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EXHIBIT 10.5
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
AND
LEAP WIRELESS INTERNATIONAL, INC.
__________, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS .................................................. 1
1.1 Affiliate .............................................. 1
1.2 Close of the Distribution Date ......................... 1
1.3 COBRA .................................................. 1
1.4 Code ................................................... 1
1.5 Distribution Date ...................................... 1
1.6 DOL .................................................... 1
1.7 ERISA .................................................. 1
1.8 Executive Retirement Plans ............................. 2
1.9 FMLA ................................................... 2
1.10 Health and Welfare Plans ............................... 2
1.11 Immediately after the Distribution Date ................ 2
1.12 IRS .................................................... 2
1.13 Leap 401(k) Plan ....................................... 2
1.14 Leap Entity ............................................ 2
1.15 Leap Individual ........................................ 2
1.16 Leap Stock Value ....................................... 2
1.17 Long Term Incentive Plan ............................... 2
1.18 Medical Plan ........................................... 3
1.19 Non-Employee Director .................................. 3
1.20 Option ................................................. 3
1.21 Person ................................................. 3
1.22 Plan ................................................... 3
1.23 QUALCOMM 401(k) Plan ................................... 3
1.24 QUALCOMM Entity ........................................ 3
1.25 QUALCOMM Stock Value ................................... 3
1.26 QUALCOMM WCP ........................................... 3
1.27 SEC .................................................... 3
1.28 Stock Purchase Plan .................................... 3
ARTICLE 2 GENERAL PRINCIPLES ........................................... 4
2.1 Assumption of Liabilities .............................. 4
2.2 Retention of Liabilities ............................... 4
2.3 Establishment Of Leap Plans ............................ 5
2.4 Terms Of Participation In Leap Plans ................... 5
ARTICLE 3 HEALTH AND WELFARE PLANS ..................................... 6
3.1 COBRA .................................................. 6
3.2 FMLA ................................................... 6
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3.3 Workers' Compensation Programs ......................... 6
ARTICLE 4 DEFINED CONTRIBUTION PLANS ............................. 7
4.1 Leap 401(k) Plan ....................................... 7
4.2 Leap Executive Retirement Plans ........................ 8
ARTICLE 5 EMPLOYEE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS
UNDERQUALCOMM LONG-TERM INCENTIVE PLANS; LIFE INSURANCE ...... 8
5.1 Leap Option Grants with respect to Certain
QUALCOMM Options ....................................... 8
5.2 Adjustment of QUALCOMM Options held by Persons other
than Employees, Consultants and Non-Employee
Directors of QUALCOMM .................................. 9
5.3 Amendment of QUALCOMM Options held by Leap Employees ... 9
5.4 Savings Clause ......................................... 10
5.5 Issuance of Leap Shares with respect to Certain
QUALCOMM Option Exercises .............................. 10
5.6 Black-Out of Certain Exercises of QUALCOMM Options ..... 10
5.7 Registration Requirements .............................. 10
ARTICLE 6 GENERAL AND ADMINISTRATIVE ................................... 11
6.1 Accounting Methodologies And Assumptions ............... 11
6.2 Sharing Of Participant Information ..................... 11
6.3 Non-Termination Of Employment; No Third-Party
Beneficiaries .......................................... 11
6.4 Beneficiary Designations ............................... 11
6.5 Requests For Agency Rulings And Opinions ............... 11
6.6 Fiduciary Matters ...................................... 12
6.7 Consent Of Third Parties ............................... 12
ARTICLE 7 MISCELLANEOUS ................................................ 12
7.1 Effect If Distribution Does Not Occur .................. 12
7.2 Relationship Of Parties ................................ 12
7.3 Affiliates ............................................. 12
7.4 Third Party Beneficiaries .............................. 12
7.5 Notices ................................................ 13
7.6 Severability ........................................... 13
7.7 Modification And Amendment; Entire Agreement ........... 13
7.8 Dispute Resolution ..................................... 14
7.9 Governing Law .......................................... 14
Exhibit A Distribution Stock Option Agreement
Exhibit B Option Amendment Agreement and Release
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EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT ("Agreement"), dated as of _______________,
1998, is by and between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("QUALCOMM") and LEAP WIRELESS
INTERNATIONAL, INC. ("Leap"). Certain capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in Article
1 hereof or as assigned to them in the Separation and Distribution Agreement
between the parties dated as of the date hereof (the "Separation Agreement").
WHEREAS, QUALCOMM and Leap have entered into the Separation and Distribution
Agreement and certain other agreements that will govern certain matters relating
to the Separation, the Distribution and the relationship of QUALCOMM and Leap
and their respective Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Separation and Distribution Agreement, QUALCOMM and
Leap have agreed to enter into this agreement allocating assets, liabilities and
responsibilities with respect to certain employee compensation and benefit plans
and programs between them.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement the following terms shall have the following
meanings:
1.1 AFFILIATE means with respect to any other Person, a Person that
controls, is controlled by, or is under common control with, such other Person.
1.2 CLOSE OF THE DISTRIBUTION DATE means 11:59:59 P.M., Pacific Standard
Time or Pacific Daylight Time (whichever shall then be in effect), on the
Distribution Date.
1.3 COBRA means the continuation coverage requirements for "group health
plans" under Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and as codified in Code Section 4980B and ERISA Sections 601
through 608.
1.4 CODE means the Internal Revenue Code of 1986, as amended, or any
successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that
provision.
1.5 DISTRIBUTION DATE has the meaning given such term in the Separation and
Distribution Agreement.
1.6 DOL means the United States Department of Labor.
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1.7 ERISA means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific provision of ERISA also includes any proposed,
temporary, or final regulation in force under that provision.
1.8 EXECUTIVE RETIREMENT PLANS, when immediately preceded by "QUALCOMM,"
means the QUALCOMM Executive Retirement Plan and the QUALCOMM Executive
Retirement Matching Contribution Plan. When immediately preceded by "Leap,"
Executive Retirement Plans means the Leap Executive Retirement Plan and the Leap
Executive Retirement Matching Contribution Plan.
1.9 FMLA means the Family and Medical Leave Act of 1993, as amended.
1.10 HEALTH AND WELFARE PLANS, when immediately preceded by "QUALCOMM,"
means the health and welfare plans established and maintained by QUALCOMM for
the benefit of employees of QUALCOMM and certain QUALCOMM Entities, and such
other health and welfare plans or programs as may apply to such employees as of
the Distribution Date. When immediately preceded by "Leap," Health and Welfare
Plans means the health and welfare plans to be established by Leap effective no
later than Immediately after the Distribution Date.
1.11 IMMEDIATELY AFTER THE DISTRIBUTION DATE means 12:00 A.M., Pacific
Standard Time or Pacific Daylight Time (whichever shall then be in effect), on
the day after the Distribution Date.
1.12 IRS means the Internal Revenue Service.
1.13 LEAP 401(k) PLAN means the Leap 401(k) Savings Plan to be established
by Leap effective on or before Immediately after the Distribution Date, as a
qualified defined contribution plan under ERISA and the Code.
1.14 LEAP ENTITY means any Person that is, at the relevant time, an
Affiliate of Leap.
1.15 LEAP INDIVIDUAL means any individual who is an employee of QUALCOMM or
a QUALCOMM Entity who receives an offer of employment from Leap or a Leap Entity
on or before the Distribution Date with employment to commence after the
Distribution Date and who accepts such offer.
1.16 LEAP STOCK VALUE means the last sales price per share of Leap Common
Stock (traded on a "when-issued" basis) on the Distribution Date.
1.17 LONG TERM INCENTIVE PLAN, when immediately preceded by "QUALCOMM,"
means any of the QUALCOMM 1991 Stock Option Plan, as amended, and Non-Employee
Directors' Stock Option Plan, as amended. When immediately preceded by "Leap,"
Long Term Incentive Plan means either of the 1998 Stock Option Plan or 1998
Non-Employee Directors' Stock Option Plan to be adopted by Leap prior to
Immediately after the Distribution Date.
1.18 MEDICAL PLAN, when immediately preceded by "QUALCOMM," means the
QUALCOMM Medical Expense Plan for Employees. When immediately preceded by
"Leap,"
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Medical Plan means the medical plan to be established by Leap effective no later
than Immediately after the Distribution Date.
1.19 NON-EMPLOYEE DIRECTOR, when immediately preceded by "QUALCOMM," means
a member of QUALCOMM's Board of Directors who is not an employee of QUALCOMM or
a QUALCOMM Entity. When immediately preceded by "Leap," Non- Employee Director
means a member of Leap's Board of Directors who is not an employee of Leap or a
Leap Entity.
1.20 OPTION, when immediately preceded by "QUALCOMM," means an option to
purchase QUALCOMM Common Stock, and when immediately preceded by "Leap," Option
means an option to purchase Leap Common Stock, in each case pursuant to a Long
Term Incentive Plan of either QUALCOMM or Leap.
1.21 PERSON means any individual or legal entity.
1.22 PLAN, when immediately preceded by "QUALCOMM" or "Leap," means any
plan, policy, program (including, without limitation, any workers compensation
program), payroll practice, ongoing arrangement, contract, trust, insurance
policy or other agreement or funding vehicle providing benefits to employees or
Non-Employee Directors of QUALCOMM or a QUALCOMM Entity, or Leap or a Leap
Entity, as applicable. The term "Plan" includes, but is not limited to, any
Executive Retirement Plans, Health and Welfare Plans, Long Term Incentive Plans,
Medical Plans, and Stock Purchase Plans.
1.23 QUALCOMM 401(k) PLAN means the QUALCOMM 401(k) Savings Plan, as in
effect from time to time.
1.24 QUALCOMM ENTITY means any Person that is, at the relevant time, an
Affiliate of QUALCOMM, except that the term "QUALCOMM Entity" shall not include
Leap or a Leap Entity.
1.25 QUALCOMM STOCK VALUE means the last "regular way" sales price per
share of QUALCOMM Common Stock on the Nasdaq National Market on the Distribution
Date, less one-fourth of the Leap Stock Value.
1.26 QUALCOMM WCP means the QUALCOMM Workers' Compensation Program,
comprised of the various arrangements established by QUALCOMM or a QUALCOMM
Entity to comply with the workers' compensation requirements of the states in
which QUALCOMM or a QUALCOMM Entity conducts business.
1.27 SEC means the United States Securities and Exchange Commission.
1.28 STOCK PURCHASE PLAN, when immediately preceded by "QUALCOMM," means
the QUALCOMM 1991 Employee Stock Purchase Plan and the QUALCOMM 1996
NonQualified Employee Stock Purchase Plan. When immediately preceded by "Leap,"
Stock Purchase Plan means the employee stock purchase plan to be established by
Leap prior to Immediately after the Distribution Date as an "employee stock
purchase plan" meeting the requirements set forth in Section 423 of the Code.
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ARTICLE 2
GENERAL PRINCIPLES
2.1 ASSUMPTION OF LIABILITIES. Leap hereby assumes and agrees to pay,
perform, fulfill and discharge, in accordance with their respective terms, all
of the following Liabilities (regardless of when or where such Liabilities arose
or arise or were or are incurred), except to the extent otherwise set forth in
this Agreement, or the Separation and Distribution Agreement: (a) all
Liabilities to or relating to any Leap Individual, and his or her respective
dependents and beneficiaries, in each case relating to, arising out of or
resulting from employment by QUALCOMM or a QUALCOMM Entity before becoming a
Leap Individual arising under a QUALCOMM Plan, but only to the extent such
Liabilities relate to the payment of a bonus to a Leap Individual or relate to
the payment or crediting of accrued vacation and sick pay; (b) all other
Liabilities to or relating to Leap Individuals and other employees or former
employees of Leap or a Leap Entity, and their dependents and beneficiaries, to
the extent relating to, arising out of or resulting from future, present or
former employment with Leap or a Leap Entity (including Liabilities under Leap
Plans); (c) all Liabilities relating to, arising out of or resulting from any
other actual or alleged employment relationship with Leap or a Leap Entity
(including without limitation, actual or alleged offers of employment with Leap
or a Leap Entity made prior to the Close of the Distribution Date to employees
of QUALCOMM, a QUALCOMM Entity or any other Person, by any Person who at the
time of the actual or alleged offer of employment was an employee of QUALCOMM or
a QUALCOMM Entity and who then became an employee of Leap or a Leap Entity); and
(d) all other Liabilities relating to, arising out of or resulting from
obligations, liabilities and responsibilities expressly assumed or retained by
Leap, a Leap Entity, or a Leap Plan pursuant to this Agreement. As to bonus
arrangements under a QUALCOMM Plan for which QUALCOMM has accrued a liability
and which would be payable for the first time after the Distribution Date, a
Leap Individual's termination of employment with QUALCOMM to become a Leap
Individual shall not prevent or terminate Leap's assumption of the liability to
pay such bonus amount, even though the applicable QUALCOMM Plan may provide that
termination of employment with QUALCOMM terminates QUALCOMM's liability for this
bonus.
2.2 RETENTION OF LIABILITIES. To the extent that Liabilities under a
QUALCOMM Plan that relate to the employment of a Leap Individual by QUALCOMM or
a QUALCOMM Entity prior to the Close of the Distribution Date are not assumed by
Leap, then QUALCOMM, the QUALCOMM Entity, or the QUALCOMM Plan respectively,
shall retain, discharge and pay such Liabilities.
2.3 ESTABLISHMENT OF LEAP PLANS. Effective no later than Immediately after
the Distribution Date, Leap shall adopt, or cause to be adopted, the Leap Long
Term Incentive Plan(s), the Leap 401(k) Plan, an executive retirement plan (the
"Leap Executive Retirement Plan"), an executive retirement matching plan (the
"Leap Executive Retirement Matching Contribution Plan"), and the Leap Medical
Plan for the benefit of current, future, and former employees of Leap and the
Leap Entities. Leap shall also adopt, or cause to be adopted, as soon as
practicable, the Leap Stock Purchase Plan, and the Leap Health and Welfare Plans
for the benefit of current, future, and former employees of Leap and the Leap
Entities.
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2.4 TERMS OF PARTICIPATION IN LEAP PLANS. The Leap Plans shall not provide
benefits that duplicate benefits provided by, the corresponding QUALCOMM Plans
with respect to Leap Individuals and all other employees and former employees of
Leap and the Leap Entities, and beneficiaries and dependents thereof. QUALCOMM
and Leap shall agree on methods and procedures, including amending the
respective Plan documents, to prevent Leap Individuals from receiving
duplicative benefits from the QUALCOMM Plans and the Leap Plans. With respect to
Leap Individuals, each Leap Plan shall provide that all service determinations
that, as of the Close of the Distribution Date, were recognized under each
corresponding QUALCOMM Plan, if any, shall, as of Immediately after the
Distribution Date and thereafter, receive full recognition, credit, and validity
and be taken into account under such Leap Plan to the same extent as if such
determinations had occurred under such Leap Plan, except to the extent that
duplication of benefits would result. Nothing in this Section 2.4, or any other
provision of this Agreement, however, shall require Leap to adopt all of the
types of Plans sponsored by QUALCOMM on the Distribution Date, or to provide
that the terms of a Leap Plan shall be the same or similar to the terms of any
corresponding QUALCOMM Plan, or limit the ability of Leap to amend, modify or
terminate any Leap Plan.
ARTICLE 3
HEALTH AND WELFARE PLANS
3.1 COBRA. Effective Immediately after the Distribution Date, Leap shall
solely be responsible for administering compliance with the health care
continuation coverage requirements of COBRA for the Leap Health and Welfare
Plans, and shall cooperate and coordinate with QUALCOMM, as appropriate, to
allow QUALCOMM to administer compliance with the health care continuation
requirements of COBRA for the QUALCOMM Health and Welfare Plans. Leap
Individuals shall be permitted to timely elect health care continuation coverage
in accordance with the terms of the QUALCOMM Health and Welfare Plans, and
QUALCOMM and the QUALCOMM Health and Welfare Plans shall accept and honor such
timely and properly-made elections, to the fullest extent required under the
provisions of COBRA.
3.2 FMLA.
(a) Effective Immediately after the Distribution Date: (i) Leap shall
honor, and shall cause each Leap Entity to honor, all terms and conditions of
leaves of absence which have been granted to any Leap Individual and all other
employees of Leap and the Leap Entities under the FMLA before the Close of the
Distribution Date by QUALCOMM, Leap, or a Leap Entity, including such leaves
that are to commence after the Distribution Date; (ii) Leap and each Leap Entity
shall be solely responsible for administering compliance with the FMLA with
respect to their employees; and (iii) Leap and each Leap Entity shall recognize
all periods of service of Leap Individuals and all other employees of Leap and
the Leap Entities with QUALCOMM or a QUALCOMM Entity, as applicable, to the
extent such service is recognized by QUALCOMM for the purpose of eligibility for
leave entitlement under the FMLA; provided, that no duplication of benefits
shall be required by the foregoing.
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(b) As soon as administratively possible after the Close of the
Distribution Date, QUALCOMM shall provide to Leap copies of all records
pertaining to the FMLA with respect to all Leap Individuals and all other
employees of Leap and the Leap Entities to the extent such records have not been
provided previously to Leap or a Leap Entity.
3.3 WORKERS' COMPENSATION PROGRAMS. QUALCOMM and the QUALCOMM WCP shall
retain, discharge and pay all Liabilities arising under the QUALCOMM WCP,
including, without limitation, all Liabilities relating to claims that are, or
have been, incurred under the QUALCOM WCP before the Close of the Distribution
Date by Leap Individuals. Leap and the Leap WCP shall retain, discharge and pay
all Liabilities arising under the Leap WCP. Each party shall fully cooperate
with the other with respect to the administration and reporting of claims under
the QUALCOMM WCP and the Leap WCP, to the extent that such cooperation is
permitted under applicable law and does not otherwise have a material adverse
effect on the QUALCOMM WCP or the Leap WCP.
ARTICLE 4
DEFINED CONTRIBUTION PLANS
4.1 LEAP 401(k) PLAN.
(a) PLAN TRUST. Immediately after the Distribution Date or prior to
that time, Leap shall establish, or cause to be established, a trust qualified
under Code Section 401(a), exempt from taxation under Code Section 501(a)(1),
and forming part of the Leap 401(k) Plan.
(b) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS. As soon as
practicable after the Distribution Date or prior to that time: (i) the Leap
401(k) Plan shall assume and be solely responsible for all Liabilities to or
relating to Leap Individuals under the QUALCOMM 401(k) Plan other than
Liabilities arising prior to the transfer of assets described in the following
clause (ii) relating to breach of the trust or plan or failure of QUALCOMM to
comply with applicable laws, regulations or agreements (including, without
limitation, the failure of the QUALCOMM 401(k) Plan to be a "qualified plan"
under the Code); and (ii) QUALCOMM shall cause the accounts of the Leap
Individuals under the QUALCOMM 401(k) Plan, and the assets in such accounts,
which are held in trust as of the Close of the Distribution Date to be
transferred in kind to the Leap 401(k) Plan, and the related trust, and Leap
shall cause such transferred accounts and assets to be accepted in kind by such
plan and trust. Both QUALCOMM and Leap shall use their reasonable best efforts
to enter into such mutually satisfactory agreements to accomplish such
assumptions and transfers, and Leap shall use its reasonable best efforts to
enter into such agreements satisfactory to Leap to provide for the maintenance
of the necessary participant records, the appointment of an initial trustee
under the Leap 401(k) Plan, the engagement of an initial recordkeeper under such
plans, and the selection of one or more investment managers to manage the assets
of the Leap 401(k) Plan.
4.2 LEAP EXECUTIVE RETIREMENT PLANS.
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(a) PLAN TRUST. Immediately after the Distribution Date or prior to
that time, Leap shall establish, or cause to be established, a trust or separate
trusts for the deposit of assets forming part of the Leap Executive Retirement
Plans.
(b) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS. A Leap
Individual may request not later than December 31, 1998, and QUALCOMM may then
permit, if the Leap Individual executes an agreement provided by QUALCOMM
releasing QUALCOMM from liability arising out of events after the transfer, the
account of the Leap Individual under the respective QUALCOMM Executive
Retirement Plans which are held in trust as of the Close of the Distribution
Date to be transferred to the corresponding Leap Executive Retirement Plan and
related trust (the "Transferred Accounts"), and Leap shall cause such
Transferred Accounts to be accepted by such plan and trust. As to Transferred
Accounts, the Leap Executive Retirement Plans shall assume and be solely
responsible for all Liabilities to or relating to the Leap Individual under the
respective QUALCOMM Executive Retirement Plans other than Liabilities arising
before the transfer of the accounts under these plans relating to breach of the
trust or plan or failure of QUALCOMM to comply with applicable laws, regulations
or agreements. Effective no later than Immediately after the Distribution Date,
QUALCOMM and Leap shall use their reasonable best efforts to enter into such
mutually satisfactory agreements to accomplish such assumptions and transfers,
and Leap shall use its reasonable best efforts to enter into such agreements
satisfactory to Leap to provide for the maintenance of the necessary participant
records, the initial appointment of a trustee under the Leap Executive
Retirement Plans, the initial engagement of a recordkeeper under such plans, and
the selection of one or more investment managers to manage the assets of the
Leap Executive Retirement Plans.
ARTICLE 5
EMPLOYEE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS UNDER QUALCOMM
LONG-TERM INCENTIVE PLANS; LIFE INSURANCE
5.1 LEAP OPTION GRANTS WITH RESPECT TO CERTAIN QUALCOMM OPTIONS.
(a) Subject to the terms of this Agreement, effective as of
immediately prior to the Close of the Distribution Date, Leap shall grant to
each Person who is either a current or former employee, consultant or director
of QUALCOMM (as determined by QUALCOMM) and who is a holder of a QUALCOMM Option
that is outstanding as of immediately prior to the Close of the Distribution
Date, a Leap Option, with respect to each such QUALCOMM Option, in substantially
the form attached hereto as Exhibit A (each a "Distribution Option") which shall
be delivered to each such holder as soon as practicable after the Close of the
Distribution Date.
(b) Each Distribution Option shall provide for the purchase of a
number of shares of Leap Common Stock equal to twenty-five percent (25%) of the
number of shares of QUALCOMM Common Stock which are subject, as of immediately
prior to the Close of the Distribution Date, to the QUALCOMM Option (the
"Corresponding QUALCOMM Option") with respect to which such Distribution Option
is granted (whether vested or unvested), and then rounded down in the case of
each Distribution Option to the nearest whole share.
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(c) The per-share exercise price of each Distribution Option shall be
calculated by multiplying the per-share exercise price of the applicable
Corresponding QUALCOMM Option by the product of four multiplied by a fraction,
the numerator of which is one-fourth of the Leap Stock Value and the denominator
of which is the sum of the QUALCOMM Stock Value and one-fourth of the Leap Stock
Value. The vesting provisions, term and other provisions of each Distribution
Option shall be the same as those in effect with respect to the applicable
Corresponding QUALCOMM Option immediately prior to the Close of the Distribution
Date, except as otherwise provided for in this Section 5.1 and subject to the
provisions of Section 5.3.
(d) The per-share exercise price of each Corresponding QUALCOMM Option
shall be reduced as of immediately prior to the Close of the Distribution Date
to the price determined by multiplying the per-share exercise price of such
Corresponding QUALCOMM Option as in effect immediately prior to such reduction
by a fraction, the numerator of which is the QUALCOMM Stock Value and the
denominator of which is the sum of the QUALCOMM Stock Value and one-fourth of
the Leap Stock Value. The vesting provisions, term and other provisions of each
such Corresponding QUALCOMM Option shall be the same as those in effect
immediately prior to the Close of the Distribution Date, subject to the
provisions of Section 5.3.
5.2 ADJUSTMENT OF CERTAIN QUALCOMM OPTIONS. Subject to the terms of this
Agreement, effective as of immediately prior to the Close of the Distribution
Date, QUALCOMM shall cause to be made, with respect to each QUALCOMM Option held
by any Person as of immediately prior to the Close of the Distribution Date who
is not either a current or former employee, consultant or director of QUALCOMM
(as determined by QUALCOMM), an adjustment to the per share exercise price and
number of shares of QUALCOMM Common Stock subject to such Option in such manner
as QUALCOMM deems appropriate in its reasonable discretion pursuant to the terms
of the QUALCOMM Long Term Incentive Plan under which such Option was originally
granted.
5.3 AMENDMENT OF QUALCOMM OPTIONS HELD BY LEAP INDIVIDUALS. Subject to the
terms of this Agreement, effective as of immediately prior to the Close of the
Distribution Date, QUALCOMM shall, with respect to each QUALCOMM Option held by
any Leap Individual, cause the vesting provisions of such Option to be amended
such that the vesting of such Option is tied to such Leap Individual's continued
employment with Leap or a Leap Entity rather than QUALCOMM or a QUALCOMM Entity,
all as more fully set forth in and in accordance with the terms of the Option
Amendment Agreement and Release in the form substantially as attached hereto as
Exhibit B and, with respect to each such Leap Individual, subject to the
execution and delivery by such Leap Individual of such Option Amendment
Agreement and Release.
5.4 SAVINGS CLAUSE. Notwithstanding any other provision of Sections 5.1
through 5.3, if and to the extent QUALCOMM shall determine in its reasonable
judgment that any action required to be taken by QUALCOMM or Leap under such
Sections may not comply with all applicable laws or the terms of any applicable
Long Term Incentive Plan or that any such action is otherwise inappropriate or
inadvisable, QUALCOMM shall be entitled to require that Leap or QUALCOMM instead
shall take such other action that QUALCOMM determines in its reasonable judgment
is necessary or appropriate in order to comply with such laws or Long Term
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Incentive Plan or is otherwise appropriate or advisable. In no event shall the
total effect of the grant of any Leap Options or adjustment of any QUALCOMM
Options pursuant to such Sections cause a new measurement date for any QUALCOMM
Option to be used by QUALCOMM's accountants.
5.5 ISSUANCE OF LEAP SHARES WITH RESPECT TO CERTAIN QUALCOMM OPTION
EXERCISES.
(a) To the extent a QUALCOMM Option granted to a current or former
employee, director or consultant of QUALCOMM (as determined by QUALCOMM) is
exercised after the Record Date but prior to the Close of the Distribution Date,
then Leap shall issue and deliver, within ten (10) days (or such shorter period
of time as may be required by applicable laws or the requirements of Nasdaq)
after the Close of the Distribution Date, to the holder of such QUALCOMM Option
such number of shares of Leap Common Stock that equals one-fourth the number of
shares for which such QUALCOMM Option was so exercised; provided that such
number of shares of Leap Common Stock shall be rounded down to the nearest whole
share. Notwithstanding any other provision in this Agreement or any Ancillary
Agreement, QUALCOMM shall have no obligation to deliver any shares of Leap
Common Stock with respect to any such exercises.
(b) For each such share of Leap Common Stock delivered pursuant to
this Section 5.5, within the time set forth in subsection 5.5(a), QUALCOMM shall
pay to Leap a prorated portion of the consideration received by QUALCOMM from
such exercise of the QUALCOMM Option as is determined by QUALCOMM in its
reasonable judgment to be appropriate and which is consistent with the
allocation of option exercise prices otherwise provided for in Section 5.1. The
shares reserved for issuance under the Leap Long-Term Incentive Plan under which
such shares would have been issued had the exercise of the QUALCOMM Option not
occurred prior to the Close of the Distribution Date shall be correspondingly
reduced by the number of shares so delivered.
5.6 BLACK-OUT OF CERTAIN EXERCISES OF QUALCOMM OPTIONS. QUALCOMM shall use
reasonable efforts to cause each QUALCOMM Option outstanding during the period
beginning with the Record Date and ending as of immediately prior to the Close
of the Distribution Date and held by any Person who is not a current or former
employee, director or consultant of QUALCOMM (as determined by QUALCOMM) not to
be exercised by the holder thereof during such period.
5.7 REGISTRATION REQUIREMENTS. Following the date as of which the Form 10
is declared effective by the SEC but in any case prior to the date of issuance
or grant of any Leap Option and/or shares of Leap Common Stock pursuant to this
Article 5, Leap agrees that it shall file a Form S-8 Registration Statement with
respect to and cause to be registered pursuant to the Securities Act of 1933, as
amended, each such grant and/or issuance of such Options and/or Common Stock, as
applicable and as required pursuant to such Act and any applicable rules or
regulations thereunder.
5.8 SPLIT DOLLAR LIFE INSURANCE. QUALCOMM and Leap shall take all actions
necessary or appropriate to assign to Leap, effective on the Distribution Date,
(i) QUALCOMM's
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rights and interests in the split dollar life insurance policy (including,
without limitation, all riders to such policy that are then in effect) covering
the life of Leap's Chief Executive Officer, and (ii) QUALCOMM's obligations
under any agreements requiring QUALCOMM to pay any premiums for any split dollar
life insurance policy (including, without limitation, all riders to such policy
that are then in effect) covering the life of Leap's Chief Executive Officer.
Such actions shall include Leap's acceptance of any collateral assignments,
policy endorsements or such other documentation executed by or on behalf of such
individual, or any trustee of any trust to which such individual's policy rights
or incidents of ownership under the assigned split dollar policy have been
assigned, and Leap's entering into such agreements as may be necessary to
fulfill any obligations of QUALCOMM to any such trustee of any trust, or any
insurance company or insurance agent or broker under such policy or policies.
From and after the effective date of the assignment of any such split dollar
policy to Leap, Leap shall assume and be solely responsible for all Liabilities,
and shall be entitled to all benefits, of QUALCOMM under such policy and any
related agreements entered into by such individual, or any trustee of any trust
to which such individual's policy rights or incidents of ownership under the
assigned split dollar policy has been assigned; provided however, that an amount
equal to the sum of premiums paid by QUALCOMM under such split dollar life
insurance policy, and for which QUALCOMM has not otherwise been reimbursed,
shall be transferred by Leap to QUALCOMM within thirty days of Leap receiving
payment under the terms of such split dollar life insurance policy or agreement
relating to it. Leap shall transfer to QUALCOMM, no later than the thirtieth
business day after the Distribution Date, a pro-rated portion of the cost of all
premiums paid by QUALCOMM to maintain in effect the split dollar life insurance
policy (including, without limitation, all riders to such policy that are then
in effect) for the month in which falls the Distribution Date; such pro-rata
amount shall be determined based on the number of calendar days in the month,
and the premium cost allocable to the Distribution Date and the calendar days
that follow the Distribution Date and fall in that month shall be the pro-rata
amount that Leap shall transfer to QUALCOMM.
ARTICLE 6
GENERAL AND ADMINISTRATIVE
6.1 ACCOUNTING METHODOLOGIES AND ASSUMPTIONS. For purposes of this
Agreement, unless specifically indicated otherwise, the value of the assets of a
Plan shall be the value established for purposes of relevant audited or
unaudited financial statements for the period ending on the date as of which the
valuation is to be made.
6.2 SHARING OF PARTICIPANT INFORMATION. QUALCOMM and Leap shall share with
each all participant information reasonably necessary to effectuate the
transfers and other transactions hereunder.
6.3 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES. No
provision of this Agreement or the Separation and Distribution Agreement, or any
other agreements entered into between QUALCOMM or a QUALCOMM Entity and Leap or
a Leap Entity relating to this Agreement or the Separation and Distribution
Agreement, shall be construed to create any right, or accelerate entitlement, to
any compensation or benefit whatsoever on the part of any Leap Individual or
other future, present or former employee of
14
QUALCOMM, a QUALCOMM Entity, Leap, or a Leap Entity under any QUALCOMM Plan or
Leap Plan or otherwise; or to continue to be employed by or return to employment
with QUALCOMM or a QUALCOMM Entity, or Leap or a Leap Entity. Without limiting
the generality of the foregoing: (i) the Distribution shall not cause any
employee to be deemed to have incurred a termination of employment which
entitles such individual to the commencement of benefits under any of the
QUALCOMM Plans, any of the Leap Plans; and (ii) except as expressly provided in
this Agreement, nothing in this Agreement shall preclude Leap, at any time after
the Close of the Distribution Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
Leap Plan, any benefit under any Leap Plan or any trust, insurance policy or
funding vehicle related to any Leap Plan.
6.4 BENEFICIARY DESIGNATIONS. All beneficiary designations made by Leap
Individuals for QUALCOMM Plans shall be transferred to and be in full force and
effect under the corresponding Leap Plans until such beneficiary designations
are replaced or revoked by the Leap Individual who made the beneficiary
designation.
6.5 REQUESTS FOR AGENCY RULINGS AND OPINIONS.
(a) COOPERATION. Leap shall cooperate fully with QUALCOMM on any issue
relating to the transactions contemplated by this Agreement for which QUALCOMM
elects to seek a determination letter or private letter ruling from the IRS, an
advisory opinion from the DOL, or a no-action letter or other ruling from the
SEC. QUALCOMM shall cooperate fully with Leap with respect to any request for a
determination letter or private letter ruling from the IRS, an advisory opinion
from the DOL, or a no-action letter or other ruling from the SEC, with respect
to any of the Leap Plans relating to the transactions contemplated by this
Agreement.
(b) LIFE INSURANCE. To the extent the transfer or allocation of all or
a portion of any life insurance policies results in any adverse tax or legal
consequences, including without limitation (i) any finding that such transfer
results in the creation of a modified endowment contract within the meaning of
Code Section 7702A, a transfer for value within the meaning of Code Section
101(a), or a lack of insurable interest for either QUALCOMM or Leap (or their
respective trusts, if any), or (ii) multiple claims for insurance proceeds,
QUALCOMM and Leap shall take such steps as may be necessary to contest any such
finding and, to the extent of any final determination that such adverse tax or
legal consequences will result, QUALCOMM and Leap shall make such further
adjustments so as to place both parties in the proportionate financial position
that they each would have been in relative to the other but for such adverse tax
or legal consequences.
6.6 FIDUCIARY MATTERS. QUALCOMM and Leap each acknowledge that actions
required to be taken pursuant to this Agreement may be subject to fiduciary
duties or standards of conduct under ERISA or other applicable law, and no party
shall be deemed to be in violation of this Agreement if it fails to comply with
any provisions hereof based upon its good faith determination that to do so
would violate such a fiduciary duty or standard.
6.7 CONSENT OF THIRD PARTIES. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, QUALCOMM and Leap shall use their reasonable best
efforts to implement the applicable
15
provisions of this Agreement to the full extent practicable. If any provision of
this Agreement cannot be implemented due to the failure of such third party to
consent, QUALCOMM and Leap shall negotiate in good faith to implement the
provision in a mutually satisfactory manner. The phrase "reasonable best
efforts" as used herein shall not be construed to require the incurrence of any
non-routine or unreasonable expense or liability or the waiver of any right.
ARTICLE 7
MISCELLANEOUS
7.1 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately after
the Distribution Date, or otherwise in connection with the Distribution, shall
not be taken or occur except to the extent specifically agreed by Leap and
QUALCOMM.
7.2 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed or
construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
7.3 AFFILIATES. Each of QUALCOMM and Leap shall cause to be performed, and
hereby guarantees the performance of, all actions, agreements and obligations
set forth in this Agreement to be performed by a QUALCOMM Entity or a Leap
Entity, respectively.
7.4 THIRD PARTY BENEFICIARIES. The provisions of this Agreement and each
Ancillary Agreement are solely for the benefit of the parties and are not
intended to confer upon any Person except the parties any rights or remedies
hereunder, and there are no third party beneficiaries of this Agreement or any
Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall
provide any third person with any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement or any Ancillary Agreement.
7.5 NOTICES. All notices or other communications under this Agreement or
any Ancillary Agreement shall be in writing and shall be deemed to be duly given
when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
If to QUALCOMM, to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to General Counsel at the same
address.
16
If to Leap, to: Leap Wireless International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to General Counsel at the same
address.
Either party may, by notice to the other party, change the address to which such
notices are to be given.
7.6 SEVERABILITY. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
7.7 MODIFICATION AND AMENDMENT; ENTIRE AGREEMENT. This Agreement may not be
modified or amended except in a writing signed by the parties. This Agreement
sets forth the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between the parties with respect to the subject matter hereof.
7.8 DISPUTE RESOLUTION. The parties acknowledge and agree that this
Agreement and any dispute hereunder shall be subject to and governed by the
dispute resolution provisions set forth in Article 10 of the Separation and
Distribution Agreement.
7.9 GOVERNING LAW. To the extent not preempted by applicable federal law,
this Agreement shall be governed by, construed and interpreted in accordance
with the laws of the State of California, irrespective of the choice of laws
principles of the State of California, as to all matters, including matters of
validity, construction, effect, enforceability, performance and remedies.
IN WITNESS WHEREOF, the parties have caused this Employee Benefits Agreement
to be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇:
By:________________________________
Name:______________________________
17
Title:_____________________________
LEAP WIRELESS INTERNATIONAL, INC.:
By:________________________________
Name:______________________________
Title:_____________________________
18
Exhibit A Distribution Stock Option Agreement
19
LEAP WIRELESS INTERNATIONAL, INC.
DISTRIBUTION STOCK OPTION GRANT NOTICE
LEAP WIRELESS INTERNATIONAL, INC. (the "Company"), pursuant to its 1998
Stock Option Plan (the "Plan") hereby grants to the Optionholder named below a
non-qualified stock option to purchase the number of shares of the Company's
common stock set forth below. This option is subject to all of the terms and
conditions set forth herein and in Attachment I, the Plan, and that certain
option agreement, as amended from time to time, for the option numbered
____________, and granted under the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 1991 Stock Option Plan
or the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Non-Employee Directors' Stock Option Plan (the
"QUALCOMM Option") which this option supplements pursuant to that certain
Employee Benefits Agreement dated ________ between the Company and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, which Attachment I, Plan, and QUALCOMM Option are incorporated
herein in their entirety. This option is a "Distribution Option" (as defined in
the Plan).
Optionholder/Emp #: firstname~ name~ #employeeid~ Grant No.: grantnumber~
Date of Grant: grantdate~ Shares Subject to Option: shares~
Exercise Price Per Share: $optionprice~
Expiration Date: Coincident with that of the QUALCOMM Option
VESTING SCHEDULE: On the date of grant, this option is vested (i.e.,
exercisable) for ____________ shares, provided however, that such vesting shall
not occur, if continuation of vesting under the QUALCOMM Option is being tolled,
until the tolling of such vesting has ceased. Thereafter, on each vesting date
of the QUALCOMM Option this option shall become vested in an additional
_________ shares, but the aggregate the number of shares that vest under this
option shall not exceed the number of shares subject to this option.
Notwithstanding the foregoing, this option is not exercisable prior to its
exercise price and number of shares being finally determined by the Company.
ADDITIONAL TERMS/ACKNOWLEDGMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to the terms of the following: this Grant
Notice, the Stock Option Agreement, the Plan, and also the QUALCOMM Option to
the extent its provisions establish those of this option. Optionholder further
acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option
Agreement, the Plan, the stock option plan under which the QUALCOMM Option was
granted, the Employee Benefits Agreement, and the provisions of the QUALCOMM
Option as incorporated into this option, set forth the entire understanding
between Optionholder and the Company regarding the acquisition of stock in the
Company and supersede all prior oral and written agreements pertaining to this
particular option.
20
LEAP WIRELESS INTERNATIONAL, INC. OPTIONHOLDER:
By:____________________________ _____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Signature
President
Dated: grantdate~ Date:________________________________
Attachment I: Stock Option Agreement
21
ATTACHMENT I
LEAP WIRELESS INTERNATIONAL, INC.
DISTRIBUTION STOCK OPTION AGREEMENT
Pursuant to the Grant Notice and this Stock Option Agreement, the Company
has granted you an option to purchase the number of shares of the Company's
common stock ("Common Stock") indicated in the Grant Notice at the exercise
price indicated in the Grant Notice. Defined terms not explicitly defined in
this Stock Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of this option are as follows:
1. VESTING. Subject to the limitations contained herein, this option will
vest as provided in the Grant Notice, provided that vesting will cease upon the
termination of vesting under the QUALCOMM Option.
2. METHOD OF PAYMENT. Payment of the exercise price by cash, check, or any
other method expressly provided for under the QUALCOMM Option, is due upon
exercise of all or any part of this option that has become exercisable by you.
Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company. Payment of the exercise price may
also be made by a combination of the above methods.
3. EXERCISE FOR MINIMUM NUMBER OF SHARES. The minimum number of shares with
respect to which this option may be exercised at any one time is twenty-five
(25), except (a) as to an installment subject to exercise, as set forth in
paragraph 1, which amounts to fewer than twenty-five (25) shares, in which case,
as to the exercise of that installment, the number of such shares in such
installment shall be the minimum number of shares, and (b) with respect to the
final exercise of this option, this minimum shall not apply. This option may
only be exercised for whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
5. TERM. The term of this option commences on the Date of Grant (as
specified in the Grant Notice) and expires upon the earliest of:
(a) the Expiration Date indicated in the Grant Notice;
(b) the tenth (10th) anniversary of the Date of Grant; or
22
(c) the termination of the QUALCOMM Option, provided that if during
any post- termination exercise period of the QUALCOMM Option, this option is not
exercisable solely because of the condition set forth in paragraph 4 (Securities
Law Compliance), then this option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
equal to the post-termination exercise period of the QUALCOMM Option.
6. EXERCISE.
(a) You may exercise the vested portion of this option during its
term by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subsection 7(b) of the Plan.
(b) By exercising this option you agree that as a condition to any
exercise of this option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise.
7. TRANSFERABILITY. This option is not transferable, except by will or by
the laws of descent and distribution or pursuant to a domestic relations order
as defined by the Code or Title I of the Employee Retirement Income Securities
Act of 1974, as amended (a "DRO"), or the rules thereunder, and is exercisable
during your life only by you or any transferee pursuant to a DRO.
8. OPTION NOT A SERVICE CONTRACT. This option is not an employment or
service contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the service of the Company
or any Affiliate of the Company, or of the Company or any Affiliate of the
Company to continue your service. In addition, nothing in this option shall
obligate the Company, its Affiliates, or their stockholders, Board of Directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or any Affiliate of the Company.
9. NOTICES. Any notices provided for in this option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
10. GOVERNING DOCUMENTS. This option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of this option, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control, to the extent not inconsistent
with the terms of the QUALCOMM Option and the Employee Benefits Agreement, which
also control the provisions of this option and modify the provisions of the
Plan.
23
LEAP WIRELESS INTERNATIONAL, INC.
DISTRIBUTION STOCK OPTION GRANT NOTICE
LEAP WIRELESS INTERNATIONAL, INC. (the "Company"), pursuant to its 1998
Stock Option Plan (the "Plan") hereby grants to the Optionholder named below a
non-qualified stock option to purchase the number of shares of the Company's
common stock set forth below. This option is subject to all of the terms and
conditions set forth herein and in Attachment I, the Plan, and that certain
option agreement, as amended from time to time, for the option numbered
____________, and granted under the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 1991 Stock Option Plan
or the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Non-Employee Directors' Stock Option Plan (the
"QUALCOMM Option") which this option supplements pursuant to that certain
Employee Benefits Agreement dated ________ between the Company and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, which Attachment I, Plan, and QUALCOMM Option are incorporated
herein in their entirety. This option is a "Distribution Option" (as defined in
the Plan).
Optionholder/Emp #: firstname~ name~ #employeeid~ Grant No.: grantnumber~
Date of Grant: grantdate~ Shares Subject to Option: shares~
Exercise Price Per Share: $optionprice~
Expiration Date: Coincident with that of the QUALCOMM Option
VESTING SCHEDULE: On the date of grant, this option is vested (i.e.,
exercisable) for ____________ shares, provided however, that such vesting shall
not occur, if continuation of vesting under the QUALCOMM Option is being tolled,
until the tolling of such vesting has ceased. Thereafter, on each vesting date
of the QUALCOMM Option this option shall become vested in an additional
_________ shares, but the aggregate the number of shares that vest under this
option shall not exceed the number of shares subject to this option.
Notwithstanding the foregoing, this option is not exercisable prior to its
exercise price and number of shares being finally determined by the Company.
ADDITIONAL TERMS/ACKNOWLEDGMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to the terms of the following: this Grant
Notice, the Stock Option Agreement, the Plan, and also the QUALCOMM Option to
the extent its provisions establish those of this option. Optionholder further
acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option
Agreement, the Plan, the stock option plan under which the QUALCOMM Option was
granted, the Employee Benefits Agreement, and the provisions of the QUALCOMM
Option as incorporated into this option, set forth the entire understanding
between Optionholder and the Company regarding the acquisition of stock in the
Company and supersede all prior oral and written agreements pertaining to this
particular option.
24
LEAP WIRELESS INTERNATIONAL, INC. OPTIONHOLDER:
By:_____________________________ ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Signature
President
Dated: grantdate~ Date:_______________________________
Attachment I: Stock Option Agreement
25
ATTACHMENT I
LEAP WIRELESS INTERNATIONAL, INC.
DISTRIBUTION STOCK OPTION AGREEMENT
Pursuant to the Grant Notice and this Stock Option Agreement, the Company
has granted you an option to purchase the number of shares of the Company's
common stock ("Common Stock") indicated in the Grant Notice at the exercise
price indicated in the Grant Notice. Defined terms not explicitly defined in
this Stock Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of this option are as follows:
1. VESTING. Subject to the limitations contained herein, this option will
vest as provided in the Grant Notice, provided that vesting will cease upon the
termination of vesting under the QUALCOMM Option.
2. METHOD OF PAYMENT. Payment of the exercise price by cash, check, or any
other method expressly provided for under the QUALCOMM Option, is due upon
exercise of all or any part of this option that has become exercisable by you.
Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company. Payment of the exercise price may
also be made by a combination of the above methods.
3. EXERCISE FOR MINIMUM NUMBER OF SHARES. The minimum number of shares with
respect to which this option may be exercised at any one time is twenty-five
(25), except (a) as to an installment subject to exercise, as set forth in
paragraph 1, which amounts to fewer than twenty-five (25) shares, in which case,
as to the exercise of that installment, the number of such shares in such
installment shall be the minimum number of shares, and (b) with respect to the
final exercise of this option, this minimum shall not apply. This option may
only be exercised for whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
5. TERM. The term of this option commences on the Date of Grant (as
specified in the Grant Notice) and expires upon the earliest of:
(a) the Expiration Date indicated in the Grant Notice;
(b) the tenth (10th) anniversary of the Date of Grant; or
26
(c) the termination of the QUALCOMM Option, provided that if during
any post- termination exercise period of the QUALCOMM Option, this option is not
exercisable solely because of the condition set forth in paragraph 4 (Securities
Law Compliance), then this option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
equal to the post-termination exercise period of the QUALCOMM Option.
6. EXERCISE.
(a) You may exercise the vested portion of this option during its
term by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subsection 7(b) of the Plan.
(b) By exercising this option you agree that as a condition to any
exercise of this option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise.
7. TRANSFERABILITY. This option is not transferable, except by will or by
the laws of descent and distribution or pursuant to a domestic relations order
as defined by the Code or Title I of the Employee Retirement Income Securities
Act of 1974, as amended (a "DRO"), or the rules thereunder, and is exercisable
during your life only by you or any transferee pursuant to a DRO.
8. OPTION NOT A SERVICE CONTRACT. This option is not an employment or
service contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the service of the Company
or any Affiliate of the Company, or of the Company or any Affiliate of the
Company to continue your service. In addition, nothing in this option shall
obligate the Company, its Affiliates, or their stockholders, Board of Directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or any Affiliate of the Company.
9. NOTICES. Any notices provided for in this option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
10. GOVERNING DOCUMENTS. This option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of this option, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control, to the extent not inconsistent
with the terms of the QUALCOMM Option and the Employee Benefits Agreement, which
also control the provisions of this option and modify the provisions of the
Plan.
27
Exhibit B Option Amendment Agreement and Release
28
OMNIBUS AMENDMENT TO
STOCK OPTION AGREEMENT(S)
___________, 1998
firstname~ name~, Optionee:
Effective this date, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Company") has amended
the stock option(s) granted to you under the Company's 1991 Stock Option Plan,
as amended from time to time (the "Plan") and identified on the attached Exhibit
B (the "Option(s)"). The changes to the terms of the Option(s) contained in this
Omnibus Amendment are mutually agreed to by you and the Company and (with the
exception of the adjustment in the per share exercise price(s) of the Option(s))
are in consideration for your execution of the Release Agreement (the "Release")
attached hereto as Exhibit A, and are set forth below:
1. For purposes of the Option(s) only, your service as an employee or
director of, or consultant to, Leap Wireless International, Inc. or any
Affiliate of Leap Wireless International, Inc. will be deemed Continuous
Service as an Employee, Director or Consultant under the Plan (a
transfer between Leap Wireless International, Inc. and any Affiliate of
Leap Wireless International, Inc. of your services, or a leave of
absence, that is approved by either the chief executive officer of Leap
Wireless International, Inc., or the board of directors of Leap Wireless
International, Inc. will not be deemed an interruption or termination of
such service qualifying as Continuous Service as an Employee, Director
or Consultant).
2. Notwithstanding the foregoing, the continuation of vesting under the
Option(s) shall toll until the effective date of the Release, and the
Option(s) shall terminate thirty (30) days after the termination of your
service as an employee of the Company, unless the Release shall have
become effective prior to that time.
3. Service as an employee, director or consultant for Leap Wireless
International, Inc. or any of its Affiliates will be deemed service as
such for the Company for purposes of determining, under the Plan, the
effect on the Option(s) of (a) a merger or consolidation in which the
Company is not the surviving corporation or (b) a reverse merger in
which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, and the surviving corporation
(whether under (a) or (b)) refuses
29
to assume or continue Options outstanding under the Plan, or to
substitute similar options for those outstanding under the Plan.
4. The per share exercise price of each of the Option(s), for the
remaining number of shares subject to the Option(s), is adjusted by
application of the following formula: ___________________, which results
in a per share exercise price [[of ____________] OR [as listed on the
attached Exhibit B for each of the Option(s)]].
Except as specifically amended and modified herein, the Option(s) shall
continue in force and effect under the terms, as originally granted, subject to
the provisions of the Plan.
Dated the ____ day of _____________, 1998.
Very truly yours,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
By:_________________________
The undersigned Optionee acknowledges receipt of this Omnibus Amendment
and understands and agrees that the rights and liabilities with respect to the
Option(s) are now described in the Option(s), this Omnibus Amendment, the
Release, and the Plan. Copies of the Option(s), the Release, and the Plan have
previously been received by Optionee.
____________________________________________
Optionee's signature
Address:______________________________
______________________________________
Attachments:
Exhibit A - Release Agreement
Exhibit B - List of the Option(s) Affected by this Omnibus Amendment [will need
to list on this exhibit, the adjusted exercise prices and the remaining number
of shares]
30
RELEASE AGREEMENT
[Employees 40 years of age and over]
I understand that my position with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Company")
terminates effective ___________, 1998 (the "Separation Date"). The Company has
agreed that if I choose to sign this Agreement, the Company will amend my stock
option(s) granted under the Company's 1991 Stock Option Plan and identified on
the attached Exhibit A (the "Option(s)"), to extend the time during which the
Option(s) may be exercised following the Separation Date and to permit
additional shares of stock that are subject to the Option(s), but for which the
Option(s) are not yet exercisable to possibly vest and become exercisable during
the remaining term of the Option(s) pursuant to that certain The Omnibus
Amendment, between me and the Company and dated, ____________ (the "The Omnibus
Amendment") which amends the Option(s) and to which this Release Agreement is an
attachment. I understand that I will be not entitled to the extension of
exercisability and the possibility of continued vesting following the Separation
Date under The Omnibus Amendment unless I sign this Agreement and it becomes
effective.
In consideration for the benefits that I will receive under The Omnibus
Amendment, I agree not to use or disclose any of the Company's proprietary
information without written authorization from the Company, to immediately
return all Company property and documents (including all embodiments of
proprietary information) and all copies thereof in my possession or control, and
to release the Company and its officers, directors, agents, attorneys,
employees, stockholders, and affiliates from any and all claims, liabilities,
demands, causes of action, attorneys' fees, damages, or obligations of every
kind and nature, whether they are known or unknown, arising at any time prior to
the date I sign this Agreement. This general release includes, but is not
limited to: all federal and state statutory and common law claims, claims
related to my employment or the termination of my employment or related to
breach of contract, tort, wrongful termination, discrimination, wages or
benefits, or claims for any form of compensation. In releasing claims unknown to
me at present, I am waiving all rights and benefits under Section 1542 of the
California Civil Code, and any law or legal principle of similar effect in any
jurisdiction: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE 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."
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"). I also acknowledge that the consideration given for
the waiver in the above paragraph is in addition to anything of value to which I
was already entitled. I have been advised by this writing, as required by the
ADEA that: (a) my waiver and release do not apply to any claims that may arise
after my signing of this Agreement; (b) I should consult with an attorney prior
to executing this release; (c) I have twenty-one (21) days within which to
consider this release (although I may choose to voluntarily execute this release
earlier); (d) I have seven (7) days following the execution of this release to
revoke the Agreement; and (e) this Agreement will not be effective until the
eighth day after this Agreement has been signed both by me and by the Company
("Effective Date").
The Omnibus Amendment and this Release Agreement constitute the complete, final
and exclusive embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly
31
stated in either document. The Omnibus Amendment and this Agreement may only be
modified by a writing signed by both me and a duly authorized officer of the
Company.
I accept and agree to the terms and conditions stated above:
_______________________________ ________________________________________
Date [Employee]
_______________________________ ________________________________________
Date ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
32
RELEASE AGREEMENT
[Employees under 40 years of age]
I understand that my position with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Company")
terminates effective ___________, 1998 (the "Separation Date"). The Company has
agreed that if I choose to sign this Agreement, the Company will amend my stock
option(s) granted under the Company's 1991 Stock Option Plan and identified on
the attached Exhibit A (the "Option(s)"), to extend the time during which the
Option(s) may be exercised following the Separation Date and to permit
additional shares of stock that are subject to the Option(s), but for which the
Option(s) are not yet exercisable to possibly vest and become exercisable during
the remaining term of the Option(s) pursuant to that certain Omnibus Amendment,
between me and the Company and dated, ____________ (the "Omnibus Amendment")
which amends the Option(s) and to which this Release Agreement is an attachment.
I understand that I will be not entitled to the extension of exercisability and
the possibility of continued vesting following the Separation Date under the
Omnibus Amendment unless I sign this Agreement and it becomes effective.
In consideration for the benefits that I will receive under the Omnibus
Amendment, I agree not to use or disclose any of the Company's proprietary
information without written authorization from the Company, to immediately
return all Company property and documents (including all embodiments of
proprietary information) and all copies thereof in my possession or control, and
to release the Company and its officers, directors, agents, attorneys,
employees, stockholders, and affiliates from any and all claims, liabilities,
demands, causes of action, attorneys' fees, damages, or obligations of every
kind and nature, whether they are known or unknown, arising at any time prior to
the date I sign this Agreement. This general release includes, but is not
limited to: all federal and state statutory and common law claims, claims
related to my employment or the termination of my employment or related to
breach of contract, tort, wrongful termination, discrimination, wages or
benefits, or claims for any form of compensation. In releasing claims unknown to
me at present, I am waiving all rights and benefits under Section 1542 of the
California Civil Code, and any law or legal principle of similar effect in any
jurisdiction: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE 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."
The Omnibus Amendment and this Release Agreement constitute the complete, final
and exclusive embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated in either document.
The Omnibus Amendment and this Agreement may only be modified by a writing
signed by both me and a duly authorized officer of the Company.
I accept and agree to the terms and conditions stated above:
_______________________________ ________________________________________
Date [Employee]
_______________________________ ________________________________________
Date ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇