EXHIBIT 10.3
(FIVE-YEAR VESTING)
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.
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: ___________________
GRANT DATE: ___________________
PURCHASE PRICE PER SHARE: $_______ 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
amounts indicated in Exhibit B to this Grant
Notice.
By his or her signature and the Company's signature below, Xxxxxx 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
Xxxxxx 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: ____________________________
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
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
-2-
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 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 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 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.
ARTICLE IV
ESCROW OF SHARES
4.1 Escrow of Shares. To insure the availability for delivery of Xxxxxx'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
-3-
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 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. Xxxxxx 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.
-4-
5.2 Taxes. Xxxxxx has reviewed with Xxxxxx'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 Holder (and not the
Company) shall be responsible for Xxxxxx'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 XXXXXX'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
-5-
RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER,
A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Xxxxxx 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 Xxxxxx'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 Xxxxxx and by a duly authorized
representative of the Company.
-6-
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 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 Xxxxxx and his or her heirs, executors, administrators, successors and
assigns.
-7-
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 and 3 below, the Unreleased Shares shall be released from the
Company's Repurchase Option in their entirety on the fifth 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 2006 as set forth in
paragraph (a) below and/or both equal or exceed the respective Achievement
Threshold amounts for 2007 as set forth in paragraph (b) below and/or both equal
or exceed the respective Achievement Threshold amounts for 2008 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
paragraph (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 2006. If the Company's EBITDA and Net Adds 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%
[***]
*** 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.
B-1
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 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 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.
*** 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.
B-2
(c) Fiscal Year 2008. If the Company's EBITDA and Net Adds for
Fiscal Year 2008 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).
2008 Net Adds
---------------------------------
Threshold Target Maximum
[***] [***] [***]
--------- ------ -------
2008 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.
B-3
(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.
(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. 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
B-4
from the Company's Repurchase Option of Unreleased Shares to occur upon the
attainment of EBITDA and Net Adds Achievement Levels for 2006, 2007 or 2008, 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) 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, 2007. In the event of a
Change in Control prior to January 1, 2007, (i) if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then
one-third of the number of Unreleased Shares immediately prior to such Change in
Control 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 one-third
of the number of Unreleased Shares immediately prior to such Change in Control
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 on or after January 1, 2007 but prior to
January 1, 2008. In the event of a Change in Control on or after January 1, 2007
but prior to January 1, 2008, if Holder is an Employee, Director or Consultant
immediately prior to such Change in Control, then two-thirds of the number of
Unreleased Shares immediately prior to such Change in Control 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 remaining Unreleased Shares shall be released
from the Company's Repurchase Option.
(c) Change in Control on or after January 1, 2008. In the event of a
Change in Control on or after January 1, 2008, if Holder is an Employee,
Director or Consultant immediately prior to such Change in Control, then
eighty-five percent (85%) of the number of Unreleased Shares immediately prior
to such Change in Control 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
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, 2007, one-third of the Unreleased Shares
shall
B-5
be released form the Company's Repurchase Option and (ii) if the Change in
Control occurs on or after January 1, 2007, 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).
(e) 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 the Holder's employment agreement with the Company in effect on
the Grant Date and if the Holder does not have an employment agreement or
Holder's employment agreement does not include definitions of "Cause" and "Good
Reason", the terms shall be defined for purposes of this Exhibit B as follows:
(i) "CAUSE" shall mean termination of Holder's employment by
the Company (or the Parent, any Subsidiary or any successor thereof): (A)
upon Holder's willful failure substantially to perform Holder's duties
with the Company (or the Parent, any Subsidiary or any successor thereof)
(other than any such failure resulting from Xxxxxx's incapacity due to
physical or mental illness or any such actual or anticipated failure after
Xxxxxx's issuance of a Notice of Termination (as described below) for Good
Reason), as reasonably determined by the Company, or, if Xxxxxx is then
employed in a position as Senior Vice President of the Company or a more
senior officer of the Company, by the Board of Directors of the Company
after a written demand for substantial performance is delivered to Holder
by the Company, or the Board of Directors of the Company, as the case may
be, which demand specifically identifies the manner in which the Company
or the Board of Directors of the Company, as the case may be, believes
that Xxxxxx has not substantially performed such duties, provided that
Holder 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), (B) upon Xxxxxx's willful failure substantially to follow
and comply with the specific and lawful directives of the Company or, if
Holder is then employed in a position as a Senior Vice President of the
Company or a more senior officer of the Company, by the Board of Directors
of the Company (or the Board of Directors of the Parent) or duly adopted
policies of the Company which are consistent with Xxxxxx's duties with the
Company (or the Parent, any Subsidiary or any successor thereof), as
reasonably determined by the Company or, if Xxxxxx is then employed in a
position as a Senior Vice President of the Company or a more senior
officer of the Company, by the Board of Directors of the Company (other
than any such failure resulting from Xxxxxx's incapacity due to physical
or mental illness or any such actual or anticipated failure after Xxxxxx's
issuance of a Notice of Termination for Good Reason), after a written
demand for substantial performance is delivered to Holder by the Company
or the Board of Directors of the Company, as the case may be, which demand
specifically identifies the manner in which the Company or the Board of
Directors of the Company, as the case may be, believes that Holder has not
substantially performed such directives, provided that the Holder 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), (C) upon Xxxxxx's commission of an act of fraud or dishonesty
impacting or involving the Company (or the Parent, any Subsidiary or any
successor thereof), (D) upon Holder's willful engagement in illegal
conduct or gross
B-6
misconduct affecting the Company, or (E) upon the Holder's being convicted
of, or pleading nolo contendere to, the commission of a felony.
(ii) "GOOD REASON" shall mean, without Xxxxxx'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 a
Notice of Termination given in respect thereof: (A) the continuous
assignment to Holder of any duties materially inconsistent with Xxxxxx's
positions with the Company (or the Parent, any Subsidiary or any successor
thereof), a significant adverse alteration in the nature or status of
Holder's responsibilities or the conditions of Holder's employment with
the Company (or the Parent, any Subsidiary or any successor thereof), or
any other action that results in a material diminution in Holder's
position, authority, title, duties or responsibilities with the Company
(or the Parent, any Subsidiary or any successor thereof); (B) reduction of
Holder's annual base salary as in effect on the Grant Date or as the same
may be increased from time to time thereafter; (C) the relocation of the
Company's offices at which Holder is principally employed to a location
more than sixty (60) miles from such location; (D) the Company's failure
(or the failure of the Parent, any Subsidiary or any successor) to pay
Holder any portion of Holder's current compensation; (E) the Company's
failure (or the failure of the Parent, any Subsidiary or any successor) to
continue in effect any material compensation or benefit plan in which
Holder 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 Holder's participation therein
(or in such substitute or alternative plan) on the basis not materially
less favorable, both in terms of the amount of benefits provided and the
level of Holder's participation relative to other participants; (F) the
Company's failure (or the failure of the Parent, any Subsidiary or any
successor) to continue to provide Holder with benefits substantially
similar in the aggregate to those enjoyed by Holder under any of the
Company's life insurance, medical, health and accident, disability,
pension, retirement, or other benefit plans in which Holder or Holder's
eligible family members were participating immediately prior thereto, or
the taking of any action by the Company (or the Parent, any Subsidiary or
any successor thereof) which would directly or indirectly materially
reduce any of such benefits; or (G) the continuation or repetition, after
written notice of objection from Holder, of harassing or denigrating
treatment of Holder by the Company, the Parent, any Subsidiary or any
successor thereof inconsistent with Xxxxxx's position with the Company.
Xxxxxx's right to terminate employment with the Company or the Parent,
Subsidiary or any successor thereof pursuant to this subparagraph shall
not be affected by Xxxxxx's incapacity due to physical or mental illness.
Xxxxxx's continued employment with the Company or the Parent, Subsidiary
or any successor thereof shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason
thereunder.
(b) Condition to Release of Shares. The release of Unreleased Shares
from the Company's Repurchase Option pursuant to subparagraph 3(d) shall be
conditioned on the Holder's delivery to the Company of an executed General
Release and the Holder's non-revocation of such General Release during the time
period for such revocation set forth therein.
B-7
4. 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.
5. Confidentiality. The 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.
B-8
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.
B-1-1
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
2005 [***] 11.25% 16.25% 18.75%
EBITDA (midpoint of [***] (midpoint of (midpoint of (midpoint of
and [***]) 10% and 12.5% and 15% 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.
B-1-2
EXHIBIT C
TO RESTRICTED STOCK AWARD GRANT NOTICE
CONSENT OF SPOUSE
I, ________________________, spouse of _____________, 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: _______________, ______ ______________________________
Signature of Spouse
C-1
EXHIBIT D
TO RESTRICTED STOCK AWARD GRANT NOTICE
STOCK ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, __________, 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 ___________, ____.
Dated: _______________, ____ ______________________________
[Name of Xxxxxx]
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.
D-1
EXHIBIT E
TO RESTRICTED STOCK AWARD GRANT NOTICE
JOINT ESCROW INSTRUCTIONS
________________, ____
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. Xxxxxx
does hereby irrevocably constitute and appoint you as Xxxxxx'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.
E-1
4. Upon written request of Xxxxxx, 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. At the written request
of Xxxxxx, on or prior to the later of (i) one hundred sixty (160) days after
any voluntary or involuntary termination of Holder's services to the Company for
any or no reason and (ii) ten (10) days after your receipt of Holder's written
request, 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 Xxxxxx, 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.
E-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 Xxxxxx 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 Xxxxxx'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)
E-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:
______________________________________
Address: _____________________________
_____________________________
ESCROW AGENT:
By: ______________________________________________
Xxxxxx Xxxxxx,
Secretary, Leap Wireless International, Inc.
Address: 00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
E-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.
F-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:
_______________________
_______________________
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 ______________. 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 ___________ per share.
7. A copy of this statement has been furnished to the Company.
Dated: _____________, 200_ Taxpayer Signature _______________________
F-1-1
The undersigned spouse of Xxxxxxxx joins in this election. (Complete if
applicable).
Dated: _____________, 200_ Spouse's Signature _______________________
Signature(s) Notarized by:
_______________________
_______________________
F-1-2
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,
_________________________________
Enclosures
cc: Leap Wireless International, Inc.
F-2-1
