EXHIBIT 10.13
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into as of January 10, 2005 (the "Effective Date") by and among
CRICKET COMMUNICATIONS, INC., a Delaware corporation (the "Company"), LEAP
WIRELESS INTERNATIONAL, INC., a Delaware corporation (the "Parent"), and Xxxxxxx
X. Xxxxxxxxx, an individual currently residing in San Diego, California
("EXECUTIVE"). EXECUTIVE is currently employed by the Company and serves as an
officer of the Parent, the Company and various of their respective subsidiaries.
The Company is a subsidiary of the Parent. The Company, the Parent and EXECUTIVE
are hereinafter collectively referred to as the "Parties," and individually
referred to as a "Party." This Agreement amends, restates and supercedes the
Executive Employment Agreement among the Parties made and entered into as of
January 10, 2005, as amended.
1. EMPLOYMENT.
1.1 The Company hereby employs EXECUTIVE, and EXECUTIVE hereby accepts and
continues employment by the Company, upon the terms and conditions set forth in
this Agreement, for the period beginning on the Effective Date and ending as
provided in Paragraph 3 hereof (the "Employment Period").
1.2 Commencing on February 25, 2005 and continuing during the Employment
Period, EXECUTIVE shall serve as Chief Executive Officer of the Company on a
full-time basis and shall have the normal duties, responsibility and authority
of the Chief Executive Officer of the Company, as specified by the Company's
Board of Directors from time to time. EXECUTIVE's duties to the Company shall be
those customarily assigned to an executive holding similar positions in a
comparable corporation engaged in a business similar to the business of the
Company. EXECUTIVE shall devote substantially all of his time to the activities
of the Company working from the Company's headquarters in San Diego, California,
or other business locations, subject to Company-related business travel.
EXECUTIVE shall use all reasonable commercial efforts to do and perform all
services, acts, or responsibilities necessary or advisable to carry out the job
duties of the Chief Executive Officer of the Company, as reasonably assigned by
the Board of Directors of the Company from time to time; provided, however, that
at all times during his employment EXECUTIVE shall be subject to the direction
and policies and procedures from time to time established by the Board of
Directors of the Company.
1.3 Commencing on February 25, 2005 and continuing during the Employment
Period, EXECUTIVE shall serve as the Chief Executive Officer of the Parent.
EXECUTIVE
shall have the normal duties, responsibilities and authority of the Chief
Executive Officer of the Parent, as specified by the Parent's Board of Directors
from time to time. Notwithstanding the provisions of Paragraph 1.2, EXECUTIVE
shall use all reasonable commercial efforts to do and perform all services,
acts, or responsibilities necessary or advisable to carry out the job duties of
Chief Executive Officer of the Parent, as reasonably assigned by the Board of
Directors of the Parent from time to time; provided, however, that at all times
during his service as Chief Executive Officer of the Parent, EXECUTIVE shall be
subject to the direction and policies and procedures from time to time
established by the Board of Directors of the Parent. EXECUTIVE's duties to the
Parent shall be those customarily assigned to an executive holding similar
positions in a comparable corporation engaged in a business similar to the
business of the Parent. In his role as Chief Executive Officer of the Parent,
EXECUTIVE shall devote such of his time as is appropriate (in light of his
position with the Company) to the activities of the Parent working from the
Parent's headquarters in San Diego, California, or other business locations,
subject to Parent-related business travel. Executive shall not receive any
compensation or benefits for such services other than the compensation and
benefits provided for in this Agreement.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE.
2.1 During his employment with the Company, EXECUTIVE shall faithfully and
diligently devote EXECUTIVE's full business time and efforts to the performance
of his duties as the Chief Executive Officer of the Company (except as otherwise
provided in Paragraph 1.3 above and Paragraph 2.2 below), with the degree of
loyalty and care prescribed by law, provided that EXECUTIVE shall be permitted
to continue to serve on the boards of directors/trustees/advisors of Scientific
Materials, Inc. and San Diego Children's Museum, and no other boards of
directors or similar obligations, unless approved by the Parent's Board of
Directors, so long as his services do not materially and adversely affect
EXECUTIVE's ability to perform his duties hereunder as reasonably determined by
the Parent's Board of Directors. This Employment Agreement is a personal
services contract whereby the Company and Parent are engaging the services of
EXECUTIVE.
2.2 The Company and the Parent agree that EXECUTIVE may devote up to three
business days per month pursuing outside business interests provided such
business interests do not compete with the Company's or the Parent's business.
3. TERM OF EMPLOYMENT.
3.1 EXECUTIVE shall be employed pursuant to the terms of this Agreement
for a term beginning on the Effective Date and expiring at midnight on December
31, 2008. The term of employment, including any extension period contemplated in
Paragraph 3.2 below, shall be referred to as the "Employment Period."
3.2 This Agreement and EXECUTIVE's employment hereunder may be extended
for such period following December 31, 2008, and upon such terms and conditions,
as shall be mutually agreed upon by the Company, the Parent and EXECUTIVE and
set forth in a written amendment to this Agreement.
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3.3 Notwithstanding Paragraphs 3.1 and 3.2, EXECUTIVE's employment may
terminate in accordance with Paragraph 5 and, in the event of such termination,
the Employment Period shall end on the Date of Termination (as defined in
Paragraph 5.8 below).
4. COMPENSATION AND BENEFITS.
4.1 Beginning with the Effective Date, and during the Employment Period,
Company shall pay EXECUTIVE a salary (the "Base Salary") of three hundred fifty
thousand dollars ($350,000) per year, payable bi-weekly in accordance with the
Company's normal payroll practices for EXECUTIVE, such salary subject to
adjustment from time to time pursuant to periodic reviews by the Company's Board
of Directors (with input, if any, from the Compensation Committee of the Board
of Directors of Parent).
4.2 The Company shall pay EXECUTIVE a success bonus in the amount of three
hundred thousand dollars ($300,000) as follows:
(i) Not later than fourteen (14) days after the Effective
Date, the Company shall pay EXECUTIVE a lump sum payment in cash in the
amount of one hundred fifty thousand dollars ($150,000), and
(ii) The Company shall pay EXECUTIVE an additional lump sum
payment in cash in the amount of one hundred fifty thousand dollars
($150,000) on (or promptly after) the earliest to occur of the following
events:
(i) September 30, 2005, provided EXECUTIVE is still
employed by the Company on such date; and
(ii) the date on which EXECUTIVE ceases to be employed
by the Company, unless such cessation of employment occurs as
a result of a termination for Cause.
4.3 During the Employment Period, EXECUTIVE's annual target performance
bonus ("Target Performance Bonus") shall be eighty percent (80%) of EXECUTIVE's
Base Salary, and EXECUTIVE shall be eligible to be paid an annual performance
bonus with respect to each calendar year (including 2004), with the amount of
such bonus to be paid to EXECUTIVE determined in accordance with the Company's
prevailing annual performance bonus practices that are used to determine annual
performance bonuses for the senior executives of the Company generally;
provided, however, that, in the event EXECUTIVE is employed by the Company on
December 31, 2008, then EXECUTIVE shall be paid any final installment of his
2008 annual performance bonus, calculated as set forth above, on the date on
which the final installments of the 2008 annual performance bonuses for senior
executives are paid, without regard to whether EXECUTIVE is then employed by the
Company.
4.4 The EXECUTIVE shall be entitled to the following benefits during the
Employment Period:
(a) All benefits to which other executive officers of the Company
are entitled as determined by the Company's Board of Directors, on terms no less
favorable than other such
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participants, including but not limited to, participation in any and all
retirement plans, bonus and incentive payment programs (provided that such
participation would not duplicate Executive's bonus entitlement pursuant to
Paragraph 4.3), group life insurance policies and plans, medical, health, dental
and disability insurance policies and plans, and the like, which may be
maintained by the Company for the benefit of its executive officers.
(b) Four (4) weeks of Scheduled Time Off ("STO") per year under the
Company's Paid Time Off ("PTO") policy, which shall accrue and may be used by
EXECUTIVE in accordance with the Company's then prevailing PTO practices.
EXECUTIVE shall also be entitled to paid holidays and paid personal/sick days,
in a manner consistent with the Company's policies and practices for senior
executives.
4.5 The Company shall reimburse EXECUTIVE for all reasonable out-of-pocket
expenses incurred by him in the course of performing his duties under this
Agreement (whether such reimbursement is sought before or after termination of
this Agreement), to the extent consistent with the Company's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to the Company's requirements with respect to reporting and
documentation of such expenses pursuant to Company policy.
4.6 All of EXECUTIVE's compensation shall be subject to applicable federal
and state withholding taxes and any other employment taxes as are required to be
collected or withheld by the Company.
4.7 The Parent has adopted the Leap Wireless International, Inc. 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "Parent Plan").
Not later than sixty (60) days after the Effective Date, the Parent shall grant,
or cause to be granted, to EXECUTIVE the awards described in Exhibit A hereto
(the "Awards") under the Plan. The terms and conditions of the Awards shall be
set forth in the Restricted Stock Award Grant Notice and Restricted Stock Award
Agreement (attached as Attachment A-1 or Attachment A-4 hereto, as applicable),
the Stock Option Grant Notice and Non-Qualified Stock Option Agreement (attached
as Attachment A-2 or Attachment A-5 hereto, as applicable) and the Deferred
Stock Unit Award Grant Notice and Deferred Stock Unit Award Agreement (attached
as Attachment A-3 hereto), respectively, and shall be subject to the terms and
conditions of the Plan (as in effect from time to time).
4.8 If, during the Employment Period, all or substantially all of the
assets of the Company or shares of stock of the Company or Parent having fifty
percent (50%) or more of the voting rights of the total outstanding stock of the
Company or Parent, as the case may be, are sold with the approval of or pursuant
to the active solicitation of the Board of Directors of the Company or the Board
of Directors of the Parent, whichever is applicable, to a strategic investor
(i.e. an investor whose primary business is not financial investing) the Company
shall pay to EXECUTIVE a stay bonus in a lump sum payment in cash in an amount
equal to EXECUTIVE's Base Salary (at the annual rate then in effect) for a
period of eighteen (18) months, if the EXECUTIVE continues his Employment with
the Company (or its successor) for a two (2) month period commencing on the date
of the closing of such sale. Such lump sum cash payment shall be made within
fifteen (15) days following the expiration of the two (2) month period.
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4.9 Not later than March 31, 2006, Parent and the Company will perform an
annual performance review of EXECUTIVE and a review of EXECUTIVE's compensation
and benefits relative to compensation and benefits provided to executives
holding similar positions in comparable corporations engaged in a business
similar to the business of Parent and the Company, and following such reviews,
Parent, the Company and EXECUTIVE agree to confer and negotiate in good faith
any appropriate adjustments to the compensation and benefits payable pursuant to
this Paragraph 4.
5. TERMINATION OF EMPLOYMENT.
5.1 EXECUTIVE's employment under this Agreement shall terminate without
notice upon the date of EXECUTIVE's death. In the event of EXECUTIVE's death,
all rights of EXECUTIVE to compensation hereunder shall automatically terminate
immediately upon his death, except that EXECUTIVE's heirs, personal
representatives or estate shall be entitled to any unpaid portion of his salary
and accrued benefits earned up to the date of his death, including a pro rata
share of EXECUTIVE's Target Performance Bonus for the year of his death.
5.2 The Company may terminate EXECUTIVE's employment under this Agreement
after thirty (30) days notice in the event that EXECUTIVE is unable to
substantially perform his duties for an aggregate period of sixty (60) days
during any 180-day period resulting from EXECUTIVE's incapacity due to a
physical or mental disability after attempts to reasonably accommodate
EXECUTIVE's disability have failed. In the event that, during the Employment
Period, EXECUTIVE's employment is terminated for disability, EXECUTIVE shall be
entitled to any unpaid portion of his salary and accrued benefits earned up to
the Date of Termination, including a pro rata share of EXECUTIVE's Target
Performance Bonus for the year in which his termination occurs.
5.3 The Company may terminate EXECUTIVE's employment under this Agreement
for Cause (as defined in Paragraph 5.5 below). In the event that, EXECUTIVE's
employment is terminated by the Company for Cause during the Employment Period,
EXECUTIVE shall be entitled to any unpaid portion of his salary and accrued
benefits earned up to the Date of Termination.
5.4 The Company may terminate EXECUTIVE's employment under this Agreement
other than for Cause, and EXECUTIVE may terminate his employment under this
Agreement for Good Reason (as defined in Paragraph 5.6 below). In the event
that, EXECUTIVE's employment is terminated by the Company other than for Cause,
or by EXECUTIVE for Good Reason, during the remaining Employment Period,
EXECUTIVE shall be entitled to the following:
(a) EXECUTIVE shall be entitled to any unpaid portion of his salary
and accrued benefits earned up to the Date of Termination.
(b) The Company shall pay EXECUTIVE (i) a severance benefit in the
form of a lump sum payment in cash in an amount equal to the EXECUTIVE's Base
Salary (at the annual rate then in effect) for a period of nine (9) months which
shall be made within thirty (30) days after the date of termination and (ii)
monthly payments for nine months commencing on the first day of the ninth month
following the date of termination equal to the EXECUTIVE's Base
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Salary; provided, however, that the monthly severance benefit shall be reduced
by the amount, if any, that the EXECUTIVE receives from employment with a
subsequent employer or for services as an independent contractor during the
period during which the monthly payments are paid. Upon written request from the
Company, made not more than monthly during the period during which such monthly
payments are paid, EXECUTIVE shall furnish the Company with a statement as to
whether he is employed or acting as an independent contractor and the amount of
compensation (including salary, wages, bonuses and fees for services) therefrom;
if EXECUTIVE fails to furnish the statement within thirty (30) days of the
Company's request or furnishes a materially false statement, the Company may, in
its sole discretion, reduce or permanently discontinue any further monthly
payments under this Paragraph 5.4.2. Notwithstanding the foregoing, no payments
shall be made to EXECUTIVE under this Paragraph 5.4.2 in the event that
EXECUTIVE has been paid or is entitled to a payment under Paragraph 4.8.
(c) In the event that the Date of Termination occurs on or prior to
December 31, 2005, the Company shall pay EXECUTIVE an additional lump sum
payment in cash in an amount equal to the excess (if any) of: (i) EXECUTIVE's
Target Performance Bonus for 2005, over (ii) any portion of EXECUTIVE's annual
performance bonus for 2005 already paid to EXECUTIVE. Such lump sum cash payment
shall be made within thirty (30) days after the Date of Termination and shall be
in lieu of any annual performance bonus with respect to 2005, or any remaining
installments thereof, otherwise payable under Paragraph 4.3.
(d) To the extent EXECUTIVE elects continuation health care coverage
for EXECUTIVE and his eligible dependents under Section 4980B of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), and Sections
601-608 of the Employee Retirement Income Security Act of 1974, as amended from
time to time (collectively, "COBRA Coverage"), EXECUTIVE shall not-be required
to pay premiums for such COBRA Coverage for the eighteen (18) month period
commencing on the Date of Termination (or, if earlier, until EXECUTIVE is
eligible for comparable coverage with a subsequent employer).
(e) EXECUTIVE shall not be required to mitigate the amount of any
payment provided for in this Paragraph 5.4 by seeking other employment or
otherwise nor, except as provided in Paragraphs 5.4.2 and 5.4.4, shall the
amount of any payment or benefit provided for in this Paragraph 5.4 be reduced
by any compensation or benefits earned by EXECUTIVE as the result of employment
by another employer or self-employment, by retirement benefits, by offset
against any amount claimed to be owed by EXECUTIVE to the Company, or otherwise.
5.5 For purposes of this Paragraph 5, "Cause" shall mean termination of
EXECUTIVE's employment by the Company: (i) upon EXECUTIVE's willful failure
substantially to perform EXECUTIVE's duties with the Company (or the Parent)
(other than any such failure resulting from EXECUTIVE's incapacity due to
physical or mental illness or any such actual or anticipated failure after
EXECUTIVE's issuance of a Notice of Termination (as defined below) for Good
Reason), as reasonably determined by the Company, after a written demand for
substantial performance is delivered to EXECUTIVE by the Board of Directors of
the Company, which demand specifically identifies the manner in which the Board
of Directors of the Company believes that EXECUTIVE has not substantially
performed such duties, provided that the EXECUTIVE shall have been given a
reasonable period, not to exceed fifteen
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(15) days, in which to cure such failure (provided such failure is capable of
being cured), (ii) upon EXECUTIVE's willful failure substantially to follow and
comply with the specific and lawful directives of the Board of Directors of the
Company (or the Board of Directors of the Parent) which are consistent with
EXECUTIVE's duties with the Company (or the Parent), as reasonably determined by
the Board of Directors of the Company (other than any such failure resulting
from EXECUTIVE's incapacity due to physical or mental illness or any such actual
or anticipated failure after EXECUTIVE's issuance of a Notice of Termination for
Good Reason), after a written demand for substantial performance is delivered to
EXECUTIVE by the Board of Directors of the Company, which demand specifically
identifies the manner in which the Board of Directors of the Company believes
that EXECUTIVE has not substantially performed such directives, provided that
the EXECUTIVE shall have been given a reasonable period not to exceed fifteen
(15) days in which to cure such failure (provided such failure is capable of
being cured), (iii) upon EXECUTIVE's commission of an act of fraud or dishonesty
materially impacting or involving the Company (or the Parent), or (iv) upon
EXECUTIVE's willful engagement in illegal conduct or gross misconduct.
Notwithstanding the foregoing, EXECUTIVE's employment shall not be deemed
terminated for "Cause" pursuant to this Paragraph 5.5 unless and until there
shall have been delivered to EXECUTIVE a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire membership of the
Board of Directors of the Company at a meeting of the Board of Directors of the
Company held within three (3) days (or such longer time period as the Board of
Directors of the Company may determine) after the Company provides the EXECUTIVE
with notice that it has determined that an event described in clauses (i)
through (iv) of this Paragraph 5.5 has occurred, at which the EXECUTIVE,
together with EXECUTIVE's counsel may be heard for a period of no more than
three (3) hours before the Company. The determination of whether the EXECUTIVE's
employment shall be terminated for "Cause" shall be made by the Board of
Directors of the Company in its sole discretion.
5.6 For purposes of this Paragraph 5, "Good Reason" shall mean, without
EXECUTIVE's express written consent, the occurrence of any of the following
circumstances unless such circumstances are cured (provided such circumstances
are capable of being cured) prior to the Date of Termination specified in the
Notice of Termination given in respect thereof: (i) the continuous assignment to
EXECUTIVE of any duties materially inconsistent with EXECUTIVE's positions with
the Company (or the Parent), a significant adverse alteration in the nature or
status of EXECUTIVE's responsibilities or the conditions of EXECUTIVE's
employment with the Company (or the Parent), or any other action that results in
a material diminution in EXECUTIVE's position, authority, title, duties or
responsibilities with the Company (or the Parent); (ii) reduction of EXECUTIVE's
annual Base Salary as in effect on the Effective Date or as the same may be
increased from time to time thereafter; (iii) the relocation of the Company's
offices at which EXECUTIVE is principally employed to a location more than sixty
(60) miles from such location, but only after the EXECUTIVE has commuted for a
period of one year to the new location (with the Company bearing the reasonable
cost of such commuting); (iv) the Company's failure to pay EXECUTIVE any portion
of EXECUTIVE's current compensation; (v) the Company's failure to continue in
effect any material compensation or benefit plan in which EXECUTIVE
participates, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the Company's
failure to continue EXECUTIVE's participation therein (or in such substitute or
alternative plan) on the basis not materially less favorable, both in terms of
the amount of
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benefits provided and the level of EXECUTIVE's participation relative to other
participants; (vi) the Company's failure to continue to provide EXECUTIVE with
benefits substantially similar in the aggregate to those enjoyed by EXECUTIVE
under any of the Company's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans in which EXECUTIVE or
EXECUTIVE's eligible family members were participating immediately prior
thereto, or the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits; or (vii) the continuation or
repetition, after written notice of objection from EXECUTIVE, of harassing or
denigrating treatment of EXECUTIVE by the Company inconsistent with EXECUTIVE's
position with the Company or (viii) if a successor to Company does not retain
EXECUTIVE'S services for at least one year on substantially the same terms as
Sections 4.1 and 4.2 of this Agreement which includes the obligation to assume
the Company's obligations under this Agreement. EXECUTIVE's right to terminate
employment with the Company pursuant to Paragraph 5.4 shall not be affected by
EXECUTIVE's incapacity due to physical or mental illness. EXECUTIVE's continued
employment with the Company shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason thereunder.
The appointment or election of EXECUTIVE as Chief Executive Officer of the
Company (or the Parent) and the assignment to EXECUTIVE of the duties,
responsibilities and authority of such positions shall not constitute "Good
Reason."
5.7 Any purported termination of EXECUTIVE's employment by the Company for
Cause or other than for Cause, or by EXECUTIVE for Good Reason, shall be
communicated by Notice of Termination to the other party hereto in accordance
with Paragraph 10. "Notice of Termination" shall mean a written notice that
shall indicate the specific termination provision in this Paragraph 5 relied
upon and shall set forth in reasonable detail any facts and circumstances
claimed to provide a basis for the termination of employment under the provision
so indicated.
5.8 For purposes of this Paragraph 5, "Date of Termination" shall mean the
date specified in the Notice of Termination (which, in the case of a termination
by the Company for Cause may occur immediately upon giving the Notice of
Termination, and, in the case of a termination by the Company other than for
Cause, or by EXECUTIVE for Good Reason, shall not be less than fifteen (15) nor
more than sixty (60) days after the date such Notice of Termination is given),
or, if EXECUTIVE's employment terminates by reason of EXECUTIVE's death or
disability, the date of such termination.
5.9 In consideration of, and as a condition to receiving, the benefits to
be provided to EXECUTIVE under this Paragraph 5 (other than any unpaid portion
of his salary and accrued benefits earned up to the Date of Termination),
EXECUTIVE (or, in the event of EXECUTIVE's death, the executor or legal
representative of his estate) shall execute and deliver to the Company and to
the Parent, the "General Release" set forth on Exhibit B hereto on or after the
Date of Termination and not later than twenty-one (21) days after the Date of
Termination (or, in the event that the termination of EXECUTIVE's employment
with the Company is in connection with an exit incentive or other employment
termination program offered to a group or class of employees, not later than
forty-five (45) days after the Date of Termination (or, if later, the date
EXECUTIVE is provided with the information required in accordance with Section
3(f) of the General Release)). In the event that EXECUTIVE fails to execute and
deliver the General Release in accordance with this Paragraph 5.9, or EXECUTIVE
revokes the General Release in accordance with the terms thereof, EXECUTIVE
shall not receive the benefits set forth in this
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Paragraph 5 (other than any unpaid portion of his salary and accrued benefits
earned up to the Date of Termination).
5.10 As further consideration for the benefits to be provided under this
Paragraph 5 (other than any unpaid portion of his salary and accrued benefits
earned up to the Date of Termination), EXECUTIVE hereby agrees as follows:
(a) For the period commencing on the Date of Termination and
terminating on the second anniversary thereof, EXECUTIVE shall not, either on
EXECUTIVE's own account or jointly with or as a manager, agent, officer,
employee, consultant, partner, joint venturer, owner or shareholder or otherwise
on behalf of any other person, firm or corporation, directly or indirectly
solicit or attempt to solicit away from the Company, the Parent, or any of their
respective affiliates, any of their respective officers or employees or offer
employment to any person who, on or during the six (6) months immediately
preceding the date of such solicitation or offer, is or was an officer or
employee of the Company, the Parent, or any of their respective affiliates;
provided, however, that a general advertisement to which an officer or employee
of the Company, the Parent, or any of their respective affiliates, responds and
any employment resulting from such response shall in no event be deemed to
result in a breach of this Paragraph 5.10.1.
(b) In the event that EXECUTIVE breaches the provisions of Paragraph
5.10.1, or threatens to do so, in addition to and without limiting or waiving
any other remedies available to the Company or the Parent in law or in equity,
the Company or the Parent shall be entitled to immediate injunctive relief in
any court having the capacity to grant such relief, to restrain such breach or
threatened breach and to enforce Paragraph 5.10.1. EXECUTIVE acknowledges that
it is impossible to measure in money the damages that the Company will sustain
in the event that EXECUTIVE breaches or threatens to breach Paragraph 5.10.1
and, in the event that the Company or the Parent institutes any action or
proceeding to enforce Paragraph 5.10.1 seeking injunctive relief, EXECUTIVE
hereby waives and agrees not to assert or use as a defense a claim or defense
that the Company or the Parent has an adequate remedy at law. Also, in addition
to any other remedies available to the Company or the Parent in law or in
equity, in the event that EXECUTIVE breaches the provisions of Paragraph 5.10.1
in any material respect, EXECUTIVE shall forfeit EXECUTIVE's right to further
benefits under Paragraph 5 and EXECUTIVE shall be obligated to repay to the
Company the benefits that EXECUTIVE has received under Paragraph 5.
5.11 Notwithstanding the foregoing provision of this Paragraph 5, the
payments provided for in this Paragraph 5 (other than unpaid salary earned prior
to termination and the monthly severance payments pursuant paragraph 5.4.2)
shall be made not later than the tenth day following the date on which the
General Release by EXECUTIVE becomes irrevocable.
6. PARACHUTE PAYMENT EXCISE TAX GROSS-UP.
6.1 In the event that the EXECUTIVE'S employment under this Agreement is
(i) terminated by the Company other than for Cause or (ii) by the EXECUTIVE for
Good Reason, in each case within one (1) year of a Change in Control (as defined
in the Parent Plan, as in effect on the Effective Date) and it is determined
under this Paragraph 6 that any payment or benefit to EXECUTIVE or for
EXECUTIVE's benefit or on EXECUTIVE's behalf (whether
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paid or payable or distributed or distributable) pursuant to the terms of this
Agreement or any other agreement, arrangement or plan with the Company or any
Affiliate (as defined below) (individually, a "Payment" and collectively, the
"Payments") would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then EXECUTIVE shall be entitled to receive from the
Company one or more additional payments (individually, a "Gross-Up Payment" and
collectively, the "Gross-Up Payments"), such that the net amount of the Payments
and the Gross-Up Payments retained by EXECUTIVE after the payment of all Excise
Taxes (and any interest or penalties imposed with respect to such Excise Taxes)
on the Payments, and all federal, state and local income tax, employment tax and
Excise Taxes (including any interest or penalties imposed with respect to such
taxes) on the Gross-Up Payments provided for in this Paragraph 6, shall be equal
to the Payments. For purposes of this Paragraph 6, an "Affiliate" shall mean
Parent, any successor to all or substantially all of the business and/or assets
of the Company or the Parent, any person acquiring ownership or effective
control of the Company or the Parent or ownership of a substantial portion of
the assets of the Company or the Parent, or any person whose relationship to the
Company, the Parent or such person is such as to require attribution under
Section 318(a) of the Code.
(a) All determinations required to be made under this Paragraph 6,
including whether and when any Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be utilized in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide EXECUTIVE and the Company with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from EXECUTIVE or the Company that EXECUTIVE has received or
will receive a Payment. For the purposes of this Paragraph 6, the "Accountants"
shall mean the Company's independent certified public accountants serving
immediately prior to the "change in the ownership or effective control of a
corporation" or "change in the ownership of a substantial portion of the assets
of a corporation", as defined in Code Section 280G, with respect to which the
determination is being made. In the event that the Accountants are also serving
as the accountants or auditors for the individual, entity or group effecting the
"change in the ownership or effective control of a corporation" or "change in
the ownership of a substantial portion of the assets of a corporation", as
defined in Code Section 280G, with respect to which the determination is being
made, Company shall appoint another nationally recognized public accounting
firm, reasonably acceptable to the EXECUTIVE, to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accountants hereunder). All fees and expenses of the Accountants shall be borne
solely by the Company.
(b) For the purposes of determining whether any of the Payments will
be subject to the Excise Tax and the amount of such Excise Tax, such Payments
shall be treated as "parachute payments" within the meaning of Section 280G of
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of the
Accountants, such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax.
-10-
(c) For purposes of determining the amount of the Gross-Up Payment,
EXECUTIVE shall be deemed to pay federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of EXECUTIVE's adjusted gross income); and to
have otherwise allowable deductions for federal, state and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in EXECUTIVE's adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be paid by
the Company at the time EXECUTIVE is entitled to receive the Payment and in no
event will any Gross-Up Payment be paid later than five days after the receipt
by EXECUTIVE of the Accountant's determination.
(d) Any determination by the Accountants shall be binding upon the
Company and EXECUTIVE. As a result of uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that the Gross-Up Payment made will have been an
amount less than the Company should have paid pursuant to this Paragraph 6 (the
"Underpayment"), or more than the Company should have paid pursuant to this
Paragraph 6 (the "Overpayment"). In the event that the Company exhausts its
remedies pursuant to Paragraph 6 and EXECUTIVE is required to make a payment of
any Excise Tax, the Underpayment shall be promptly paid by the Company to or for
EXECUTIVE's benefit (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code. In the event it is determined that there has been an
Overpayment, the Overpayment shall be promptly paid by EXECUTIVE to the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(e) EXECUTIVE shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable after EXECUTIVE is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. EXECUTIVE shall not pay such claim prior to the
expiration of the 30-day period following the date on which EXECUTIVE gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If the Company notifies EXECUTIVE in writing prior to the expiration of such
period that it desires to contest such claim, EXECUTIVE shall: (i) give the
Company any information reasonably requested by the Company relating to such
claim; (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company; (iii) cooperate with the Company
in good faith in order to effectively contest such claim; and (iv) permit the
Company to participate in any proceedings relating to such claims; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify EXECUTIVE for and hold EXECUTIVE harmless from, on
an after-tax basis, any
-11-
Excise Tax or income or other taxes (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of all
related costs and expenses.
(f) Without limiting the foregoing provisions of this Paragraph 6,
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct EXECUTIVE to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
EXECUTIVE agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs EXECUTIVE to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to EXECUTIVE, on an interest-free
basis, and shall indemnify EXECUTIVE for and hold EXECUTIVE harmless from, on an
after-tax basis, any Excise Tax or income or other taxes (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance (including as a
result of any forgiveness by the Company of such advance); provided, further,
that any extension of the statute of limitations relating to the payment of
taxes for the taxable year of EXECUTIVE with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
EXECUTIVE shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(g) Notwithstanding the foregoing provisions of this Paragraph 6.1,
if the EXECUTIVE terminated his employment for Good Reason, he shall, upon the
written request of the Company and reasonable advance notice, provide consulting
services to the Company (or to the Parent at the direction of the Company, or
both) for up to three (3) days per month for up to a one (1) year period
following his Date of Termination. The EXECUTIVE shall be entitled to payment by
the Company in the amount of $1,500 for each day on which he provides consulting
services pursuant to such written request from the Company. The Company and the
EXECUTIVE shall mutually use their best efforts to schedule the date or dates on
which EXECUTIVE will provide the requested consulting services so as not to
prevent EXECUTIVE from being gainfully employed by a subsequent employer, and
shall be arranged so as to reasonably accommodate EXECUTIVE's vacation or other
personal affairs. Notwithstanding any other provision of this Paragraph 6, if
EXECUTIVE refuses or otherwise fails to perform the requested consulting
services, if any, he shall forfeit his right to the payment of any Gross-Up
Payments or indemnification hereunder, and if any such Gross-Up Payments or
indemnification had previously been paid by the Company to the EXECUTIVE
hereunder, EXECUTIVE shall promptly repay such amount or amounts to the Company
within five (5) business days following the Company's written demand therefor.
(h) Notwithstanding the foregoing provisions of this Paragraph 6, in
no event shall the Company's liability for Gross-Up Payments as indemnification
under this Paragraph 6 exceed one million dollars ($1,000,000).
-12-
6.2 In the event of the termination of EXECUTIVE's employment with the
Company, any Gross-Up Payment to be made to EXECUTIVE pursuant to this Section 6
shall be made not later than the tenth day following the date on which the
General Release by EXECUTIVE becomes irrevocable (or, if later, the tenth day
following the date the "change in the ownership or effective control of a
corporation" or "change in a substantial portion of the assets of a corporation"
occurs); provided, however, if the Gross-Up Payment cannot be finally determined
on or before such day, the Company shall pay to EXECUTIVE on such day an
estimate, as determined in good faith by the Company, of the minimum amount of
such Gross Up Payment and shall pay the remainder of such Gross-Up Payment
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated Gross-Up Payment exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to EXECUTIVE,
payable on the fifth day after demand by the Company (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code).
7. PROPRIETARY AND CONFIDENTIAL INFORMATION.
7.1 Prior to the execution of this Agreement, EXECUTIVE executed the
Company's standard form of Invention Disclosure, Confidentiality and Proprietary
Rights Agreement which, among other matters, requires EXECUTIVE to maintain the
confidentiality of certain Company information. Such Invention Disclosure,
Confidentiality and Proprietary Rights Agreement shall remain in full force and
effect in accordance with the terms and conditions thereof.
7.2 EXECUTIVE will exercise reasonable care, consistent with good business
judgment to preserve in good working order, subject to reasonable wear and tear
from authorized usage, and to prevent loss of, any equipment, instruments or
accessories of the Company in his custody for the purpose of conducting the
business of the Company. Upon request, EXECUTIVE will promptly surrender the
same to the Company at the conclusion of his employment, or if not surrendered,
EXECUTIVE will account to the Company to its reasonable satisfaction as to the
present location of all such instruments or accessories and the business purpose
for their placement at such location. At the conclusion of EXECUTIVE's
employment with the Company, he agrees to return such instruments or accessories
to the Company or to account for same to the Company's reasonable satisfaction.
8. TERMINATION OF SEVERANCE BENEFITS AGREEMENT.
8.1 In consideration of the execution and delivery of this Agreement by
the Company and the Parent, the Severance Agreement, dated May 30, 2003, by and
among EXECUTIVE, the Parent and the Company (the "Severance Benefits Agreement")
is hereby terminated effective as of the Effective Date. From and after the
Effective Date, EXECUTIVE waives any and all rights, claims, benefits and awards
under the Severance Agreement and releases the Parent and the Company from any
liability or obligation for any and all rights, claims, benefits or awards due
EXECUTIVE thereunder.
-13-
9. ASSIGNMENT AND BINDING EFFECT.
9.1 This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE and EXECUTIVE's heirs, executors, administrators, estate,
beneficiaries, and legal representatives. Neither this Agreement nor any rights
or obligations under this Agreement shall be assignable by either party without
the prior express written consent of the other party; provided, however, that
the Company may assign this Agreement and its rights and obligations hereunder
to any successor in interest to the Company. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors, assigns and
legal representatives.
10. NOTICES.
10.1 All notices or demands of any kind required or permitted to be given
by the Company, the Parent or EXECUTIVE under this Agreement shall be given in
writing and shall be personally delivered (and receipted for) or sent by
facsimile (with confirmation of receipt), or sent by recognized commercial
overnight courier, or mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Company:
Cricket Communications, Inc.
Attention: General Counsel
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Parent:
Leap Wireless International, Inc.
Attention: General Counsel
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to EXECUTIVE:
Xxxxxxx X. Xxxxxxxxx
000 Xxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Any such written notice shall be deemed received when personally delivered or
upon receipt in the event of facsimile or overnight courier, or three (3) days
after its deposit in the United States mail by certified mail as specified
above. Either Party may change its address for notices by giving notice to the
other Party in the manner specified in this section.
-14-
11. CHOICE OF LAW.
11.1 This Agreement is made in San Diego, California. This Agreement shall
be construed and interpreted in accordance with the internal laws of the State
of California, without regard- to the conflicts of law principles thereof. Any
controversy or claim arising out of or relating to this Agreement or breach
hereof, whether involving remedies at law or in equity, or arising out of or
relating to the rights, duties or obligations of the Company or of EXECUTIVE
shall be brought and adjudicated exclusively in San Diego County, California or
in such other location as the parties may agree.
12. INTEGRATION AND AMENDMENT.
12.1 This Agreement and the Invention Disclosure, Confidentiality and
Proprietary Rights Agreement referred to in Paragraph 7.1 contain the entire
agreement of the parties relating to the subject matter hereof, and supersede
all prior oral and written employment agreements or arrangements between the
Parties, including without limitation, the Executive Employment Agreement among
the Parties made and entered into as of January 10, 2005, as amended. This
Agreement cannot be amended or modified except by a written agreement signed by
EXECUTIVE, the Company and the Parent.
13. WAIVER.
13.1 No term, covenant or condition of this Agreement or any breach
thereof shall be deemed waived, except with the written consent of the Party
against whom the waiver is claimed, and any waiver of any such term, covenant,
condition or breach shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.
No failure to exercise, delay in exercising, or single or partial exercise of
any right, power or remedy by either party hereto shall constitute a waiver
thereof or shall preclude any other or further exercise of the same or any other
right, power or remedy.
14. SEVERABILITY.
14.1 The unenforceability, invalidity, or illegality of any provision of
this Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal.
15. INTERPRETATION, CONSTRUCTION.
15.1 The headings set forth in this Agreement are for convenience only and
shall not be used in interpreting this Agreement. The Parties acknowledge that
each Party and its counsel has reviewed and revised, or had an opportunity to
review and revise, this Agreement, and the normal rule of construction to the
effect any ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement.
16. ATTORNEYS' FEES.
16.1 In any arbitration of a controversy or claim arising out of or
relating to this Agreement or the breach thereof, or any lawsuit to enforce a
resulting arbitration award, the parties shall bear their own costs and expenses
(including legal expenses), provided, however, that if the
-15-
Company makes a binding offer to settle the dispute (subject only to reasonable
and customary conditions) for an amount of money, which offer is rejected (the
"Offer") and the arbitration award is in an amount less than the Offer, the
Company shall be entitled to recover reasonable fees and costs, including legal
expenses) incurred in the arbitration or in any action to enforce the
arbitration or this Paragraph 16.1 from the EXECUTIVE.
16.2 The Company hereby agrees to pay EXECUTIVE's reasonable legal fees
and expenses up to five thousand dollars $5,000 incurred in connection with the
negotiation of this Agreement and any related agreements and documents.
17. COUNTERPARTS.
17.1 This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall together constitute an original
thereof.
18. REPRESENTATIONS AND WARRANTIES.
18.1 EXECUTIVE Representations and Warranties. EXECUTIVE represents and
warrants that he is not restricted or prohibited, contractually or otherwise,
from entering into and performing each of the terms and covenants contained in
this Agreement, and that his execution and performance of this Agreement will
not violate or breach any other agreement between EXECUTIVE and any other person
or entity.
18.2 Company Representatives and Warranties.
(i) Due Authorization. The Company has full corporate power
and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms;
(ii) Conflicts. The execution, delivery and performance of
this Agreement by the Company, does not and will not (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any
provision of its Certificate of Incorporation, bylaws, or other governing
documents or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which the Company is
bound or to which any of the Company `s assets is subject.
19. ARBITRATION.
19.1 Any controversy or claim arising out or relating to this Agreement,
or the breach hereof, whether involving remedies at law or in equity, or arising
out of or relating to the rights, duties or obligations of the Company or of
EXECUTIVE shall be settled by binding arbitration conducted in San Diego County,
California, or in such other location as the parties may agree, in accordance
with, and by an arbitrator appointed pursuant to, the National Rules for the
-16-
Resolution of Employment Disputes of the American Arbitration Association
("AAA") in effect at the time, and the judgment upon the award rendered pursuant
thereto shall be in writing and may be entered in any court having jurisdiction,
and all rights or remedies of the Company and of the EXECUTIVE to the contrary
are hereby expressly waived. The AAA's administrative fees and the costs of the
arbitrator shall be borne by the Company.
[SIGNATURE PAGE FOLLOWS]
-17-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
THE COMPANY: EXECUTIVE:
CRICKET COMMUNICATIONS, INC. /s/ S. Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President,
Human Resources
THE PARENT:
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President,
Human Resources
-18-
EXHIBIT A
AWARDS UNDER THE LEAP WIRELESS INTERNATIONAL, INC. 2004 STOCK OPTION,
RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN
1. Restricted Stock Awards: Award of 90,000 shares of the Parent's Common
Stock, par value $.0001 per share ("Parent
Common Stock"), at a purchase price of $.0001
per share, subject to vesting conditions and
repurchase and transfer restrictions set
forth in Exhibit 1 A-1 attached hereto.
Award of 9,487 shares of Parent Common
Stock, at a purchase price of $.0001 per
share, subject to vesting conditions and
repurchase and transfer restrictions set
forth in Exhibit A-4 attached hereto.
2. Stock Option Grants: Grant of option to purchase 85,106 shares of
Parent Common Stock, at an exercise price of
$26.55 per share, subject to vesting and
exercisability conditions set forth in
Exhibit A-2 attached hereto.
Grant of option to purchase 75,901 shares
of Parent Common Stock, at an exercise
price of $26.35 per share, subject to
vesting and exercisability conditions set
forth in Exhibit A-5 attached hereto.
3. Deferred Stock Unit Award: Award of 30,000 shares of Deferred Stock
Units, at a purchase price of $.0001 per
share, fully vested and subject to deferred
purchase conditions set forth in
Exhibit A-3 attached hereto.
-19-
ATTACHMENT A-1
LEAP WIRELESS INTERNATIONAL, INC.
2004 STOCK OPTION, RESTRICTED STOCK AND
DEFERRED STOCK UNIT PLAN
RESTRICTED STOCK AWARD GRANT NOTICE AND
RESTRICTED STOCK AWARD AGREEMENT
Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN"), hereby
grants to the holder listed below ("HOLDER"), the right to purchase the number
of shares of the Company's Common Stock set forth below (the "SHARES") at the
purchase price set forth below. This Restricted Stock award is subject to all of
the terms and conditions as set forth herein and in the Restricted Stock Award
Agreement attached hereto as Exhibit A (the "RESTRICTED STOCK AGREEMENT") and
the Plan, each of which are incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Grant Notice and the Restricted Stock Agreement.
HOLDER: Xxxxxxx X. Xxxxxxxxx
XXXXX DATE: ______________, 2005
PURCHASE PRICE PER SHARE: $0.0001 per share
TOTAL NUMBER OF SHARES OF
RESTRICTED STOCK: [__________]
VESTING SCHEDULE: The Shares shall be released from the
Company's Repurchase Option set forth in Section
3.1 of the Restricted Stock Agreement on the
dates and in the percentages indicated in Exhibit
B to this Grant Notice.
By his or her signature and the Company's signature below, Holder agrees
to be bound by the terms and conditions of the Plan, the Restricted Stock
Agreement and this Grant Notice. Holder has reviewed the Restricted Stock
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of this Grant Notice, the Restricted Stock
Agreement and the Plan. Holder hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator of the Plan upon
any questions arising under the Plan, this Grant Notice or the Restricted Stock
Agreement. If Holder is married, his or her spouse has signed the Consent of
Spouse attached to this Grant Notice as Exhibit C.
LEAP WIRELESS INTERNATIONAL, INC. HOLDER:
By: _________________________________ By: __________________________________
Print Name: _________________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title: ______________________________ Title: _______________________________
Address: 00000 Xxxxxxx Xxxxxx Xxxxx Address: _____________________________
San Diego, California _____________________________
92121
EXHIBIT A
TO RESTRICTED STOCK AWARD GRANT NOTICE
RESTRICTED STOCK AWARD AGREEMENT
Pursuant to the Restricted Stock Award Grant Notice ("GRANT NOTICE") to
which this Restricted Stock Award Agreement (this "AGREEMENT") is attached, Leap
Wireless International, Inc. (the "COMPANY") has granted to Holder the right to
purchase the number of shares of Restricted Stock under the Company's 2004 Stock
Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN") indicated in
the Grant Notice.
ARTICLE I
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
1.2 Incorporation of Terms of Plan. The Shares are subject to the terms
and conditions of the Plan which are incorporated herein by reference.
ARTICLE II
GRANT OF RESTRICTED STOCK
2.1 Grant of Restricted Stock. In consideration of Holder's past and/or
continued employment with or service to the Company or its Subsidiaries and for
other good and valuable consideration, effective as of the Grant Date set forth
in the Grant Notice (the "GRANT DATE"), the Company irrevocably grants to Holder
the right to purchase the number of shares of Common Stock set forth in the
Grant Notice (the "SHARES"), upon the terms and conditions set forth in the Plan
and this Agreement.
2.2 Purchase Price. The purchase price of the Shares shall be as set forth
in the Grant Notice, without commission or other charge. The payment of the
purchase price shall be paid by cash or check.
2.3 Issuance of Shares. The issuance of the Shares under this Agreement
shall occur at the principal office of the Company simultaneously with the
execution of this Agreement by the parties or on such other date as the Company
and Holder shall agree (the "ISSUANCE DATE"). Subject to the provisions of
Article IV below, on the Issuance Date, the Company shall issue the Shares
(which shall be issued in Holder's name).
2.4 Conditions to Issuance of Stock Certificates. The Shares, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such Shares shall
be fully paid and nonassessable. The Company
-1-
shall not be required to issue or deliver any Shares prior to fulfillment of all
of the following conditions:
(a) The admission of such Shares to listing on all stock exchanges
on which such Common Stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
Issuance Date as the Administrator may from time to time establish for reasons
of administrative convenience; and
(e) The receipt by the Company of full payment for such Shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by Holder to pay for
such Shares, subject to Section 10.4 of the Plan.
2.5 Rights as Stockholder. Except as otherwise provided herein, upon
delivery of the Shares to the escrow holder pursuant to Article IV, Holder shall
have all the rights of a stockholder with respect to said Shares, subject to the
restrictions herein, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares;
provided, however, that any and all cash dividends paid on such Shares and any
and all shares of Common Stock, capital stock or other securities received by or
distributed to Holder with respect to the Shares as a result of any stock
dividend stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company
shall also be subject to the Repurchase Option (as defined in Section 3.1 below)
and the restrictions on transfer in Section 3.4 below until such restrictions on
the underlying Shares lapse or are removed pursuant to this Agreement.
ARTICLE III
RESTRICTIONS ON SHARES
3.1 Repurchase Option. Subject to the provisions of Section 3.2 below, if
Holder has a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, before all of the Shares are released
from the Company's Repurchase Option (as defined below), the Company shall, upon
the date of such Termination (as reasonably fixed and determined by the
Company), have an irrevocable, exclusive option, but not the obligation, for a
period of sixty (60) days, commencing ninety (90) days after the date Holder has
a Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, to repurchase all or any portion of the Unreleased
Shares (as defined below in Section 3.3) at such
-2-
time (the "Repurchase Option") at the original cash purchase price per share
(the "Repurchase Price"). The Repurchase Option shall lapse and terminate one
hundred fifty (150) days after Holder has a Termination of Employment,
Termination of Directorship or Termination of Consultancy, as applicable. The
Repurchase Option shall be exercisable by the Company by written notice to
Holder or Holder's executor (with a copy to the escrow agent appointed pursuant
to Section 4.1 below) and shall be exercisable, at the Company's option, by
delivery to Holder or Holder's executor with such notice of a check in the
amount of the Repurchase Price times the number of Shares to be repurchased (the
"Aggregate Repurchase Price"). Upon delivery of such notice and the payment of
the Aggregate Repurchase Price, the Company shall become the legal and
beneficial owner of the Shares being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of Shares being repurchased by the Company.
In the event the Company repurchases any Shares under this Section 3.1, any
dividends or other distributions paid on such Shares and held by the escrow
agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be
promptly paid by the escrow agent to the Company.
3.2 Release of Shares from Repurchase Restriction. The Shares shall be
released from the Company's Repurchase Option as indicated in Exhibit B to the
Grant Notice. Any of the Shares released from the Company's Repurchase Option
shall thereupon be released from the restrictions on transfer under Section 3.4.
In the event any of the Shares are released from the Company's Repurchase
Option, any dividends or other distributions paid on such Shares and held by the
escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be
promptly paid by the escrow agent to the Holder.
3.3 Unreleased Shares. Any of the Shares which, from time to time, have
not yet been released from the Company's Repurchase Option are referred to
herein as "Unreleased Shares."
3.4 Restrictions on Transfer. Unless otherwise permitted by the
Administrator pursuant to the Plan, no Unreleased Shares or any dividends or
other distributions thereon or any interest or right therein or part thereof,
shall be liable for the debts, contracts or engagements of the Holder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
ARTICLE IV
ESCROW OF SHARES
4.1 Escrow of Shares. To insure the availability for delivery of Holder's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option under Section 3.1, Holder hereby appoints the Secretary of the Company,
or any other person designated by the Administrator as escrow agent, as his or
her attorney-in-fact to assign and transfer unto the Company, such Unreleased
Shares, if any, repurchased by the Company pursuant to the Repurchase Option
pursuant to Section 3.1 and any dividends or other distributions thereon, and
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shall, upon execution of this Agreement, deliver and deposit with the Secretary
of the Company, or such other person designated by the Administrator, any share
certificates representing the Unreleased Shares, together with the stock
assignment duly endorsed in blank, attached to the Grant Notice as Exhibit D to
the Grant Notice. The Unreleased Shares and stock assignment shall be held by
the Secretary of the Company, or such other person designated by the
Administrator, in escrow, pursuant to the Joint Escrow Instructions of the
Company and Holder attached as Exhibit E to the Grant Notice, until the Company
exercises its Repurchase Option as provided in Section 3.1, until such
Unreleased Shares are released from the Company's Repurchase Option, or until
such time as this Agreement no longer is in effect. Upon release of the
Unreleased Shares, the escrow agent shall deliver to Holder the certificate or
certificates representing such Shares in the escrow agent's possession belonging
to Holder in accordance with the terms of the Joint Escrow Instructions attached
as Exhibit E to the Grant Notice, and the escrow agent shall be discharged of
all further obligations hereunder; provided, however, that the escrow agent
shall nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement. If
the Shares are held in book entry form, then such entry will reflect that the
Shares are subject to the restrictions of this Agreement. If any dividends or
other distributions are paid on the Unreleased Shares held by the escrow agent
pursuant to this Section 4.1 and the Joint Escrow Instructions, such dividends
or other distributions shall also be subject to the restrictions set forth in
this Agreement and held in escrow pending release of the Unreleased Shares with
respect to which such dividends or other distributions were paid from the
Company's Repurchase Option.
4.2 Transfer of Repurchased Shares. Holder hereby authorizes and directs
the Secretary of the Company, or such other person designated by the
Administrator, to transfer the Unreleased Shares as to which the Repurchase
Option has been exercised from Holder to the Company.
4.3 No Liability for Actions in Connection with Escrow. The Company, or
its designee, shall not be liable for any act it may do or omit to do with
respect to holding the Shares in escrow and while acting in good faith and in
the exercise of its judgment.
ARTICLE V
OTHER PROVISIONS
5.1 Adjustment for Stock Split. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, combination, reclassification, or
similar change in the capital structure of the Company, the Administrator shall
make appropriate and equitable adjustments in the Unreleased Shares subject to
the Repurchase Option and the number of Shares, consistent with any adjustment
under Section 10.3 of the Plan. The provisions of this Agreement shall apply, to
the full extent set forth herein with respect to the Shares, to any and all
shares of capital stock or other securities which may be issued in respect of,
in exchange for, or in substitution of the Shares, and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof.
5.2 Taxes. Holder has reviewed with Holder's own tax advisors the federal,
state, local and foreign tax consequences of this investment and the
transactions contemplated by the
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Grant Notice and this Agreement. Holder is relying solely on such advisors and
not on any statements or representations of the Company or any of its agents.
Holder understands that Holder (and not the Company) shall be responsible for
Holder's own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement. Holder understands that Holder will
recognize ordinary income for federal income tax purposes under Section 83 of
the Code. In this context, "restriction" includes the right of the Company to
repurchase the Shares pursuant to its Repurchase Option set forth in Section
3.1. Holder understands that Holder may elect to be taxed for federal income tax
purposes at the time the Shares are purchased rather than as and when the
Repurchase Option lapses by filing an election under Section 83(b) of the Code
with the Internal Revenue Service within thirty (30) days from the date of
purchase. A form of election under Section 83(b) of the Code is attached to the
Grant Notice as Exhibit X.
XXXXXX ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF HOLDER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HOLDER'S
BEHALF
5.3 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Holder is subject to Section
16 of the Exchange Act, the Plan, the Shares and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
5.4 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Holder, the Company and all other interested persons.
No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Shares. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.
5.5 Restrictive Legends and Stop-Transfer Orders.
(a) Any share certificate(s) evidencing the Shares issued hereunder
shall be endorsed with the following legend and any other legend required by any
applicable federal and state securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN
THE COMPANY
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AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(b) Holder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
(c) The Company shall not be required: (i) to transfer on its books
any shares of Common Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such shares of Common Stock or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such shares shall have been so
transferred.
5.6 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to Holder shall be addressed to Holder at
the address given beneath Holder's signature on the Grant Notice. By a notice
given pursuant to this Section 5.6, either party may hereafter designate a
different address for notices to be given to that party. Any notice shall be
deemed duly given when sent via email or when sent by certified mail (return
receipt requested) and deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
5.7 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
5.8 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware without regard
to conflicts of laws thereof. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
5.9 Conformity to Securities Laws. Holder acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Shares are to be issued, only
in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
5.10 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Holder and by a duly authorized
representative of the Company.
5.11 No Employment Rights. If Holder is an Employee, nothing in the Plan
or this Agreement shall confer upon Holder any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its
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Subsidiaries, which are expressly reserved, to discharge Holder at any time for
any reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in a written agreement between the Company and Holder.
5.12 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Holder and his or her heirs, executors, administrators, successors and
assigns.
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EXHIBIT B
TO RESTRICTED STOCK AWARD GRANT NOTICE
VESTING PROVISIONS
Capitalized terms used in this Exhibit B and not defined below shall have
the meanings given them in the Agreement to which this Exhibit B is attached.
1. Time-Based Vesting. Subject to any accelerated vesting pursuant to
paragraphs 2, 3 and 4 below, the Unreleased Shares shall be released from the
Company's Repurchase Option in their entirety on the third anniversary of the
Grant Date, if the Holder is an Employee, Director or Consultant on such date.
2. Performance-Based Accelerated Vesting. If the Company's EBITDA (as
defined below) and the Company's Net Adds (as defined below) both equal or
exceed the respective Achievement Threshold amounts for 2005 as set forth in
paragraph (a) below and/or both equal or exceed the respective Achievement
Threshold amounts for 2006 as set forth in paragraph (b) below, then a certain
percentage of the Unreleased Shares shall be released in accordance with the
provisions of paragraphs (a) and (b) below; provided, however, that no
Unreleased Shares shall be released pursuant to paragraphs (a) or (b) below if
either the Company's EBITDA or Net Adds do not at least equal the Achievement
Threshold amount for the applicable year.
(a) Fiscal Year 2005. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for the Fiscal Year 2005 equal or exceed the EBITDA
and Net Adds Achievement Thresholds (as set forth below), then a number of the
Unreleased Shares shall be released from the Company's Repurchase Option on the
applicable Performance Vesting Effective Date equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Restricted Stock subject to the Award (as shown in
the Grant Notice).
2005 PERFORMANCE-BASED VESTING SCHEDULE
2005 Net Adds
----------------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ ------
2005 Threshold 10% 12.5% 15%
[***]
EBITDA
(in thousands)
Target 12.5% 20% 22.5%
[***]
Maximum 15% 22.5% 30%
[***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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The percentage of Unreleased Shares which shall be released from the
Company's Repurchase Option if performance is between the Achievement Threshold
amount and the Achievement Target amount, or between the Achievement Target
amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(b) Fiscal Year 2006. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for Fiscal Year 2006 equal or exceed the EBITDA and
Net Add Achievement Thresholds (as set forth below), then a number of the
Unreleased Shares shall be released from the Company's Repurchase Option on the
applicable Performance Vesting Effective Date equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Restricted Stock subject to the Award (as shown in
the Grant Notice).
2006 Net Adds
---------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ ------
2006 Threshold 10% 12.5% 15%
[***]
EBITDA
(in thousands)
Target 12.5% 20% 22.5%
[***]
Maximum 15% 22.5% 30%
[***]
The percentage of Unreleased Shares which shall be released from the
Company's Repurchase Option if performance is between the Achievement Threshold
amount and the Achievement Target amount, or between the Achievement Target
amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(c) Definition of EBITDA. For purposes of this Exhibit B, the term
"EBITDA" for a Fiscal Year means the Company's consolidated net income or loss
for such period before extraordinary items and before the cumulative effect of
any change in accounting principles plus (a) the following to the extent
deducted in calculating such consolidated net
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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income or loss: (i) consolidated interest expense, (ii) all income tax expense
deducted in arriving at such consolidated net income or loss, (iii) depreciation
and amortization expense, (iv) non-cash impairment of assets (tangible and
intangible) and related non-cash charges, (v) charges and expenses related to
stock based compensation awards, (vi) net non-cash reorganization expenses and
charges, (vii) non-cash dividends or other distributions made with respect to
qualified preferred stock as contemplated by the Credit Agreement negotiated
among the Company, Cricket Communications Inc., the administrative agent
identified therein and others posted to IntraLinks on December 23, 2004 and
(viii) other non-recurring expenses reducing such consolidated net income or
loss which do not represent a cash item in such period or any future period
(including losses attributable to the sale of assets other than in the ordinary
course of business) and minus (b) the following to the extent included in
calculating such consolidated net income or loss: (i) income tax credits for
such period, (ii) all gains arising in relation to the sale of assets other than
in the ordinary course of business and (iii) all non-cash items increasing such
consolidated net income or loss for such period.
(d) Definition of Net Adds. For purposes of this Exhibit B, the term
"NET ADDS" means, with respect to any Fiscal Year, "end of period customers" on
the last day of such Fiscal Year less "end of period customers" on the last day
of the preceding Fiscal Year. If the Company adopts a pre-paid card based
service offering, the Administrator shall, in its discretion, equitably adjust
the Net Adds Achievement Levels set forth in paragraphs (a) and (b) to reflect
the Company's changed scope of operations.
(e) Adjustments for Future Changes in the Company's Business. The
EBITDA Achievement Levels and Net Adds Achievement Levels set forth in
paragraphs (a) and (b) are designed to be measured against the Company's
performance in its existing thirty-nine (39) markets. If the Company commences
operations in any new markets, or ceases to operate in any existing market, the
Administrator shall, in its discretion, equitably adjust the EBITDA Achievement
Levels and/or the Net Adds Achievement Levels to reflect the Company's changed
scope of operations.
(f) Release of Shares Cumulative; Continued Service Condition. The
release of Unreleased Shares from the Company's Repurchase Option under
paragraphs (a) and (b) shall be cumulative. Except as otherwise provided in
subparagraph 2(i), Unreleased Shares shall only be released from the Company's
Repurchase Option pursuant to this paragraph 2 if Holder is an Employee,
Director or Consultant of the Company or any of its Subsidiaries on the
applicable Performance Vesting Effective Date.
(g) Definition of Fiscal Year. For purposes of this Exhibit B, the
term "FISCAL YEAR" means the Company's fiscal year ending December 31.
(h) Definition of Performance Vesting Effective Date. For purposes
of this Exhibit B, the term "PERFORMANCE VESTING EFFECTIVE DATE" means, with
respect to the release from the Company's Repurchase Option of Unreleased Shares
to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005
or 2006, as applicable, the date of the public announcement by the Company of
EBITDA or Net Adds, as applicable, for the relevant Fiscal Year, but in no event
shall the Company make such public announcement later than the date on which the
Company files its Form 10-K for the relevant Fiscal Year.
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(i) Minimum Vesting for Fiscal Year 2006. Notwithstanding the other
provisions of this paragraph 2 (other than subparagraph 2(j)), if the Holder is
an Employee, Director or Consultant on December 31, 2005, then the minimum
number of Unreleased Shares that shall be released from the Company's Repurchase
Option under this subparagraph 2 on the Performance Vesting Effective Date for
Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal
Year 2006) shall be twenty percent (20%) of the total number of shares of
Restricted Stock subject to the Award (as shown in the Grant Notice).
(j) Termination of Performance-Based Vesting. Notwithstanding the
foregoing provisions of this paragraph 2, no Unreleased Shares shall be released
from the Company's Repurchase Option under this paragraph 2 on or after the date
of occurrence of a Change in Control.
3. Change in Control Accelerated Vesting.
(a) Change in Control prior to January 1, 2006. In the event of a
Change in Control prior to January 1, 2006, (i) if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then fifty
percent (50%) of the Unreleased Shares shall be released from the Company's
Repurchase Option, and (ii) if Holder is an Employee, Director or Consultant on
the first anniversary of the date of the occurrence of such Change in Control,
then an additional fifty percent (50%) of the Unreleased Shares shall be
released from the Company's Repurchase Option, and (iii) if the Holder is an
Employee, Director or Consultant on the second anniversary of the date of the
occurrence of such Change in Control, then any remaining Unreleased Shares shall
be released from the Company's Repurchase Option.
(b) Change in Control during 2006. In the event of a Change in
Control during 2006, (i) if Holder is an Employee, Director or Consultant
immediately prior to such Change in Control, then seventy-five percent (75%) of
the Unreleased Shares shall be released from the Company's Repurchase Option,
and (ii) if Holder is an Employee, Director or Consultant on the first
anniversary of the date of the occurrence of such Change in Control, then the
remaining Unreleased Shares shall be released from the Company's Repurchase
Option.
(c) Change in Control on or after January 1, 2007. In the event of a
Change in Control on or after January 1, 2007, if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then
eighty-five percent (85%) of the Unreleased Shares shall be released from the
Company's Repurchase Option and (ii) if the Holder is an Employee, Director or
Consultant on the first anniversary of the date of occurrence of such change in
Control, then any then remaining Unreleased Shares shall be released from the
Company's Repurchase Option.
(d) Termination of Employment in the Event of a Change in Control.
In the event of a Change in Control, if Holder has a Termination of Employment
by reason of discharge by the Company other than for Cause (as defined below),
or by reason of resignation by Holder for Good Reason (as defined below), during
the period commencing ninety (90) days prior to such Change in Control and
ending twelve (12) months after such Change in Control, then (i) if the Change
in Control occurs prior to January 1, 2006, twenty-five percent (25%) of the
Unreleased Shares shall be released form the Company's Repurchase Option and
(ii) if the
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Change in Control occurs on or after January 1, 2006, the remaining Unreleased
Shares shall be released from the Company's Repurchase Option, in each case, on
the date of Holder's Termination of Employment (or, if later, immediately prior
to the date of the occurrence of such Change in Control).
4. Accelerated Vesting in the Event of Termination of Employment.
(a) Accelerated Vesting in the Event of Termination of Employment by
the Company Other than for Cause or by Holder for Good Reason After February 28,
2006. In the event of Holder's Termination of Employment by reason of discharge
by the Company other than for Cause, or by reason of resignation by the Holder
for Good Reason after February 28, 2006, (i) if the Holder, upon written request
of the Company and reasonable advance notice, agrees to provide, and does
provide, consulting services to the Company (or to the Parent at the direction
of the Company, or both) for up to five (5) days a month for up to a one (1)
year period for a fee of $1,500 per day, the remaining Unreleased Shares shall
be released from the Company's Repurchase Option on the last day of the one year
period, or (ii) such remaining Unreleased Shares shall otherwise be released
from the Company's Repurchase Option on the third anniversary of the Grant Date.
The Company and the Holder shall mutually use their best efforts to schedule the
date or dates on which the Holder will provide the requested consulting services
so as not to prevent the Holder from being gainfully employed by a subsequent
employer, and shall be arranged so as to reasonably accommodate Holder's
vacation or other personal affairs.
(b) Definitions of Cause and Good Reason. For purposes of this
Exhibit B, the terms "CAUSE" and "GOOD REASON" shall have the meanings given to
such terms in that certain Amended and Restated Executive Employment Agreement
dated as of January 10, 2005, by and between Holder, the Company and Cricket
Communications, Inc., as amended from time to time (the "EMPLOYMENT AGREEMENT").
(c) Condition to Release of Shares. The release of Unreleased Shares
from the Company's Repurchase Option pursuant to this paragraph 4 shall be
conditioned on the Holder's delivery to the Company of an executed General
Release in accordance with Section 5.9 of the Employment Agreement and the
Holder's non-revocation of such General Release during the time period for such
revocation set forth therein.
5. Limit on Release of Shares. In no event will more than 100% of the
Unreleased Shares be released from the Company's Repurchase Option pursuant to
the provisions of this Exhibit B.
6. Confidentiality. Holder agrees to keep the EBITDA and Net Adds
achievement levels set forth in this Exhibit B confidential and not to disclose
such thresholds to any third party without the prior written consent of the
Company.
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ATTACHMENT B-1
METHODOLOGY FOR LINEAR INTERPOLATION
2005 Net Adds
-------------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold 10% 12.5% 15%
EBITDA [***]
(in thousands)
Target 12.5% 20% 22.5%
[***]
Maximum 15% 22.5% 30%
[***]
The EBITDA amounts in the following examples are shown in thousands.
Example 1:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: The net adds performance falls exactly on a specified payout
range, but performance in EBITDA falls somewhere in-between the schedule.
SOLUTION: Start with the net adds payout column and use straight-line
interpolation to determine the final payout.
PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12.5% for
threshold EBITDA performance and 20% for target EBITDA performance. Since EBITDA
performance ([***]) is halfway between THRESHOLD and TARGET performance ([***]
and [***]), the actual payout should be halfway between the scheduled payouts of
12.5% and 20%. Thus the payout is (1/2)*(20%-12.5%)+12.5%
- Payout = 16.25%
Example 2:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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PROBLEM: Neither the net adds performance nor the EBITDA performance fall
exactly on a specified payout.
SOLUTION: Use straight line interpolation for both measures. Starting with
either measure will yield the same result.
PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between
THRESHOLD and TARGET performance ([***]and [***]), so we can interpolate an
EBITDA-based payout schedule by finding the halfway point at each defined level
of Net Adds. At [***] net adds, the EBITDA-based payout would be halfway between
10% and 12.5%. At [***] net adds, the EBITDA-based payout would be halfway
between 12.5% and 20%. At [***] net adds, the EBITDA-based payout would be
halfway between 15% and 22.5%. Thus the interpolated, EBITDA-based payout
schedule looks like this:
2005 Net Adds
-------------------------------------------
Threshold Target Maximum
[***] [***] [***]
------------ ------------ -------------
Actual 11.25% 16.25%
2005 [***] (midpoint of (midpoint of 18.75%
EBITDA (midpoint of 10% and 12.5% and (midpoint of
[***]and [***]) 12.5%) 20%) 15% and 22.5%)
To determine the actual payout given this range, we interpolate a payout
at [***] net adds based on the scheduled payouts at [***] and [***]. First we
determine where [***] lies in the range of [***] to [***]. The length of the
range is [***] - [***] = [***] net adds. [***] is [***] above the range minimum
([***] - [***] = [***]). So the actual performance of [***] net adds falls 1/3
of the way between [***] net adds (target) and [***] net adds (maximum). This
means the actual payout must fall 1/3 of the way between 16.25% and 18.75%. Thus
the payout is (1/3)*(18.75%-16.25%)+16.25%
- Payout = 17.08%
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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EXHIBIT C
TO RESTRICTED STOCK AWARD GRANT NOTICE
CONSENT OF SPOUSE
I, [________________________], spouse of Xxxxxxx X. Xxxxxxxxx, have read
and approve the foregoing Agreement. In consideration of issuing to my spouse
the shares of the common stock of Leap Wireless International, Inc. set forth in
the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to
the exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any shares of the common stock of Leap Wireless International, Inc. issued
pursuant thereto under the community property laws or similar laws relating to
marital property in effect in the state of our residence as of the date of the
signing of the foregoing Agreement.
Dated: [_______________],2005
________________________
Signature of Spouse
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EXHIBIT D
TO RESTRICTED STOCK AWARD GRANT NOTICE
STOCK ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, Xxxxxxx X. Xxxxxxxxx, hereby sells,
assigns and transfers unto LEAP WIRELESS INTERNATIONAL, INC., a Delaware
corporation, [_______] shares of the Common Stock of LEAP WIRELESS
INTERNATIONAL, INC., a Delaware corporation, standing in its name of the books
of said corporation represented by Certificate No. [____] herewith and do hereby
irrevocably constitute and appoint [____________________] to transfer the said
stock on the books of the within named corporation with full power of
substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Award Agreement between LEAP WIRELESS INTERNATIONAL, INC. and the
undersigned dated [___________],2005.
Dated: _______________, ____
________________________
Xxxxxxx X. Xxxxxxxxx
INSTRUCTIONS: Please do not fill in the blanks other than the signature
line. The purpose of this assignment is to enable the Company to exercise its
"Repurchase Option," as set forth in the Restricted Stock Award Agreement,
without requiring additional signatures on the part of Holder.
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EXHIBIT E
TO RESTRICTED STOCK AWARD GRANT NOTICE
JOINT ESCROW INSTRUCTIONS
________________, 2005
Secretary
Leap Wireless International, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
As escrow agent (the "ESCROW AGENT") for both Leap Wireless International,
Inc., a Delaware corporation (the "COMPANY"), and the undersigned recipient of
stock of the Company (the "HOLDER"), you are hereby authorized and directed to
hold in escrow the documents delivered to you pursuant to the terms of that
certain Restricted Stock Award Agreement ("AGREEMENT") between the Company and
the undersigned (the "Escrow"), including the stock certificate and the
Assignment in Blank, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "COMPANY") exercises the Company's
Repurchase Option as defined in the Agreement), the Company shall give to the
Holder and you a written notice specifying the number of shares of stock to be
purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. The Holder and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. As of the date of closing of the repurchase indicated in such notice,
you are directed (a) to date the stock assignments necessary for the repurchase
and transfer in question, (b) to fill in the number of shares being repurchased
and transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be repurchased and transferred, to the Company
or its assignee.
3. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement. Holder
does hereby irrevocably constitute and appoint you as Holder's attorney-in-fact
and agent for the term of this escrow to execute with respect to such securities
all documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated, including but not limited to the
filing with any applicable state blue sky authority of any required applications
for consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph and the Agreement, Holder shall exercise all rights
and privileges of a stockholder of the Company while the stock is held by you.
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4. Upon written request of Holder, but no more than once per calendar
month, unless the Company's Repurchase Option has been exercised, you will
deliver to Holder a certificate or certificates representing so many shares of
stock as are not then subject to the Repurchase Option. Within one hundred
twenty (120) days after any voluntary or involuntary termination of Holder's
services to the Company for any or no reason, you will deliver to Holder a
certificate or certificates representing the aggregate number of shares held or
issued pursuant to the Agreement and not repurchased pursuant to the Repurchase
Option set forth in Section 3.1 of the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Holder, you
shall deliver all of the same to the Holder and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Holder while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the expiration of any rights under any
applicable state, federal or local statute of limitations or similar statute or
regulation with respect to these Joint Escrow Instructions or any documents
deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor. The Company will reimburse you
for any reasonable attorneys' fees with respect thereto.
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12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to the Holder or you shall be addressed to
the address given beneath Holder's and your signatures on the signature page to
this Agreement. By a notice given pursuant to this Section 15, any party may
hereafter designate a different address for notices to be given to that party.
Any notice, which is required to be given to Holder, shall, if the Holder is
then deceased, be given to Holder's designated beneficiary, if any by written
notice under this Section 15. Any notice shall be deemed duly given when sent
via email or when sent by certified mail (return receipt requested) and
deposited (with postage prepaid) in a post office or branch post office
regularly obtained by the United States Postal Service.
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without
regard to conflicts of law thereof.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed these Joint Escrow
Instructions as of the date first written above.
Very truly yours,
LEAP WIRELESS INTERNATIONAL, INC.
By: ___________________________________
Name:
Title:
Address: 00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
HOLDER:
________________________________________
Xxxxxxx X. Xxxxxxxxx
Address _______________________________
_______________________________
ESCROW AGENT:
By: ________________________________
Xxxxxx Xxxxxx,
Secretary, Leap Wireless
International, Inc.
Address: 00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
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EXHIBIT F
TO RESTRICTED STOCK AWARD GRANT NOTICE
FORM OF 83(B) ELECTION AND INSTRUCTIONS
These instructions are provided to assist you if you choose to make an
election under Section 83(b) of the Internal Revenue Code, as amended, with
respect to the shares of common stock, par value $0.0001, of Leap Wireless
International, Inc. transferred to you. PLEASE CONSULT WITH YOUR PERSONAL TAX
ADVISOR AS TO WHETHER AN ELECTION OF THIS NATURE WILL BE IN YOUR BEST INTERESTS
IN LIGHT OF YOUR PERSONAL TAX SITUATION.
The executed original of the Section 83(b) election must be filed with the
Internal Revenue Service not later than 30 days after the date the shares were
transferred to you. PLEASE NOTE: There is no remedy for failure to file on time.
The steps outlined below should be followed to ensure the election is mailed and
filed correctly and in a timely manner. ALSO, PLEASE NOTE: If you make the
Section 83(b) election, the election is irrevocable.
1. Complete Section 83(b) election form (attached as Attachment 1) and make
four (4) copies of the signed election form. (Your spouse, if any, should
sign Section 83(b) election form as well.)
2. Prepare the cover letter to the Internal Revenue Service (sample letter
attached as Attachment 2).
3. Send the cover letter with the originally executed Section 83(b) election
form and one (1) copy via certified mail, return receipt requested to the
Internal Revenue Service at the address of the Internal Revenue Service
where you file your personal tax returns. We suggest that you have the
package date-stamped at the post office. The post office will provide you
with a white certified receipt that includes a dated postmark. Enclose a
self-addressed, stamped envelope so that the Internal Revenue Service may
return a date-stamped copy to you. However, your postmarked receipt is
your proof of having timely filed the Section 83(b) election if you do not
receive confirmation from the Internal Revenue Service.
4. One (1) copy must be sent to Leap Wireless International, Inc. for its
records and one (1) copy must be attached to your federal income tax
return for the applicable calendar year.
5. Retain the Internal Revenue Service file stamped copy (when returned) for
your records.
Please consult your personal tax advisor for the address of the office of
the Internal Revenue Service to which you should mail your election form.
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ATTACHMENT 1 TO EXHIBIT F
ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B)
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of shares (the "Shares") of Common Stock,
par value $0.0001 per share, of Leap Wireless International, Inc., a Delaware
corporation (the "Company").
1. The name, address and taxpayer identification number of the undersigned
taxpayer are:
Xxxxxxx X. Xxxxxxxxx
_____________________
_____________________
SSN:
The name, address and taxpayer identification number of the Taxpayer's
spouse are (complete if applicable):
_____________________
_____________________
_____________________
SSN:
2. Description of the property with respect to which the election is being
made: __________________(_____) shares of Common Stock, par value $0.0001
per share, of the Company.
3. The date on which the property was transferred was _________, 200_. The
taxable year to which this election relates is calendar year 200_.
4. Nature of restrictions to which the property is subject:
The Shares are subject to repurchase at their original purchase price if
unvested as of the date of termination of employment, directorship or
consultancy with the Company.
5. The fair market value at the time of transfer (determined without regard
to any lapse restrictions, as defined in Treasury Regulation Section
1.83-3(a)) of the Shares was $___________ per Share.
6. The amount paid by the taxpayer for Shares was $0.0001 per share.
7. A copy of this statement has been furnished to the Company.
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Dated: _____________, 200_. Taxpayer Signature ________________________
The undersigned spouse of Taxpayer joins in this election. (Complete if
applicable).
Dated: _____________, 200_. Spouse's Signature ________________________
Signature(s) Notarized by:
_____________________
_____________________
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ATTACHMENT 2 TO EXHIBIT F
SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE
__________________, 200_
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Internal Revenue Service
[Address where taxpayer files returns]
Re: Election under Section 83(b) of the Internal Revenue Code of 1986
Taxpayer:________________________________________________________________
Taxpayer's Social Security Number:_______________________________________
Taxpayer's Spouse:_______________________________________________________
Taxpayer's Spouse's Social Security Number:______________________________
Ladies and Gentlemen:
Enclosed please find an original and one copy of an Election under Section
83(b) of the Internal Revenue Code of 1986, as amended, being made by the
taxpayer referenced above. Please acknowledge receipt of the enclosed materials
by stamping the enclosed copy of the Election and returning it to me in the
self-addressed stamped envelope provided herewith.
Very truly yours,
____________________________
Xxxxxxx X. Xxxxxxxxx
Enclosures
cc: Leap Wireless International, Inc.
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ATTACHMENT A-2
LEAP WIRELESS INTERNATIONAL, INC.
2004 STOCK OPTION, RESTRICTED STOCK
AND DEFERRED STOCK UNIT PLAN
STOCK OPTION GRANT NOTICE AND NON-QUALIFIED
STOCK OPTION AGREEMENT
Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "Plan"), hereby
grants to the holder listed below ("HOLDER"), an option to purchase the number
of shares of the Company's Common Stock set forth below (the "OPTION"). This
Option is subject to all of the terms and conditions as set forth herein and in
the Non-Qualified Stock Option Agreement attached hereto as Exhibit A (the
"STOCK OPTION AGREEMENT") and the Plan, each of which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Stock Option
Agreement.
HOLDER: Xxxxxxx X. Xxxxxxxxx
XXXXX DATE: _________________, 2005
EXERCISE PRICE PER SHARE: $___________ per share
TOTAL NUMBER OF SHARES
SUBJECT TO THE OPTION: [_____]
EXPIRATION DATE: __________________, 2015
TYPE OF OPTION: This Option is a Non-Qualified Stock Option and
is not an incentive stock option within the
meaning of Section 422 of the Code.
VESTING SCHEDULE: The shares of Common Stock subject to
the Option (rounded down to the next whole
number of shares) shall vest and become
exercisable on the dates and in the percentages
indicated in Exhibit B to this Grant Notice.
By his or her signature and the Company's signature below, Holder agrees
to be bound by the terms and conditions of the Plan, the Stock Option Agreement
and this Grant Notice. Holder has reviewed the Stock Option Agreement, the Plan
and this Grant Notice in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Grant Notice and fully understands all
provisions of this Grant Notice, the Stock Option Agreement and the Plan. Holder
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator of the Plan upon any questions arising
under the Plan or the Option.
LEAP WIRELESS INTERNATIONAL, INC. HOLDER:
By:_____________________________ By:__________________________________
Print Name:_____________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title:__________________________ Title:_______________________________
Address: 00000 Xxxxxxx Xxxxxx Xxxxx Address:_____________________________
Xxx Xxxxx, Xxxxxxxxxx 00000 _____________________________
EXHIBIT A
TO STOCK OPTION GRANT NOTICE
NON-QUALIFIED STOCK OPTION AGREEMENT
Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this
Non-Qualified Stock Option Agreement (this "AGREEMENT") is attached, Leap
Wireless International, Inc. (the "COMPANY") has granted to Holder an option
under the Company's 2004 Stock Option, Restricted Stock and Deferred Stock Unit
Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in
the Grant Notice.
ARTICLE I
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
1.2 Incorporation of Terms of Plan. The Option is subject to the terms and
conditions of the Plan which are incorporated herein by reference.
ARTICLE II
GRANT OF OPTION
2.1 Grant of Option. In consideration of Holder's past and/or continued
employment with or service to the Company or its Subsidiaries and for other good
and valuable consideration, effective as of the Grant Date set forth in the
Grant Notice (the "GRANT DATE"), the Company irrevocably grants to Holder the
Option to purchase any part or all of an aggregate of the number of shares of
Common Stock set forth in the Grant Notice, upon the terms and conditions set
forth in the Plan and this Agreement. The Option shall be a Non-Qualified Stock
Option and shall not be an incentive stock option within the meaning of Section
422 of the Code.
2.2 Purchase Price. The purchase price of the shares of Common Stock
subject to the Option shall be as set forth in the Grant Notice, without
commission or other charge.
ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability.
(a) Subject to Sections 3.3 and 5.8, the Option shall become vested
and exercisable in such amounts and at such times as are set forth in Exhibit B
to the Grant Notice.
(b) No portion of the Option which has not become vested and
exercisable at Termination of Employment, Termination of Directorship or
Termination of Consultancy, as
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applicable, shall thereafter become vested and exercisable, except as may be
otherwise provided by the Administrator or as set forth in a written agreement
between the Company and Holder.
3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in Exhibit B to the Grant Notice are cumulative. Each
such installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in Exhibit B to the Grant Notice shall remain vested and
exercisable until it becomes unexercisable under Section 3.3.
3.3 Expiration of Option.
(a) The Option may not be exercised to any extent by anyone after
the first to occur of the following events:
(i) The expiration of ten (10) years from the Grant Date; or
(ii) The expiration of ninety (90) days following the date of
Holder's Termination of Employment, Termination of Directorship or Termination
of Consultancy, as applicable (or, if later, with respect to any shares of
Common Stock that become exercisable pursuant to subparagraph 2(j) or
subparagraph 4(a) of Exhibit B hereto, ninety (90) days following the date such
shares become exercisable), unless such termination occurs by reason of Holder's
death or Disability (as defined below) or the Holder's termination by the
Company for Cause (as defined in Exhibit B hereto); or
(iii) The expiration of one (1) year following the date of
Holder's Termination of Employment, Termination of Directorship or Termination
of Consultancy, as applicable, by reason of Holder's death or Disability; or
(iv) The date of Termination of Employment, Termination of
Directorship or Termination of Consultancy for Cause (as defined in Exhibit B
hereto).
(b) For purposes of this Agreement, "Disability" means permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
ARTICLE IV
EXERCISE OF OPTION
4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of Holder, only Holder may exercise the Option or
any portion thereof. After the death of Holder, any exercisable portion of the
Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by Holder's personal representative or by any person
empowered to do so under the deceased Holder's will or under the then applicable
laws of descent and distribution.
4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.
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4.3 Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Secretary of the Company or the
Secretary's office of all of the following prior to the time when the Option or
such portion thereof becomes unexercisable under Section 3.3:
(a) An Exercise Notice in writing signed by Holder or any other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit C to the Grant Notice (or such
other form as is prescribed by the Administrator); and
(b) Subject to Section 6.2(d) of the Plan:
(i) Full payment (in cash or by check) for the shares with
respect to which the Option or portion thereof is exercised; or
(ii) With the consent of the Administrator, such payment may
be made, in whole or in part, through the delivery of shares of Common Stock
which have been owned by Holder for at least six (6) months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof; or
(iii) To the extent permitted under applicable laws, through
the delivery of a notice that Holder has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided, that payment of such proceeds is made to the Company upon
settlement of such sale; or
(iv) With the consent of the Administrator, any combination of
the consideration provided in the foregoing paragraphs (i), (ii) and (iii); and
(c) A bona fide written representation and agreement, in such form
as is prescribed by the Administrator, signed by Holder or the other person then
entitled to exercise such Option or portion thereof, stating that the shares of
Common Stock are being acquired for Holder's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that Holder or other person then entitled
to exercise such Option or portion thereof will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above. The
Administrator may, in its absolute discretion, take whatever additional actions
it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Administrator may require an opinion of
counsel acceptable to it to the effect that any subsequent transfer of shares
acquired on an Option exercise does not violate the Securities Act,
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and may issue stop-transfer orders covering such shares. Share certificates
evidencing Common Stock issued on exercise of the Option shall bear an
appropriate legend referring to the provisions of this subsection (c) and the
agreements herein. The written representation and agreement referred to in the
first sentence of this subsection (c) shall, however, not be required if the
shares to be issued pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in respect of such
shares; and
(d) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by Holder to pay for
such shares under Section 4.3(b), subject to Section 10.4 of the Plan; and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than Holder, appropriate
proof of the right of such person or persons to exercise the Option.
4.4 Conditions to Issuance of Stock Certificates. The shares of Common
Stock deliverable upon the exercise of the Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any shares
of Common Stock purchased upon the exercise of the Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such Common Stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may from time to time establish for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by the Holder to pay
for such shares under Section 4.3(b), subject to Section 10.4 of the Plan.
4.5 Rights as Stockholder. Holder of the Option shall not be, nor have any
of the rights or privileges of, a stockholder of the Company in respect of any
shares purchasable upon the exercise of any part of the Option unless and until
such shares shall have been issued by the Company to such holder.
-4-
ARTICLE V
OTHER PROVISIONS
5.1 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Holder, the Company and all other interested persons.
No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.
5.2 Option Not Transferable.
(a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until the shares underlying the Option have been issued, and all
restrictions applicable to such shares have lapsed. Neither the Option nor any
interest or right therein shall be liable for the debts, contracts or
engagements of Holder or his or her successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
(b) Notwithstanding any other provision in this Agreement, with the
consent of the Administrator and to the extent the Option is not intended to
qualify as an Incentive Stock Option, the Option may be transferred to one or
more Permitted Transferees, subject to the terms and conditions set forth in
Section 10.1 of the Plan.
(c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of Holder, only Holder may exercise the
Option or any portion thereof unless it has been disposed of pursuant to a DRO.
After the death of Holder, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 3.3, be exercised
by Holder's personal representative or by any person empowered to do so under
the deceased Holder's will or under the then applicable laws of descent and
distribution.
5.3 Restrictive Legends and Stop-Transfer Orders.
(a) The share certificate or certificates evidencing the shares of
Common Stock purchased hereunder shall be endorsed with any legends that may be
required by state or federal securities laws.
(b) Holder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer
-5-
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) The Company shall not be required: (i) to transfer on its books
any shares of Common Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such shares of Common Stock or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such shares shall have been so
transferred.
5.4 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement.
5.5 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to Holder shall be addressed to Holder at
the address given beneath Holder's signature on the Grant Notice. By a notice
given pursuant to this Section 5.5, either party may hereafter designate a
different address for notices to be given to that party. Any notice which is
required to be given to Holder shall, if Holder is then deceased, be given to
the person entitled to exercise his or her Option pursuant to Section 4.1 by
written notice under this Section 5.5. Any notice shall be deemed duly given
when sent via email or when sent by certified mail (return receipt requested)
and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
5.6 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
5.7 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware without regard
to conflicts of laws thereof. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
5.8 Conformity to Securities Laws. Holder acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
5.9 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Holder or such other person as may
be permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.
-6-
5.10 No Employment Rights. If Holder is an Employee, nothing in the Plan
or this Agreement shall confer upon Holder any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are expressly reserved, to
discharge Holder at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in a written agreement between
the Company and Holder.
5.11 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Holder and his or her heirs, executors, administrators, successors and
assigns.
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EXHIBIT B
TO STOCK OPTION GRANT NOTICE
VESTING AND EXERCISABILITY PROVISIONS
Capitalized terms used in this Exhibit B and not defined below shall have
the meanings given them in the Grant Notice and the Stock Option Agreement.
1. Time-Based Vesting. Subject to any accelerated vesting and
exercisability pursuant to paragraphs 2, 3 and 4 below, the shares of Common
Stock subject to the Option shall vest and become exercisable in their entirety
on the third anniversary of the Grant Date, if Holder is an Employee, Director
or Consultant on that date.
2. Performance-Based Accelerated Vesting. If the Company's EBITDA (as
defined below) and the Company's Net Adds (as defined below) both equal or
exceed the respective Achievement Threshold amounts for 2005 as set forth in
paragraph (a) below and/or both equal or exceed the Achievement Threshold
amounts for 2006 as set forth in paragraph (b) below, then a certain percentage
of the number of shares of Common Stock subject to the Option shall vest and
become exercisable in accordance with the provisions of paragraphs (a) and (b)
below; provided, however, that no shares subject to the Option shall vest and
become exercisable pursuant to paragraphs (a) or (b) below, if either the
Company's EBITDA or Net Adds do not at least equal the Achievement Threshold
amount for the applicable year.
(a) Fiscal Year 2005. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for Fiscal Year 2005 equal or exceed the EBITDA and
Net Adds Achievement Thresholds (as set forth below), then the Option shall vest
and become exercisable as to that number of shares of Common Stock equal to the
number obtained by multiplying the percentage determined in accordance with the
following table, by the total number of shares of Common Stock subject to the
Option (as set forth in the Grant Notice).
2005 PERFORMANCE-BASED VESTING SCHEDULE
2005 Net Adds
--------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold
[***] 10% 12.5% 15%
EBITDA Target
(in thousands) [***] 12.5% 20% 22.5%
Maximum
[***] 15% 22.5% 30%
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-1-
The percentage for determining the number of shares of Common Stock that
shall vest and become exercisable if performance is between the Achievement
Threshold amount and the Achievement Target amount or between the Achievement
Target amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(b) Fiscal Year 2006. If the Company's EBITDA and Net Adds for
Fiscal Year 2006 equal or exceed the EBITDA and Net Adds Achievement Thresholds
(as set forth below), then the Option shall vest and become exercisable as to
that number of shares of Common Stock equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Common Stock subject to the Option (as set forth
in the Grant Notice).
2006 Net Adds
--------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2006 Threshold
[***] 10% 12.5% 15%
EBITDA Target
(in thousands) [***] 12.5% 20% 22.5%
Maximum
[***] 15% 22.5% 30%
The percentage for determining the number of shares of Common Stock that
shall vest and become exercisable if performance is between the Achievement
Threshold amount and the Achievement Target amount or between the Achievement
Target amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(c) Definition of EBITDA. For purposes of this Exhibit B, the term
"EBITDA" for a Fiscal Year means the Company's consolidated net income or loss
for such period before extraordinary items and before the cumulative effect of
any change in accounting principles plus (a) the following to the extent
deducted in calculating such consolidated net income or loss: (i) consolidated
interest expense, (ii) all income tax expense deducted in arriving
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-2-
at such consolidated net income or loss, (iii) depreciation and amortization
expense, (iv) non-cash impairment of assets (tangible and intangible) and
related non-cash charges, (v) charges and expenses related to stock based
compensation awards, (vi) net non-cash reorganization expenses and charges,
(vii) non-cash dividends or other distributions made with respect to qualified
preferred stock as contemplated by the Credit Agreement negotiated among the
Company, Cricket Communications Inc., the administrative agent identified
therein and others posted to IntraLinks on December 23, 2004 and (viii) other
non-recurring expenses reducing such consolidated net income or loss which do
not represent a cash item in such period or any future period (including losses
attributable to the sale of assets other than in the ordinary course of
business) and minus (b) the following to the extent included in calculating such
consolidated net income or loss: (i) income tax credits for such period, (ii)
all gains arising in relation to the sale of assets other than in the ordinary
course of business and (iii) all non-cash items increasing such consolidated net
income or loss for such period.
(d) Definition of Net Adds. For purposes of this Exhibit B, the term
"NET ADDS" means, with respect to any Fiscal Year, the Company's "end of period
customers" on the last day of such Fiscal Year less "end of period customers" on
the last day of the preceding Fiscal Year. If the Company adopts a pre-paid card
based service offering, the Administrator shall, in its discretion, equitably
adjust the Net Adds Achievement Levels set forth in paragraphs (a) and (b) to
reflect the Company's changed scope of operations.
(e) Adjustments for Future Changes in the Company's Business. The
EBITDA Achievement Levels and Net Adds Achievement Levels set forth in
paragraphs (a) and (b) are designed to be measured against the Company's
performance in its existing thirty-nine (39) markets. If the Company commences
operations in any new markets, or ceases to operate in any existing market, the
Administrator shall, in its discretion, equitably adjust the EBITDA Achievement
Levels and/or the Net Adds Achievement Levels to reflect the Company's changed
scope of operations.
(f) Accelerated Vesting Cumulative; Continued Service Condition. The
vesting and exercisability of the Option as to shares of Common Stock under
paragraphs 2(a) and 2(b) shall be cumulative. Except as otherwise provided in
subparagraph 2(j), the Option shall vest and become exercisable as to shares of
Common Stock pursuant to this paragraph 2 if Holder is an Employee, Director or
Consultant of the Company or any of its Subsidiaries on the applicable
Performance Vesting Effective Date.
(g) Definition of Performance Vesting Effective Date. For purposes
of this Exhibit B, the term "PERFORMANCE VESTING EFFECTIVE DATE" means, with
respect to vesting and exercisability to occur upon the attainment of EBITDA and
Net Adds Achievement Levels for 2005 or 2006, as applicable, the date of the
public announcement by the Company of EBITDA or Net Adds, as applicable, for the
relevant Fiscal Year, but in no event shall the Company make such public
announcement later than the date on which the Company files its Form 10-K for
the relevant Fiscal Year.
(h) Definition of Fiscal Year. For purposes of this Exhibit B, the
term "FISCAL YEAR" means the Company's fiscal year ending December 31.
-3-
(i) Termination of Performance-Based Vesting. Notwithstanding the
foregoing provisions of this paragraph 2, the Option shall not vest and become
exercisable as to any additional shares of Common Stock pursuant to
performance-based accelerated vesting and exercisability under this paragraph 2
on or after the date of the occurrence of a Change in Control.
(j) Minimum Vesting For Fiscal Year 2006. Notwithstanding the other
provisions of this paragraph 2 (other than subparagraph 2(i)), if Holder is an
Employee, Director or Consultant on December 31, 2005, then the minimum
additional number of shares of Common Stock that shall vest and become
exercisable under this paragraph 2 on the Performance Vesting Effective Date for
Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal
Year 2006) shall equal twenty percent (20%) of the total number of shares of
Common Stock subject to the Option (as set forth in the Grant Notice).
3. Change in Control Accelerated Vesting.
(a) Change in Control prior to January 1, 2006. In the event of a
Change in Control prior to January 1, 2006, (i) if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, the Option
shall then vest and become exercisable as to a number of shares of Common Stock
equal to fifty percent (50%) of the number of then unvested shares of Common
Stock subject to the Option and (ii) if Holder is an Employee, Director or
Consultant on the first anniversary of the date of the occurrence of such Change
in Control, the Option shall then vest and become exercisable as to an
additional number of shares of Common Stock equal to fifty percent (50%) of the
number of then unvested shares of Common Stock subject to the Option, and (iii)
if Holder is an Employee, Director or Consultant on the second anniversary of
the date of the occurrence of such Change in Control, the Option shall then vest
and become exercisable as to the remaining unvested shares of Common Stock
subject to the Option.
(b) Change in Control during 2006. In the event of a Change in
Control during 2006, (i) if Holder is an Employee, Director or Consultant
immediately prior to such Change in Control, the Option shall then vest and
become exercisable as to a number of shares of Common Stock equal to
seventy-five percent (75%) of the number of then unvested shares of Common Stock
subject to the Option, and (ii) if Holder is an Employee, Director or Consultant
on the first anniversary of the date of the occurrence of such Change in
Control, the Option shall then vest and become exercisable as to the remaining
unvested shares of Common Stock subject to the Option.
(c) Change in Control on or after January 1, 2007. In the event of a
Change in Control on or after January 1, 2007, if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, the Option
shall then vest and become exercisable as to a number of shares of Common Stock
equal to eighty-five percent (85%) of the number of then unvested shares of
Common Stock subject to the Option, and (ii) if Holder is an Employee, Director
or Consultant on the first anniversary of the date of the occurrence of such
Change in Control, the Option shall then vest and become exercisable as to any
then remaining unvested shares of Common Stock subject to the Option.
-4-
(d) Termination of Employment in the Event of a Change in Control.
In the event of a Change in Control, if the Holder has a Termination of
Employment by reason of discharge by the Company other than for Cause (as
defined below), or by reason of resignation by Holder for Good Reason (as
defined below), during the period commencing ninety (90) days prior to such
Change in Control and ending twelve (12) months after such Change in Control,
then (i) if the Change in Control occurs prior to January 1, 2006, twenty-five
percent (25)% of the number of then unvested shares of Common Stock subject to
the Option shall vest and become exercisable and (ii) if the change in Control
occurs on or after January 1, 2006, the remaining unvested shares of Common
Stock subject to the Option shall vest and become exercisable on the date of
Holder's Termination of Employment (or, if later, immediately prior to the date
of the occurrence of such Change in Control).
4. Accelerated Vesting in the Event of Termination of Employment.
(a) Termination of Employment by the Company Other than for Cause or
by Holder for Good Reason After February 28, 2006. In the event of Holder's
Termination of Employment (without regard to any consulting services provided
pursuant to this paragraph (a)) by reason of discharge by the Company other than
for Cause, or by reason of resignation by the Holder for Good Reason after
February 28, 2006, (i) if the Holder, upon written request of the Company and
reasonable advance notice, agrees to provide, and does provide, consulting
services to the Company (or to the Parent at the direction of the Company, or
both) for up to five (5) days a month for up to a one (1) year period for a fee
of $1,500 per day, the remaining unvested shares of Common Stock subject to the
Option shall vest and become exercisable on the last day of the one (1) year
period, or (ii) such remaining unvested shares of Common Stock subject to the
Option shall otherwise vest and become exercisable on the third anniversary of
the Grant Date. The Company and the Holder shall mutually use their best efforts
to schedule the date or dates on which the Holder will provide the requested
consulting services so as not to prevent the Holder from being gainfully
employed by a subsequent employer, and shall be arranged so as to reasonably
accommodate Holder's vacation or other personal affairs.
(b) Definitions of Cause and Good Reason. For purposes of this
Exhibit B, the terms "CAUSE" and "GOOD REASON" shall have the meanings given to
such terms in that certain Amended and Restated Executive Employment Agreement
dated as of January 10, 2005, by and among Holder, the Company and Cricket
Communications, Inc., as amended from time to time (the "EMPLOYMENT AGREEMENT").
(c) Condition to Accelerated Vesting and Exercisability. The
accelerated vesting and exercisability of shares of Common Stock subject to the
Option pursuant to this paragraph 4 shall be conditioned on the Holder's
delivery to the Company of an executed General Release in accordance with
Section 5.9 of the Employment Agreement and the Holder's non-revocation of such
General Release during the time period for such revocation set forth therein.
5. Limit on Vesting. In no event will the Option become vested and/or
exercisable for more than 100% of the shares of Common Stock subject to the
Option pursuant to the provisions of this Exhibit B.
-5-
6. Confidentiality. Holder agrees to keep the EBITDA and Net Adds
achievement levels set forth in this Exhibit B confidential and not to disclose
such thresholds to any third party without the prior written consent of the
Company.
-6-
ATTACHMENT B-1
METHODOLOGY FOR LINEAR INTERPOLATION
2005 Net Adds
--------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold
[***] 10% 12.5% 15%
EBITDA Target
(in thousands) [***] 12.5% 20% 22.5%
Maximum
[***] 15% 22.5% 30%
The EBITDA amounts in the following examples are shown in thousands.
Example 1:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: The net adds performance falls exactly on a specified payout
range, but performance in EBITDA falls somewhere in-between the schedule.
SOLUTION: Start with the net adds payout column and use straight-line
interpolation to determine the final payout.
PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12.5% for
threshold EBITDA performance and 20% for target EBITDA performance. Since EBITDA
performance ([***]) is halfway between THRESHOLD and TARGET performance ([***]
and [***]), the actual payout should be halfway between the scheduled payouts of
12.5% and 20%. Thus the payout is (1/2)*(20%-12.5%)+12.5%
- Payout = 16.25%
Example 2:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: Neither the net adds performance nor the EBITDA performance fall
exactly on a specified payout.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-7-
SOLUTION: Use straight line interpolation for both measures. Starting with
either measure will yield the same result.
PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between
THRESHOLD and TARGET performance ([***] and [***]), so we can interpolate an
EBITDA-based payout schedule by finding the halfway point at each defined level
of Net Adds. At [***] net adds, the EBITDA-based payout would be halfway between
10% and 12.5%. At [***] net adds, the EBITDA-based payout would be halfway
between 12.5% and 20%. At [***] net adds, the EBITDA-based payout would be
halfway between 15% and 22.5%. Thus the interpolated, EBITDA-based payout
schedule looks like this:
2005 Net Adds
----------------------------------------
Threshold Target Maximum
[***] [***] [***]
------------ ------------ ------------
Actual 11.25% 16.25% 18.75%
[***] (midpoint of (midpoint of (midpoint of
2005 (midpoint of [***] 10% and 12.5% and 15% and
EBITDA and [***]) 12.5%) 20%) 22.5%)
To determine the actual payout given this range, we interpolate a payout
at [***] net adds based on the scheduled payouts at [***] and [***]. First we
determine where [***] lies in the range of [***] to [***]. The length of the
range is [***] - [***] = [***] net adds. [***] is [***] above the range minimum
([***] - [***] = [***]). So the actual performance of [***] net adds falls 1/3
of the way between [***] net adds (target) and [***] net adds (maximum). This
means the actual payout must fall 1/3 of the way between 16.25% and 18.75%. Thus
the payout is (1/3)*(18.75%-16.25%)+16.25%
- Payout = 17.08%
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-8-
EXHIBIT C
TO STOCK OPTION GRANT NOTICE
FORM OF EXERCISE NOTICE
Effective as of today,______________ , ______________ the undersigned
("HOLDER") hereby elects to exercise Holder's option to purchase _______________
shares of the Common Stock (the "SHARES") of Leap Wireless International, Inc.
(the "COMPANY") under and pursuant to the Leap Wireless International, Inc.
200__ Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "Plan")
and the Stock Option Grant Notice and Non-Qualified Stock Option Agreement dated
_______________, 2005, (the "OPTION AGREEMENT"). Capitalized terms used herein
without definition shall have the meanings given in the Option Agreement.
GRANT DATE: ___________________________ , 2005
NUMBER OF SHARES AS TO WHICH OPTION IS EXERCISED: _____________________________________
EXERCISE PRICE PER SHARE: $____________
TOTAL EXERCISE PRICE: $____________
CERTIFICATE TO BE ISSUED IN NAME OF: _____________________________________
CASH PAYMENT DELIVERED HEREWITH: $______________ (Representing the full
Exercise Price for the Shares, as well
as any applicable withholding tax)
TYPE OF OPTION: The Option is a Non-Qualified Stock Option and is not an
incentive stock option within the meaning of Section 422
of the Code.
1. Representations of Holder. Holder acknowledges that Holder has
received, read and understood the Plan and the Option Agreement. Holder agrees
to abide by and be bound by their terms and conditions.
2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any' other
rights as a stockholder shall exist with respect to Shares subject to the
Option, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 10.3 of the Plan.
3. Tax Consultation. Holder understands that there are tax consequences to
Holder as a result of Holder's purchase or disposition of the Shares. Holder
represents that Holder has consulted with any tax consultants Holder deems
advisable in connection with the purchase or disposition of the Shares and that
Holder is not relying on the Company for any tax advice.
4. Entire Agreement. The Plan and Option Agreement are incorporated herein
by reference. This Exercise Notice, the Plan and the Option Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Holder with respect to the
subject matter hereof.
-1-
ACCEPTED BY: SUBMITTED BY
LEAP WIRELESS INTERNATIONAL, HOLDER:
INC.
By:____________________________ By:_________________________________
Print Name:____________________ Print Name: _________________________
Title:_________________________ Address:_____________________________
-2-
ATTACHMENT A-3
LEAP WIRELESS INTERNATIONAL, INC.
2004 STOCK OPTION, RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN
DEFERRED STOCK UNIT AWARD GRANT NOTICE AND DEFERRED STOCK UNIT
AWARD AGREEMENT
Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN"), hereby
grants to the holder listed below ("HOLDER"), the number of Deferred Stock Units
set forth below (the "DEFERRED STOCK UNITS"). The Deferred Stock Units are
subject to all of the terms and conditions as set forth herein and in the
Deferred Stock Unit Award Agreement attached hereto as Exhibit A (the "DEFERRED
STOCK UNIT AGREEMENT") and the Plan, each of which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Deferred Stock Unit
Agreement.
HOLDER: Xxxxxxx X. Xxxxxxxxx
XXXXX DATE: ______________________, 2005
PURCHASE PRICE PER DEFERRED STOCK UNIT: $0.0001 per share
TOTAL NUMBER OF DEFERRED STOCK UNITS: ______________________
VESTING SCHEDULE: The Deferred Stock Units shall be immediately vested.
DISTRIBUTION SCHEDULE: The Deferred Stock Units shall be distributable in
accordance with Section 2.4 of the Deferred Stock
Unit Agreement.
By his or her signature and the Company's signature below, Holder agrees
to be bound by the terms and conditions of the Plan, the Deferred Stock Unit
Agreement and this Grant Notice. Holder has reviewed the Deferred Stock Unit
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of this Grant Notice, the Deferred Stock
Unit Agreement and the Plan. Holder hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator of
the Plan upon any questions arising under the Plan, this Grant Notice or the
Deferred Stock Unit Agreement.
LEAP WIRELESS INTERNATIONAL, HOLDER:
INC.
By:___________________________________ By:_________________________________
Print Name:___________________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title:________________________________ Address:_____________________________
Address:10307 Xxxxxxx Xxxxxx Xxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000
EXHIBIT A
TO DEFERRED STOCK UNIT AWARD GRANT NOTICE DEFERRED STOCK UNIT
AWARD AGREEMENT
Pursuant to the Deferred Stock Unit Award Grant Notice ("GRANT NOTICE") to
which this Deferred Stock Unit Award Agreement (this "AGREEMENT") is attached,
Leap Wireless International, Inc. (the "COMPANY") has granted to Holder the
number of Deferred Stock Units under the Company's 2004 Stock Option, Restricted
Stock and Deferred Stock Unit Plan (the "PLAN") indicated in the Grant Notice.
ARTICLE I
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
1.2 Incorporation of Terms of Plan. The Deferred Stock Units and the
shares of Common Stock issuable with respect thereto are subject to the terms
and conditions of the Plan which are incorporated herein by reference.
ARTICLE II
GRANT, VESTING AND DISTRIBUTION OF DEFERRED STOCK UNITS
2.1 Grant of Deferred Stock Units. In consideration of Holder's past
and/or continued employment with or service to the Company or its Subsidiaries
and for other good and valuable consideration, effective as of the Grant Date
set forth in the Grant Notice (the "GRANT DATE"), the Company irrevocably grants
to Holder an award of the number of Deferred Stock Units indicated in the Grant
Notice, subject to all of the terms and conditions in the Plan and this
Agreement. A Deferred Stock Unit shall represent the right to purchase a share
of Common Stock at the time the Deferred Stock Unit is available for
distribution on a deferred basis in accordance with the terms and conditions of
the Plan and this Agreement.
2.2 Purchase Price. The purchase price of the shares of Common Stock
issuable pursuant to the Deferred Stock Units shall be as set forth in the Grant
Notice, without commission or other charge.
2.3 Vesting of Deferred Stock Units. On the Grant Date, the Deferred Stock
Units will be fully vested and shall not be subject to forfeiture.
2.4 Distribution of Deferred Stock Units.
(a) Shares of Common Stock shall be available for purchase by Holder (or
in the event of Holder's death, to his or her estate) with respect to such
Holder's vested Deferred Stock Units granted to Holder pursuant to this
Agreement, subject to the terms and provisions of
-1-
the Plan and this Agreement, for a period of thirty (30) days commencing
following the earliest to occur of the following events (each, a "DISTRIBUTION
Event"):
(i) the date Holder has a Termination of Employment,
Termination of Consultancy or Termination of Directorship, as applicable;
(ii) the date immediately prior to a Change in Control; or
(iii) August 15, 2005.
(b) Following a Distribution Event, Holder may purchase the shares
of Common Stock issuable with respect to his or her vested Deferred Stock Units
by delivery to the Secretary of the Company or the Secretary's office of all of
the following within thirty (30) days following the occurrence of the
Distribution Event.
(i) A Purchase Notice in writing signed by the Holder or any
other person then entitled to purchase the shares of Common Stock issuable
with respect to the vested Deferred Stock Units, stating that such shares
of Common Stock are being purchased, such notice complying with all
applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit B to the Grant Notice (or
such other form as is prescribed by the Administrator); and
(ii) Full payment (in cash or by check) for the shares of
Common Stock to be purchased by Holder, including payment of any
applicable withholding tax, which in the discretion of the Administrator
may be in any form permitted by Section 10.4 of the Plan; and
(iii) A bona fide written representation and agreement, in
such form as is prescribed by the Administrator, signed by Holder or the
other person then entitled to purchase the shares of Common Stock issuable
with respect to the vested Deferred Stock Units, stating that the shares
of Common Stock are being acquired for Holder's own account, for
investment and without any present intention of distributing or reselling
said shares or any of them except as may be permitted under the Securities
Act and then applicable rules and regulations thereunder, and that Holder
or the other person then entitled to purchase the shares of Common Stock
issuable with respect to the vested Deferred Stock Units will indemnify
the Company against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or distribution
of the shares by such person is contrary to the representation and
agreement referred to above. The Administrator may, in its absolute
discretion, take whatever additional actions it deems appropriate to
ensure the observance and performance of such representation and agreement
and to effect compliance with the Securities Act and any other federal or
state securities laws or regulations. Without limiting the generality of
the foregoing, the Administrator may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares
acquired by Holder does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing
Common Stock issued pursuant to the Deferred Stock Units shall bear an
appropriate legend referring to the provisions of this subsection (c) and
the agreements
-2-
herein.The written representation and agreement referred to in the first
sentence of this subsection (c) shall, however, not be required if the
shares to be issued pursuant to such exercise have been registered under
the Securities Act, and such registration is then effective in respect of
such shares; and
(iv) In the event the shares of Common Stock issuable with
respect to the vested Deferred Stock Units shall be purchased pursuant to
this Section 2.4(b) by any person or persons other than Holder,
appropriate proof of the right of such person or persons to purchase such
shares of Common Stock.
(c) Subject to the conditions of Sections 2.4(b) and 2.6, the
Company shall distribute any shares of Common Stock purchased pursuant to this
Section 2.4(b) in a single lump sum distribution. If Holder does not purchase
the shares of Common Stock issuable with respect to any vested Deferred Stock
Units within thirty (30) days following the occurrence of a Distribution Event,
such Deferred Stock Units shall terminate.
(d) All distributions shall be made by the Company in the form of
whole shares of Common Stock (and cash in an amount equal to the value of any
fractional Deferred Stock Unit, determined based on the Fair Market Value as of
the distribution date).
(e) Neither the time nor form of distribution of the Deferred Stock
Units under this Agreement may be changed, except as may be provided under the
Plan.
(f) Notwithstanding the foregoing, shares of Common Stock shall be
issuable pursuant to a Deferred Stock Unit at such times and upon such events as
are specified in this Agreement only to the extent issuance under such terms
will not cause the Deferred Stock Units or the shares of Common Stock issuable
pursuant to the Deferred Stock Units to be includible in the gross income of
Holder under Section 409A of the Code prior to such times or the occurrence of
such events, as permitted by the Code and the regulations and other guidance
thereunder.
2.5 Restrictions on Transfer. Unless otherwise permitted by the
Administrator pursuant to the Plan, no Deferred Stock Units or shares of Common
Stock issuable with respect thereto or any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Holder or
his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
2.6 Conditions to Issuance of Stock Certificates. The shares of Common
Stock deliverable with respect to the Deferred Stock Units, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall be
fully paid and nonassessable. The Company shall not be required to issue or
deliver any shares of Common Stock with respect to the Deferred Stock Units
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such Common Stock is then listed; and
-3-
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
applicable Distribution Event as the Administrator may from time to time
establish for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
the Company (or other employer corporation) is required to withhold upon
issuance of such shares in accordance with Section 10.4 of the Plan.
2.7 Rights as Stockholder. Except as otherwise provided herein, the Holder
shall not be, nor have any of the rights or privileges of, a stockholder of the
Company in respect of any shares issuable pursuant to the Deferred Stock Units
unless and until such shares shall have been issued by the Company to Holder.
ARTICLE III
OTHER PROVISIONS
3.1 Adjustment for Stock Split. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, combination, reclassification, or
similar change in the capital structure of the Company, appropriate adjustments
shall be made in the Deferred Stock Units and/or the shares of Common Stock
issuable with respect thereto, consistent with any adjustment under Section 10.3
of the Plan. The provisions of this Agreement shall apply, to the full extent
set forth herein with respect to the Deferred Stock Units and the shares of
Common Stock issuable with respect thereto, to any and all shares of capital
stock or other securities which may be issued in respect of, or in exchange for,
in substitution of the Deferred Stock Units and the shares of Common Stock
issuable with respect thereto, and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the like
occurring after the date hereof.
3.2 Taxes. Notwithstanding anything to the contrary in this Agreement, the
Company shall be entitled to require payment to the Company or any of its
Subsidiaries in cash or deduction from other compensation payable to Holder of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance or distribution of the Deferred Stock Units or shares of Common
Stock issuable with respect thereto. The Company shall not be obligated to
deliver any new certificate representing shares of Common Stock issuable with
respect to the Deferred Stock Units to Holder or his legal representative unless
and until Holder or his legal representative shall have paid or otherwise
satisfied in full the amount of all federal,
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state and local taxes applicable to the taxable income of Holder resulting from
the grant of the Deferred Stock Units or the distribution of the shares of
Common Stock issuable with respect thereto.
3.3 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Holder is subject to Section
16 of the Exchange Act, the Plan, the Deferred Stock Units and the shares of
Common stock issuable with respect thereto and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
3.4 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Holder, the Company and all other interested persons.
No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Deferred Stock Units. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Administrator under the Plan and this Agreement.
3.5 Restrictive Legends and Stop-Transfer Orders.
(a) Any share certificate(s) evidencing the shares of Common Stock
issued hereunder shall be endorsed with any legend required by any applicable
federal and state securities laws.
(b) Holder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
(c) The Company shall not be required: (i) to transfer on its books
any shares of Common Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such shares of Common Stock or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such shares shall have been so
transferred.
3.6 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to Holder shall be addressed to Holder at
the address given beneath Holder's signature on the Grant Notice. By a notice
given pursuant to this Section 3.6, either party may hereafter designate a
different address for notices to be given to that party. Any notice shall be
deemed duly given when sent via email or when sent by certified mail (return
receipt requested)
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and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
3.7 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
3.8 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware without regard
to conflicts of laws thereof. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
3.9 Conformity to Securities Laws. Holder acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Deferred Stock Units are
granted, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
3.10 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Holder and by a duly authorized
representative of the Company.
3.11 No Employment Rights. If Holder is an Employee, nothing in the Plan
or this Agreement shall confer upon Holder any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are expressly reserved, to
discharge Holder at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in a written agreement between
the Company and Holder.
3.12 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Holder and his or her heirs, executors, administrators, successors and
assigns.
3.13 Unfunded, Unsecured Obligations. The obligations of the Company under
the Plan and this Agreement shall be unfunded and unsecured, and nothing
contained herein shall be construed as providing for assets to be held in trust
or escrow or any other form of segregation of the assets of the Company for the
benefit of Holder or any other person. Holder shall have only the rights of a
general, unsecured creditor of the Company with respect to the Deferred Stock
Units, unless and until shares of Common Stock shall be distributed to Holder
under the terms and conditions of this Agreement.
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EXHIBIT B
TO DEFERRED STOCK UNIT AWARD GRANT NOTICE
FORM OF PURCHASE NOTICE
Effective as of today, ____________, _______, the undersigned ("Holder")
hereby elects to purchase shares of the Common Stock (the "SHARES") of Leap
Wireless International, Inc. (the "COMPANY") under and pursuant to the Leap
Wireless International, Inc. 2004 Stock Option, Restricted Stock and Deferred
Stock Unit Plan (the "PLAN") and the Deferred Stock Unit Award Grant Notice and
Deferred Stock Unit Award Agreement dated____________, _______, (the "AWARD
AGREEMENT"). Capitalized terms used herein without definition shall have the
meanings given in the Award Agreement.
GRANT DATE: ___________________________ , 200__
NUMBER OF SHARES BEING PURCHASED: _____________________________________
PURCHASE PRICE PER SHARE: $____________
TOTAL PURCHASE PRICE: $____________
CERTIFICATE TO BE ISSUED IN NAME OF: _____________________________________
CASH PAYMENT DELIVERED HEREWITH: $______________ (Representing the full
Purchase Price for the Shares, as well
as any applicable withholding tax)
1. Representations of Holder. Holder acknowledges that Holder has
received, read and understood the Plan and the Award Agreement. Holder agrees to
abide by and be bound by their terms and conditions.
2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to Shares, notwithstanding the
delivery of this Purchase Notice. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 10.3 of the Plan.
3. Tax Consultation. Holder understands that there are tax consequences to
Holder as a result of Holder's purchase or disposition of the Shares. Holder
represents that Holder has consulted with any tax consultants Holder deems
advisable in connection with the purchase or disposition of the Shares and that
Holder is not relying on the Company for any tax advice.
4. Entire Agreement. The Plan and Award Agreement are incorporated herein
by reference. This Purchase Notice, the Plan and the Award Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Holder with respect to the
subject matter hereof.
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ACCEPTED BY: SUBMITTED BY
LEAP WIRELESS INTERNATIONAL, HOLDER:
INC.
By:_________________________________ By:_________________________________
Print Name:__________________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title:_______________________________ Address:_____________________________
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ATTACHMENT A-4
LEAP WIRELESS INTERNATIONAL, INC.
2004 STOCK OPTION, RESTRICTED STOCK AND
DEFERRED STOCK UNIT PLAN
RESTRICTED STOCK AWARD GRANT NOTICE AND
RESTRICTED STOCK AWARD AGREEMENT
Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN"), hereby
grants to the holder listed below ("HOLDER"), the right to purchase the number
of shares of the Company's Common Stock set forth below (the "SHARES") at the
purchase price set forth below. This Restricted Stock award is subject to all of
the terms and conditions as set forth herein and in the Restricted Stock Award
Agreement attached hereto as Exhibit A (the "RESTRICTED STOCK AGREEMENT") and
the Plan, each of which are incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Grant Notice and the Restricted Stock Agreement.
HOLDER: Xxxxxxx X. Xxxxxxxxx
XXXXX DATE: ______________, 2005
PURCHASE PRICE PER SHARE: $0.0001 per share
TOTAL NUMBER OF SHARES OF
RESTRICTED STOCK: [__________]
VESTING SCHEDULE: The Shares shall be released from the Company's
Repurchase Option set forth in Section 3.1 of
the Restricted Stock Agreement on the dates and
in the percentages indicated in Exhibit B to
this Grant Notice.
By his or her signature and the Company's signature below, Holder agrees
to be bound by the terms and conditions of the Plan, the Restricted Stock
Agreement and this Grant Notice. Holder has reviewed the Restricted Stock
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of this Grant Notice, the Restricted Stock
Agreement and the Plan. Holder hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator of the Plan upon
any questions arising under the Plan, this Grant Notice or the Restricted Stock
Agreement. If Holder is married, his or her spouse has signed the Consent of
Spouse attached to this Grant Notice as Exhibit C.
LEAP WIRELESS INTERNATIONAL, HOLDER:
INC.
By: _______________________________ By: _______________________________
Print Name: _______________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title: ____________________________ Title: ____________________________
Address: 00000 Xxxxxxx Xxxxxx Xxxxx Address: ___________________________
Xxx Xxxxx, Xxxxxxxxxx 00000 ___________________________
EXHIBIT A
TO RESTRICTED STOCK AWARD GRANT NOTICE
RESTRICTED STOCK AWARD AGREEMENT
Pursuant to the Restricted Stock Award Grant Notice ("GRANT NOTICE") to
which this Restricted Stock Award Agreement (this "AGREEMENT") is attached, Leap
Wireless International, Inc. (the "COMPANY") has granted to Holder the right to
purchase the number of shares of Restricted Stock under the Company's 2004 Stock
Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN") indicated in
the Grant Notice.
ARTICLE I
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
1.2 Incorporation of Terms of Plan. The Shares are subject to the terms
and conditions of the Plan which are incorporated herein by reference.
ARTICLE II
GRANT OF RESTRICTED STOCK
2.1 Grant of Restricted Stock. In consideration of Holder's past and/or
continued employment with or service to the Company or its Subsidiaries and for
other good and valuable consideration, effective as of the Grant Date set forth
in the Grant Notice (the "GRANT DATE"), the Company irrevocably grants to Holder
the right to purchase the number of shares of Common Stock set forth in the
Grant Notice (the "SHARES"), upon the terms and conditions set forth in the Plan
and this Agreement.
2.2 Purchase Price. The purchase price of the Shares shall be as set forth
in the Grant Notice, without commission or other charge. The payment of the
purchase price shall be paid by cash or check.
2.3 Issuance of Shares. The issuance of the Shares under this Agreement
shall occur at the principal office of the Company simultaneously with the
execution of this Agreement by the parties or on such other date as the Company
and Holder shall agree (the "ISSUANCE DATE"). Subject to the provisions of
Article IV below, on the Issuance Date, the Company shall issue the Shares
(which shall be issued in Holder's name).
2.4 Conditions to Issuance of Stock Certificates. The Shares, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such Shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any Shares prior to fulfillment of all of the following conditions:
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(a) The admission of such Shares to listing on all stock exchanges
on which such Common Stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
Issuance Date as the Administrator may from time to time establish for reasons
of administrative convenience; and
(e) The receipt by the Company of full payment for such Shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by Holder to pay for
such Shares, subject to Section 10.4 of the Plan.
2.5 Rights as Stockholder. Except as otherwise provided herein, upon
delivery of the Shares to the escrow holder pursuant to Article IV, Holder shall
have all the rights of a stockholder with respect to said Shares, subject to the
restrictions herein, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares;
provided, however, that any and all cash dividends paid on such Shares and any
and all shares of Common Stock, capital stock or other securities received by or
distributed to Holder with respect to the Shares as a result of any stock
dividend stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company
shall also be subject to the Repurchase Option (as defined in Section 3.1 below)
and the restrictions on transfer in Section 3.4 below until such restrictions on
the underlying Shares lapse or are removed pursuant to this Agreement.
ARTICLE III
RESTRICTIONS ON SHARES
3.1 Repurchase Option. Subject to the provisions of Section 3.2 below, if
Holder has a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, before all of the Shares are released
from the Company's Repurchase Option (as defined below), the Company shall, upon
the date of such Termination (as reasonably fixed and determined by the
Company), have an irrevocable, exclusive option, but not the obligation, for a
period of sixty (60) days, commencing ninety (90) days after the date Holder has
a Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, to repurchase all or any portion of the Unreleased
Shares (as defined below in Section 3.3) at such time (the "Repurchase Option")
at the original cash purchase price per share (the "Repurchase Price"). The
Repurchase Option shall lapse and terminate one hundred fifty (150) days after
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Holder has a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable. The Repurchase Option shall be
exercisable by the Company by written notice to Holder or Holder's executor
(with a copy to the escrow agent appointed pursuant to Section 4.1 below) and
shall be exercisable, at the Company's option, by delivery to Holder or Holder's
executor with such notice of a check in the amount of the Repurchase Price times
the number of Shares to be repurchased (the "Aggregate Repurchase Price"). Upon
delivery of such notice and the payment of the Aggregate Repurchase Price, the
Company shall become the legal and beneficial owner of the Shares being
repurchased and all rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own name the number
of Shares being repurchased by the Company. In the event the Company repurchases
any Shares under this Section 3.1, any dividends or other distributions paid on
such Shares and held by the escrow agent pursuant to Section 4.1 and the Joint
Escrow Instructions shall be promptly paid by the escrow agent to the Company.
3.2 Release of Shares from Repurchase Restriction. The Shares shall be
released from the Company's Repurchase Option as indicated in Exhibit B to the
Grant Notice. Any of the Shares released from the Company's Repurchase Option
shall thereupon be released from the restrictions on transfer under Section 3.4.
In the event any of the Shares are released from the Company's Repurchase
Option, any dividends or other distributions paid on such Shares and held by the
escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be
promptly paid by the escrow agent to the Holder.
3.3 Unreleased Shares. Any of the Shares which, from time to time, have
not yet been released from the Company's Repurchase Option are referred to
herein as "Unreleased Shares."
3.4 Restrictions on Transfer. Unless otherwise permitted by the
Administrator pursuant to the Plan, no Unreleased Shares or any dividends or
other distributions thereon or any interest or right therein or part thereof,
shall be liable for the debts, contracts or engagements of the Holder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
ARTICLE IV
ESCROW OF SHARES
4.1 Escrow of Shares. To insure the availability for delivery of Holder's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option under Section 3.1, Holder hereby appoints the Secretary of the Company,
or any other person designated by the Administrator as escrow agent, as his or
her attorney-in-fact to assign and transfer unto the Company, such Unreleased
Shares, if any, repurchased by the Company pursuant to the Repurchase Option
pursuant to Section 3.1 and any dividends or other distributions thereon, and
shall, upon execution of this Agreement, deliver and deposit with the Secretary
of the Company, or such other person designated by the Administrator, any share
certificates representing the
-3-
Unreleased Shares, together with the stock assignment duly endorsed in blank,
attached to the Grant Notice as Exhibit D to the Grant Notice. The Unreleased
Shares and stock assignment shall be held by the Secretary of the Company, or
such other person designated by the Administrator, in escrow, pursuant to the
Joint Escrow Instructions of the Company and Holder attached as Exhibit E to the
Grant Notice, until the Company exercises its Repurchase Option as provided in
Section 3.1, until such Unreleased Shares are released from the Company's
Repurchase Option, or until such time as this Agreement no longer is in effect.
Upon release of the Unreleased Shares, the escrow agent shall deliver to Holder
the certificate or certificates representing such Shares in the escrow agent's
possession belonging to Holder in accordance with the terms of the Joint Escrow
Instructions attached as Exhibit E to the Grant Notice, and the escrow agent
shall be discharged of all further obligations hereunder; provided, however,
that the escrow agent shall nevertheless retain such certificate or certificates
as escrow agent if so required pursuant to other restrictions imposed pursuant
to this Agreement. If the Shares are held in book entry form, then such entry
will reflect that the Shares are subject to the restrictions of this Agreement.
If any dividends or other distributions are paid on the Unreleased Shares held
by the escrow agent pursuant to this Section 4.1 and the Joint Escrow
Instructions, such dividends or other distributions shall also be subject to the
restrictions set forth in this Agreement and held in escrow pending release of
the Unreleased Shares with respect to which such dividends or other
distributions were paid from the Company's Repurchase Option.
4.2 Transfer of Repurchased Shares. Holder hereby authorizes and directs
the Secretary of the Company, or such other person designated by the
Administrator, to transfer the Unreleased Shares as to which the Repurchase
Option has been exercised from Holder to the Company.
4.3 No Liability for Actions in Connection with Escrow. The Company, or
its designee, shall not be liable for any act it may do or omit to do with
respect to holding the Shares in escrow and while acting in good faith and in
the exercise of its judgment.
ARTICLE V
OTHER PROVISIONS
5.1 Adjustment for Stock Split. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, combination, reclassification, or
similar change in the capital structure of the Company, the Administrator shall
make appropriate and equitable adjustments in the Unreleased Shares subject to
the Repurchase Option and the number of Shares, consistent with any adjustment
under Section 10.3 of the Plan. The provisions of this Agreement shall apply, to
the full extent set forth herein with respect to the Shares, to any and all
shares of capital stock or other securities which may be issued in respect of,
in exchange for, or in substitution of the Shares, and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof.
5.2 Taxes. Holder has reviewed with Holder's own tax advisors the federal,
state, local and foreign tax consequences of this investment and the
transactions contemplated by the Grant Notice and this Agreement. Holder is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. Holder understands that
-4-
Holder (and not the Company) shall be responsible for Holder's own tax liability
that may arise as a result of this investment or the transactions contemplated
by this Agreement. Holder understands that Holder will recognize ordinary income
for federal income tax purposes under Section 83 of the Code. In this context,
"restriction" includes the right of the Company to repurchase the Shares
pursuant to its Repurchase Option set forth in Section 3.1. Holder understands
that Holder may elect to be taxed for federal income tax purposes at the time
the Shares are purchased rather than as and when the Repurchase Option lapses by
filing an election under Section 83(b) of the Code with the Internal Revenue
Service within thirty (30) days from the date of purchase. A form of election
under Section 83(b) of the Code is attached to the Grant Notice as Exhibit X.
XXXXXX ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF HOLDER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HOLDER'S
BEHALF
5.3 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Holder is subject to Section
16 of the Exchange Act, the Plan, the Shares and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
5.4 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Holder, the Company and all other interested persons.
No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Shares. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.
5.5 Restrictive Legends and Stop-Transfer Orders.
(a) Any share certificate(s) evidencing the Shares issued hereunder
shall be endorsed with the following legend and any other legend required by any
applicable federal and state securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN
THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
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(b) Holder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
(c) The Company shall not be required: (i) to transfer on its books
any shares of Common Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such shares of Common Stock or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such shares shall have been so
transferred.
5.6 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to Holder shall be addressed to Holder at
the address given beneath Holder's signature on the Grant Notice. By a notice
given pursuant to this Section 5.6, either party may hereafter designate a
different address for notices to be given to that party. Any notice shall be
deemed duly given when sent via email or when sent by certified mail (return
receipt requested) and deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
5.7 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
5.8 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware without regard
to conflicts of laws thereof. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
5.9 Conformity to Securities Laws. Holder acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Shares are to be issued, only
in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
5.10 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Holder and by a duly authorized
representative of the Company.
5.11 No Employment Rights. If Holder is an Employee, nothing in the Plan
or this Agreement shall confer upon Holder any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are expressly reserved, to
discharge Holder at any time for any reason
-6-
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written agreement between the Company and Holder.
5.12 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Holder and his or her heirs, executors, administrators, successors and
assigns.
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EXHIBIT B
TO RESTRICTED STOCK AWARD GRANT NOTICE
VESTING PROVISIONS
Capitalized terms used in this Exhibit B and not defined below shall have
the meanings given them in the Agreement to which this Exhibit B is attached.
1. Time-Based Vesting. Subject to any accelerated vesting pursuant to
paragraphs 2, 3 and 4 below, the Unreleased Shares shall be released from the
Company's Repurchase Option in their entirety on December 31, 2008, if the
Holder is an Employee, Director or Consultant on such date.
2. Performance-Based Accelerated Vesting. If the Company's EBITDA (as
defined below) and the Company's Net Adds (as defined below) both equal or
exceed the respective Achievement Threshold amounts for 2005 as set forth in
paragraph (a) below and/or both equal or exceed the respective Achievement
Threshold amounts for 2006 as set forth in paragraph (b) below and/or both equal
or exceed the respective Achievement Threshold amounts for 2007 as set forth in
paragraph (c) below, then a certain percentage of the Unreleased Shares shall be
released in accordance with the provisions of paragraphs (a), (b) and (c) below;
provided, however, that no Unreleased Shares shall be released pursuant to
paragraphs (a), (b) or (c) below if either the Company's EBITDA or Net Adds do
not at least equal the Achievement Threshold amount for the applicable year.
(a) Fiscal Year 2005. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for the Fiscal Year 2005 equal or exceed the EBITDA
and Net Adds Achievement Thresholds (as set forth below), then a number of the
Unreleased Shares shall be released from the Company's Repurchase Option on the
applicable Performance Vesting Effective Date equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Restricted Stock subject to the Award (as shown in
the Grant Notice).
2005 PERFORMANCE-BASED VESTING SCHEDULE
2005 Net Adds
--------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold 10% 12.5% 15%
[***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confindential treatment has been requested with respect to the
omitted portions.
-1-
EBITDA Target 12.5% 20% 22.5%
(in thousands) [***]
------- ---- ---- ----
Maximum 15% 22.5% 30%
[***]
The percentage of Unreleased Shares which shall be released from the
Company's Repurchase Option if performance is between the Achievement Threshold
amount and the Achievement Target amount, or between the Achievement Target
amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(b) Fiscal Year 2006. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for Fiscal Year 2006 equal or exceed the EBITDA and
Net Adds Achievement Thresholds (as set forth below), then a number of the
Unreleased Shares shall be released from the Company's Repurchase Option on the
applicable Performance Vesting Effective Date equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Restricted Stock subject to the Award (as shown in
the Grant Notice).
2006 Net Adds
--------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2006 Threshold 10% 12.5% 15%
[***]
EBITDA --------- ------ ----- -----
(in thousands) Target 12.5% 20% 22.5%
[***]
--------- ------ ----- -----
Maximum 15% 22.5% 30%
[***]
The percentage of Unreleased Shares which shall be released from the
Company's Repurchase Option if performance is between the Achievement Threshold
amount and the Achievement Target amount, or between the Achievement Target
amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment
B-1.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-2-
(c) Fiscal Year 2007. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for Fiscal Year 2007 equal or exceed the EBITDA and
Net Adds Achievement Thresholds (as set forth below), then a number of the
Unreleased Shares shall be released from the Company's Repurchase Option on the
applicable Performance Vesting Effective Date equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Restricted Stock subject to the Award (as shown in
the Grant Notice).
2007 Net Adds
------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2007 Threshold 10% 12.5% 15%
[***]
EBITDA --------- ------ ----- ------
(in thousands)
Target 12.5% 20% 22.5%
[***]
--------- ------ ----- ------
Maximum 15% 22.5% 30%
[***]
The percentage of Unreleased Shares which shall be released from the
Company's Repurchase Option if performance is between the Achievement Threshold
amount and the Achievement Target amount, or between the Achievement Target
amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(d) Definition of EBITDA. For purposes of this Exhibit B, the term
"EBITDA" for a Fiscal Year means the Company's consolidated net income or loss
for such period before extraordinary items and before the cumulative effect of
any change in accounting principles plus (a) the following to the extent
deducted in calculating such consolidated net income or loss: (i) consolidated
interest expense, (ii) all income tax expense deducted in arriving at such
consolidated net income or loss, (iii) depreciation and amortization expense,
(iv) non-cash impairment of assets (tangible and intangible) and related
non-cash charges, (v) charges and expenses related to stock based compensation
awards, (vi) net non-cash reorganization expenses and charges, (vii) non-cash
dividends or other distributions made with respect to qualified preferred stock
as contemplated by the Credit Agreement negotiated among the Company, Cricket
Communications Inc., the administrative agent identified therein and others
posted to IntraLinks on December 23, 2004 and (viii) other non-recurring
expenses reducing such consolidated net income or loss which do not represent a
cash item in such period or any future period (including losses attributable to
the sale of assets other than in the ordinary course of business) and minus (b)
the following to the extent included in calculating such consolidated net
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-3-
income or loss: (i) income tax credits for such period, (ii) all gains arising
in relation to the sale of assets other than in the ordinary course of business
and (iii) all non-cash items increasing such consolidated net income or loss for
such period.
(e) Definition of Net Adds. For purposes of this Exhibit B, the term
"NET ADDS" means, with respect to any Fiscal Year, "end of period customers" on
the last day of such Fiscal Year less "end of period customers" on the last day
of the preceding Fiscal Year. If the Company adopts a pre-paid card based
service offering, the Administrator shall, in its discretion, equitably adjust
the Net Adds Achievement Levels set forth in paragraphs (a), (b) and (c) to
reflect the Company's changed scope of operations.
(f) Adjustments for Future Changes in the Company's Business. The
EBITDA Achievement Levels and Net Adds Achievement Levels set forth in
paragraphs (a), (b) and (c) are designed to be measured against the Company's
performance in its existing thirty-nine (39) markets. If the Company commences
operations in any new markets, or ceases to operate in any existing market, the
Administrator shall, in its discretion, equitably adjust the EBITDA Achievement
Levels and/or the Net Adds Achievement Levels to reflect the Company's changed
scope of operations.
(g) Release of Shares Cumulative; Continued Service Condition. The
release of Unreleased Shares from the Company's Repurchase Option under
paragraphs (a), (b) and (c) shall be cumulative. Except as otherwise provided in
subparagraph 2(j), Unreleased Shares shall only be released from the Company's
Repurchase Option pursuant to this paragraph 2 if Holder is an Employee,
Director or Consultant of the Company or any of its Subsidiaries on the
applicable Performance Vesting Effective Date.
(h) Definition of Fiscal Year. For purposes of this Exhibit B, the
term "FISCAL YEAR" means the Company's fiscal year ending December 31.
(i) Definition of Performance Vesting Effective Date. For purposes
of this Exhibit B, the term "PERFORMANCE VESTING EFFECTIVE DATE" means, with
respect to the release from the Company's Repurchase Option of Unreleased Shares
to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005,
2006 or 2007, as applicable, the date of the public announcement by the Company
of EBITDA or Net Adds, as applicable, for the relevant Fiscal Year, but in no
event shall the Company make such public announcement later than the date on
which the Company files its Form 10-K for the relevant Fiscal Year.
(j) Minimum Vesting for Fiscal Year 2006. Notwithstanding the other
provisions of this paragraph 2 (other than subparagraph 2(k)), if the Holder is
an Employee, Director or Consultant on December 31, 2005, then the minimum
number of Unreleased Shares that shall be released from the Company's Repurchase
Option under this subparagraph 2 on the Performance Vesting Effective Date for
Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal
Year 2006) shall be twenty percent (20%) of the total number of shares of
Restricted Stock subject to the Award (as shown in the Grant Notice).
(k) Termination of Performance-Based Vesting. Notwithstanding the
foregoing provisions of this paragraph 2, no Unreleased Shares shall be released
from the
-4-
Company's Repurchase Option under this paragraph 2 on or after the date of
occurrence of a Change in Control.
3. Change in Control Accelerated Vesting.
(a) Change in Control prior to January 1, 2006. In the event of a
Change in Control prior to January 1, 2006, (i) if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then fifty
percent (50%) of the Unreleased Shares shall be released from the Company's
Repurchase Option, and (ii) if Holder is an Employee, Director or Consultant on
the first anniversary of the date of the occurrence of such Change in Control,
then an additional fifty percent (50%) of the Unreleased Shares shall be
released from the Company's Repurchase Option, and (iii) if the Holder is an
Employee, Director or Consultant on the second anniversary of the date of the
occurrence of such Change in Control, then any remaining Unreleased Shares shall
be released from the Company's Repurchase Option.
(b) Change in Control during 2006. In the event of a Change in
Control during 2006, (i) if Holder is an Employee, Director or Consultant
immediately prior to such Change in Control, then seventy-five percent (75%) of
the Unreleased Shares shall be released from the Company's Repurchase Option,
and (ii) if Holder is an Employee, Director or Consultant on the first
anniversary of the date of the occurrence of such Change in Control, then the
remaining Unreleased Shares shall be released from the Company's Repurchase
Option.
(c) Change in Control on or after January 1, 2007. In the event of a
Change in Control on or after January 1, 2007, if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then
eighty-five percent (85%) of the Unreleased Shares shall be released from the
Company's Repurchase Option and (ii) if the Holder is an Employee, Director or
Consultant on the first anniversary of the date of occurrence of such change in
Control, then any then remaining Unreleased Shares shall be released from the
Company's Repurchase Option.
(d) Termination of Employment in the Event of a Change in Control.
In the event of a Change in Control, if Holder has a Termination of Employment
by reason of discharge by the Company other than for Cause (as defined below),
or by reason of resignation by Holder for Good Reason (as defined below), during
the period commencing ninety (90) days prior to such Change in Control and
ending twelve (12) months after such Change in Control, then (i) if the Change
in Control occurs prior to January 1, 2006, twenty-five percent (25%) of the
Unreleased Shares shall be released form the Company's Repurchase Option and
(ii) if the Change in Control occurs on or after January 1, 2006, the remaining
Unreleased Shares shall be released from the Company's Repurchase Option, in
each case, on the date of Holder's Termination of Employment (or, if later,
immediately prior to the date of the occurrence of such Change in Control).
4. Accelerated Vesting in the Event of Termination of Employment.
(a) Accelerated Vesting in the Event of Termination of Employment by
the Company Other than for Cause or by Holder for Good Reason After February 28,
2006. In the event of Holder's Termination of Employment by reason of discharge
by the Company other
-5-
than for Cause, or by reason of resignation by the Holder for Good Reason after
February 28, 2006, (i) if the Holder, upon written request of the Company and
reasonable advance notice, agrees to provide, and does provide, consulting
services to the Company (or to the Parent at the direction of the Company, or
both) for up to five (5) days a month for up to a one (1) year period for a fee
of $1,500 per day, the remaining Unreleased Shares shall be released from the
Company's Repurchase Option on the last day of the one year period, or (ii) such
remaining Unreleased Shares shall otherwise be released from the Company's
Repurchase Option on December 31, 2008. The Company and the Holder shall
mutually use their best efforts to schedule the date or dates on which the
Holder will provide the requested consulting services so as not to prevent the
Holder from being gainfully employed by a subsequent employer, and shall be
arranged so as to reasonably accommodate Holder's vacation or other personal
affairs.
(b) Definitions of Cause and Good Reason. For purposes of this
Exhibit B, the terms "CAUSE" and "GOOD REASON" shall have the meanings given to
such terms in that certain Amended and Restated Executive Employment Agreement
dated as of January 10, 2005, by and between Holder, the Company and Cricket
Communications, Inc., as amended from time to time (the "EMPLOYMENT AGREEMENT").
(c) Condition to Release of Shares. The release of Unreleased Shares
from the Company's Repurchase Option pursuant to this paragraph 4 shall be
conditioned on the Holder's delivery to the Company of an executed General
Release in accordance with Section 5.9 of the Employment Agreement and the
Holder's non-revocation of such General Release during the time period for such
revocation set forth therein.
5. Limit on Release of Shares. In no event will more than 100% of the
Unreleased Shares be released from the Company's Repurchase Option pursuant to
the provisions of this Exhibit B.
6. Confidentiality. Holder agrees to keep the EBITDA and Net Adds
achievement levels set forth in this Exhibit B confidential and not to disclose
such thresholds to any third party without the prior written consent of the
Company.
-6-
ATTACHMENT B-1
METHODOLOGY FOR LINEAR INTERPOLATION
2005 Net Adds
------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold 10% 12.5% 15%
EBITDA [***]
(in thousands) --------- ------ ------ ------
Target 12.5% 20% 22.5%
[***]
--------- ------ ------ ------
Maximum 15% 22.5% 30%
[***]
The EBITDA amounts in the following examples are shown in thousands.
Example 1:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: The net adds performance falls exactly on a specified payout
range, but performance in EBITDA falls somewhere in-between the schedule.
SOLUTION: Start with the net adds payout column and use straight-line
interpolation to determine the final payout.
PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12.5% for
threshold EBITDA performance and 20% for target EBITDA performance. Since EBITDA
performance ([***]) is halfway between THRESHOLD and TARGET performance
([***] and [***]), the actual payout should be halfway between the scheduled
payouts of 12.5% and 20%. Thus the payout is (1/2)*(20%-12.5%)+12.5%
- Payout = 16.25%
Example 2:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
*** Certain information on this page has been omitted and field separately with
the Confindential treatment has been requested with respect to the omitted
portions.
-7-
PROBLEM: Neither the net adds performance nor the EBITDA performance fall
exactly on a specified payout.
SOLUTION: Use straight line interpolation for both measures. Starting with
either measure will yield the same result.
PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between
THRESHOLD and TARGET performance ([***] and [***]), so we can interpolate an
EBITDA-based payout schedule by finding the halfway point at each defined level
of Net Adds. At [***] net adds, the EBITDA-based payout would be halfway between
10% and 12.5%. At [***] net adds, the EBITDA-based payout would be halfway
between 12.5% and 20%. At [***] net adds, the EBITDA-based payout would be
halfway between 15% and 22.5%. Thus the interpolated, EBITDA-based payout
schedule looks like this:
2005 Net Adds
--------------------------------------------
Threshold Target Maximum
[***] [***] [***]
------------ ------------ ------------
2005 Actual 11.25% 16.25% 18.75%
EBITDA [***] (midpoint of (midpoint of (midpoint of
(midpoint of [***] 10% and 12.5% and 15% and
and [***]) 12.5%) 20%) 22.5%)
To determine the actual payout given this range, we interpolate a payout
at [***] net adds based on the scheduled payouts at [***] and [***]. First we
determine where [***] lies in the range of [***] to [***]. The length of the
range is [***] - [***] = [***] net adds. [***] is [***] above the range minimum
([***] - [***] = [***]). So the actual performance of [***] net adds falls 1/3
of the way between [***] net adds (target) and [***] net adds (maximum). This
means the actual payout must fall 1/3 of the way between 16.25% and 18.75%. Thus
the payout is (1/3)*(18.75%-16.25%)+16.25%
- Payout = 17.08%
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-8-
EXHIBIT C
TO RESTRICTED STOCK AWARD GRANT NOTICE
CONSENT OF SPOUSE
I, [________________________], spouse of Xxxxxxx X. Xxxxxxxxx, have read
and approve the foregoing Agreement. In consideration of issuing to my spouse
the shares of the common stock of Leap Wireless International, Inc. set forth in
the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to
the exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any shares of the common stock of Leap Wireless International, Inc. issued
pursuant thereto under the community property laws or similar laws relating to
marital property in effect in the state of our residence as of the date of the
signing of the foregoing Agreement.
Dated: [_______________], 2005
__________________________
Signature of Spouse
-1-
EXHIBIT D
TO RESTRICTED STOCK AWARD GRANT NOTICE
STOCK ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, Xxxxxxx X. Xxxxxxxxx, hereby sells,
assigns and transfers unto LEAP WIRELESS INTERNATIONAL, INC., a Delaware
corporation, [_______] shares of the Common Stock of LEAP WIRELESS
INTERNATIONAL, INC., a Delaware corporation, standing in its name of the books
of said corporation represented by Certificate No. [____] herewith and do hereby
irrevocably constitute and appoint [____________________] to transfer the said
stock on the books of the within named corporation with full power of
substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Award Agreement between LEAP WIRELESS INTERNATIONAL, INC. and the
undersigned dated [___________], 2005.
Dated: _______________, ____
_________________________________
Xxxxxxx X. Xxxxxxxxx
INSTRUCTIONS: Please do not fill in the blanks other than the signature
line. The purpose of this assignment is to enable the Company to exercise its
"Repurchase Option," as set forth in the Restricted Stock Award Agreement,
without requiring additional signatures on the part of Holder.
-1-
EXHIBIT E
TO RESTRICTED STOCK AWARD GRANT NOTICE
JOINT ESCROW INSTRUCTIONS
________________, 2005
Secretary
Leap Wireless International, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
As escrow agent (the "ESCROW AGENT") for both Leap Wireless International,
Inc., a Delaware corporation (the "COMPANY"), and the undersigned recipient of
stock of the Company (the "HOLDER"), you are hereby authorized and directed to
hold in escrow the documents delivered to you pursuant to the terms of that
certain Restricted Stock Award Agreement ("AGREEMENT") between the Company and
the undersigned (the "Escrow"), including the stock certificate and the
Assignment in Blank, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "COMPANY") exercises the Company's
Repurchase Option as defined in the Agreement), the Company shall give to the
Holder and you a written notice specifying the number of shares of stock to be
purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. The Holder and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. As of the date of closing of the repurchase indicated in such notice,
you are directed (a) to date the stock assignments necessary for the repurchase
and transfer in question, (b) to fill in the number of shares being repurchased
and transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be repurchased and transferred, to the Company
or its assignee.
3. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement. Holder
does hereby irrevocably constitute and appoint you as Holder's attorney-in-fact
and agent for the term of this escrow to execute with respect to such securities
all documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated, including but not limited to the
filing with any applicable state blue sky authority of any required applications
for consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph and the Agreement, Holder shall exercise all rights
and privileges of a stockholder of the Company while the stock is held by you.
-1-
4. Upon written request of Holder, but no more than once per calendar
month, unless the Company's Repurchase Option has been exercised, you will
deliver to Holder a certificate or certificates representing so many shares of
stock as are not then subject to the Repurchase Option. Within one hundred
twenty (120) days after any voluntary or involuntary termination of Holder's
services to the Company for any or no reason, you will deliver to Holder a
certificate or certificates representing the aggregate number of shares held or
issued pursuant to the Agreement and not repurchased pursuant to the Repurchase
Option set forth in Section 3.1 of the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Holder, you
shall deliver all of the same to the Holder and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Holder while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the expiration of any rights under any
applicable state, federal or local statute of limitations or similar statute or
regulation with respect to these Joint Escrow Instructions or any documents
deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor. The Company will reimburse you
for any reasonable attorneys' fees with respect thereto.
-2-
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to the Holder or you shall be addressed to
the address given beneath Holder's and your signatures on the signature page to
this Agreement. By a notice given pursuant to this Section 15, any party may
hereafter designate a different address for notices to be given to that party.
Any notice, which is required to be given to Holder, shall, if the Holder is
then deceased, be given to Holder's designated beneficiary, if any by written
notice under this Section 15. Any notice shall be deemed duly given when sent
via email or when sent by certified mail (return receipt requested) and
deposited (with postage prepaid) in a post office or branch post office
regularly obtained by the United States Postal Service.
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without
regard to conflicts of law thereof.
(Signature Page Follows)
-3-
IN WITNESS WHEREOF, the parties have executed these Joint Escrow
Instructions as of the date first written above.
Very truly yours,
LEAP WIRELESS INTERNATIONAL,
INC.
By:_________________________________
Name:
Title:
Address: 00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
HOLDER:
_____________________________________
Xxxxxxx X. Xxxxxxxxx
Address _____________________________
_____________________________
ESCROW AGENT:
By: _________________________
Xxxxxx Xxxxxx,
Secretary, Leap Wireless International, Inc.
Address: 00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
-4-
EXHIBIT F
TO RESTRICTED STOCK AWARD GRANT NOTICE
FORM OF 83(B) ELECTION AND INSTRUCTIONS
These instructions are provided to assist you if you choose to make an
election under Section 83(b) of the Internal Revenue Code, as amended, with
respect to the shares of common stock, par value $0.0001, of Leap Wireless
International, Inc. transferred to you. PLEASE CONSULT WITH YOUR PERSONAL TAX
ADVISOR AS TO WHETHER AN ELECTION OF THIS NATURE WILL BE IN YOUR BEST INTERESTS
IN LIGHT OF YOUR PERSONAL TAX SITUATION.
The executed original of the Section 83(b) election must be filed with the
Internal Revenue Service not later than 30 days after the date the shares were
transferred to you. PLEASE NOTE: There is no remedy for failure to file on time.
The steps outlined below should be followed to ensure the election is mailed and
filed correctly and in a timely manner. ALSO, PLEASE NOTE: If you make the
Section 83(b) election, the election is irrevocable.
1. Complete Section 83(b) election form (attached as Attachment 1) and make
four (4) copies of the signed election form. (Your spouse, if any, should
sign Section 83(b) election form as well).
2. Prepare the cover letter to the Internal Revenue Service (sample letter
attached as Attachment 2).
3. Send the cover letter with the originally executed Section 83(b) election
form and one (1) copy via certified mail, return receipt requested to the
Internal Revenue Service at the address of the Internal Revenue Service
where you file your personal tax returns. We suggest that you have the
package date-stamped at the post office. The post office will provide you
with a white certified receipt that includes a dated postmark. Enclose a
self-addressed, stamped envelope so that the Internal Revenue Service may
return a date-stamped copy to you. However, your postmarked receipt is
your proof of having timely filed the Section 83(b) election if you do not
receive confirmation from the Internal Revenue Service.
4. One (1) copy must be sent to Leap Wireless International, Inc. for its
records and one (1) copy must be attached to your federal income tax
return for the applicable calendar year.
5. Retain the Internal Revenue Service file stamped copy (when returned) for
your records.
Please consult your personal tax advisor for the address of the office of
the Internal Revenue Service to which you should mail your election form.
-1-
ATTACHMENT 1 TO EXHIBIT F
ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B)
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of shares (the "Shares") of Common Stock,
par value $0.0001 per share, of Leap Wireless International, Inc., a Delaware
corporation (the "Company").
1. The name, address and taxpayer identification number of the undersigned
taxpayer are:
Xxxxxxx X. Xxxxxxxxx
____________________________
____________________________
SSN:
The name, address and taxpayer identification number of the Taxpayer's
spouse are (complete if applicable):
________________________
________________________
________________________
SSN:
2. Description of the property with respect to which the election is being
made:
__________________(_____) shares of Common Stock, par value $0.0001 per
share, of the Company.
3. The date on which the property was transferred was _________, 200_. The
taxable year to which this election relates is calendar year 200_.
4. Nature of restrictions to which the property is subject:
The Shares are subject to repurchase at their original purchase price if
unvested as of the date of termination of employment, directorship or
consultancy with the Company.
5. The fair market value at the time of transfer (determined without regard
to any lapse restrictions, as defined in Treasury Regulation Section
1.83-3(a)) of the Shares was $___________ per Share.
6. The amount paid by the taxpayer for Shares was $0.0001 per share.
7. A copy of this statement has been furnished to the Company.
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Dated: _____________, 200_. Taxpayer Signature ________________________
The undersigned spouse of Taxpayer joins in this election. (Complete if
applicable).
Dated: ______________, 200_. Spouse's Signature ________________________
Signature(s) Notarized by:
______________________________
______________________________
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ATTACHMENT 2 TO EXHIBIT F
SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE
__________________, 200_
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Internal Revenue Service
[Address where taxpayer files returns]
Re: Election under Section 83(b) of the Internal Revenue Code of 1986
Taxpayer:_________________________________________________________________
Taxpayer's Social Security Number:________________________________________
Taxpayer's Spouse:________________________________________________________
Taxpayer's Spouse's Social Security Number:_______________________________
Ladies and Gentlemen:
Enclosed please find an original and one copy of an Election under Section
83(b) of the Internal Revenue Code of 1986, as amended, being made by the
taxpayer referenced above. Please acknowledge receipt of the enclosed materials
by stamping the enclosed copy of the Election and returning it to me in the
self-addressed stamped envelope provided herewith.
Very truly yours,
_______________________________________
Xxxxxxx X. Xxxxxxxxx
Enclosures
cc: Leap Wireless International, Inc.
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ATTACHMENT A-5
LEAP WIRELESS INTERNATIONAL, INC.
2004 STOCK OPTION, RESTRICTED STOCK
AND DEFERRED STOCK UNIT PLAN
STOCK OPTION GRANT NOTICE AND NON-QUALIFIED
STOCK OPTION AGREEMENT
Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004
Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN"), hereby
grants to the holder listed below ("HOLDER"), an option to purchase the number
of shares of the Company's Common Stock set forth below (the "OPTION"). This
Option is subject to all of the terms and conditions as set forth herein and in
the Non-Qualified Stock Option Agreement attached hereto as Exhibit A (the
"STOCK OPTION AGREEMENT") and the Plan, each of which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Stock Option
Agreement.
HOLDER: Xxxxxxx X. Xxxxxxxxx
XXXXX DATE: _________________, 2005
EXERCISE PRICE PER SHARE: $___________ per share
TOTAL NUMBER OF SHARES
SUBJECT TO THE OPTION: [______]
EXPIRATION DATE: __________________, 2015
TYPE OF OPTION: This Option is a Non-Qualified Stock Option and is
not an incentive stock option within the meaning of
Section 422 of the Code.
VESTING SCHEDULE: The shares of Common Stock subject to the Option
(rounded down to the next whole number of shares)
shall vest and become exercisable on the dates and
in the percentages indicated in Exhibit B to this
Grant Notice.
By his or her signature and the Company's signature below, Holder agrees
to be bound by the terms and conditions of the Plan, the Stock Option Agreement
and this Grant Notice. Holder has reviewed the Stock Option Agreement, the Plan
and this Grant Notice in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Grant Notice and fully understands all
provisions of this Grant Notice, the Stock Option Agreement and the Plan. Holder
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator of the Plan upon any questions arising
under the Plan or the Option.
LEAP WIRELESS INTERNATIONAL, INC. HOLDER:
By:__________________________________ By:____________________________________
Print Name:__________________________ Print Name: Xxxxxxx X. Xxxxxxxxx
Title:_______________________________ Title:_________________________________
Address: 00000 Xxxxxxx Xxxxxx Xxxxx Address:_______________________________
Xxx Xxxxx, Xxxxxxxxxx 00000 _______________________________
EXHIBIT A
TO STOCK OPTION GRANT NOTICE
NON-QUALIFIED STOCK OPTION AGREEMENT
Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this
Non-Qualified Stock Option Agreement (this "AGREEMENT") is attached, Leap
Wireless International, Inc. (the "COMPANY") has granted to Holder an option
under the Company's 2004 Stock Option, Restricted Stock and Deferred Stock Unit
Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in
the Grant Notice.
ARTICLE I
GENERAL
1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.
1.2 Incorporation of Terms of Plan. The Option is subject to the terms and
conditions of the Plan which are incorporated herein by reference.
ARTICLE II
GRANT OF OPTION
2.1 Grant of Option. In consideration of Holder's past and/or continued
employment with or service to the Company or its Subsidiaries and for other good
and valuable consideration, effective as of the Grant Date set forth in the
Grant Notice (the "GRANT DATE"), the Company irrevocably grants to Holder the
Option to purchase any part or all of an aggregate of the number of shares of
Common Stock set forth in the Grant Notice, upon the terms and conditions set
forth in the Plan and this Agreement. The Option shall be a Non-Qualified Stock
Option and shall not be an incentive stock option within the meaning of Section
422 of the Code.
2.2 Purchase Price. The purchase price of the shares of Common Stock
subject to the Option shall be as set forth in the Grant Notice, without
commission or other charge.
ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability.
(a) Subject to Sections 3.3 and 5.8, the Option shall become vested
and exercisable in such amounts and at such times as are set forth in Exhibit B
to the Grant Notice.
(b) No portion of the Option which has not become vested and
exercisable at Termination of Employment, Termination of Directorship or
Termination of Consultancy, as
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applicable, shall thereafter become vested and exercisable, except as may be
otherwise provided by the Administrator or as set forth in a written agreement
between the Company and Holder.
3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in Exhibit B to the Grant Notice are cumulative. Each
such installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in Exhibit B to the Grant Notice shall remain vested and
exercisable until it becomes unexercisable under Section 3.3.
3.3 Expiration of Option.
(a) The Option may not be exercised to any extent by anyone after
the first to occur of the following events:
(i) The expiration of ten (10) years from the Grant Date; or
(ii) The expiration of ninety (90) days following the date of
Holder's Termination of Employment, Termination of Directorship or Termination
of Consultancy, as applicable (or, if later, with respect to any shares of
Common Stock that become exercisable pursuant to subparagraph 2(k) or
subparagraph 4(a) of Exhibit B hereto, ninety (90) days following the date such
shares become exercisable), unless such termination occurs by reason of Holder's
death or Disability (as defined below) or the Holder's termination by the
Company for Cause (as defined in Exhibit B hereto); or
(iii) The expiration of one (1) year following the date of
Holder's Termination of Employment, Termination of Directorship or Termination
of Consultancy, as applicable, by reason of Holder's death or Disability; or
(iv) The date of Termination of Employment, Termination of
Directorship or Termination of Consultancy for Cause (as defined in Exhibit B
hereto).
(b) For purposes of this Agreement, "Disability" means permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
ARTICLE IV
EXERCISE OF OPTION
4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of Holder, only Holder may exercise the Option or
any portion thereof. After the death of Holder, any exercisable portion of the
Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by Holder's personal representative or by any person
empowered to do so under the deceased Holder's will or under the then applicable
laws of descent and distribution.
4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.
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4.3 Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Secretary of the Company or the
Secretary's office of all of the following prior to the time when the Option or
such portion thereof becomes unexercisable under Section 3.3:
(a) An Exercise Notice in writing signed by Holder or any other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit C to the Grant Notice (or such
other form as is prescribed by the Administrator); and
(b) Subject to Section 6.2(d) of the Plan:
(i) Full payment (in cash or by check) for the shares with
respect to which the Option or portion thereof is exercised; or
(ii) With the consent of the Administrator, such payment may
be made, in whole or in part, through the delivery of shares of Common Stock
which have been owned by Holder for at least six (6) months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof; or
(iii) To the extent permitted under applicable laws, through
the delivery of a notice that Holder has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided, that payment of such proceeds is made to the Company upon
settlement of such sale; or
(iv) With the consent of the Administrator, any combination of
the consideration provided in the foregoing paragraphs (i), (ii) and (iii); and
(c) A bona fide written representation and agreement, in such form
as is prescribed by the Administrator, signed by Holder or the other person then
entitled to exercise such Option or portion thereof, stating that the shares of
Common Stock are being acquired for Holder's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that Holder or other person then entitled
to exercise such Option or portion thereof will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above. The
Administrator may, in its absolute discretion, take whatever additional actions
it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Administrator may require an opinion of
counsel acceptable to it to the effect that any subsequent transfer of shares
acquired on an Option exercise does not violate the Securities Act,
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and may issue stop-transfer orders covering such shares. Share certificates
evidencing Common Stock issued on exercise of the Option shall bear an
appropriate legend referring to the provisions of this subsection (c) and the
agreements herein. The written representation and agreement referred to in the
first sentence of this subsection (c) shall, however, not be required if the
shares to be issued pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in respect of such
shares; and
(d) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by Holder to pay for
such shares under Section 4.3(b), subject to Section 10.4 of the Plan; and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than Holder, appropriate
proof of the right of such person or persons to exercise the Option.
4.4 Conditions to Issuance of Stock Certificates. The shares of Common
Stock deliverable upon the exercise of the Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any shares
of Common Stock purchased upon the exercise of the Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such Common Stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may from time to time establish for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by the Holder to pay
for such shares under Section 4.3(b), subject to Section 10.4 of the Plan.
4.5 Rights as Stockholder. Holder of the Option shall not be, nor have any
of the rights or privileges of, a stockholder of the Company in respect of any
shares purchasable upon the exercise of any part of the Option unless and until
such shares shall have been issued by the Company to such holder.
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ARTICLE V
OTHER PROVISIONS
5.1 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Holder, the Company and all other interested persons.
No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.
5.2 Option Not Transferable.
(a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until the shares underlying the Option have been issued, and all
restrictions applicable to such shares have lapsed. Neither the Option nor any
interest or right therein shall be liable for the debts, contracts or
engagements of Holder or his or her successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
(b) Notwithstanding any other provision in this Agreement, with the
consent of the Administrator and to the extent the Option is not intended to
qualify as an Incentive Stock Option, the Option may be transferred to one or
more Permitted Transferees, subject to the terms and conditions set forth in
Section 10.1 of the Plan.
(c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of Holder, only Holder may exercise the
Option or any portion thereof unless it has been disposed of pursuant to a DRO.
After the death of Holder, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 3.3, be exercised
by Holder's personal representative or by any person empowered to do so under
the deceased Holder's will or under the then applicable laws of descent and
distribution.
5.3 Restrictive Legends and Stop-Transfer Orders.
(a) The share certificate or certificates evidencing the shares of
Common Stock purchased hereunder shall be endorsed with any legends that may be
required by state or federal securities laws.
(b) Holder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer
-5-
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) The Company shall not be required: (i) to transfer on its books
any shares of Common Stock that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, or (ii) to treat as owner
of such shares of Common Stock or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such shares shall have been so
transferred.
5.4 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this
Agreement.
5.5 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company, and any notice to be given to Holder shall be addressed to Holder at
the address given beneath Holder's signature on the Grant Notice. By a notice
given pursuant to this Section 5.5, either party may hereafter designate a
different address for notices to be given to that party. Any notice which is
required to be given to Holder shall, if Holder is then deceased, be given to
the person entitled to exercise his or her Option pursuant to Section 4.1 by
written notice under this Section 5.5. Any notice shall be deemed duly given
when sent via email or when sent by certified mail (return receipt requested)
and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
5.6 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
5.7 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware without regard
to conflicts of laws thereof. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
5.8 Conformity to Securities Laws. Holder acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
5.9 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Holder or such other person as may
be permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.
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5.10 No Employment Rights. If Holder is an Employee, nothing in the Plan
or this Agreement shall confer upon Holder any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are expressly reserved, to
discharge Holder at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in a written agreement between
the Company and Holder.
5.11 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Holder and his or her heirs, executors, administrators, successors and
assigns.
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EXHIBIT B
TO STOCK OPTION GRANT NOTICE
VESTING AND EXERCISABILITY PROVISIONS
Capitalized terms used in this Exhibit B and not defined below shall have
the meanings given them in the Grant Notice and the Stock Option Agreement.
1. Time-Based Vesting. Subject to any accelerated vesting and
exercisability pursuant to paragraphs 2, 3 and 4 below, the shares of Common
Stock subject to the Option shall vest and become exercisable in their entirety
on December 31, 2008, if Holder is an Employee, Director or Consultant on that
date.
2. Performance-Based Accelerated Vesting. If the Company's EBITDA (as
defined below) and the Company's Net Adds (as defined below) both equal or
exceed the respective Achievement Threshold amounts for 2005 as set forth in
paragraph (a) below and/or both equal or exceed the Achievement Threshold
amounts for 2006 as set forth in paragraph (b) below and/or both equal or exceed
the Achievement Threshold amounts for 2007 as set forth in paragraph (c) below,
then a certain percentage of the number of shares of Common Stock subject to the
Option shall vest and become exercisable in accordance with the provisions of
paragraphs (a), (b) and (c) below; provided, however, that no shares subject to
the Option shall vest and become exercisable pursuant to paragraphs (a), (b) or
(c) below, if either the Company's EBITDA or Net Adds do not at least equal the
Achievement Threshold amount for the applicable year.
(a) Fiscal Year 2005. If the Company's EBITDA (as defined below) and
Net Adds (as defined below) for Fiscal Year 2005 equal or exceed the EBITDA and
Net Adds Achievement Thresholds (as set forth below), then the Option shall vest
and become exercisable as to that number of shares of Common Stock equal to the
number obtained by multiplying the percentage determined in accordance with the
following table, by the total number of shares of Common Stock subject to the
Option (as set forth in the Grant Notice).
2005 PERFORMANCE-BASED VESTING SCHEDULE
2005 Net Adds
------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold 10% 12.5% 15%
[***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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EBITDA Target 12.5% 20% 22.5%
(in thousands) [***]
------- ---- ---- ----
Maximum 15% 22.5% 30%
[***]
The percentage for determining the number of shares of Common Stock that
shall vest and become exercisable if performance is between the Achievement
Threshold amount and the Achievement Target amount or between the Achievement
Target amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(b) Fiscal Year 2006. If the Company's EBITDA and Net Adds for
Fiscal Year 2006 equal or exceed the EBITDA and Net Adds Achievement Thresholds
(as set forth below), then the Option shall vest and become exercisable as to
that number of shares of Common Stock equal to the number obtained by
multiplying the percentage determined in accordance with the following table, by
the total number of shares of Common Stock subject to the Option (as set forth
in the Grant Notice).
2006 Net Adds
------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2006 Threshold 10% 12.5% 15%
[***]
EBITDA --------- ---- ---- ----
(in thousands) Target 12.5% 20% 22.5%
[***]
--------- ---- ---- ----
Maximum 15% 22.5% 30%
[***]
The percentage for determining the number of shares of Common Stock that
shall vest and become exercisable if performance is between the Achievement
Threshold amount and the Achievement Target amount or between the Achievement
Target amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(c) Fiscal Year 2007. If the Company's EBITDA and Net Adds for
Fiscal Year 2007 equal or exceed the EBITDA and Net Adds Achievement Thresholds
(as set forth
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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below), then the Option shall vest and become exercisable as to that number of
shares of Common Stock equal to the number obtained by multiplying the
percentage determined in accordance with the following table, by the total
number of shares of Common Stock subject to the Option (as set forth in the
Grant Notice).
2007 Net Adds
------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2007 Threshold 10% 12.5% 15%
[***]
EBITDA --------- ---- ---- ----
(in thousands) Target 12.5% 20% 22.5%
[***]
--------- ---- ---- ----
Maximum 15% 22.5% 30%
[***]
The percentage for determining the number of shares of Common Stock that
shall vest and become exercisable if performance is between the Achievement
Threshold amount and the Achievement Target amount or between the Achievement
Target amount and the Achievement Maximum amount shall be determined by linear
interpolation between the applicable Achievement amounts for each measure in
accordance with the method described in Attachment B-1.
(d) Definition of EBITDA. For purposes of this Exhibit B, the term
"EBITDA" for a Fiscal Year means the Company's consolidated net income or loss
for such period before extraordinary items and before the cumulative effect of
any change in accounting principles plus (a) the following to the extent
deducted in calculating such consolidated net income or loss: (i) consolidated
interest expense, (ii) all income tax expense deducted in arriving at such
consolidated net income or loss, (iii) depreciation and amortization expense,
(iv) non-cash impairment of assets (tangible and intangible) and related
non-cash charges, (v) charges and expenses related to stock based compensation
awards, (vi) net non-cash reorganization expenses and charges, (vii) non-cash
dividends or other distributions made with respect to qualified preferred stock
as contemplated by the Credit Agreement negotiated among the Company, Cricket
Communications Inc., the administrative agent identified therein and others
posted to IntraLinks on December 23, 2004 and (viii) other non-recurring
expenses reducing such consolidated net income or loss which do not represent a
cash item in such period or any future period (including losses attributable to
the sale of assets other than in the ordinary course of business) and minus (b)
the following to the extent included in calculating such consolidated net income
or loss: (i) income tax credits for such period, (ii) all gains arising in
relation to the sale of assets other than in the ordinary course of business and
(iii) all non-cash items increasing such consolidated net income or loss for
such period.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(e) Definition of Net Adds. For purposes of this Exhibit B, the term
"NET ADDS" means, with respect to any Fiscal Year, the Company's "end of period
customers" on the last day of such Fiscal Year less "end of period customers" on
the last day of the preceding Fiscal Year. If the Company adopts a pre-paid card
based service offering, the Administrator shall, in its discretion, equitably
adjust the Net Adds Achievement Levels set forth in paragraphs (a), (b) and (c)
to reflect the Company's changed scope of operations.
(f) Adjustments for Future Changes in the Company's Business. The
EBITDA Achievement Levels and Net Adds Achievement Levels set forth in
paragraphs (a), (b) and (c) are designed to be measured against the Company's
performance in its existing thirty-nine (39) markets. If the Company commences
operations in any new markets, or ceases to operate in any existing market, the
Administrator shall, in its discretion, equitably adjust the EBITDA Achievement
Levels and/or the Net Adds Achievement Levels to reflect the Company's changed
scope of operations.
(g) Accelerated Vesting Cumulative; Continued Service Condition. The
vesting and exercisability of the Option as to shares of Common Stock under
paragraphs 2(a), 2(b) and 2(c) shall be cumulative. Except as otherwise provided
in subparagraph 2(k), the Option shall vest and become exercisable as to shares
of Common Stock pursuant to this paragraph 2 if Holder is an Employee, Director
or Consultant of the Company or any of its Subsidiaries on the applicable
Performance Vesting Effective Date.
(h) Definition of Performance Vesting Effective Date. For purposes
of this Exhibit B, the term "PERFORMANCE VESTING EFFECTIVE DATE" means, with
respect to vesting and exercisability to occur upon the attainment of EBITDA and
Net Adds Achievement Levels for 2005, 2006 or 2007, as applicable, the date of
the public announcement by the Company of EBITDA or Net Adds, as applicable, for
the relevant Fiscal Year, but in no event shall the Company make such public
announcement later than the date on which the Company files its Form 10-K for
the relevant Fiscal Year.
(i) Definition of Fiscal Year. For purposes of this Exhibit B, the
term "FISCAL YEAR" means the Company's fiscal year ending December 31.
(j) Termination of Performance-Based Vesting. Notwithstanding the
foregoing provisions of this paragraph 2, the Option shall not vest and become
exercisable as to any additional shares of Common Stock pursuant to
performance-based accelerated vesting and exercisability under this paragraph 2
on or after the date of the occurrence of a Change in Control.
(k) Minimum Vesting For Fiscal Year 2006. Notwithstanding the other
provisions of this paragraph 2 (other than subparagraph 2(j)), if Holder is an
Employee, Director or Consultant on December 31, 2005, then the minimum
additional number of shares of Common Stock that shall vest and become
exercisable under this paragraph 2 on the Performance Vesting Effective Date for
Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal
Year 2006) shall equal twenty percent (20%) of the total number of shares of
Common Stock subject to the Option (as set forth in the Grant Notice).
-4-
3. Change in Control Accelerated Vesting.
(a) Change in Control prior to January 1, 2006. In the event of a
Change in Control prior to January 1, 2006, (i) if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, the Option
shall then vest and become exercisable as to a number of shares of Common Stock
equal to fifty percent (50%) of the number of then unvested shares of Common
Stock subject to the Option and (ii) if Holder is an Employee, Director or
Consultant on the first anniversary of the date of the occurrence of such Change
in Control, the Option shall then vest and become exercisable as to an
additional number of shares of Common Stock equal to fifty percent (50%) of the
number of then unvested shares of Common Stock subject to the Option, and (iii)
if Holder is an Employee, Director or Consultant on the second anniversary of
the date of the occurrence of such Change in Control, the Option shall then vest
and become exercisable as to the remaining unvested shares of Common Stock
subject to the Option.
(b) Change in Control during 2006. In the event of a Change in
Control during 2006, (i) if Holder is an Employee, Director or Consultant
immediately prior to such Change in Control, the Option shall then vest and
become exercisable as to a number of shares of Common Stock equal to
seventy-five percent (75%) of the number of then unvested shares of Common Stock
subject to the Option, and (ii) if Holder is an Employee, Director or Consultant
on the first anniversary of the date of the occurrence of such Change in
Control, the Option shall then vest and become exercisable as to the remaining
unvested shares of Common Stock subject to the Option.
(c) Change in Control on or after January 1, 2007. In the event of a
Change in Control on or after January 1, 2007, if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, the Option
shall then vest and become exercisable as to a number of shares of Common Stock
equal to eighty-five percent (85%) of the number of then unvested shares of
Common Stock subject to the Option, and (ii) if Holder is an Employee, Director
or Consultant on the first anniversary of the date of the occurrence of such
Change in Control, the Option shall then vest and become exercisable as to any
then remaining unvested shares of Common Stock subject to the Option.
(d) Termination of Employment in the Event of a Change in Control.
In the event of a Change in Control, if the Holder has a Termination of
Employment by reason of discharge by the Company other than for Cause (as
defined below), or by reason of resignation by Holder for Good Reason (as
defined below), during the period commencing ninety (90) days prior to such
Change in Control and ending twelve (12) months after such Change in Control,
then (i) if the Change in Control occurs prior to January 1, 2006, twenty-five
percent (25)% of the number of then unvested shares of Common Stock subject to
the Option shall vest and become exercisable and (ii) if the change in Control
occurs on or after January 1, 2006, the remaining unvested shares of Common
Stock subject to the Option shall vest and become exercisable on the date of
Holder's Termination of Employment (or, if later, immediately prior to the date
of the occurrence of such Change in Control).
4. Accelerated Vesting in the Event of Termination of Employment.
-5-
(a) Termination of Employment by the Company Other than for Cause or
by Holder for Good Reason After February 28, 2006. In the event of Holder's
Termination of Employment (without regard to any consulting services provided
pursuant to this paragraph (a)) by reason of discharge by the Company other than
for Cause, or by reason of resignation by the Holder for Good Reason after
February 28, 2006, (i) if the Holder, upon written request of the Company and
reasonable advance notice, agrees to provide, and does provide, consulting
services to the Company (or to the Parent at the direction of the Company, or
both) for up to five (5) days a month for up to a one (1) year period for a fee
of $1,500 per day, the remaining unvested shares of Common Stock subject to the
Option shall vest and become exercisable on the last day of the one (1) year
period, or (ii) such remaining unvested shares of Common Stock subject to the
Option shall otherwise vest and become exercisable on December 31, 2008. The
Company and the Holder shall mutually use their best efforts to schedule the
date or dates on which the Holder will provide the requested consulting services
so as not to prevent the Holder from being gainfully employed by a subsequent
employer, and shall be arranged so as to reasonably accommodate Holder's
vacation or other personal affairs.
(b) Definitions of Cause and Good Reason. For purposes of this
Exhibit B, the terms "CAUSE" and "GOOD REASON" shall have the meanings given to
such terms in that certain Amended and Restated Executive Employment Agreement
dated as of January 10, 2005, by and among Holder, the Company and Cricket
Communications, Inc., as amended from time to time (the "EMPLOYMENT AGREEMENT").
(c) Condition to Accelerated Vesting and Exercisability. The
accelerated vesting and exercisability of shares of Common Stock subject to the
Option pursuant to this paragraph 4 shall be conditioned on the Holder's
delivery to the Company of an executed General Release in accordance with
Section 5.9 of the Employment Agreement and the Holder's non-revocation of such
General Release during the time period for such revocation set forth therein.
5. Limit on Vesting. In no event will the Option become vested and/or
exercisable for more than 100% of the shares of Common Stock subject to the
Option pursuant to the provisions of this Exhibit B.
6. Confidentiality. Holder agrees to keep the EBITDA and Net Adds
achievement levels set forth in this Exhibit B confidential and not to disclose
such thresholds to any third party without the prior written consent of the
Company.
-6-
ATTACHMENT B-1
METHODOLOGY FOR LINEAR INTERPOLATION
2005 Net Adds
-------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2005 Threshold 10% 12.5% 15%
[***]
EBITDA --------- ---- ---- ----
(in thousands) Target 12.5% 20% 22.5%
[***]
--------- ---- ---- ----
Maximum 15% 22.5% 30%
[***]
The EBITDA amounts in the following examples are shown in thousands.
Example 1:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: The net adds performance falls exactly on a specified payout
range, but performance in EBITDA falls somewhere in-between the schedule.
SOLUTION: Start with the net adds payout column and use straight-line
interpolation to determine the final payout.
PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12.5% for
threshold EBITDA performance and 20% for target EBITDA performance. Since EBITDA
performance ([***]) is halfway between THRESHOLD and TARGET performance ([***]
and [***]), the actual payout should be halfway between the scheduled payouts of
12.5% and 20%. Thus the payout is (1/2)*(20%-12.5%)+12.5%
- Payout = 16.25%
Example 2:
- 2005 EBITDA: [***]
- 2005 Net Adds: [***]
PROBLEM: Neither the net adds performance nor the EBITDA performance fall
exactly on a specified payout.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-7-
SOLUTION: Use straight line interpolation for both measures. Starting with
either measure will yield the same result.
PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between
THRESHOLD and TARGET performance ([***] and [***]), so we can interpolate an
EBITDA-based payout schedule by finding the halfway point at each defined level
of Net Adds. At [***] net adds, the EBITDA-based payout would be halfway between
10% and 12.5%. At [***] net adds, the EBITDA-based payout would be halfway
between 12.5% and 20%. At [***] net adds, the EBITDA-based payout would be
halfway between 15% and 22.5%. Thus the interpolated, EBITDA-based payout
schedule looks like this:
2005 Net Adds
--------------------------------------------
Threshold Target Maximum
[***] [***] [***]
------------ ------------ ------------
2005 Actual 11.25% 16.25% 18.75%
EBITDA [***] (midpoint of (midpoint of (midpoint of
(midpoint of [***] 10%and 12.5% and 15% and
and [***]) 12.5%) 20%) 22.5%)
To determine the actual payout given this range, we interpolate a payout
at [***] net adds based on the scheduled payouts at [***] and [***]. First we
determine where [***] lies in the range of [***] to [***]. The length of the
range is [***] - [***] = [***] net adds. [***] is [***] above the range minimum
([***] - [***] = [***]). So the actual performance of [***] net adds falls 1/3
of the way between [***] net adds (target) and [***] net adds (maximum). This
means the actual payout must fall 1/3 of the way between 16.25% and 18.75%. Thus
the payout is (1/3)*(18.75%-16.25%)+16.25%
- Payout = 17.08%
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-8-
EXHIBIT C
TO STOCK OPTION GRANT NOTICE
FORM OF EXERCISE NOTICE
Effective as of today, , the undersigned ("HOLDER") hereby elects to
exercise Holder's option to purchase shares of the Common Stock (the "SHARES")
of Leap Wireless International, Inc. (the "COMPANY") under and pursuant to the
Leap Wireless International, Inc. 200__ Stock Option, Restricted Stock and
Deferred Stock Unit Plan (the "Plan") and the Stock Option Grant Notice and
Non-Qualified Stock Option Agreement dated , 2005, (the "OPTION AGREEMENT").
Capitalized terms used herein without definition shall have the meanings given
in the Option Agreement.
GRANT DATE: ___________________________ , 2005
NUMBER OF SHARES AS TO WHICH OPTION IS EXERCISED: _____________________________________
EXERCISE PRICE PER SHARE: $____________
TOTAL EXERCISE PRICE: $____________
CERTIFICATE TO BE ISSUED IN NAME OF: _____________________________________
CASH PAYMENT DELIVERED HEREWITH: $______________ (Representing the full
Exercise Price for the Shares, as well
as any applicable withholding tax)
TYPE OF OPTION: The Option is a Non-Qualified Stock Option and is not an
incentive stock option within the meaning of Section 422 of
the Code.
1. Representations of Holder. Holder acknowledges that Holder has
received, read and understood the Plan and the Option Agreement. Holder agrees
to abide by and be bound by their terms and conditions.
2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any' other
rights as a stockholder shall exist with respect to Shares subject to the
Option, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 10.3 of the Plan.
3. Tax Consultation. Holder understands that there are tax consequences to
Holder as a result of Holder's purchase or disposition of the Shares. Holder
represents that Holder has consulted with any tax consultants Holder deems
advisable in connection with the purchase or disposition of the Shares and that
Holder is not relying on the Company for any tax advice.
4. Entire Agreement. The Plan and Option Agreement are incorporated herein
by reference. This Exercise Notice, the Plan and the Option Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Holder with respect to the
subject matter hereof.
-1-
ACCEPTED BY: SUBMITTED BY
LEAP WIRELESS INTERNATIONAL, HOLDER:
INC.
By:_________________________________ By:_________________________________
Print Name:_________________________ Print Name: _________________________
Title:______________________________ Address:_____________________________
-2-
EXHIBIT B
GENERAL RELEASE
1. GENERAL RELEASE OF CLAIMS. In consideration of the benefits under
Paragraph 5 of the Amended and Restated Executive Employment Agreement (as
amended from time to time, the "Agreement"), dated as of January 10, 2005, by
and among Cricket Communications, Inc. ("the "Company"), Leap Wireless
International, Inc. (the "Parent"), and Xxxxxxx X. Xxxxxxxxx ("EXECUTIVE"),
EXECUTIVE does hereby for himself or herself and his or her spouse,
beneficiaries, heirs, successors and assigns, release, acquit and forever
discharge the Company, the Parent, their subsidiaries, and their respective
stockholders, officers, directors, any of the directors' affiliated entities,
managers, employees, representatives, related entities, successors and assigns,
and all persons acting by, through or in concert with them (the "Releasees") of
and from any and all claims, actions, charges, complaints, causes of action,
rights, demands, debts, damages, or accountings of whatever nature, known or
unknown, which EXECUTIVE may have against the Releasees based on any actions or
events which occurred prior to the date of this General Release, including, but
not limited to, those related to, or arising from, EXECUTIVE's employment with
the Company, or the termination thereof, any claims under Title VII of the Civil
Rights Act of 1964, as amended, the Federal Age Discrimination and Employment
Act, the Equal Pay Act, the Family and Medical Leave Act, the Americans with
Disabilities Act, the Civil Rights Act of 1866, 1871 and 1991, the California
Fair Employment and Housing Act, the California Occupational Safety and Health
Act, claims for unpaid wages and failure to pay wages under the California Labor
Code (collectively, "Claims"). This General Release shall not, however,
constitute a waiver of any of EXECUTIVE's rights under the Agreement or under
any outstanding stock option granted to EXECUTIVE, or under the terms of any
employee benefit plan of the Companies in which EXECUTIVE is a participant after
this General Release becomes effective and remains unrevoked for eight days.
2. RELEASE OF UNKNOWN CLAIMS. IN ADDITION, EXECUTIVE EXPRESSLY WAIVES ALL
RIGHTS UNDER SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA, WHICH
READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.
3. OLDER WORKER'S BENEFIT PROTECTION ACT. EXECUTIVE AGREES AND EXPRESSLY
ACKNOWLEDGES THAT THIS GENERAL RELEASE INCLUDES A WAIVER AND RELEASE OF ALL
CLAIMS WHICH EXECUTIVE HAS OR MAY HAVE UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. SECTION 621, ET SEQ. ("ADEA"). THE
FOLLOWING TERMS AND CONDITIONS APPLY TO AND ARE PART OF THE WAIVER AND RELEASE
OF ALL CLAIMS INCLUDING BUT NOT LIMITED TO THE ADEA CLAIMS UNDER THIS GENERAL
RELEASE:
-1-
1) That the Agreement and this General Release are written in a
manner calculated to be understood by EXECUTIVE.
2) The waiver and release of claims under the ADEA contained in this
General Release do not cover rights or claims that may arise after the date on
which EXECUTIVE signs this General Release.
3) The Agreement provides for consideration in addition to anything
of value to which EXECUTIVE is already entitled.
4) EXECUTIVE is advised to consult an attorney before signing this
General Release.
5) EXECUTIVE is afforded twenty-one (21) days (or, in the event that
the termination of EXECUTIVE's employment is in connection with an exit
incentive or other employment termination program, forty-five (45) days) after
EXECUTIVE is provided with this General Release to decide whether or not to sign
this General Release. If EXECUTIVE executes this General Release prior to the
expiration of such period, EXECUTIVE does so voluntarily and after having had
the opportunity to consult with an attorney.
6) In the event that the termination of EXECUTIVE's employment is in
connection with an exit incentive or other employment termination program,
EXECUTIVE is provided with written information, calculated to be understood by
the average individual eligible to participate, as to:
(i) any class, unit, or group of individuals covered by such
program, any eligibility factors for such program, and any time limits
applicable to such programs; and
(ii) the job titles and ages of all individuals eligible or
selected for the program, and the ages of all individuals in the same job
classification or organizational unit who are not eligible or not selected for
the program.
7) EXECUTIVE will have the right to revoke this General Release
within seven (7) days of signing this General Release. In the event this General
Release is revoked, this General Release will be null and void in its entirety,
and EXECUTIVE will not receive the benefits described in Section 5.3 of the
Agreement.
8) If EXECUTIVE wishes to revoke the General Release, EXECUTIVE
shall deliver written notice stating his intent to revoke this General Release
to the Company's General Counsel on or before the seventh (7th) day after the
date hereof.
4. NO ASSIGNMENT OF CLAIMS. EXECUTIVE represents and warrants to the
Releasees that there has been no assignment or other transfer of any interest in
any Claim which EXECUTIVE may have against the Releasees, or any of them, and
EXECUTIVE agrees to indemnify and hold the Releasees harmless from any
liability, claims, demands, damages, costs, expenses and attorneys' fees
incurred as a result of any person asserting any such assignment or transfer of
any rights or Claims under any such assignment or transfer from such party.
-2-
5. NO SUITS OR ACTIONS. EXECUTIVE agrees that if he or she hereafter
commences, joins in, or in any manner seeks relief through any suit arising out
of, based upon, or relating to any of the Claims released hereunder, or in any
manner asserts against the Releasees any of the Claims released hereunder, then
he or she will pay to the Releasees against whom such suit or Claim is asserted,
in addition to any other damages caused thereby, all attorneys' fees incurred by
such Releasees in defending or otherwise responding to said suit or Claim.
6. NO ADMISSION. EXECUTIVE further understands and agrees that neither the
payment of money nor the execution of this Release shall constitute or be
construed as an admission of any liability whatsoever by the Releasees.
EXECUTIVE
___________________________________
Date: _______________________ Xxxxxxx X. Xxxxxxxxx
-3-
