SC 13D/A

0000950123-07-016921.txt : 20071221 0000950123-07-016921.hdr.sgml : 20071221 20071220215741 ACCESSION NUMBER: 0000950123-07-016921 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20071221 DATE AS OF CHANGE: 20071220 GROUP MEMBERS: MARK H. RACHESKY, M.D. GROUP MEMBERS: MHR FUND MANAGEMENT LLC GROUP MEMBERS: MHR INSTITUTIONAL ADVISORS II LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LEAP WIRELESS INTERNATIONAL INC CENTRAL INDEX KEY: 0001065049 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 330811062 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-54639 FILM NUMBER: 071320679 BUSINESS ADDRESS: STREET 1: 10307 PACIFIC CENTER COURT CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 8588826000 MAIL ADDRESS: STREET 1: 10307 PACIFIC CENTER COURT CITY: SAN DIEGO STATE: CA ZIP: 92121 FORMER COMPANY: FORMER CONFORMED NAME: QUALCOMM SPINCO INC/ DATE OF NAME CHANGE: 19980820 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MHR Institutional Partners IIA LP CENTRAL INDEX KEY: 0001301390 IRS NUMBER: 200382655 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O AKIN GUMP STRAUSS HAUER & FELD LLP STREET 2: 590 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-872-1000 MAIL ADDRESS: STREET 1: C/O AKIN GUMP STRAUSS HAUER & FELD LLP STREET 2: 590 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 e44854a3sc13dza.htm AMENDMENT NO. 3 TO SCHEDULE 13D SC 13D/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 3)*

Leap Wireless International, Inc.

(Name of Issuer)

Common Stock, Par Value $.0001 Per Share

(Title of Class of Securities)

521863308

(CUSIP Number)

Doron Lipshitz, Esq.
O’Melveny & Myers LLP
7 Times Square
New York, New York 10036
(212) 326-2061
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

December 20, 2007
(Date of Event which Requires Filing
of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box o.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Continued on following pages


CUSIP No.		521863308


1	NAMES OF REPORTING PERSONS MHR INSTITUTIONAL PARTNERS IIA LP


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			8,415,428

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			8,415,428

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	8,415,428

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	12.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	PN


CUSIP No.		521863308


1	NAMES OF REPORTING PERSONS MHR INSTITUTIONAL ADVISORS II LLC


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			11,755,806

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			11,755,806

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	11,755,806

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	17.2%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


CUSIP No.		521863308


1	NAMES OF REPORTING PERSONS MHR FUND MANAGEMENT LLC


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			14,319,600

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			14,319,600

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	14,319,600

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	21.0%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


CUSIP No.		521863308


1	NAMES OF REPORTING PERSONS MARK H. RACHESKY, M.D.


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	United States of America

		7	SOLE VOTING POWER

NUMBER OF			14,363,274

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			14,363,274

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	14,363,274

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	21.0%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IN; HC

This Statement on Schedule 13D (this “Statement”) further amends and supplements, as Amendment No. 3, the Schedule 13D filed on August 26, 2004 (the “Original Schedule 13D”), which was amended and restated on December 19, 2007 by Amendment No. 1 to the Original Schedule 13D (“Amendment No. 1”) and on December 20, 2007 by Amendment No. 2 to the Original 13D (“Amendment No. 2” and, together with the Original Schedule 13D and Amendment No. 1, the “Schedule 13D”) and relates to the shares of common stock, par value $0.0001 per share (the “Common Stock”), of Leap Wireless International, Inc. (the “Issuer”).

This Statement is being filed by the Reporting Persons to report the acquisition of additional shares of Common Stock.

Item 3. Source and Amount of Funds or Other Consideration

Item 3 is hereby amended to add the following:

The source of funds for the purchase reported in this Statement was the working capital of Master Account, Capital Partners (100) and Institutional Partners III.

Item 4. Purpose of Transaction

Item 4 is hereby amended and restated in its entirety as follows:

All of the shares of Common Stock reported herein as having been acquired for the accounts of the Reporting Persons were acquired for investment purposes only.

Neither the Reporting Persons nor, to the best of their knowledge, any of the other persons identified in response to Item 2 hereof, has any plans or proposals that relate to or would result in the occurrence of any of the transactions described in subparagraphs (b) through (j) of Item 4 of Schedule 13D. Notwithstanding and in addition to the foregoing, Dr. Rachesky was elected as a member of the Board of Directors of the Issuer, effective August 19, 2004. In his capacity as a Director of the Issuer, Dr. Rachesky may have influence over the corporate activities of the Issuer and may, with or without the Reporting Persons or the persons identified in Item 2 hereof, from time to time develop and/or discuss plans or proposals that relate to or would result in the occurrence of any transaction or event described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

(a) Depending upon a variety of factors, including, without limitation, trading prices of the shares of Common Stock, the financial condition, results of operations and prospects of the Issuer, general investment and trading policies of the Reporting Persons and general economic, financial and industry conditions, the Reporting Persons may from time to time (including in the coming days) acquire, or cause to be acquired, additional securities of the Issuer or dispose, or cause to be disposed, such securities, in open market transactions, privately negotiated transactions, transactions in which the Issuer raises, through private or public offerings, additional capital through a combination of additional debt and/or equity financing or otherwise.

Institutional Partners III will direct the deposit of certain shares of Common Stock, as applicable, and will not receive such shares of Common Stock, pursuant to the terms of an escrow agreement, dated December 20, 2007 (the “Escrow Agreement”), which is filed as Exhibit 1 hereto and is incorporated herein by reference, by and between Institutional Partners III and The Bank of New York, as escrow agent (the “Escrow Agent”), is in escrow pending expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Escrow Agreement is further described in Item 6 of this Statement, which is incorporated into this Item 4 by reference.

The Reporting Persons reserve the right, from time to time, to formulate other purposes, plans or proposals that relate to or would result in the occurrence of any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D if and to the extent deemed advisable in light of general investment and trading policies of the Reporting Persons, market conditions or other factors. The information set forth in this Item 4 is subject to change at any time, and there can be no assurances that any of the Reporting Persons will or will not take any of the actions described above.

Item 5. Interest in Securities of the Issuer

Item 5 is hereby amended and restated in its entirety as follows:

The percentages set forth in this Statement are calculated based on information contained in the Issuer’s Form 10-Q for the quarterly period ended September 30, 2007, which disclosed that there were 68,207,914 shares of Common Stock outstanding as of December 7, 2007.

(a) (i) Master Account may be deemed the beneficial owner of 239,577 shares of Common Stock held for its own account (approximately 0.4% of the total number of shares of Common Stock outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act).

(ii) Capital Partners (100) may be deemed the beneficial owner of 28,819 shares of Common Stock held for its own account (approximately 0.04% of the total number of shares of Common Stock outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act).

(iii) Advisors may be deemed the beneficial owner of 268,396 shares of Common Stock (approximately 0.4% of the total number of shares of Common Stock outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act). This number consists of (A) 239,577 shares of Common Stock held for the account of Master Account and (B) 28,819 shares of Common Stock held for the account of Capital Partners (100).

(iv) Institutional Partners II LP may be deemed the beneficial owner of 3,340,378 shares of Common Stock held for its own account (approximately 4.9% of the total number of shares of Common Stock outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act).

(v) Institutional Partners IIA may be deemed the beneficial owner of 8,415,428 shares of Common Stock held for its own account (approximately 12.3% of the total number of shares of Common Stock outstanding calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act).

(vi) Institutional Advisors II may be deemed the beneficial owner of 11,755,806 shares of Common Stock (approximately 17.2% of the total number of shares of Common Stock outstanding calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act). This number consists of (A) 3,340,378 shares of Common Stock held for the account of Institutional Partners II and (B) 8,415,428 shares of Common Stock held for the account of Institutional Partners IIA.

(vii) Institutional Partners III may be deemed the beneficial owner of 2,295,398 shares of Common Stock held for its own account (approximately 3.4% of the total number of shares of Common Stock outstanding calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act).

(viii) Institutional Advisors III may be deemed the beneficial owner of 2,295,398 shares of Common Stock (approximately 3.4% of the total number of shares of Common Stock outstanding calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act). This number consists of 2,295,398 shares of Common Stock held for the account of Institutional Partners III.

(ix) Fund Management may be deemed the beneficial owner of 14,319,600 shares of Common Stock (approximately 21.0% of the total number of shares of Common Stock outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Exchange Act). This number consists of all of the shares of Common Stock otherwise described in this Item 5(a) by virtue of Fund Management’s investment management agreement with Master Account, Capital Partners (100), Institutional Partners II, Institutional Partners IIA and Institutional Partners III.

(x) Dr. Rachesky may be deemed the beneficial owner of 14,363,274 shares of Common Stock (approximately 21.0% of the total number of shares of Common Stock outstanding, calculated in accordance

with Rule 13d-3(d)(1)(i) under the Exchange Act). This number consists of (A) all of the shares of Common Stock otherwise described in this Item 5(a) by virtue of Dr. Rachesky’s position as the managing member of each of Fund Management, Advisors, Institutional Advisors II and Institutional Advisors III, (B) 3,474 shares of restricted stock, and (C) 40,200 shares of Common Stock that can be obtained upon the exercise of certain non-qualified stock options.

(b) (i) Master Account may be deemed to have (x) the sole power to direct the disposition of 239,577 shares of Common Stock which may be deemed to be beneficially owned by Master Account as described above, and (y) the sole power to direct the voting of 239,577 shares of Common Stock which may be deemed to be beneficially owned by Master Account as described above.

(ii) Capital Partners (100) may be deemed to have (x) the sole power to direct the disposition of 28,819 shares of Common Stock which may be deemed to be beneficially owned by Capital Partners (100) as described above, and (y) the sole power to direct the voting of 28,819 shares of Common Stock which may be deemed to be beneficially owned by Capital Partners (100) as described above.

(iii) Advisors may be deemed to have (x) the sole power to direct the disposition of 268,396 shares of Common Stock which may be deemed to be beneficially owned by Advisors as described above, and (y) the sole power to direct the voting of 268,396 shares of Common Stock which may be deemed to be beneficially owned by Advisors as described above.

(iv) Institutional Partners II may be deemed to have (x) the sole power to direct the disposition of 3,340,378 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners II as described above, and (y) the sole power to direct the voting of 3,340,378 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners II as described above.

(v) Institutional Partners IIA may be deemed to have (x) the sole power to direct the disposition of 8,415,428 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners IIA as described above, and (y) the sole power to direct the voting of 8,415,428 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners IIA as described above.

(vi) Institutional Advisors II may be deemed to have (x) the sole power to direct the disposition of 11,755,806 shares of Common Stock which may be deemed to be beneficially owned by Institutional Advisors II as described above, and (y) the sole power to direct the voting of 11,755,806 shares of Common Stock which may be deemed to be beneficially owned by Institutional Advisors II as described above.

(vii) Institutional Partners III may be deemed to have (x) the sole power to direct the disposition of 2,295,398 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners III as described above, and (y) the sole power to direct the voting of 2,295,398 shares of Common Stock which may be deemed to be beneficially owned by Institutional Partners III as described above.

(viii) Institutional Advisors III may be deemed to have (x) the sole power to direct the disposition of 2,295,398 shares of Common Stock which may be deemed to be beneficially owned by

Institutional Advisors III as described above, and (y) the sole power to direct the voting of 2,295,398 shares of Common Stock which may be deemed to be beneficially owned by Institutional Advisors III as described above.

(ix) Fund Management may be deemed to have (x) the sole power to direct the disposition of the 14,319,600 shares of Common Stock which may be deemed to be beneficially owned by Fund Management as described above, and (y) the sole power to direct the voting of 14,319,600 shares of Common Stock which may be deemed to be beneficially owned by Fund Management as described above.

(x) Dr. Rachesky may be deemed to have (x) the sole power to direct the disposition of the 14,363,274 shares of Common Stock which may be deemed to be beneficially owned by Dr. Rachesky as described above, (y) the sole power to direct the voting of 14,363,274 shares of Common Stock which may be deemed to be beneficially owned by Dr. Rachesky as described above.

(c) Except as otherwise disclosed herein, there have been no transactions with respect to the shares of Common Stock in the last 60 days by any of the Reporting Persons.

(d) (i) The partners of Master Account, including Advisors, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of Master Account in accordance with their partnership interests in Master Account.

(ii) The partners of Capital Partners (100), including Advisors, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of Capital Partners (100) in accordance with their partnership interests in Capital Partners (100).

(iii) The partners of Institutional Partners II, including Institutional Advisors II, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of Institutional Partners II in accordance with their partnership interests in Institutional Partners II.

(iv) The partners of Institutional Partners IIA, including Institutional Advisors II, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of Institutional Partners IIA in accordance with their partnership interests in Institutional Partners IIA.

(v) The partners of Institutional Partners III, including Institutional Advisors III, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of Institutional Partners III in accordance with their partnership interests in Institutional Partners III.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended to add the following:

Escrow Agreement

On December 20, 2007, the Escrow Agent and Institutional Partners III entered into the Escrow Agreement, pursuant to which Institutional Partners III will direct the deposit of certain shares of Common Stock, and will not receive such shares of Common Stock, into an escrow account to be held by the Escrow Agent in such account, pending expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Upon such expiration or termination, and pursuant to and in accordance with the terms of the Escrow Agreement, Institutional Partners III will direct the Escrow Agent to release from escrow such shares of Common Stock to Institutional Partners III. The description of the Escrow Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Escrow Agreement, attached to this Statement as Exhibit 1 and is incorporated herein by reference.

Item 7. Materials to be Filed as Exhibits


Exhibit No.		Description
1		Escrow Agreement, dated as of December 20, 2007, by and between MHR Institutional Partners III LP and The Bank of New York (Exhibits and schedules to this Exhibit have not been filed; upon request, the Reporting Persons will furnish supplementally to the Securities and Exchange Commission a copy of any such exhibit or schedule)

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Statement is true, complete and correct.


Date: December 20, 2007	MHR INSTITUTIONAL PARTNERS IIA LP

	By:	MHR Institutional Advisors II LLC, its General Partner

	By:	/s/ Mark Rachesky
	Name: Mark Rachesky, M.D.
	Title: Managing Member


		MHR INSTITUTIONAL ADVISORS II LLC

		By:		/s/ Mark Rachesky
		Name: Mark Rachesky, M.D.
		Title: Managing Member

		MHR FUND MANAGEMENT LLC

		By:		/s/ Mark Rachesky
		Name: Mark Rachesky, M.D.
		Title: Managing Member

		MARK H. RACHESKY, M.D.

		By:		/s/ Mark Rachesky

EX-99.1 2 e44854a3exv99w1.htm EX-99.1: ESCROW AGREEMENT EX-99.1

EXECUTION COPY

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (the “Agreement”) is dated as of December 20, 2007, by and between MHR Institutional Partners III LP (the “Depositor”) and The Bank of New York, as escrow agent (the “Escrow Agent”).

WHEREAS, the Depositor contemplates filing a notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) notifying the Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) of its acquisition of shares of common stock, par value $0.0001 per share, of Leap Wireless International, Inc. (the “Shares”);

WHEREAS, under the HSR Act, the Depositor’s acquisition of the Shares is subject to a regulatory waiting period; and

WHEREAS, the Depositor desires to deposit, or direct the deposit on behalf of the Depositor, in escrow the Shares, which shall be held by the Escrow Agent until the Escrow Agent is notified by the Depositor of the conclusion of the regulatory proceedings under the HSR Act in accordance with the terms and conditions set forth in this Agreement;

WHEREAS, the Depositor and the Escrow Agent entered into a Confidentiality Agreement dated December 13, 2007, the terms of which are incorporated herein by reference and apply to this Agreement and the subject matters thereof.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1. Appointment. The Depositor hereby appoints the Escrow Agent as its escrow agent for the purposes set forth in this Agreement, and the Escrow Agent hereby accepts this appointment under the terms and conditions set forth in this Agreement. The Escrow Agent further acknowledges and agrees that MHR Fund Management LLC, an affiliate of the Depositor may act for and on behalf of the Depositor for all purposes of this Agreement, including by providing any instructions or taking any actions contemplated by this Agreement on behalf of the Depositor, on which instructions the Escrow Agent may rely and the Escrow Agent hereby agrees that it shall honor such actions and written instructions.

2. Escrow Fund. The Depositor may deposit, or direct the deposit on behalf of the Depositor, with the Escrow Agent the Shares (the “Escrow Deposit”) pursuant to the terms of this Agreement. The Escrow Agent shall hold the Escrow Deposit and all interest, dividends and other distributions, payments and rights in connection with the Escrow Deposit (the “Escrow Distributions”, and together with the Escrow Deposit, the “Escrow Fund”) and not distribute nor take any action regarding the Escrow Fund or that might affect the ownership or rights related to the Escrow Fund prior to receipt of express instructions provided under Section 4 hereof and shall promptly, but in any event, no later than one Business Day (as hereinafter defined) following receipt of instructions pursuant to the terms of this Agreement, distribute the Escrow Fund in accordance with such instructions.

3. Rights. The Depositor shall not retain any right to exercise any of the voting, consensual rights and powers, or obtain any financial interest accruing to an owner of the Escrow Deposit, prior to expiration or early termination of the HSR waiting period (or notice that the HSR waiting period is no

longer applicable), and shall not be entitled to receive any Escrow Distributions or dispose of or sell the Escrow Deposit, unless and until the Escrow Deposit is delivered to the Depositor in accordance with Section 4 hereof.

4. Disposition and Termination.

4.1 Release of Escrow Fund to the Depositor. The Escrow Agent shall deliver the Escrow Fund to the Depositor promptly, but in no event more than one Business Day, following receipt of instructions from the Depositor which shall include a confirmation that the HSR waiting period has expired, been terminated or become otherwise inapplicable. A form of the instructions to be provided under this Section 4.1 is attached hereto as Exhibit A.

4.2 Sale of Escrow Deposit and Release of Proceeds to the Depositor. Following receipt of instructions and notification from the Depositor that the FTC or DOJ has challenged or failed to approve the Depositor’s acquisition of the Shares, the Escrow Agent shall promptly, but no later than one Business Day following written instructions from the Depositor, deliver to a broker (as designated by the Depositor) the entirety of the Escrow Fund held by the Escrow Agent in order to facilitate its disposition by such designated broker.

4.3 Except as otherwise provided in this Agreement, the Escrow Agent shall not be responsible for the transfer of any of the securities deposited hereunder. Upon delivery of the entire Escrow Fund by the Escrow Agent, this Agreement shall terminate, subject to the provisions of Section 8 hereof.

5. Escrow Agent. The Escrow Agent shall perform only such duties as are expressly set forth in this Agreement and no duties shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Agreement and the Confidentiality Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting in accordance with any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties hereto. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Fund; provided that in the event there is any Escrow Distribution, the Escrow Agent shall take reasonable efforts to collect any such payments or distributions. Any such collections shall be subject to Escrow Agent’s usual collection practices. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith, except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to the Depositor. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through reputable and authorized agents or attorneys who are also bound by the Confidentiality Agreement (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be reasonably selected and retained by it. The Escrow Agent shall not be liable for anything reasonably done, suffered or omitted in good faith by it in accordance with the written advice or opinion of any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from the Depositor which, in its opinion (with the advice of its legal counsel), conflict with any of the provisions of this Agreement, it shall contact the Depositor to clarify the same and its sole obligation shall be to keep safely and in

accordance with this Agreement all property held in escrow until it shall be directed otherwise in writing by the Depositor or by a final order or judgment of a court of competent jurisdiction. In the event of any dispute between or conflicting claims by or among the Depositor and/or any other person or entity with respect to any Escrow Fund, Escrow Agent shall be entitled, in its reasonable discretion, to refuse to comply with any and all claims, demands or instructions with respect to such Escrow Fund so long as such dispute or conflict shall continue, and Escrow Agent shall not be or become liable in any way to the Depositor for failure or refusal to comply with such conflicting claims, demands or instructions. Escrow Agent shall be entitled to refuse to act until, in its reasonable discretion, either (i) such conflicting or adverse claims or demands (other than any claims or demands to which the Escrow Agent is a party) shall have been determined by a final order, judgment or decree of a court of competent jurisdiction, which order, judgment or decree is not subject to appeal, or settled by agreement between the conflicting parties as evidenced in a writing satisfactory to Escrow Agent or (ii) Escrow Agent shall have received security or an indemnity reasonably satisfactory to it sufficient to hold it harmless from and against any and all losses which it may incur by reason of so acting. Escrow Agent may, in addition, elect, in its reasonable discretion, to commence an interpleader action or seek other judicial relief or orders as it may deem, in its reasonable discretion, necessary. The costs and expenses (including reasonable and documented attorneys’ fees and expenses) incurred in connection with such proceeding shall be paid by, and shall be deemed an obligation of, the Depositor. Anything in this Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action; provided that the Escrow Agent shall remain liable for all such losses or damages arising out of the Escrow Agent’s gross negligence or act(s) of willful misconduct.

6. Succession. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving 10 days advance notice in writing of such resignation to the Depositor specifying a date when such resignation shall take effect. Upon such notice, the Depositor shall promptly appoint a qualified successor escrow agent. If such appointment does not occur prior the resignation of the Escrow Agent, the Escrow Agent shall have the right to apply to a court of competent jurisdiction for the appointment of a successor escrow agent. Any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any corporation or association to which all or substantially all of the escrow business of the Escrow Agent’s corporate trust line of business may be transferred, shall be the Escrow Agent under this Agreement without further act.

7. Fees. The Depositor shall pay the Escrow Agent the amounts set forth on Schedule 1 attached hereto.

8. Indemnity. The Depositor shall or shall cause any of its affiliates to indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”) from all loss, liability or expense (including the fees and expenses of in house or outside counsel) arising out of or in connection with (i) the Escrow Agent’s execution and performance of this Agreement in accordance with its terms, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the negligence or willful misconduct of such indemnitee, for a period of thirty (30) months from the date hereof, or (ii) the Escrow Agent following any instructions or other directions from the Depositor provided expressly in accordance with and not forbidden by the terms hereof for the duration of the applicable statute of limitations. The Depositor acknowledges that the foregoing

indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Agreement for the respective periods specified herein.

9. Notices. All communications under this Agreement shall be in writing and shall be deemed to be duly given and received (a) upon delivery if delivered personally and upon confirmed transmittal if by facsimile or e-mail, (b) on the next Business Day if sent by overnight courier or (c) four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address set forth on Schedule 1 attached hereto (with a copy to the address of the counsel of such party set forth on Schedule 1 attached hereto) or at such other address as any party hereto (or their respective counsel) may have furnished to the other party in writing by registered mail, return receipt requested. Notwithstanding the foregoing, in the case of communications delivered to the Escrow Agent pursuant to (a) or (b) above, such communications shall be deemed to have been given on the date received by the Escrow Agent. In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate. “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth on Schedule 1 attached hereto is authorized or required by law or executive order to remain closed.

10. Miscellaneous. The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto. Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by either party hereto, except (i) as provided in Section 6 and (ii) that the Depositor may assign to one or more of its affiliated entities without the prior consent of the other party, provided such assignee assumes all obligations of the Depositor hereunder, (iii) with the consent of the other party hereto, which consent shall not be unreasonably withheld or delayed. This Agreement shall be governed by and construed under the laws of the State of New York. Each party hereto irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of New York. The parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Agreement. No party to this Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, floods, strikes, equipment or transmission failure, or other causes reasonably beyond its control. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement is for the exclusive benefit of the parties hereto and their respective successors and assignees hereunder, and shall not be deemed to give, either express or implied, any legal or equitable right, remedy, or claim to any other entity or person whatsoever.

11. Liability. If at any time Escrow Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process which in any way affects the Escrow Fund (including but not limited to orders of attachment or garnishment or other forms of levies or injunctions or stays relating to the transfer of the Escrow Fund), Escrow Agent is authorized to comply therewith in any manner as it or its legal counsel of its own choosing reasonably deems appropriate; and if Escrow Agent takes actions necessary to comply with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, Escrow Agent shall not be liable to any of the parties hereto or to any other person or entity for such actions even

though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 20th day of December, 2007.


		“ESCROW AGENT”

		THE BANK OF NEW YORK


		By:		/s/ Regina Jones

				Name: Regina Jones
				Title: Assistant Treasurer

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 20th day of December 2007.


		“DEPOSITOR”

		MHR INSTITUTIONAL PARTNERS III LP

		By: MHR Institutional Advisors III LLC, its General Partner

		By:		/s/ Mark Rachesky

				Name: Mark Rachesky, M.D.
				Title: Managing Member