LEAP WIRELESS INTERNATIONAL, INC. 2004 STOCK OPTION, RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN

 

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                                                                    EXHIBIT 10.2

 

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

 

                   STOCK OPTION GRANT NOTICE AND NON-QUALIFIED

                             STOCK OPTION AGREEMENT

 

         Leap Wireless International, Inc. (the "COMPANY"), pursuant to its 2004

Stock Option, Restricted Stock and Deferred Stock Unit Plan (the "PLAN"), hereby

grants to the holder listed below ("HOLDER"), an option to purchase the number

of shares of the Company's Common Stock set forth below (the "OPTION"). This

Option is subject to all of the terms and conditions as set forth herein and in

the Non-Qualified Stock Option Agreement attached hereto as Exhibit A (the

"STOCK OPTION AGREEMENT") and the Plan, each of which are incorporated herein by

reference. Unless otherwise defined herein, the terms defined in the Plan shall

have the same defined meanings in this Grant Notice and the Stock Option

Agreement.

 

HOLDER:

 

GRANT DATE:                              _________________

 

EXERCISE PRICE PER SHARE:                $___________ per share

 

TOTAL NUMBER OF SHARES SUBJECT TO THE

OPTION:                                  [_____]

 

EXPIRATION DATE:                         __________________

 

TYPE OF OPTION:    This Option is a Non-Qualified Stock Option and is not an

                  incentive stock option within the meaning of Section 422 of

                  the Code.

 

VESTING SCHEDULE: The shares of Common Stock subject to the Option (rounded down

                  to the next whole number of shares) shall vest and become

                  exercisable on the dates and in the percentages indicated in

                  Exhibit B to this Grant Notice.

 

         By his or her signature and the Company's signature below, Holder

agrees to be bound by the terms and conditions of the Plan, the Stock Option

Agreement and this Grant Notice. Holder has reviewed the Stock Option Agreement,

the Plan and this Grant Notice in their entirety, has had an opportunity to

obtain the advice of counsel prior to executing this Grant Notice and fully

understands all provisions of this Grant Notice, the Stock Option Agreement and

the Plan. Holder hereby agrees to accept as binding, conclusive and final all

decisions or interpretations of the Administrator of the Plan upon any questions

arising under the Plan or the Option.

 

LEAP WIRELESS INTERNATIONAL, INC.            HOLDER:

 

By: ___________________________________      By: ________________________________

Print Name: ___________________________      Print Name:

Title: ________________________________      Title: _____________________________

Address: 10307 Pacific Center Court          Address: ___________________________

         San Diego, California 92121                  ___________________________

 

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                                    EXHIBIT A

 

                          TO STOCK OPTION GRANT NOTICE

 

                       NON-QUALIFIED STOCK OPTION AGREEMENT

 

         Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which

this Non-Qualified Stock Option Agreement (this "AGREEMENT") is attached, Leap

Wireless International, Inc. (the "COMPANY") has granted to Holder an option

under the Company's 2004 Stock Option, Restricted Stock and Deferred Stock Unit

Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in

the Grant Notice.

 

                                    ARTICLE I

 

                                     GENERAL

 

         1.1 Defined Terms. Capitalized terms not specifically defined herein

shall have the meanings specified in the Plan and the Grant Notice.

 

         1.2 Incorporation of Terms of Plan. The Option is subject to the terms

and conditions of the Plan which are incorporated herein by reference.

 

                                   ARTICLE II

 

                                 GRANT OF OPTION

 

         2.1 Grant of Option. In consideration of Holder's past and/or continued

employment with or service to the Company or its Subsidiaries and for other good

and valuable consideration, effective as of the Grant Date set forth in the

Grant Notice (the "GRANT DATE"), the Company irrevocably grants to Holder the

Option to purchase any part or all of an aggregate of the number of shares of

Common Stock set forth in the Grant Notice, upon the terms and conditions set

forth in the Plan and this Agreement. The Option shall be a Non-Qualified Stock

Option and shall not be an incentive stock option within the meaning of Section

422 of the Code.

 

         2.2 Purchase Price. The purchase price of the shares of Common Stock

subject to the Option shall be as set forth in the Grant Notice, without

commission or other charge.

 

                                    ARTICLE III

 

                            PERIOD OF EXERCISABILITY

 

         3.1 Commencement of Exercisability.

 

                  (a) Subject to Sections 3.3 and 5.8, the Option shall become

vested and exercisable in such amounts and at such times as are set forth in

Exhibit B to the Grant Notice.

 

                  (b) No portion of the Option which has not become vested and

exercisable at Termination of Employment, Termination of Directorship or

Termination of Consultancy, as

 

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applicable, shall thereafter become vested and exercisable, except as may be

otherwise provided by the Administrator or as set forth in a written agreement

between the Company and Holder.

 

         3.2 Duration of Exercisability. The installments provided for in the

vesting schedule set forth in Exhibit B to the Grant Notice are cumulative. Each

such installment which becomes vested and exercisable pursuant to the vesting

schedule set forth in Exhibit B to the Grant Notice shall remain vested and

exercisable until it becomes unexercisable under Section 3.3.

 

         3.3 Expiration of Option.

 

                  (a) The Option may not be exercised to any extent by anyone

after the first to occur of the following events:

 

                           (i) The expiration of ten (10) years from the Grant

Date; or

 

                           (ii) The expiration of ninety (90) days following the

date of Holder's Termination of Employment, Termination of Directorship or

Termination of Consultancy, as applicable, unless such termination occurs by

reason of Holder's death or Disability (as defined below) or the Holder's

termination by the Company for Cause (as defined in Exhibit B hereto);

 

                           (iii) The expiration of one (1) year following the

date of Holder's Termination of Employment, Termination of Directorship or

Termination of Consultancy, as applicable, by reason of Holder's death or

Disability; or

 

                           (iv) The date of Termination of Employment,

Termination of the Directorship, or Termination of Consultancy for Cause (as

defined in Exhibit B hereto).

 

                  (b) For purposes of this Agreement, "Disability" means

permanent and total disability within the meaning of Section 22(e)(3) of the

Code.

 

                                   ARTICLE IV

 

                               EXERCISE OF OPTION

 

         4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b)

and 5.2(c), during the lifetime of Holder, only Holder may exercise the Option

or any portion thereof. After the death of Holder, any exercisable portion of

the Option may, prior to the time when the Option becomes unexercisable under

Section 3.3, be exercised by Holder's personal representative or by any person

empowered to do so under the deceased Holder's will or under the then applicable

laws of descent and distribution.

 

         4.2 Partial Exercise. Any exercisable portion of the Option or the

entire Option, if then wholly exercisable, may be exercised in whole or in part

at any time prior to the time when the Option or portion thereof becomes

unexercisable under Section 3.3.

 

         4.3 Manner of Exercise. The Option, or any exercisable portion thereof,

may be exercised solely by delivery to the Secretary of the Company or the

Secretary's office of all

 

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of the following prior to the time when the Option or such portion thereof

becomes unexercisable under Section 3.3:

 

                  (a) An Exercise Notice in writing signed by Holder or any

other person then entitled to exercise the Option or portion thereof, stating

that the Option or portion thereof is thereby exercised, such notice complying

with all applicable rules established by the Administrator. Such notice shall be

substantially in the form attached as Exhibit C to the Grant Notice (or such

other form as is prescribed by the Administrator); and

 

                  (b) Subject to Section 6.2(d) of the Plan:

 

                           (i) Full payment (in cash or by check) for the shares

with respect to which the Option or portion thereof is exercised; or

 

                           (ii) With the consent of the Administrator, such

payment may be made, in whole or in part, through the delivery of shares of

Common Stock which have been owned by Holder for at least six (6) months, duly

endorsed for transfer to the Company with a Fair Market Value on the date of

delivery equal to the aggregate exercise price of the Option or exercised

portion thereof; or

 

                            (iii) To the extent permitted under applicable laws,

through the delivery of a notice that Holder has placed a market sell order with

a broker with respect to shares of Common Stock then issuable upon exercise of

the Option, and that the broker has been directed to pay a sufficient portion of

the net proceeds of the sale to the Company in satisfaction of the Option

exercise price, provided, that payment of such proceeds is made to the Company

upon settlement of such sale; or

 

                           (iv) With the consent of the Administrator, any

combination of the consideration provided in the foregoing paragraphs (i), (ii)

and (iii); and

 

                  (c) A bona fide written representation and agreement, in such

form as is prescribed by the Administrator, signed by Holder or the other person

then entitled to exercise such Option or portion thereof, stating that the

shares of Common Stock are being acquired for Holder's own account, for

investment and without any present intention of distributing or reselling said

shares or any of them except as may be permitted under the Securities Act and

then applicable rules and regulations thereunder, and that Holder or other

person then entitled to exercise such Option or portion thereof will indemnify

the Company against and hold it free and harmless from any loss, damage, expense

or liability resulting to the Company if any sale or distribution of the shares

by such person is contrary to the representation and agreement referred to

above. The Administrator may, in its absolute discretion, take whatever

additional actions it deems appropriate to ensure the observance and performance

of such representation and agreement and to effect compliance with the

Securities Act and any other federal or state securities laws or regulations.

Without limiting the generality of the foregoing, the Administrator may require

an opinion of counsel acceptable to it to the effect that any subsequent

transfer of shares acquired on an Option exercise does not violate the

Securities Act, and may issue stop-transfer orders covering such shares. Share

certificates evidencing Common Stock issued on exercise of the Option shall bear

an appropriate legend referring to the

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provisions of this subsection (c) and the agreements herein. The written

representation and agreement referred to in the first sentence of this

subsection (c) shall, however, not be required if the shares to be issued

pursuant to such exercise have been registered under the Securities Act, and

such registration is then effective in respect of such shares; and

 

                  (d) The receipt by the Company of full payment for such

shares, including payment of any applicable withholding tax, which in the

discretion of the Administrator may be in the form of consideration used by

Holder to pay for such shares under Section 4.3(b), subject to Section 10.4 of

the Plan; and

 

                  (e) In the event the Option or portion thereof shall be

exercised pursuant to Section 4.1 by any person or persons other than Holder,

appropriate proof of the right of such person or persons to exercise the Option.

 

         4.4 Conditions to Issuance of Stock Certificates. The shares of Common

Stock deliverable upon the exercise of the Option, or any portion thereof, may

be either previously authorized but unissued shares or issued shares which have

then been reacquired by the Company. Such shares shall be fully paid and

nonassessable. The Company shall not be required to issue or deliver any shares

of Common Stock purchased upon the exercise of the Option or portion thereof

prior to fulfillment of all of the following conditions:

 

                  (a) The admission of such shares to listing on all stock

exchanges on which such Common Stock is then listed; and

 

                  (b) The completion of any registration or other qualification

of such shares under any state or federal law or under rulings or regulations of

the Securities and Exchange Commission or of any other governmental regulatory

body, which the Administrator shall, in its absolute discretion, deem necessary

or advisable; and

 

                  (c) The obtaining of any approval or other clearance from any

state or federal governmental agency which the Administrator shall, in its

absolute discretion, determine to be necessary or advisable; and

 

                  (d) The lapse of such reasonable period of time following the

exercise of the Option as the Administrator may from time to time establish for

reasons of administrative convenience; and

 

                  (e) The receipt by the Company of full payment for such

shares, including payment of any applicable withholding tax, which in the

discretion of the Administrator may be in the form of consideration used by the

Holder to pay for such shares under Section 4.3(b), subject to Section 10.4 of

the Plan.

 

         4.5 Rights as Stockholder. Holder of the Option shall not be, nor have

any of the rights or privileges of, a stockholder of the Company in respect of

any shares purchasable upon the exercise of any part of the Option unless and

until such shares shall have been issued by the Company to such holder.

 

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                                    ARTICLE V

 

                                OTHER PROVISIONS

 

         5.1 Administration. The Administrator shall have the power to interpret

the Plan and this Agreement and to adopt such rules for the administration,

interpretation and application of the Plan as are consistent therewith and to

interpret, amend or revoke any such rules. All actions taken and all

interpretations and determinations made by the Administrator in good faith shall

be final and binding upon Holder, the Company and all other interested persons.

No member of the Administrator shall be personally liable for any action,

determination or interpretation made in good faith with respect to the Plan,

this Agreement or the Option. In its absolute discretion, the Board may at any

time and from time to time exercise any and all rights and duties of the

Administrator under the Plan and this Agreement.

 

         5.2 Option Not Transferable.

 

                  (a) Subject to Section 5.2(b), the Option may not be sold,

pledged, assigned or transferred in any manner other than by will or the laws of

descent and distribution or, subject to the consent of the Administrator,

pursuant to a DRO, unless and until the shares underlying the Option have been

issued, and all restrictions applicable to such shares have lapsed. Neither the

Option nor any interest or right therein shall be liable for the debts,

contracts or engagements of Holder or his or her successors in interest or shall

be subject to disposition by transfer, alienation, anticipation, pledge,

encumbrance, assignment or any other means whether such disposition be voluntary

or involuntary or by operation of law by judgment, levy, attachment, garnishment

or any other legal or equitable proceedings (including bankruptcy), and any

attempted disposition thereof shall be null and void and of no effect, except to

the extent that such disposition is permitted by the preceding sentence.

 

                  (b) Notwithstanding any other provision in this Agreement,

with the consent of the Administrator and to the extent the Option is not

intended to qualify as an Incentive Stock Option, the Option may be transferred

to one or more Permitted Transferees, subject to the terms and conditions set

forth in Section 10.1 of the Plan.

 

                  (c) Unless transferred to a Permitted Transferee in accordance

with Section 5.2(b), during the lifetime of Holder, only Holder may exercise the

Option or any portion thereof unless it has been disposed of pursuant to a DRO.

After the death of Holder, any exercisable portion of the Option may, prior to

the time when the Option becomes unexercisable under Section 3.3, be exercised

by Holder's personal representative or by any person empowered to do so under

the deceased Holder's will or under the then applicable laws of descent and

distribution.

 

         5.3 Restrictive Legends and Stop-Transfer Orders.

 

                  (a) The share certificate or certificates evidencing the

shares of Common Stock purchased hereunder shall be endorsed with any legends

that may be required by state or federal securities laws.

 

                  (b) Holder agrees that, in order to ensure compliance with the

restrictions referred to herein, the Company may issue appropriate "stop

transfer" instructions to its transfer

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agent, if any, and that, if the Company transfers its own securities, it may

make appropriate notations to the same effect in its own records.

 

                  (c) The Company shall not be required: (i) to transfer on its

books any shares of Common Stock that have been sold or otherwise transferred in

violation of any of the provisions of this Agreement, or (ii) to treat as owner

of such shares of Common Stock or to accord the right to vote or pay dividends

to any purchaser or other transferee to whom such shares shall have been so

transferred.

 

         5.4 Shares to Be Reserved. The Company shall at all times during the

term of the Option reserve and keep available such number of shares of Common

Stock as will be sufficient to satisfy the requirements of this Agreement.

 

         5.5 Notices. Any notice to be given under the terms of this Agreement

to the Company shall be addressed to the Company in care of the Secretary of the

Company, and any notice to be given to Holder shall be addressed to Holder at

the address given beneath Holder's signature on the Grant Notice. By a notice

given pursuant to this Section 5.5, either party may hereafter designate a

different address for notices to be given to that party. Any notice which is

required to be given to Holder shall, if Holder is then deceased, be given to

the person entitled to exercise his or her Option pursuant to Section 4.1 by

written notice under this Section 5.5. Any notice shall be deemed duly given

when sent via email or when sent by certified mail (return receipt requested)

and deposited (with postage prepaid) in a post office or branch post office

regularly maintained by the United States Postal Service.

 

         5.6 Titles. Titles are provided herein for convenience only and are not

to serve as a basis for interpretation or construction of this Agreement.

 

         5.7 G