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EXHIBIT 2.1
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
AND
LEAP WIRELESS INTERNATIONAL, INC.
DATED AS OF
__________, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.............................................................1
1.1 Action.....................................................................1
1.2 Affiliate..................................................................1
1.3 Ancillary Agreements.......................................................1
1.4 cdmaOne....................................................................2
1.5 Consents...................................................................2
1.6 Contingent Gain............................................................2
1.7 Contingent Liability.......................................................2
1.8 Credit Facility............................................................2
1.9 Distribution Date..........................................................2
1.10 Employee Benefits Agreement................................................3
1.11 Equipment Agreement........................................................3
1.12 Form 10....................................................................3
1.13 Governmental Approvals.....................................................3
1.14 Governmental Authority.....................................................3
1.15 Insurance Proceeds.........................................................3
1.16 Interest...................................................................3
1.17 Interim Services Agreement.................................................3
1.18 Liabilities................................................................3
1.19 Person.....................................................................4
1.20 Policies...................................................................4
1.21 Privileges.................................................................4
1.22 Privileged Information.....................................................4
1.23 QUALCOMM Business..........................................................4
1.24 QUALCOMM Common Stock......................................................4
1.25 QUALCOMM Group.............................................................4
1.26 QUALCOMM Policies..........................................................4
1.27 Record Date................................................................4
1.28 Related Entity.............................................................5
1.29 Security Interest..........................................................5
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TABLE OF CONTENTS
(CONTINUED)
PAGE
1.30 Shared Policies............................................................5
1.31 Leap Assets................................................................5
1.32 Leap Business..............................................................5
1.33 Leap Group.................................................................5
1.34 Leap Operating Assets......................................................5
1.35 Leap Policies..............................................................5
1.36 Subsidiary.................................................................5
1.37 Tax Agreement..............................................................5
1.38 Tax........................................................................5
1.39 Warrant....................................................................6
1.40 Wireless System............................................................6
ARTICLE 2 THE SEPARATION.......................................................6
2.1 Transfer of Assets and Assumption of Liabilities...........................6
2.2 Leap Assets................................................................7
2.3 Leap Liabilities...........................................................7
2.4 Termination Of Agreements..................................................9
2.5 Disclaimer Of Representations And Warranties...............................9
2.6 Governmental Approvals And Consents; Deferred Transfers....................9
2.7 Assignment Of Assumed Leap Liabilities....................................10
2.8 QUALCOMM Consideration; Leap Reserve Shares...............................10
ARTICLE 3 THE DISTRIBUTION....................................................11
3.1 The Distribution..........................................................11
3.2 Actions Prior To The Distribution.........................................12
3.3 Conditions To Distribution................................................12
3.4 Fractional Shares.........................................................13
ARTICLE 4 INDEMNIFICATION.....................................................14
4.1 Indemnification By Leap...................................................14
4.2 Indemnification By QUALCOMM...............................................14
4.3 Indemnification Obligations Net Of Insurance Proceeds And Other Amounts...15
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TABLE OF CONTENTS
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4.4 Procedures For Indemnification Of Third Party Claims......................15
4.5 Additional Matters........................................................17
4.6 Survival Of Indemnities...................................................17
ARTICLE 5 CERTAIN COVENANTS AND OTHER AGREEMENTS OF THE PARTIES...............17
5.1 Restriction on Interests..................................................17
5.2 Restriction on Use of Other Technology....................................18
5.3 Restriction on Employee Solicitation or Hiring............................19
5.4 Right of First Refusal....................................................19
5.5 Competition...............................................................21
5.6 Management of Interests...................................................21
5.7 Investment Company Act....................................................21
5.8 License Grant By Leap.....................................................22
5.9 Metrosvyaz Limited; Equipment Requirements; Financial Support.............22
ARTICLE 6 CONFIDENTIALITY.....................................................22
6.1 Confidentiality...........................................................22
6.2 Protective Arrangements...................................................23
ARTICLE 7 ACCESS TO INFORMATION AND SERVICES..................................23
7.1 Provision of Corporate Records............................................23
7.2 Access to Information.....................................................24
7.3 Production of Witnesses...................................................24
7.4 Reimbursement.............................................................25
7.5 Retention of Records......................................................25
7.6 Privileged Matters........................................................25
ARTICLE 8 INSURANCE...........................................................27
8.1 Policies and Rights Included Within the Leap Assets.......................27
8.2 Post-Distribution Date Claims.............................................27
8.3 Administration and Reserves...............................................27
8.4 Agreement for Waiver of Conflict and Shared Defense.......................28
ARTICLE 9 ARBITRATION; DISPUTE RESOLUTION.....................................28
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TABLE OF CONTENTS
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9.1 Disputes..................................................................28
9.2 Alternative Dispute Resolution............................................29
9.3 Arbitration Procedure.....................................................29
9.4 Confidentiality...........................................................31
ARTICLE 10 FURTHER ASSURANCES..................................................31
10.1 Further Assurances........................................................31
ARTICLE 11 TERMINATION.........................................................32
11.1 Termination By Mutual Consent.............................................32
ARTICLE 12 MISCELLANEOUS.......................................................33
12.1 Counterparts; Entire Agreement............................................33
12.2 Governing Law.............................................................33
12.3 Assignability.............................................................33
12.4 Third Party Beneficiaries.................................................33
12.5 Notices...................................................................33
12.6 Severability..............................................................34
12.7 Publicity.................................................................34
12.8 Expenses..................................................................34
12.9 Headings..................................................................34
12.10 Survival Of Covenants.....................................................34
12.11 Waivers Of Default........................................................34
12.12 Specific Performance......................................................35
12.13 Amendments................................................................35
12.14 Interpretation............................................................35
12.15 Legal Counsel.............................................................35
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT (including all exhibits and
schedules hereto, the "Agreement"), dated as of _____________, 1998, is by and
between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("QUALCOMM") and LEAP WIRELESS INTERNATIONAL, INC.
("Leap"). Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article 1 hereof.
WHEREAS, the Board of Directors of QUALCOMM has determined that it is in
the best interests of QUALCOMM and its stockholders to transfer the Leap Assets
to Leap and to cause Leap to assume the Leap Liabilities, all as more fully
described in this Agreement and the Ancillary Agreements (the "Separation");
WHEREAS, the Board of Directors of QUALCOMM has further determined that it
is appropriate and desirable, on the terms and conditions contemplated hereby,
for QUALCOMM to distribute to holders of shares of QUALCOMM Common Stock all of
the outstanding shares of common stock, $0.0001 par value (the "Leap Common
Stock"), owned directly or indirectly by QUALCOMM (the "Distribution"), and
retain the Warrant; and
WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the Separation and the Distribution
and certain other agreements that will govern certain matters relating to the
Separation and the Distribution and the relationship of QUALCOMM and Leap
following the Distribution.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE 1
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1 ACTION means any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority or any arbitration or mediation
tribunal.
1.2 AFFILIATE of any Person means a Person that controls, is controlled by,
or is under common control with such Person. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
1.3 ANCILLARY AGREEMENTS means the Credit Facility, the Equipment
Agreement, the Employee Benefits Agreement, the Interim Services Agreement, the
Conversion Agreement and the Tax Agreement.
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1.4 cdmaONE shall mean those fixed or mobile wireless telecommunications
systems based on or derived from QUALCOMM's CDMA technology which (i) have been
adopted as an industry standard by the Telecommunications Industry Association
(TIA) or other recognized international standards bodies, and the adoption of
such standard has been voted in favor of by QUALCOMM ("QUALCOMM Approved
Standards"), (ii) are compatible with or employ the same physical layer as
QUALCOMM Approved Standards ("QUALCOMM Approved Systems") or (iii) are
compatible with the infrastructure and subscriber equipment manufactured and
sold by QUALCOMM. cdmaOne currently includes, by way of example and not by
limitation, the TIA's IS-95 digital cellular standard and ANSI JSTD-008 digital
PCS standard. If a system is considered a cdmaOne system in one country,
QUALCOMM and Leap have agreed that it would be considered a cdmaOne system in
any other country, irrespective of whether or not such system has been adopted
(or approved by QUALCOMM) as a standard in such other country.
1.5 CONSENTS means any consents, waivers or approvals from, or notification
requirements to, any third parties.
1.6 CONTINGENT GAIN means any claim or other right of QUALCOMM or Leap or
any of their respective Affiliates, whenever arising, against any Person other
than QUALCOMM, Leap or any of their respective Affiliates, if and to the extent
that (i) such claim or right has accrued as of the Distribution Date (based on
then existing law) and (ii) the existence or scope of the obligation of such
other Person as of the Distribution Date was not acknowledged, fixed or
determined in any material respect, due to a dispute or other uncertainty as of
the Distribution Date or as a result of the failure of such claim or other right
to have been discovered or asserted as of the Distribution Date. A claim or
right meeting the foregoing definition shall be considered a Contingent Gain
regardless of whether there was any Action pending, threatened or contemplated
as of the Distribution Date with respect thereto.
1.7 CONTINGENT LIABILITY means any Liability, other than Liabilities for
Taxes (which are governed by the Tax Agreement), of QUALCOMM, Leap or any of
their respective Affiliates, whenever arising, to any Person other than
QUALCOMM, Leap or any of their respective Affiliates, if and to the extent that
(i) such Liability has accrued as of the Distribution Date (based on then
existing law) and (ii) the existence or scope of the obligation of QUALCOMM,
Leap or any of their respective Affiliates as of the Distribution Date with
respect to such Liability was not acknowledged, fixed or determined in any
material respect, due to a dispute or other uncertainty as of the Distribution
Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Distribution Date (it being understood that the existence of
a litigation or other reserve with respect to any Liability shall not be
sufficient for such Liability to be considered acknowledged, fixed or
determined).
1.8 CREDIT FACILITY means that certain Credit Agreement of even date
herewith by and between QUALCOMM and Leap.
1.9 DISTRIBUTION DATE means the date on which the Distribution to the
QUALCOMM stockholders is effective.
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1.10 EMPLOYEE BENEFITS AGREEMENT means that certain Employee Benefits
Agreement of even date herewith by and between QUALCOMM and Leap.
1.11 EQUIPMENT AGREEMENT means that certain Master Agreement Regarding
Equipment Procurement of even date herewith by and between QUALCOMM and Leap.
1.12 FORM 10 means the Registration Statement on Form 10 (Registration No.
001-14269) filed by Leap with the Securities and Exchange Commission (the
"Commission") on July 1, 1998, as amended, relating to the Leap Common Stock.
1.13 GOVERNMENTAL APPROVALS means any notices, reports or other filings to
be made, or any consents, registrations, approvals, permits or authorizations to
be obtained from, any Governmental Authority.
1.14 GOVERNMENTAL AUTHORITY shall mean any federal, state, local, foreign
or international court, government, department, commission, board, bureau,
agency, official or other regulatory, administrative or governmental authority.
1.15 INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured; or
in either case net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
1.16 INTEREST in any Person, as used in Sections 5.1, 5.4 and 5.7 only,
means any loan or advance in excess of $100,000, in aggregate, to such Person,
any purchase or other acquisition of a material portion of the assets of such
Person or of a business unit of such Person, or any purchase or other
acquisition of any capital stock or other ownership or profit interest,
warrants, rights, options, obligations or other securities of such Person, any
capital contribution to such Person or any other investment in such Person,
including, without limitation, any arrangement pursuant to which a Person
guarantees, directly or indirectly in any manner, any indebtedness in excess of
$100,000, in aggregate, of such Person.
1.17 INTERIM SERVICES AGREEMENT means that certain Interim Services
Agreement of even date herewith by and between QUALCOMM and Leap.
1.18 LIABILITIES means any and all losses, claims, charges, debts, demands,
actions, causes of action, suits, damages, obligations, payments, costs and
expenses, sums of money, accounts, reckonings, bonds, specialties, indemnities
and similar obligations, exonerations, covenants, contracts, controversies,
agreements, promises, doings, omissions, variances, guarantees, make whole
agreements and similar obligations, and other liabilities, including all
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the
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costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses (including allocated costs of in-house counsel and other personnel),
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened or contemplated Actions), order or consent decree
of any Governmental Authority or any award of any arbitrator or mediator of any
kind, and those arising under any contract, commitment or undertaking, including
those arising under this Agreement or any Ancillary Agreement, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any Person.
1.19 PERSON means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
1.20 POLICIES means insurance policies and insurance contracts of any kind
relating to the Leap Business or the QUALCOMM Business as conducted prior to the
Distribution Date, including without limitation primary and excess policies,
comprehensive general liability policies, automobile and workers' compensation
insurance policies, and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
1.21 PRIVILEGES means all privileges that may be asserted under applicable
law, including, without limitation, privileges arising under or relating to the
attorney-client relationship (including but not limited to the attorney-client
and work product privileges), the accountant-client privilege, and privileges
relating to internal evaluative processes.
1.22 PRIVILEGED INFORMATION means all Information as to which QUALCOMM,
Leap or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
1.23 QUALCOMM BUSINESS means the collective business of QUALCOMM, excluding
the Leap Business.
1.24 QUALCOMM COMMON STOCK means the Common Stock, $0.0001 par value per
share, of QUALCOMM.
1.25 QUALCOMM GROUP means QUALCOMM and each Person (other than any member
of the Leap Group) that is an Affiliate of QUALCOMM immediately after the
Distribution Date.
1.26 QUALCOMM POLICIES means all Policies, current or past, which are owned
or maintained by or on behalf of QUALCOMM (or any of its predecessors) which
relate to the QUALCOMM Business but do not relate to the Leap Business.
1.27 RECORD DATE means the close of business on the date to be determined
by the QUALCOMM Board of Directors as the record date for determining
stockholders of QUALCOMM entitled to receive shares of Leap Common Stock in the
Distribution.
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1.28 RELATED ENTITY means any Person (i) in which Leap, directly or
indirectly through one or more intermediaries, holds an interest of ten percent
(10%) or more of the aggregate issued and outstanding ownership interests of
such Person, (ii) that Leap or an Affiliate of Leap, by means of a reseller
agreement, management contract, debt financing agreement or otherwise, has the
ability to substantially influence the management and control of such Person, or
(iii) that is an Affiliate of Leap.
1.29 SECURITY INTEREST means any mortgage, security interest, pledge, lien,
charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer, or other encumbrance of any nature whatsoever.
1.30 SHARED POLICIES means all Policies, current or past, which are owned
or maintained by or on behalf of QUALCOMM or its predecessors which relate to
both the QUALCOMM Business and the Leap Business, and all other Policies not
constituting Leap Policies or QUALCOMM Policies.
1.31 LEAP ASSETS has the definition set forth in Section 2.2.
1.32 LEAP BUSINESS means the business of operating Leap Operating Assets.
1.33 LEAP GROUP means Leap and each Person (other than any member of the
QUALCOMM Group) that is an Affiliate of Leap immediately after the Distribution
Date
1.34 LEAP OPERATING ASSETS means all of QUALCOMM's right, title and
interest in and to the assets listed on Schedules A-1 through A-7.
1.35 LEAP POLICIES means all Policies, current or past, which are owned or
maintained by or on behalf of QUALCOMM or any of its Affiliates or predecessors,
which relate to the Leap Business but do not relate to the QUALCOMM Business and
which Policies are either maintained by the QUALCOMM Group or assignable to the
Leap Group.
1.36 SUBSIDIARY of any Person means any corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however that no Person that is not directly or indirectly wholly owned by any
other Person shall be a Subsidiary of such other Person unless such other Person
controls, or has the right, power or ability to control, that Person.
1.37 TAX AGREEMENT means that certain Tax Agreement of even date herewith
by and between QUALCOMM and Leap.
1.38 TAX (and, with correlative meanings, "Taxes" and "Taxable") means,
without limitation, and as determined on a jurisdiction-by-jurisdiction basis,
each foreign or U.S. federal, state, local or municipal income, alternative or
add-on minimum, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise,
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severance, stamp, occupation, premium, property or any other tax, custom,
tariff, impost, levy, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty, addition to tax
or additional amount related thereto, imposed by any taxing authority.
1.39 WARRANT means that certain warrant dated of even date herewith to
purchase up to 5,500,000 shares of Leap Common Stock, granted to QUALCOMM in
connection with the Distribution.
1.40 WIRELESS SYSTEM means a terrestrial-based PCS, cellular, wireless
local loop or other terrestrial-based wireless communication system.
ARTICLE 2
THE SEPARATION
2.1 TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES.
(a) QUALCOMM hereby assigns, transfers, conveys and delivers to Leap,
and agrees to cause its applicable Subsidiaries to assign, transfer, convey and
deliver to Leap, and Leap hereby accepts from QUALCOMM and its respective
Subsidiaries, all of QUALCOMM's and its applicable Subsidiaries' respective
right, title and interest in and to the Leap Assets (as defined in Section 2.2
below).
(b) Leap hereby assumes and agrees to faithfully perform and fulfill
all Leap Liabilities (as defined in Section 2.3), in accordance with their
respective terms. Notwithstanding the foregoing, Leap shall not assume any
Liability attributable to the failure of QUALCOMM or its officers, directors,
employees, agents, Subsidiaries or Affiliates to perform QUALCOMM's obligations
to Leap pursuant to this Agreement or the Ancillary Agreements.
(c) In the event that at any time or from time to time (whether prior
to or after the Distribution Date) any party hereto (or any member of the
QUALCOMM Group or Leap Group, as applicable), shall receive or otherwise possess
an asset that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer or cause to be
transferred, such asset to such Person so entitled thereto. Prior to such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for such other Person. In the event that at any time or from time to time
(whether prior to or after the Distribution Date) any party hereto or any member
of the QUALCOMM Group or Leap Group, as applicable, shall hold or otherwise
possess any information or otherwise be required to cooperate to allow a Person
to avoid a Liability assumed pursuant to this Agreement or any Ancillary
Agreement, such Person shall, to the extent reasonable, promptly provide such
information and/or cooperation and/or cause such information or cooperation to
be provided to the Person so entitled thereto.
(d) In furtherance of the assignment, transfer and conveyance of Leap
Assets and the assumption of Leap Liabilities set forth in Section 2.1(a) and
(b), simultaneously with the execution and delivery hereof or as promptly as
practicable thereafter, (i) QUALCOMM shall execute and deliver, and shall cause
its Subsidiaries to execute and deliver, such bills of sale,
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stock powers, certificates of title, assignments of contracts and other
instruments of transfer, conveyance and assignment as and to the extent
necessary to evidence the transfer, conveyance and assignment of all of
QUALCOMM's and its respective Subsidiaries' right, title and interest in and to
the Leap Assets to Leap and (ii) Leap shall execute and deliver, to QUALCOMM and
its respective Subsidiaries such bills of sale, stock powers, certificates of
title, assumptions of contracts, indemnity agreements and other instruments of
assumption as and to the extent necessary to evidence the valid and effective
assumption of the Leap Liabilities by Leap.
2.2 LEAP ASSETS.
(i) For the purpose of this Agreement, "Leap Assets" shall mean
(i) the assets listed on Schedules A-1 (Chase Telecommunications, Inc.), ▇-▇
(▇▇▇▇▇▇▇▇), ▇-▇ (▇▇▇▇▇▇▇▇▇▇), ▇-▇ (OzPhone), A-5 (PC Phone), A-6 (Pegaso), A-7
(Telesystems of Ukraine) and A-8 (other assets) hereto; (ii) any and all assets
that are expressly stated in this Agreement or any Ancillary Agreement (or the
schedules hereto or thereto) as assets to be assigned to Leap; and (iii) any and
all Contingent Gains primarily relating to the Leap Business or expressly
assigned to Leap pursuant to this Agreement or any Ancillary Agreement.
Notwithstanding the foregoing, Leap Assets shall not include any of the
following assets (the "Excluded Assets"):
(i) assets of QUALCOMM under or relating to equipment supply
and/or vendor finance agreements, including but not limited to all equipment
supply and vendor finance agreements with entities that comprise the Leap
Operating Assets except as may be expressly transferred to Leap pursuant to this
Agreement or the Ancillary Agreements (or the Schedules or Exhibits hereto or
thereto);
(ii) any and all assets that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules or Exhibits hereto or
thereto), as assets to be retained by QUALCOMM or any other member of the
QUALCOMM Group; or
(iii) any and all Contingent Gains primarily relating to the
QUALCOMM Business or expressly retained by QUALCOMM pursuant to this Agreement
or any Ancillary Agreement.
2.3 LEAP LIABILITIES.
(a) For the purposes of this Agreement, "Leap Liabilities" shall
mean:
(i) the Liabilities listed on Schedules B-1 (Chase
Telecommunications, Inc.), B-2 (ChileSat), B-3 (Metrosvyaz), B-4 (OzPhone), B-5
(PC Phone), B-6 (Pegaso), B-7 (Telesystems of Ukraine) and B-8 (other
Liabilities) hereto;
(ii) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the schedules hereto or thereto)
as Liabilities to be assumed by Leap, and all agreements, obligations and
Liabilities of any member of the Leap Group under this Agreement or any of the
Ancillary Agreements;
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(iii) all Liabilities (other than Taxes based on, or measured by
reference to, net income, and liabilities expressly retained by QUALCOMM
pursuant to this Agreement and/or the Ancillary Agreements), including any
employee-related Liabilities and any Liabilities relating to environmental laws,
rules and regulations of any jurisdiction ("Environmental Laws") (such
Liabilities, "Environmental Liabilities"), relating to, arising out of or
resulting from:
(1) the operation of the Leap Business, as conducted at any
time after the Distribution (including any Liability relating to, arising out of
or resulting from any act or failure to act by any director, officer, employee,
agent or representative (whether or not such act or failure to act is or was
within such Person's authority));
(2) the operation of any business conducted by any member
of the Leap Group at any time after the Distribution (including any Liability
relating to, arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority)); or
(3) any Leap Asset(s) to the extent the Liability arises
after the Distribution; or
(4) any agreements or understandings, whether oral or
written, relating to future business, equity participation, employment or
similar arrangements with respect to U.S. domestic wireless operator
opportunities, whether or not such agreements or understandings were entered
into prior to, on or after the Distribution Date;
(iv) any and all Contingent Liabilities primarily relating to the
Leap Business or expressly assumed by Leap pursuant to this Agreement or any
Ancillary Agreement; and
(v) all other Liabilities of Leap relating to, arising out of or
resulting from Leap's performance or obligations under any Ancillary Agreement
or this Agreement.
Notwithstanding the foregoing, the Leap Liabilities shall not include the
following Liabilities (the "Excluded Liabilities"): (i) Liabilities of QUALCOMM
under or relating to equipment supply and/or vendor finance agreements,
including all equipment supply and vendor finance agreements with the entities
that comprise the Leap Operating Assets, except as may be expressly transferred
to Leap pursuant to this Agreement or the Ancillary Agreements or schedules or
exhibits hereto or thereto; (ii) Liabilities based upon or relating to the
Distribution, except for those Liabilities set forth in Section 4.1(d) and
Liabilities arising out of or attributable to actions or inaction of Leap; (iii)
Liabilities based upon or relating to Actions against employees of QUALCOMM who
become employees of Leap as of or following the Separation, to the extent such
Actions are based upon or relate to actions or conduct of such employees in
their capacities as employees prior to July 1, 1998; (iv) any and all
Liabilities that are expressly contemplated by this Agreement or any Ancillary
Agreement (or the schedules hereto or thereto) as Liabilities to be retained or
assumed by QUALCOMM or any other member of the QUALCOMM Group, and all
agreements and obligations of any member of the QUALCOMM Group under this
Agreement or any of the Ancillary Agreements; and (v) any and all Contingent
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Liabilities not primarily relating to the Leap Business or that are expressly
assumed by Leap pursuant to this Agreement or any Ancillary Agreement.
2.4 TERMINATION OF AGREEMENTS. Except with respect to this Agreement and
the Ancillary Agreements (and agreements expressly contemplated herein or
therein to survive by their terms), Leap and QUALCOMM (on their own behalf and
on behalf of the members of the Leap Group and QUALCOMM Group, respectively)
hereby terminate, except to the extent the same are in writing and do not by
their written terms terminate as a result of the Separation or Distribution, any
and all written or oral agreements, arrangements, commitments or understandings,
between or among them, effective as of the Distribution Date; and each party
shall, at the reasonable request of any other party, take, or cause to be taken,
such other actions as may be necessary to effect the foregoing.
2.5 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. (a) Each of QUALCOMM (on
behalf of itself and each member of the QUALCOMM Group) and Leap (on behalf of
itself and each member of the Leap Group) understands and agrees that, except as
expressly set forth herein or in any Ancillary Agreement, no party to this
Agreement, any Ancillary Agreement or any other agreement or document
contemplated by this Agreement, any Ancillary Agreement or otherwise, is
representing or warranting in any way as to the assets, businesses or
Liabilities transferred or assumed as contemplated hereby or thereby, as to any
consents or approvals required in connection therewith, as to the value or
freedom from any Security Interests of, or any other matter concerning, any
assets of such party, or as to the absence of any defenses or right of setoff or
freedom from counterclaim with respect to any claim or other asset, including
any accounts receivable, of any party, or as to the legal sufficiency of any
assignment, document or instrument delivered hereunder to convey title to any
asset or thing of value upon the execution, delivery and filing hereof or
thereof. Except as may expressly be set forth herein or in any Ancillary
Agreement, all such assets are being transferred on an "as is," "where is" basis
and the respective transferees shall bear the economic and legal risks that any
conveyance shall prove to be insufficient to vest in the transferee good and
marketable title, free and clear of any Security Interest.
2.6 GOVERNMENTAL APPROVALS AND CONSENTS; DEFERRED TRANSFERS
(a) To the extent that the Separation requires any Governmental
Approvals or Consents, the parties will use commercially reasonable efforts to
obtain any such Governmental Approvals and Consents.
(b) If and to the extent that the valid, complete and perfected
transfer or assignment (or novation of any government contract) to Leap of any
Leap Assets would be a violation of applicable laws or require any Consent or
Governmental Approval in connection with the Separation or the Distribution,
then, unless QUALCOMM shall otherwise determine, the transfer or assignment to
or from the Leap Group, as the case may be, of such Leap Assets or non-Leap
Assets, respectively, shall be automatically deemed deferred and any such
purported transfer or assignment shall be null and void until such time as all
legal impediments are removed and/or each of such Consents or Governmental
Approvals have been obtained. Notwithstanding the foregoing, such asset shall be
deemed a Leap Asset for purposes of determining whether any Liability is an Leap
Liability.
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(c) If the transfer or assignment of any assets intended to be
transferred or assigned hereunder is not consummated prior to or at the
Distribution Date, whether as a result of the provisions of Section 2.6(b) or
for any other reason, then the Person retaining such asset shall thereafter hold
such asset for the use and benefit, insofar as reasonably possible, of the
Person entitled thereto (at the expense of the Person entitled thereto).
(d) If and when the Consents and/or Governmental Approvals, or any
other impediments to transfer, the absence of which caused the deferral of
transfer of any asset pursuant to Section 2.6(b) or otherwise, are obtained or
removed (as appropriate), the transfer of the applicable asset shall be effected
in accordance with the terms of this Agreement and/or the applicable Ancillary
Agreement.
(e) The Person retaining an asset due to the deferral of the transfer
of such asset shall take such actions with respect to such asset as may be
reasonably requested by the Person entitled to the asset, provided that such
person retaining an asset shall not be obligated, in connection with the
foregoing, to expend any money unless the necessary funds are advanced by the
Person entitled to the asset, other than reasonable out-of-pocket expenses,
attorneys' fees and recording or similar fees, all of which shall be promptly
reimbursed by the Person entitled to such asset.
2.7 ASSIGNMENT OF ASSUMED LEAP LIABILITIES.
(a) Each of QUALCOMM and Leap, at the request of the other, shall use
its commercially reasonable efforts to obtain, or to cause to be obtained, any
consent, substitution, approval or amendment required to assign all obligations
under agreements, leases, licenses and other obligations or Liabilities of any
nature whatsoever that constitute Leap Liabilities.
(b) If QUALCOMM or Leap is unable to obtain, or to cause to be
obtained, any such required consent, approval, substitution or amendment, the
applicable member of the QUALCOMM Group shall continue to be bound by such
agreements, leases, licenses and other obligations and, unless not permitted by
law or the terms thereof, Leap shall, as agent or subcontractor for QUALCOMM or
such other Person, as the case may be, pay, perform and discharge fully all the
obligations or other Liabilities of QUALCOMM or such other Person, as the case
may be, thereunder from and after the date hereof. QUALCOMM shall, without
further consideration, pay and remit, or cause to be paid or remitted, to Leap
promptly all money, rights and other consideration received by it or any member
of the QUALCOMM Group in respect of such performance (unless any such
consideration is an Excluded Asset). If and when any such consent, approval,
release, substitution or amendment shall be obtained or such agreement, lease,
license or other rights or obligations shall otherwise become assignable,
QUALCOMM shall thereafter assign, or cause to be assigned, all its rights,
obligations and other Liabilities thereunder or any rights or obligations of any
member of the QUALCOMM Group to Leap without payment of further consideration
and Leap shall, without the payment of any further consideration, assume such
rights and obligations.
2.8 QUALCOMM CONSIDERATION; LEAP RESERVE SHARES. In consideration of the
transfer of the Leap Assets by QUALCOMM to Leap, and QUALCOMM's other
obligations pursuant hereto and pursuant to the Ancillary Agreements, in
addition to the other consideration
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described herein (including, without limitation, Leap's obligations pursuant
hereto and pursuant to the Ancillary Agreements), Leap shall issue, grant or
transfer to QUALCOMM, as appropriate, prior to the Distribution Date, (i) shares
of Leap Common Stock necessary to effect the Distribution, and (ii) the Warrant.
In addition, without limitation on any of Leap's other obligations pursuant to
this Agreement and the Ancillary Agreements, Leap agrees to hold in reserve for
issuance, and to promptly issue, all such shares of Leap Common Stock as may be
or become issuable as a result of the Distribution by reason of any provision of
any stock option plan or agreement, warrant or other security of QUALCOMM
(including without limitation QUALCOMM's 1991 Stock Option Plan and QUALCOMM's
Non-Employee Director Stock Option Plan and options outstanding thereunder,
QUALCOMM's Executive Matching Retirement Plan, and all outstanding Trust
Convertible Preferred Securities issued by QUALCOMM Financial Trust, an
Affiliate of QUALCOMM) and in such manner as is directed by QUALCOMM consistent
with such adjustment provisions (the "Leap Reserve Shares"). Leap shall issue
Leap Reserve Shares to the holders of the QUALCOMM Trust Convertible Preferred
Securities promptly following the exercise or conversion thereof and for no
additional consideration except as may be determined otherwise by QUALCOMM. Leap
shall also issue Leap Reserve Shares to holders of QUALCOMM options, warrants
and other convertible securities promptly following the exercise or conversion
thereof for consideration equal to the price per share set forth in the
particular instrument, as further described in the Employee Benefits Agreement.
ARTICLE 3
THE DISTRIBUTION
3.1 THE DISTRIBUTION.
1 (a) Subject to Section 3.3 hereof, on or prior to the Distribution
Date, QUALCOMM will deliver to the distribution agent selected by QUALCOMM (the
"Agent"), for the benefit of and distribution to holders of record of QUALCOMM
Common Stock on the Record Date, stock certificates, endorsed by QUALCOMM in
blank, representing all of the outstanding shares of Leap Common Stock then
owned by QUALCOMM or any member of the QUALCOMM Group, and shall instruct the
Agent to distribute on the Distribution Date the appropriate number of such
shares of Leap Common Stock to each such holder or designated transferee or
transferees of such holder.
(b) Subject to Section 3.4, each holder of QUALCOMM Common Stock on
the Record Date (or such holder's designated transferee or transferees) will be
entitled to receive in the Distribution one (1) share of Leap Common Stock for
each four (4) shares of QUALCOMM Common Stock held by such holder on the Record
Date.
(c) Leap and QUALCOMM, as the case may be, will provide to the Agent
all share certificates and any information required in order to complete the
Distribution on the basis specified above.
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3.2 ACTIONS PRIOR TO THE DISTRIBUTION.
(a) Prior to the Distribution Date, QUALCOMM and Leap shall prepare
and mail to the holders of QUALCOMM Common Stock, such information concerning
Leap, its business, operations and management, the Distribution and such other
matters as QUALCOMM shall reasonably determine and as may be required by law.
Leap will prepare, and Leap will, to the extent required under applicable law,
file with the Commission the Form 10 and any such other documentation which
QUALCOMM determines are necessary or desirable to effectuate the Distribution
and QUALCOMM and Leap shall each use its commercially reasonable efforts to
obtain all necessary approvals from the Commission with respect thereto as soon
as practicable.
(b) QUALCOMM and Leap shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of the United States (and
any comparable laws under any foreign jurisdiction) in connection with the
Distribution.
(c) QUALCOMM and Leap shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 3.3 to be satisfied and
to effect the Distribution on the Distribution Date.
(d) Leap shall prepare and file, and shall use its commercially
reasonable efforts to have approved, an application for the inclusion of the
Leap Common Stock to be distributed in the Distribution on the Nasdaq National
Market.
(e) QUALCOMM and Leap shall enter into all Ancillary Agreements.
(f) QUALCOMM and Leap shall cooperate to change the name of any
entity that is part of the Leap Group or the Leap Operating Assets so that the
word "QUALCOMM" or derivations thereof is not included in any such name.
3.3 CONDITIONS TO DISTRIBUTION. QUALCOMM and Leap shall be obligated to
consummate the Distribution no later than September 27, 1998, subject to the
satisfaction, or waiver by the QUALCOMM Board of Directors in its sole
discretion, of the following conditions:
(a) any material Governmental Approvals and Consents necessary to
consummate the Distribution shall have been obtained and be in full force and
effect;
(b) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Distribution shall be in effect and no other event outside
the control of QUALCOMM shall have occurred or failed to occur that prevents the
consummation of the Distribution;
(c) the Board of Directors of QUALCOMM shall have (i) authorized and
approved the Distribution and not withdrawn such authorization and approval;
(ii) received the opinion of ▇▇▇▇▇▇ Brothers described in the Form 10; (iii)
received an opinion from Delaware counsel, selected by QUALCOMM in its sole
discretion, regarding the appropriateness of the QUALCOMM Board of Directors'
determination as to whether statutory surplus is legally
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available to effect the Distribution under Section 170 of the Delaware General
Corporation Law; and (iv) received an opinion in such form as is reasonably
acceptable to QUALCOMM (the "Investment Company Opinion"), from ▇▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ or other counsel selected by QUALCOMM in its sole discretion, to the
effect that (a) Leap has filed an application under Section 3(b)(2) of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), for
an order of the Commission finding and declaring Leap to be primarily engaged in
a business other than investing, reinvesting, owning, holding or trading in
securities either directly or through majority-owned subsidiaries or controlled
companies conducting similar types of businesses, (b) the filing of such
application provides Leap with an automatic 60-day exemption from all provisions
of the Investment Company Act, (c) immediately following the expiration of such
60-day period Leap may, and the Board of Directors of Leap has taken all
necessary action to, avail itself to the exemption from the registration
requirements of the Investment Company Act set forth in rule 3(a)(2) thereunder
(the transient investment company exemption), and (d) Leap is not an investment
company within the meaning of the Investment Company Act;
(d) All Ancillary Agreements shall have been entered into by the
respective parties thereto, and all conditions precedent to borrowing amounts
under the Credit Facility shall be satisfied or waived by the lenders
thereunder;
(e) the executive officers and members of the Board of Directors of
Leap listed in the section entitled "Management" in the Form 10 shall have
resigned from QUALCOMM in every capacity in which they served QUALCOMM prior to
the Distribution, including without limitation as officer, director, committee
member, employee and/or consultant (excluding, however, any continuing
consulting arrangement described in the Form 10) and arrangements shall have
been made to the satisfaction of QUALCOMM pursuant to the Employee Benefits
Agreement or otherwise for the complete and orderly transition of employment of
all other Persons designated by the parties as those QUALCOMM employees who are
to become Leap employees as of or prior to the Distribution; and
(f) no other events or developments shall have occurred that, in the
judgment of the Board of Directors of QUALCOMM, would result in the Distribution
having a material adverse effect on QUALCOMM or on the stockholders of QUALCOMM
or not being in the best interest of QUALCOMM and its stockholders.
The foregoing conditions are for the sole benefit of QUALCOMM and shall not give
rise to or create any duty on the part of QUALCOMM or the QUALCOMM Board of
Directors to waive or not waive any such condition.
3.4 FRACTIONAL SHARES. As soon as practicable after the Distribution Date,
QUALCOMM shall direct the Agent to aggregate all fractional shares of Leap
Common Stock to which its stockholders would otherwise be entitled and sell the
whole shares obtained thereby at the direction of QUALCOMM in open market
transactions or otherwise, in each case at then prevailing trading prices, and
to cause to be distributed to each such holder or for the benefit of each such
beneficial owner to which a fractional share shall be allocable such holder's or
owner's ratable share of the proceeds of such sale, after making appropriate
deductions of the amount required to be withheld for federal income tax purposes
and after deducting an amount equal to all brokerage charges, commissions and
transfer taxes attributed to such sale.
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QUALCOMM and the Agent shall use their reasonable efforts to aggregate the
shares of QUALCOMM Common Stock that may be held by any beneficial owner thereof
through more than one account in determining the fractional share allocable to
such beneficial owner.
ARTICLE 4
INDEMNIFICATION
4.1 INDEMNIFICATION BY LEAP. Except as provided in Section 4.3, Leap shall
indemnify, defend and hold harmless QUALCOMM, each member of the QUALCOMM Group
and each of their respective directors and officers, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"QUALCOMM Indemnitees"), from and against any and all Liabilities of the
QUALCOMM Indemnitees relating to, arising out of or resulting from any of the
following items:
(a) the failure of Leap or any other member of the Leap Group or any
other Person to pay, perform or otherwise promptly discharge any Leap
Liabilities in accordance with their respective terms after the Distribution
Date;
(b) any Leap Liability;
(c) any breach by Leap of this Agreement or any of the Ancillary
Agreements; and
(d) any failure (or alleged failure) of Leap to operate the Leap
Business as described in the "Business" section of the Form 10.
4.2 INDEMNIFICATION BY QUALCOMM. QUALCOMM shall indemnify, defend and hold
harmless Leap, each member of the Leap Group and each of their respective
directors and officers, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "Leap Indemnitees"), from and against
any and all Liabilities of the Leap Indemnitees relating to, arising out of or
resulting from any of the following items:
(a) the failure of QUALCOMM or any other member of the QUALCOMM Group
or any other Person to pay, perform or otherwise promptly discharge any
Liabilities of the QUALCOMM Group other than the Leap Liabilities after the
Distribution Date; provided, however, this Section 4.2(a) shall not apply to any
Liability arising out of or related to any agreement (such as an equipment
supply agreement, vendor finance agreement or capital contribution agreement),
other than an agreement specified in Section 4.2(d), between any member of the
QUALCOMM Group, on the one hand, and any member of the Leap Group and any Person
in which Leap, directly or indirectly, holds an equity, debt or other financial
interest, on the other hand; provided further, however, nothing in the
immediately preceding proviso shall be construed as impairing the rights of the
subject parties under any such agreement;
(b) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to all information contained in the Form 10 except with respect to
information described in Section 4.1(d) above;
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(c) any Liability of the QUALCOMM Group, other than the Leap
Liabilities; and
(d) any breach by QUALCOMM of this Agreement or any of the Ancillary
Agreements.
4.3 INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER
AMOUNTS.
(a) The parties intend that any Liability subject to indemnification
or reimbursement pursuant to this Article 4 or Article 5 will be net of
Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds
recovery had been received, realized or recovered before the Indemnity Payment
was made.
(b) In the case of any Contingent Liability, any Insurance Proceeds
recovered by either party in respect of the Contingent Liability will be used to
satisfy the Contingent Liability before the parties shall seek relief under this
Article 4.
(c) An insurer who would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a "windfall" (i.e., a benefit they
would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof. Notwithstanding
the foregoing, each member of the QUALCOMM Group and Leap Group shall be
required to use commercially reasonable efforts to collect or recover any
available Insurance Proceeds.
4.4 PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS.
(a) If an Indemnitee shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the QUALCOMM Group or the Leap Group of any claim or of the commencement by
any such Person of any Action (collectively, a "Third Party Claim") with respect
to which an Indemnifying Party may be obligated to provide indemnification to
such Indemnitee pursuant to Section 4.1 or 4.2, or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party and each party to this Agreement, written notice thereof
within twenty (20) days after becoming aware of such Third Party Claim. Any such
notice shall describe the Third Party Claim in reasonable detail. If any Person
shall receive notice or otherwise learn of the assertion of a Third Party Claim
which may reasonably be determined to be a Shared Contingent Liability, such
Person shall give each other party to this Agreement written notice thereof
within 20 days after becoming aware of such Third Party Claim. Any such notice
shall describe the
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Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this
Section 4.4(a) shall not relieve the related Indemnifying Party of its
obligations under this Article 4, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim; provided that if the
defendants in any such claim include both the Indemnifying Party and one or more
Indemnitees and in such Indemnitees' reasonable judgment a conflict of interest
between such Indemnitees and such Indemnifying Party exists in respect of such
claim, such Indemnitees shall have the right to employ separate counsel and in
that event the reasonable fees and expenses of such separate counsel (but not
more than one separate counsel reasonably satisfactory to the Indemnifying
Party) shall be paid by such Indemnifying Party. Within 30 days after the
receipt of notice from an Indemnitee in accordance with Section 4.4(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 4.4(b), such Indemnitee may defend such Third Party Claim
at the cost and expense (not including allocated costs of in-house counsel and
other in-house personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of
the Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim without the consent of
the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other similar order or other similar nonmonetary relief to be entered,
directly or indirectly, against any Indemnitee.
(f) The provisions of Section 4.4 and Section 4.5 shall not apply to
Taxes (which are covered by the Tax Agreement).
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4.5 ADDITIONAL MATTERS.
(a) Any claim on account of a Liability which does not result from a
Third Party Claim shall be asserted by written notice given by the Indemnitee to
the related Indemnifying Party. Such Indemnifying Party shall have a period of
30 days after the receipt of such notice within which to respond thereto. If
such Indemnifying Party does not respond within such 30-day period, such
Indemnifying Party shall be deemed to have refused to accept responsibility to
make payment. If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee shall be free
to pursue such remedies as may be available to such party as contemplated by
this Agreement and the Ancillary Agreements.
(b) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party is not
a named defendant, if the Indemnifying Party shall so request, the parties shall
endeavor to substitute the Indemnifying Party for the named defendant, add the
Indemnifying Party as a named defendant if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this section and subject to Section 4.4 with respect to Contingent
Liabilities, the Indemnifying Party shall fully indemnify the named defendant
against all costs of defending the Action (including court costs, sanctions
imposed by a court, attorneys' fees, experts' fees and all other external
expenses, and the allocated costs of in-house counsel and other personnel), the
costs of any judgment or settlement, and the cost of any interest or penalties
relating to any judgment or settlement.
4.6 SURVIVAL OF INDEMNITIES. The rights and obligations of each of QUALCOMM
and Leap and their respective Indemnitees under this Article 4 shall survive the
sale or other transfer by any party of any Assets or businesses or the
assignment by it of any Liabilities.
ARTICLE 5
CERTAIN COVENANTS AND OTHER AGREEMENTS OF THE PARTIES
5.1 RESTRICTION ON INTERESTS. During the period commencing at the
Distribution and continuing until January 1, 2004, subject to the express terms
of written agreements to which Leap is a party in existence at the time of the
Distribution:
(a) Leap and its Affiliates shall not acquire Interests, directly or
indirectly, in Persons that deploy (or intend to deploy) a Wireless System
unless (i) with respect to Persons that do not have a pre-existing Wireless
System that utilizes a technology other than cdmaOne,
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such Person only utilizes or intends to only utilize cdmaOne for such Wireless
System and such Person agrees to procure infrastructure and subscriber equipment
from QUALCOMM in accordance with the provisions of the Equipment Agreement, or
(ii) with respect to Persons that do have a pre-existing Wireless System that
utilizes a technology other than cdmaOne, the provisions of the last sentence in
this Section 5.1 are complied with as to such Person and such Person agrees to
procure infrastructure and subscriber equipment from QUALCOMM for such Person's
cdmaOne Wireless System in accordance with the provisions of the Equipment
Agreement; and
(b) Leap shall use commercially reasonable efforts to cause each
Related Entity that is not a Leap Affiliate to not acquire Interests in other
Persons that deploy (or intend to deploy) a Wireless System unless such Person
only utilizes or intends to only utilize cdmaOne for such Wireless System and
such Person agrees to procure infrastructure and subscriber equipment from
QUALCOMM in accordance with the provisions of the Equipment Agreement.
Notwithstanding the provisions of this Section 5.1, an Interest may be acquired
in a Person that has a pre-existing Wireless System that utilizes a technology
other than cdmaOne, but only so long as (i) the proceeds from the acquisition of
any such Interest are to be used by such Person solely to support and in
connection with the deployment of a cdmaOne Wireless System, (ii) reasonable
efforts are made to ensure that such proceeds are so utilized, and (iii) unless
such Person is already a party to an equipment requirements agreement with
QUALCOMM (in accordance with the provisions of the Equipment Agreement), the
efforts described above are undertaken to have such Person agree to procure
infrastructure and subscriber equipment in accordance with the provisions of the
Equipment Agreement.
5.2 RESTRICTION ON USE OF OTHER TECHNOLOGY. Leap agrees that during the
period commencing at the Distribution and continuing until January 1, 2004,
subject to the express terms of written agreements to which Leap is a party in
existence at the time of the Distribution:
(a) Leap will solely implement and utilize cdmaOne in connection with
its own (i) deployment and/or use of wireless infrastructure equipment, and (ii)
distribution and sale of wireless subscriber equipment, and (iii) provision of
wireless communication services in the world (the activities in clauses "(i)"
through "(iii)" collectively being referred to as the "Wireless Activities");
(b) Leap will cause its Affiliates that do not have a pre-existing
Wireless System that utilizes a technology other than cdmaOne to solely
implement and utilize, cdmaOne in connection with each such Affiliate's Wireless
Activities;
(c) Leap will cause its Affiliates that do have a pre-existing
Wireless System that utilizes a technology other than cdmaOne to solely
implement and utilize cdmaOne in connection with each such Affiliate's Wireless
Activities to the extent those Wireless Activities are funded, directly or
indirectly, by Leap, and furthermore Leap shall exercise commercially reasonable
efforts to cause such Affiliates to use cdmaOne or a cdmaOne overlay with
respect to any expansions of each such pre-existing non-cdmaOne Wireless System;
and
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(d) Leap will use its commercially reasonable efforts to cause each
Related Entity (that is not a Leap Affiliate) to solely implement and utilize
cdmaOne in connection with each such Related Entity's Wireless Activities.
Except to the extent set forth in clause "(c)" of the immediately preceding
sentence with respect to Affiliates having pre-existing non-cdmaOne Wireless
Systems, (i) in no event will Leap or its Affiliates implement, utilize or
support in any respect global system for mobile communications ("GSM"), time
division multiple access ("TDMA") or any other digital technologies (or variants
thereof) in competition with cdmaOne in connection with the provision of
wireless communication services, and (ii) Leap agrees to exercise its
commercially reasonable efforts to cause any Related Entity not to implement,
utilize or support in any respect GSM, TDMA or any other competing digital
technologies (or variants thereof) in competition with cdmaOne in connection
with the provision of wireless communication services. Leap further agrees to,
and agrees to cause its Affiliates to, support and promote cdmaOne based
technology for commercial implementation by its corporate partners and any
consortium of which it is a member in connection with any Wireless Activities
engaged in by any such partners and/or consortia in all parts of the world.
5.3 RESTRICTION ON EMPLOYEE SOLICITATION OR HIRING. Leap (on behalf of
itself, its Affiliates and any Related Entity, if any, that is utilized to
execute the domestic business activities described in the section of the Form 10
captioned "United States Wireless Opportunities") agrees that for a period of
three (3) years following the date of the Distribution, it will not solicit or
induce any employee of QUALCOMM or any other member of the QUALCOMM Group to
terminate or breach an employment, contractual or other relationship with
QUALCOMM nor will Leap (or its Affiliates) hire or otherwise employ any employee
of QUALCOMM or any other member of the QUALCOMM Group or any individual that was
employed by QUALCOMM or any other member of the QUALCOMM Group within the
previous six months, unless such person has approached Leap independently
without solicitation by Leap and Leap first consults with QUALCOMM and obtains
QUALCOMM's prior written approval. QUALCOMM (on behalf of itself and its
Affiliates) agrees that for a period of three (3) years following the date of
the Distribution, it will not solicit or induce any employee of Leap to
terminate or breach an employment, contractual or other relationship with Leap
nor will QUALCOMM (or its Affiliates) hire or otherwise employ any employee of
Leap or any member of the Leap Group or any individual that was employed by Leap
or any member of the Leap Group within the previous six months, unless such
person has approached QUALCOMM independently without solicitation by QUALCOMM
and QUALCOMM first consults with Leap and obtains Leap's prior written approval.
5.4 RIGHT OF FIRST REFUSAL. All rights and obligations set forth in this
Section 5.4 are expressly limited by and subject to any and all rights or third
parties existing on the Distribution Date, all of which rights are set forth on
Schedule 5.4 hereto to the actual knowledge of Leap.
(a) Except as otherwise may be agreed by the parties, Leap shall not
sell, assign, pledge, or in any manner transfer any Interest in its Leap
Operating Assets, whether voluntarily or by operation of law, for consideration
or by gift or otherwise, except by a transfer which meets the requirements
hereinafter set forth in this Section 5.4.
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(b) If Leap desires to sell or otherwise transfer as described in
Section 5.4(a) above any Leap Operating Asset, Leap shall first give written
notice thereof to QUALCOMM. Such notice shall indicate the relevant Leap
Operating Asset and name the proposed transferee, and state the number of shares
(or the extent and nature of the interest) proposed to be transferred, the
proposed consideration including timing and form thereof, and all other material
terms and conditions of the proposed transfer.
(c) For thirty (30) days following receipt of such notice, QUALCOMM
shall have the option to elect to purchase all of the Leap Operating Asset
described in the notice at the price and upon the terms set forth in such
notice, subject to the rights of third parties and other restrictions that may
be set forth in written agreements with Leap in existence at the time of the
Distribution. In the event QUALCOMM elects to purchase all of the Leap Operating
Asset, it shall give written notice to Leap of its election and such purchase
shall be made pursuant to Section 5.4(e) below.
(d) Payment for any purchase QUALCOMM elects to make pursuant to
subsection (c) above shall be made in cash or by wire transfer, within thirty
(30) days following the election to purchase by QUALCOMM. Notwithstanding the
foregoing, QUALCOMM shall have the option to pay for said Leap Operating Asset
on substantially the same terms and conditions set forth in the notice from Leap
regarding the proposed transfer of such Leap Operating Asset.
(e) In the event QUALCOMM does not elect to acquire all of such Leap
Operating Asset, Leap may, within the one hundred eighty (180) day period
following the expiration of the option rights granted to QUALCOMM herein,
transfer the Leap Operating Asset as specified in the notice, provided such
transfer is consummated on the basis such that each of the corresponding
material terms of such transfer is at least as favorable to Leap as each of the
material terms set forth in the notice to QUALCOMM.
(f) The foregoing provisions in this Section 5.4 shall not be
applicable to the following transfers by Leap:
(i) Leap's pledge, mortgage or other transfer (or any
foreclosure pursuant thereto) of an Leap Operating Asset pursuant to the terms
of the Credit Facility;
(ii) Leap's bona fide pledge or mortgage (or any foreclosure
pursuant thereto) of an Leap Operating Asset with a commercial lending
institution, consistent with the terms of the Credit Facility; and
(iii) Leap's transfer of an Leap Operating Asset to QUALCOMM.
(g) The foregoing rights of QUALCOMM with respect to any Leap
Operating Asset shall be subject to rights of third parties to acquire such Leap
Operating Asset existing as of the Distribution Date with respect to such Leap
Operating Asset, all of which rights are set forth on Schedule 5.4 hereto to the
actual knowledge of Leap.
(h) The foregoing right of first refusal shall terminate as of the
date three (3) years following the Distribution.
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(i) QUALCOMM may not assign its rights under this Section 5.4.
5.5 COMPETITION. Expect as may be set forth in this Agreement or any of the
Ancillary Agreements, no member of either the QUALCOMM Group or the Leap Group
shall have any duty to refrain from (i) engaging in the same or similar
activities or lines of business as any member of the other Group, (ii) doing
business with any potential or actual supplier or customer of any member of the
other Group, (iii) engaging in, or refraining from, any other activities
whatsoever relating to any of the potential or actual suppliers or customers of
any member of the other Group, or (iv) acquiring a joint venture or equity
interest in any telecommunications operating company or any other entity in the
United States or any other country. Notwithstanding the foregoing, following the
Distribution, so long as QUALCOMM or any of its Affiliates is in the business of
developing and/or selling cdmaOne application specific integrated circuits
neither Leap nor any of its Affiliates shall engage in the development or design
of cdmaOne application specific integrated circuits; provided, however, that
this restriction shall no longer apply in the event of a "change of control" of
QUALCOMM. For purposes of this Agreement, "change of control" means a
transaction or series of transactions whereby (i) any Person or two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of voting stock of
QUALCOMM (or other securities convertible into such voting stock) representing
20% or more of the combined voting power of all voting stock of QUALCOMM; or
(ii) during any period of up to 18 consecutive months, commencing after the date
of this Agreement, individuals who at the beginning of such 18-month period were
directors of QUALCOMM, together with such directors as are approved by directors
who were directors at the beginning of such period, shall cease for any reason
to constitute a majority of the board of directors of QUALCOMM; or (iii) any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of QUALCOMM.
5.6 MANAGEMENT OF INTERESTS. Leap covenants and agrees that following the
Distribution Date it shall take an active management role in its Leap Operating
Assets and any other wireless telecommunications operating company in which it
acquires a joint venture or equity interest, consistent with its own business
needs and applicable laws, contractual arrangements and other requirements of
Leap.
5.7 INVESTMENT COMPANY ACT. Following the Distribution Date, Leap shall use
commercially reasonable efforts, including without limitation by monitoring and
adjusting the nature and extent of its Interests, to ensure that Leap does not
become or remain an "investment company" as defined in the Investment Company
Act. Without limiting the foregoing, and notwithstanding the receipt by the
QUALCOMM Board of Directors of the Investment Company Opinion, as soon as
practicable following the Distribution, Leap shall use commercially reasonable
efforts to obtain an exemptive order from the Commission finding and declaring
Leap to be engaged in a business other than investing, reinvesting, owning,
holding or trading in securities, either directly, through majority-owned
subsidiaries or through controlled companies conducting similar types of
businesses.
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5.8 LICENSE GRANT BY LEAP. Leap (on behalf of itself and its Affiliates)
hereby grants to QUALCOMM (i) with respect to all Leap Patents (as defined
below) that have a wireless communications application, a worldwide,
non-exclusive, royalty-free, fully paid up, perpetual license (with the right to
sublicense) to use, make, have made and/or practice such Leap Patents for any
purpose, and (ii) with respect to all other Leap Patents, a worldwide,
non-exclusive, royalty-free, fully paid up, perpetual license (with the right to
sublicense only to Affiliates of QUALCOMM) to use, make, have made and/or
practice such Leap Patents for any purpose. For purposes of this Section 5.8,
"Leap Patents" shall mean any patents or patent applications (whether filed or
issued and whether foreign or domestic) which are owned or controlled at any
time by Leap or its Affiliates. Notwithstanding the foregoing, Leap Patents
shall not include any patent or patent application as to which each of the
following three conditions are applicable: (i) the patent or patent application
is developed by Leap or its Affiliates expressly for an unaffiliated third
party; (ii) the development of such patent or patent application is funded by
such unaffiliated third party; and (iii) under the terms of the agreement to
develop such patent, Leap does not retain rights to license such patent to any
third parties.
5.9 METROSVYAZ LIMITED; EQUIPMENT REQUIREMENTS; FINANCIAL SUPPORT. Without
the prior written consent of QUALCOMM, Leap shall not amend, waive or otherwise
modify, nor permit the amendment, waiver or modification of (by QUALCOMM
Telecommunications Ltd. or otherwise) (i) the provisions of any shareholders
agreement with Tiller International Limited and/or Tass Telecom that contains a
requirement or obligation to purchase or otherwise acquire infrastructure or
subscriber equipment from any member of the QUALCOMM Group, and/or (ii) the
provisions of any agreement (to which no member of the QUALCOMM Group is a
party) relating to the purchase from any member of the QUALCOMM Group of
infrastructure or subscriber equipment by any Person in which QUALCOMM
Telecommunications Ltd. and/or Metrosvyaz Limited, directly or indirectly, holds
an equity interest.
ARTICLE 6
CONFIDENTIALITY
6.1 CONFIDENTIALITY.
(a) Subject to Section 6.2, each of QUALCOMM and Leap agrees to hold,
and to cause its respective directors, officers, employees, agents, accountants,
counsel and other advisors and representatives to hold, in strict confidence,
with at least the same degree of care that applies to QUALCOMM's confidential
and proprietary information pursuant to policies in effect as of the
Distribution Date, all Information concerning the other that is either in its
possession as of the Distribution Date or furnished by the other or its
respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement, any
Ancillary Agreement or otherwise, and shall not use any such Information other
than for such purposes as shall be expressly permitted hereunder or thereunder,
except, in each case, to the extent that such Information has been (i) in the
public domain through no fault of such party or any member of the QUALCOMM Group
or the Leap Group, as applicable, or any of their respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives, (ii) later lawfully acquired from other sources by such party
(or any member of the QUALCOMM Group or the Leap Group, as
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applicable) which sources are not themselves bound by a confidentiality
obligation), or (iii) independently generated without reference to any
proprietary or confidential Information of the other party. For purposes of this
Agreement, "Information" shall mean information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
(b) Each party agrees not to release or disclose, or permit to be
released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 6.2. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).
6.2 PROTECTIVE ARRANGEMENTS. In the event that either party or any other
respective member of the QUALCOMM Group or the Leap Group, as applicable, either
(i) determines on the advice of its counsel that it is required to disclose any
Information pursuant to applicable law or (ii) receives any demand under lawful
process or from any Governmental Authority to disclose or provide Information of
the other party (or any other member of the QUALCOMM Group or the Leap Group, as
applicable) that is subject to the confidentiality provisions hereof, such party
shall notify the other party prior to disclosing or providing such Information
and shall cooperate at the expense of the requesting party in seeking any
reasonable protective arrangements requested by such other party. Subject to the
foregoing, the Person that received such request may thereafter disclose or
provide Information to the extent required by such law (as so advised by
counsel) or by lawful process or such Governmental Authority.
ARTICLE 7
ACCESS TO INFORMATION AND SERVICES
7.1 PROVISION OF CORPORATE RECORDS.
(a) Except as may otherwise be provided in any Ancillary Agreement,
QUALCOMM shall arrange as soon as practicable following the Distribution Date
for the transportation (at Leap's cost) to Leap of the books and records
relating exclusively to the Leap Business (the "Leap Books and Records") in its
possession, except to the extent such items are already in the possession of
Leap or a Leap Subsidiary. The Leap Books and Records shall be the property of
Leap, but shall be available to QUALCOMM for review and duplication until
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QUALCOMM shall notify Leap in writing that such records are no longer of use to
QUALCOMM.
(b) Except as otherwise provided in any Ancillary Agreement, Leap
shall arrange as soon as practicable following the Distribution Date for the
transportation (at QUALCOMM's cost) to QUALCOMM of the books and records
relating exclusively to the QUALCOMM Business (the "QUALCOMM Books and Records")
in its possession, except to the extent such items are already in the possession
of QUALCOMM. The QUALCOMM Books and Records shall be the property of QUALCOMM,
but shall be available to Leap for review and duplication (except that QUALCOMM
shall have the right to withhold QUALCOMM Books and Records to the extent
QUALCOMM reasonably determines such QUALCOMM Books and Records do not relate in
any material way to the Leap Business) until Leap shall notify QUALCOMM in
writing that such records are no longer of use to Leap.
(c) With respect to books and records that relate to both the Leap
Business and the QUALCOMM Business ("Combined Books and Records"), (i) the
parties shall use good faith efforts to divide such Combined Books and Records
into Leap Books and Records and QUALCOMM Books and Records, as appropriate, and
(ii) to the extent such Combined Books and Records are not so divided, the
parties shall each keep and maintain copies of such Combined Books and Records
as reasonably appropriate under the circumstances, subject to applicable
confidentiality provisions hereof and of any Ancillary Agreement.
7.2 ACCESS TO INFORMATION. Except as otherwise provided in an Ancillary
Agreement, from and after the Distribution Date, QUALCOMM shall afford to Leap
and its authorized accountants, counsel and other designated representatives
reasonable access (including using reasonable efforts to give access to persons
or firms possessing information) and duplicating rights during normal business
hours to all records, books, contracts, instruments, computer data and other
data and information relating to pre-Distribution operations of the Leap
Business (collectively, "Operations Data") within QUALCOMM's possession insofar
as such access is reasonably required by Leap for the conduct of the Leap
Business, subject to appropriate restrictions for classified or Privileged
Information. Similarly, except as otherwise provided in an Ancillary Agreement,
Leap shall afford to QUALCOMM and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable efforts
to give access to persons or firms possessing information) and duplicating
rights during normal business hours to Operations Data within Leap's possession,
insofar as such access is reasonably required by QUALCOMM for the conduct of the
QUALCOMM Business, subject to appropriate restrictions for classified or
Privileged Information. Operations Data may be requested under this Article 8
for the legitimate business purposes of either party, including, without
limitation, audit, accounting, claims (including claims for indemnification
hereunder), litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing under this Agreement and
the transactions contemplated hereby.
7.3 PRODUCTION OF WITNESSES. At all times from and after the Distribution
Date, each of Leap and QUALCOMM shall use reasonable efforts to make available
to the other, upon written request, its and its Subsidiaries' officers,
directors, employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any Action.
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7.4 REIMBURSEMENT. Except to the extent otherwise contemplated in any
Ancillary Agreement, a party providing Operations Data or witness services to
the other party under this Article 8 shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payments of such amounts,
relating to supplies, disbursements and other out-of-pocket expenses (at cost)
and direct and indirect expenses of employees who are witnesses or otherwise
furnish assistance (at cost), as may be reasonably incurred in providing such
Operations Data or witness services.
7.5 RETENTION OF RECORDS. Except as otherwise required by law or agreed to
in an Ancillary Agreement or otherwise in writing, each of QUALCOMM and Leap may
destroy or otherwise dispose of any of the Operations Data, which is material
Operations Data and is not contained in other Operations Data retained by
QUALCOMM or Leap, as the case may be, at any time after the tenth anniversary of
this Agreement, provided that, prior to such destruction or disposal, (a) it
shall provide no less than 90 or more than 120 days prior written notice to the
other, specifying in reasonable detail the Operations Data proposed to be
destroyed or disposed of and (b) if a recipient of such notice shall request in
writing prior to the scheduled date for such destruction or disposal that any of
the Operations Data proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the Operations Data as was requested at the
expense of the party requesting such Operations Data.
7.6 PRIVILEGED MATTERS. To allocate the interests of each party with
respect to Privileged Information, the parties agree as follows:
(a) QUALCOMM shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the QUALCOMM Business, whether or not the Privileged
Information is in the possession of or under the control of QUALCOMM or Leap.
QUALCOMM shall also be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information that relates
solely to the subject matter of any claims constituting Liabilities of the
QUALCOMM Group, now pending or which may be asserted in the future, in any
lawsuits or other Actions initiated against or by QUALCOMM, whether or not the
Privileged Information is in the possession of or under the control of QUALCONM
or Leap.
(b) Leap shall be entitled, in perpetuity, to control the assertion
or waiver of all Privileges in connection with Privileged Information which
relates solely to the Leap Business, whether or not the Privileged Information
is in the possession of or under the control of QUALCOMM or Leap. Leap shall
also be entitled, in perpetuity, to control the assertion or waiver of all
Privileges in connection with Privileged Information which relates solely to the
subject matter of any claims constituting Leap Liabilities, now pending or which
may be asserted in the future, in any lawsuits or other Actions initiated
against or by Leap, whether or not the Privileged Information is in the
possession of Leap or under the control of QUALCOMM or Leap.
(c) QUALCOMM and Leap agree that they shall have a shared Privilege,
with equal right to assert or waive, subject to the restrictions of this Section
7.6, with respect to all Privileges not allocated pursuant to the terms of
Sections 7.6(a) and (b). All Privileges relating
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to any claims, proceedings, litigation, disputes or other matters which involve
both QUALCOMM and Leap in respect of which QUALCOMM and Leap retain any
responsibility or liability under this Agreement shall be subject to a shared
Privilege.
(d) No party may waive any Privilege which could be asserted under
any applicable law, and in which the other party has a shared Privilege, without
the consent of the other party, except to the extent reasonably required in
connection with any litigation with third parties or as provided in Section
7.6(e) below. Such consent shall be in writing, or shall be deemed to be granted
unless written objection is made within 20 days after notice upon the other
party requesting such consent.
(e) In the event of any litigation or dispute between a member of the
QUALCOMM Group and a member of the Leap Group, either party may waive a
Privilege in which the other party has a shared Privilege, without obtaining the
consent of the other party, provided that such waiver of a shared Privilege
shall be effective only as to the use of information with respect to the
litigation or dispute between the QUALCOMM Group and the Leap Group, and shall
not operate as a waiver of the shared Privilege with respect to third-parties.
(f) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of either party,
each party agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other party, and shall not
unreasonably withhold consent to any request for waiver by the other party. Each
party specifically agrees that it will not withhold consent to waiver for any
purpose except to protect its own legitimate interests.
(g) Upon receipt by any party of any subpoena, discovery or other
request which arguably calls for the production or disclosure of information
subject to a shared Privilege or as to which the other party has the sole right
hereunder to assert a Privilege, or if any party obtains knowledge that any of
its current or former directors, officers, agents or employees has received any
subpoena, discovery or other request which arguably calls for the production or
disclosure of such Privileged Information, such party shall promptly notify the
other party of the existence of the request and shall provide the other party a
reasonable opportunity to review the information and to assert any rights it may
have under this Section 7.6 or otherwise to prevent the production or disclosure
of such Privileged Information.
(h) The transfer of the Leap Books and Records and the QUALCOMM Books
and Records and other Information between the QUALCOMM Group and the Leap Group
is made in reliance on the agreement of QUALCOMM and Leap, as set forth in
Sections 7.5 and 7.6 and elsewhere in this Agreement, to maintain the
confidentiality of Privileged Information and to assert and maintain applicable
Privileges. The access to information being granted pursuant to Sections 7.1 and
7.2, the agreement to provide witnesses and individuals pursuant to Section 7.3
and the transfer of Privileged Information between the QUALCOMM Group and the
Leap Group pursuant to this Agreement shall not be deemed a waiver of any
Privilege that has been or may be asserted under this Agreement or otherwise.
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ARTICLE 8
INSURANCE
8.1 POLICIES AND RIGHTS INCLUDED WITHIN THE LEAP ASSETS. Without limiting
the generality of the definition of the Leap Assets, the Leap Assets shall
include (a) any and all rights of an insured party under each of the Shared
Policies, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in connection
with the conduct of the Leap Business (provided QUALCOMM shall have equal rights
with respect to indemnity and the right to be defended to the extent practical
and appropriate) or, to the extent any claim is made against Leap or any of its
Subsidiaries, the QUALCOMM Business, and which injuries, losses, liabilities,
damages and expenses may arise out of insured or insurable occurrences or events
under one or more of the Shared Policies provided, however, that nothing in this
Section 8.1 shall be deemed to constitute (or to reflect) the assignment of the
Shared Policies, or any of them, to Leap; and (b) the Leap Policies.
8.2 POST-DISTRIBUTION DATE CLAIMS. If, subsequent to the Distribution Date,
any Person shall assert a claim against Leap or any Leap Subsidiary with respect
to any injury, loss, liability, damage or expense incurred or claimed to have
been incurred on or prior to the Distribution Date in or in connection with the
Distribution or the conduct of the Leap Business or, to the extent any claim is
made against Leap or any of its Subsidiaries, the QUALCOMM Business, and which
injury, loss, liability, damage or expense may arise out of insured or insurable
occurrences or events under one or more of the Shared Policies, QUALCOMM shall
at the time such claim is asserted (except to the extent inconsistent with
Section 8.1) be deemed to assign, without need of further documentation, to Leap
any and all rights of an insured party under the applicable Shared Policy with
respect to such asserted claim, specifically including rights of indemnity and
the right to be defended by or at the expense of the insurer, provided, however,
that nothing in this Section 8.2 shall be deemed to constitute (or to reflect)
the assignment of the Shared Policies, or any of them, to Leap.
8.3 ADMINISTRATION AND RESERVES.
(a) Notwithstanding the provisions of Article 2, but subject to any
contrary provisions of any Ancillary Agreement, from and after the Distribution
Date:
(i) Leap shall be entitled to any reserves established prior to
the Distribution Date by QUALCOMM, or the benefit of reserves held by any
insurance carrier, with respect to the Leap Liabilities; and
(ii) QUALCOMM shall be entitled to any reserves established by
QUALCOMM, or the benefit of reserves held by any insurance carrier, with respect
to the Liabilities of the QUALCOMM Group.
(b) INSURANCE PREMIUMS. Leap shall have the right but not the
obligation to pay the premiums, to the extent that QUALCOMM does not pay
premiums with respect to the
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Liabilities of the QUALCOMM Group (retrospectively-rated or otherwise), with
respect to Shared Policies and the Leap Policies, as required under the terms
and conditions of the respective Policies, whereupon QUALCOMM shall forthwith
reimburse Leap for that portion of such premiums paid by Leap as are
attributable to the Liabilities of the QUALCOMM Group. QUALCOMM shall provide
continued coverage under its director and officer liability insurance policy for
a period of not less than three years, with a policy limit of not less than
Twenty Million Dollars ($20,000,000), for acts which took place or were alleged
to have taken place prior to the Distribution Date covering persons who were
directors and officers of QUALCOMM prior to the Distribution Date. Fifty percent
of the additional premiums, if any, for such coverage shall be reimbursed by
Leap within 15 days of the Distribution Date.
(c) ALLOCATION OF INSURANCE PROCEEDS. Insurance Proceeds received
with respect to claims, costs and expenses under the Policies shall be paid to
Leap with respect to the Leap Liabilities and to QUALCOMM with respect to the
Liabilities of the QUALCOMM Group. Payment of the allocable portions of
indemnity costs of Insurance Proceeds resulting from the liability policies will
be made to the appropriate party upon receipt from the insurance carrier. In the
event that the aggregate limits on any Shared Policies are exceeded, the parties
agree to provide an equitable allocation of Insurance Proceeds received after
the Distribution Date based upon their respective bona fide claims. The parties
agree to use their commercially reasonable efforts to cooperate with respect to
insurance matters.
8.4 AGREEMENT FOR WAIVER OF CONFLICT AND SHARED DEFENSE. In the event that
Insured Claims of both Leap and QUALCOMM exist relating to the same occurrence,
Leap and QUALCOMM agree to jointly defend and to waive any conflict of interest
necessary to the conduct of that joint defense. Nothing in this Section 8.4
shall be construed to limit or otherwise alter in any way the indemnity
obligations of the parties to this Agreement, including those created by this
Agreement, by operation of law or otherwise.
ARTICLE 9
ARBITRATION; DISPUTE RESOLUTION
9.1 DISPUTES. QUALCOMM and Leap recognize that disputes as to certain
matters may from time to time arise during the effectiveness of this Agreement
and/or the Ancillary Agreements (collectively with this Agreement, the "Leap
Agreements") which relate to either party's rights and/or obligations hereunder
or thereunder. It is the objective of the parties to establish procedures to
facilitate the resolution of disputes arising under any of the Leap Agreements
in an expedient manner by mutual cooperation and without resort to litigation.
To accomplish this objective, the parties agree to follow the procedures set
forth in this Article 9 if and when a dispute arises under any of the Leap
Agreements. In the event of a dispute between the parties, any party may, by
written notice to the other, have such dispute referred to their respective
chief executive officers for attempted resolution by good faith negotiations
within fourteen (14) days after such notice is received. In the event the chief
executive officers are not able to resolve such dispute, either party may at any
time after the fourteen (14) day period seek to resolve the dispute through the
other means provided in Section 9.2.
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9.2 ALTERNATIVE DISPUTE RESOLUTION. Any dispute, controversy or claim
arising out of or relating to any of the Leap Agreements, including, without
limitation, disputes relating to alleged breach or to termination of any of such
agreements, shall be settled by binding Alternative Dispute Resolution ("ADR")
in the manner described below.
If a party intends to begin an ADR to resolve a dispute, such party shall
provide written notice (the "ADR Request") to the other party informing such
other party of such intention and the issues to be resolved. Within fifteen (15)
business days after receipt of the ADR Request, the other party may, by written
notice to counsel for the party initiating ADR, add additional issues to be
resolved.
9.3 ARBITRATION PROCEDURE. The ADR shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association for Large,
Complex Cases then in effect. Notwithstanding those rules, the following
provisions shall apply to the ADR hereunder.
(a) ARBITRATOR. The arbitration shall be carried out by a single
arbitrator, who shall be a retired United States judge or justice or magistrate
and shall be selected by the parties within thirty (30) days of receipt of the
ADR request in accordance with the procedure described below.
(i) The parties shall select an arbitrator as described in
subsection (ii) below, which arbitrator may but need not be selected from a list
of arbitrators such as the CPR Panel of Distinguished Neutrals of the Center for
Public Resources, subject to: (1) his/her availability and willingness to serve,
(2) his/her availability to commence the arbitration within a reasonable period
of time, (3) his/her agreement to charge fees and expenses that are reasonable
under the circumstances, and (4) his/her commitment to render his/her award
within the time periods provided in this Article 9.
(ii) Each party will exchange a list of ten (10) qualified
arbitrators and in the event that both parties agree to a single common name
that person shall be the arbitrator. In submitting the ten names, each party
shall prioritize from one to ten the persons on their respective lists. In the
event that there is more than one common name on the parties' lists, the person
having the lowest combined priority number shall be the selected arbitrator. The
combined priority number shall be the sum of the order numbers assigned to that
person by the parties. Thus, if one person was Leap's number two priority and
QUALCOMM's number three priority, and another person was Leap's number two
priority and QUALCOMM's number four priority, the former would be appointed. If
more than one person has the lowest combined priority number, the person for
whom there is less difference between the order numbers assigned by the parties
shall be appointed. Thus, if one person was Leap's number one priority and
QUALCOMM's number four priority, and another person was Leap's number two
priority and QUALCOMM's number three priority, the latter person would be
appointed. If this method does not produce a sole arbitrator or if there are no
common names, the parties shall alternatively strike from the combined list
until one name remains, which shall be the selected arbitrator. The party to
strike first shall be determined by the toss of a coin.
(iii) In the event the arbitrator is unable to meet the
requirements set forth in subsection (a) above, then, in the event the first
selected arbitrator was common to both
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lists and there was more than one common name on the parties' lists, the
arbitrator having the next lowest combined priority number who is able and
willing to serve pursuant to these requirements shall be selected. If there is
no such individual, then the parties shall use the alternate strike method set
forth above. In the event an arbitrator selected by the alternate strike
methodology is unable or unwilling to serve consistent with the requirements set
forth above, then the alternate striking procedure shall be retraced in reverse
order until an arbitrator is selected.
The arbitrator shall be neutral, disinterested, impartial, and independent
of the parties and others having any known interest in the outcome, and shall
abide by the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes.
There shall be no ex parte communications with the arbitrator either before or
during the arbitration, relating to the dispute or issues involved in the
dispute or the arbitrator's views on any such issue.
(b) INTERIM REVIEW. Either party may apply to any court having
jurisdiction hereof and seek preliminary injunctive relief until such time as
the arbitration award is rendered or the controversy is otherwise resolved.
(c) LOCATION. Any arbitration under Section 9.2 shall be conducted in
San Diego, California.
(d) DISCOVERY PROCEEDINGS AND HEARINGS. The parties shall have the
right to undertake such limited discovery as is expressly authorized by the
arbitrator upon a determination that such discovery is reasonably necessary to
enable the requesting party to prepare and present its claims and/or defenses at
the hearing. Discovery shall be conducted pursuant to Rules 26-37 of the Federal
Rules of Civil Procedure (with references to "court" in those Rules being
considered references to the "arbitrator") except as they may be modified by the
arbitrator. In addition:
(i) The arbitrator will determine the specific location within
San Diego, California and the date and time of the arbitration hearing, which
will commence no later than ninety (90) days after the date of the appointment
of the arbitrator. The arbitrator will provide reasonable notice of the hearing
date and time.
(ii) The arbitrator will ordinarily conduct the arbitration
hearing in the manner set forth in this Section 9.3 except that the Federal
Rules of Evidence shall apply. The arbitrator shall render its decision in
writing. If the AAA rules and the rules of this subsection (d) conflict in any
manner, the rules of this subsection (d) shall prevail. The arbitrator must hold
an oral hearing, but may impose reasonable time limits on each phase of the
proceeding and may limit testimony to exclude evidence that would be immaterial
or unduly repetitive, provided that all parties are afforded the opportunity to
present material and relevant evidence and that each party is given at least an
approximately equal amount of time for presentation of its case.
(iii) The arbitrator will require witnesses to testify under oath
if requested by any party.
(iv) Any party desiring a stenographic record may secure a court
reporter to attend the proceedings.
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(v) The arbitrator will determine the order of proof, which will
generally be similar to that of a court trial, including opening and closing
statements.
(vi) When the arbitrator determines that all relevant and
material evidence and arguments have been presented, the arbitrator will declare
the hearing closed. The arbitrator may defer the closing of the hearing for up
to ten (10) days to permit the parties to submit post-hearing briefs and or to
make closing arguments, as the arbitrator deems appropriate, before rendering an
award.
(vii) The arbitrator will render the award and its decisions
within thirty (30) days after the date of the closing of the hearing or, if an
arbitration hearing has been waived, within thirty (30) days after the date of
the arbitrator's receiving all materials specified by the parties. The decision
and award of the arbitrator will constitute the arbitration award and will be
binding on the parties.
(viii) The arbitrator shall, in rendering its decision and award,
apply the substantive law of the State of California, without regard to its
conflict of laws provisions, except that the interpretation of and enforcement
of this Article shall be governed by the Federal Arbitration Act. The costs of
the winning party and its reasonable attorneys fees shall be paid by the losing
party which shall be designated by the arbitrator. If the arbitrator is unable
to designate a losing party, it shall so state and each party shall bear its own
costs and attorneys fees.
(e) AWARD. The arbitrator is empowered to award any remedy allowed by
law, including money damages, prejudgment interest and attorneys' fees, and to
grant final, complete, interim, or interlocutory relief, including injunctive
relief. Notwithstanding the foregoing, punitive or multiple damages may not be
awarded. Judgment upon any arbitration award hereunder may be entered and
enforced in any court having jurisdiction thereof.
(f) ARBITRATION FEES. The fees of the arbitrator shall be split
equally between the parties.
9.4 CONFIDENTIALITY. The ADR proceeding shall be confidential and the
arbitrator shall issue appropriate protective orders to safeguard each party's
confidential Information. Except as required by law, no party shall make (or
instruct the arbitrator to make) any public announcement with respect to the
proceedings or decision of the arbitrator without prior written consent of each
other party. The existence of any dispute submitted to ADR, and the award, shall
be kept in confidence by the parties and the arbitrator, except as required in
connection with the enforcement of such award or as otherwise required by
applicable law.
ARTICLE 10
FURTHER ASSURANCES
10.1 FURTHER ASSURANCES.
(a) In addition to the actions specifically provided for elsewhere in
this Agreement, each of the parties hereto shall use its commercially reasonable
efforts, prior to, on
31.
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and after the Distribution Date, to take, or cause to be taken, all actions, and
to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement and the Ancillary
Agreements.
(b) Without limiting the foregoing, prior to, on and after the
Distribution Date, each party hereto shall cooperate with the other parties, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use its commercially reasonable efforts to cause to
be executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement and the
Ancillary Agreements, in order to effectuate the provisions and purposes of this
Agreement and the Ancillary Agreements and the transfers of the Leap Assets and
the assignment and assumption of the Leap Liabilities and the other transactions
contemplated hereby and thereby
(c) QUALCOMM and Leap, and each of the members of their respective
Groups, waive (and agree not to assert against any of the others) any claim or
demand that any of them may have against any of the others for any Liabilities
or other claims relating to or arising out of: (i) the failure of Leap or any
member of the Leap Group, on the one hand, or of QUALCOMM or any member of the
QUALCOMM Group, on the other hand, to provide any notification or disclosure
required under any state Environmental Law in connection with the Separation or
the other transactions contemplated by this Agreement, including the transfer by
any member of any Group to any member of any other Group of ownership or
operational control of any Assets not previously owned or operated by such
transferee; or (ii) any inadequate, incorrect or incomplete notification or
disclosure under any such state Environmental Law by the applicable transferor.
To the extent any Liability to any Governmental Authority or any third Person
arises out of any action or inaction described in clause (i) or (ii) above, the
transferee of the applicable Asset hereby assumes and agrees to pay any such
Liability.
ARTICLE 11
TERMINATION
11.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at any
time prior to the Distribution Date by the mutual consent of QUALCOMM and Leap
and upon such termination neither party shall have any Liability or further
obligation to the other party. The previsions hereof shall remain in full force
and effect and shall survive the Distribution Date, including without limitation
the indemnification provisions set forth in Article 4, and the covenants and
other agreements of the parties set forth in Article 5, except to the extent
otherwise agreed by the parties in writing.
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ARTICLE 12
MISCELLANEOUS
12.1 COUNTERPARTS; ENTIRE AGREEMENT.
(a) This Agreement and each Ancillary Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
(b) This Agreement, and the Ancillary Agreements and the exhibits,
schedules and appendices hereto and thereto contain the entire agreement between
the parties with respect to the subject matter hereof, supersede all previous
agreements, negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter and there are no agreements or
understandings between the parties other than those set forth or referred to
herein or therein.
12.2 GOVERNING LAW. This Agreement, except as expressly provided herein,
and, unless expressly provided therein, each Ancillary Agreement, shall be
governed by and 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, enforceability, performance and remedies.
12.3 ASSIGNABILITY. Except as set forth in any Ancillary Agreement, this
Agreement and each Ancillary Agreement shall be binding upon and inure to the
benefit of the parties hereto and thereto, respectively, and their respective
successors and assigns; provided, however, that no party hereto or thereto may
assign its respective rights or delegate its respective obligations under this
Agreement or any Ancillary Agreement without the express prior written consent
of the other parties hereto or thereto.
12.4 THIRD PARTY BENEFICIARIES. Except for the indemnification rights under
this Agreement of any QUALCOMM Indemnitee or Leap Indemnitee in their respective
capacities as such, (a) the provisions of this Agreement and each Ancillary
Agreement are solely for the benefit of the parties and are not intended to
confer upon any Person except the parties any rights or remedies hereunder, and
(b) there are no third party beneficiaries of this Agreement or any Ancillary
Agreement and neither this Agreement nor any Ancillary Agreement shall provide
any third person with any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement or any Ancillary Agreement.
12.5 NOTICES. All notices or other communications under this Agreement or
any Ancillary Agreement shall be in writing and shall be deemed to be duly given
when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
33.
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If to QUALCOMM, to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to General Counsel at the same address.
If to Leap, to: Leap Wireless International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to General Counsel at the same address.
Either party may, by notice to the other party, change the address to which such
notices are to be given.
12.6 SEVERABILITY. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
12.7 PUBLICITY. Prior to the Distribution, each of Leap and QUALCOMM shall
consult with each other prior to issuing any press releases or otherwise making
public statements with respect to the Distribution or any of the other
transactions contemplated hereby and prior to making any filings with any
Governmental Authority with respect thereto.
12.8 EXPENSES. Except as expressly set forth in this Agreement or in any
Ancillary Agreement, whether or not the Distribution is consummated, all third
party fees, costs and expenses paid or incurred in connection with the
Distribution will be paid by QUALCOMM.
12.9 HEADINGS. The article, section and paragraph headings contained in
this Agreement and in the Ancillary Agreements are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or any Ancillary Agreement.
12.10 SURVIVAL OF COVENANTS. Except as expressly set forth in any Ancillary
Agreement, the covenants, representations and warranties contained in this
Agreement and each Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive each of the Separation and the
Distribution.
12.11 WAIVERS OF DEFAULT. Waiver by any party of any default by the other
party of any provision of this Agreement or any Ancillary Agreement shall not be
deemed a waiver by the waiving party of any subsequent or other default, nor
shall it prejudice the rights of the other party.
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12.12 SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who are or are to be
thereby aggrieved shall have the right to specific performance and injunctive or
other equitable relief of its rights under this Agreement or such Ancillary
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is
waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
12.13 AMENDMENTS.
(a) This Agreement and all Ancillary Agreements except to the extent
as may otherwise be set forth therein, may be amended by the written agreement
of QUALCOMM and Leap. No provisions of this Agreement or any Ancillary Agreement
shall be deemed waived, amended, supplemented or modified by any party, unless
such waiver, amendment, supplement or modification is in writing and signed by
the authorized representative of the party against whom it is sought to enforce
such waiver, amendment, supplement or modification.
(b) Without limiting the foregoing, the parties anticipate that,
prior to the Distribution Date, some or all of the Schedules to this Agreement
may be amended or supplemented and, in such event, such amended or supplemented
Schedules shall be attached hereto in lieu of the original Schedules.
12.14 INTERPRETATION. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement (or the applicable Ancillary Agreement) as a whole
(including all of the schedules, exhibits and appendices hereto and thereto) and
not to any particular provision of this Agreement (or such Ancillary Agreement).
Article, Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement (or the
applicable Ancillary Agreement) unless otherwise specified. The word "including"
and words of similar import when used in this Agreement (or the applicable
Ancillary Agreement) shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified. The word "or" shall
not be exclusive.
12.15 LEGAL COUNSEL. QUALCOMM has engaged Cooley Godward LLP ("▇▇▇▇▇▇
Godward") as legal counsel to QUALCOMM in connection with the Distribution, the
preparation of this Agreement and the other Leap Agreements and the transactions
contemplated hereby and thereby. ▇▇▇▇▇▇ Godward has not been engaged to protect
or represent the interests of Leap with respect to the preparation of this
Agreement, any other Leap Agreement or the transactions contemplated hereby or
thereby. Leap has carefully considered the foregoing and hereby approves ▇▇▇▇▇▇
Godward's representation of QUALCOMM. Leap further:
35.
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(a) acknowledges that actual or potential conflicts of interest exist between
QUALCOMM and Leap, that Leap's interests will not be represented by legal
counsel unless Leap engages counsel on its own behalf, and that Leap has been
afforded the opportunity to engage and seek the advice of its own legal counsel
before entering into this Agreement; and (b) agrees that, in the event of any
disputes between Leap and QUALCOMM, Cooley Godward may represent QUALCOMM, that
notwithstanding any actual or potential conflict of interest, Leap will make no
objections to such representation and that QUALCOMM and Cooley Godward have
relied on the provisions of this Section 12.15 in connection with this Agreement
and the Distribution. Finally, Leap agrees that neither this Agreement nor the
transactions contemplated hereby or in connection with the Distribution are
intended to create an attorney-client relationship between ▇▇▇▇▇▇ Godward and
Leap or any other relationship pursuant to which Leap would have a right to
object to Cooley Godward's representation of any Person under any circumstances.
Notwithstanding the provisions of Section 12.4, it is intended that Cooley
Godward shall be entitled to obtain enforcement of this Section 12.15.
36.
42
IN WITNESS WHEREOF, the parties have caused this Separation and Distribution
Agreement to be executed by their duly authorized representatives.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LEAP WIRELESS INTERNATIONAL, INC.:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
37.
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SCHEDULE A-1
(ASSETS RELATED TO CHASE TELECOMMUNICATIONS, INC.)
- 449,340 Class B Common Shares of Chase Telecommunications, Inc.
- Warrant rights to purchase 526,973 Class B Common Shares (subject to
vesting) of Chase Telecommunications, Inc. (the right to purchase 208,568
of such shares is vested and the right to the balance of such shares is
subject to the vesting schedule set forth in the Warrant Agreement, as to
which Leap shall be entitled to receive 5/18ths of the amount of all rights
vested in the future).
- Investor Rights Agreement, dated December 18, 1996, between Chase
Telecommunications, Inc. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as amended (excluding
any rights and benefits retained by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ as a prospective
shareholder, if any, with respect to registration rights and similar
rights).
- Class B Common Stock Purchase Agreement, dated December 18, 1996, by and
among Chase Telecommunications, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as amended.
- All outstanding Working Capital Loans (and accrued but unpaid interest on
such Working Capital Loans) outstanding under that certain Credit
Agreement, entered into as of June 26, 1998, by and among Chase
Telecommunications, Inc., as borrower, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as a Lender,
any Affiliate of QUALCOMM or such other Persons as shall from time to time
become Lenders thereunder, and QUALCOMM, as Collateral Agent, and all
rights and benefits associated therewith as the holder of such Working
Capital Loans. Any promissory notes evidencing any such Working Capital
Loans shall be endorsed, without recourse, to Leap.
1
44
SCHEDULE A-2
(ASSETS RELATED TO CHILESAT)
- 10,999,900 shares of stock in Inversiones QUALCOMM Chile, S.A.
- Beneficial interest in 100 shares of stock of Inversiones QUALCOMM Chile,
S.A. currently held by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
- Subscription and Shareholders Agreement, dated as of February 27, 1997 and
effective as of March 4, 1997, by and among Telex-Chile S.A., Chilesat
S.A., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ and Chilesat PCS, as amended.
- Reimbursement Agreement, dated as of November 7, 1996, by and between
Chilesat PCS and Bank of America, as amended (but not including any
obligations therein related to forfeiture of any bonds as a result of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ failing to perform as a vendor).
- All principal amounts (and accrued but unpaid interest theron) outstanding
under the "Additional Commitment" under that certain Amended and Restated
Deferred Payment Agreement, entered into as of June 24, 1998, together with
all forebearances outstanding under such Additional Commitment, and all
rights to convert such amounts outstanding under the Additional Commitment
into equity, and all rights and benefits associated therewith as the holder
of such principal. Any promissory notes evidencing any such outstanding
principal amounts shall be endorsed, without recourse, to Leap.
2
45
SCHEDULE A-3
(ASSETS RELATED TO METROSVYAZ/RUSSIA)
- 70 Shares of QUALCOMM Telecommunications, Ltd. (Cayman Islands).
- 70 Shares of QUALCOMM Telecommunications Limited (Isle of ▇▇▇▇); provided,
however, if as of the date of the Distribution ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ has
not already transferred to Tiller International Limited 30 Shares of
QUALCOMM Telecommunications, Ltd. (Isle of ▇▇▇▇), then ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ shall transfer such 30 Shares to Leap and Leap shall assume
all obligations of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ to transfer such 30 Shares to
Tiller International Limited.
- Joint Venture Agreement, dated September 25, 1997, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ International Limited (but specifically excluding
50%, pro rata, of the obligation under Section 2.3 of the Agreement to make
payments thereunder, such excluded 50% obligation remaining with QUALCOMM).
- Development Agreement, dated September 25, 1997, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and Tiller International Limited.
- All principal amounts (and accrued but unpaid interest theron) outstanding
under that certain Loan Agreement, dated as of August 14, 1998, by and
among Metrosvyaz Limited, as Borrower, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as a Lender
and Collateral Agent, and any other parties thereto, to the extent such
amounts relate to financing the working capital needs of Metrosvyaz
Limited, and all rights and benefits associated therewith as the holder of
such principal amounts. Any promissory notes evidencing any such principal
amounts shall be endorsed, without recourse, to Leap.
- A receivable in the amount of $1.7 million owed by QUALCOMM
Telecommunications, Ltd. (Cayman Islands) to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
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SCHEDULE A-4
(ASSETS RELATED TO OZPHONE)
- 8 Ordinary Shares of OzPhone Pty. Ltd.
- Share Purchase Agreement, dated 18 April 1998, by and among ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Bloggs Pty Limited, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as
trustees for the CXR Superannuation Fund, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, and
OzPhone Pty. Ltd.
- Rights under that certain Agreement, dated 24 April 1998, by and between
OzPhone Pty. Ltd., Science Applications International Corporation ("SAIC"),
Price Waterhouse Corporate Finance Pty. Ltd. ("PW"), and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent such rights relate to arrangements with PW to
provide financial advisor services, but specifically excluding any rights
or obligations with respect to SAIC providing technical and operational
services, including system integration services, which rights and
obligations are retained by QUALCOMM). If ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Leap and
SAIC reach an agreement on system integration services to be provided by
SAIC, Leap will cause OzPhone Pty. Ltd. to issue the required shares to
SAIC as provided in this Agreement.
4
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SCHEDULE A-5
(ASSETS RELATED TO PC PHONE)
- Agreements, letters of intent and leads, if any, to acquire US PCS
spectrum.
- All plans, business plans, models, studies, marketing plans, naming
efforts, operational plans, management studies, and work in progress
relating to becoming a terrestrial-based wireless telecommunications PCS
operator in the United States, including but not limited to the following:
(i) marketing, strategic planning, market analysis, competitive analysis,
brand name, logo, platform, retail channel development, market demand,
product pricing, and ad agency selection/contract; (ii) back-office
planning, including back office architecture, systems planning and adjunct
systems architecture; (iii) operations planning, including network
deployment; (iv) management planning, including implementation plan
development, spectrum acquisition and legal work product related thereto,
and (v) site acquisition and planning efforts related thereto.
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SCHEDULE A-6
(ASSETS RELATED TO PEGASO)
- 1000 Shares of QUALCOMM PCS Mexico, Inc.
- Rights under that certain Services Agreement, dated June 10, 1998, between
QUALCOMM Wireless Services (Mexico) S.A. de C.V. ("QWS") (as successor to
and assignee of QUALCOMM International Wireless Technology, Inc.) and
Pegaso S.A. de C.V. (as successor to and assignee of Pegaso Comunicaciones
Y Sistemas, S.A. de C.V.), to the extent such rights allow and/or require
QWS, or a related company, to provide operational or related services
pursuant to Section 8.2 of the Agreement, to Pegaso PCS S.A. de C.V. and
its affiliates.
6
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SCHEDULE A-7
(ASSETS RELATED TO TELESYSTEMS OF UKRAINE)
- A 49% equity interest in Telesystems of Ukraine and all other rights
attributable thereto.
- Agreement on Joint Investment Activity No 1, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and Telesystems of Ukraine Company, dated 3 April 1997, as
amended, and Additional Agreement No. 2 related thereto, and all rights of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ provided for therein.
- Application for obtaining the License to use Frequency in the territory of
Ukraine, dated December 14, 1996.
- Statute of Limited Liability Company "Telesystems of Ukraine," as amended
and registered on 24 December 1996 under No. 866.
- Foundation Agreement on Activity of Limited Liability Company "Telesystems
of Ukraine," regarding the creation and activity of the Limited Liability
Company "Telesystems of Ukraine," as executed by RUTA-FARM Limited
Liability Company, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, and Ukrainian Association of
Electric Communication "Ukrtelecom".
7
50
SCHEDULE A-8
(OTHER ASSETS)
- Building lease on real property commonly known as ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, and leasehold improvements thereon.
- The furniture, equipment and supplies (including individual computers but
not including any network equipment) utilized by Leap employees and agreed
upon by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as established by an inventory to be
conducted by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ as of September 5, 1998.
- $10,000,000 in cash
- Assets in employee benefits plans delivered to Leap pursuant to the
Employee Benefits Agreement. If such plans do not have trust or other
separately designated assets, a cash amount equal to the value of the
subject benefits as of the Distribution Date, as more specifically set
forth in the Employee Benefits Agreement.
- Any and all rights which ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ may have to pursue an
opportunity to enter into a venture with the Ukraine Railroad for fiber
optic back-haul and related services.
8
51
SCHEDULE B-1
(LIABILITIES RELATED TO CHASE TELECOMMUNICATIONS, INC.)
- Obligations under that certain Investors Rights Agreement, dated
December 18, 1996, between Chase Telecommunications, Inc. and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, to the extent relating to the rights and benefits
transferred to Leap under such Investors Rights Agreement.
- Class B Common Stock Purchase Agreement, dated December 18, 1996 by, and
among Chase Telecommunications, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
- The commitment to provide Working Capital Loans under that certain Credit
Agreement, entered into as of June 26, 1998, by and between Chase
Telecommunications, Inc., as borrower, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as a Lender,
any Affiliate of QUALCOMM or such other Persons as shall from time to time
become Lenders hereunder, and QUALCOMM, as Collateral Agent, and all
obligations and liabilities associated with assuming such commitment.
9
52
SCHEDULE B-2
(LIABILITIES RELATED TO CHILESAT)
- The commitment to provide funds under the "Additional Commitment" under
that certain Amended and Restated Deferred Payment Agreement, entered into
as of June 24, 1998, and all obligations and liabilities associated with
assuming such commitment.
- Subscription and Shareholders Agreement, dated as of February 27, 1997 and
effective as of March 4, 1997 by and among Telex-Chile S.A., Chilesat S.A.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ and Chilesat PCS, as amended.
- Reimbursement Agreement, dated as of November 7, 1996, by and between
Chilesat PCS and Bank of America, as amended (but not including any
obligations therein related to forfeiture of any bonds as a result of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ failing to perform as a vendor), and all liability
of QUALCOMM with respect to the related guaranty of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
10
53
SCHEDULE B-3
(LIABILITIES RELATED TO METROSVYAZ/RUSSIA)
- Joint Venture Agreement, dated September 25, 1997, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ International Limited (but specifically excluding
50%, pro rata, of the obligation under Section 2.3 of the Agreement to make
payments thereunder, such excluded 50% obligation remaining with QUALCOMM).
- Development Agreement, dated September 25, 1997, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and Tiller International Limited.
- The commitment to provide working capital loan financing under that certain
Loan Agreement, dated as of August 14, 1998, by and among Metrosvyaz
Limited, as Borrower, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as a Lender and Collateral
Agent, and any other parties thereto, which commitment is in the aggregate
amount of approximately $75 million, and all obligations and liabilities
associated with assuming such commitment.
11
54
SCHEDULE B-4
(LIABILITIES RELATED TO OZPHONE)
- Share Purchase Agreement, dated 18 April 1998, by and among ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Bloggs Pty Limited, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as
trustees for the CXR Superannuation Fund, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, and
OzPhone Pty. Ltd.
- Agreement, dated 24 April 1998, by and between OzPhone Pty. Ltd., Science
Applications International Corporation ("SAIC"), Price Waterhouse Corporate
Finance Pty. Ltd. ("PW"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (specifically excluding
any obligations of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ with respect to SAIC providing
technical and operational services, including system integration services,
which obligations are retained by QUALCOMM). If ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Leap
and SAIC reach an agreement on system integration services by SAIC, Leap
will cause OzPhone to issue the required shares to SAIC as provided in this
Agreement.
12
55
SCHEDULE B-5
(LIABILITIES RELATED TO PC PHONE)
- Agreements, letters of intent and leads, if any, to acquire US PCS
spectrum.
- Brokers Agreement with The Cascade Group dated July __, 1998.
13
56
SCHEDULE B-6
(LIABILITIES RELATED TO PEGASO)
- Any obligations under that certain Services Agreement, dated June 10, 1998,
between QUALCOMM Wireless Services (Mexico) S.A. de C.V. ("QWS") (as
successor to and assignee of QUALCOMM International Wireless Technology,
Inc.) and Pegaso S.A. de C.V. (as successor to and assignee of Pegaso
Comunicaciones Y Sistemas, S.A. de C.V.) associated with exercising the
right to allow and/or require QWS, or a related company, to provide
operational or related services pursuant to Section 8.2 of the Agreement,
to Pegaso PCS S.A. de C.V. and its affiliates.
14
57
SCHEDULE B-7
(LIABILITIES RELATED TO TELESYSTEMS OF UKRAINE)
- Agreement on Joint Investment Activity No 1, by and between ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and Telesystems of Ukraine Company, dated 3 April 1997, as
amended, and Additional Agreement No. 2 related thereto, and all
obligations of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ provided for therein.
- Application for obtaining the License to use Frequency in the territory of
Ukraine, dated December 14, 1996.
- Statute of Limited Liability Company "Telesystems of Ukraine," as amended
and registered on 24 December 1996 under No. 866.
- Foundation Agreement on Activity of Limited Liability Company "Telesystems
of Ukraine," regarding the creation and activity of the Limited Liability
Company "Telesystems of Ukraine," as executed by RUTA-FARM Limited
Liability Company, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, and Ukrainian Association of
Electric Communication "Ukrtelecom".
15
58
SCHEDULE B-8
(OTHER LIABILITIES)
- Building lease on premises at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ with payments prorated to the Distribution Date.
- Liabilities assumed by Leap pursuant to the Employee Benefits Agreement.
16