement in and to the Collateral,
including the execution and delivery of all termination statements necessary to
terminate any financing or continuation statements filed with respect to the
Collateral. Such reassignment and redelivery shall be without warranty by or
recourse to the Trustee in its capacity as such, except as to the absence of any
Liens on the Collateral created by or arising through the Trustee, and shall be
at the reasonable expense of the Company.
Section 17.10 SURVIVAL OF REPRESENTATIONS AND COVENANTS. All
representations, warranties and covenants of the Company contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall terminate
only upon the termination of this Pledge Agreement.
Section 17.11 WAIVERS. The Company waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Company might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 17.12 AUTHORITY OF THE TRUSTEE.
(a) The Trustee shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Trustee by the terms
hereof, together with such powers as are reasonably incident thereto. The
Trustee may perform any of its duties hereunder or in connection with the
Collateral by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning all such
matters. Except as otherwise expressly provided in this Pledge Agreement or the
Indenture, neither the
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<PAGE> 17
Trustee nor any director, officer, employee, attorney or agent of the Trustee
shall be liable to the Company for any action taken or omitted to be taken by
the Trustee, in its capacity as Trustee, hereunder, except for its own bad
faith, gross negligence or willful misconduct, and the Trustee shall not be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Trustee and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document reasonably believed by it or them to be
genuine and correct and to have been signed or sent by the proper person or
persons.
Section 17.13 The Company acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Trustee and the Holders of the Senior Notes, be governed by the Indenture
and by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Trustee and the Company, the Trustee shall be
conclusively presumed to be acting as agent for the Holders of the Senior Notes
with full and valid authority so to act or refrain from acting, and the Company
shall not be obligated or entitled to make any inquiry respecting such
authority. All rights of the Trustee under the Indenture, including its right to
reimbursement and indemnification are incorporated herein by reference in their
entirety.
Section 17.14 FINAL EXPRESSION. This Pledge Agreement, together with
the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
Section 17.15 RIGHTS OF HOLDERS OF THE NOTES. No Holder of Senior
Notes shall have any independent rights hereunder other than those rights
granted to individual Holders of the Senior Notes pursuant to Section 6.07 of
the Indenture; provided that nothing in this subsection shall limit any rights
granted to the Trustee under the Senior Notes or the Indenture.
Section 17.16 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES.
(a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK.
(b) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR NOTES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW (AND TO THE EXTENT THE TRUSTEE
HAS RECEIVED INDEMNITY DEEMED SATISFACTORY TO IT AND HAS AGREED TO DO SO), TO
PROCEED AGAINST THE COMPANY OR THE COLLATERAL IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION
OVER THE COMPANY OR THE COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO
REALIZE ON SUCH COLLATERAL, OR TO
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<PAGE> 18
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF NEW YORK IN THE BOROUGH OF
MANHATTAN ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(c) THE COMPANY AGREES THAT NONE OF ANY HOLDER OF SENIOR
NOTES, (EXCEPT AS OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE)
STATE STREET IN ITS CAPACITY AS TRUSTEE OR STATE STREET IN ITS CAPACITY AS
COLLATERAL SECURITIES INTERMEDIARY SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE TRUSTEE, COLLATERAL SECURITIES INTERMEDIARY OR SUCH HOLDER OF
SENIOR NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE, COLLATERAL SECURITIES INTERMEDIARY OR SUCH
HOLDERS OF SENIOR NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER
OF SENIOR NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE
ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY
RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF
SENIOR NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER
OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR
THE HOLDERS OF THE SENIOR NOTES ON THE OTHER HAND.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
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<PAGE> 19
IN WITNESS WHEREOF, the Company and the Trustee have each caused this
Pledge Agreement to be duly executed and delivered as of the date first above
written.
Company:
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ James E. Hoffmann
---------------------------------
Name: James E. Hoffmann
Title: Sr. Vice President
Trustee:
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
---------------------------------
Name: Elizabeth C. Hammer
Title: Vice President
Collateral Securities Intermediary:
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
---------------------------------
Name: Elizabeth C. Hammer
Title: Vice President
S-1
<PAGE> 1
EXHIBIT 4.3
WARRANT AGREEMENT
Dated as of February 23, 2000
by and between
LEAP WIRELESS INTERNATIONAL, INC.
and
STATE STREET BANK AND TRUST COMPANY
as Warrant Agent
<PAGE> 2
<TABLE>
<S> <C>
SECTION 1. Certain Definitions.................................................. 1
SECTION 2. Appointment of Warrant Agent......................................... 7
SECTION 3. Issuance of Warrants; Warrant Certificates........................... 7
SECTION 4. Separation of Warrants............................................... 24
SECTION 5. Registration and Countersignature.................................... 24
SECTION 6. Terms of Warrants; Exercise of Warrants.............................. 24
SECTION 7. Mandatory Disposition or Redemption Pursuant to FCC Regulations...... 27
SECTION 8. Payment of Taxes..................................................... 28
SECTION 9. Reservation of Warrant Shares........................................ 28
SECTION 10. Obtaining Stock Exchange Listings.................................... 29
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares
Issuable............................................................. 29
SECTION 12. Statement on Warrants................................................ 35
SECTION 13. No Dilution or impairment; Capital and Ownership Structure........... 35
SECTION 14. Fractional Interest.................................................. 36
SECTION 15. Notices to Warrant Holders; No Rights as Shareholders................ 36
SECTION 16. Merger, Consolidation or Change of Name of Warrant Agent............. 38
SECTION 17. Warrant Agent........................................................ 39
SECTION 18. Resignation and Removal of Warrant Agent; Appointment of
Successor............................................................ 42
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 19. Registration......................................................... 43
SECTION 20. Reports.............................................................. 43
SECTION 21. Rule 144A and Rule 144............................................... 43
SECTION 22. Notices to Company and Warrant Agent................................. 43
SECTION 23. Supplements and Amendments........................................... 44
SECTION 24. Successors........................................................... 44
SECTION 25. Termination.......................................................... 45
SECTION 26. Governing Law........................................................ 45
SECTION 27. Benefits of This Agreement........................................... 45
SECTION 28. Counterparts......................................................... 45
</TABLE>
2
<PAGE> 4
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of February 23, 2000 (the
"AGREEMENT"), by and between Leap Wireless International, Inc., a Delaware
corporation (the "COMPANY"), and State Street Bank and Trust Company, a state
chartered trust company organized under the laws of the Commonwealth of
Massachusetts as warrant agent (the "WARRANT AGENT").
WITNESSETH
WHEREAS, the Company proposes to issue warrants, as hereinafter
described, to purchase shares of Common Stock (as defined below), in connection
with the offering by the Company of (i) $225,000,000 representing 225,000 Units,
each Unit consisting of one 12 1/2% Series A Senior Note Due 2010 and one
warrant to purchase up to an aggregate of 5.146 shares of Common Stock (the
"Senior Note Warrants") and (ii) $668,000,000 representing 668,000 Units, each
Unit consisting of one 14 1/2% Series A Senior Discount Note Due 2010 and one
warrant to purchase up to an aggregate of 2.503 shares of Common Stock (the
"Senior Discount Warrants" and together with the Senior Note Warrants, the
"Warrants"). The Notes (as defined below) will be guaranteed by Cricket
Communications Holdings, Inc. (the "Guarantor").
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing so to act, in connection with
the issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"144A GLOBAL WARRANT" means one or more Global Warrants
substantially in the form of Exhibit A hereto bearing the Global Warrant Legend
and the Private Placement Legend and deposited with or on behalf of, and
registered in the name of, the Depositary or its nominee that will be issued in
a denomination equal to the outstanding number of the Warrants sold in reliance
on Rule 144A.
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such specified Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
<PAGE> 5
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CASHLESS EXERCISE" means the exercise of a Warrant without the
payment of cash, by reducing the number of shares of Common Stock that would be
obtainable upon the exercise of a Warrant and payment of the Exercise Price in
cash so as to yield a number of shares of Common Stock issuable upon the
exercise of the Warrant equal to the product of (a) the number of shares of
Common Stock into which the Warrant is exercisable as of the date of exercise
(if the Exercise Price were being paid in cash) and (b) the Cashless Exercise
Ratio.
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator
of which is the excess of the Current Market Value per share of Common Stock on
the date of exercise of a Warrant over the Exercise Price per share as of the
such date and the denominator of which is the Current Market Value per share of
the Common Stock on the date of exercise of a Warrant.
"CLEARSTREAM" means Clearstream International.
"CLOSING DATE" means the date hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON EQUITY SECURITIES" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"COMMON STOCK" means the common stock, par value $.0001 per
share, of the Company.
"COMPANY" means Leap Wireless International, Inc., a Delaware
corporation, and its successors and assigns.
"CURRENT MARKET VALUE" for any Share of Common Stock means (A) if
the Common Stock is publicly traded and listed on the Nasdaq National Market or
a national securities exchange, the average closing price as quoted on the
Nasdaq National Market of the Common Stock for each of the 10 trading days
immediately prior to the Exercise Date (or, if the Common Stock is listed on a
national securities exchange, the average closing price as reported on such
national securities exchange during such 10-trading-day period); or (B) if the
Common Stock is not publicly traded, or otherwise is not listed on a national
securities exchange, the fair market value shall be equal to the value per share
as determined in good faith by the Board of Directors of the Company.
"DEFINITIVE WARRANT" means, individually and collectively, each
of the Restricted Definitive Warrants and the Unrestricted Definitive Warrants
in the form of a certificated Warrant registered in the name of the Holder
thereof and issued in accordance with Section 3.5 hereof, substantially in the
form of Exhibit A hereto except that such Warrant shall
2
<PAGE> 6
not bear the Global Warrant Legend and shall not have the "Schedule of Exchanges
of Interests in the Global Warrant" attached thereto.
"DEPOSITARY" means, with respect to the Warrants issuable or
issued, in whole or in part, in global form, the Person specified in Section 3.3
hereof as the Depositary with respect to the Warrants, and any and all
successors thereto appointed as Depositary hereunder and having become such
pursuant to the applicable provision of this Agreement.
"DESIGNATED WARRANTS" means Warrants in an amount sufficient so
that after the disposition or redemption of such Warrants, such Holder's
ownership of equity securities (including options, warrants and securities
convertible into equity securities) of the Company shall be reduced to less than
the Permitted Maximum Percentage of the total equity securities of the Company
then outstanding.
"DTC" means The Depository Trust Company.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE DATE" means any time on or after February 23, 2001.
"EXERCISE PRICE" means the purchase price per share of Common
Stock to be paid upon the exercise of each Warrant in accordance with the terms
hereof, which price shall initially be $96.80 per share, subject to adjustment
from time to time pursuant to Sections 11 and 13 hereof.
"EXPIRATION DATE" means 5:00 p.m., New York City time, on April
15, 2010.
"FCC" means the Federal Communications Commission.
"GLOBAL WARRANTS" means, individually and collectively, each of
the Restricted Global Warrants and the Unrestricted Global Warrants,
substantially in the form of Exhibit A hereto issued in accordance with Section
3.1(b) and 3.5 hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section
3.5(g)(ii), which is required to be placed on all Global Warrants issued under
this Agreement.
"HOLDER" means a person who holds of record any Warrants.
"INDENTURE" means the indenture, dated February 23, 2000, among
the Company, the Guarantor and State Street Bank and Trust Company, the Trustee
relating to the Notes.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Warrant through a Participant.
3
<PAGE> 7
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is
an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, which is not also a QIB.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders for use by such Holders in
connection with the Registration Statement.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NOTES" means the Senior Notes and the Senior Discount Notes of
the Company, being sold and issued pursuant to the Placement Agreement and the
Indenture, or any Notes exchanged therefor as contemplated by the Indenture and
the Registration Rights Agreement.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent in form and substance reasonably
acceptable to the Warrant Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Warrant Agent.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).
"PERMITTED MAXIMUM PERCENTAGE" means 15% as of the date of this
Agreement, as such percentage may be reduced, increased or otherwise modified
from time to time by the FCC.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business.
"PLACEMENT AGENTS" means Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc.,
ABN AMRO Incorporated and Credit Suisse First Boston Corporation.
4
<PAGE> 8
"PLACEMENT AGREEMENT" means the Placement Agreement, dated as of
February 16, 2000, by and among the Company, the Guarantor and the Placement
Agents relating to the Units.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
3.5(g)(i) to be placed on all Warrants issued under this Warrant Agreement
except where otherwise permitted by the provisions of this Warrant Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"QUALCOMM" means Qualcomm Incorporated.
"REGISTRABLE SECURITIES" shall have the meaning ascribed to such
term in the Warrant Registration Rights Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of February 23, 2000, by and among the Company, the
Guarantor and the Placement Agents relating to the Notes.
"REGISTRATION STATEMENT" shall have the meaning ascribed to such
term in the Warrant Registration Rights Agreement.
"REGULATION S" means Regulation S promulgated under the
Securities Act.
"REGULATION S GLOBAL WARRANT" means a Global Warrant in the form
of Exhibit A hereto bearing the Global Warrant Legend, the Private Placement
Legend and the Regulation S Legend and deposited with or on behalf of and
registered in the-name of the Depositary or its nominee, issued in a
denomination equal to the outstanding number of the Warrants resold in reliance
on Rule 903 or Rule 904 of Regulation S, which shall have a zero balance
following the initial resale of the Warrants.
"RESPONSIBLE OFFICER" means, when used with respect to the
Warrant Agent, any officer of the Warrant Agent, including any vice president,
assistant vice president, assistant secretary, assistant treasurer or any other
officer of the Warrant Agent who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of the Warrant Agreement.
"REGULATION S LEGEND" means the legend set forth in Section
3.5(g)(iv) to be placed on all Registrable Securities resold pursuant to
Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant
bearing the Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the
Private Placement Legend.
5
<PAGE> 9
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR NOTES" means the 12 1/2% Series A Senior Notes Due 2010
of the Company.
"SENIOR DISCOUNT NOTES" means the 14 1/2% Series A Senior
Discount Notes Due 2010 of the Company.
"SEPARATION DATE" means, subject to Section 7 below, the earliest
of (i) the date that is six months following the initial sale of the Units; (ii)
the commencement of the Exchange Offer (as defined in the Registration Rights
Agreement); (iii) the date a Shelf Registration Statement (as defined in the
Registration Rights Agreement) with respect to the Notes is declared effective
under the Securities Act; (iv) such date as Morgan Stanley & Co. Incorporated
shall determine; and (v) upon an offer to purchase upon a change of control of
the Company or a permitted optional redemption of the Senior Notes or Senior
Discount Notes, as applicable, in each case upon the terms and conditions of the
Indenture.
"TRUSTEE" means State Street Bank and Trust Company, a state
chartered trust company organized under the laws of the Commonwealth of
Massachusetts, the trustee under the Indenture.
"UNRESTRICTED GLOBAL WARRANT" means a Global Warrant
substantially in the form of Exhibit A attached hereto that bears the Global
Warrant Legend and that has the "Schedule of Exchanges of Interests in the
Global Warrant" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Warrants that
do not bear the Private Placement Legend.
"UNRESTRICTED DEFINITIVE WARRANT" means one or more Definitive
Warrants that do not bear and are not required to bear the Private Placement
Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(k) under
the Securities Act.
"WARRANT AGENT" means State Street Bank and Trust Company or the
successor or successors of such Warrant Agent appointed in accordance with the
terms hereof.
"WARRANT COUNTERSIGNATURE ORDER" has the meaning assigned to such
term in Section 3.2 hereof.
6
<PAGE> 10
"WARRANT CERTIFICATE" has the meaning assigned to such term in
Section 3.1(a) hereof.
"WARRANT REGISTRAR" has the meaning assigned to such term in
Section 3.3 hereof.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement, dated as of February 23, 2000, by and among the Company and
the Placement Agents relating to the Warrants and the Warrant Shares.
"WARRANT SHARES" means the shares of Common Stock issued or
issuable upon the exercise of the Warrants.
SECTION 2. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 3. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
3.1 FORM AND DATING.
(a) General.
The Warrants shall be substantially in the form of Exhibit A
hereto (the "WARRANT CERTIFICATES"). The Warrants may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Warrant shall
be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall
constitute, and are hereby expressly made, a part of this Warrant Agreement. The
Company and the Warrant Agent, by their execution and delivery of this Warrant
Agreement, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Warrant conflicts with the express
provisions of this Warrant Agreement, the provisions of this Warrant Agreement
shall govern and be controlling.
(b) Global Warrants.
Each Global Warrant shall represent such of the outstanding
Warrants as shall be specified therein and each shall provide that it shall
represent the number of outstanding Warrants from time to time endorsed thereon
and that the number of outstanding Warrants represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the number of outstanding Warrants represented thereby
shall be made by the Warrant Agent in accordance with instructions given by the
Holder thereof as required by Section 3.5 hereof.
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<PAGE> 11
(c) Euroclear and Clearstream Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream
shall be applicable to transfers of beneficial interests in the Regulation S
Global Warrant that are held by Participants through Euroclear or Clearstream.
3.2 EXECUTION.
An Officer shall sign the Warrants for the Company by manual or
facsimile signature.
If the Officer whose signature is on a Warrant no longer holds
that office at the time a Warrant is countersigned, the Warrant shall
nevertheless be valid.
A Warrant shall not be valid until countersigned by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company
signed by an Officer (a "WARRANT COUNTERSIGNATURE ORDER"), countersign Warrants
for original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company
to countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
3.3 WARRANT REGISTRAR.
The Company shall maintain an office or agency where Warrants may
be presented for registration of transfer or for exchange (the "WARRANT
REGISTRAR"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
Warrant Registrar not a party to this Warrant Agreement. If the Company fails to
appoint or maintain another entity as Warrant Registrar, the Warrant Agent shall
act as such. The Company or any of its subsidiaries may act as Warrant
Registrar.
The Company initially appoints DTC to act as Depositary with
respect to the Global Warrants.
The Company initially appoints the Warrant Agent to act as the
Warrant Registrar with respect to the Global Warrants.
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3.4 HOLDER LISTS.
The Warrant Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders. If the Warrant Agent is not the Warrant Registrar, the
Company shall promptly furnish to the Warrant Agent at such times as the Warrant
Agent may request in writing, a list in such form and as of such date as the
Warrant Agent may reasonably require of the names and addresses of the Holders.
3.5 TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Warrants. A Global
Warrant may not be transferred as a whole except by the Depositary to a nominee
of the Depositary, by a nominee of the Depositary to the Depositary or to
another nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Warrants will be exchanged by the Company for Definitive Warrants if (i) the
Company delivers to the Warrant Agent notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 90 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Warrants shall be issued in such names
as the Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 3.6 and 3.7
hereof. Every Warrant countersigned and delivered in exchange for, or in lieu
of, a Global Warrant or any portion thereof, pursuant to this Section 3.5 or
Sections 3.6 or 3.7 hereof, shall be countersigned and delivered in the form of,
and shall be, a Global Warrant. A Global Warrant may not be exchanged for
another Warrant other than as provided in this Section 3.5(a), however,
beneficial interests in a Global Warrant may be transferred and exchanged as
provided in Section 3.5(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Warrants. The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Warrants shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Warrants also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Warrant. Beneficial interests in any Restricted Global
Warrant may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same
Restricted Global Warrant in accordance with the transfer
restrictions set forth in the Private Placement Legend.
Beneficial interests in any Unrestricted Global Warrant may
be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global
Warrant. No written orders
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<PAGE> 13
or instructions shall be required to be delivered to the
Warrant Registrar to effect the transfers described in this
Section 3.5(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Warrants. In connection with all
transfers and exchanges of beneficial interests that are not
subject to Section 3.5(b)(i) above, the transferor of any
such beneficial interest must deliver to the Warrant
Registrar either (A) (1) a written order from a Participant
or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial
interest in another Global Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable
Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a
Definitive Warrant in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Warrant Registrar containing
information regarding the Person in whose name such
Definitive Warrant shall be registered. Upon effectiveness
of the Registration Statement in accordance with Section
3.5(f) hereof, the requirements of this Section 3.5(b)(ii)
shall be deemed to have been satisfied upon receipt by the
Warrant Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Warrants. Upon
satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Warrants
contained in this Agreement and the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall
adjust the principal amount of the relevant Global
Warrant(s) pursuant to Section 3.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Warrant. A beneficial interest in any
Restricted Global Warrant may be transferred to a Person who
takes delivery thereof in the form of a beneficial interest
in another Restricted Global Warrant if the transfer
complies with the requirements of Section 3.5(b)(ii) above
and the Warrant Registrar receives:
(A) if the transferee will take delivery in
the form of a beneficial interest in the 144A Global
Warrant, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications
in item (1) thereof; and
(B) if the transferee will take delivery in
the form of a beneficial interest in the Regulation S
Global Warrant, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Warrant for Beneficial Interests in the
Unrestricted Global
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<PAGE> 14
Warrant. A beneficial interest in any Restricted Global
Warrant may be exchanged by any Holder thereof for a
beneficial interest in an Unrestricted Global Warrant or
transferred to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global
Warrant if the exchange or transfer complies with the
requirements of Section 3.5(b)(ii) above and:
(A) such transfer is effected pursuant to
the Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the
following:
(1) if the holder of such beneficial
interest in a Restricted Global Warrant
proposes to exchange such beneficial
interest for a beneficial interest in an
Unrestricted Global Warrant, a certificate
from such holder in the form of Exhibit C
hereto, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant
proposes to transfer such beneficial
interest to a Person who shall take delivery
thereof in the form of a beneficial interest
in an Unrestricted Global Warrant, a
certificate from such holder in the form of
Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to
the Warrant Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
above at a time when an Unrestricted Global Warrant has not yet been issued, the
Company shall issue and, upon receipt of a Warrant Countersignature Order in
accordance with Section 3.2 hereof, the Warrant Agent shall countersign one or
more Unrestricted Global Warrants in the number equal to the number of
beneficial interests transferred pursuant to subparagraph (B) above.
(c) Transfer and Exchange of Beneficial Interests for
Definitive Warrants.
(i) Beneficial Interests in Restricted Global Warrants
to Restricted Definitive Warrants. If any holder of a
beneficial interest in a Restricted Global Warrant proposes
to exchange such beneficial interest for a Restricted
Definitive Warrant or to transfer such beneficial interest
to a Person
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<PAGE> 15
who takes delivery thereof in the form of a Restricted
Definitive Warrant, then, upon receipt by the Warrant
Registrar of the following documentation:
(A) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
exchange such beneficial interest for a Restricted
Definitive Warrant, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in
item (2)(a) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904 under
the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
144 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration
requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being
transferred pursuant to an effective registration
statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Warrant Agent shall cause, in accordance with the standing
instructions and procedures existing between the Depositary and
the Warrant Agent, the number of Warrants represented by the
Global Warrant to be reduced by the number of Warrants to be
represented by the Definitive Warrant pursuant to Section 3.5(h)
hereof, and the Company shall execute and the Warrant Agent shall
countersign and deliver to the Person designated in the
instructions a Definitive Warrant in the appropriate amount. Any
Definitive Warrant issued in exchange for a beneficial
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<PAGE> 16
interest in a Restricted Global Warrant pursuant to this Section
3.5(c) shall be registered in such name or names as the holder of
such beneficial interest shall instruct the Warrant Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants
are so registered. Any Definitive Warrant issued in exchange for
a beneficial interest in a Restricted Global Warrant pursuant to
this Section 3.5(c)(i) shall bear the Private Placement Legend
and shall be subject to all restrictions on transfer contained
therein.
(ii) Beneficial Interests in Restricted Global
Warrants to Unrestricted Definitive Warrants. A holder of a
beneficial interest in a Restricted Global Warrant may exchange
such beneficial interest for an Unrestricted Definitive Warrant
or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive
Warrant only if:
(A) such transfer is effected pursuant to
the Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the
following:
(1) if the holder of such beneficial
interest in a Restricted Global Warrant
proposes to exchange such beneficial
interest for a Definitive Warrant that does
not bear the Private Placement Legend, a
certificate from such holder in the form of
Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant
proposes to transfer such beneficial
interest to a Person who shall take delivery
thereof in the form of a Definitive Warrant
that does not bear the Private Placement
Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global
Warrants to Unrestricted Definitive Warrants. If any holder
of a beneficial interest in an Unrestricted Global Warrant
proposes to exchange such beneficial interest for an
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<PAGE> 17
Unrestricted Definitive Warrant or to transfer such
beneficial interest to a Person who takes delivery thereof
in the form of an Unrestricted Definitive Warrant, then,
upon satisfaction of the conditions set forth in Section
3.5(b)(ii) hereof, the Warrant Agent shall cause the amount
of the applicable Unrestricted Global Warrant to be reduced
accordingly pursuant to Section 3.5(h) hereof, and the
Company shall execute and the Warrant Agent shall
countersign and deliver to the Person designated in the
instructions an Unrestricted Definitive Warrant in the
appropriate principal amount. Any Unrestricted Definitive
Warrant issued in exchange for a beneficial interest
pursuant to this Section 3.5(c)(iii) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest
shall instruct the Warrant Registrar through instructions
from the Depositary and the Participant or Indirect
Participant. The Warrant Agent shall deliver such
Unrestricted Definitive Warrants to the Persons in whose
names such Warrants are so registered. Any Unrestricted
Definitive Warrant issued in exchange for a beneficial
interest pursuant to this Section 3.5(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Warrants for
Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial
Interests in Restricted Global Warrants. If any Holder of a
Restricted Definitive Warrant proposes to exchange such
Warrant for a beneficial interest in a Restricted Global
Warrant or to transfer such Restricted Definitive Warrants
to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Warrant, then,
upon receipt by the Warrant Registrar of the following
documentation:
(A) if the Holder of such Restricted
Definitive Warrant proposes to exchange such Warrant for a
beneficial interest in a Restricted Global Warrant, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b)
thereof;
(B) if such Restricted Definitive Warrant is
being transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Warrant is
being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904 under
the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such Restricted Definitive Warrant is
being transferred pursuant to an exemption from the
registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a
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<PAGE> 18
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Warrant is
being transferred to the Company or any of its
Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(F) if such Restricted Definitive Warrant is
being transferred pursuant to an effective registration
statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant,
increase or cause to be increased the amount of, in the case of clause
(A) above, the appropriate Restricted Global Warrant, in the case of
clause (B) above, the 144A Global Warrant, and in the case of clause (C)
above, the Regulation S Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial
Interests in Unrestricted Global Warrants. A Holder of a
Restricted Definitive Warrant may exchange such Warrant for
a beneficial interest in an Unrestricted Global Warrant or
transfer such Restricted Definitive Warrant to a Person who
takes delivery thereof in the form of a beneficial interest
in an Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to
the Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the
following:
(1) if the Holder of such Definitive
Warrants proposes to exchange such Warrants
for a beneficial interest in the
Unrestricted Global Warrant, a certificate
from such Holder in the form of Exhibit C
hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive
Warrants proposes to transfer such Warrants
to a Person who shall take delivery thereof
in the form of a beneficial interest in the
Unrestricted Global Warrant, a certificate
from such Holder in the form of Exhibit B
hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
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<PAGE> 19
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 3.5(d)(ii), the Warrant Agent shall cancel the Definitive
Warrants and increase or cause to be increased the aggregate amount of
the applicable Unrestricted Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial
Interests in Unrestricted Global Warrants. A Holder of an
Unrestricted Definitive Warrant may exchange such Warrant
for a beneficial interest in an Unrestricted Global Warrant
or transfer such Definitive Warrants to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant at any time. Upon receipt of a
request for such an exchange or transfer, the Warrant Agent
shall cancel the applicable Unrestricted Definitive Warrant
and increase or cause to be increased the amount of one of
the Unrestricted Global Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or
(iii) above at a time when an Unrestricted Global Warrant has not yet
been issued, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2 hereof, the
Warrant Agent shall countersign one or more Unrestricted Global Warrants
in the number equal to the number of beneficial interests of Definitive
Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for
Definitive Warrants. Upon request by a Holder of Definitive Warrants and such
Holder's compliance with the provisions of this Section 3.5(e), the Warrant
Registrar shall register the transfer or exchange of Definitive Warrants. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Warrant Registrar the Definitive Warrants duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Warrant Registrar duly executed by such Holder or by its
attorney, duly authorized in writing. In addition, the requesting Holder shall
provide any additional certifications, documents and information, as applicable,
required pursuant to the following provisions of this Section 3.5(e).
(i) Restricted Definitive Warrants to Restricted
Definitive Warrants. Any Restricted Definitive Warrant may
be transferred to and registered in the name of Persons who
take delivery thereof in the form of a Restricted Definitive
Warrant if the Warrant Registrar receives the following:
(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; or
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<PAGE> 20
(C) if the transfer will be made pursuant to
any other exemption from the registration requirements of
the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Warrants to Unrestricted
Definitive Warrants. Any Restricted Definitive Warrant may be
exchanged by the Holder thereof for an Unrestricted Definitive
Warrant or transferred to a Person or Persons who take delivery
thereof in the form of an Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant
to the Registration Statement in accordance with the
Warrant Registration Rights Agreement; or
(B) the Warrant Registrar receives the
following:
(1) if the Holder of such Restricted
Definitive Warrants proposes to exchange
such Warrants for an Unrestricted Definitive
Warrant, a certificate from such Holder in
the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted
Definitive Warrants proposes to transfer
such Warrants to a Person who shall take
delivery thereof in the form of an
Unrestricted Definitive Warrant, a
certificate from such Holder in the form of
Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Warrants to
Unrestricted Definitive Warrants. A Holder of Unrestricted
Definitive Warrants may transfer such Warrants to a Person who
takes delivery thereof in the form of an Unrestricted Definitive
Warrant. Upon receipt of a request to register such a transfer,
the Warrant Registrar shall register the Unrestricted Definitive
Warrants pursuant to the instructions from the Holder thereof.
(f) Registration Statement. Upon the effectiveness of the
Registration Statement in accordance with the Warrant Registration Rights
Agreement, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2, the Warrant Agent shall
countersign one or more Unrestricted Global Warrants in an amount up to
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<PAGE> 21
the amount of the beneficial interests in the Restricted Global Warrants covered
by such Shelf Registration Statement and concurrently with the resales or
exercise of Warrants pursuant to the Registration Statement, the Warrant Agent
shall cause the amount of the applicable Restricted Global Warrants to be
reduced accordingly, will increase the beneficial interests in the Unrestricted
Global Warrant or issue additional Unrestricted Definitive Warrants as provided
in this Section 3. Resales of Warrants represented by Restricted Definitive
Warrants pursuant to the Registration Statement shall be dealt with pursuant to
the provisions of this Section 3.
(g) Legends. The following legends shall appear on the
face of all Global Warrants and Definitive Warrants issued under this Warrant
Agreement unless specifically stated otherwise in the applicable provisions of
this Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Warrant and each Definitive Warrant
(and all Warrants issued in exchange therefor or
substitution thereof) shall bear the legend in
substantially the following form:
[THE WARRANTS/SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") [OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING [THESE WARRANTS/THESE SHARES OF
COMMON STOCK REPRESENTED BY THIS CERTIFICATE] IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT,] (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF SUCH TRANSFER,
RESELL OR OTHERWISE TRANSFER [THESE WARRANTS/THESE SHARES OF
COMMON STOCK REPRESENTED BY THIS CERTIFICATE] EXCEPT (A) TO
LEAP OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE [WARRANT AGENT/ TRANSFER AGENT
AND REGISTRAR] A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF
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[THESE WARRANTS/ THESE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE] (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM [WARRANT AGENT/TRANSFER AGENT AND REGISTRAR]) AND, IF
SUCH TRANSFER IS IN RESPECT OF ANY WARRANTS AFTER THE
SEPARATION DATE/ANY SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE], AN OPINION OF COUNSEL ACCEPTABLE TO LEAP
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) TO A PERSON OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT [THAT, FOR ANY TRANSFER PRIOR TO ONE YEAR
AFTER CLOSING FURNISHES TO THE [WARRANT AGENT/ THE TRANSFER
AGENT AND REGISTRAR], PRIOR TO SUCH TRANSFER, A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
[WARRANT/SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE] (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE [WARRANT AGENT/THE TRANSFER AGENT AND REGISTRAR])], (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM [THESE WARRANTS/THESE SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE] ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF [THESE WARRANTS/THESE SHARES OF COMMON
STOCK REPRESENTED BY THIS CERTIFICATE] WITHIN THE TIME
PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
[THE WARRANT AGENT/TRANSFER AGENT AND REGISTRAR]. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST , PRIOR TO SUCH TRANSFER, FURNISH TO THE
[WARRANT AGENT/TRANSFER AGENT AND REGISTRAR] AND LEAP SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING
THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF
[THESE WARRANTS/THESE
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<PAGE> 23
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE] IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
(B) Notwithstanding the foregoing, any
Global Warrant or Definitive Warrant issued pursuant to
subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 3.5
(and all Warrants issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Warrant Legend. Each Global Warrant shall
bear a legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY
BE EXCHANGED OR TRANSFERRED PURSUANT TO SECTIONS 3.5(a), 3.6
AND 3.7 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL
WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR
CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT
AGREEMENT."
(iii) Unit Legend. Each Warrant issued prior to the
Separation Date shall bear a legend in substantially the
following form:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE
INITIALLY ISSUED AS PART OF AN ISSUANCE OF (I) UNITS (THE
"UNITS"), WHICH CONSIST OF $225,000,000 PRINCIPAL AMOUNT AT
MATURITY OF THE 12 1/2% SENIOR NOTES DUE 2010 OF LEAP
WIRELESS INTERNATIONAL, INC. AND ONE WARRANT INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 5.146 SHARES, PAR
VALUE $.0001 PER SHARE, OF LEAP WIRELESS INTERNATIONAL, INC.
AND (II) UNITS, WHICH CONSIST OF $668,000,000 PRINCIPAL
AMOUNT AT MATURITY ($325,102,240 INITIAL ACCRETED VALUE) OF
THE 14 1/2% SENIOR DISCOUNT NOTES (TOGETHER WITH THE SENIOR
NOTES, THE "NOTES") DUE 2010 OF LEAP WIRELESS INTERNATIONAL,
INC. AND ONE WARRANT INITIALLY ENTITLING THE HOLDER THEREOF
TO PURCHASE 2.503 SHARES, PAR VALUE $.0001 PER SHARE, OF
LEAP WIRELESS INTERNATIONAL, INC. (THE WARRANTS ISSUED IN
CONNECTION WITH THE SENIOR NOTES TOGETHER WITH THE WARRANTS
ISSUED IN CONNECTION WITH THE SENIOR DISCOUNT NOTES ARE
COLLECTIVELY REFERRED TO AS "WARRANTS".)
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EXCEPT AS CONTEMPLATED BY SECTION 7 OF THE WARRANT
AGREEMENT, PRIOR TO THE EARLIEST TO OCCUR OF (I) THE DATE
THAT IS SIX MONTHS FOLLOWING THE INITIAL SALE OF UNITS, (II)
THE DATE ON WHICH A REGISTRATION STATEMENT WITH RESPECT TO A
REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (III) THE DATE ON WHICH
A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES IS
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (IV) SUCH DATE
AS MORGAN STANLEY & CO. INCORPORATED IN ITS SOLE DISCRETION
SHALL DETERMINE AND (V) THE OCCURRENCE OF A CHANGE OF
CONTROL (AS DEFINED IN THE INDENTURE GOVERNING THE NOTES) OR
A PERMITTED OPTIONAL REDEMPTION OF THE SENIOR NOTES OR THE
SENIOR DISCOUNT NOTES, AS APPLICABLE (AS DEFINED IN THE
INDENTURE GOVERNING THE NOTES), THE WARRANTS EVIDENCED BY
THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE NOTES.
(iv) Regulation S Legend. Each Warrant that is a
Registrable Security and issued pursuant to Regulation S
shall bear the following legends on the face thereof:
"THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND THE WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY
U.S. PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. IN ORDER TO EXERCISE
THIS WARRANT, THE HOLDER MUST FURNISH TO THE COMPANY AND THE
WARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION THAT IT IS
NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON
BEHALF OF A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL
TO THE EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OF
THE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR
THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS IN
THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT."
"HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT."
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(h) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global
Warrant have been exercised or exchanged for Definitive Warrants or a particular
Global Warrant has been exercised, redeemed, repurchased or canceled in whole
and not in part, each such Global Warrant shall be returned to or retained and
canceled by the Warrant Agent in accordance with Section 3.8 hereof. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exercised or exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Warrant or for
Definitive Warrants, the amount of Warrants represented by such Global Warrant
shall be reduced accordingly and an endorsement shall be made on such Global
Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Warrant, such other Global
Warrant shall be increased accordingly and an endorsement shall be made on such
Global Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent to reflect such increase.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute Global Warrants and Definitive
Warrants at the Warrant Registrar's request. The Warrant
Agent shall countersign Global Warrants and Definitive
Warrants in accordance with the provisions of Section 3.2
hereof.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Warrant or to a holder of a
Definitive Warrant for any registration of transfer or
exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Section 8 hereof).
(iii) All Global Warrants and Definitive Warrants
issued upon any registration of transfer or exchange of
Global Warrants or Definitive Warrants shall be the duly
authorized, executed and issued warrants for Common Stock of
the Company, not subject to any preemptive rights, and
entitled to the same benefits under this Agreement, as the
Global Warrants or Definitive Warrants surrendered upon such
registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a
transfer of any Warrant, the Warrant Agent, the Warrant
Registrar and the Company may deem and treat the Person in
whose name any Warrant is registered as the absolute owner
of such Warrant for all purposes and none of the Warrant
Agent, the Warrant Registrar or the Company shall be
affected by notice to the contrary.
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<PAGE> 26
(j) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel required
to be submitted to the Warrant Registrar pursuant to this Section 3.5 to effect
a registration of transfer or exchange may be submitted by facsimile.
Notwithstanding anything herein to the contrary, as to any
certificates and/or certifications delivered to the Warrant Registrar pursuant
to this Section 3.5, the Warrant Registrar's duties shall be limited to
confirming that any such certifications and certificates delivered to it are in
the form of Exhibits B and C attached hereto. The Warrant Registrar shall not be
responsible for confirming the truth or accuracy of representations made in any
such certifications or certificates. As to any Opinions of Counsel delivered
pursuant to this Section 3.5, the Warrant Registrar may conclusively rely upon,
and be fully protected in relying upon, such Opinions.
3.6 REPLACEMENT WARRANTS.
In case any of the Warrant Certificates shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion issue
and the Warrant Agent may countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Warrant
Certificate. If required by the Warrant Agent or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Warrant
Agent and the Company to protect the Company, the Warrant Agent, and any other
agent for purposes of the countersignature from any loss that any of them may
suffer if a Warrant is replaced. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company and the Warrant Agent may
prescribe. The Company may charge for its expenses in replacing a Warrant.
Every replacement Warrant is an additional warrant of the
Company and shall be entitled to all of the benefits of this Warrant Agreement
equally and proportionately with all other Warrants duly issued hereunder.
3.7 TEMPORARY WARRANTS.
Until certificates representing Warrants are ready for
delivery, the Company may prepare and the Warrant Agent, upon receipt of a
Warrant Countersignature Order, shall issue temporary Warrants. Temporary
Warrants shall be substantially in the form of certificated Warrants but may
have variations that the Company considers appropriate for temporary Warrants
and as shall be reasonably acceptable to the Warrant Agent. Without unreasonable
delay, the Company shall prepare and the Warrant Agent shall countersign
definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of
the benefits of this Warrant Agreement.
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<PAGE> 27
3.8 CANCELLATION.
Subject to Section 3.5(h) hereof, the Company at any time
may deliver Warrants to the Warrant Agent for cancellation. The Warrant
Registrar shall forward to the Warrant Agent any Warrants surrendered to them
for registration of transfer, exchange or exercise. The Warrant Agent and no one
else shall cancel all Warrants surrendered for registration of transfer,
exchange, exercise, replacement or cancellation and shall return such canceled
Warrants to the Company (subject to the record retention requirement of the
Exchange Act). The Company may not issue new Warrants to replace Warrants that
have been exercised or that have been delivered to the Warrant Agent for
cancellation.
SECTION 4. SEPARATION OF WARRANTS. Except as contemplated in
Section 7 of this Agreement, the Notes and Warrants shall not be separately
transferable prior to the Separation Date.
SECTION 5. REGISTRATION AND COUNTERSIGNATURE. (a) The Warrant
Agent, on behalf of the Company, shall number and register the Warrant
Certificates in a register as they are issued by the Company.
(a) Warrant Certificates shall be manually countersigned
by the Warrant Agent and shall not be valid for any purpose unless so
countersigned.
(b) The Company and the Warrant Agent may deem and treat
the Holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. Prior to the Separation Date, DTC
shall be deemed the registered Holder of such Warrants for all purposes
hereunder.
SECTION 6. TERMS OF WARRANTS; EXERCISE OF WARRANTS. (a) Subject
to the terms of this Agreement, each Holder shall have the right, which may be
exercised commencing at the opening of business on the Exercise Date and until
5:00 p.m., New York City time on the Expiration Date to receive from the Company
the number of fully paid and nonassessable Warrant Shares which the Holder may
at the time be entitled to receive on exercise of such Warrants and payment of
the Exercise Price then in effect for such Warrant Shares; provided that no
Holder shall be entitled to exercise such Holder's Warrants at any time, unless,
at the time of exercise (A) (i) a registration statement under the Securities
Act relating to the Warrant Shares has been filed with, and declared effective
by, the Commission, and no stop order suspending the effectiveness of such
registration statement has been issued by the Commission or (ii) the issuance of
the Warrant Shares is permitted pursuant to an exemption from the registration
requirements of the Securities Act; (B) such Warrant Shares are qualified for
sale or exempt from qualification under the applicable securities laws of the
states in which the various holders of the Warrants or other Persons to whom it
is proposed that the Warrant Shares be issued on exercise of the Warrants
reside; and (C) a Black Out Period or Suspension Notice (as defined in the
Warrant Registration Rights Agreement) is not in effect. Each Warrant not
exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall
become void
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and all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time. No adjustments as to dividends will be made upon
exercise of the Warrants.
The Company shall give notice not less than 90, and not more than
120, days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
the 5:00 p.m., New York City time on the Expiration Date. If the Company fails
to give such notice, the Warrants will not expire until 90 days after the
Company gives such notice, provided in no event will Holders be entitled to any
damages or other remedy for the Company's failure to give such notice other than
any such extension.
In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the Holder thereof
must surrender for exercise the Warrant Certificate to the Company at the office
of the Warrant Agent at its New York corporate trust office, (ii) in the case of
a book-entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of the Depositary as the holder of such
book-entry interest must comply with the Applicable Procedures relating to the
exercise of such book-entry interest in such Global Warrant and (iii) in the
case of both Global Warrants and Definitive Warrants, the holder thereof or the
Participant, as applicable, must deliver to the Company at the office of the
Warrant Agent the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, which is set forth in the form of
Warrant Certificate as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. In addition, if the
Holder is exercising Warrants resold pursuant to Regulation S, (A) such Holder
must certify in writing (i) it is not a "U.S. person" within the meaning of Rule
902(k) of Regulation S under the Securities Act, (ii) the Warrants are not being
purchased or exercised on behalf of or for the account or benefit of a "U.S.
person," (iii) such Holder will resell such Warrants and securities delivered
upon exercise thereof only in accordance with the provisions of Rules 901
through 905 of Regulation S, pursuant to registration under the Securities Act
or pursuant to an available exemption from registration and (iv) such Holder
will not engage in hedging transactions with regard to the Warrants and the
shares issuable on exercise of such Warrants unless in compliance with the
Securities Act or (B) such Holder must give a written opinion of counsel to the
effect that the Warrants and the securities delivered upon exercise thereof have
been registered under the Securities Act or are exempt from registration
thereunder.
Payment of the aggregate Exercise Price shall be made (i) in cash
by wire transfer or by certified or official bank check, payable to the order of
the Company in United States dollars or (ii) by a Cashless Exercise for any
share of Common Stock.
When a Holder surrenders a Warrant Certificate representing more
than one Warrant in connection with an option to elect a Cashless Exercise, the
number of shares of Common Stock deliverable upon such Cashless Exercise shall
be equal to the number of shares of Common Stock issuable upon the exercise of
the Warrants that the Holder specifies are to be exercised pursuant to a
Cashless Exercise multiplied by the Cashless Exercise Ratio. The
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<PAGE> 29
exercise of Warrants by Holders of beneficial interest in Global Warrants shall
be effected only in accordance with this Agreement and the procedures of the
Depositary therefor.
Subject to the provisions of Section 8 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Warrant Agent
shall thereupon promptly notify the Company, and the Company shall or shall
cause its Transfer Agent (as defined) promptly to transfer to the Holder of such
Warrant Certificate a certificate or certificates for the appropriate number of
Warrant Shares or other securities or property (including any money) to which
the Holder is entitled, registered or otherwise placed in, or payable to the
order of, such name or names as may be directed in writing by the Holder, and
shall deliver such certificate or certificates representing the Warrant Shares
and any other securities or property (including any money) to the person or
persons entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in Section 14 hereof. Any such certificate
or certificates representing the Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercise
Date, at the election of the Holders thereof, either in full or from time to
time in part. If less than all the Warrants represented by a Definitive Warrant
are exercised, such Definitive Warrant shall be surrendered and a new Definitive
Warrant of the same tenor and for the number of Warrants which were not
exercised shall be executed by the Company and delivered to the Warrant Agent
and the Warrant Agent shall countersign the new Definitive Warrant, registered
in such name or names as may be directed in writing by the Holder, and shall
deliver the new Definitive Warrant to the Person or Persons entitled to receive
the same. The Warrant Agent shall make such notations on the "Schedule of
Exchanges of Interests on the Global Warrants" to each Global Warrant as are
required to reflect any change in the number of Warrants represented by such
Global Warrant resulting from any exercise in accordance with the terms hereof.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled by the Warrant Agent. Such canceled Warrant Certificates shall
then be disposed of by the Warrant Agent in a manner satisfactory to the
Company. The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all monies received by
the Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants. The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder by or from the Company available for
inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may reasonably request.
All certificates representing Warrant Shares issued in a
transaction exempt from registration under the Securities Act shall bear the
following legend (provided that if no legend is required none shall be placed on
the Warrant Shares):
"THIS SECURITY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
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<PAGE> 30
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
FROM REGISTRATION REQUIREMENTS."
(b) Notwithstanding any other provision of this Agreement
to the contrary, to the extent Qualcomm or any of its Affiliates is a Holder of
any of the Warrants, neither Qualcomm nor any of its Affiliates may exercise any
Warrants in a manner that would (i) preclude the Company from qualifying as a
"Publicly Traded Corporation With Widely Disbursed Voting Power" (a "PTC") under
47 CFR 24.720(m) as a result of the Company not satisfying the provisions of 47
CFR 24.720(m)(2) (which restriction on exercise shall only be applicable so long
as the Company is seeking to acquire, acquires and/or holds, directly or
indirectly, C-Block and F-Block broadband PCS licenses on the basis of
qualifying as a PTC), or (ii) cause any change in the Company's status as a
"very small business" designated entity as defined by the rules and regulations
of the FCC (to the extent the Company thereupon would not be qualified to hold
or acquire, directly or indirectly, C-Block and F-Block broadband PCS licenses
as to which it is or would be, directly or indirectly, the licensee), and any
such exercise shall be invalid ab initio to the extent such exercise would
preclude such qualification or cause any such change; provided, however, that in
the event the rules and regulations of the FCC should later be changed (or a
waiver of any such rules and regulations is obtained) to permit exercise of any
rights otherwise restricted as described above, Qualcomm or such Affiliate shall
then be entitled to exercise such additional rights. In determining whether any
exercise of Warrants held by Qualcomm or any of its Affiliates would preclude
the qualification referred to in clause (i) or cause any change referred to in
clause (ii) of this Subparagraph (b), the calculations with respect to
Qualcomm's or such Affiliate's beneficial ownership in the Company will include
all shares of the Company's equity securities held by or which after the date of
this Agreement are acquired by (whether by gift, purchase, pursuant to stock
options, warrants or convertible securities, or otherwise acquired by or
received by in any manner) any officers or directors of Qualcomm or any such
Affiliate.
SECTION 7. MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO FCC
REGULATIONS. If at any time a Holder beneficially owns more than the Permitted
Maximum Percentage of the total outstanding equity securities of the Company
(including all options, warrants and other securities convertible into equity
securities) then:
(i) If such event occurs prior to the Separation Date,
the Designated Warrants shall become immediately separable
from the Senior Notes or Senior Discount Notes, as the case
may be; and
(ii) The Company may, at its option:
(a) require such Holder to dispose of the
Designated Warrants within 30 days of receipt of notice of
the Company's election or such date as may be requested or
required by the FCC; or
(b) redeem the Designated Warrants within 30
days or such earlier date as may be requested or required
by the FCC at a redemption price equal to the product of
(1) the number of shares of Common Stock for which the
Designated Warrants are exercisable as of the date of
redemption and (2) an amount equal to the excess of the
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<PAGE> 31
Current Market Value per share of Common Stock on the
redemption date over the Exercise Price per share as of
the redemption date.
In calculating Qualcomm's or any of its Affiliate's beneficial
ownership of equity securities of the Company for purposes of this Section 7,
such calculations will include all shares of the Company's equity securities
held by or which after the date of this Agreement are acquired by (whether by
gift, purchase, pursuant to stock options, warrants or convertible securities,
or otherwise acquired by or received by in any manner) any officers or directors
of Qualcomm or any such Affiliate.
SECTION 8. PAYMENT OF TAXES. The Company shall pay all
documentary stamp taxes attributable (a) to the initial issuance of Warrant
Shares upon the exercise of Warrants or (b) to any Separation Date; provided
that, in each case, the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificates or any certificates for Warrant Shares in a name other than
that of the Holder of a Warrant Certificate surrendered upon the exercise of a
Warrant, and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 9. RESERVATION OF WARRANT SHARES.
(a) The Company shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock or its authorized and issued Common Stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, the maximum number of shares of Common
Stock which may then be deliverable upon the exercise of all outstanding
Warrants.
(b) The Company will be irrevocably authorized and
directed at all times to reserve such number of authorized shares of Common
Stock as shall be required for issuance upon exercise of the Warrants.
(c) Before taking any action which would cause an
adjustment pursuant to Sections 11 or 13 hereof to reduce the Exercise Price
below the then par value (if any) of the Warrant Shares, the Company will take
any corporate action which may, in the opinion of its counsel (which may be
counsel employed by the Company), be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
(d) The Company covenants that all Warrant Shares which
may be issued upon exercise of Warrants in accordance with the terms of this
Agreement (including the terms of the Exercise Price) will, after receipt of the
Exercise Price and upon issue, be duly and validly issued, fully paid and
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests created by or through the Company.
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SECTION 10. OBTAINING STOCK EXCHANGE LISTINGS. The Company will
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges and markets (including, without
limitation, the Nasdaq Stock Market) within the United States of America, if
any, on which other shares of Common Stock are then listed. Upon the listing of
such Warrant Shares, the Company shall notify the Warrant Agent in writing. The
Company will obtain and keep all required permits and records in connection with
such listing.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:
(a) Stock Splits, Combinations, etc. In case the Company
shall hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Warrant thereafter
exercised shall be entitled to receive upon payment of the Exercise Price the
number of shares of capital stock of the Company which such Holder would have
owned immediately following such action had such Warrant been exercised
immediately prior thereto. An adjustment made pursuant to this paragraph shall
become effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this paragraph, the Holder of any Warrant thereafter exercised
shall become entitled to receive shares of two or more classes of capital stock
of the Company, the Board of Directors of the Company (whose determination shall
be conclusive) shall determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. Except
as provided in Section 11(e) in case of any reclassification or change of
outstanding shares of Common Stock issuable upon exercise of the Warrants (other
than as set forth in paragraph (a) above and other than a change in par value,
or from par value to no par value, or from no par value to par value or as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants) or in case of any
sale or conveyance to another corporation of the assets of the Company as an
entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the Company
or such a successor or purchasing corporation, as the case may be, shall
forthwith make lawful and adequate provision whereby the Holder of such Warrant
then outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of shares of stock or other securities or property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a Holder of the number of shares of Common Stock issuable upon
exercise of such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or
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conveyance and enter into a supplemental warrant agreement so providing. Such
provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
11. If the issuer of securities deliverable upon exercise of Warrants under the
supplemental warrant agreement is an Affiliate of the formed, surviving or
transferee corporation, that issuer shall join in the supplemental warrant
agreement. The above provisions of this paragraph (b) shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. In the
event that both (x) the Company shall, at any time or from time to time after
the date hereof, issue, sell, distribute or otherwise grant in any manner
(including by assumption) to all holders of the Common Stock any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any rights, warrants or options being herein called "OPTIONS" and
any convertible or exchangeable stock or securities being herein called
"CONVERTIBLE SECURITIES") or any Convertible Securities (other than upon
exercise of any Option), whether or not such Options or the rights to convert or
exchange such Convertible Securities are immediately exercisable, and (y) the
price per share at which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or receivable
by the Company as consideration for the issuance, sale, distribution or granting
of such Options or any such Convertible Security, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options or upon conversion or exchange of all such
Convertible Securities, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the conversion or exchange of all such Convertible Securities, by
(ii) the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities or upon the conversion or exchange of all Convertible
Securities issuable upon the exercise of all such Options) shall be less than
the current market price per share of Common Stock on the record date for the
issuance, sale, distribution or granting of such Options or Convertible
Securities (any such event being herein called a "DISTRIBUTION"), then,
effective upon such Distribution, (I) the Exercise Price shall be reduced to the
price (calculated to the nearest 1/1,000 of one cent) determined by multiplying
the Exercise Price in effect immediately prior to such Distribution by a
fraction, the numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such Distribution multiplied by
the current market price per share of Common Stock on the date of such
Distribution plus (2) the consideration, if any, received by the Company upon
such Distribution plus consideration to be received by the Company upon the
exercise, conversion or exchange of such Options or Convertible Securities, if
any, and the denominator of which shall be the product of (A) the total number
of shares of Common Stock outstanding immediately after such Distribution
multiplied by (B) the current market price per share of Common Stock on the
record date for such Distribution and (II) the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such Distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
the adjustment required by clause (I) of this
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sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment (for the purposes of this clause (ii) without
giving effect to the provisions of Section 11(j)). For purposes of the
foregoing, the total maximum number of shares of Common Stock issuable upon
exercise of all such Options or upon conversion or exchange of all such
Convertible Securities or upon the conversion or exchange of the total maximum
amount of the Convertible Securities issuable upon the exercise of all such
Options shall be deemed to have been issued as of the date of such Distribution
and thereafter shall be deemed to be outstanding and the Company shall be deemed
to have received as consideration therefor such price per share, determined as
provided above. No adjustment to the number of Warrant Shares issuable upon the
exercise of the Warrants or to the Exercise Price shall be made, however, as a
result of (i) the issuance of shares of Common Stock under any Options or upon
the exercise, conversion or exchange of Options or Convertible Securities (or
upon the conversion of Qualcomm Trust Convertible Preferred Securities) existing
on the date hereof including warrants issued to Qualcomm or issued pursuant
hereto, (ii) the issuance of shares of Common Stock or warrants or Convertible
Securities in bona fide public or private offerings (including in connection
with Rule 145 transactions) or (iii) the issuance of Options or shares of Common
Stock pursuant to any Option, under any employee benefit plans approved by the
Board of Directors. Such adjustments shall be made whenever such rights, options
or warrants or convertible securities are issued. Except as provided in
paragraphs (1) and (m) below, no additional adjustment of the Exercise Price
shall be made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities or upon the conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Other Issuances of Common Stock, Options or
Convertible Securities. Upon any issuance of Common Stock, Options or
Convertible Securities as to which paragraphs (a), (b) and (c) above are not
applicable, in the event that at any time or from time to time the Company shall
issue (i) shares of Common Stock (subject to the provisions below), (ii) Options
(provided, however, that no adjustment shall be made upon the exercise of such
Options) or (iii) Convertible Securities (provided, however, that no adjustment
shall be made upon the conversion, exchange or exercise of such securities
(other than issuances specified in (i), (ii) or (iii) which are made as the
result of antidilution adjustments in such securities)), at a price per share at
the record date of such issuance that is less than the then current market price
per share of Common Stock, then the number of shares of Common Stock issuable
upon the exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such Options or Convertible Securities, if any)
would purchase at the then current market price per share of Common Stock, and
subject to paragraph (j) below, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such date of
issuance by the aforementioned fraction; provided, however, that no adjustment
to the number of Warrant Shares issuable upon the exercise of the Warrants or to
the Exercise Price shall be made as a result of (i) the issuance of
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shares of Common Stock under any Options existing on the date hereof , including
warrants previously issued to Qualcomm, or issued pursuant hereto or upon the
conversion or exchange of any Convertible Securities (or upon the conversion of
Qualcomm Trust Convertible Preferred Securities), (ii) the issuance of shares of
Common Stock or warrants or Convertible Securities in bona fide public or
private offerings (including in connection with Rule 145 transactions) or (iii)
the issuance of Options or shares of Common Stock pursuant to any Option, under
any employee benefit plans approved by the Board of Directors. Such adjustments
shall be made whenever such rights, options or warrants or convertible
securities are issued. No adjustment shall be made pursuant to this paragraph
(d) which shall have the effect of decreasing the number of shares of Common
Stock issuable upon exercise of each warrant or of increasing the Exercise
Price, except by operation of paragraph (1) below. For purposes of paragraph (c)
hereof and this paragraph (d) only, any issuance of Common Stock, Options or
Convertible Securities, which issuance (or agreement to issue) (A) is in
exchange for or otherwise in connection with the bona fide acquisition of
property or assets of any kind (excluding any such exchange exclusively for
cash) of any Person and (B) is at a price per share determined by the Board of
Directors to be equal to the fair market value thereof at the time an agreement
in principle is reached or at the time a definitive agreement is entered into,
shall be deemed to have been made at a price per share equal to the current
market price per share at the record date with respect to such issuance (the
time of closing or consummation of such exchange or acquisition) if such
definitive agreement is entered into within 90 days of the date of such
agreement in principle. The consideration the Company receives in any public or
private offering shall be deemed to include the amount of fees, discounts and
commissions paid to underwriters, agents and financial advisors.
(e) Combination; Liquidation. In the event of (A) a
consolidation or merger of the Company or a sale of all or substantially all of
the assets of the Company where consideration to the holders of Common Stock in
exchange for their shares is payable solely in cash or (B) the dissolution,
liquidation or winding-up of the Company, Holders shall be entitled to receive,
upon surrender of their Warrant Certificates, distributions on an equal basis
with the holders of Common Stock or other securities, issuable upon exercise of
the Warrants, as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price. Upon receipt of such payment, if any, the
Warrants will expire and the rights of the Holders will cease. In case of any
combination described in this paragraph (e), the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay to the holders of the Warrant the amounts to which they are
entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Warrant Agent is required to deliver a check in
such amount as is appropriate (or, in the case of consideration other than cash,
such other consideration as is appropriate) to such Person or Persons as it may
be directed in writing by the Holders surrendering such Warrants.
(f) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to all
the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities or other properties or assets
(in each case other than (i) dividends payable in Common Stock, Options or
Convertible Securities and (ii) any cash dividend and other cash distribution
from current or retained earnings, or any options, warrants or other rights to
subscribe for or purchase any of the
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foregoing), then (A) the Exercise Price shall be decreased to a price determined
by multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be the current market price per share of Common Stock on the record
date for such distribution less the sum of (X) the cash portion, if any, of such
distribution per share of Common Stock outstanding (exclusive of any treasury
shares) on the record date for such distribution plus (Y) the then fair market
value (as determined in good faith by the Board of Directors of the Company) per
share of Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution of that portion, if any, of such distribution
consisting of evidences of indebtedness, other securities, properties, assets,
options, warrants or subscription or purchase rights, and the denominator of
which shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of shares of
Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment (for the purposes of this clause (B) without
giving effect to the provisions of Section 11(j)). The adjustments required by
this paragraph (f) shall be made whenever any such distribution occurs
retroactive to the record date for the determination of stockholders entitled to
receive such distribution.
(g) Current Market Price. For the purpose of any
computation of current market price under this Section 11, Section 13 and
Section 14, the current market price per share of Common Stock at any date shall
be (x) for purposes of Section 13, the closing price on the business day
immediately prior to the exercise of the applicable Warrant pursuant to Section
6 and (y) in all other cases, the average of the daily closing prices for the
shorter of (i) the 20 consecutive trading days ending on the last full trading
day on the exchange or market specified in the second succeeding sentence prior
to the Time of Determination (as defined below) and (ii) the period commencing
on the date next succeeding the first public announcement of the issuance, sale,
distribution or granting in question through such last full trading day prior to
the Time of Determination. The term "TIME OF DETERMINATION" as used herein shall
be the time and date of the earlier to occur of (A) the date as of which the
current market price is to be computed and (B) the last full trading day on such
exchange or market before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment required by
paragraph (a), (b), (c), (d), (e) or (f). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case (1) on the principal national securities exchange on
which the shares of Common Stock are listed or to which such shares are admitted
to trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by
Nasdaq National Market or any comparable system or (3) if the Common Stock is
not listed on Nasdaq National Market or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this paragraph (g), the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
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(h) Certain Distributions. If the Company shall pay a
dividend payable in Options or Convertible Securities or make any other
distribution payable in Options or Convertible Securities, then, for purposes of
paragraph (c) above, such Options or Convertible Securities shall be deemed to
have been issued or sold without consideration.
(i) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then
current market price of such consideration (as determined in good faith by the
Board of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration; provided, that if such Options have
an exercise price equal to or greater than the fair market value of the Common
Stock on the date of issuance of such Options, then such Options shall be deemed
to have been issued for consideration equal to such exercise price.
(j) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of each Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
one percent of the Exercise Price; provided that any adjustments which by reason
of this paragraph (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. No adjustment need be made for
a change in the par value of the Common Stock. All calculations under this
Section shall be made to the nearest 1/1,000 of one cent or to the nearest
1/1,000 of a share, as the case may be.
(k) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraphs (c) and (d)
above is adjusted, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in paragraphs
(c) and (d) above, or the rate at which any Convertible Securities referred to
in paragraphs (c) and (d) above are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by reason of provisions
designed to protect against dilution upon an event which results in a related
adjustment pursuant to this Section 11), the Exercise Price then in effect and
the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall forthwith be readjusted (effective only with respect to any
exercise of any Warrant after such readjustment) to the Exercise Price and
number of shares of Common Stock so purchasable that would then be in effect had
the adjustment made upon the issuance, sale, distribution or granting of such
Options or Convertible Securities been made based upon such changed purchase
price, additional consideration or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(l) Expiration of Options and Convertible Securities. If,
at any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall have been made pursuant to
paragraph (c), (d) or (k) above or this paragraph (1), any Options or
Convertible Securities shall have expired unexercised, the number of such
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shares purchasable upon the exercise of each Warrant shall, upon such
expiration, be readjusted and shall thereafter be such as they would have been
had they been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of such shares so purchasable by an amount (calculated by
adjusting such decrease to account for all other adjustments made pursuant to
this Section 11 following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution or granting of such Options or Convertible
Securities.
(m) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Section 11, the Holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Section 11.
(n) Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to this Section 11 or upon the occurrence of any
event or action which would require an adjustment of the Exercise Price pursuant
to this Section 11 but for Section 11(j), each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock obtained by multiplying the number of Warrant Shares so
purchasable upon exercise of a Warrant by payment of the Exercise Price in
effect immediately prior to adjustment by a fraction, the numerator of which is
the Exercise Price in effect immediately prior to the adjustment and the
denominator of which shall be the adjusted Exercise Price (without giving effect
to the provisions of Section 11(j)).
SECTION 12. STATEMENT ON WARRANTS. Irrespective of any adjustment
in the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 13. NO DILUTION OR IMPAIRMENT; CAPITAL AND OWNERSHIP
STRUCTURE. The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be reasonably necessary
or appropriate in order to protect the rights of the Holders under this
Agreement. Without limiting the generality of the foregoing, the Company (a)
will take all such action as may be reasonably necessary or
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appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock on the exercise of the Warrants from
time to time outstanding and (b) will not take any action which results in any
adjustment of the Exercise Price if the total number of Warrant Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purposes of issue upon such exercise. A
consolidation, merger, reorganization or transfer of assets involving the
Company covered by Section 11(b) or 11(e) shall not be prohibited by or require
any adjustment under this Section 13.
It is the intent of this Agreement to provide that, on and as of
the Closing Date, the number of Warrant Shares into which the Warrants are
exercisable represent 7.333% of the issued and outstanding shares of Common
Stock on a fully diluted basis. For purposes of this paragraph, the phrase "on a
fully diluted basis" shall include any and all options, warrants or other rights
to acquire common equity of the Company, whether or not exercisable on the
Closing Date but excluding all such options, warrants (other than the Warrants)
or other rights to acquire common equity at an exercise or conversion price
greater than the exercise price of the Warrants as of the Closing Date, as
adjusted. If either (i) the issuance of the Warrants causes the application of
the anti-dilution provisions of any of the Company's warrants, options or
convertible securities outstanding as of the Closing Date to result in an
increase in the number of shares of Common Stock issuable thereunder or (ii)
after the Closing Date the exercise price of the Company's then outstanding
warrants, options or convertible securities is adjusted to an exercise price
equal to or less than the Exercise Price of the Warrants, such additional shares
of Common Stock, or such shares of Common Stock issuable upon the exercise or
conversion of such warrants, options or convertible securities, as the case may
be, will be included in the calculation of the Common Stock on a fully diluted
basis, and the number of Warrant Shares issuable upon exercise of each Warrant
automatically shall be adjusted upward by an amount sufficient to bring the
total number of Warrant Shares issuable pursuant to the Warrant Agreement to a
number representing 7.333% of the then issued and outstanding shares of Common
Stock of the Company on a fully diluted basis.
SECTION 14. FRACTIONAL INTEREST. The Company shall not be
required to issue fractional shares of Common Stock on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which shall
be issuable upon such exercise shall be computed on the basis of the aggregate
number of shares of Common Stock acquirable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall direct the Transfer Agent to pay
an amount in cash calculated by it to equal the then current market price per
share multiplied by such fraction computed to the nearest whole cent less such
fraction of the Exercise Price. The Holders, by their acceptance of the Warrant
Certificates, expressly waive any and all rights to receive any fraction of a
share of Common Stock or a stock certificate representing a fraction of a share
of Common Stock.
SECTION 15. NOTICES TO WARRANT HOLDERS; NO RIGHTS AS
SHAREHOLDERS. Upon any adjustment of the Exercise Price pursuant to Sections 11
or 13, the Company shall promptly thereafter (i) cause to be filed with the
Warrant Agent a certificate of a firm of independent public accountants of
nationally recognized standing selected by the Board of
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Directors of the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered Holders (or
the DTC Participants with interests in the Global Warrant) at his/her address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. The Warrant Agent shall be entitled to rely
on the above-referenced accountant's certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time to any Holder desiring an inspection thereof during reasonable
business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require any adjustment of the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants or the Exercise Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value (or the kind or amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the Warrants. The Warrant Agent
shall not be responsible for any failure of the Company to make any cash payment
or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other common stock or property upon the exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to subscribe
for or purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock or
distributions referred to in Section 11 hereof); or
(c) of any consolidation or merger to which the Company is
a party and for which approval of any shareholders of the Company is required,
or of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) a Change of Control (as defined in the Indenture)
occurs; or
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(f) the Company proposes to take any other action that
would require an adjustment of the Exercise Price or the number of Warrant
Shares pursuant to Sections 11 or 13;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrant Certificates at
such Holder's address appearing on the Warrant register, at least 20 days (or 10
days in any case specified in clauses (a) or (b) above) prior to the applicable
record date hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or Change of Control is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or Change of Control. The failure to give the notice required by this Section
15 or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or Change of Control or the
vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 16. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 18. Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be mailed (by first class
mail, postage prepaid) to each Holder at such Holder's last address as shown on
the register maintained by the Warrant Agent pursuant this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the agency created
by this Agreement, and in case at that time any of the Warrant Certificates
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original Warrant Agent; and
in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor to the Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
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In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior name, and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant-Certificates either in its prior name or in
its changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 17. WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as otherwise provided by the express terms of this
Agreement.
(b) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
of its own selection (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) Before the Warrant Agent acts or refrains from acting,
it may require an officer's certificate or an opinion of counsel, or both. The
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder of any Warrant Certificate for any action taken in reliance on any
Warrant Certificate, certificate of shares, notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument (whether in its
original or facsimile form) believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent such
compensation as shall be agreed upon from time to time in writing for all
services rendered by the Warrant Agent in the execution of this Agreement, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature reasonably incurred by the Warrant Agent in
the execution of this Agreement and to indemnify the Warrant Agent and any
predecessor Warrant Agent and save it harmless against any and all liabilities,
claims, damages, losses and expenses (including taxes other than taxes based on
the income of the Warrant Agent) including judgments, reasonable costs and
counsel fees and expenses, for anything done or omitted by the Warrant Agent in
the execution of this Agreement or arising out of or in connection with its
performance of its obligations or duties under this Agreement, except
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to the extent such liabilities are attributable to its gross negligence or
willful misconduct. The Warrant Agent shall notify the Company promptly of any
claim for which it may seek indemnity; provided that the failure by the Warrant
Agent to so notify the Company shall not relieve or reduce its obligations
hereunder except to the extent the failure to so notify the Company of any claim
of which a Responsible Officer of the Warrant Agent has actual knowledge
materially prejudices the Company. The Company shall defend the claim and the
Warrant Agent shall cooperate in the defense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expense of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more Holders of Warrant
Certificates shall furnish the Warrant Agent with security and indemnity
reasonably satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take such
action as is necessary, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the Holders of the Warrants, as their respective
rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director,
officer or employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by the provisions
hereof.
(i) The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement except
for its own gross negligence or willful misconduct.
(j) The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder of any Warrant Certificate to make or cause
to be made any adjustment of the Exercise Price or number of the Warrant Shares
or other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other
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securities will when issued be validly issued and fully paid and nonassessable,
and makes no representation with respect thereto.
(k) The Warrant Agent undertakes to perform such duties
and only such-duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Warrant Agent.
(l) The Warrant Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Warrant Agent and conforming to
the requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Warrant Agent, the Warrant Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).
(m) The Warrant Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Warrant Agent was negligent in ascertaining the pertinent facts.
(n) The Warrant Agent shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority interest of Warrants relating to the
time, method and place of conducting any proceeding for any remedy available to
the Warrant Agent, or exercising any trust or power conferred upon the Warrant
Agent, under this Agreement with respect to the Units, Warrants or Notes, as
applicable.
(o) No provision of this Agreement shall require the
Warrant Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(p) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Warrant Agent shall be subject to the
provisions of this Section.
(q) The Warrant Agent may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(r) The Warrant Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Warrant Agent, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the
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Warrant Agent shall determine to make such further inquiry or investigation, it
shall he entitled to, during reasonable business hours, examine the books,
records and premises of the Company, personally or by agent or attorney at the
sole cost of the Warrant Agent and shall incur no liability or additional
liability of any kind by any reason of such inquiry or investigation.
(s) The Warrant Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Warrant Agent shall not be responsible for
any willful misconduct or gross negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(t) The Warrant Agent shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement.
(u) The rights, privileges, protections, immunities and
benefits given to the Warrant Agent, including, without limitation, its right to
be indemnified, are extended to, and shall be enforceable by, the Warrant Agent
in each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder.
SECTION 18. RESIGNATION AND REMOVAL OF WARRANT AGENT; APPOINTMENT
OF SUCCESSOR. No resignation or removal of the Warrant Agent and no appointment
of a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence, willful misconduct or bad faith) after giving written notice to the
Company. The Company may remove the Warrant Agent upon written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first class mail, postage
prepaid) to each Holder at his last address as shown on the register of the
Company maintained by the Warrant Registrar a copy of said notice of resignation
or notice of removal, as the case may be. Upon such resignation or removal, the
Company shall appoint in writing a successor warrant agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent or after
such removal, then the resigning Warrant Agent or the Holder of any Warrant may
at the expense of the Company apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent, whether appointed
by the Company or by such a court, shall be a corporation doing business under
the laws of the United States or any state thereof, in good standing and having
a combined capital and surplus of not less than $50,000,000. The combined
capital and surplus of any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of
its condition published by such warrant agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new warrant agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall
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be done at the expense of the Company and shall be legally and validly executed
and delivered by the resigning or removed Warrant Agent. Not later than the
effective date of any such appointment, the Company shall give notice thereof to
the resigning or removed Warrant Agent. Failure to give any notice provided for
in this Section, however, or any defect therein, shall not affect the legality
or validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.
SECTION 19. REGISTRATION. The Company and the Warrant Agent
acknowledge that Holders shall have the registration rights set forth in the
Warrant Registration Rights Agreement, a copy of which is attached hereto as
Exhibit D.
SECTION 20. REPORTS. (a) So long as any of the Warrants remain
outstanding, and to the extent the Company is required to send such documents to
the holders of its outstanding Common Stock, the Company shall, upon request,
furnish to the registered Holders of the Warrants and to the beneficial Holders,
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants; and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports. In addition, whether or not required by the rules and regulations
of the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
Delivery of such reports, information and documents to the
Warrant Agent is for informational purposes only and the Warrant Agent's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Warrant Agent is entitled to rely exclusively on Officers' Certificates).
(b) The Company shall provide the Warrant Agent with a
sufficient number of copies of all reports filed with the Commission pursuant to
clause (a) above that the Warrant Agent may be required to deliver to the
Holders of the Warrants under this Section 20.
SECTION 21. RULE 144A AND RULE 144. The Company hereby agrees
with each Holder, for so long as any Registrable Securities remain outstanding,
and during any period in which the Company (i) is not subject to Section 13 or
15(d) of the Exchange Act, to make available, upon request of any Holder of
Registrable Securities, to such Holder or beneficial owner of Registrable
Securities, the information required by Rule 144A(d)(4) under the Securities Act
in order to permit resales of such Registrable Securities pursuant to Rule 144A,
and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all
filings required thereby in a timely manner in order to permit resales of such
Registrable Securities pursuant to Rule 144.
SECTION 22. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the
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Holder of any Warrant Certificate to or on the Company shall be sufficiently
given or made when and if deposited in the mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, CA 92121
Telecopier No.: (858) 882-6040
Attention: General Counsel
In case the Company shall fail to maintain such office or agency
or shall fail to give such notice of the location or of any change in the
location thereof, presentations may be made and notices and demands may be
served at the principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company
or by the Holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
State Street Bank and Trust Company
225 Asylum Street
Hartford, CT 06103
Attention: Michael M. Hopkins
Fax: (860) 244-1889
SECTION 23. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any Holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not in any way materially adversely affect the interests of any Holder of
Warrant Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of Holders shall require the written
consent of Holders representing a majority of the then outstanding Warrants
(excluding Warrants held by the Company or any of its Affiliates). The consent
of each Holder affected shall be required for any amendment pursuant to which
the Exercise Price would be increased or the number of Warrant Shares
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided by this Agreement) or the Exercise Period with respect to
the Warrants would be shortened. The Warrant Agent shall be entitled to receive
and, subject to Section 19, shall be fully protected in relying upon, an
officers' certificate and opinion of counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted hereunder, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
SECTION 24. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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SECTION 25. TERMINATION. This Agreement (other than the Company's
obligations with respect to Warrants previously exercised and with respect to
indemnification under Section 17) shall terminate on the earlier to occur of (i)
5:00 p.m., New York City time on the Expiration Date (ii) the date on which all
Warrants are exercised into Warrant Shares or (iii) the payment to Holders of
the distributions referred to in Section 11(e) upon surrender of their Warrant
Certificates.
SECTION 26. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES.
SECTION 27. BENEFITS OF THIS AGREEMENT. (a) Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the Holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the Holders of the Warrant Certificates.
(a) Prior to the exercise of the Warrants, no Holder of a
Warrant Certificate, as such, shall be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
Except as provided in Section 11(e), the Holders of the Warrants are not
entitled to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs.
(b) All rights of action in respect of this Agreement are
vested in the Holders of the Warrants, and any Holder of any Warrant, without
the consent of the Warrant Agent or the Holder of any other Warrant, may, on
such Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's rights hereunder,
including the right to exercise, exchange or surrender for purchase such
Holder's Warrants in the manner provided in this Agreement.
SECTION 28. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ JAMES E. HOFFMANN
-------------------------------
Name: James E. Hoffmann
Title: Sr. Vice President
STATE STREET BANK AND TRUST COMPANY, as Warrant Agent
By: /s/ ELIZABETH C. HAMMER
-------------------------------
(Authorized Signature)
S-1
<PAGE> 50
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
Unit Legend. Each Warrant issued prior to the Separation Date
shall bear the following legend (the "UNIT LEGEND") on the face thereof:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED
AS PART OF AN ISSUANCE OF (I) UNITS (THE "UNITS"), EACH OF WHICH CONSIST OF
$225,000,000 PRINCIPAL AMOUNT AT MATURITY OF THE 12 1/2% SENIOR NOTES DUE 2010
OF LEAP WIRELESS INTERNATIONAL, INC. AND ONE WARRANT INITIALLY ENTITLING THE
HOLDER THEREOF TO PURCHASE 5.146 SHARES, PAR VALUE $.0001 PER SHARE, OF LEAP
WIRELESS INTERNATIONAL AND (II) UNITS, WHICH CONSIST OF $668,000,000 PRINCIPAL
AMOUNT AT MATURITY ($325,102,240 INITIAL ACCRETED VALUE) OF THE 14 1/2% SENIOR
DISCOUNT NOTES (TOGETHER WITH THE SENIOR NOTES, THE "NOTES") DUE 2010 OF LEAP
WIRELESS INTERNATIONAL, INC. AND ONE WARRANT INITIALLY ENTITLING THE HOLDER
THEREOF TO PURCHASE 2.503 SHARES, PAR VALUE $.0001 PER SHARE, OF LEAP WIRELESS
INTERNATIONAL, INC. (THE WARRANTS ISSUED IN CONNECTION WITH THE SENIOR NOTES
TOGETHER WITH THE WARRANTS ISSUED IN CONNECTION WITH THE SENIOR DISCOUNT NOTES
ARE COLLECTIVELY REFERRED TO AS "WARRANTS").
EXCEPT AS CONTEMPLATED BY SECTION 7 OF THE WARRANT AGREEMENT,
PRIOR TO THE EARLIEST TO OCCUR OF (I) THE DATE THAT IS SIX MONTHS FOLLOWING THE
INITIAL SALE OF UNITS, (II) THE DATE ON WHICH A REGISTRATION STATEMENT WITH
RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (III) THE DATE ON WHICH A SHELF REGISTRATION STATEMENT WITH
RESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (IV) SUCH
DATE AS MORGAN STANLEY & CO. INCORPORATED IN ITS SOLE DISCRETION SHALL DETERMINE
AND (V) THE OCCURRENCE OF A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE
GOVERNING THE NOTES) OR A PERMITTED OPTIONAL REDEMPTION OF THE SENIOR NOTES OR
THE SENIOR DISCOUNT NOTES, AS APPLICABLE (AS DEFINED IN THE INDENTURE GOVERNING
THE NOTES), THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE NOTES.
Private Placement Legend: Each Warrant issued pursuant to an
exemption from the registration requirements of the Securities Act shall bear
the following legend (the "PRIVATE PLACEMENT LEGEND") on the face thereof
A-1
<PAGE> 51
[THE WARRANTS/SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
[OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING [THESE WARRANTS/THESE SHARES OF
COMMON STOCK REPRESENTED BY THIS CERTIFICATE] IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,] (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES
ACT AS IN EFFECT ON THE DATE OF SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER
[THESE WARRANTS/THESE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE]
EXCEPT (A) TO LEAP OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE [WARRANT AGENT/ TRANSFER AGENT AND REGISTRAR] A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF [THESE WARRANTS/ THESE SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE] (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
[WARRANT AGENT/TRANSFER AGENT AND REGISTRAR]) AND, IF SUCH TRANSFER IS IN
RESPECT OF ANY WARRANTS AFTER THE SEPARATION DATE/ANY SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE], AN OPINION OF COUNSEL ACCEPTABLE TO LEAP THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) TO A PERSON OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT [THAT, FOR ANY TRANSFER PRIOR TO ONE YEAR AFTER CLOSING
FURNISHES TO THE [WARRANT AGENT/ THE TRANSFER AGENT AND REGISTRAR], PRIOR TO
SUCH TRANSFER, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE [WARRANT/SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE] (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE [WARRANT AGENT/THE TRANSFER AGENT AND REGISTRAR])], (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM [THESE
WARRANTS/THESE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE] ARE
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
A-2
<PAGE> 52
WITH ANY TRANSFER OF [THESE WARRANTS/THESE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE] WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO [THE WARRANT AGENT/TRANSFER
AGENT AND REGISTRAR]. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST , PRIOR TO SUCH TRANSFER, FURNISH TO THE [WARRANT
AGENT/TRANSFER AGENT AND REGISTRAR] AND LEAP SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE WARRANT
AGREEMENT CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER
ANY TRANSFER OF [THESE WARRANTS/THESE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE] IN VIOLATION OF THE FOREGOING RESTRICTIONS.
A-3
<PAGE> 53
No. ___________ ___Warrants
CUSIP No. ________
Warrant Certificate
LEAP WIRELESS INTERNATIONAL, INC.
This Warrant Certificate certifies that Cede & Co., or its
registered assigns, is the registered holder of Warrants expiring April 15, 2010
(the "Warrants") to purchase Common Stock, par value $.0001 (the "Common
Stock"), of Leap Wireless International, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the registered holder upon exercise at any
time from 9:00 a.m. on the Exercisability Date referred to below (the "Exercise
Date") until 5:00 p.m. New York City Time on April 15, 2010, to receive from the
Company [5.146]* [2.503]** fully paid and nonassessable shares of Common Stock
(the "Warrant Shares") at the exercise price (the "Exercise Price") of $96.80
per share payable upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject to
the conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. The number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time
on April 15, 2010, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless countersigned
by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
- --------------------
* Insert for Senior Note Warrant.
** Insert for Senior Discount Warrant.
A-4
<PAGE> 54
IN WITNESS WHEREOF, Leap Wireless International, Inc. has caused
this Warrant Certificate to be signed below.
DATED: _________, 2000
LEAP WIRELESS INTERNATIONAL, INC.
By:
-------------------------------
Name:
Title:
Countersigned:
STATE STREET BANK AND TRUST COMPANY
as Warrant Agent
By:
-------------------------------------
Authorized Signature
A-5
<PAGE> 55
[REVERSE OF WARRANT CERTIFICATE]
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m. New York City time on
April 15, 2010 entitling the holder on exercise to receive shares of Common
Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as
of February 23, 2000 (the "Warrant Agreement"), duly executed and delivered by
the Company to State Street Bank and Trust Company, as warrant agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company. Except as otherwise indicated,
capitalized terms used and not otherwise defined herein have the meanings set
forth in the Warrant Agreement.
Warrants may be exercised at any time on or after the Exercise
Date and on or before 5:00 p.m. New York City time on April 15, 2010; provided
that holders shall be able to exercise their Warrants only if a registration
statement relating to the Warrants Shares is then in effect, or the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and such securities are qualified
for sale or exempt from qualification under the applicable securities laws of
the states in which the various holders of the Warrants or other persons to whom
it is proposed that the Warrant Shares be issued on exercise of the Warrants
reside. In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Warrant Agent at its New
York corporate trust office set forth in Section 22 of the Warrant Agreement
this Warrant Certificate and the form of election to purchase on the reverse
hereof duly filled in and signed, which signature shall be medallion guaranteed
by an institution which is a member of a Securities Transfer Association
recognized signature guarantee program, and upon payment to the Warrant Agent
for the account of the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrant Shares issuable upon exercise of this
Warrant (the "Exchange Rate") may, subject to certain conditions, be adjusted.
If the Exercise Rate is adjusted, the Warrant Agreement provides that the number
of shares of Common Stock issuable upon the exercise of each Warrant shall be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company will pay the cash value thereof
determined as provided in the Warrant Agreement.
The Warrant Shares are entitled to the benefits of a registration
rights agreement (the "Warrant Registration Rights Agreement"), pursuant to
which the Company is required to file a shelf registration statement covering
the resale of the Warrants, the issuance of common stock upon the exercise the
Warrants and, under certain circumstances if required by law, the resale of
common stock issuable upon exercise of the Warrants and to use its best efforts
to cause
A-6
<PAGE> 56
such registration statement to be declared effective, subject to certain
exceptions, on or prior to the date that is 180 days after the Closing Date (as
defined in the Warrant Agreement).
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-7
<PAGE> 57
[FORM OF ELECTION TO PURCHASE]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Common Stock and herewith tenders payment for such shares to the order of LEAP
WIRELESS INTERNATIONAL, INC., in the amount of $__________ in accordance with
the terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is __________________
and that such shares be delivered to ___________, whose address is
____________________________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________________, whose address is
____________________, and that such Warrant Certificate be delivered to whose
address is ____________________.
----------------------------------------
Signature
Date:
----------------------------------------
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Warrant Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-8
<PAGE> 58
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
The following exchanges of a part of this Global Warrant have been made:
<TABLE>
<CAPTION>
Number of
Amount of Amount of Warrants in this
decrease in increase in Global Warrant Signature of
Number of Number of following such authorized
Date of Warrants in this Warrants in this decrease or officer of
Exchange Global Warrant Global Warrant increase Warrant Agent
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE> 59
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, CA 92121
State Street Bank and Trust Company
225 Asylum Street
Hartford, CT 06103
Re: Warrants
Reference is hereby made to the Warrant Agreement, dated as of
February 23, 2000 (the "WARRANT AGREEMENT"), between Leap Wireless
International, Inc., as issuer (the "COMPANY"), and State Street Bank and Trust
Company, as warrant agent. Capitalized terms used but not defined herein shall
have the meanings given to them in the Warrant Agreement.
___________________, (the "TRANSFEROR") owns and proposes to
transfer the Warrant[S] or interest in such Warrant[S] specified in Annex A
hereto, in the amount representing _____ Warrant Shares (the "TRANSFER"), to
___________________________ (the "TRANSFEREE"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST In THE 144A GLOBAL WARRANT OR A DEFINITIVE WARRANT PURSUANT TO RULE
144A. The Transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Warrant is being transferred to a Person that
the Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Warrant for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Warrant Agreement, the transferred beneficial
interest or Definitive Warrant will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Warrant
and/or the Definitive Warrant and in the Warrant Agreement and the Securities
Act.
B-1
<PAGE> 60
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST In THE REGULATION S GLOBAL WARRANT OR A DEFINITIVE WARRANT PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the applicable restricted period, the transfer is not being made
to a U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Warrant Agreement, the transferred beneficial interest or
Definitive Warrant will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend and in the Regulation S Legend printed on the
Regulation S Global Warrant and/or the Definitive Warrant and in the Warrant
Agreement and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
DEFINITIVE WARRANT PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN
RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the
transfer restrictions applicable to beneficial interests in Restricted Global
Warrants and Restricted Definitive Warrants and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any state
of the United States, and accordingly the Transferor hereby further certifies
that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements
of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and
the Transferor hereby further certifies that it
B-2
<PAGE> 61
has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted
Global Warrant or Restricted Definitive Warrants and the requirements of
the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit E to the
Warrant Agreement and (2) if the Company requests, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of
the proposed transfer in accordance with the terms of the Warrant
Agreement, the transferred beneficial interest or Definitive Warrant
will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Definitive Warrants and in the
Warrant Agreement and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL WARRANT OR OF AN UNRESTRICTED DEFINITIVE
WARRANT.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions
contained in the Warrant Agreement and any applicable blue sky
securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Warrant Agreement and the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Warrant Agreement, the
transferred beneficial interest or Definitive Warrant will no longer be
subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Warrants, on
Restricted Definitive Warrants and in the Warrant Agreement.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer
restrictions contained in the Warrant Agreement and any applicable blue
sky securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Warrant Agreement and the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Warrant Agreement, the
transferred beneficial interest or Definitive Warrant will no longer be
subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Warrants, on
Restricted Definitive Warrants and in the Warrant Agreement.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other
than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Warrant Agreement and any applicable blue
sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Warrant Agreement and the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of
B-3
<PAGE> 62
the proposed Transfer in accordance with the terms of the Warrant
Agreement, the transferred beneficial interest or Definitive Warrant
will not be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Warrants or
Restricted Definitive Warrants and in the Warrant Agreement.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
---------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Name:
Title:
Dated:
-------------------------------
B-4
<PAGE> 63
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Warrant, or
(ii) [ ] Regulation S Global Warrant; or
(b) [ ] a Restricted Definitive Warrant.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Warrant, or
(ii) [ ] Regulation S Global Warrant, or
(iv) [ ] Unrestricted Global Warrant; or
(b) [ ] a Restricted Definitive Warrant; or
(c) [ ] an Unrestricted Definitive Warrant,
in accordance with the terms of the Warrant Agreement.
B-5
<PAGE> 64
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, CA 92121
State Street Bank and Trust Company
225 Asylum Street
Hartford, CT 06103
Re: Warrants
(CUSIP ____________)
Reference is hereby made to the Warrant Agreement, dated as of
February 23, 2000 (the "WARRANT AGREEMENT"), between Leap Wireless
International, Inc., as issuer (the "COMPANY"), and State Street Bank and Trust
Company, as warrant agent. Capitalized terms used but not defined herein shall
have the meanings given to them in the Warrant Agreement.
__________________________, (the "OWNER") owns and proposes to
exchange the Warrant[S] or interest in such Warrant[S] specified herein, in the
amount of ____________ in such Warrant[S] or interests (the "EXCHANGE"). In
connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL WARRANT FOR UNRESTRICTED DEFINITIVE WARRANTS OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL WARRANT
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL WARRAnt TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL WARRANT.
In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Warrant for a beneficial interest in an Unrestricted
Global Warrant in an equal principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global
Warrants and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Warrant Agreement and the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in
an Unrestricted Global Warrant is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL WARRAnt TO UNRESTRICTED DEFINITIVE WARRANT. In connection with
the Exchange of the Owner's
C-1
<PAGE> 65
beneficial interest in a Restricted Global Warrant for an Unrestricted
Definitive Warrant, the Owner hereby certifies (i) the Definitive
Warrant is being acquired for the Owner's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Warrants and pursuant
to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Warrant Agreement and the Private Placement
Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Warrant is being acquired in
compliance with any applicable blue sky securities laws of any state of
the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
BENEFICIAL INTEREst IN AN UNRESTRICTED GLOBAL WARRANT. In connection
with the Owner's Exchange of a Restricted Definitive Warrant for a
beneficial interest in an Unrestricted Global Warrant, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted
Definitive Warrants and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Warrant Agreement and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
UNRESTRICTed DEFINITIVE WARRANT. In connection with the Owner's Exchange
of a Restricted Definitive Warrant for an Unrestricted Definitive
Warrant, the Owner hereby certifies (i) the Unrestricted Definitive
Warrant is being acquired for the Owner's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Warrants and pursuant
to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Warrant Agreement and the Private Placement
Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Warrant is being
acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL WARRANTS FOR RESTRICTED DEFINITIVE WARRANTS OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL WARRANTS
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL WARRAnt TO RESTRICTED DEFINITIVE WARRANT. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global
Warrant for a Restricted Definitive Warrant in a number equal to the
number of beneficial interests exchanged, the Owner hereby certifies
that the Restricted Definitive Warrant is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange
in accordance with the terms of the Warrant Agreement, the Restricted
Definitive Warrant issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Definitive Warrant and in the Warrant
Agreement and the Securities Act.
C-2
<PAGE> 66
(b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL WARRANT. In connection with
the Exchange of the Owner's Restricted Definitive Warrant for a
beneficial interest in the [CHECK ONE] [ ] 144A Global Warrant, [ ]
Regulation S Global Warrant, in a number equal to the number of
beneficial interests exchanged, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account
without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global
Warrants and pursuant to and in accordance with the Securities Act, and
in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in
accordance with the terms of the Warrant Agreement, the beneficial
interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant
Restricted Global Warrant and in the Warrant Agreement and the
Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
-------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Name:
Title:
Dated:
-------------------------------
C-3
<PAGE> 67
EXHIBIT D
FORM OF WARRANT REGISTRATION RIGHTS AGREEMENT
D-1
<PAGE> 68
EXHIBIT E
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Leap Wireless International, Inc.
- --------------------------------
- --------------------------------
- --------------------------------
State Street Bank and Trust Company
225 Asylum Street
Hartford, CT 06103
Re: Warrants
Reference is hereby made to the Warrant Agreement, dated as of
February 23, 2000 (the "WARRANT AGREEMENT"), between Leap Wireless
International, Inc., as issuer (the "COMPANY"), and State Street Bank and Trust
Company, as warrant agent. Capitalized terms used but not defined herein shall
have the meanings given to them in the Warrant Agreement. In connection with our
proposed purchase of ____________ Warrants evidenced by a beneficial interest in
a Global Warrant or a Definitive Warrant, we confirm that:
1. We understand that any subsequent transfer of the Warrants or
any interest therein is subject to certain restrictions and conditions set forth
in the Warrant Agreement and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Warrants or any interest therein except
in compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES Act").
2. We understand that the offer and sale of the Warrants have not
been registered under the Securities Act, and that the Warrants and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Warrants or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if
requested by the Company, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Warrant from us in a transaction meeting the
requirements of clauses (A) through (E)
E-1
<PAGE> 69
of this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Warrants or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Warrants purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Warrants,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Warrants or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
We agree not to engage in any hedging transactions with regard to
the Warrants unless such hedging transactions are in compliance with the
Securities Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
-----------------------------------
[Insert Name of Transferor]
By:
-------------------------------
Name:
Title:
Dated:
-------------
E-2
<PAGE> 1
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
DATED FEBRUARY 23, 2000
AMONG
LEAP WIRELESS INTERNATIONAL, INC.,
CRICKET COMMUNICATIONS HOLDINGS, INC.
AND
MORGAN STANLEY & CO. INCORPORATED,
FOR ITSELF AND ON BEHALF OF THE OTHER PLACEMENT AGENTS
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into February 23, 2000, by and among Leap Wireless International, Inc.
(the "Company"), Cricket Communications Holdings, Inc. ("Guarantor") and Morgan
Stanley & Co. Incorporated, for itself and on behalf of the entities listed as
signatories hereto.
This Agreement is made pursuant to the Placement Agreement dated
February 16, 2000, among the Company, Guarantor and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of (i) $225,000,000 representing 225,000 Units, each Unit
consisting of one 12_% Series A Senior Note Due 2010 (each a "Senior Note") and
one warrant to purchase common stock (the "Warrants") and (ii) $668,000,000
representing 668,000 Units, each Unit consisting of one 14_% Series A Senior
Discount Note Due 2010 (each a "Senior Discount Note" and the Senior Notes,
together with their related guarantees provided by Guarantor, the "Securities")
and one Warrant. In order to induce the Placement Agents to enter into the
Placement Agreement, the Company and Guarantor have agreed to provide to the
Placement Agents and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Accreted Value" shall mean the Accreted Value as defined in the
Indenture.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company and
Guarantor of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
<PAGE> 3
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by the Company
or Guarantor under the Indenture containing terms identical to the Securities
(except that (i) interest thereon shall accrue from the last date on which
interest was paid on the Securities or, if no such interest has been paid, from
April 15, 2000, in the case of the Senior Notes, and April 15, 2005, in the case
of the Senior Discount Notes and (ii) the Exchange Securities will not contain
restrictions on transfer) and to be offered to Holders of Securities in exchange
for Securities pursuant to the Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as they own
any Registrable Securities, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers (as
defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities
dated as of February 23, 2000 between the Company, Guarantor and State Street
Bank and Trust Company, as trustee, and as the same may be amended from time to
time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company , Guarantor or any of its affiliates (as such term is defined in Rule
405 under the 1933 Act) (other than the Placement Agents or subsequent Holders
of Registrable Securities if such subsequent holders are deemed to be such
affiliates solely by reason of their holding of such Registrable Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement,
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<PAGE> 4
and by all other amendments and supplements to such prospectus, and in each case
including all material incorporated by reference therein.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities and any
Exchange Securities includable in a Shelf Registration Statement pursuant to
Section 2(b)(iii)(a) or (b); provided, however, that the Securities shall cease
to be Registrable Securities (i) when a Registration Statement with respect to
such Securities shall have been declared effective under the 1933 Act and such
Securities shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933 Act
or (iii) when such Securities shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company and Guarantor with this
Agreement, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating
to the qualification of the Indenture under applicable securities laws, (vi) the
fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and Guarantor and, in the case of a
Shelf Registration Statement, the fees and disbursements of one counsel for the
Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Placement Agent) and (viii) the fees and
disbursements of the independent public accountants of the Company and
Guarantor, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, but
excluding fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Company and Guarantor that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
3
<PAGE> 5
"Semi-Annual Accrual Date" shall mean the Semi-Annual Accrual
Date as defined in the Indenture.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and Guarantor pursuant to the provisions of Section
2(b) of this Agreement which covers all of the Registrable Securities (but no
other securities unless approved by the Holders whose Registrable Securities are
covered by such Shelf Registration Statement) on an appropriate form under Rule
415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean
a registration in which Registrable Securities are sold to an Underwriter for
reoffering to the public.
2. REGISTRATION UNDER THE 1933 ACT.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company and Guarantor shall use
their best efforts to cause to be filed an Exchange Offer Registration Statement
covering the offer by the Company and Guarantor to the Holders to exchange all
of the Registrable Securities for Exchange Securities and to have such
Registration Statement remain effective until the closing of the Exchange Offer.
The Company and Guarantor shall commence the Exchange Offer promptly after the
Exchange Offer Registration Statement has been declared effective by the SEC and
use its best efforts to have the Exchange Offer consummated not later than 45
days after such effective date. The Company and Guarantor shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable
Securities validly tendered will be accepted for
exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such
notice is mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and will continue to accrue interest and, if
a Senior Discount Note, will
4
<PAGE> 6
continue to accrete in value until April 15, 2005 and
thereafter will accrue interest, but will not retain any
rights under this Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be
required to surrender such Registrable Security,
together with the enclosed letters of transmittal, to
the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in
the notice prior to the close of business on the last
Exchange Date; and
(v) that Holders will be entitled to withdraw their
election, not later than the close of business on the
last Exchange Date, by sending to the institution and at
the address (located in the Borough of Manhattan, The
City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount at
maturity of Registrable Securities delivered for
exchange and a statement that such Holder is withdrawing
his election to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company
and Guarantor shall:
(vi) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to
the Exchange Offer; and
(vii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions
thereof so accepted for exchange by the Company and
Guarantor and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange
Security equal in principal amount at maturity to the
principal amount at maturity of the Registrable
Securities surrendered by such Holder.
The Company and Guarantor shall use their best efforts to complete the Exchange
Offer as provided above and shall comply with the applicable requirements of the
1933 Act, the 1934 Act and other applicable laws and regulations in connection
with the Exchange Offer. The Exchange Offer shall not be subject to any
conditions, other than that the Exchange Offer does not violate applicable law
or any applicable interpretation of the Staff of the SEC. The Company and
Guarantor shall inform the Placement Agents of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agents shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and Guarantor determine that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate
5
<PAGE> 7
applicable law or the applicable interpretations of the Staff of the SEC, (ii)
the Exchange Offer is not for any other reason consummated by a date that is 180
days after the Closing Date or (iii) the Exchange Offer has been completed and
(a) in the opinion of counsel for the Placement Agents a Registration Statement
must be filed and a Prospectus must be delivered by the Placement Agents in
connection with any offering or sale by them of Registrable Securities or (b) in
the opinion of counsel for Qualcomm Incorporated, a Registration Statement must
be filed and a Prospectus must be delivered by Qualcomm Incorporated or one of
its Affiliates in connection with any offering or sale by them of Registrable
Securities, the Company and Guarantor shall use their best efforts to cause to
be filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company and Guarantor, as the case may be, a
Shelf Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC. In the event the Company and Guarantor are required to
file a Shelf Registration Statement solely as a result of the matters referred
to in clause (iii) of the preceding sentence, the Company and Guarantor shall
use their best efforts to file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) with respect to
all Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Placement
Agents or Qualcomm Incorporated or one of its Affiliates after completion of the
Exchange Offer. The Company and Guarantor agree to use their best efforts to
keep the Shelf Registration Statement continuously effective until the
expiration of the period referred to in Rule 144(k) with respect to the
Registrable Securities or such shorter period that will terminate when all of
the Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement. The Company and Guarantor
further agree to supplement or amend the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to the
registration form used by the Company and Guarantor for such Shelf Registration
Statement or by the 1933 Act or by any other rules and regulations thereunder
for shelf registration or if reasonably requested by a Holder with respect to
information relating to such Holder, and to use its best efforts to cause any
such amendment to become effective and such Shelf Registration Statement to
become usable as soon as thereafter practicable. The Company and Guarantor agree
to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) The Company and Guarantor shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and Section 2(b). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not
6
<PAGE> 8
to have become effective during the period of such interference until the
offering of Registrable Securities pursuant to such Registration Statement may
legally resume. In the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to the date that is
180 days after the Closing Date, (i) the interest rate borne by the Senior Notes
will be increased by 0.50% per annum and (ii) interest in addition to the
accrual of original issue discount and in addition to interest otherwise due for
periods after the Full Accretion Date (as defined in the Indenture) will accrue
on the Senior Discount Notes at a rate per annum equal to 0.50% of the Accreted
Value (as defined in the Indenture) thereof, until the Exchange Offer is
consummated or the Shelf Registration Statement is declared effective by the
SEC.
(e) Without limiting the remedies available to the Placement Agents and
the Holders, the Company and Guarantor each acknowledge that any failure by the
Company and Guarantor to comply with its obligations under Section 2(a) and
Section 2(b) hereof may result in material irreparable injury to the Placement
Agents or the Holders for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Placement Agents or any Holder may obtain such
relief as may be required to specifically enforce the Company's and Guarantor's
obligations under Section 2(a) and Section 2(b) hereof.
(f) Notwithstanding the foregoing, the Company and the Guarantor shall
not be required to amend or supplement any Shelf Registration Statement, any
related prospectus or any document incorporated therein by reference, or
otherwise keep any Registration Statement continuously effective for a period (a
"Black Out Period") not to exceed, for so long as this Agreement is in effect,
two 45 consecutive-day periods in any calendar year, in the event that the
Company shall be (i) engaged in a material acquisition, disposition or
reorganization, or other material business transaction, (ii) such transaction is
required to be disclosed in the applicable Shelf Registration Statement,
Prospectus or amendment or supplement thereto, or the failure by the Company to
disclose such transaction in the applicable Shelf Registration Statement,
Prospectus or amendment or supplement thereto, would cause such Shelf
Registration Statement to contain an untrue statement of material fact or omit
to state a material fact necessary in order to make the statement therein not
misleading, in light of the circumstances under which they were made, (iii) such
information regarding the existence of such transaction has not then been
publicly disclosed by or on behalf of the Company and (iv) the Company
determines in its good faith judgment that the disclosure of such event at such
time would have a material adverse effect on the business, operations or
prospects of the Company; provided that such Black Out Period shall be extended
for any period, not to exceed an aggregate of 30 days in any calendar year,
during which the Commission is reviewing any proposed amendment or supplement to
the Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference which has been filed by the Company
7
<PAGE> 9
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company and Guarantor
with respect to the Registration Statements pursuant to Section 2(a) and Section
2(b) hereof, the Company and Guarantor shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and Guarantor and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to cause
such Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act to the extent
required; to keep each Prospectus current during the period described under
Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions
by brokers or dealers with respect to the Registrable Securities or Exchange
Securities;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel for the
Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and the Company consents to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by each of the
selling Holders of Registrable Securities and any such Underwriters in
connection with the offering and sale of the Registrable Securities covered by
and in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use their best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with such
Holders in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company shall not
be required to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d),
8
<PAGE> 10
(ii) file any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the Placement
Agents promptly and, if requested by any such Holder or counsel, confirm such
advice in writing (i) when a Registration Statement has become effective and
when any post-effective amendment thereto has been filed and becomes effective,
(ii) of any request by the SEC or any state securities authority for amendments
and supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and Guarantor
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering cease to be true and correct
in all material respects or if the Company and Guarantor receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the existence of any fact or the happening
of any event, during the period a Shelf Registration Statement is effective,
which makes any statement of a material fact made in the Registration Statement,
the Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any additions
to or changes in the Prospectus in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (vi)
of any determination by the Company and Guarantor that a post-effective
amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at least
two business days prior to the closing of any sale of Registrable Securities;
9
<PAGE> 11
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to prepare
and file with the SEC a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company and Guarantor each agrees to
notify the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to suspend
use of the Prospectus until the Company and Guarantor have amended or
supplemented the Prospectus to correct such misstatement or omission and such
amendment has been declared effective by the SEC, if required;
(j) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or any document which is to be incorporated by
reference into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the Placement
Agents and their counsel (and, in the case of a Shelf Registration Statement,
the Holders and their counsel) and make such of the representatives of the
Company and Guarantor as shall be reasonably requested by the Placement Agents
or their counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document, and shall
not at any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration Statement or a
Prospectus or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Placement Agents and their
counsel (and, in the case of a Shelf Registration Statement, the Holders and
their counsel) shall not have previously been advised and furnished a copy or to
which the Placement Agents or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall reasonably object;
(k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for inspection
by a representative of the Holders of the Registrable Securities, any
Underwriter participating in any disposition pursuant to such Shelf Registration
Statement, and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, all financial and
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<PAGE> 12
other records, pertinent documents and properties of the Company and Guarantor,
and cause the respective officers, directors and employees of the Company and
Guarantor to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement;
(n) in the case of a Shelf Registration, use their best efforts to cause
all Registrable Securities to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the Company are
then listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or Registrable
Securities, as the case may be, to be rated by two nationally recognized
statistical rating organizations (as such term is defined in Rule 436(g)(2)
under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company and Guarantor have received
notification of the matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and warranties
to the Holders and any Underwriters of such Registrable Securities with respect
to the business of the Company and its subsidiaries, the Registration Statement,
Prospectus and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings and confirm the same
if and when requested, (ii) obtain opinions of counsel to the Company and
Guarantor (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort" letters from
the independent certified public accountants of the Company and Guarantor (and,
if necessary, any other certified public accountant of any subsidiary of the
Company, or of any business acquired by the Company for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and Underwriter of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings, and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority in principal amount of
the Registrable Securities being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of the Company and Guarantor made
pursuant to clause (i) above
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<PAGE> 13
and to evidence compliance with any customary conditions contained in an
underwriting agreement.
In the case of a Shelf Registration Statement, the Company and
Guarantor may require each Holder of Registrable Securities to furnish to the
Company and Guarantor such information regarding the Holder and the proposed
distribution by such Holder of such Registrable Securities as the Company and
Guarantor may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of notice from the Company of the commencement of a Black Out
Period (in each case, a "Black Out Notice") or of any notice from the Company
and Guarantor of the happening of any event of the kind described in Section
3(e)(v) hereof, other than the happening of any event of the kind for which the
Company could issue a Black Out Notice (in each case, a "Suspension Notice"),
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of notice of
termination of the Black Out Period or the copies of the supplemented or amended
Prospectus contemplated by Section 3(i) hereof. If so directed by the Company
and Guarantor, such Holder will deliver to the Company and Guarantor (at their
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company and Guarantor
shall give any such notice to suspend the disposition of Registrable Securities
pursuant to a Shelf Registration Statement, the Company and Guarantor shall
extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions or its termination of
the Black Out Period, as the case may be.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) The Staff of the SEC has taken the position that any broker-dealer
that receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.
The Company and Guarantor understand that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of
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<PAGE> 14
distribution containing a statement to the above effect and the means by which
Participating Broker-Dealers may resell the Exchange Securities, without naming
the Participating Broker-Dealers or specifying the amount of Exchange Securities
owned by them, such Prospectus may be delivered by Participating Broker-Dealers
to satisfy their prospectus delivery obligation under the 1933 Act in connection
with resales of Exchange Securities for their own accounts, so long as the
Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of this
Agreement, the Company and Guarantor each agree that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be
contemplated by Section 3(i), for a period exceeding 180
days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company
and Guarantor to deliver and shall not deliver such
Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange
Offer Registration, to the extent not required by the
positions of the Staff of the SEC or the 1933 Act and
the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company
and Guarantor by the Placement Agents or with the
reasonable request in writing to the Company and
Guarantor by one or more broker-dealers who certify to
the Placement Agents and the Company and Guarantor in
writing that they anticipate that they will be
Participating Broker-Dealers; and provided further that,
in connection with such application of the Shelf
Registration procedures set forth in Section 3 to an
Exchange Offer Registration, the Company and Guarantor
shall be obligated (x) to deal only with one entity
representing the Participating Broker-Dealers, which
shall be Morgan Stanley & Co. Incorporated unless it
elects not to act as such representative, in which case
it shall be designated by Participating Broker-Dealers
holding a majority in principal amount at maturity of
all Securities held by Participating Broker-Dealers (y)
to pay the fees and expenses of only one counsel
representing the Participating Broker-Dealers, which
shall be counsel to the Placement Agents unless such
counsel elects not to so act and (z) to cause to be
delivered only one, if any, "cold comfort" letter with
respect to the Prospectus in the form existing on the
last Exchange Date and with respect
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<PAGE> 15
to each subsequent amendment or supplement, if any,
effected during the period specified in clause (i)
above.
(c) The Placement Agents shall have no liability to the Company,
Guarantor or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and Guarantor each agree to indemnify and hold harmless
the Placement Agents, each Holder and each Person, if any, who controls any
Placement Agent or any Holder within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act, or is under common control with, or is
controlled by, any Placement Agent or any Holder, from and against all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by the Placement Agent, any Holder or any
such controlling or affiliated Person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company and Guarantor shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Placement Agents or any Holder
furnished to the Company and Guarantor in writing by Morgan Stanley & Co.
Incorporated or any selling Holder expressly for use therein; provided, however,
that the foregoing indemnity agreement with respect to any prospectus shall not
inure to the benefit of any of the Placement Agents or Holders from whom the
person asserting any such losses, claims, damages or liabilities purchased
Registrable Securities, or any person controlling such Placement Agent or
Holder, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Placement Agent or Holder to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Registrable Securities to such person, and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 3(c) hereof. In
connection with any Underwritten Offering permitted by Section 3, the Company
and Guarantor will also indemnify the Underwriters, if any, selling brokers,
dealers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent
as provided above with respect to the indemnification of the Holders, if
requested in connection with any Registration Statement.
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<PAGE> 16
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, Guarantor, the Placement Agents and the other selling
Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company,
Guarantor, any Placement Agent and any other selling Holder within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same
extent as the foregoing indemnity from the Company and Guarantor to the
Placement Agents and the Holders, but only with reference to information
relating to such Holder furnished to the Company and Guarantor in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company and Guarantor, its directors, its officers who sign the Registration
Statement and each Person, if any, who controls the Company and Guarantor within
the meaning of either such Section and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Holders and all
Persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In such case involving the Placement Agents and Persons who control
the Placement Agents, such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated. In such case involving the Holders and such Persons who
control Holders, such firm shall be designated in writing by the Majority
Holders. In all other cases, such firm shall be designated by the Company and
Guarantor. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
15
<PAGE> 17
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and Guarantor and the Holders shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and Guarantor or by the Holders and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective principal amount of Registrable Securities of such
Holder that were registered pursuant to a Registration Statement.
(e) The Company and Guarantor and each Holder agree that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies, which
may otherwise be available to any indemnified party at law or in equity.
16
<PAGE> 18
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any Person controlling any Placement
Agent or any Holder, or by or on behalf of the Company, its officers or
directors or any Person controlling the Company and Guarantor, (iii) acceptance
of any of the Exchange Securities and (iv) any sale of Registrable Securities
pursuant to a Shelf Registration Statement.
6. MISCELLANEOUS.
(a) No Inconsistent Agreements. Neither the Company nor Guarantor have
not entered into, and on or after the date of this Agreement will not enter
into, any agreement, which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's and Guarantor's other issued and outstanding securities
under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company and Guarantor has obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided, however, that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopy, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company and Guarantor by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect to the
Placement Agents, the address set forth in the Placement Agreement; and (ii) if
to the Company and Guarantor, initially at the Company's address set forth in
the Placement Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
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<PAGE> 19
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof. The Placement Agents
(in their capacity as Placement Agents) shall have no liability or obligation to
the Company and Guarantor with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and
Guarantor, on the one hand, and the Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent they deem
such enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by the laws of the
State of New York.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ James E. Hoffmann
-----------------------------------------
Name: James E. Hoffmann
Title: Sr. Vice President
CRICKET COMMUNICATIONS HOLDINGS, INC.
By: /s/ James E. Hoffmann
-----------------------------------------
Name: James E. Hoffmann
Title: Assistant Secretary
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
ABN AMRO INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
By: Morgan Stanley & Co. Incorporated
By: /s/ Bryan W. Andrzejewski
----------------------------------
Name: Bryan W. Andrzejewski
Title: Principal
S-1
<PAGE> 1
EXHIBIT 4.5
WARRANT
REGISTRATION RIGHTS AGREEMENT
DATED AS OF FEBRUARY 23, 2000
AMONG
LEAP WIRELESS INTERNATIONAL, INC.
AND
MORGAN STANLEY & CO. INCORPORATED,
FOR ITSELF AND ON BEHALF OF THE PLACEMENT AGENTS
LISTED AS SIGNATORIES HERETO
<PAGE> 2
WARRANT REGISTRATION RIGHTS AGREEMENT
This Warrant Registration Rights Agreement (this "Agreement") is
made and entered into as of February 23, 2000, by and among Leap Wireless
International, Inc. (the "Company") and Morgan Stanley & Co. Incorporated, for
itself and on behalf of the Placement Agents listed as signatories hereto
(collectively, the "Placement Agents"), which have agreed to purchase the
Warrants (as defined below) of the Company issued pursuant to the warrant
agreement (the "Warrant Agreement") between the Company and State Street Bank
and Trust Company, a state chartered trust company organized under the laws of
the Commonwealth of Massachusetts, as warrant agent (the "Warrant Agent").
RECITALS
The Warrants are being issued and sold in connection with the
offering by the Company of (i) $225,000,000 representing 225,000 Units, each
Unit consisting of one 12 1/2% Series A Senior Note due 2010 and one warrant to
purchase 5.146 shares of common stock and (ii) $668,000,000 representing 668,000
Units, each Unit consisting of one 14 1/2% Series A Senior Discount Note due
2010 and one warrant to purchase 2.503 shares of common stock (the warrants
issued in connection with the Senior Notes together with the warrants issued in
connection with the Senior Discount Notes are collectively referred to as
"Warrants"). The Notes (as defined below) will be guaranteed by Cricket
Communications Holdings, Inc.
This Agreement is made pursuant to that certain Placement
Agreement, dated February 16, 2000 (the "Placement Agreement"), among the
Company, the Guarantor (as defined in the Placement Agreement) and the Placement
Agents. In order to induce the Placement Agents to purchase the Warrants, the
Company has agreed to provide the registration rights set forth in this
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Warrant Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Act": The Securities Act of 1933, as amended.
"Affiliate": As defined in Rule 144.
"Black Out Notice": As defined in Section 4(b) hereof.
"Business Day": As defined in the Exchange Act.
"Black Out Period": As defined in Section 3(a) hereof.
<PAGE> 3
"Closing Date": The date hereof.
"Commission": The Securities and Exchange Commission.
"Common Stock": The common stock, par value $.0001 per share, of
the Company.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Expiration Date": 5:00 p.m. New York City time on April 15,
2010.
"Holders": As defined in Section 2 hereof.
"Indemnified Party": As defined in Section 6(c).
"Indemnifying Party": As defined in Section 6(c).
"Notes": The Company's 12 1/2% Series A Senior Notes Due 2010 and
the Company's 14 1/2% Series A Senior Discount Notes Due 2010.
"Prospectus": The prospectus included in a Registration Statement
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Registration Statement": Any registration statement of the
Company relating to the registration for resale of Registrable Securities and
the issuance of the Warrant Shares that is filed pursuant to the provisions of
this Agreement and including the Prospectus included therein, all amendments and
supplements thereto, including post-effective amendments, and all exhibits and
material incorporated by reference therein.
"Registrable Securities": The Registrable Warrants and the
Registrable Warrant Shares; provided that a security ceases to be a Registrable
Security when it is no longer a Transfer Restricted Security.
"Registrable Warrant Shares": Warrant Shares issued upon exercise
of the Warrants the resale of which is required to be registered under the Act.
"Registrable Warrants": All Warrants originally issued pursuant
to the Warrant Agreement.
"Rule 144": Rule 144 promulgated under the Act.
"Transfer Restricted Securities": The Registrable Securities upon
original issuance thereof; provided that a Registrable Security is no longer a
Transfer Restricted Security when such Registrable Security is sold pursuant to
the Registration Statement contemplated by Section 3 or is freely transferable
without restrictions pursuant to Rule 144(k) or any successor rule under the
Act.
2
<PAGE> 4
"Warrant Shares": The shares of Common Stock issued or issuable
upon the exercise of the Warrants.
2. HOLDERS
A Person is deemed to be a holder of Registrable Securities
(each, a "Holder") whenever such Person is the holder of record of Registrable
Securities.
3. SHELF REGISTRATION
(a) Shelf Registration. The Company shall prepare and cause to be
filed with the Commission pursuant to Rule 415 under the Act a Registration
Statement on the appropriate form relating to the resale of Warrants, the
issuance of the Common Stock upon exercise of the Warrants and, under certain
circumstances if required by law, the resale of the Common Stock issuable upon
exercise of the Warrants. The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the Commission on or before
180 days after the Closing Date.
To the extent necessary to ensure that the Registration Statement
is available for sales of Registrable Securities by the Holders thereof entitled
to the benefit of this Section 3(a), the Company shall use its best efforts to
keep any Registration Statement required by this Section 3(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Section 4(a) hereof and in conformity with the requirements of
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, until the earlier of (A) the
Expiration Date and (B) the first date as of which all Warrants have been
exercised by the Holders thereof; provided that such obligation shall expire
before such date if the Company delivers to the Warrant Agent a written opinion
of counsel to the Company (which opinion of counsel shall be satisfactory to the
Company) that all Holders of Warrants and Warrant Shares may resell the Warrants
and the Warrant Shares without registration under the Act and without
restriction as to the manner, timing or volume of any such sale. Notwithstanding
the foregoing, the Company shall not be required to amend or supplement any
Registration Statement, any related prospectus or any document incorporated
therein by reference, or otherwise keep any Registration Statement continuously
effective for a period (a "Black Out Period") not to exceed, for so long as this
Agreement is in effect, two 45 consecutive-day periods (except for the 45
consecutive-day period immediately before the Expiration Date) in any calendar
year, in the event that the Company shall be (i) engaged in a material
acquisition, disposition or reorganization, or other material business
transaction, (ii) such transaction is required to be disclosed in the applicable
Registration Statement, Prospectus or amendment or supplement thereto, or the
failure by the Company to disclose such transaction in the applicable
Registration Statement, Prospectus or amendment or supplement thereto, would
cause such Registration Statement to contain an untrue statement of material
fact or omit to state a material fact necessary in order to make the statement
therein not misleading, in light of the circumstances under which they were
made, (iii) such information regarding the existence of such transaction has not
then been publicly disclosed by or on behalf of the Company and (iv) the Company
determines in its good faith judgment that the disclosure of such event at such
time would have a material adverse effect on the business, operations or
prospects of the Company; provided that such Black Out Period shall be extended
for any period, not to exceed an aggregate
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of 30 days in any calendar year, during which the Commission is reviewing any
proposed amendment or supplement to the Registration Statement, any related
prospectus or any document incorporated therein by reference which has been
filed by the Company; and provided, further, if any Black Out Period is in
effect during the three months prior to April 15, 2010 the Expiration Date shall
be extended by one day for each day that any Black Out Period is in effect
during such three month period.
(b) Provision by Holders of Certain Information in Connection
with the Registration Statement. No Holder of Registrable Securities may include
any of its Registrable Securities for resale in any Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Company
in writing, within 20 days after receipt of a request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for
use in connection with any Registration Statement or Prospectus or preliminary
Prospectus included therein. Each selling Holder agrees to promptly furnish
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading. No
such information shall be required with respect to the registration of the
issuance of the Warrant Shares upon exercise of the Warrants.
4. REGISTRATION PROCEDURES
(a) In connection with the Registration Statement and any related
Prospectus required by this Agreement and, where applicable, subject to any
Black Out Period, the Company shall:
(i) use its best efforts to effect such registration to
permit the sale of the Registrable Securities being sold in
accordance with the intended method or methods of distribution
thereof (as indicated in the information furnished to the Company
pursuant to Section 3(c) hereof), and pursuant thereto the
Company will use its best efforts to prepare and file with the
Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be
available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with
the provisions hereof;
(ii) use its best efforts to keep such Registration
Statement continuously effective. Upon the occurrence of any
event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain an untrue statement
of material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or (B) not to be
effective and usable for resale of Registrable Securities during
the period required by this Agreement, the Company shall file
promptly an appropriate amendment to such Registration Statement
or a supplement to the Prospectus, as applicable, curing such
defect, and, in the case of an amendment, use its reasonable best
efforts to cause such amendment to be declared effective as soon
as practicable;
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<PAGE> 6
(iii) use its best efforts to prepare and file with the
Commission such amendments and post-effective amendments to the
applicable Registration Statement as may be necessary to keep
such Registration Statement effective for the applicable period
set forth in Section 3; cause the Prospectus contained therein to
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and
to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions
of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus contained
therein;
(iv) advise the Placement Agents promptly and, if
requested by the Placement Agents, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request
by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the
Registrable Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding
purposes, and (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of
any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from
qualification of the Registrable Securities under state
securities or Blue Sky laws, the Company shall use its reasonable
best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
(v) subject to Section 4(a)(ii), if any fact or event
contemplated by Section 4(a)(iv)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Registrable Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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<PAGE> 7
(vi) furnish to the Placement Agents, promptly after the
time of filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements (excluding Prospectus Supplements relating solely to
the resale of Registrable Securities under a Registration
Statement) to any such Registration Statement or Prospectus
(excluding all documents incorporated by reference).
(vii) make available, at reasonable times, for inspection
by the Placement Agents and any attorney or accountant retained
by the Placement Agents, all financial and other records,
pertinent corporate documents of the Company, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by the Placement Agents or then
attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to
the filing thereof and prior to its effectiveness;
(viii) if requested by the Placement Agents, promptly
include in any Registration Statement or Prospectus, pursuant to
a supplement or post-effective amendment if necessary, such
information as the Placement Agents may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Registrable
Securities and the use of the Registration Statement or
Prospectus for market-making activities; and make all required
filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or
post-effective amendment;
(ix) furnish to the Placement Agents and each Holder, upon
request, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each
amendment thereto including, upon request and without change, all
documents incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference);
(x) deliver to the Placement Agents and each Holder,
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto
as the Placement Agents or such Holder reasonably may request;
the Company hereby consents to the use (in accordance with law
and subject to Section 4(b) hereof) of the Prospectus and any
amendment or supplement thereto by each selling Person in
connection with the offering and the sale of the Registrable
Securities covered by the Prospectus or any amendment or
supplement thereto and all market-making activities of the
Placement Agents, as the case may be;
(xi) upon the request of the Placement Agents, enter into
such agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Registrable Securities pursuant to any
applicable Registration Statement contemplated by this Agreement
as may be requested by the Placement Agents in connection with
any sale or resale pursuant
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<PAGE> 8
to any applicable Registration Statement but only in connection
with an underwritten public offering expected to result in not
less than $5 million in net proceeds to the Holder of the
Warrant Shares. In such connection, the Company shall:
(A) upon request of the Placement Agents, furnish
(or in the case of paragraphs (2) and (3), use its best
efforts to cause to be furnished) to the Placement Agents,
upon the effectiveness of the Registration Statement:
(1) a certificate, dated such date,
signed on behalf of the Company by (x) the
President or any Vice President and (y) a
principal financial or accounting officer of the
Company, confirming, as of the date thereof, the
matters set forth in Sections 1, 5(a)(i), and
5(a)(ii) of the Placement Agreement and such
other similar matters as such Person may
reasonably request;
(2) an opinion, dated the date of
effectiveness of the Registration Statement, of
counsel for the Company covering matters
customary for underwritten public offerings of
equity securities, and in any event including a
statement to the effect that such counsel has
participated in conferences with officers and
other representatives of the Company,
representatives of the independent public
accountants for the Company and have considered
the matters required to be stated therein and
the statements contained therein, although such
counsel has not independently verified the
accuracy, completeness or fairness of such
statements; and that such counsel advises that,
on the basis of the foregoing (relying as to
materiality to the extent such counsel deems
appropriate upon the statements of officers and
other representatives of the Company and without
independent check or verification), no facts
came to such counsel's attention that caused
such counsel to believe that the applicable
Registration Statement, at the time such
Registration Statement or any post-effective
amendment thereto became effective contained an
untrue statement of a material fact or omitted
to state a material fact required to be stated
therein or necessary to make the statements
therein not misleading, or that the Prospectus
contained in such Registration Statement as of
its date contained an untrue statement of a
material fact or omitted to state a material
fact necessary in order to make the statements
therein, in the light of the circumstances under
which they were made, not misleading. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no
responsibility for, and has not independently
verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules
and other financial data included or
incorporated by reference in or omitted from any
Registration
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Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated
the date of effectiveness of the Registration
Statement, from the Company's independent
accountants, in the customary form and covering
matters of the type customarily covered in
comfort letters to underwriters in connection
with underwritten offerings of equity
securities; and
(B) deliver such other documents and certificates
as may be reasonably requested by the Placement Agents to
evidence compliance with the matters covered in clause (A)
above and with any customary conditions contained in any
agreement entered into by the Company pursuant to this
clause;
(xii) prior to any public offering of Registrable
Securities, cooperate with the selling Holders and their counsel
in connection with the registration and qualification of the
Registrable Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders may reasonably request
and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration
Statement; provided that the Company shall not be required to
register or qualify as a foreign corporation where it is not now
so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement,
in any jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Registrable
Securities that will result in such securities no longer being
Registrable Securities, cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and to register such Registrable Securities in such
denominations and such names as the selling Holders may request
at least two Business Days prior to such sale of Registrable
Securities;
(xiv) use its best efforts to cause the disposition of the
Registrable Securities covered by the Registration Statement to
be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller
or sellers thereof to consummate the disposition of such
Registrable Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Registrable Securities
not later than the effective date of a Registration Statement
covering such Registrable Securities and provide the Warrant
Agent with certificates for the Registrable Securities which are
in a form eligible for deposit with The Depository Trust Company;
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<PAGE> 10
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) covering a twelve-month period
beginning after the effective date of the Registration Statement
(as such term is defined in Rule 158(c) under the Act); and
(xvii) provide promptly to the Placement Agents, upon
request, each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of
a Registrable Security and each of the Placement Agents agrees that, upon
receipt of the notice from the Company of the commencement of a Black Out Period
(in each case, a "Black Out Notice") or of the existence of any fact of the kind
described in Section 4(a)(iv)(D) hereof, other than the existence of any fact
for which the Company could issue a Black Out Notice (a "Suspension Notice"),
such Person will forthwith discontinue disposition of Registrable Securities
pursuant to the applicable Registration Statement until such Person is advised
in writing by the Company of the termination of the Black Out Period or the
Suspension Notice, as applicable. Each Person receiving a Black Out Notice or
Suspension Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Person's possession
which have been replaced by the Company with more recently dated Prospectuses or
(ii) deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Person's possession of the Prospectus
covering such Registrable Securities that was current at the time of receipt of
the Black Out Notice.
5. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing Prospectuses (whether
for sales, market-making or otherwise), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company; (v) all
application and filing fees in connection with listing the Warrant Shares on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will not be responsible for the payment of any brokerage
commissions, underwriting discounts or other expenses of the Holders.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
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6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each
Holder, its directors, officers and each Person, if any, who controls such
Holder (within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses incurred
by the Holder in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto) provided by the Company to
any Holder or any purchaser of Registrable Securities, or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any of
the Holders furnished to the Company in writing by any of the Holders; provided,
however, that the foregoing indemnity agreement with respect to any prospectus
shall not inure to the benefit of any of the Holders from whom the person
asserting any such losses, claims, damages or liabilities purchased Registrable
Securities, or any person controlling such Holder, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Holder to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Registrable Securities to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 4(a)(v)
hereof.
(b) Each Holder of Registrable Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the other selling
Holders, and each of their respective directors and officers, and each Person,
if any, who controls (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) the Company and the other selling Holders, to the same
extent as the foregoing indemnity from the Company set forth in Section 6(a)
hereof, but only with reference to information relating to such Holder furnished
in writing to the Company by such Holder expressly for use in any Registration
Statement (or any amendment thereto). In no event shall any Holder, its
directors, officers or any Person who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Registrable Securities
pursuant to a Registration Statement exceeds (i) the amount paid by such Holder
for such Registrable Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to Section 6(a) or 6(b) (the "indemnified
party"), the indemnified party shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing, and the
indemnifying party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all reasonable fees and expenses of such counsel, as incurred (except
that, in the case of any action in respect of
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<PAGE> 12
which indemnity may be sought pursuant to both Sections 6(a) and 6(b), a Holder
shall not be required to assume the defense of such action pursuant to this
Section 6(c), but may employ separate counsel and participate in the defense
thereof, but the fees and expenses of such counsel, except as provided below,
shall be at the expense of the Holder). Any indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified party, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. In any such case, the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction (a) be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 6(a), and by
the Company, in the case of parties indemnified pursuant to Section 6(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party for such
fees and expenses of counsel in accordance with such request prior to the date
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which such indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to herein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and of the Holders, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by the Holders, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or
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omission. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to above shall be
deemed to include, subject to the limitations set forth in this Section, any
legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the preceding paragraph. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any matter, including any action that could have
given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 6, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Registrable Securities
pursuant to a Registration Statement exceeds (i) the amount paid by such Holder
for such Registrable Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective principal amount of
Registrable Securities held by each Holder.
The Company agrees that the indemnity and contribution provisions
of this Section 6 shall apply to the Placement Agents to the same extent, on the
same conditions, as it applies to Holders.
7. RULE 144
The Company agrees with each Holder, for so long as any
Registrable Securities remain outstanding and during any period in which the
Company is subject to Section 13 or 15(d) of the Exchange Act, to make all
filings required thereby in a timely manner in order to permit resales of such
Registrable Securities pursuant to Rule 144.
8. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any
failure by the Company to comply with its obligations under Section 3 hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 3
hereof. The Company further
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agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
this Section 8(c), the Company has obtained the written consent of Holders of
all outstanding Registrable Securities, and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Registrable Securities
(excluding Registrable Securities held by the Company, the Guarantor, or any of
their respective Affiliates); provided that this Agreement may be amended or
supplemented without the consent of any Holder in the same manner and to the
same extent to which the Warrant Agreement may be amended or supplemented
pursuant to Section 22 thereof.
(d) Third-Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements granting rights to Holders made hereunder
between the Company, on the one hand, and the Placement Agents, on the other
hand, and shall have the right to enforce such agreements directly to the extent
they may deem such enforcement necessary or advisable to protect their rights or
the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Warrant Agent, with a copy to the Warrant Agent;
and
(ii) if to the Company:
Leap Wireless International, Inc.
10307 Pacific Center Court
San Diego, CA 92191
Telecopier: (858) 882-6040
Attention: General Counsel
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
13
<PAGE> 15
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Warrant Agent at the
address specified in Warrant Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Placement Agreement or the Warrant
Agreement. If any transferee of any Holder shall acquire Registrable Securities
in any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on resale set forth in
this Agreement and, if applicable, the Placement Agreement, and such Person
shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
14
<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ James E. Hoffmann
--------------------------------
Name: James E. Hoffmann
Title: Senior Vice President
MORGAN STANLEY & CO. INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
ABN AMRO INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
By: Morgan, Stanley & Co. Incorporated
By: /s/ Bryan W. Andrzejewski
------------------------------------
Name: Bryan W. Andrzejewski
Title: Principal
S-1
<PAGE> 1
Exhibit 10.22.1
AMENDMENT NO. 1 TO
1999 STOCK OPTION PLAN OF
CRICKET COMMUNICATIONS, INC.
This Amendment No. 1 (this "Amendment") to Cricket Communications Inc.
1999 Stock Option Plan (the "Plan") is made effective as of this 8th day of
February, 2000 by Cricket Communications Holdings, Inc. (the "Company").
A. Cricket Communications, Inc., now known as Cricket Communications
Holdings, Inc., established the Plan to provide for grants of stock options to
directors, key employees and consultants of the Company and its affiliates; and
B. The Board of Directors has approved an amendment to the Plan to allow
for the transfer of stock options by all Vice Presidents and higher ranking
employees of the Company or any of its Affiliates as provided in this Amendment.
NOW, THEREFORE, the Plan is amended as follows:
1. The heading to the Plan and Section 2(f) of the Plan are hereby
amended by deleting the phrase "Cricket Communications, Inc." and by replacing
the same with the phrase "Cricket Communications Holdings, Inc."
2. Section 6(f) of the Plan is hereby deleted and replaced with the
following:
"A Nonstatutory Stock Option shall be transferable to the extent
provided in the Option Agreement relating to such Option, provided, however, as
long as the Company is relying upon the exemption contained in California
Corporations Code Section 25102(o) (or any successor section) in connection with
the grant of Options under this Plan and the issuance of common stock upon the
exercise thereof, Nonstatutory Stock Options may be transferred only to the
extent permitted by California Code of Regulations Section 260.140.41(d), as
amended from time to time, or any successor statute. If the Option Agreement
relating to any Nonstatutory Stock Option does not provide for transferability,
then such Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing provisions
of this subsection 6(f), the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option."
3. After the date of this Amendment, each reference in the Plan to the
"Plan" shall mean and refer to the Plan as amended hereby. Except as provided in
this Amendment, the Plan and all related documents shall remain in full force
and effect and are ratified and confirmed.
IN WITNESS WHEREOF, this Amendment No. 1 to the Plan has been executed
as of the date set forth above.
CRICKET COMMUNICATIONS HOLDINGS, INC.
By: /s/ Susan G. Swenson
-----------------------------------
Susan G. Swenson, President and CEO
<PAGE> 1
Exhibit 10.26.10
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
FIRST AMENDMENT dated as of November 24, 1999 (this
"Amendment"), to the Credit Agreement (the "Credit
Agreement") dated as of September 20, 1999, among
Cricket Communications, Inc. ("Holdings"), Cricket
Wireless Communications, Inc. (the "Borrower"), and
Lucent Technologies, Inc., as administrative agent.
Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the
Credit Agreement.
WHEREAS the Borrower has requested that certain provisions of
the Credit Agreement be amended in certain respects, and the Lenders and the
Administrative Agent are willing to amend such provisions for the limited
purposes described herein on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, for and in consideration of the mutual
agreements contained in this Amendment and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Amendments. (a) The Table of Contents to the Credit
Agreement is hereby amended by inserting "Schedule 1.01(a) -- Airgate Licenses"
immediately before "Schedule 2.01".
(b) The Credit Agreement is hereby amended by attaching Exhibit A hereto
as Schedule 1.01(a) thereto.
(c) The preamble to the Credit Agreement is hereby amended by:
(i) deleting "CRICKET COMMUNICATIONS INC." therefrom and
substituting "CRICKET COMMUNICATIONS HOLDINGS, INC." in lieu thereof;
and
(ii) deleting "CRICKET WIRELESS COMMUNICATIONS INC." therefrom
and substituting "CRICKET COMMUNICATIONS, INC." in lieu thereof.
(d) Section 1.01 of the Credit Agreement is hereby amended by:
(i) inserting after the definition of "Agents" and before the
definition of "Alternate Base Rate" the following definition:
<PAGE> 2
"'Airgate Debt' means Permitted License Acquisition
Debt, in an amount not exceeding $7,100,000, owed to
Airgate Wireless, LLC as consideration for the licenses
listed on Schedule 1.01(a);
(ii) modifying the definition of "Borrower" by deleting
"Cricket Wireless Communications, Inc." therefrom and
substituting "Cricket Communications, Inc." in lieu thereof; and
(iii) modifying the definition of "Holdings" by deleting
"Cricket Communications, Inc." therefrom and substituting
"Cricket Communications Holdings, Inc." in lieu thereof.
(e) Paragraph (a) of Section 2.02 of the Credit Agreement is hereby
amended by inserting the following after "Availability Date)" and before "." in
the first sentence of such paragraph:
"; provided that if a Commitment is assigned by Lucent (in its capacity
as a Lender) after a receipt of a Borrowing Request in order to permit
the assignee to fund all or a portion of the Loan that otherwise would
have been funded by Lucent in connection with such Borrowing Request
(any such assigned Commitment, a "Fronting Commitment"), Lucent's
ratable share of such Borrowing shall equal (w) Lucent's ratable share
of such Borrowing calculated without giving effect to such assignment
minus (x) the amount of such Fronting Commitment, and the assignee's
ratable portion of such Borrowing shall equal the sum of (y) such
assignee's ratable share of such Borrowing calculated without giving
effect to any assignment under which such assignee was assigned a
Fronting Commitment plus (z) the amount of such Fronting Commitment".
(f) Clause (c) of Section 6.03 of the Credit Agreement is hereby deleted
and the following substituted therefor in its entirety:
"(c) The Borrower will conduct its business as an operating
company or through one or more operating Subsidiaries, which, together
with the Borrower, shall own all equipment and other assets (other than
FCC Licenses and Equipment Site Interests) used to conduct such
business."
<PAGE> 3
(g) Clause (d) of Section 6.03 of the Credit Agreement is hereby deleted
in its entirety and the following substituted therefor:
"(d) Each Subsidiary will be wholly owned by the Borrower and
will be either (i) an operating Subsidiary formed for the purpose of
conducting business in one or more geographical markets as contemplated
by paragraph (c) above or (ii) a Real Estate Subsidiary."
(h) Clause (i) of Section 6.01 of the Credit Agreement is hereby amended
by inserting the following after "* * * " and before ".":
"; provided further that for the purposes of sub-clause (ii) of this
clause (i) "Permitted License Acquisition Debt" shall not include any
portion of Airgate Debt that is repaid prior to September 20, 2000".
(i) Paragraph (b) of Section 9.04 of the Credit Agreement is hereby
amended by adding the following after "otherwise consents" and before "," in
clause (iii) of such paragraph:
"(except that this clause shall not prohibit the assignment of a
Fronting Commitment as contemplated by Section 2.02 in an amount greater
than or equal to $1,000,000)".
SECTION 2. Representations and Warranties. Holdings and the
Borrower hereby represent and warrant to the Lenders and the Administrative
Agent that (a) this Amendment has been duly authorized, executed and delivered
by Holdings and the Borrower and each of this Amendment and the Credit Agreement
as amended hereby constitutes a legal, valid and binding obligation of Holdings
and the Borrower, enforceable in accordance with its terms, (b) as of the date
hereof, and after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing and (c) the representations and
warranties of Holdings and the Borrower contained in the Credit Agreement, other
than those expressly made as of a specific date, are true and correct in all
material respects as if made on the date hereof.
SECTION 3. Conditions to Effectiveness. This Amendment shall
become effective as of the date first set forth above only upon the occurrence
of the following conditions precedent:
[* * * Deleted pursuant to Confidential Treatment Request.]
<PAGE> 4
(a) The Administrative Agent shall have received duly executed
counterparts of this Amendment which, when taken together, bear the
signatures of all the parties hereto.
(b) The Administrative Agent and each Lender shall have received
all fees and other amounts then due and payable to it, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower in connection with
this Amendment.
SECTION 4. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 5. Credit Agreement. Except as expressly amended hereby,
the Credit Agreement shall continue in full force and effect in accordance with
the provisions thereof. Any reference in the Credit Agreement, or in any
documents or instruments required thereunder or annexes or schedules thereto,
referring to the Credit Agreement shall be deemed to refer to the Credit
Agreement as amended by this Amendment.
SECTION 6. Expenses. The Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the fees, changes and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
SECTION 7. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract. Delivery of an
executed counterpart of a signature page by facsimile transmission
<PAGE> 5
shall be effective as delivery of a manually executed counterpart of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first written above.
CRICKET COMMUNICATIONS
HOLDINGS, INC. (formerly known
as Cricket Communications, Inc.),
by
/s/ Stefan C. Karnavas
----------------------------------
Name: Stefan C. Karnavas
Title: Vice President
CRICKET COMMUNICATIONS, INC.
(formerly known as Cricket
Wireless Communications Inc.),
by
/s/ Stefan C. Karnavas
----------------------------------
Name: Stefan C. Karnavas
Title: Vice President
LUCENT TECHNOLOGIES, INC.,
individually and as
Administrative Agent,
by
/s/ Susan M. Colross
----------------------------------
Name:
Title:
<PAGE> 6
EXHIBIT A
Schedule 1.01(a)
Airgate Licenses
<TABLE>
<CAPTION>
Market Name BTA Block
- ----------- --- -----
<S> <C> <C>
Charlotte, NC 74 F
Greensboro, NC 174 F
Hickory, NC 189 F
Greenswood, NC 178 F
</TABLE>
<PAGE> 1
Exhibit 10.26.11
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SECOND AMENDMENT dated as of January 27, 2000,
to the Credit Agreement (as amended, the "Credit
Agreement") dated as of September 20, 1999, among
Cricket Communications Holdings, Inc. ("Holdings"),
Cricket Communications, Inc. (the "Borrower"), the
lenders party thereto and Lucent Technologies, Inc., as
administrative agent. Capitalized terms used herein and
not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
WHEREAS Holdings and the Borrower have requested that certain
provisions of the Credit Agreement be amended in certain respects, and the
Lenders and the Administrative Agent are willing to amend such provisions on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual
agreements contained in this Amendment and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Amendments. (a) Section 1.01 of the Credit Agreement
is hereby amended by deleting the definition of "Cash Interest Expense" and
replacing it with the following definition:
"Cash Interest Expense" means, for any period, the sum of (a)
interest expense of the Borrower and the Subsidiary Loan Parties for
such period, determined on a consolidated basis in accordance with GAAP,
excluding (to the extent otherwise included therein) (i) amortization of
debt discounts and loan fees, (ii) interest expense in respect of any
Indebtedness that constitutes a Primary Subordinated Obligation and
(iii) any other interest that is not required to be paid during such
period or within one year after the end of such period, plus (b) the
aggregate amount of Restricted Payments made during such period pursuant
to clauses (d) or (e) of Section 6.06.
(b) Section 1.01 of the Credit Agreement is hereby amended by
inserting after the definition of "Eligible
<PAGE> 2
Assignee" and before the definition of "Eligible Secured Debt" the
following definition:
"Eligible Parent Debt" means Indebtedness of the Parent in
respect of debt securities issued in an underwritten public offering or
private placement pursuant to Rule 144A; provided that (a) such
Indebtedness shall not mature, nor shall any scheduled repayment of any
principal thereof be due, nor shall such Indebtedness be subject to any
mandatory redemption or required repurchase, conversion or exchange
(whether upon the occurrence of any contingency or otherwise, but
excluding contingent redemption offer provisions in the event of a
"change of control" or "asset sale" that are customary for similar debt
securities), in each case prior to the date that is one year after the
Maturity Date, (b) any covenants, events of default and similar
provisions relating thereto shall be reasonably satisfactory to the
Required Lenders, (c) the obligations of the Parent in respect thereof
shall not be Guaranteed by any Loan Party (except for Holdings) or
secured by any Lien (except for a Lien on the collateral account
established to fund interest payments as provided in clause (d) below)
and (d) by its terms, no interest shall be payable in respect of such
Indebtedness (other than (i) by the issuance of additional Eligible
Parent Debt or (ii) out of a collateral account funded by the Parent
from the net proceeds of the issuance of such Indebtedness in an amount
sufficient to pay such cash interest) prior to October 1, 2003 and (e)
the net proceeds of such Indebtedness (other than the portion, if any,
of such net proceeds (i) applied to fund any collateral account
established to fund interest payments as provided above or (ii) not
exceeding * * * to be used to purchase FCC Licenses (either directly as
an asset purchase or as a portion of the consideration for the
acquisition of an entity that owns an FCC License, such portion not to
exceed the value of such FCC License) which are contributed to a License
Subsidiary prior to September 30, 2000; provided that all proceeds
described in this clause (ii) shall be held in an interest-bearing
account until so used and, to the extent such proceeds and the accrued
interest thereon are not used to purchase FCC Licenses prior to
September 30, 2000, such unused proceeds and accrued interest shall be
contributed to the Borrower as common equity on September 30, 2000) are
contributed by the Parent to Holdings as common equity or are used to
repay, in an amount not to exceed $51,000,000, a promissory note issued
by the Parent to
[* * * Deleted pursuant to Confidential Treatment Request.]
<PAGE> 3
Holdings as consideration for the purchase price of equity in Holdings
and then, in each case, contributed by Holdings to the Borrower as
common equity.
(c) Section 1.01 of the Credit Agreement is hereby amended by deleting
clause (f) of the definition of "Excess Cash Flow" and replacing it with the
following:
(f) the aggregate principal amount of Long-Term Indebtedness
repaid or prepaid by the Borrower and the Subsidiary Loan Parties during
such fiscal year, excluding (i) Eligible Secured Debt prepaid pursuant
to Section 2.09(c) or (d), and (ii) repayments or prepayments of
Long-Term Indebtedness financed by incurring other Long-Term
Indebtedness; minus
(g) the aggregate amount of Restricted Payments made during such
fiscal year pursuant to clauses (d) or (e) of Section 6.06.
(d) Paragraph (a) of Section 2.08 of the Credit Agreement is hereby
deleted in its entirety and replaced by the following:
(a) Subject to adjustment pursuant to paragraph (c) of this
Section, the Borrower shall repay Borrowings on each Payment Date set
forth below in an aggregate amount equal to the percentage set forth
opposite such Payment Date multiplied by an amount equal to the sum of
all Loans made during the Availability Period (whether or not previously
repaid):
<TABLE>
<CAPTION>
Payment Date Percentage
------------ ----------
<S> <C>
Each of first, second, third
and fourth 2.50%
Each of fifth, sixth, seventh and
eighth 3.75%
Each of ninth, tenth, eleventh and
twelfth 5.00%
Each of thirteenth, fourteenth,
fifteenth and sixteenth
6.25%
Each of seventeenth, eighteenth,
nineteenth and twentieth
7.50%
</TABLE>
<PAGE> 4
(e) Section 5.15 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 5.15. Intercompany Agreements. Each of Holdings and the
Borrower agrees that, prior to March 31, 2000, all intercompany
agreements and arrangements between Holdings, the Borrower or any
Subsidiary Loan Party, on the one hand, and the Parent or any other
Affiliate of Holdings, the Borrower or any Subsidiary Loan Party (other
than Holdings, the Borrower or any Subsidiary Loan Party), on the other
hand, including with respect to tax sharing, management fees or sharing
of facilities, services or employees, shall be completed on terms and
conditions reasonably satisfactory to the Required Lenders and shall be
set forth in written agreements (the "Intercompany Agreements")
reasonably satisfactory in form and substance to the Required Lenders,
and true and correct copies of such Intercompany Agreements shall have
been delivered to the Lenders.
(f) Section 6.06 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.06. Restricted Payments. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary Loan Party to,
declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except (a) the Borrower may declare and pay
dividends with respect to its capital stock payable solely in additional
shares of its common stock, (b) Subsidiaries may declare and pay
dividends and distributions to the Borrower, (c) after the Parent pays
the ChaseTel Earnout (but in any event not prior to January 1, 2006),
the Borrower may make Restricted Payments in an aggregate amount not
exceeding the lesser of $41,000,000 and the amount of such ChaseTel
Earnout paid by the Parent (and Holdings may make Restricted Payments
with the proceeds of any such Restricted Payments received by Holdings),
provided that at the time of and after giving effect to any such
Restricted Payment (i) no Default shall have occurred and be continuing,
(ii) the Borrower shall be in compliance with Sections 6.18 and 6.19
determined on a pro forma basis as of the last day of the most recently
ended calendar quarter of the Borrower for which financial statements
are available as though such payment had been made on the first day of
each relevant period for testing compliance with such covenant, and
(iii) the ratio of Annualized EBITDA to Fixed Charges
<PAGE> 5
shall be greater than or equal to 1.0 to 1.0, (d) on or after the
earlier of April 1, 2004 and the date after the end of the Availability
Period on which the Borrower shall have repaid at least 21.25% of the
aggregate principal amount of the Loans that were outstanding at the end
of the Availability Period, the Borrower may make Restricted Payments at
the time that any scheduled interest payment is due in respect of any
Permitted Holdings Debt or Eligible Parent Debt (and, in the case of
Restricted Payments made in respect of such interest payments on
Eligible Parent Debt, Holdings may make Restricted Payments with the
proceeds of any such Restricted Payments received by Holdings), in an
aggregate amount not exceeding the aggregate amount of such interest
payment; provided that (i) at the time of and after giving effect to any
such Restricted Payment, (A) no Default shall have occurred and be
continuing and (B) the ratio of Annualized EBITDA to Fixed Charges shall
be greater than or equal to 1.0 to 1.0, (ii) such Restricted Payments
shall be applied to make such interest payment and (iii) the aggregate
amount of Restricted Payments made in reliance upon this clause (d)
shall not exceed $35,000,000 during any 12-month period, (e) on or after
the earlier of June 30, 2005 and the date after the end of the
Availability Period on which the Borrower shall have repaid at least 45%
of the aggregate principal amount of the Loans that were outstanding at
the end of the Availability Period, the Borrower may make Restricted
Payments at the time that any scheduled interest payment is due in
respect of any Permitted Holdings Debt or Eligible Parent Debt (and, in
the case of Restricted Payments made in respect of such interest
payments on Eligible Parent Debt, Holdings may make Restricted Payments
with the proceeds of any such Restricted Payments received by Holdings),
in an aggregate amount not exceeding the aggregate amount of such
interest payment; provided that (i) at the time of and after giving
effect to any such Restricted Payment, (A) no Default shall have
occurred and be continuing and (B) the ratio of Annualized EBITDA to
Fixed Charges shall be greater than or equal to 1.2 to 1.0, (ii) such
Restricted Payments shall be applied to make such interest payment and
(iii) the aggregate amount of Restricted Payments made in reliance upon
this clause (e) together with the aggregate amount of Restricted
Payments made in reliance upon clause (d) above shall not exceed
$100,000,000 during any 12-month period and (f) the Borrower and
Holdings may make Restricted Payments the proceeds of which are
contemporaneously used to purchase FCC Licenses (either
<PAGE> 6
directly as an asset purchase or as a portion of the consideration for
the acquisition of an entity that owns an FCC License, such portion not
to exceed the value of such FCC License) which are contributed to a
License Subsidiary within one Business Day of the date that such
Restricted Payments are made.
(g) Section 6.14 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.14. Amendment of Material Documents. Neither Holdings
nor the Borrower will, nor will they permit any Subsidiary Loan Party
to, amend, modify or waive any of its rights under (a) any Intercompany
Agreement, (b) its certificate of incorporation, by-laws or other
organizational documents, (c) the ChaseTel Purchase Agreement, (d) the
ChaseTel Credit Agreement or any agreement or instrument securing,
guaranteeing or evidencing any Permitted ChaseTel Financing (other than
amendments or modifications that do not adversely effect any Permitted
ChaseTel Financings) or (e) any agreement or instrument governing or
evidencing any Permitted Holdings Debt, FCC Debt or Eligible Parent
Debt.
(h) Section 6.15 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.15. Capital Expenditures. The Borrower will not permit
the aggregate amount of Capital Expenditures made by the Borrower and
its Subsidiaries in any calendar year to exceed the amount set forth
below with respect to such calendar year:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1999 $ 74,000,000
2000 $585,000,000
2001 $469,000,000
2002 $484,000,000
2003 $206,000,000
2004 and thereafter $115,000,000
</TABLE>
(i) Section 6.16 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.16. Covered POPS. The Borrower will not permit the
total number of Covered POPS at any
<PAGE> 7
time during any period set forth below to be less than the number set
forth below with respect to such period:
<TABLE>
<CAPTION>
Period Number
------ ---------
<S> <C>
January 1, 2000 to and
including March 31, 2000 275,000
April 1, 2000 to and
including June 30, 2000 1,150,000
July 1, 2000 to and
including September 30, 2000 1,500,000
October 1, 2000 to and
including December 31, 2000 1,500,000
January 1, 2001 to and
including March 31, 2001 7,500,000
April 1, 2001 to and
including June 30, 2001 7,500,000
July 1, 2001 to and
including September 30, 2001 11,500,000
October 1, 2001 to and
including December 31, 2001 13,300,000
January 1, 2002 to and
including December 31, 2002 13,400,000
January 1, 2003 to and
including December 31, 2003 20,500,000
January 1, 2004 to and
including December 31, 2004 21,100,000
January 1, 2005 to and
including December 31, 2005 21,600,000
January 1, 2006 and thereafter 22,000,000
</TABLE>
(j) Section 6.17 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.17. Subscribers. The Borrower will not permit the
total number of Subscribers at any
<PAGE> 8
time during any period set forth below to be less than the number set
forth below opposite such period:
<TABLE>
<CAPTION>
Period Number
------ ---------
<S> <C>
January 1, 2000 to and
including March 31, 2000 16,500
April 1, 2000 to and
including June 30, 2000 23,000
July 1, 2000 to and
including September 30, 2000 36,000
October 1, 2000 to and
including December 31, 2000 56,000
January 1, 2001 to and
including March 31, 2001 145,000
April 1, 2001 to and
including June 30, 2001 216,000
July 1, 2001 to and
including September 30, 2001 323,000
October 1, 2001 to and
including December 31, 2001 475,000
January 1, 2002 to and
including December 31, 2002 725,000
January 1, 2003 to and
including December 31, 2003 1,400,000
January 1, 2004 to and
including December 31, 2004 2,000,000
January 1, 2005 to and
including December 31, 2005 2,450,000
January 1, 2006 and thereafter 2,700,000
</TABLE>
(k) Section 6.19 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.19. Total Indebtedness to Annualized EBITDA. The
Borrower will not permit the ratio of Total Indebtedness to Annualized
EBITDA as of
<PAGE> 9
any date during any period set forth below to exceed the ratio set forth
below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----------
<S> <C>
January 1, 2003 to and
including March 31, 2003 15.0 to 1.0
April 1, 2003 to and
including June 30, 2003 10.0 to 1.0
July 1, 2003 to and
including September 30, 2003 7.0 to 1.0
October 1, 2003 to and
including December 31, 2003 5.5 to 1.0
January 1, 2004 and thereafter 5.0 to 1.0
</TABLE>
(l) Section 6.20 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.20. Consolidated EBITDA to Cash Interest Expense. The
Borrower will not permit the ratio of Consolidated EBITDA to Cash
Interest Expense for any period of four consecutive calendar quarters
ending during any period set forth below to be less than the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----------
<S> <C>
January 1, 2003 to and
including March 31, 2003 .90 to 1.0
April 1, 2003 to and
including June 30, 2003 1.10 to 1.0
July 1, 2003 to and
including September 30, 2003 1.20 to 1.0
October 1, 2003 to and
including December 31, 2003 1.60 to 1.0
January 1, 2004 and thereafter 3.00 to 1.0
</TABLE>
<PAGE> 10
(m) Section 6.21 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.21. Minimum Gross Revenue. (a) After the earlier to
occur of (i) the last day of the first full calender quarter ending
after the consummation of the ChaseTel Acquisition in accordance with
Section 6.04 and (ii) September 30, 2000, the Borrower will not permit
the consolidated revenue of the Borrower and the Subsidiary Loan Parties
during any calendar quarter ending on a date set forth below to be less
than the amount set forth below opposite such date:
<TABLE>
<CAPTION>
Calendar Quarter Ending Amount
----------------------- -----------
<S> <C>
December 31, 1999 $ 1,330,000
March 31, 2000 $ 3,100,000
June 30, 2000 $ 5,200,000
September 30, 2000 $ 8,100,000
December 31, 2000 $21,000,000
March 31, 2001 $31,200,000
June 30, 2001 $44,700,000
September 30, 2001 $65,900,000
</TABLE>
(b) The Borrower will not permit the consolidated revenue of the
Borrower and the Subsidiary Loan Parties during any calendar year ending
on a date set forth below to be less than the amount set forth below
opposite such date:
<TABLE>
<CAPTION>
Calendar Year Ending Amount
-------------------- ------
<S> <C>
December 31, 2001 $ 242,300,000
December 31, 2002 $ 554,600,000
December 31, 2003 $ 831,600,000
December 31, 2004 $1,073,200,000
December 31, 2005
</TABLE>
<PAGE> 11
<TABLE>
<S> <C>
and thereafter $1,200,000,000
</TABLE>
(n) Section 6.22 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following:
SECTION 6.22. Activities of Holdings. Holdings will not engage
in any business or activity other than the ownership of all the
outstanding Equity Interests of the Borrower and activities incidental
thereto. Holdings will not own or acquire any assets (other than shares
of common stock of the Borrower, cash, Permitted Investments and, prior
to the issuance of Eligible Parent Debt, a promissory note issued by the
Parent to Holdings as consideration for the purchase price of equity in
Holdings) or incur any liabilities (other than liabilities under the
Loan Documents, liabilities imposed by law, including tax liabilities,
other liabilities incidental to its existence and liabilities in respect
of Permitted Holdings Debt, the ChaseTel Earnout or guarantees of
Eligible Parent Debt). Holdings will not create, incur, assume or permit
to exist any Lien on any asset now owned or hereafter acquired by it,
except Liens created under the Loan Documents and Permitted
Encumbrances.
SECTION 2. Approval of Terms of Eligible Parent Debt. Pursuant
to clause (b) of the definition of Eligible Parent Debt, the Lenders party
hereto hereby confirm that the covenants, events of default and similar
provisions thereof contained in the Description of Notes attached hereto as
Exhibit A are reasonably satisfactory to each such Lender.
SECTION 3. Representations and Warranties. Holdings and the
Borrower hereby represent and warrant to the Lenders and the Administrative
Agent that (a) this Amendment has been duly authorized, executed and delivered
by Holdings and the Borrower and each of this Amendment and the Credit Agreement
as amended hereby constitutes a legal, valid and binding obligation of Holdings
and the Borrower, enforceable in accordance with its terms, (b) as of the date
hereof, and after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing and (c) the representations and
warranties of Holdings and the Borrower contained in the Credit Agreement, other
than those expressly made as of a specific date, are true and correct in all
material respects as if made on the date hereof.
SECTION 4. Conditions to Effectiveness. This Amendment shall
become effective as of the date first set
<PAGE> 12
forth above only upon the occurrence of the following conditions precedent:
(a) The Administrative Agent shall have received duly executed
counterparts of this Amendment which, when taken together, bear the
signatures of all the parties hereto.
(b) The Administrative Agent and each Lender shall have received
all fees and other amounts then due and payable to it, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower in connection with
this Amendment.
SECTION 5. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Credit Agreement. Except as expressly amended hereby,
the Credit Agreement shall continue in full force and effect in accordance with
the provisions thereof. Any reference in the Credit Agreement, or in any
documents or instruments required thereunder or annexes or schedules thereto,
referring to the Credit Agreement shall be deemed to refer to the Credit
Agreement as amended by this Amendment.
SECTION 7. Expenses. The Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
SECTION 8. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract. Delivery of an
executed counterpart of a signature page by facsimile transmission
<PAGE> 13
shall be effective as delivery of a manually executed counterpart of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first written above.
CRICKET COMMUNICATIONS
HOLDINGS, INC.,
by
/s/ James E. Hoffmann
----------------------------------
Name: James E. Hoffmann
Title: Secretary
CRICKET COMMUNICATIONS, INC.,
by
/s/ Robert J. Irving, Jr.
----------------------------------
Name: Robert J. Irving, Jr.
Title: Vice President, Legal
LUCENT TECHNOLOGIES, INC.,
individually and as Administrative
Agent,
by
/s/ Dina Fede
----------------------------------
Name: Dina Fede
Title: Director - Customer Finance
<PAGE> 14
EXHIBIT A
DESCRIPTION OF THE NOTES
The Senior Notes and the Senior Discount Notes will be issued under an
Indenture, to be dated as of the Closing Date (the "Indenture"), between the
Company, as issuer, the Guarantor and State Street Bank and Trust Company, as
Trustee (the "Trustee"). The Senior Notes and the Senior Discount Notes are
collectively referred to as the "Notes." A copy of the Indenture is available
upon request from the Company. The following summary of certain provisions of
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Indenture,
the Notes and the Guarantee, including the definitions of certain terms therein
and those terms made a part thereof by reference to the Trust Indenture Act of
1939, as amended. Whenever particular defined terms of the Indenture not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference. For definitions of certain capitalized terms used in the
following summary, see "-- Certain Definitions." For purposes of the Description
of Notes, references to the "Company" are references solely to Leap Wireless
International, Inc. and do not include the Company's subsidiaries, except for
purposes of financial data determined on a consolidated basis.
GENERAL
MATURITY, INTEREST AND PRINCIPAL OF THE SENIOR NOTES
The Senior Notes will be initially limited to $225 million aggregate
principal amount, and will mature on April 15, 2010. Each Senior Note will
initially bear interest at the rate shown on the front cover of this Memorandum
from the Closing Date or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semiannually in arrears on April
15 and October 15 of each year, commencing April 15, 2000, to Holders of record
at the close of business on the April 1 or October 1 immediately preceding the
Interest Payment Date. Interest payments due on the first seven Interest Payment
Dates for the Senior Notes will be secured by amounts on deposit in the Pledge
Account described below. See "-- Security" below. See "-- Registration Rights"
for a description of the circumstances under which the interest rate on the
Notes may be increased.
The Company may, subject to the covenants described below under
"-- Covenants" and applicable law, issue additional Senior Notes under the
Indenture having identical terms and conditions to the Senior Notes offered
hereby. The Senior Notes offered hereby and any additional Senior Notes
subsequently issued would be treated as a single class for all purposes of the
Indenture.
MATURITY, INTEREST AND PRINCIPAL OF THE SENIOR DISCOUNT NOTES
The Senior Discount Notes will be initially limited to $668 million
aggregate principal amount at maturity, and will mature on April 15, 2010. The
Senior Discount Notes are being offered at a discount from their aggregate
principal amount at maturity, with the initial Accreted Value per $1,000 in
principal amount of Senior Discount Notes equal to $486.68 (representing the
original price at which the Senior Discount Notes are being offered). The Senior
Discount Notes will accrete (representing the amortization of original issue
discount) on a semiannual bond equivalent basis using a 360-day year comprised
of twelve 30-day months such that the Accreted Value shall be equal to the full
principal amount at maturity of the Senior Discount Notes on April 15, 2005 (the
"Full Accretion Date"). See "Certain Federal Income Tax Considerations." No
interest is payable in cash on the Senior Discount Notes prior to the Full
Accretion Date, other than interest payable as a result of an increase in the
interest as described under the caption "-- Registration Rights." Beginning on
the Full Accretion Date, the Senior Discount Notes will accrue interest at the
rate shown on the front cover of this Memorandum from the Full Accretion Date or
from the most recent Interest Payment Date to which interest has been paid,
payable in cash semiannually in arrears on April 15 and October 15 of each year,
commencing October 15, 2005, to Holders of record on the close of business on
the April 1 or October 1 immediately
87
<PAGE> 15
preceding the Interest Payment Date. See "-- Registration Rights" for a
description of the circumstances under which the interest rate on the Notes may
be increased.
The Company may, subject to the covenants described below under
"-- Covenants" and applicable law, issue additional Senior Discount Notes under
the Indenture having identical terms and conditions to the Senior Discount Notes
offered hereby. The Senior Discount Notes offered hereby and any additional
Senior Discount Notes subsequently issued would be treated as a single class for
all purposes of the Indenture.
RANKING
The Notes will be senior, unsecured (except to the extent described under
"-- Security" below with respect to the Senior Notes) obligations of the Company
and will rank equally in right of payment with all of our existing and future
senior unsecured indebtedness and will be senior in right of payment to all
future subordinated indebtedness of the Company. The Notes (except to the extent
described under "-- Security" below with respect to the Senior Notes) will not
be secured by any assets and will be effectively subordinated to any secured
indebtedness of the Company to the extent of the value of the assets securing
such indebtedness and to all indebtedness and other liabilities (including trade
payables and lease obligations) of our subsidiaries other than any Guarantor. As
of November 30, 1999, on a pro forma as adjusted basis, after giving effect to
the offering and application of proceeds thereof, we and our subsidiaries had
approximately $241.0 million of indebtedness to which holders of the Notes would
have been effectively subordinated. See "Capitalization." The operations of the
Company are conducted through its subsidiaries and, therefore, the Company is
dependent upon cash flow from those entities to meet its obligations. None of
the Company's subsidiaries other than any Guarantor will have any direct
obligation to pay amounts due on the Notes and will not guarantee the Notes. As
of the Closing Date, Cricket Communications Holdings will be the only subsidiary
of the Company which will be a Guarantor. The Guarantee will be a senior,
unsecured obligation of the Guarantor and will rank equally in right of payment
with all existing and future senior, unsecured indebtedness of the Guarantor and
will be subordinate in right of payment to all secured indebtedness of the
Guarantor to the extent of the value of the assets securing such indebtedness.
See "Risk Factors -- Our Ability to Service the Notes Depends on Our Ability to
Get Cash from Our Subsidiaries" and "-- The Notes Will be Effectively
Subordinated to Our Secured Debt." The Company and its subsidiaries will be
permitted to incur additional secured and unsecured indebtedness. See "Risk
Factors -- We Will Have Substantial Indebtedness, and We May Incur More
Indebtedness." See "Covenants -- Limitation on Indebtedness" for a description
of additional indebtedness that may be incurred.
The Company will grant a security interest to the Trustee for the benefit
of the holders of the Senior Notes in the Pledge Account and all amounts on
deposit therein. The holders of the Senior Notes will have a claim on the
amounts on deposit in the Pledge Account and any investment and reinvestment
thereof that is prior to the claims of other creditors of the Company.
PAYMENT, DENOMINATIONS
If a holder has given wire transfer instructions to the Company, the
Company will make all principal, premium, if any, and interest payments on such
Notes in accordance with such instructions. All other principal of, premium, if
any, and interest on the Notes will be payable, and the Notes may be exchanged
or transferred, at the office or agency of the Company maintained for such
purpose in the Borough of Manhattan, the City of New York (which initially will
be the corporate trust office of the Trustee at 61 Broadway, New York, New York
10006); provided that, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses as they appear in the
Security Register.
88
<PAGE> 16
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount at maturity of the Notes and
integral multiples thereof. See "-- Book-Entry; Delivery and Form." No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
GUARANTEE
On the Closing Date, Cricket Communications Holdings will jointly and
severally with any future Guarantors, as primary obligor and not merely as
surety, unconditionally and irrevocably guarantee (the "Guarantee") the due and
punctual payment of the principal of, premium, if any, and interest on the
Notes, on an unsecured basis, in accordance with the terms thereof and of the
Indenture. The Guarantee will be limited so as not to constitute a fraudulent
conveyance under applicable law. See, however, "Risk Factors -- Fraudulent
Conveyance Considerations." After the Closing Date, the Company will cause any
future domestic Restricted Subsidiary (other than any direct or indirect
Subsidiary of Cricket Communications Holdings or any License Subsidiary) and any
Restricted Subsidiary which guarantees certain Indebtedness of the Company to
execute and deliver to the Trustee a Guarantee pursuant to which such Restricted
Subsidiary will jointly and severally with all other Guarantors, as primary
obligor and not merely as surety, unconditionally and irrevocably guarantee the
due and punctual payment of the principal of, premium, if any, and interest on
the Notes, on an unsecured basis, in accordance with the terms thereof and of
the Indenture. See "Covenants -- Limitation on Issuance of Guarantees by
Restricted Subsidiaries" and "-- Future Guarantors." If no Event of Default has
occurred and is continuing, concurrently with any sale or disposition of all of
the Capital Stock of any Guarantor or all or substantially all of the assets of
any Guarantor to any Person that is not an Affiliate of the Company, which sale
or disposition is in compliance with the covenant entitled "Limitation on Asset
Sales" described below, or upon the designation of any Guarantor as an
Unrestricted Subsidiary in compliance with the Indenture, such Guarantor will
automatically and unconditionally be released from all obligations under its
Guarantee.
SECURITY
The Trustee will establish the Pledge Account on or before the Closing Date
in connection with the issuance of the Senior Notes. On the Closing Date, the
Company will deposit in the Pledge Account, for the benefit of the Holders of
the Senior Notes, an amount from the net proceeds of the Offering of the Senior
Notes sufficient to acquire Pledged Securities in an amount as will be
sufficient upon receipt of scheduled interest and principal payments on such
Pledged Securities to provide payment in full when due of the first seven
scheduled interest payments due on the Senior Notes. The Company expects to use
approximately $78.3 million of the net proceeds from the Offering of the Senior
Notes to acquire the Pledged Securities; however, the actual amount of the net
proceeds used to purchase the Pledged Securities will vary depending on the
interest rates on U.S. government obligations prevailing at the time of the
purchase of the Pledged Securities. The Pledged Securities will be deposited in
the Pledge Account on the Closing Date.
All amounts deposited in the Pledge Account and the Pledged Securities will
be pledged by the Company to the Trustee for the benefit of the Holders of the
Senior Notes pursuant to the Pledge Agreement. Pursuant to the Pledge Agreement,
immediately prior to an Interest Payment Date for the Senior Notes, the Company
may either deposit with the Trustee from funds otherwise available to the
Company cash sufficient to pay the interest scheduled to be paid on such date or
the Company may direct the Trustee to release from the Pledge Account proceeds
sufficient to pay interest then due on the Senior Notes. In the event the
Company exercises the former option, the Company may direct the
89
<PAGE> 17
Trustee to release a like amount of proceeds from the Pledge Account. The
Pledged Securities and Pledge Account also secure the repayment of the principal
amount and premium on the Senior Notes.
If an Event of Default shall have occurred and be continuing and the Senior
Notes shall have been accelerated, the Trustee shall apply the funds in the
Pledge Account in the following order of priority: first, to the Trustee for
amounts due to the Trustee under the Indenture; second, to the Holders for
amounts due and unpaid on the Senior Notes for interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Senior Notes for interest; and third, to the Holders for amounts due and
unpaid on the Senior Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Senior
Notes for principal.
Under the Pledge Agreement, once the Company makes the first six scheduled
interest payments on the Senior Notes, all of the remaining Pledged Securities,
if any, will be released from the Pledge Account and thereafter the Senior Notes
will be unsecured.
OPTIONAL REDEMPTION
OPTIONAL REDEMPTION OF SENIOR NOTES
The Senior Notes will be redeemable, at the Company's option, in whole or
in part, at any time or from time to time, on or after April 15, 2005 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address as it appears in the Security
Register, at the following Redemption Prices (expressed as percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing April 15, of
the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2005.................................................... 106.250%
2006.................................................... 104.167%
2007.................................................... 102.083%
2008 and thereafter..................................... 100.000%
</TABLE>
In addition, at any time prior to April 15, 2003, the Company may redeem up
to 35% of the aggregate principal amount of the Senior Notes originally issued
with the Net Cash Proceeds of one or more Qualified Equity Offerings, at any
time as a whole or from time to time in part, at a Redemption Price (expressed
as a percentage of principal amount) of 112.50%, plus accrued and unpaid
interest to the Redemption Date (subject to the rights of Holders of record on
the relevant Regular Record Date that is prior to the Redemption Date to receive
interest due on an Interest Payment Date); provided that at least 65% of the
aggregate principal amount of Senior Notes originally issued remains outstanding
after each such redemption and notice of such redemption is given to the Holders
within 60 days after consummation of such Qualified Equity Offering.
OPTIONAL REDEMPTION OF SENIOR DISCOUNT NOTES
The Senior Discount Notes will be redeemable, at the Company's option, in
whole or in part, at any time or from time to time, on or after April 15, 2005
and prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's last address as it appears in the
Security Register, at the following Redemption Prices (expressed as percentages
of principal amount at maturity), plus accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive
90
<PAGE> 18
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing April 15, of the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2005.................................................... 107.250%
2006.................................................... 104.833%
2007.................................................... 102.417%
2008 and thereafter..................................... 100.000%
</TABLE>
In addition, at any time prior to April 15, 2003, the Company may redeem up
to 35% of the aggregate principal amount at maturity of the Senior Discount
Notes originally issued with the Net Cash Proceeds of one or more Qualified
Equity Offerings, at any time as a whole or from time to time in part, at a
Redemption Price (expressed as a percentage of Accreted Value on the Redemption
Date) of 114.5%, plus accrued and unpaid interest to the Redemption Date
(subject to the rights of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date); provided that 65% of the aggregate principal amount at maturity
of the Senior Discount Notes originally issued remains outstanding after each
such redemption and notice of such redemption is given to the Holders within 60
days after consummation of such Qualified Equity Offering.
SELECTION
In the case of any partial redemption, selection of the Senior Notes or
Senior Discount Notes, as the case may be, to be redeemed will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not listed
on a national securities exchange, on a pro rata basis or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate;
provided that no Notes of $1,000 or less in principal amount of the Senior Notes
or Accreted Value of the Senior Discount Notes shall be redeemed in part. If any
Note is to be redeemed in part only, the notice of redemption relating to such
Note shall state the portion of the principal amount thereof to be redeemed. A
new Note in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original Note.
SINKING FUND
The Notes will not have the benefit of any sinking fund.
REGISTRATION RIGHTS
The Company will use its best efforts, at its cost, to file and cause to
become effective a registration statement with respect to a registered offer
(the "Exchange Offer") to exchange the Senior Notes and the Senior Discount
Notes, respectively, for senior notes and senior discount notes of the Company,
respectively (the "Exchange Notes"), to be issued under the Indenture with terms
identical to the Senior Notes and Senior Discount Notes, respectively (except
that the Exchange Notes will not contain the interest rate step-up provision
contained herein or bear legends restricting the transfer thereof). Upon such
registration statement being declared effective, the Company shall offer the
Exchange Notes in return for surrender of the Notes. Such offer shall remain
open for not less than 20 business days after the date notice of the Exchange
Offer is mailed to Holders. For each Senior Note or Senior Discount Note
surrendered to the Company under the Exchange Offer, the Holder will receive an
Exchange Note of equal principal amount at maturity. Interest on each Exchange
Note issued in exchange for a Senior Note shall accrue from the last Interest
Payment Date on which interest was paid on the Senior Notes so
91
<PAGE> 19
surrendered or, if no interest has been paid on such Senior Notes, from the
Closing Date. The Accreted Value of each Exchange Note issued in exchange for a
Senior Discount Note shall be identical to, and shall be determined in the same
manner as, the Accreted Value of the Senior Discount Notes so surrendered and
exchanged. Interest on each Exchange Note issued in exchange for a Senior
Discount Note shall be calculated and paid in the same manner as interest on the
Senior Discount Notes so surrendered and exchanged. In the event that applicable
interpretations of the staff of the SEC do not permit the Company to effect the
Exchange Offer, or under certain other circumstances, the Company shall, at its
cost, use its best efforts to cause to become effective a shelf registration
statement (the "Shelf Registration Statement") with respect to resales of the
Notes and to keep such registration statement effective until the earlier of the
expiration of the time period referred to in Rule 144(k) under the Securities
Act and the date upon which all of the Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. The
Company shall, in the event of such a shelf registration, provide to each
registered Holder copies of the prospectus, notify each registered Holder when
the Shelf Registration Statement for the Notes has become effective and take
certain other actions as are required to permit resales of the Notes. A Holder
that sells its Notes pursuant to the Shelf Registration Statement generally will
be required to be named as a selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Registration Rights Agreement
that are applicable to such a Holder (including certain indemnification
obligations).
In the event that the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to the date that is
180 days after the Closing Date, (i) the interest rate borne by the Senior Notes
shall be increased by .50% per annum over the rate shown on the cover page of
this Memorandum and (ii) interest in addition to the accrual of original issue
discount and in addition to interest otherwise due for periods after the Full
Accretion Date will accrue on the Senior Discount Notes at a rate per annum
equal to .50% of the Accreted Value thereof, in each case until the Exchange
Offer is consummated or a Shelf Registration is declared effective. In the event
of such an increase in the per annum interest rate on the Notes, the Trustee
shall provide notice thereof to the Holders upon receipt of notice from the
Company of such increase.
The Company will be entitled to close the Exchange Offer 20 business days
after the commencement thereof, provided that it has accepted all Notes
theretofore validly surrendered in accordance with the terms of the Exchange
Offer. Notes not tendered in the Exchange Offer shall bear interest at the rate
set forth on the cover page of this Memorandum and be subject to all of the
terms and conditions specified in the Indenture and to the transfer restrictions
described in "Transfer Restrictions." Holders of Notes who do not participate in
the Exchange Offer may thereafter hold a less liquid security.
The Company will be required to allow participating broker-dealers and
other persons, if any, with similar prospectus delivery requirements to use the
prospectus contained in the registration statement in connection with the resale
of Exchange Notes for a period of 180 days from the issuance of the Exchange
Notes.
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available from the Company upon request.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the definition of all terms as well as any other capitalized term
used herein for which no definition is provided.
92
<PAGE> 20
"Accreted Value" means, as of any date prior to April 15, 2005, an amount
per $1,000 principal amount at maturity of the Senior Discount Notes that is
equal to the sum of (a) the initial offering price ($486.68 per $1,000 principal
amount at maturity of the Senior Discount Notes) of such Senior Discount Notes
and (b) the portion of the excess of the principal amount of such Senior
Discount Notes over such initial offering price which shall have been amortized
through such date, such amount to be so amortized on a daily basis and
compounded semiannually on each April 15 and October 15 at the rate of 14 1/2%
per annum from the date of original issue of the Senior Discount Notes through
the date of determination computed on the basis of a 360-day year of twelve
30-day months, and as of any date on or after April 15, 2005, the principal
amount of each Senior Discount Note.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Restricted Subsidiary or (ii) assumed in connection
with an Asset Acquisition by a Restricted Subsidiary and not Incurred in
connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income of any Person that is not a Restricted Subsidiary,
except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries by such
other Person during such period;
(ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Limitation on Restricted Payments" covenant described below (and in
such case, except to the extent includable pursuant to clause (i) above),
the net income (or loss) of any Person accrued prior to the date it becomes
a Restricted Subsidiary or is merged into or consolidated with the Company
or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of
its Restricted Subsidiaries;
(iii) the net income of any Restricted Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time of
determination permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary;
(iv) any gains or losses (on an after-tax basis) attributable to sales
of assets of the Company or any Restricted Subsidiary other than in the
ordinary course of business;
(v) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Limitation on Restricted Payments" covenant described below, any
amount paid or accrued as dividends on Preferred Stock of the Company or
any Restricted Subsidiary owned by Persons other than the Company and any
of its Restricted Subsidiaries;
(vi) all extraordinary gains and extraordinary losses;
(vii) any compensation expense paid or payable solely with Capital
Stock (other than Disqualified Capital Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Capital Stock) of the Company; and
(viii) the cumulative effect of a change in accounting principles.
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"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), excluding write-ups of
capital assets (other than write-ups of tangible assets in connection with
accounting for acquisitions made in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, copyrights, organizational and developmental expenses,
unamortized debt discount and expense, unamortized deferred charges and other
like intangibles (other than FCC license acquisition costs), all as set forth on
the most recent quarterly or annual consolidated balance sheet of the Company
and its Restricted Subsidiaries, prepared in conformity with GAAP and filed with
the Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of the Indenture applicable to mergers, consolidations and sales of all or
substantially all of the assets of the Company; provided that "Asset Sale" shall
not include (a) sales or other dispositions of inventory, receivables and other
current assets, (b) sales, transfers or other dispositions of assets
constituting a Restricted Payment permitted to be made under the "Limitation on
Restricted Payments" covenant, (c) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of (as determined by the Board of Directors whose good faith
determination shall be conclusive and evidenced by a Board Resolution), provided
that the consideration received consists of property or assets (other than
current assets) of a nature or type or that are used in a business (or a company
having property or assets of a nature or type, or engaged in a business) similar
or related to the nature or type of the property and assets of, or business of,
the Company and its Restricted Subsidiaries existing on the date of such sale or
other disposition or
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(d) sales or other dispositions of assets with a fair market value not in excess
of $1,000,000 per year (as certified in an Officer's Certificate).
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Closing Date, including, without limitation, all Common Stock
and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, Personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Section 13(d) or 14(d)(2) under the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of the Company on a
fully diluted basis; or (ii) individuals who on the Closing Date constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non voting) of such Person's equity, other than Preferred Stock of
such Person, whether now outstanding or issued after the Closing Date, including
without limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income (i) Consolidated Interest Expense,
(ii) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets), (iii) depreciation expense, (iv) amortization expense, and (v) all
other non-cash items reducing Adjusted Consolidated Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; provided that,
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (a) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(b) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries.
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"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes, all as determined on a consolidated basis
(without taking into account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters for which financial statements of the Company have been filed
with the Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant described below (such four fiscal quarter period being the "Reference
Period"); provided that, in making the foregoing calculation, (a) pro forma
effect shall be given to any Indebtedness that is to be Incurred or repaid on
the Transaction Date as if such Incurrence or repayment had occurred on the
first day of such Reference Period; (b) pro forma effect shall be given to Asset
Dispositions and Asset Acquisitions (including giving pro forma effect to the
application of proceeds of any Asset Disposition) that occur during such
Reference Period or thereafter but on or prior to the Transaction Date as if
they had occurred and such proceeds had been applied on the first day of such
Reference Period; and (c) pro forma effect shall be given to asset dispositions
and asset acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition) that have been made by any Person that has
become a Restricted Subsidiary or has been merged with or into the Company or
any Restricted Subsidiary during such Reference Period or thereafter but on or
prior to the Transaction Date and that would have constituted Asset Dispositions
or Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period, provided that to the extent that clause (b) or (c) of this
sentence requires that pro forma effect be given to an Asset Acquisition or
Asset Disposition, such pro forma calculation shall be based upon the four full
fiscal quarters immediately preceding the Transaction Date of the Person, or
division or line of business of the Person, that is acquired or disposed for
which financial information is available and shall be prepared in good faith by
the Company on a basis consistent with Regulation S-X under the Securities Act.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries filed
with the Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant described below (which shall be as of a date not more than 90 days
prior to the date of such computation, and which shall not take into account
Unrestricted Subsidiaries), less any amounts attributable to Disqualified Stock
or any equity security convertible into or exchangeable for Indebtedness, the
cost of treasury stock and the principal amount of any promissory notes
receivable from the sale of the Capital Stock of the Company or any of its
Restricted Subsidiaries, each item to be determined in conformity with GAAP
(excluding the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52).
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"Cricket Communications Holdings" means Cricket Communications Holdings,
Inc.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction, including
an acquisition of FCC wireless licenses, a member of the Board of Directors who
is not an officer or employee of the Company and would not be a party to, or
have a financial interest in, such transaction. For purposes of this definition,
no person would be deemed not to be a Disinterested Director solely because such
person holds Capital Stock of the Company.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in "Limitation on Asset Sales" and
"Repurchase of Notes upon a Change of Control" covenants described below and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to the
"Limitation on Asset Sales" and "Repurchase of Notes Upon a Change of Control"
covenants described below.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; provided that the fair market value of any FCC
wireless licenses for purposes of the definition of "Qualified Proceeds" shall
be as determined in good faith by the Board of Directors, including a majority
of the Disinterested Directors, which determination shall be conclusive if
evidenced by a Board Resolution.
"FCC" means the Federal Communications Commission.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes and (ii) except as otherwise provided,
the amortization of any amount required or permitted by Accounting Principles
Board Opinion Nos. 16 and 17.
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"Guarantees" mean any guarantees by the Guarantors of the obligations of
the Company under the Indenture and the Notes.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly Guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Guarantor" means any Subsidiary of the Company that executes a Guarantee
in accordance with the provisions of the Indenture and their respective
successors and assigns.
"Holder" means any record Holder of a Note.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Indebtedness by reason of a Person becoming a
Restricted Subsidiary; provided that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(i) all indebtedness of such Person for borrowed money;
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto, but excluding obligations with respect to letters of
credit (including trade letters of credit) securing obligations (other than
obligations described in (i) or (ii) above or (v), (vi) or (vii) below)
entered into in the ordinary course of business of such Person to the
extent such letters of credit are not drawn upon or, if drawn upon, to the
extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement);
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(v) all Capitalized Lease Obligations;
(vi) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (a)
the fair market value of such asset at such date of determination and (b)
the amount of such Indebtedness;
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(vii) all Indebtedness of other Persons guaranteed by such Person to
the extent such Indebtedness is guaranteed by such Person; and
(viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date (or in the case of a revolving credit or other
similar facility, the total amount of funds outstanding and/or available on the
date of determination) of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided (1) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the unamortized
portion of the original issue discount of such Indebtedness at the time of its
issuance as determined in conformity with GAAP, (2) money borrowed at the time
of the Incurrence of any Indebtedness in order to pre-fund the payment of
interest on such Indebtedness shall be deemed not to be "Indebtedness" so long
as such money is held to secure the payment of such interest, (3) contingent
obligations arising in connection with the acquisition of any business or
Person, based on the future performance of such business or Person, shall not
constitute Indebtedness except to the extent such obligations are not paid
within seven business days of the date such contingency is resolved under GAAP
and are recorded as a liability on the books of the Company and its Subsidiaries
and (4) liabilities for federal, state, local or other taxes shall not
constitute Indebtedness.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of guarantee or
similar arrangement; but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (iii) of the "Limitation on the Issuance and
Sale of Capital Stock of Restricted Subsidiaries" covenant. For purposes of the
definition of "Unrestricted Subsidiary" and the "Limitation on Restricted
Payments" covenant described below, (a) the amount of or a reduction in an
Investment shall be equal to the fair market value thereof at the time such
Investment is made or reduced and (b) in the event the Company or any Restricted
Subsidiary makes an Investment by transferring assets to any Person and as part
of such transaction receives Net Cash Proceeds, the amount of such Investment
shall be the fair market value of the assets less the amount of Net Cash
Proceeds so received, provided that the Net Cash proceeds are applied in
accordance with clause (a) and (b) of the "Limitation on Asset Sales" covenant.
"License Subsidiary" means a Wholly Owned Subsidiary of the Company
directly owned by the Company formed for the purpose of holding wireless
licenses granted by the FCC.
"Licensed Domestic POPS" means the number of potential customers in the
geographic areas within the United States covered by wireless licenses granted
by the FCC and owned by the Company or
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any of its domestic Restricted Subsidiaries based on population statistics
published in a recognized demographic data source using as a basis for its
population estimates the most recent U.S. Census Bureau Data.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (i) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (a) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (b) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (c) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (1) is
secured by a Lien on the property or assets sold or (2) is required to be paid
as a result of such sale and (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP and
(ii) with respect to any issuance or sale of Capital Stock, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary of the Company)
and proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of attorney's fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
"Offer to Purchase" means an offer by the Company to purchase Notes from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating:
(i) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata
basis;
(ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) (the "Payment Date");
(iii) that any Note not tendered will continue to accrue interest or
original issue discount pursuant to its terms;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase
shall cease to accrue interest or original issue discount on and after the
Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address specified in
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the notice prior to the close of business on the Business Day immediately
preceding the Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; provided that each Note purchased shall be in an
integral multiple of $1,000 of the principal amount at maturity of the
Notes and each new Note issued shall be in a principal amount at maturity
of $1,000 or integral multiples thereof.
On the Payment Date, the Company shall (a) accept for payment on a pro rata
basis Notes or portions thereof validly tendered pursuant to an Offer to
Purchase: (b) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and (c) deliver, or cause to
be delivered, to the Trustee all Notes or portions thereof so accepted together
with an Officer's Certificate specifying the Notes or portions thereof accepted
for payment by the Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered; provided
that each Note purchased shall be in an integral multiple of $1,000 of the
principal amount at maturity of the Notes and each new Note issued shall be in a
principal amount at maturity of $1,000 or integral multiples thereof. The
Company will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Notes pursuant to an Offer to Purchase. To the extent
that the provisions of any applicable federal or state securities laws or
regulations conflict with the provision of the Indenture relating to an Offer to
Purchase, the Company will comply with such laws or regulations and will not be
deemed to have breached such provisions of the Indenture by virtue thereof.
"Officer's Certificate" of any Person means a certificate signed on behalf
of such Person by the principal executive officer, the principal accounting
officer or the principal financial officer of such Person.
"Permitted Cricket Holdings Shares and Options" means the issuance by
Cricket Communications Holdings, Inc. of (i) shares of its common stock upon the
exercise of that certain warrant to be issued to Chase Telecommunications
Holdings, Inc. for a number of shares not to exceed 1% of its outstanding common
stock and (ii) options for common stock issued pursuant to stock option plans of
Cricket Communications Holdings, which have been approved by the Board of
Directors and shares of common stock issued upon exercise of such options.
"Permitted Investment" means:
(i) an Investment in the Company or a domestic Restricted Subsidiary
or a Person which will, upon the making of such Investment, become a
domestic Restricted Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, the Company or a
domestic Restricted Subsidiary; provided that such person's primary
business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such Investment;
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(ii) Temporary Cash Investments;
(iii) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
(iv) stock, obligations or securities received in satisfaction of
judgments;
(v) Investments in prepaid expenses, negotiable instruments held for
collection, and lease, utility and worker's compensation, performance and
other similar deposits made in the ordinary course of business;
(vi) Interest Rate Agreements and Currency Agreements designed solely
to protect the Company and its Restricted Subsidiaries against fluctuations
in interest rates or foreign currency exchange rates;
(vii) loans or advances to officers or employees of the Company or any
Restricted Subsidiary that do not in the aggregate exceed $3 million at any
time outstanding;
(viii) Investments in Restricted Subsidiaries of the Company in Chile
not to exceed $100 million in the aggregate after the Closing Date;
(ix) Investments existing on the Closing Date;
(x) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with the
"Asset Sale" covenant; and
(xi) Investments in securities received in satisfaction of accounts
receivable pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy of the obligor on such accounts receivable.
"Permitted Liens" means:
(i) Liens for taxes, assessments, governmental charges or claims that
are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made;
(ii) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
legal proceedings promptly instituted and diligently conducted and for
which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security;
(iv) Liens incurred or deposits made (including deposits made to the
FCC) to secure the performance of tenders, bids, leases, statutory or
regulatory obligations, bankers' acceptances, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and
similar charges, encumbrances, title defects or other irregularities that
do not materially interfere with the ordinary course of business of the
Company or any of its Restricted Subsidiaries;
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(vi) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Closing Date; provided that (a) such
Lien is created solely for the purpose of securing Indebtedness Incurred,
in accordance with the "Limitation on Indebtedness" covenant described
below, (1) to finance the cost (including the cost of design, development,
acquisition, construction, installation, integration or improvement) of the
item of property or assets subject thereto and such Lien is created prior
to, at the time of or within six months after the later of the acquisition,
the completion of construction or the commencement of full operation of
such property or (2) to refinance any Indebtedness previously so secured,
(b) the principal amount of the Indebtedness secured by such Lien does not
exceed 100% of such cost and (c) any such Lien shall not extend to or cover
any property or assets other than such item of property or assets and any
improvements on such item;
(vii) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and its
Restricted Subsidiaries, taken as a whole;
(viii) any interest or title of a lessor in the property subject to
any Capitalized Lease or operating lease;
(ix) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(x) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes, or
becomes a part of, any Restricted Subsidiary; provided that such Liens do
not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets acquired;
(xi) Liens in favor of the Company or any Restricted Subsidiary;
(xii) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary of the Company that does
not give rise to an Event of Default;
(xiii) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to
such letters of credit and the products and proceeds thereof;
(xiv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xv) Liens encumbering customary initial deposits and margin deposit,
and other Liens that are either within the general parameters customary in
the industry and incurred in the ordinary course of business, in each case,
securing Indebtedness under Interest Rate Agreements and Currency
Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect
the Company or any of its Restricted Subsidiaries from fluctuations in
interest rates, currencies or the price of commodities;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business;
(xvii) Liens on or sales of receivables;
(xviii) Liens on wireless licenses issued by the FCC to secure
obligations in favor of the FCC;
(xix) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in either
case to the extent such cash or government securities
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prefund the payment of interest on such Indebtedness and are held in an
escrow account or similar arrangement to be applied for such purpose;
(xx) Liens on the Capital Stock of License Subsidiaries to secure
Indebtedness under credit facilities with any vendor, supplier or
contractor (or any financial institution providing financing arranged by or
on behalf of such vendor, supplier or contractor) permitted to be incurred
under the "Limitation on Indebtedness" covenant;
(xxi) Liens on promissory notes evidencing intercompany loans from the
Company to Restricted Subsidiaries to secure Indebtedness under credit
facilities with any vendor, supplier or contractor (or any financial
institution providing financing arranged by or on behalf of such vendor,
supplier or contractor) permitted to be Incurred under the "Limitation on
Indebtedness" covenant; and
(xxii) Liens that secure Indebtedness with an aggregate principal
amount not in excess of $10 million at any time outstanding.
"Pledge Account" means an account established with a securities
intermediary for the benefit of the Trustee pursuant to the terms of the Pledge
Agreement for the deposit of certain of the net cash proceeds from the Senior
Notes and the Pledged Securities to be purchased by the Company with such net
cash proceeds and all proceeds therefrom.
"Pledge Agreement" means the Collateral Pledge and Security Agreement,
dated as of the Closing Date, made by the Company in favor of the Trustee
governing the security interest in, and the disbursement of funds from, the
Pledge Account, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"Pledged Securities" means the U.S. Government Obligations to be purchased
by the Company with a portion of the proceeds from the issuance and sale of the
Senior Notes and held by the Trustee in the Pledge Account in accordance with
the Pledge Agreement.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
now outstanding or issued after the Closing Date, including, without limitation,
all series and classes of such preferred stock or preference stock.
"Qualified Equity Offering" means an underwritten primary public offering
or private placement of Capital Stock (other than Disqualified Stock) of the
Company resulting in aggregate Net Cash Proceeds to the Company of $50 million
or more; provided, however, that no public offering or private placement
consummated on, or within 180 days after, the Closing Date shall constitute a
Qualified Equity Offering.
"Qualified Proceeds" means (i) Net Cash Proceeds received by the Company on
or after the Closing Date from the issuance and sale of its Capital Stock (other
than Disqualified Stock) to a Person that is not a Subsidiary of the Company and
(ii) 80% of the fair market value on the date of acquisition of FCC wireless
licenses acquired by the Company or its Restricted Subsidiaries after the
Closing Date to the extent the consideration paid therefor is Capital Stock of
the Company (other than Disqualified Stock).
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group, a division of the McGraw-Hill
Companies.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and
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payable and (ii) with respect to any scheduled installment of principal of or
interest on any debt security, the date specified in such debt security as the
fixed date on which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following:
(i) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof, in each case (other than with
respect to Pledged Securities) maturing within one year after the date of
acquisition;
(ii) time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign
currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under
the Securities Act) or any moneymarket fund sponsored by a registered
broker dealer or mutual fund distribution;
(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above;
(iv) commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P; and
(v) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (a) any guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be
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deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company
or such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (b) either (1) the Subsidiary to be so designated has total assets
of $1,000 or less or (2) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under the "Limitation on Restricted Payments"
covenant described below and (c) if applicable, the Incurrence of Indebtedness
and the Investment referred to in clause (a) of this proviso would be permitted
under the "Limitation on Indebtedness" and "Limitation on Restricted Payments"
covenants described below. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, provided that immediately after giving
effect to such designation (x) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such designation would, if Incurred at
such time, have been permitted to be Incurred (and shall be deemed to have been
Incurred) for all purposes of the Indenture and (y) no Default or Event of
Default shall have occurred and be continuing. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which full faith and credit of the United States of America is pledged and which
are not callable at the Company's option.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Warrants" means the Warrants issued on the Closing Date.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person. Notwithstanding the foregoing Cricket Communications Holdings shall be
deemed Wholly Owned by the Company as long as the Company owns not less than 85%
of its outstanding Capital Stock on a fully diluted basis.
COVENANTS
The Indenture will contain, among others, the following covenants.
LIMITATION ON INDEBTEDNESS
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes issued on the
Closing Date and Indebtedness existing on the Closing Date); provided that the
Company may Incur Indebtedness if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Consolidated Leverage Ratio would be greater than zero and less than 6 to 1.
(b) Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness under one or more credit facilities in an aggregate
principal amount not to exceed $300 million, less any amount of such
Indebtedness permanently repaid as provided under the "Limitation on Asset
Sales" covenant described below;
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(ii) Indebtedness owed (a) by a Restricted Subsidiary to the Company
or (b) by the Company or a Restricted Subsidiary to any Restricted
Subsidiary; provided that (1) if the Company or any Guarantor is the
obligor on such Indebtedness, such Indebtedness shall be evidenced by a
promissory note expressly subordinated to the Notes and any Guarantees and
if any Restricted Subsidiary is the obligor on any such Indebtedness to the
Company or a Guarantor such Indebtedness shall be evidenced by a promissory
note which is unsubordinated except to secured Indebtedness permitted under
the Indenture, and (2) any event which results in any Restricted Subsidiary
which is an obligor on such Indebtedness ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to
the Company or another Restricted Subsidiary) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by
this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness (other
than Indebtedness Incurred under clause (i), (ii), (iv), (vi), (viii) or
(x) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued
interest, fees and expenses); provided that Indebtedness the proceeds of
which are used to refinance or refund the Notes or Indebtedness that is
pari passu with, or subordinated in right of payment to, the Notes or the
Guarantees shall only be permitted under this clause (iii) if (a) in case
the Notes are refinanced in part or the Indebtedness to be refinanced is
pari passu with the Notes or any Guarantees, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such
new Indebtedness is outstanding, is expressly made pari passu with, or
subordinate in right of payment to, the remaining Notes or such Guarantees,
(b) in case the Indebtedness to be refinanced is subordinated in right of
payment to the Notes and the Guarantees, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such
new Indebtedness is issued or remains outstanding, is expressly made
subordinate in right of payment to the Notes and the Guarantees at least to
the extent that the Indebtedness to be refinanced is subordinated to the
Notes and the Guarantees and (c) such new Indebtedness, determined as of
the date of Incurrence of such new Indebtedness, does not mature prior to
the Stated Maturity of the Indebtedness to be refinanced or refunded, and
the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company or
any Guarantor be refinanced by means of any Indebtedness of any Restricted
Subsidiary that is not a Guarantor pursuant to this clause (iii);
(iv) Indebtedness (a) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (b) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (1)
are designed solely to protect the Company or its Restricted Subsidiaries
against fluctuations in foreign currency exchange rates or interest rates
and (2) do not increase the Indebtedness of the obligor outstanding at any
time other than as a result of fluctuations in foreign currency exchange
rates or interest rates or by reason of fees, indemnities and compensation
payable thereunder; or (c) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary of the Company (other than guarantees of Indebtedness Incurred
by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary of the Company for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary in connection
with such disposition;
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(v) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (a) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (b) deposited to
defease the Notes as described below under "Defeasance";
(vi) Guarantees of the Notes and guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the guarantee of such
Indebtedness is permitted by and made in accordance with the "Limitation on
Issuance of Guarantees by Restricted Subsidiaries" covenant described
below;
(vii) Indebtedness (including guarantees of such indebtedness)
Incurred to finance the cost (including the cost of design, development,
site acquisition, construction, installation, integration or improvement)
of equipment, inventory or telecommunications network assets acquired
(including by way of Capital Lease and acquisitions of Capital Stock of a
Person that becomes a Restricted Subsidiary to the extent of the fair
market value of the equipment, inventory or network assets so acquired) by
the Company or any Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times Qualified Proceeds received by the Company to the
extent such Qualified Proceeds have not been used pursuant to clause (C)(2)
of the first paragraph of, or clauses (iii), (iv), (vii), (viii) or (ix) of
the second paragraph of, the "Limitation on Restricted Payments" covenant
described below to make a Restricted Payment; provided that such
Indebtedness does not mature prior to the Stated Maturity of the Notes and
has an Average Life longer than the Notes;
(ix) Acquired Indebtedness of Restricted Subsidiaries of the Company
to the extent that the Company could have Incurred such Indebtedness in
accordance with the first paragraph of this covenant on the date such
Indebtedness becomes Acquired Indebtedness of such Restricted Subsidiary;
and
(x) Indebtedness Incurred by the Company not otherwise permitted to be
Incurred pursuant to clauses (i) through (ix) above, which together with
all other Indebtedness Incurred pursuant to this clause (x), has an
aggregate principal amount not in excess of $20 million at any time
outstanding.
(b) Notwithstanding any other provisions of this "Limitation on
Indebtedness" covenant, (i) the Company and its domestic Restricted Subsidiaries
may not Incur Indebtedness pursuant to paragraph (a) or clauses (i) through (x)
of this "Limitation on Indebtedness" covenant, if after giving effect to the
Incurrence of such Indebtedness, the aggregate principal amount of Indebtedness
of the Company and its domestic Restricted Subsidiaries would exceed the sum of
(1) the product of $75.00 multiplied by Licensed Domestic POPS plus (2) the
principal amount of Indebtedness Incurred on or after the Closing Date, the
proceeds of which are used to make Investments which constitute Permitted
Investments pursuant to clause (viii) of the definition of "Permitted
Investments" in an aggregate principal amount not to exceed $100 million (such
sum being the "Aggregate Limitation"), provided that the Company and its
domestic Restricted Subsidiaries may Incur Indebtedness pursuant to paragraph
(a) or clauses (i) through (x) of this "Limitation on Indebtedness" covenant in
excess of the Aggregate Limitation in an aggregate principal amount not to
exceed the product of $10.00 multiplied by Licensed Domestic POPS, to the extent
the payment of principal of, premium if any, interest and other payment
obligations in respect of such Indebtedness is expressly subordinate to the
prior payment in full in cash of the Notes or any Guarantee, as the case may be,
and any other Indebtedness of the Company or its domestic Restricted
Subsidiaries, as the case may be, permitted to be Incurred under the Indenture
and designated by the Company or such Restricted Subsidiary as senior
indebtedness; and (ii) Cricket Communications Holdings may not Incur any
Indebtedness other than the Guarantee of the Notes and
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guarantees of (1) Indebtedness of Cricket Communications, Inc. and (2)
Indebtedness of the Company to the extent the proceeds of such Indebtedness are
contributed to Cricket Communications Holdings.
(c) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, the maximum amount of Indebtedness that the Company or a
Restricted Subsidiary may Incur pursuant to this "Limitation on Indebtedness"
covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.
(d) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (i) guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included and (ii) any
Liens granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify and from time to
time may reclassify such item of Indebtedness and only be required to include
the amount and type of such Indebtedness in one of such clauses.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly:
(i) declare or pay any dividend or make any distribution on or with
respect to the Company's or such Restricted Subsidiary's Capital Stock
(other than (a) dividends or distributions payable solely in shares of the
Company's or such Restricted Subsidiary's Capital Stock of the same class
(other than Disqualified Stock) or in options, warrants or other rights to
acquire shares of such Capital Stock and (b) pro rata dividends or
distributions on Common Stock of any Restricted Subsidiary held by minority
interest holders) held by Persons other than the Company or any of its
Restricted Subsidiaries;
(ii) purchase, call for redemption or redeem, retire or otherwise
acquire for value any shares of Capital Stock of (a) the Company or any
Guarantor or any Unrestricted Subsidiary (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any Person or
(b) a Restricted Subsidiary other than a Guarantor (including options,
warrants or other rights to acquire such shares of Capital Stock) held by
any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more
of the Capital Stock of the Company;
(iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company or any Guarantor that
is subordinated in right of payment to the Notes or any Guarantee; or
(iv) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (i) through
(iv) being collectively "Restricted Payments") if, at the time of, and
after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing, or would result from such Restricted Payment;
(B) after giving pro forma effect to such Restricted Payment as if
such Restricted Payment had been made at the beginning of the applicable
four-fiscal quarter period, the
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Company could not Incur at least $1.00 of Indebtedness under the first
paragraph of the "Limitation on Indebtedness" covenant; or
(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) made after the Closing Date shall exceed the sum of:
(1) 50% of the aggregate amount of the Adjusted Consolidated Net
Income (or, if the Adjusted Consolidated Net Income is a loss, minus
100% of the amount of such loss) (determined by excluding income
resulting from transfers of assets by the Company or a Restricted
Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Closing
Date and ending on the last day of the last fiscal quarter preceding
the Transaction Date for which reports have been filed with the
Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant; plus
(2) the aggregate Qualified Proceeds received by the Company
(except to the extent such Qualified Proceeds are used to Incur
Indebtedness pursuant to clause (viii) under the "Limitation on
Indebtedness" covenant) or from the issuance to a Person who is not a
Subsidiary of the Company of any options, warrants or other rights to
acquire Capital Stock of the Company (in each case, exclusive of any
Disqualified Stock or any options, warrants or other rights that are
redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes); plus
(3) an amount equal to the net reduction in Investments (other
than reductions in Permitted Investments) in any Person resulting
from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the
Company or any Restricted Subsidiary or from the Net Cash Proceeds
from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation
of Adjusted Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each
case as provided in the definition of "Investments"), not to exceed,
in each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or Unrestricted
Subsidiary.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (iii) of the second paragraph of part (a) of the "Limitation
on Indebtedness" covenant;
(iii) the repurchase, redemption or other acquisition of Capital Stock
of the Company (or options, warrants or other rights to acquire such
Capital Stock) in exchange for, or out of the proceeds of a substantially
concurrent offering of, shares of Capital Stock (other than Disqualified
Stock) of the Company other than to a Subsidiary of the Company;
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company or any Guarantor which is subordinated in right
of payment to the Notes or the Guarantees in exchange for, or out of the
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proceeds of, a substantially concurrent offering of, shares of the Capital
Stock of the Company (other than Disqualified Stock);
(v) payments or distributions to dissenting stockholders that are not
Affiliates of the Company or any of its Subsidiaries pursuant to applicable
law pursuant to or in connection with a consolidation, merger or transfer
of assets that complies with the provisions of the Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the
property and assets of the Company;
(vi) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Company to the
extent necessary in the good faith judgment of the Board of Directors of
the Company, to prevent the loss or secure the renewal or reinstatement of
any material license or franchise held by the Company or any Restricted
Subsidiary from any governmental agency;
(vii) the purchase, redemption, retirement or other acquisition for
value of Capital Stock of the Company or Cricket Communications Holdings,
or options to purchase such shares, held by directors, employees or former
directors or employees of the Company or any Restricted Subsidiary (or
their donees, trusts for their benefit or the benefit of their family
members, their estates or beneficiaries under their estates) upon death,
disability, retirement, termination of employment or pursuant to the terms
of any agreement under which such shares of Capital Stock or options were
issued; provided that the aggregate consideration paid for such purchase,
redemption, acquisition, cancellation or other retirement of such shares of
Capital Stock or options after the Closing Date does not exceed (a) $2
million in any fiscal year or (b) $5 million in the aggregate, plus in the
case of each of clause (a) and clause (b), the aggregate of Net Cash
Proceeds received by the Company from the issuance of Capital Stock to
directors, employees or former directors or employees of the Company or any
Restricted Subsidiary, provided that the amount of any such Net Cash
Proceeds that are utilized for any such purchase, redemption, retirement or
other acquisition shall be excluded from clause (C)(2) of the first
paragraph of this "Limitation on Restricted Payments" covenant;
(viii) Investments in any Person that is primarily engaged in a
business that is related, ancillary or complementary to the business of the
Company and its Restricted Subsidiaries on the date of such Investment;
provided that the aggregate amount of such Investments (after taking into
account the amount of all other Investments made pursuant to this subclause
(viii)) does not exceed the sum of (a) $10,000,000 and (b) the amount of
Qualified Proceeds received by the Company, except to the extent such
Qualified Proceeds are used to Incur Indebtedness pursuant to clause (viii)
under the "Limitation on Indebtedness" covenant or to make Restricted
Payments pursuant to clause (C)(2) of the first paragraph, or clauses (iii)
or (iv) of this paragraph, of this "Limitation on Restricted Payments"
covenant;
(ix) Investments acquired in exchange for Capital Stock (other than
Disqualified Capital Stock) of the Company;
(x) the redemption by the Company of any of the Warrants pursuant to
the mandatory disposition or redemption provisions thereof or any purchase
of any fractional share of Common Stock (or other Capital Stock of the
Company issuable upon exercise of the Warrants) in connection with an
exercise of the Warrants;
(xi) repurchases of Capital Stock deemed to occur upon the exercise of
stock options or warrants if such Capital Stock represents a portion of the
exercise price thereof;
(xii) other Restricted Payments in an aggregate amount not to exceed
$10 million;
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provided that, except in the case of clauses (i) and (iii), no Default or Event
of Default shall have occurred and be continuing or occur as a consequence of
the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof and an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof, or an Investment referred to in clause (ix)
thereof or repurchases of Capital Stock referred to in clause (xi) thereof), and
the Qualified Proceeds from any issuance of Capital Stock referred to in clauses
(iii), (iv) and (viii), shall be included in calculating whether the conditions
of clause (C) of the first paragraph of this "Limitation on Restricted Payments"
covenant have been met with respect to any subsequent Restricted Payments. In
the event the proceeds of an issuance of Capital Stock of the Company are used
for the redemption, repurchase or other acquisition of the Notes, or
Indebtedness that is pari passu with the Notes, then the Qualified Proceeds of
such issuance shall be included in clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant only to the extent such proceeds
are not used for such redemption, repurchase or other acquisition of
Indebtedness.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (iii) make loans or advances to
the Company or any other Restricted Subsidiary or (iv) transfer any of its
property or assets to the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Indenture, Pledge Agreement or
any other agreements in effect on the Closing Date, and any amendments,
extensions, refinancings, renewals or replacements of such agreements;
provided that the encumbrances and restrictions in any such amendments,
extensions, refinancings, renewals or replacements are no less favorable in
any material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced, renewed or
replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets of
such Person acquired by the Company or any Restricted Subsidiary, existing
at the time of such acquisition and not incurred in contemplation thereof,
which encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(iv) in the case of clause (iv) of the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (a) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (b)
existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of the Company or
any Restricted Subsidiary not otherwise prohibited by the Indenture or (c)
arising or agreed to in the ordinary course of business, not relating to
any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or any
Restricted Subsidiary;
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(v) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary; or
(vi) contained in the terms of any Indebtedness of a Restricted
Subsidiary, or any agreement pursuant to which such Indebtedness was
issued, if the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant contained
in such Indebtedness or agreement, if the encumbrance or restriction is not
materially more disadvantageous to the Holders of the Notes than is
customary in comparable financings (as determined by the Company) and if
the Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to make principal or interest
payments on the Notes.
Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent the
Company or any Restricted Subsidiary from (1) creating, incurring, assuming or
suffering to exist any liens otherwise permitted in the "Limitation on Liens"
covenant or (2) restricting the sale or other disposition of property or assets
of the Company or any of its Restricted Subsidiaries that secure Indebtedness of
the Company or any of its Restricted Subsidiaries.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to the Company or a Wholly Owned
Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales
to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) Permitted Cricket
Holdings Shares and Options; (iv) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary, provided any Investment in such Person remaining after
giving effect to such issuance or sale would have been permitted to be made
under the "Limitation on Restricted Payments" covenant, if made on the date of
such issuance or sale, or (iv) issuances and sales of Common Stock of any
Restricted Subsidiary, provided that the Company or such Restricted Subsidiary
applies the Net Cash Proceeds of any such sale in accordance with clause (a) or
(b) of the "Limitation on Asset Sales" covenant described below.
LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to guarantee any Indebtedness of the Company or any Guarantor
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary (a) is a
Guarantor or (b) simultaneously executes and delivers a supplemental indenture
to the Indenture providing for a Guarantee of payment of the Notes by such
Restricted Subsidiary and (ii) such Restricted Subsidiary waives, and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; provided that this paragraph shall
not be applicable to (a) any guarantee by a Restricted Subsidiary existing on
the Closing Date or in respect of Indebtedness Incurred pursuant to clause (i)
or (vii) of the second paragraph of the "Limitation on Indebtedness" covenant or
(b) any guarantee of any Restricted Subsidiary that existed at the time such
Person became a Restricted Subsidiary and was not Incurred in connection with,
or in contemplation of, such Person becoming a Restricted Subsidiary. If the
Guaranteed Indebtedness is (1) pari passu with the Notes or any Guaranty, then
the guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Guarantee or (2) subordinated to the Notes or any Guaranty,
then the guarantee of
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such Guaranteed Indebtedness shall be subordinated to the Guarantee at least to
the extent that the Guaranteed Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any Guarantee executed by a Restricted
Subsidiary pursuant to this provision shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by the Indenture) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
LIMITATION ON TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of the Company or with any
Affiliate of the Company or any Restricted Subsidiary, except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (a) approved by a majority of the Disinterested Directors or (b)
for which the Company or a Restricted Subsidiary delivers to the Trustee a
written opinion of a nationally recognized investment banking firm stating that
the transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view; (ii) any transaction solely between the Company and any
of its Wholly Owned Restricted Subsidiaries or solely between Wholly Owned
Restricted Subsidiaries; (iii) the payment of reasonable and customary regular
fees to directors of the Company who are not employees of the Company; (iv) any
payments or other transactions pursuant to any tax-sharing agreement between the
Company and any other Person with which the Company files a consolidated tax
return or with which the Company is part of a consolidated group for tax
purposes; or (v) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant. Notwithstanding the foregoing, any transaction
covered by the first paragraph of this "Limitation on Transactions with
Stockholders and Affiliates" covenant and not covered by clauses (ii) through
(v) of this paragraph, (1) must be approved in the manner provided for in clause
(i)(a) above and a certified Board Resolution to such effect delivered to the
Trustee, if the aggregate amount of such transaction exceeds $2 million, and (2)
must be determined fair in the manner provided for in clause (i)(b) above, if
the aggregate amount of such transaction exceeds $10 million.
LIMITATION ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Notes and the Guarantees and all other amounts due under the Indenture to be
directly secured equally and ratably with (or, if the obligation or liability to
be secured by such Lien is subordinated in right of payment to the Notes, prior
to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure
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Indebtedness owing to the Company or such other Restricted Subsidiary; (iv)
Liens securing Indebtedness which is permitted to be Incurred under clause (i)
of the "Limitation on Indebtedness" covenant; (v) Liens securing Indebtedness
which is Incurred to refinance secured Indebtedness which is permitted to be
Incurred under clause (iii) of the second paragraph of the "Limitation on
Indebtedness" covenant; provided that such Liens do not extend to or cover any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets securing the Indebtedness being refinanced; (vi) Liens on the
Capital Stock of, or any property or assets of, a Restricted Subsidiary securing
Indebtedness of such Restricted Subsidiary (or obligations in respect thereof)
or Indebtedness of any Restricted Subsidiary guaranteed by such Restricted
Subsidiary permitted under the "Limitation on Indebtedness" covenant; or (vii)
Permitted Liens.
Notwithstanding the foregoing, the Company will not create, incur or suffer
to exist any Lien on the capital stock of Cricket Communications Holdings.
LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby the Company or a
Restricted Subsidiary sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which the Company or such Restricted Subsidiary, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between the Company and
any Wholly Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or (iv) the Company or such Restricted Subsidiary, within twelve
months after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale in
accordance with clause (a) or (b) or of the second paragraph of the "Limitation
on Asset Sales" covenant described below.
FUTURE SUBSIDIARY GUARANTORS
The Company will cause each domestic Restricted Subsidiary other than any
direct or indirect Subsidiary of Cricket Communications Holdings or any License
Subsidiary to execute and deliver a Guarantee pursuant to which each such
Subsidiary will, jointly and severally, Guarantee irrevocably and
unconditionally all principal, premium, if any, and interest on the Notes on an
unsecured basis.
LIMITATION ON ASSET SALES
The Company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by the Company
or such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of as evidenced by a Board Resolution filed with the
Trustee, and (ii) at least 75% of the consideration received consists of cash or
Temporary Cash Investments, provided that the amount of any (a) liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any Guarantee) that are assumed by the transferee of any such assets pursuant to
an agreement that irrevocably releases the Company or such Restricted Subsidiary
from further liability shall be deemed to be cash for purposes of this
provision.
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In the event and to the extent that the Net Cash Proceeds received by the
Company or any of its Restricted Subsidiaries from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Company and its Subsidiaries has been filed
with the Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant), then the Company shall or shall cause the relevant Restricted
Subsidiary to (i) within 12 months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets (a) apply an amount
equal to such excess Net Cash Proceeds to permanently repay unsubordinated
Indebtedness of the Company or any Guarantor or Indebtedness of any other
Restricted Subsidiary, in each case owing to a Person other than the Company or
any of its Restricted Subsidiaries or (b) invest an equal amount, or the amount
not so applied pursuant to clause (a) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such agreement), in
property or assets (other than current assets) of a nature or type or that are
used in a business (or in a company having property and assets of a nature or
type, or engaged in a business) similar or related to the nature or type of the
property and assets of, or the business of, the Company and its Restricted
Subsidiaries existing on the date of such investment and (ii) apply (no later
than the end of the 12-month period referred to in clause (i)) such excess Net
Cash Proceeds (to the extent not applied pursuant to clause (i)) as provided in
the following paragraph of this "Limitation on Asset Sales" covenant. The amount
of such excess Net Cash Proceeds required to be applied (or to be committed to
be applied) during such twelve-month period as set forth in clause (i) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $10,000,000, the Company
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount of the Senior Notes or
Accreted Value of the Senior Discount Notes, plus, in each case, accrued
interest (if any) to the Payment Date.
ADDITIONAL HOLDING COMPANIES
The Company shall not create any subsidiary which directly or indirectly
owns (i) Capital Stock of Cricket Communications Holdings or (ii) Capital Stock
of Cricket Communications, Inc., other than Cricket Communications Holdings.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount of the Senior Notes or
Accreted Value of the Senior Discount Notes, plus accrued interest (if any) to
the Payment Date.
There can be no assurance that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of the Company which might be outstanding
at the time). The above covenant requiring the Company to repurchase the Notes
will, unless consents are obtained, require the Company to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
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COMMISSION REPORTS AND REPORTS TO HOLDERS
The Company will furnish to each of the Holders of Notes within the time
period specified in the SEC's rules and regulations (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on forms 10-Q and form 10-K as if the Company were required to
file such financial information, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Company and any
consolidated Subsidiaries and, with respect to the annual information only,
reports thereon by the Company's independent public accountants (which shall be
firms of established national reputation) and (ii) all information that will be
required to be filed with the SEC on form 8-K as if the Company were required to
file such reports. In addition, whether or not required by the rules and
regulations of the Commission, the Company shall file a copy of all such
information and reports with the Commission for public availability within the
time period specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
security analysts and prospective investors upon request for so long as any
Notes remain outstanding. In addition, the Company shall furnish to the Holders
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture:
(a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days; provided that a failure to make any of the first six scheduled
interest payments on the Senior Notes on the applicable Interest Payment
Date will constitute an Event of Default if such default continues for a
period of three days;
(c) failure by the Company or any Guarantor to comply with the
provisions of the Indenture relating to mergers, consolidations and
transfers of all or substantially all of the assets of the Company or the
failure to make or consummate an Offer to Purchase in accordance with the
"Limitation on Asset Sales" or "Repurchase of Notes upon a Change of
Control" covenant;
(d) the Company or any Restricted Subsidiary fails to perform or
breaches any other covenant or agreement of the Company in the Indenture,
in the Notes or in the Pledge Agreement (other than a default specified in
clause (a), (b) or (c) above) and such default or breach continues for a
period of 30 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Senior Notes or
the Holders of 25% or more of the aggregate principal amount at maturity of
the Senior Discount Notes, as the case may be;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Restricted Subsidiary having an outstanding principal
amount of $5 million or more in the aggregate for all such issues of all
such Persons, whether such Indebtedness now exists or shall hereafter be
created, (1) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (2) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment shall
not have been made, waived or extended within 30 days of such payment
default;
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(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Restricted Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 consecutive days
following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $5 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (1) relief in respect of the Company or any Restricted Subsidiary
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Company or any Restricted Subsidiary or for all or substantially all
of the property and assets of the Company or any Restricted Subsidiary or
(3) the winding up or liquidation of the affairs of the Company or any
Restricted Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days;
(h) the Company or any Restricted Subsidiary (1) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (2) consents to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any Restricted
Subsidiary or for all or substantially all of the property and assets of
the Company or any Restricted Subsidiary or (3) effects any general
assignment for the benefit of creditors;
(i) the Pledge Agreement shall cease to be in full force and effect or
enforceable in accordance with its terms, other than in accordance with its
terms;
(j) except upon the release of any Guarantee in accordance with the
Indenture, (1) any Guarantee ceases to be in full force and effect or is
declared null and void or (2) any Guarantor denies that it has any further
liability under the Guarantee or gives notice to that effect; or
(k) there shall have occurred any loss, suspension, revocation or
non-renewal of the wireless licenses of the Company and its Restricted
Subsidiaries covering 50% or more of the total potential customers covered
by all of the wireless licenses of the Company and its Restricted
Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Senior Notes or the Holders of at least 25% in
aggregate principal amount at maturity of the Senior Discount Notes, as the case
may be, then outstanding, by written notice to the Company (and to the Trustee
if such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of all outstanding Senior Notes or the
Accreted Value of all outstanding Senior Discount Notes, as the case may be,
together with premium, if any, and all accrued and unpaid interest thereon to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest shall be immediately due and payable.
In the event of a declaration of acceleration because an Event of Default set
forth in clause (e) above has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (e) shall be
remedied or cured by the Company or the relevant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(g) or (h) above occurs with respect to
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the Company, the principal of, premium, if any, and accrued interest on the
Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. At any time after declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in principal amount of the outstanding Senior
Notes or the Holders of at least a majority in aggregate principal amount at
maturity of the outstanding Senior Discount Notes by written notice to the
Company and to the Trustee, may waive all past defaults and rescind and annul a
declaration of acceleration and its consequences if (i) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. For
information as to the waiver of defaults, see "-- Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Senior Notes or Holders of at least a majority in aggregate
principal amount at maturity of the outstanding Senior Discount Notes, as the
case may be, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless: (i)
the Holder gives the Trustee written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Senior Notes or the Holders of at least a majority in aggregate principal amount
at maturity of the outstanding Senior Discount Notes, as the case may be, make a
written request to the Trustee to pursue the remedy; (iii) such Holder or
Holders offer the Trustee indemnity satisfactory to the Trustee against any
costs, liability or expense; (iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and (v)
during such 60-day period, the Holders of a majority in aggregate principal
amount of the outstanding Notes do not give the Trustee a direction that is
inconsistent with the request. However, such limitations do not apply to the
right of any Holder of a Note to receive payment of the principal of, premium,
if any, or interest on, such Note or to bring suit for the enforcement of any
such payment, on or after the due date expressed in the Notes, which right shall
not be impaired or affected without the consent of the Holder.
The Indenture will require certain officers of the Company to certify, on
or before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless: (i) the Company shall be the surviving or
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation
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<PAGE> 47
organized and validly existing under the laws of the United States of America or
any jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the obligations of the
Company on all of the Notes and under the Indenture; (ii) immediately after
giving effect to such transaction on a pro forma basis, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Company or any Person
becoming the successor obligor of the Notes shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction, provided that this clause (iii) shall only apply to a
sale of less than all of the assets of the Company; (iv) immediately after
giving effect to such transaction on a pro forma basis the Company, or any
Person becoming the successor obligor of the Notes, as the case may be, could
Incur at least $1.00 of Indebtedness under the first paragraph of the
"Limitation on Indebtedness" covenant described above; provided that this clause
(iv) shall not apply to a consolidation or merger or sale of all (but not less
than all) of the assets of the Company if all Liens and Indebtedness of the
Company or any Person becoming the successor obligor on the Notes, as the case
may be, and its Restricted Subsidiaries outstanding immediately after such
transaction would, if Incurred at such time, have been permitted to be Incurred
(and all such Liens and Indebtedness, other than Liens and Indebtedness of the
Company and its Restricted Subsidiaries outstanding immediately prior to such
transaction, shall be deemed to have been Incurred) for all purposes of the
Indenture; (v) if the Company is not the surviving or continuing Person, each
Guarantor shall have delivered a written instrument in form satisfactory to the
Trustee confirming its Guarantee; and (vi) the Company delivers to the Trustee
an Officer's Certificate (attaching the arithmetic computations to demonstrate
compliance with clauses (iii) and (iv)) and an Opinion of Counsel, in each case
stating that such consolidation, merger or transfer and such supplemental
indenture, if any, complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; provided, however, that clauses (iii) and (iv) above do not apply if, in
the good faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company; and
provided further that any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.
The Company will not permit any Guarantor (other than any Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
the Indenture in connection with any transaction complying with the provisions
described in the "Limitation on Assets Sales" covenant described above) to, in a
single transaction or a series of related transactions, (i) consolidate with or
merge with or into any other Person (other than a Guarantor which is a Wholly
Owned Restricted Subsidiary) or (ii) directly or indirectly, transfer, sell,
lease or otherwise dispose of all or substantially all of its assets, unless:
(a) the Guarantor shall be the surviving or continuing Person, or the Person (if
other than the Guarantor) formed by such consolidation or into which the
Guarantor is merged or that acquired or leased such property and assets of the
Guarantor shall be organized under the laws of the United States of America or
any jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the Guarantor's
obligations under the Indenture; (b) immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing; (c) immediately after giving effect to such
transaction on a pro forma basis, the Company or any Person becoming a successor
obligor on the Notes, as the case may be, could Incur at least $1.00 of
additional Indebtedness under the first paragraph of the "Limitation on
Indebtedness" covenant described above; and (d) the Company shall have delivered
to the Trustee an Officer's Certificate (attaching the arithmetic computations
to demonstrate compliance with clause (c)) and an Opinion of Counsel, in each
case stating that such consolidation, merger or transfer and such supplemental
indenture , if any, complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with.
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<PAGE> 48
DEFEASANCE
DEFEASANCE AND DISCHARGE
The Indenture will provide that the Company and the Guarantors will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Senior Notes and/or the Senior Discount Notes on the 123rd day
after the deposit referred to below, and the provisions of the Indenture will no
longer be in effect with respect to the Notes (except for, among other matters,
certain obligations to register the transfer or exchange of the Notes, to
replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold
monies for payment in trust) if, among other things, (i) the Company has
deposited with the Trustee, in trust, money and/or U.S. Government Obligations
that through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, premium, if any, and accrued interest on the Notes on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Notes, (ii) the Company has delivered to the Trustee (a) either (1) an
Opinion of Counsel to the effect that Holders will not recognize income, gain or
loss for federal income tax purposes as a result of the Company's exercise of
its option under this "Defeasance" provision and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and accompanied by a copy
of) a ruling of the Internal Revenue Service to the same effect unless there has
been a change in applicable federal income tax law after the Closing Date such
that a ruling is no longer required or (2) a ruling directed to the Trustee
received from the Internal Revenue Service to the same effect as the
aforementioned Opinion of Counsel and (b) an Opinion of Counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit
(except with respect to any trust funds for the account of any Holder who may be
deemed an "insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit); the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code or Section 15 of the New
York Debtor and Creditor Law, (iii) immediately after giving effect to such
deposit on a pro forma basis, no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or during the period ending on the
123rd day after the date of such deposit, and such deposit shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound, and (iv) if at such time
the Notes are listed on a national securities exchange, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Notes will
not be delisted as a result of such deposit, defeasance and discharge.
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT
The Indenture further will provide that the provisions of the Indenture
will no longer be in effect with respect to clauses (iii) and (iv) under
"Consolidation, Merger and Sale of Assets" and all the covenants described
herein under "Covenants," clauses (c) and (d) under "Events of Default" with
respect to such clauses (iii) and (iv) under "Consolidation, Merger and Sale of
Assets" and such covenants and clauses (e) and (f) under "Events of Default"
shall be deemed not to be Events of Default, upon, among other things, the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
that through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, premium, if any, and accrued interest on the Notes on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Notes, the satisfaction of the provisions described in clauses (ii)(b),
(iii) and (iv) of the preceding paragraph and the delivery by the Company to the
Trustee of an Opinion of Counsel to the effect that, among other things, the
Holders will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain covenants and Events of
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<PAGE> 49
Default and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred.
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT
In the event the Company exercises its option to omit compliance with
certain covenants and provisions of the Indenture with respect to the Notes as
described in the immediately preceding paragraphs and the Notes are declared due
and payable because of the occurrence of an Event of Default that remains
applicable, the amount of money and/or U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Notes at the time
of their Stated Maturity but may not be sufficient to pay amounts due on the
Notes at the time of the acceleration resulting from such Event of Default.
However, the Company will remain liable for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Senior Notes or the Holders of not
less than a majority in aggregate principal amount at maturity of the
outstanding Senior Discount Notes, as the case may be; provided, however, that
no such modification or amendment may, without the consent of each Holder
affected thereby, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, (ii) reduce the principal of, or premium,
if any, or interest on, any Note, (iii) change the place or currency of payment
of principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding Notes
the consent of whose Holders is necessary to modify or amend the Indenture, (vi)
waive a default in the payment of principal of, premium, if any, or interest on
the Notes or (vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Pledge Agreement, the
Indenture, or in any of the Notes or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer, director, employee or controlling person of the Company or of any
successor Person thereof. Each Holder, by accepting the Notes, waives and
releases all such liability.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default,
the Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.
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<PAGE> 1
EXHIBIT 10.26.12
FIRST AMENDMENT, dated as of January 27, 2000 (this
"Amendment"), to the Parent Agreement ( the "Parent Agreement"),
dated as of September 17, 1999, between Leap Wireless
International, Inc. (the "Parent") and Lucent Technologies,
Inc., as Administrative Agent for the Lenders, as defined in the
Parent Agreement (the Administrative Agent").
WHEREAS, Parent has requested that certain provisions of the Parent
Agreement be amended in certain respects, and Administrative Agent is willing to
amend such provisions on the terms and subject to the conditions set forth
herein;
NOW THEREFORE, for and in consideration of the mutual agreements
contained in this Amendment and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. Amendments. Section 9(c) of the Parent Agreement is amended
and restated in its entirety to read as follows:
"(c) Upon the payment of all amounts outstanding under the
QUALCOMM Credit Agreement and the termination of all commitments to lend
under the QUALCOMM Credit Agreement, the Parent shall comply with the
covenants set forth in Section 5 of the QUALCOMM Credit Agreement as in
effect as of the Effective Date, without giving effect to any subsequent
amendment or waiver thereto; provided, however:
(i) for purposes of this Section 9(c), the term
"Permitted Liens" as used in the QUALCOMM Credit Agreement,
shall be deemed to include liens on any collateral account
funded by the Parent from the net proceeds of the issuance of
Eligible Parent Debt in an amount sufficient to pay cash
interest on such Eligible Parent Debt;
(ii) Section 5.1(h) of the QUALCOMM Credit Agreement
shall be deemed to read:
`(h) Consents and Approvals. From time to time
obtain all material necessary governmental and third
party consents, approvals and licenses in connection
with the transactions contemplated by the Specified
Agreements.'; and
(iii) Section 5.1(j) shall be deemed to have been
deleted from the QUALCOMM Credit Agreement.
<PAGE> 2
As used in this Section 9(c), the term "Eligible Parent Debt"
shall have the meaning ascribed to such term in the Credit
Agreement, dated as of September 20, 1999 and as amended through
the date hereof, among Cricket Communications Holdings, Inc.,
Cricket Communications, Inc., the lenders party thereto and
Lucent Technologies, Inc."
SECTION 2. Consent to Amendment. Notwithstanding the provisions of
Section 10(a) of the Parent Agreement, Administrative Agent agrees that if
Parent fails to raise high-yield debt but is successful in raising equity, then
Parent may amend Section 5.3 of the QUALCOMM Credit Agreement to require a Total
Debt to Total Capitalization ratio of 70% for periods prior to the fourth
anniversary of the closing date of such credit agreement
SECTION 3. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. Expenses. The Borrower agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Amendment,
including the fees, charges and disbursements of Cravath, Swaine & Moore,
counsel for the Administrative Agent.
SECTION 5. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Delivery of an executed
counterpart of a signature page by
<PAGE> 3
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by the respective authorized officers as of the day and year first
written above.
Leap Wireless International, Inc.
By: /s/ James E. Hoffmann
----------------------------------
Name: James E. Hoffmann
Title: Sr. Vice President
LUCENT TECHNOLOGIES, INC., as
Administrative Agent
By: /s/ Dina Fede
----------------------------------
Name: Dina Fede
Title: Director - Customer Finance
<PAGE> 1
EXHIBIT 10.33
LEAP WIRELESS INTERNATIONAL, INC.
GUARANTEED BY
CRICKET COMMUNICATIONS HOLDINGS, INC.
$225,000,000 REPRESENTING 225,000 SENIOR UNITS,
EACH SENIOR UNIT CONSISTING OF ONE 12-1/2% SENIOR NOTE DUE 2010
AND ONE WARRANT TO PURCHASE COMMON STOCK
$668,000,000 REPRESENTING 668,000 SENIOR DISCOUNT UNITS,
EACH SENIOR DISCOUNT UNIT CONSISTING OF ONE 14-1/2% SENIOR DISCOUNT NOTE
DUE 2010 AND ONE WARRANT TO PURCHASE COMMON STOCK
PLACEMENT AGREEMENT
February 16, 2000
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
Bear, Stearns & Co. Inc.
ABN AMRO Incorporated
Credit Suisse First Boston Corporation
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Leap Wireless International, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "PLACEMENT AGENTS") (i) $225,000,000 representing 225,000
Units (the "SENIOR UNITS"), each Senior Unit consisting of one 12-1/2% Series A
Senior Note Due 2010 of the Company (each a "SENIOR NOTE") and one warrant (the
"SENIOR NOTE WARRANT") to purchase 5.146 shares of the common stock, $.0001 par
value per share (the "COMMON STOCK") of the Company and (ii) $668,000,000
representing 668,000 Units (the "SENIOR DISCOUNT UNITS"), each Senior Discount
Unit consisting of one 14-1/2% Series A Senior Discount Note Due 2010 of the
Company (each a "SENIOR DISCOUNT NOTE") and one warrant (the "DISCOUNT NOTE
WARRANT" and together with the Senior Note Warrant, the "WARRANTS") to purchase
2.503 shares of Common Stock of the Company, subject to the terms and conditions
set forth herein. The Senior Units and the Senior Discount Units are
collectively referred to herein as the "UNITS." The Senior Notes and the Senior
Discount Notes (the "SERIES A NOTES") are to be issued pursuant to the
provisions of an indenture (the "INDENTURE"), to be dated as of the Closing Date
(as defined below), among the Company, the Guarantor (as defined below) and
State Street Bank and Trust Company, as trustee (the "TRUSTEE"). The Series A
Notes and the Series B Notes (as defined below) issuable in exchange therefor
are collectively referred to herein as the "NOTES." Each of the Senior Notes and
the Senior Discount Notes will be guaranteed (each a "SUBSIDIARY GUARANTEE") by
Cricket Communications Holdings, Inc. (the "GUARANTOR"). The Company will pledge
pursuant to a pledge agreement (the "PLEDGE AGREEMENT") to be dated as of the
Closing Date, in favor of the Trustee a portion of the net proceeds of the
issuance and sale of the Units as security for payment for the first seven
scheduled interest payments due on the Series A Senior Notes.
The Warrants will be issued pursuant to a warrant agreement (the
"WARRANT AGREEMENT"), to be dated as of the Closing Date, between the Company
and State Street Bank and Trust Company, as warrant agent (the "WARRANT AGENT"),
which will reflect the terms of the Warrants set forth in the Final Memorandum
(as defined below) and will otherwise be in form customary for transactions of
this type. Shares of voting common stock of the Company issuable upon exercise
of the Warrants are collectively referred to herein as the "WARRANT SHARES."
<PAGE> 2
The Units will be offered without being registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act.
With respect to the Notes, the Placement Agents and their direct
and indirect transferees will be entitled to the benefits of a Registration
Rights Agreement to be dated as of the Closing Date among the Company, the
Guarantor and the Placement Agents (the "REGISTRATION RIGHTS AGREEMENT")
pursuant to which the Company will exchange the Series A Notes for the Company's
12-1/2% Series B Senior Notes due 2010 and 14-1/2% Series B Senior Discount
Notes due 2010 (the "SERIES B NOTES"), as the case may be. With respect to the
Warrants, the Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Warrant Registration Rights Agreement to be dated
as of the Closing Date among the Company and the Placement Agents (the "WARRANT
REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Units, the Company has
prepared a preliminary offering memorandum dated January 28, 2000 (the
"PRELIMINARY MEMORANDUM") and will prepare a final offering memorandum dated
February 16, 2000 (the "FINAL MEMORANDUM" and, with the Preliminary Memorandum,
each a "MEMORANDUM") including or incorporating by reference a description of
the terms of the Units, the Notes, the Warrants and the Warrant Shares, the
terms of the offering and a description of the Company. As used herein, the term
"Memorandum" shall include in each case the documents incorporated by reference
therein. The terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the "COMMISSION") pursuant to the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT").
It is understood by all parties that the Company concurrently is
entering into an agreement (the "UNDERWRITING AGREEMENT") with the underwriters
named therein (the "UNDERWRITERS") providing for the sale by the Company, of up
to 4,600,000 shares of its Common Stock.
1. Representations and Warranties. The Company and the Guarantor
each represents and warrants to, and agrees with, you that:
(a) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in either
Memorandum complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder and (ii) the Preliminary Memorandum does
not contain and the Final Memorandum, in the form used by the Placement
Agents to confirm sales and on the Closing Date (as defined in Section
4), will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in either Memorandum
based upon information relating to any Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use
therein.
2
<PAGE> 3
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in each
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(c) Except for QUALCOMM Telecommunications Limited (Cayman
Islands), Metrosvyaz Limited, QUALCOMM Telecommunications Limited (Isle
of Man), Orrengrove Investments Limited, Transworld Telecommunications,
Inc. and Transworld Communications (Bermuda) Ltd., each subsidiary of
the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and, except as described in
the Final Memorandum, are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims.
(d) To the Company's knowledge, each of Pegaso
Telecommunicaciones S.A de C.V., Pegaso Humanos Recursos S.A. de C.V.,
Pegaso PCS S.A. de C.V. and Pegaso Communiccaciones y Sistemas S.A. de
C.V. (collectively, the "PEGASO ENTITIES") has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital
stock of the Pegaso Entities owned directly or indirectly by the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and those shares of capital stock of the Pegaso entities
owned directly or indirectly by the Company are, except as described in
each Memorandum, free and clear of all liens, encumbrances, equities or
claims. As of the date of this Agreement, the Company owns 28.6% of the
outstanding capital stock of Pegaso Telecommunicaciones S.A de C.V. To
the Company's knowledge, Pegaso Telecommunicaciones S.A de C.V. owns
100% of the outstanding capital stock of each of Pegaso Humanos Recursos
S.A. de C.V., Pegaso PCS S.A. de C.V. and Pegaso Communiccaciones y
Sistemas S.A. de C.V. For purposes of the representations and warranties
contained in this Section 1 other than paragraph (c), the Pegaso
Entities shall be deemed subsidiaries; provided that such
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<PAGE> 4
representations and warranties shall be limited to the Company's actual
knowledge with respect to the Pegaso Entities.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(f) The authorized capital stock of the Company conforms
as to legal matters to the description thereof contained in the Final
Memorandum.
(g) The shares of common stock of the Company and the
Guarantor outstanding on the date hereof have been duly authorized and
are validly issued, fully paid and non-assessable
(h) The Indenture has been duly authorized by the Company
and the Guarantor and, on the Closing Date, will have been validly
executed and delivered by the Company and the Guarantor. When the
Indenture has been duly executed and delivered by the Company and the
Guarantor, the Indenture will be a valid and binding agreement of the
Company and the Guarantor, enforceable against the Company and the
Guarantor in accordance with its terms subject to the following
exceptions (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights and remedies of creditors; (ii) the effect of
general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the unenforceability
under certain circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is
contrary to public policy; and (iv) the enforceability of the waiver of
rights or defenses contained in Section 4.13 of the Indenture. On the
Closing Date, the Indenture will conform, in all material respects, to
the requirements of the Trust Indenture Act of 1939, as amended (the
"TIA" or "TRUST INDENTURE ACT"), and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
(i) The Company has duly and validly authorized the
issuance of the Notes and the Warrants as a Unit. On the Closing Date,
the Units will conform, in all material respects, as to legal matters to
the description thereof contained in the Final Memorandum.
(j) The Series A Notes have been duly authorized and, on
the Closing Date, will have been validly executed and delivered by the
Company. When the Series A Notes have been issued, executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, the Series A Notes will be entitled to the
benefits of the Indenture and the Registration Rights Agreement and will
be valid and binding obligations of the Company, enforceable in
accordance with their terms subject to the following exceptions (i) the
effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the
rights and remedies of creditors; (ii) the effect of general principles
of equity, whether enforcement
4
<PAGE> 5
is considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and (iv)
the enforceability of the waiver of rights or defenses contained in
Section 4.13 of the Indenture. On the Closing Date, the Series A Notes
will conform, in all material respects, as to legal matters to the
description thereof contained in the Final Memorandum.
(k) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued,
executed and authenticated in accordance with the terms of the Exchange
Offer (as defined in the Registration Rights Agreement) and the
Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and the Registration Rights Agreement and will be the valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms, subject to the following exceptions (i)
the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
the rights and remedies of creditors; (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding
in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought; (iii) the unenforceability under
certain circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is
contrary to public policy; and (iv) the enforceability of the waiver of
rights or defenses contained in Section 4.13 of the Indenture.
(l) On the Closing Date, the Warrants will have been duly
authorized by the Company and, when executed by the Company and
countersigned by the Warrant Agent as provided in the Warrant Agreement,
and delivered to and paid for by the Placement Agents in accordance with
the terms of this Agreement will be entitled to the benefits of the
Warrant Agreement and the Warrant Registration Rights Agreement and will
be valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to the following
exceptions (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights and remedies of creditors; (ii) the effect of
general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before
which any proceeding therefor may be brought; and (iii) the
unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy. On the
Closing Date, the Warrants will conform, in all material respects, as to
legal matters to the description thereof contained in the Final
Memorandum.
(m) On the Closing Date, the Warrant Shares will have been
duly and validly authorized for issuance by the Company, and when issued
pursuant to the terms of the Warrants and the Warrant Agreement will be
fully paid and non-assessable and will not be subject to any preemptive
or similar rights. On the Closing Date, the Warrant
5
<PAGE> 6
Shares will conform, in all material respects, as to legal matters to
the description thereof contained in the Final Memorandum.
(n) The Subsidiary Guarantee to be endorsed on the Series
A Notes by the Guarantor has been duly authorized by the Guarantor and,
on the Closing Date, will have been duly executed and delivered by the
Guarantor. When the Series A Notes have been issued, executed and
authenticated in accordance with the Indenture and delivered to and paid
for by the Placement Agents in accordance with the terms of this
Agreement, the Subsidiary Guarantee of the Guarantor endorsed thereon
will be entitled to the benefits of the Indenture and the Registration
Rights Agreement and will be the valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its
terms, subject to the following exceptions (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification
of or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and (iv)
the enforceability of the waiver of rights or defenses contained in
Section 4.13 of the Indenture. On the Closing Date, the Subsidiary
Guarantee to be endorsed on the Series A Notes will conform, in all
material respects, as to legal matters to the description thereof
contained in the Final Memorandum.
(o) The Subsidiary Guarantee to be endorsed on the Series
B Notes by the Guarantor has been duly authorized by the Guarantor and,
when issued, will have been duly executed and delivered by the
Guarantor. When the Series B Notes have been issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Subsidiary Guarantee of the Guarantor endorsed thereon
will be entitled to the benefits of the Indenture and the Registration
Rights Agreement and will be the valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its
terms, subject to the following exceptions (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification
of or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and (iv)
the enforceability of the waiver of rights or defenses contained in
Section 4.13 of the Indenture. When the Series B Notes are issued,
authenticated and delivered, the Subsidiary Guarantee to be endorsed on
the Series B Notes will conform, in all material respects, as to legal
matters to the description thereof in the Final Memorandum.
(p) On the Closing Date, each of the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Pledge
Agreement and the Warrant
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<PAGE> 7
Agreement will have been duly and validly authorized by the Company and,
when duly executed and delivered by the Company, will be a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, subject to the following exceptions (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the rights and
remedies of creditors; (ii) the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or at law,
and the discretion of the court before which any proceeding therefor may
be brought; (iii) the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification
of or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and (iv)
the enforceability of the waiver of rights or defenses contained in
Section 4.13 of the Indenture. On the Closing Date, each of the
Registration Rights Agreement, the Warrant Registration Rights
Agreement, the Pledge Agreement and the Warrant Agreement will conform,
in all material respects, as to legal matters to the description thereof
in the Final Memorandum.
(q) The execution and delivery by the Company and the
Guarantor of, and the performance by the Company and the Guarantor of
its obligations under, this Agreement, the Indenture, the Registration
Rights Agreement, the Pledge Agreement, the Warrant Agreement, the
Warrant Registration Rights Agreement, the Notes, the Warrants and the
Subsidiary Guarantees (collectively, the "TRANSACTION DOCUMENTS") will
not contravene (i) any provision of applicable law, (ii) the certificate
of incorporation or by-laws of the Company or the Guarantor, (iii) any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or (iv) any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company, the
Guarantor or any other subsidiary No consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company or the Guarantor of its
obligations under the Transaction Documents, except such as may be
required by the securities or Blue Sky laws of the various states or the
Conduct Rules of NASD Regulation, Inc. in connection with the offer and
sale of the Units, the Notes and the Warrants and by federal and state
securities laws with respect to the Company's obligations under the
Registration Rights Agreement and the Warrant Registration Rights
Agreement.
(r) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Final Memorandum.
(s) There are no legal or governmental proceedings pending
or, to the Company's knowledge, threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in each Memorandum and
proceedings that would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or on the power or ability of
the
7
<PAGE> 8
Company or the Guarantor to perform its obligations under the
Transaction Documents or to consummate the transactions contemplated by
the Final Memorandum.
(t) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(u) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(v) The Company is not, and after giving effect to the
offering and sale of the Units and the application of the proceeds
thereof as described in the Final Memorandum will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(w) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D under the Securities Act, an "Affiliate") of
the Company has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Units in a manner that would require the
registration under the Securities Act of the Units or (ii) engaged in
any form of general solicitation or general advertising in connection
with the offering of the Units, the Notes or the Warrants (as those
terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(x) It is not necessary in connection with the offer, sale
and delivery of the Units to the Placement Agents in the manner
contemplated by this Agreement and the offer, sale and delivery of the
Common Stock of the Company to the Underwriters in the manner
contemplated by the Underwriting Agreement, to register the Units, the
Notes, the Warrants or the Warrant Shares under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended.
(y) The Units, the Notes and the Warrants satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.
8
<PAGE> 9
(z) Upon the execution and delivery of the Pledge
Agreement, delivery to the Trustee of the certificates of instruments,
if any, representing the Pledged Securities related to the Notes (as
defined in the Final Memorandum) pursuant to the Pledge Agreement and
the filing of financing statements, if any, required by the Uniform
Commercial Code in the appropriate offices in the State of New York, the
pledge of and grant of a security interest in such Pledged Securities
(as defined in the Pledge Agreement) for the benefit of the Trustee and
the holders of the Notes will constitute a first priority security
interest in such Pledged Securities.
(aa) Subsequent to the respective dates as of which
information is given in the Final Memorandum, (i) the Company and its
subsidiaries have not incurred any liability or obligation, direct or
contingent, nor entered into any transaction, in each instance not in
the ordinary course of business, which is material to the Company and
its consolidated subsidiaries, taken as a whole; (ii) the Company has
not purchased any of its outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on its
capital stock; and (iii) there has not been any change in the capital
stock, short-term debt or long-term debt of the Company and its
consolidated subsidiaries, which is material to the Company and its
consolidated subsidiaries, taken as a whole; except in each case as
described in the Final Memorandum.
(bb) The Company and its subsidiaries have good and
marketable title to all real property and good and marketable title to
all personal property owned by them that is material to the business of
the Company and its consolidated subsidiaries, taken as a whole, in each
case free and clear of all liens, encumbrances and defects except such
as are described in each Memorandum or such as do not have a material
adverse effect singly or in the aggregate on the Company and its
consolidated subsidiaries, taken as a whole, or do not materially
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid and enforceable leases with such exceptions as do not
materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case
except as described in each Memorandum.
(cc) The Company and its subsidiaries own or possess all
material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them.
Neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(dd) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, or, to the knowledge of the
Company, is imminent, except for efforts in Chile by unions to organize
the employees of Smartcom S.A.; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees
9
<PAGE> 10
of any of its principal suppliers, manufacturers or contractors that
could have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(ee) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied
for, except for a requested increase in the directors' and officers'
liability insurance coverage which was refused with respect to
litigation relating to the Company's Russian Subsidiaries and ventures;
and neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(ff) The Company and its subsidiaries possess all
licenses, certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to so
possess would not singly or in the aggregate have a material adverse
effect on the Company and its consolidated subsidiaries, taken as a
whole. Neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any
such license, certificate, authorization or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
consolidated subsidiaries, taken as a whole, except as described in each
Memorandum.
(gg) Except as described in the Memorandum, the Company
and its subsidiaries (i) are in compliance in all material respects with
any and all applicable foreign, federal, state and local laws and
regulations relating to wireless communications services ("TELECOM
LAWS"), (ii) have received all material permits, licenses, concessions
or other approvals ("TELECOM LICENSES") required of them under
applicable Telecom Laws to conduct their respective businesses, all of
which were validly issued and are in full force and effect, with no
material restrictions or qualifications except as described in each
Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) and (iii) are in compliance in
all material respects with all terms and conditions of any such Telecom
License and (iv) are eligible to acquire and hold C-Block and F-Block
licenses (as such terms are set forth and further defined in 47 C.F.R.
Part 24, Subparts H and I) as a very small business under 47 C.F.R.
Section 24.709, and, except as described in each Memorandum, have
received all approvals, consents, orders or authorizations from the
Federal Communications Commission ("FCC") necessary to establish such
eligibility.
(hh) Each of the Company and its subsidiaries has filed
with the FCC or applicable foreign regulatory authority all necessary
and material reports, documents, instruments, information and
applications required to be filed pursuant to applicable Telecom Laws.
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<PAGE> 11
(ii) Except as described in the Final Memorandum, the
Company has no reason to believe, and does not believe, that the Telecom
Licenses will not be renewed for a full term when they are due for
renewal.
(jj) Except as described in the Final Memorandum, the
Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(kk) The Company and its subsidiaries have filed all
federal, foreign, state and local tax returns which have been required
to be filed and have paid all taxes required to be paid and any other
assessment, fine or penalty levied against them, to the extent that any
of the foregoing is due and payable, except, in all cases, for any such
tax, assessment, fine or penalty that is being contested in good faith
(and except in any case in which the failure to so file or pay would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole).
(ll) The Company reviewed its operations and that of its
consolidated subsidiaries to evaluate the extent to which the business
or operations of the Company or any of its consolidated subsidiaries
would be affected by the "Year 2000 Problem" (that is, any significant
risk that the computer hardware or software applications used by the
Company and its consolidated subsidiaries will not, in the case of dates
or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to
January 1, 2000); as a result of such review, the Company has no reason
to believe, and does not believe, that the Year 2000 Problem will have a
material adverse effect on the Company and its consolidated
subsidiaries, taken as a whole. As of the date of this Agreement, the
Company has not experienced any problems or incurred any costs related
to the Year 2000 Problem that are of a character required to be
described or referred to in the Memorandum which have not been
accurately described in each Memorandum.
(mm) (1) Except as would not singly or in the aggregate
have a material adverse effect on the Company and its consolidated
subsidiaries, taken as a whole, the Company and its subsidiaries have
complied and are in compliance with all federal, state, local and
foreign statutes, executive orders, proclamations, regulations, rules,
directives, decrees, ordinances and similar provisions having the force
or effect of law and all judicial and administrative orders, rulings,
determinations and common law concerning the importation of merchandise,
the export or reexport of products, services and technology, and the
terms and conduct of international transactions applicable to the
Company and its subsidiaries in connection with the conduct of the
Company's or any subsidiary's business (including as the same relates to
record keeping requirements) ("INTERNATIONAL TRADE LAWS AND
REGULATIONS"); (2) except as would not singly or in the
11
<PAGE> 12
aggregate have a material adverse effect on the Company and its
consolidated subsidiaries, taken as a whole, neither the Company nor any
of its subsidiaries has made or provided any false statement or omission
to any agency of any federal, state or local government, purchasers of
products, or foreign government or foreign agency, in connection with
the exportation of merchandise (including with respect to export
licenses, exceptions and other export authorizations and any filings
required for or related to exportation of any item), the importation of
merchandise or other approvals required by a foreign government or
agency or any other requirement relating to any International Trade Laws
and Regulations; and (3) to the Company's knowledge, neither the Company
nor any of its subsidiaries has made any payment, offer, gift, promise
to give, or authorized or otherwise participated in, assisted or
facilitated any payment or gift related to the Company's or any
subsidiary's business that is prohibited by the United States Foreign
Corrupt Practices Act.
(nn) The Company has provided the Placement Agents and
counsel for the Placement Agents true and correct copies of (i) the
Credit Agreement, dated as of September 29, 1999, among Cricket
Communications, Inc., Cricket Wireless Communications, Inc., the Lenders
party thereto, and Lucent Technologies, Inc., as Administrative Agent,
(ii) the Memorandum of Agreement, dated September 20, 1999, by and
between Ericsson Wireless Communications Inc., the Company and Cricket
Wireless Communications, Inc. or all definitive agreements entered into
pursuant to such Memorandum of Agreement on or before the date hereof,
(iii) the Credit Agreement, dated September 23, 1998, by and between the
Company and Qualcomm Incorporated ("QUALCOMM"), (iv) the Second Amended
and Restated Deferred Payment Agreement, dated October 12, 1999, by and
among Chilesat Telefonia Personal S.A., as Purchaser, Qualcomm and the
Other Vendors Named Therein, Inversiones Leap Wireless Chile S.A., as
Guarantor, Qualcomm, as Administrative Agent, and Qualcomm, as
Collateral Agent and (v) the Letter of Intent, dated April 15, 1999,
between Qualcomm and the Company setting forth terms and conditions
pursuant to which Qualcomm will provide financing to Smartcom S.A. or
all definitive agreements entered into pursuant to such Letter of Intent
on or before the date hereof, including in the case of (i), (ii), (iii)
(iv) and (v) above any amendment thereto or restatements thereof, and
all exhibits thereto, as in effect on the date hereof (collectively, the
"VENDOR FINANCING AGREEMENTS").
(oo) Each of the Vendor Financing Agreements (i) has been
duly authorized, executed and delivered by, (ii) constitutes the valid
and binding obligation of and (iii) is enforceable in accordance with
its terms against, the Company and its subsidiaries, to the extent each
is a party thereto and, to the best of the Company's knowledge, the
lenders party thereto, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies. The execution, delivery
and performance of the Vendor Financing Agreements by the Company and
any of its subsidiaries that is a party thereto, the compliance by the
Company and such subsidiaries with all of the provisions thereof and the
consummation of the transactions contemplated thereby do not (1) require
any consent, approval, authorization or other order for, or
qualification with, any court or governmental body or agency (except
such as have already been obtained), except where such failure to obtain
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<PAGE> 13
any consent, approval, authorization or other order or qualification
would not singly or in the aggregate have a material adverse effect on
the Company and its subsidiaries, taken as a whole, (2) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under (or an event which with notice or lapse of time, or both, would
constitute a breach of or a default under), (x) the certificate of
incorporation or by-laws of the Company or any of its subsidiaries or
(y) any indenture, loan agreement, mortgage, lease or other agreement or
instrument, to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries are bound, except,
with respect to clause (y), for any such conflict, breach or default
which, singly or in the aggregate, would not have a material adverse
effect on the Company and its consolidated subsidiaries, taken as a
whole, (3) as of the date hereof violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or
any governmental body or agency having jurisdiction over the Company or
any of its subsidiaries, except for any such violation or conflict which
would not singly or in the aggregate have a material adverse effect on
the Company and its consolidated subsidiaries, taken as a whole.
(pp) The consolidated financial statements of the Company
together with related notes set forth in the Final Memorandum fairly
present the financial condition of the Company and its subsidiaries, as
of the dates indicated, and the results of operations and changes in
financial position for the periods therein specified in conformity with
generally accepted accounting principles consistently applied throughout
the periods involved (except as otherwise stated therein); the summary
and selected financial data in the Final Memorandum present fairly in
all material respects the financial information shown therein and have
been prepared and compiled on a basis consistent with audited financial
statements included therein, except as otherwise stated therein; and the
pro forma financial information and the related notes thereto included
in the Final Memorandum have been prepared using reasonable assumptions
and have been prepared in accordance with the requirements of the
Securities Act which would be applicable if the offering of the Units
were registered under the Securities Act and include all adjustments
necessary to present fairly in all material respects the pro forma
financial information included in the Final Memorandum at the respective
dates and for the respective periods indicated. Each of
PricewaterhouseCoopers LLP, Price Waterhouse and PricewaterhouseCoopers,
which have reported upon certain of the audited financial statements
included in the Final Memorandum, is an independent public accounting
firm within the meaning of the Securities Act and the rules and
regulations thereunder.
(qq) No relationship, direct or indirect, exists between
or among the Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders, customers, suppliers or contractors
of the Company and its subsidiaries, on the other hand, the disclosure
of which would be required to be described in an offering memorandum
relating to a registered offering, which is not so described in the
Memorandum.
(rr) The Asset Purchase Agreement, dated December 24,
1998, by and among Chase Telecommunications Holdings, Inc., Anthony
Chase, Richard McDugald and the Company is in full force and effect,
and, to the best of the Company's
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<PAGE> 14
knowledge, there are no facts or circumstances existing that would
prevent or delay the consummation of the transactions contemplated by
such agreement, subject to obtaining the approval of the FCC.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Placement Agents, and each Placement Agent, upon the basis
of the representations and warranties of the Company and the Guarantor herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from the Company the respective numbers of Senior
Units and Senior Discount Units set forth in Schedule I hereto opposite its name
at a purchase price of $970 per Senior Unit and $469.65 per Senior Discount
Units (the "PURCHASE PRICE").
The Company hereby agrees that, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the Placement Agents, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of (i) any debt securities of the Company or warrants to purchase debt
securities of the Company substantially similar to the Notes or (ii) warrants to
purchase common stock of the Company (in each case other than the sale of the
Units, Notes and Warrants under this Agreement).
3. Terms of Offering. You have advised the Company and the
Guarantor that the Placement Agents will make an offering of the Units purchased
by the Placement Agents hereunder on the terms to be set forth in the Final
Memorandum, as soon as practicable after this Agreement is entered into as in
your judgment is advisable.
4. Payment and Delivery. Payment for the Units shall be made to
the Company (which will upon receipt immediately deposit a portion of the
proceeds sufficient to purchase the Pledged Securities with the Trustee pursuant
to the Pledge Agreement) in Federal or other funds immediately available in New
York City or such other location as may be mutually acceptable against delivery
of such Units for the respective accounts of the several Placement Agents at
10:00 a.m., New York City time, on February 23, 2000, or at such other time on
the same or such other date, not later than March 1, 2000, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
Certificates for the Notes shall be in definitive global form,
registered in such names and in such denominations as you shall request in
writing not later than one full business day prior to the Closing Date. The
certificates evidencing the Warrants shall be in definitive global form,
registered in such names and denominations as you shall request in writing not
later than one full business day prior to the Closing Date. The certificates
evidencing the Notes and the certificates evidencing the Warrants shall be
delivered to you, or upon your instruction, on the Closing Date for the
respective accounts of the Placement Agents, with any transfer taxes payable in
connection with the transfer of the Units, the Notes and the Warrants to the
Placement Agents duly paid, against payment of the applicable Purchase Price
therefor.
5. Conditions to the Placement Agents' Obligations. The several
obligations of the Placement Agents to purchase and pay for the Units on the
Closing Date are subject to the following conditions:
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<PAGE> 15
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
the Company or any of the Company's debt securities or in the rating
outlook for the Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set forth
in the Final Memorandum (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is so material and adverse that it makes it, in your judgment,
impracticable to market the Units on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantor contained in this Agreement are true and
correct as of the Closing Date and that the Company and the Guarantor
have complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date. The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to
proceedings threatened.
(c) The Placement Agents shall have received on the
Closing Date an opinion of Latham & Watkins, outside counsel for the
Company and the Guarantor, dated the Closing Date, to the effect set
forth in Exhibit A. Such opinion shall be rendered to the Placement
Agents at the request of the Company and the Guarantor and shall so
state therein.
(d) The Placement Agents shall have received on the
Closing Date an opinion of O'Melveny & Myers, LLP, counsel for the
Placement Agents, dated the Closing Date, in form and substance
reasonably satisfactory to you.
(e) The Placement Agents shall have received on the
Closing Date an opinion of Grasty Quintana Majlis & Cia, outside counsel
for Inversiones Leap Wireless Chile S.A. and Smartcom S.A. (formerly
Chilesat Telefonica Personal S.A.), dated the Closing Date, in form and
substance reasonably satisfactory to you. Such opinion shall be rendered
to the Placement Agents at the request of the Company and the Guarantor
and shall so state therein.
(f) The Placement Agents shall have received on the
Closing Date an opinion of Mijares, Angoitia, Cortes Y Fuentes, outside
counsel for the Pegaso Entities,
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<PAGE> 16
dated the Closing Date, in form and substance reasonably satisfactory to
you. Such opinion shall be rendered to the Placement Agents at the
request of the Company and the Guarantor and shall so state therein.
(g) The Placement Agents shall have received on each of
the date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory
to the Placement Agents, from each of PricewaterhouseCoopers LLP, Price
Waterhouse and PricewaterhouseCoopers, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Final Memorandum; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The "lock-up" agreement dated January 27, 2000
previously delivered to you by Qualcomm Incorporated shall be in full
force and effect on the Closing Date.
(i) The Units shall have been approved by the NASD for
trading and duly listed in PORTAL.
(j) The Placement Agents shall have received a
counterpart, conformed as executed, of the Indenture which shall have
been entered into by the Company, the Guarantor and the Trustee.
(k) The Company and the Guarantor shall have executed the
Registration Rights Agreement and the Placement Agents shall have
received an original copy thereof, duly executed by the Company and the
Guarantor.
(l) The Company shall have executed the Warrant Agreement,
the Warrant Registration Rights Agreement and the Pledge Agreement and
the Placement Agents shall have received an original copy thereof, duly
executed by the Company.
(m) The closing of the sale of the Firm Shares (as defined
in the Underwriting Agreement) under the Underwriting Agreement shall
have occurred prior to or concurrently with the closing hereunder.
(n) The Company shall have received an executed payoff
letter (the "Payoff Letter") from Qualcomm Incorporated in the form
previously agreed to by the Placement Agents.
6. Covenants of the Company. In further consideration of the
agreements of the Placement Agents contained in this Agreement, the Company
covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c), as many copies of the Final
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<PAGE> 17
Memorandum, any documents incorporated by reference therein and any
supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior
to the date on which all of the Units shall have been sold by the
Placement Agents, any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Final Memorandum in
order to make the statements therein, in the light of the circumstances
when the Final Memorandum is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Placement Agents, it is
necessary to amend or supplement the Final Memorandum to comply with
applicable law, forthwith to prepare and furnish, at its own expense, to
the Placement Agents, either amendments or supplements to the Final
Memorandum so that the statements in the Final Memorandum as so amended
or supplemented will not, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, be misleading or so that
the Final Memorandum, as amended or supplemented, will comply with
applicable law.
(d) To endeavor to qualify the Units, the Notes and the
Warrants for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you shall reasonably request.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company
shall pay or cause to be paid all expenses incident to the performance
of its obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Units, the
Notes and the Warrants and all other fees or expenses in connection with
the preparation of each Memorandum and all amendments and supplements
thereto, including all printing costs associated therewith, and the
delivering of copies thereof to the Placement Agents, in the quantities
herein above specified, (ii) all costs and expenses related to the
transfer and delivery of the Units, the Notes and the Warrants to the
Placement Agents, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or legal investment
memorandum in connection with the offer and sale of the Units, the Notes
and the Warrants under state securities laws and all expenses in
connection with the qualification of the Units, the Notes and the
Warrants for offer and sale under state securities laws as provided in
Section 6(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Placement Agents in connection with
such qualification and in connection with the Blue Sky or legal
investment memorandum, (iv) any fees charged by rating agencies for the
rating of the Units, the Notes and the Warrants, (v) the cost of
printing this Agreement, (vi) the fees and expenses, if any, incurred in
connection with the admission of the Units for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee
and the Warrant Agent and any transfer agent, registrar or depositary,
(viii) the cost of the preparation, issuance and delivery of the Units,
(ix) the costs and expenses of the
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<PAGE> 18
Company relating to investor presentations on any "road show" undertaken
in connection with the marketing of the offering of the Units,
including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants
engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered by the Company in connection with
the road show, and (x) all other cost and expenses incident to the
performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8, and the
last paragraph of Section 10, the Placement Agents will pay all of their
costs and expenses, including, without limitation, fees and
disbursements of their counsel, transfer taxes payable on resale of any
of the Units, the Notes and the Warrants by them and any advertising
expenses connected with any offers they may make.
(f) Except as contemplated by the Registration Rights
Agreement and the Warrant Registration Rights Agreement, neither the
Company nor any Affiliate will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Units in
a manner which would require the registration under the Securities Act
of the Units.
(g) Except as contemplated by the Registration Rights
Agreement and the Warrant Registration Rights Agreement, the Company
shall not solicit any offer to buy or offer or sell the Units by means
of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(h) While any of the Units, the Notes and the Warrants
remain "restricted securities" within the meaning of the Securities Act,
to make available, upon request, to any seller of such Units, Notes or
Warrants the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or
15(d) of the Exchange Act.
(i) To use its best efforts to permit the Units to be and
to remain designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(m) During the period of two years after the Closing Date,
the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to resell any of the
Units, the Notes and the Warrants which constitute "restricted
securities" under Rule 144 that have been reacquired by the Company.
7. Offering of Securities; Restrictions on Transfer. Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or
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<PAGE> 19
offer or sell, any Units, Notes or Warrants by any form of general solicitation
or general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (ii) it will solicit offers for such
Units, Notes or Warrants only from, and will offer such Units, Notes or Warrants
only to, persons that it reasonably believes to be QIBs that in purchasing such
Units, Notes or Warrants are deemed to have represented and agreed as provided
in the Final Memorandum under the caption "Transfer Restrictions."
8. Indemnity and Contribution. (a) The Company and the Guarantor
each agree to indemnify and hold harmless each Placement Agent and each person,
if any, who controls any Placement Agent within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Placement Agent furnished to the Company in writing
by such Placement Agent through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any Memorandum
shall not inure to the benefit of any Placement Agent from whom the person
asserting any such losses, claims, damages or liabilities purchased Units, or
any person controlling such Placement Agent, if a copy of the Final Memorandum
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Placement Agent to such person, at or prior to the written confirmation of the
sale of the Units, to such person, and if the Final Memorandum (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(a) hereof.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantor, and each of their
respective directors, officers and each person, if any, who controls the Company
or the Guarantor within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Guarantor to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in
either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the
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<PAGE> 20
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Placement Agents on the other hand from the offering of the Units or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
and the Guarantor on the one hand and of the Placement Agents on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantor
on the one hand and the Placement Agents on the other hand in connection with
the offering of the Units shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Units (before deducting
expenses) received by the Company and the total discounts and
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<PAGE> 21
commissions received by the Placement Agents, in each case as set forth in the
Final Memorandum, bear to the aggregate offering price of the Units. The
relative fault of the Company and the Guarantor on the one hand and of the
Placement Agents on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Placement Agents and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Placement Agents' respective obligations
to contribute pursuant to this Section 8 are several in proportion to the
respective number of Units they have purchased hereunder, and not joint.
(e) The Company, the Guarantor and the Placement Agents agree
that it would not be just or equitable if contribution pursuant to this Section
8 were determined by pro rata allocation (even if the Placement Agents were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(d). The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in Section 8(d) shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Placement Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the Units
resold by it in the initial placement of such Units were offered to investors
exceeds the amount of any damages that such Placement Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Guarantor contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company or the
Guarantor, or any of their respective officers or directors or any person
controlling the Company or the Guarantor and (iii) acceptance of and payment for
any of the Units.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your
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<PAGE> 22
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or together
with any other such event, makes it, in your judgment, impracticable to market
the Units on the terms and in the manner contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Placement
Agents shall fail or refuse to purchase Units that it or they have agreed to
purchase hereunder on such date, and the aggregate number of Units which such
defaulting Placement Agent or Placement Agents agreed but failed or refused to
purchase is not more than one-tenth of the aggregate number of Units to be
purchased on such date, the other Placement Agents shall be obligated severally
in the proportions that the number of Units set forth opposite their respective
names in Schedule I bears to the aggregate number of Units set forth opposite
the names of all such non-defaulting Placement Agents, or in such other
proportions as you may specify, to purchase the Units which such defaulting
Placement Agent or Placement Agents agreed but failed or refused to purchase on
such date; provided that in no event shall the number of Units that any
Placement Agent has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Units without the written consent of such Placement Agent. If, on the Closing
Date any Placement Agent or Placement Agents shall fail or refuse to purchase
Units which it or they have agreed to purchase hereunder on such date and the
aggregate number of Units with respect to which such default occurs is more than
one-tenth of the aggregate number of Units to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Units
are not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Placement Agent or of the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Final Memorandum or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Placement Agent from liability in respect of
any default of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement
Agents, or any of them, because of any failure or refusal on the part of the
Company or the Guarantor to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or the Guarantor
shall be unable to perform its obligations under this Agreement, the Company and
the Guarantor will reimburse the Placement Agents or such Placement Agents as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Placement Agents in connection with this Agreement
or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
22
<PAGE> 23
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
[Remainder of Page Intentionally Blank]
23
<PAGE> 24
Very truly yours,
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ Harvey P. White
-----------------------------------------
Name: Harvey P. White
Title: Chairman and CEO
CRICKET COMMUNICATIONS HOLDINGS, INC.
By: /s/ Harvey P. White
-----------------------------------------
Name: Harvey P. White
Title: Chairman
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Acting severally on behalf of themselves
and the several Placement Agents named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ Bryan W. Andzejewski
-----------------------------------
Name: Bryan W. Andzejewski
Title: Principal
S-1
<PAGE> 25
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SENIOR
NUMBER OF SENIOR DISCOUNTED UNITS TO BE
PLACEMENT AGENT UNITS TO BE PURCHASED PURCHASED
--------------- --------------------- ----------------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated........... 123,750 367,400
Donaldson, Lufkin & Jenrette Securities
Corporation................................. 56,250 167,000
Dear, Stearns & Co. Inc..................... 22,500 66,800
ABN AMRO Incorporated....................... 11,250 33,400
Credit Suisse First Boston Corporation...... 11,250 33,400
Total....................................... 225,000 668,000
</TABLE>
Sch. I-1
<PAGE> 26
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered
pursuant to Section 5(c) of the Placement Agreement shall be to the effect that:
A. Each of the Company and the Guarantor has been duly
incorporated and is validly existing and in good standing under the laws of the
State of Delaware, with corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum. Based solely on
certificates from public officials, we confirm that the Company is qualified to
do business in the states listed on Schedule ___ hereto.
B. Each domestic subsidiary of the Company has been duly
incorporated and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the corporate power and authority to own
its property and to conduct its business as described in the Final Memorandum.
Based solely on certificates from public officials, we confirm that such
domestic subsidiaries are qualified to do business in the states listed on
Schedule ___ hereto.
C. The Placement Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
D. The authorized capital stock of the Company conforms as to
legal matters to the description thereof under the captions "Description of Leap
Capital Stock" and "Capitalization" contained in the Final Memorandum.
E. The shares of common stock of the Company and the Guarantor
outstanding on the date hereof have been duly authorized and are validly issued,
fully paid and non-assessable.
F. All of the issued shares of capital stock of each domestic
subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable.
G. The Indenture has been duly authorized, executed and delivered
by the Company and the Guarantor. When the Indenture has been duly executed and
delivered by the Company and the Guarantor, the Indenture will be a valid and
binding agreement of the Company and the Guarantor, enforceable against the
Company and the Guarantor in accordance with its terms. On the Closing Date, the
Indenture is in such form that would not preclude qualification under the Trust
Indenture Act of 1939, as amended (the "TIA" or the "Trust Indenture Act"), in
accordance with the Registration Rights Agreement.
H. The Company has duly and validly authorized the issuance of
the Notes and the Warrants as a Unit. On the Closing Date, the Units, Notes,
Warrants, Warrant Shares and Subsidiary Guarantees will conform, in all material
respects, as to legal matters to the description thereof contained in the Final
Memorandum.
Exh. A-1
<PAGE> 27
I. The Series A Notes when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid for by you
in accordance with the terms of the Placement Agreement, will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms.
J. On the Closing Date, the Series B Notes (as defined in the
Registration Rights Agreement) have been duly authorized by the Company. The
Series B Notes when executed and authenticated in accordance with the terms of
the Indenture and the Registration Rights Agreement, will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms.
K. On the Closing Date, the Warrants have been duly authorized by
the Company and, when executed by the Company and countersigned by the Warrant
Agent as provided in the Warrant Agreement, and delivered to and paid for by you
in accordance with the terms of the Placement Agreement will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Warrant
Agreement and the Warrant Registration Rights Agreement.
L. On the Closing Date, the Warrant Shares will have been duly
and validly authorized for issuance by the Company, and when issued pursuant to
the terms of the Warrants and the Warrant Agreement will be validly issued,
fully paid and non-assessable and, to the best of our knowledge, free of
preemptive rights.
M. The Subsidiary Guarantee to be endorsed on the Series A Notes
has been duly authorized by the Guarantor and when executed in accordance with
the terms of the Indenture and upon due execution, authentication and delivery
of the Series A Notes and upon payment therefor, will be legally, valid and
binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms.
N. The Subsidiary Guarantee to be endorsed on the Series B Notes
has been duly authorized by the Guarantor and when executed in accordance with
the terms of the Indenture and upon due execution, authentication and delivery
of the Series B Notes in accordance with the terms of the Registration Rights
Agreement, will be legally, valid and binding obligations of the Guarantors,
enforceable against the Guarantors in accordance with their terms.
O. On the Closing Date, each of the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Pledge Agreement and
the Warrant Agreement will have been duly and validly authorized by the Company
and, when duly executed and delivered by the Company, will be a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms. On the Closing Date, each of the Registration Rights Agreement, the
Warrant Registration Rights Agreement, the Pledge Agreement and the Warrant
Agreement will conform, in all material respects, as to legal matters to the
description thereof in the Final Memorandum.
P. The execution and delivery by the Company and the Guarantor
of, and the compliance by the Company and the Guarantor with the provisions of,
the Placement
Exh. A-2
<PAGE> 28
Agreement, the Indenture, the Registration Rights Agreement, the Pledge
Agreement, the Warrant Agreement, the Warrant Registration Rights Agreement, the
Notes, the Warrants and the Subsidiary Guarantees (collectively, the
"TRANSACTION DOCUMENTS") will not result in a violation by the Company or the
Guarantor of its certificate of incorporation or by-laws, or the Delaware
General Corporation Law or any federal or California statute, rule or regulation
known to us to be applicable to the Company or the Guarantor (other than federal
or state securities laws or the Communications Act of 1934, as amended (the
"Communications Act") or the rules, regulations, decisions and written policies
of the FCC (the "FCC Rules"), which are specifically addressed elsewhere
herein), or any judgment, order or decree of any governmental body, or agency
specifically directed to the Company, the Guarantor or any other domestic
subsidiary and identified to us by an officer of the Company or the Guarantor as
material to the Company or the Guarantor. To the best of our knowledge, no
consent, approval, authorization or order of, or filing with, any federal or
California court or governmental agency or body is required for the compliance
by the Company with the provisions of the Transaction Documents, except such as
have been obtained or as may be required under state securities laws in
connection with the purchase and distribution of the Units by the Placement
Agents.
Q. The Company is not, and after giving effect to the offering
and sale of the Units and the application of the proceeds thereof as described
in the Final Memorandum, will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
R. The statements in the Final Memorandum under the captions
"Description of the Units", "Description of the Notes", "Description of the
Warrants", "Description of Leap Capital Stock", "Transfer Restrictions" and
"Certain U.S. Federal Tax Considerations", insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to therein,
are accurate in all material respects.
S. The Units, the Notes and the Warrants satisfy the requirements
set forth in Rule 144A(d)(3) under the Securities Act.
T. Upon the execution and delivery of the Pledge Agreement,
delivery to the Trustee of the certificates of instruments, if any, representing
the Pledged Securities related to the Notes (as defined in the Final Memorandum)
pursuant to the Pledge Agreement and the filing of financing statements, if any,
required by the Uniform Commercial Code in the appropriate offices in the State
of New York, the pledge of and grant of a security interest in such Pledged
Securities for the benefit of the Trustee and the holders of the Notes will
constitute a first priority security interest in such Pledged Securities.
U. Schedule I attached hereto includes all licenses,
authorization, and permits required under the Communication Act or the FCC
Rules, which are necessary for the Company, the Guarantor and the Company's
other domestic subsidiaries to conduct their business as we have been advised
they are now conducted and as proposed to be conducted immediately following the
Closing Date (the "FCC LICENSES"). Schedule I attached hereto accurately sets
forth each such license, the name of the licensee, the call letters (if
applicable), the class of service, geographic scope and the expiration date for
each of the FCC Licenses, each of which is in full force and effect.
Exh. A-3
<PAGE> 29
V. Except as described in the Final Memorandum, other than
rulemaking proceedings or similar proceedings generally affecting the domestic
public cellular mobile radio telecommunications industry, there is no proceeding
before the FCC that is pending or, to the best of our knowledge, threatened
against the Company, the Guarantor or the Company's other domestic subsidiaries
or any of their officers, directors or shareholders, including any FCC
complaint, investigation, notice of apparent liability, order of forfeiture,
proceeding pursuant to an exercise of pre-emptive authority under 47 U.S.C.
Section 252, or other administrative action or proceeding, regarding the
business of the Company, the Guarantor and any other domestic subsidiaries (i)
that is likely to result in a forfeiture or termination, revocation, adverse
modification, non-renewal, short-term renewal, or other material impairment of
any of the FCC Licenses, or (ii) that reasonably could be expected to materially
and adversely affect the operations or condition, financial or otherwise, of the
Company, or its domestic subsidiaries or the ability of the Company or the
Guarantor to perform its obligations under this Agreement.
W. No authorization or approval or other action by, and no notice
to or filing with, the FCC is required under the Communications Act or the FCC
Rules: (i) in connection with the due execution and delivery by the Company and
the Guarantor of the Placement Agreement; or (ii) for the exercise by the
Placement Agents of any of their respective rights and remedies under the
Placement Agreement.
X. The execution and delivery by the Company and the Guarantor of
the Placement Agreement and the performance by the Company and the Guarantor of
its obligations under the Placement Agreement (i) do not contravene the
Communications Act or any FCC Rule and (ii) do not and will not result in any
suspension, revocation, material impairment or non-renewal of any FCC License
material to the Company's and its domestic subsidiaries' operations and
business.
Y. Each document filed pursuant to the Exchange Act, if any, and
incorporated by reference in the Final Memorandum (except for financial
statements, schedules and other financial and statistical data included or
incorporated by reference in, or omitted from, the Final Memorandum as to which
we need not express any opinion) complied when so filed as to form in all
material respects with the requirements for such documents under the Exchange
Act and the applicable rules and regulations of the Commission thereunder. In
passing upon the compliance as to form of each such document filed pursuant to
the Exchange Act, if any, we assume that the statements made and incorporated by
reference therein are correct and complete.
Z. No registration of the Units or the Guarantees under the
Securities Act, and no qualification of the Indenture under the Trust Indenture
Act, is required for the purchase of the Units by you or the initial resale of
the Units by you to QIBs, in each case, in the manner contemplated by the
Placement Agreement and the Final Memorandum. We express no opinion, however, as
to when or under what circumstances any Units initially sold by you may be
reoffered or resold.
In addition, we have participated in conferences with officers
and other representatives of the Company, counsel to the Company,
representatives of the independent public accountants for the Company, and your
representatives, at which the contents of the Final Memorandum and related
matters were discussed and, although we are not passing upon, and do
Exh. A-4
<PAGE> 30
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Final Memorandum and
have not made any independent check or verification thereof, during the course
of such participation, no facts came to our attention that caused us to believe
that the Final Memorandum, as of its date or as of the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, it being understood
that we express no belief with respect to the financial statements, schedules or
other financial and statistical data included or incorporated by reference in,
or omitted from the Final Memorandum.
Exh. A-5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 628,87<F1>
<SECURITIES> 29,725<F2>
<RECEIVABLES> 7,528
<ALLOWANCES> 1,174
<INVENTORY> 5,379
<CURRENT-ASSETS> 684,550
<PP&E> 157,273
<DEPRECIATION> 20,496
<TOTAL-ASSETS> 1,053,663
<CURRENT-LIABILITIES> 54,986
<BONDS> 552,986
0
0
<COMMON> 3
<OTHER-SE> 435,678
<TOTAL-LIABILITY-AND-EQUITY> 1,053,663
<SALES> 14,283
<TOTAL-REVENUES> 14,283
<CGS> 22,462
<TOTAL-COSTS> 22,462
<OTHER-EXPENSES> 43,289
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,120
<INCOME-PRETAX> (124,816)
<INCOME-TAX> 0
<INCOME-CONTINUING> (124,816)
<DISCONTINUED> 0
<EXTRAORDINARY> (4,422)
<CHANGES> 0
<NET-INCOME> (129,238)
<EPS-BASIC> (6.53)
<EPS-DILUTED> (6.53)
<FN>
<F1>Included in Cash are restricted amounts totaling $28,942.
<F2>The balance in Securities represent restricted investments.
</FN>
</TABLE>
