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Technology Stocks : Leap Wireless International (LWIN) -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (452)	7/25/1999 9:17:00 PM
From: SKIP PAUL	Respond to of 2737

The FCC has determined that to be non issue. See discussion below. 21. Based on the structure created by the Warrant and the Agreement Concerning Share Ownership, we find that the maximum number of shares that QUALCOMM may hold under the Warrant will not exceed 15 percent of Leap's equity. The current Warrant permits QUALCOMM to purchase up to 4,500,000 shares of Leap's common stock, which constitutes approximately 14.61 percent of Leap's total equity. The Warrant, however, also obligates QUALCOMM to aggregate its shares with the shares and options of its officers and directors and limits the amount of shares that QUALCOMM may purchase such that the aggregated amount of shares owned by QUALCOMM and shares and options owned by its officers and directors will not exceed 15 percent of Leap's equity. 22. These two obligations are also contained in the Agreement Concerning Share Ownership. QUALCOMM further commits in the Agreement Concerning Share Ownership to implement a monitoring program to ensure compliance with the 15 percent aggregate limit. Accordingly, as we view this structure, QUALCOMM may not exercise its rights under the Warrant in a manner that would cause the aggregate of its shares and those of its officers and directors to exceed 15 percent of Leap's equity. Because QUALCOMM's officer and directors currently hold approximately nine percent of Leap's equity, QUALCOMM may purchase shares under the Warrant in an amount that equals no more than approximately six percent of Leap's equity. If the number of shares and options held by QUALCOMM's officer and directors changes, or if the structure of Leap's equity changes, QUALCOMM would be able to purchase additional shares, as long as the aggregate amount of its interest and that of its officers and directors does not exceed 15 percent of Leap's equity. 23. We do not agree with Petitioners that the obligations imposed upon QUALCOMM in the Warrant and the Agreement Concerning Share Ownership constitute either an impermissible savings clause or a time-restricted call option under the Fifth MO&O such that QUALCOMM's interest must be viewed as 23.61 percent. We do not believe that the combined interest of QUALCOMM and its officers and directors threatens Leap's status as a designated entity or puts Leap in a position where, at the end of the designated entity holding period applicable to its licenses, it will not have complete control of decisions involving whether to sell equity, as is required by the Fifth MO&O. QUALCOMM's obligation under the Warrant to aggregate its shares with the shares and options held by its officers and directors and the overall 15 percent aggregate limit do not expire until September 23, 2008. The designated entity holding period for AirGate's licenses will expire on April 28, 2002. The designated entity holding period for the licenses that Leap will acquire pursuant to Auction No. 22 will expire in 2004. Thus, the obligations in the Warrant and the Agreement Concerning Share Ownership exceed not only the five-year designated entity holding period for both the C and F Block licenses it seeks to acquire but also the license term of the F Block licenses that Leap seeks to acquire from AirGate. In addition, the obligations will last nine of the ten years of the license term for the licenses granted pursuant to Auction No. 22. We conclude, therefore, that the structure does not afford QUALCOMM the ability to change Leap's status as a designated entity by purchasing shares under the Warrant, and we do not consider the provisions creating these obligations to constitute an impermissible savings clause or time restriction. 24. Accordingly, QUALCOMM does not hold more than 15 percent of Leap's equity. Because we find that no party holds more than 15 percent of Leap's equity, Leap satisfies this criterion of the PTC Exception.