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Exhibit 10.6
CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT ("Agreement"), dated as of ___, 1998,
is by and between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("QUALCOMM") and LEAP WIRELESS
INTERNATIONAL, INC. ("Leap"). Certain capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in
Article 1 hereof or as assigned to them in the Separation and Distribution
Agreement between the parties dated as of the date hereof (the "Separation
Agreement").
WHEREAS, QUALCOMM and Leap have entered into the Separation Agreement,
and the Credit Facility, the Equipment Agreement, the Employee Benefits
Agreement, the Interim Services Agreement and the Tax Agreement (including this
Agreement, the "Ancillary Agreements"), which Ancillary Agreements will govern
certain matters relating to the Separation, the Distribution and the
relationship of QUALCOMM and Leap and their respective Subsidiaries following
the Distribution;
WHEREAS, pursuant to Section 2.8 of the Separation Agreement, Leap has
agreed to issue shares of Leap Common Stock constituting the Leap Reserve Shares
as may be or become issuable as a result of the Distribution, including the
issuance of shares of Leap Common Stock to the holders of the Convertible
Preferred Securities or Debentures, as appropriate, promptly following the
conversion thereof;
WHEREAS, concurrently herewith, QUALCOMM and Leap have entered into the
Employee Benefits Agreement pursuant to which, among other things, Leap has
agreed to issue shares of Leap Common Stock and options with respect to certain
QUALCOMM options and option exercises, all as more fully set forth therein;
WHEREAS, QUALCOMM and Leap desire to enter into this Agreement to
provide for the issuance of shares of Leap Common Stock to holders of
Convertible Preferred Securities or Debentures, as appropriate pursuant to the
terms set forth herein, and under the circumstances described herein; and
WHEREAS, Leap acknowledges that QUALCOMM is transferring certain assets
to Leap in connection with the Separation, and QUALCOMM is proceeding with the
Distribution, in consideration of and reliance upon, among other things, Leap's
agreement to perform the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
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ARTICLE 1
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 ADDITIONAL PAYMENTS shall have the meaning assigned thereto in the
Indenture.
1.2 CONVERSION AGENT shall have the meaning assigned thereto in the
Indenture.
1.3 CONVERSION DATE shall have the meaning assigned thereto in the
Indenture.
1.4 CONVERTIBLE PREFERRED SECURITIES shall have the meaning assigned
thereto in the Indenture.
1.5 DEBENTURES shall have the meaning assigned thereto in the Indenture.
1.6 DISTRIBUTION DATE means the date of the Distribution.
1.7 HOLDER shall have the meaning assigned thereto in the Indenture.
1.8 INDENTURE means that certain Indenture dated as of February 25, 1997
by QUALCOMM, as Issuer, to Wilmington Trust Company, as Trustee, relating to the
Debentures.
1.9 MATURITY shall have the meaning assigned thereto in the Indenture.
1.10 NOTICE OF CONVERSION shall have the meaning assigned thereto in the
Indenture.
1.11 PERSON means any individual or legal entity.
1.12 SECURITIES ACT shall mean the Securities Act of 1933: as amended,
or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.13 TRUST means the QUALCOMM Financial Trust I, a Delaware statutory
business trust.
ARTICLE 2
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES
2.1 CONVERTIBLE PREFERRED SECURITIES. Leap agrees that, effective as of
the Distribution Date, subject to and upon compliance with the provisions of
Article XV of the Indenture, each Convertible Preferred Security or Debenture,
as appropriate, shall be convertible into fully paid and nonassessable shares of
both QUALCOMM Common Stock and Leap Common Stock at an initial conversion rate
of 0.6882 and 0.17205 shares respectively for each $50 in aggregate principal
amount of Debentures. Subject to the terms hereof, conversion of such securities
shall be governed by all provisions of Article XV of the Indenture, so that,
among
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other things, (i) Leap shall have the obligations of "the Company" described
therein with respect to such Leap Common Stock so long as Leap may be required
to issue any shares of Leap Common Stock in accordance with this Agreement; and
(ii) the conversion rate set forth above pursuant to which securities are
convertible into shares of Leap Common Stock shall be subject to adjustment in
the event of certain events with respect to Leap Common Stock or certain actions
of Leap, all as more fully described in Article XV of the Indenture with respect
to the Company.
2.2 RESERVATION OF SHARES. Leap agrees that as of and following the
Distribution Date, Leap will at all times have reserved and keep available,
solely for issuance and delivery upon the conversion of Convertible Preferred
Securities and/or Debentures, as appropriate, all Leap Common Stock issuable
from time to time upon conversion of such securities.
2.3 REGISTRATION OF SHARES. Promptly following the Distribution, Leap
shall effect registration, on form ▇-▇, ▇-▇ or any other appropriate form(s)
agreed to by QUALCOMM, of the Leap Common Stock into which the Convertible
Preferred Securities and/or Debentures, as appropriate, are convertible, and/or
registration of the issuance and/or resale thereof, necessary to permit or
facilitate the issuance and resale of all such securities in compliance with all
applicable Federal and state securities laws. In the alternative, as permitted
by QUALCOMM, Leap may furnish QUALCOMM an opinion of reputable outside counsel
reasonably satisfactory to QUALCOMM, to the effect that such shares of Leap
Common Stock into which such securities are convertible, and the issuance and
resale thereof, are exempt from registration under the Securities Act and other
applicable Federal and state securities laws.
2.4 CONVERSION OF SHARES. Promptly following written notice by QUALCOMM
to Leap that a Notice of Conversion has been delivered in accordance with
Section 15.2 of the Indenture, Leap shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder in the Notice of
Conversion, a certificate or certificates for the number of full shares of Leap
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same. The Conversion Agent shall thereupon be instructed to deliver
such certificate or certificates to such Person or Persons. The Person or
Persons entitled to receive the Leap Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such Leap
Common Stock as of the Conversion Date.
2.5 SATISFACTION OF QUALCOMM PRINCIPAL REPAYMENT; NO CONSIDERATION TO
LEAP. QUALCOMM's and Leap's delivery, upon conversion of any Convertible
Preferred Securities, of the number of shares of QUALCOMM Common Stock and Leap
Common Stock into which the Debentures are convertible (together with the cash
payments, if any, in lieu of fractional shares) pursuant to the Indenture and
this Agreement, shall be deemed to satisfy QUALCOMM's obligation to pay the
principal amount at Maturity of the portion of Debentures so converted [and any
unpaid interest (including Additional Payments) accrued on such Debentures at
the time of such conversion]. Leap shall receive no consideration for the
issuance of Leap Common Stock upon conversion of such securities.
2.6 AGENCY. In effecting the conversion transactions described in this
Section 2 and in Section 15.2 of the Indenture, the Conversion Agent is acting
as agent of the holders of the
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Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Debentures) and as agent of the Holders of Debentures (in the
conversion of Debentures into Common Stock), as the case may be. Leap
acknowledges and agrees the Conversion Agent is authorized (i) to exchange
Debentures held by the Trust from time to time for Convertible Preferred
Securities in connection with the conversion of such Convertible Preferred
Securities in accordance with this Section 2 and Article XV of the Indenture and
(ii) to convert all or a portion of the Debentures into QUALCOMM Common Stock
and/or Leap Common Stock as appropriate and thereupon to deliver such shares of
QUALCOMM Common Stock and/or Leap Common Stock in accordance with this Section 2
and Article XV of the Indenture and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
ARTICLE 3
MISCELLANEOUS
3.1 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of or in connection with the Distribution shall not be
taken or occur except to the extent specifically agreed by Leap and QUALCOMM.
3.2 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
3.3 AFFILIATES. Each of QUALCOMM and Leap shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by a QUALCOMM Entity or
a Leap Entity, respectively.
3.4 NO THIRD PARTY BENEFICIARIES. It is understood and agreed between
the parties that this Agreement and the covenants that are made herein are made
expressly and solely for the benefit of the parties hereto, and no other Person
shall be entitled or be deemed to be entitled to any benefits or rights
hereunder nor be authorized or entitled to enforce any rights, claims or
remedies hereunder.
3.5 MODIFICATION AND AMENDMENT; ENTIRE AGREEMENT. This Agreement may be
modified, amended or terminated by the parties pursuant hereto at any time only
in a writing signed by the parties. This Agreement sets forth the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties with
respect to the subject matter hereof.
3.6 DISPUTE RESOLUTION. The parties acknowledge and agree that this
Agreement and any dispute hereunder shall be subject to and governed by the
dispute resolution provisions set forth in Article 10 of the Separation and
Distribution Agreement.
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3.7 GOVERNING LAW. This Agreement shall be governed by, construed and
interpreted in accordance with the laws of the State of California, irrespective
of the choice of laws principles of the State of California, as to all matters,
including matters of validity, construction, effect, performance and remedies.
IN WITNESS WHEREOF, the parties have caused this Conversion Agreement to
be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇:
By:____________________________________
Name:__________________________________
Title:_________________________________
LEAP WIRELESS INTERNATIONAL, INC.:
By:____________________________________
Name:__________________________________
Title:_________________________________
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