THIRD
AMENDMENT TO AMENDED AND RESTATED
EXECUTIVE
EMPLOYMENT AGREEMENT
THIS THIRD
AMENDMENT TO AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
(this “Amendment”), effective as of December 31,
2008, is entered into by and among LEAP WIRELESS INTERNATIONAL,
INC., a Delaware corporation (“Parent”), CRICKET
COMMUNICATIONS, INC., a Delaware corporation (the
“Company”), and S. Douglas Hutcheson
(“EXECUTIVE”). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the
Existing Agreement (as defined below). All Paragraph, Exhibit and
Attachment references in this Amendment are to Paragraphs, Exhibits
and Attachments of the Existing Agreement.
WHEREAS, Parent,
the Company and EXECUTIVE are parties to that certain Amended and
Restated Executive Employment Agreement, effective as of
January 10, 2005, as amended by (i) that certain First
Amendment to Amended and Restated Executive Employment Agreement,
effective as of June 17, 2005 and (ii) that certain
Second Amendment to Amended and Restated Executive Employment
Agreement, effective as of February 17, 2006 (as amended, the
“Existing Agreement”); and
WHEREAS, Parent,
the Company and EXECUTIVE desire to amend the Existing Agreement to
(i) ensure that the benefits to be provided by the Existing
Agreement comply with or are exempt from the provisions of
Section 409A of the United States Internal Revenue Code, as
amended and (ii) make certain other revisions to the severance
benefits provided to EXECUTIVE hereunder to correspond to the terms
of a certain Severance Benefit Agreement approved by Parent’s
Compensation Committee in 2008 to be entered into with
Parent’s officers.
NOW, THEREFORE, in
consideration of the foregoing, the parties hereby amend the
Existing Agreement as follows:
1.
Paragraph 3 of the Existing Agreement .
Paragraph 3 of the Existing Agreement is hereby amended and
restated to read as follows:
3.1 EXECUTIVE
shall be employed pursuant to the terms of this Agreement for a
term beginning on the Effective Date and expiring at midnight on
December 31, 2009. The term of employment, including any
extension period contemplated in Paragraph 3.2 below, shall be
referred to as the “Employment Period.”
3.2 This Agreement
and EXECUTIVE’s employment hereunder may be extended for such
period following December 31, 2009, and upon such terms and
conditions, as shall be mutually agreed upon by the Company, Parent
and EXECUTIVE and set forth in a written amendment to this
Agreement; provided, however, that commencing on December 31,
2009 and on each December 31 thereafter, the term of this
Agreement shall be automatically extended for one additional year
unless, not later than the immediately preceding January 1,
the Company or Parent shall have given notice to EXECUTIVE that the
term of this Agreement shall not be further extended.
3.3
Notwithstanding Paragraphs 3.1 and 3.2, EXECUTIVE’s
employment may terminate in accordance with Paragraph 5 and,
in the event of such termination, the Employment Period shall end
on the Date of Termination (as defined in Paragraph 5.8
below).
3.4 EXECUTIVE and
the Company acknowledge and agree that the expiration of the term
of this Agreement alone shall not constitute a termination of
EXECUTIVE’s employment relationship with the Company, which
shall continue on an at-will basis beyond the term of this
Agreement until otherwise terminated by the Company or EXECUTIVE.
If this Agreement expires without a concurrent termination of
EXECUTIVE’s employment, EXECUTIVE shall not be entitled to
any benefits under Paragraph 5 of this Agreement as a result
of the expiration of the term of this Agreement.”
2.
Paragraph 4.8 of the Existing Agreement .
Paragraph 4.8 of the Existing Agreement is hereby amended and
restated to read as follows: “[Intentionally
Omitted]”
3.
Paragraph 5 of the Existing Agreement .
Paragraph 5 of the Existing Agreement is hereby amended and
restated to read as follows:
“5.1
Termination For Death . EXECUTIVE’s employment under
this Agreement shall terminate without notice upon the date of
EXECUTIVE’s death. In the event of EXECUTIVE’s death,
all rights of EXECUTIVE to compensation hereunder shall
automatically terminate immediately upon his death, except that
EXECUTIVE’s heirs, personal representatives or estate shall
be entitled to any unpaid portion of his salary and accrued
benefits earned up to the date of his death, including a pro rata
share of EXECUTIVE’s Target Performance Bonus for the year of
his death.
5.2 Termination
For Disability . The Company may terminate EXECUTIVE’s
employment under this Agreement after thirty (30) days notice
in the event that EXECUTIVE is unable to substantially perform his
duties for an aggregate period of sixty (60) days during any
180-day period resulting from EXECUTIVE’s incapacity due to a
physical or mental disability after attempts to reasonably
accommodate EXECUTIVE’s disability have failed. In the event
that, during the Employment Period, EXECUTIVE’s employment is
terminated for disability, EXECUTIVE shall be entitled to any
unpaid portion of his salary and accrued benefits earned up to the
Date of Termination, including a pro rata share of
EXECUTIVE’s Target Performance Bonus for the year in which
his termination occurs.
5.3 Termination
for Cause . The Company may terminate EXECUTIVE’s
employment under this Agreement for Cause (as defined in
Paragraph 5.5 below). In the event that EXECUTIVE’s
employment is terminated by the Company for Cause during the
Employment Period, EXECUTIVE shall be entitled to any unpaid
portion of his salary and accrued benefits earned up to the Date of
Termination.
5.4 Termination
Other Than for Cause or Resignation by EXECUTIVE . The Company
may terminate EXECUTIVE’s employment under this Agreement
other than for Cause and EXECUTIVE may terminate his employment
under this Agreement for any reason. In the event that
EXECUTIVE’s employment is terminated by the Company other
than for Cause, or by EXECUTIVE for Good Reason, EXECUTIVE shall be
entitled to the following:
5.4.1
EXECUTIVE shall be entitled to any unpaid portion of his salary and
accrued benefits earned up to the Date of Termination.
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5.4.2
The Company shall pay to EXECUTIVE, following the date of his
termination of employment and in accordance with
Paragraph 5.11, a lump sum severance benefit in cash in the
amount equal to (a) two (2) times the sum of
(i) EXECUTIVE’S Base Salary and (ii) EXECUTIVE’s
annual Target Performance Bonus plus (b) if none of the health
benefits provided by Parent or the Company (or any parent,
subsidiary or successor thereof) to EXECUTIVE are self-funded as of
the date of EXECUTIVE’s Date of Termination, an amount equal
to six (6) multiplied by the monthly premium EXECUTIVE would be
required to pay for continued COBRA Coverage (as defined below) for
EXECUTIVE and his eligible dependents (calculated by reference to
the premium as of the date of EXECUTIVE’s Date of
Termination).
5.4.3.
To the extent EXECUTIVE elects continuation health care coverage
for EXECUTIVE and his eligible dependents under Section 4980B
of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”), and Sections 601-608 of the Employee
Retirement Income Security Act of 1974, as amended from time to
time (collectively, “COBRA Coverage”), EXECUTIVE shall
not -
be required to pay premiums for such
COBRA Coverage for the eighteen (18) month period commencing
on the Date of Termination (or, if earlier, until EXECUTIVE is
eligible for comparable coverage with a subsequent employer). The
COBRA Coverage shall be provided in reliance on the exemption from
Section 409A of the Code under Treasury
Regulation Section 1.409A-1(a)(5).
If
any of the health benefits provided by Parent or the Company (or
any parent, subsidiary or successor thereof) to EXECUTIVE are
self-funded as of the date of EXECUTIVE’s Date of
Termination, instead of providing health insurance benefits as set
forth above, the Company shall instead elect to either:
(i) pay to EXECUTIVE a lump sum payment in amount equal to
twenty-four (24) multiplied by the monthly premium EXECUTIVE
would be required to pay for continued COBRA Coverage for himself
and his eligible dependents (calculated by reference to the premium
as of the Date of Termination) (the “COBRA Payment”),
grossed-up for applicable taxes, with such amount to be paid to
EXECUTIVE following the Date of Termination and in accordance with
Paragraph 5.11; or (ii) withhold the amount of the COBRA
Payment and apply such amount, on an after-tax basis, to
EXECUTIVE’s premiums for COBRA Coverage for the twenty-four
(24) months following the Date of Termination, without regard
to whether EXECUTIVE receives COBRA Coverage for the entire period,
with such amount to be reported on EXECUTIVE’s Form W-2. Any
tax gross-up pursuant to this Paragraph 5.4.3 shall be paid in
accordance with Treasury
Regulation Section 1.409A-3(i)(1)(v).
5.4.4.
EXECUTIVE shall not be required to mitigate the amount of any
payment provided for in this Paragraph 5.4 by seeking other
employment or otherwise nor, except as provided in
Paragraph 5.4.3, shall the amount of any payment or benefit
provided for in this Paragraph 5.4 be reduced by any
compensation or benefits earned by EXECUTIVE as the result of
employment by another employer or self-employment, by retirement
benefits, by offset against any amount claimed to be owed by
EXECUTIVE to the Company, or otherwise.
5.5 Definition
of “Cause” . For purposes of this Paragraph 5,
“Cause” shall mean any one or more of the following
occurrences:
5.5.1
EXECUTIVE’s material breach of any provision of the Invention
Disclosure, Confidentiality and Proprietary Rights Agreement or any
other agreement between EXECUTIVE and the Company (or any parent or
subsidiary of the Company or any successor thereof), after a
written notice from the Company is delivered to EXECUTIVE
describing EXECUTIVE’s breach and EXECUTIVE is afforded a
period of at least thirty (30) days to correct the breach and
fails to do so within such period;
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5.5.2
EXECUTIVE’S conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for
(i) any felony, or (ii) other illegal conduct (other than
minor traffic violations) that is likely to inflict or has
inflicted material injury on the business of the Company (or any
parent or subsidiary of the Company or any successor
thereof);
5.5.3
EXECUTIVE’S commission of an act of fraud, embezzlement or
dishonesty, whether prior to or subsequent to the date hereof upon
the Company (or any parent or subsidiary of the Company or any
successor thereof);
5.5.4
EXECUTIVE’S willful neglect of or willful failure to
substantially perform (i) EXECUTIVE’S duties with the Company
(or any parent or subsidiary of the Company or any successor
thereof) or (ii) the lawful and reasonable directions of the
Board of Directors of the Company (or any parent or subsidiary of
the Company or any successor thereof which employs EXECUTIVE or for
which EXECUTIVE serves as an officer) (other than any such neglect
or failure occurring after EXECUTIVE’S issuance of a Notice
of Termination for Good Reason), after a written notice from the
Company is delivered to EXECUTIVE describing EXECUTIVE’S
neglect or failure to perform and EXECUTIVE is afforded a period of
at least thirty (30) days to correct the neglect or failure to
perform and fails to do so within such period; or
5.5.5
EXECUTIVE’S gross misconduct affecting or material violation
of any duty of loyalty to the Company (or any parent or subsidiary
of the Company or any successor thereof).
Notwithstanding
the foregoing, EXECUTIVE’s employment shall not be deemed
terminated for “Cause” pursuant to this
Paragraph 5.5 unless and until there shall have been delivered
to EXECUTIVE a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the
Board of Directors of the Company or Parent at a meeting of the
Board of Directors of the Company or Parent held within three
(3) days (or such longer time period as the Board of Directors
of the Company or Parent may determine) after the Company or Parent
provides EXECUTIVE with notice that it has determined that an event
described in this Paragraph 5.5 has occurred, at which
EXECUTIVE, together with EXECUTIVE’s counsel may be heard for
a period of no more than three (3) hours before the Company or
Parent. The determination of whether the EXECUTIVE’s
employment shall be terminated for “Cause” shall be
made by the Board of Directors of the Company or Parent in its sole
discretion.
5.6 Definition
of “Good Reason” . For purposes of this
Paragraph 5, “Good Reason” shall mean, without
EXECUTIVE’s express written consent, the occurrence of any of
the following circumstances:
5.6.1
a material diminution in EXECUTIVE’s authority, duties or
responsibilities with the Company (or any parent or subsidiary of
the Company or any successor thereof), including, without
limitation, the continuous assignment to EXECUTIVE of any duties
materially inconsistent with EXECUTIVE’s position with the
Company (or any parent or subsidiary of the Company or any
successor thereof), a material negative change in the nature or
status of EXECUTIVE’s responsibilities or the conditions of
EXECUTIVE’s employment with the Company (or any parent or
subsidiary of the Company or any successor thereof);
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5.6.2
a material diminution in EXECUTIVE’s annualized cash and
benefits compensation opportunity, which shall include
EXECUTIVE’s base compensation, EXECUTIVE’s annual
Target Performance Bonus opportunity and EXECUTIVE’s
aggregate employee benefits, as in effect on the Effective Date as
the same may be increased from time to time thereafter;
5.6.3
a material change in the geographic location at which EXECUTIVE
must perform his duties (and the Company and EXECUTIVE agree that
any involuntary relocation of the Company’s offices (or the
offices of any parent or subsidiary of the Company or any successor
thereof) at which EXECUTIVE is principally employed to a location
more than sixty (60) miles from such location would constitute
a material change); or
5.6.4
any other action or inaction that constitutes a material breach by
the Company (or any parent or subsidiary of the Company or any
successor thereof) of its obligations to EXECUTIVE under this
Agreement.
EXECUTIVE’s
right to terminate employment with the Company (or any parent or
subsidiary of the Company or any successor thereof) pursuant to
this Paragraph 5.6 shall not be affected by EXECUTIVE’s
incapacity due to physical or mental illness. EXECUTIVE’s
continued employment with the Company (or any parent or subsidiary
of the Company or any successor thereof) shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
EXECUTIVE
must provide written notice to the Company of the occurrence of any
of the foregoing events or conditions without EXECUTIVE’s
written consent within ninety (90) days of the initial
occurrence of such event or condition. The Company (or any parent
or subsidiary of the Company or any successor thereof) shall have a
period of thirty (30) days to cure such event or condition
after receipt of written notice of such event or condition from
EXECUTIVE. EXECUTIVE’s termination of employment by reason of
resignation from employment with the Company for Good Reason must
occur within one (1) year following the initial existence of
the event or condition constituting Good Reason.
5.7 Notice of
Termination . Any purported termination of EXECUTIVE’s
employment by the Company for Cause or other than for Cause, or by
EXECUTIVE for Good Reason, shall be communicated by Notice of
Termination to the other party hereto in accordance with Paragraph
10. “Notice of Termination” shall mean a written notice
that shall indicate the specific termination provision in this
Paragraph 5 relied upon and shall set forth in reasonable
detail any facts and circumstances claimed to provide a basis for
the termination of employment under the provision so
indicated.
5.8 Definition
of “Date of Termination” . For purposes of this
Paragraph 5, “Date of Termination” shall mean the
date of EXECUTIVE’s termination of employment.
5.9 Delivery of
Release . In consideration of, and as a condition to receiving,
the benefits to be provided to EXECUTIVE under this
Paragraph 5 (other than any unpaid portion of his salary and
accrued benefits earned up to the Date of Termination), EXECUTIVE
(or, in the event of EXECUTIVE’s death, the executor or legal
representative of his estate) shall execute and deliver to the
Company and to Parent, the “General Release” set forth
on Exhibit B hereto on or after the Date of Termination and
not later than twenty-one (21) days after the Date of
Termination (or, in the event that the termination of
EXECUTIVE’s employment with the Company is in connection with
an exit incentive or other employment termination
program
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offered to a
group or class of employees, not later than forty-five
(45) days after the Date of Termination (or, if later, the
date EXECUTIVE is provided with the information required in
accordance with Section 3(f) of the General Release)). In the event
that EXECUTIVE fails to execute and deliver the General Release in
accordance with this Paragraph 5.9, or EXECUTIVE revokes the
General Release in accordance with the terms thereof, EXECUTIVE
shall not receive the benefits set forth in this Paragraph 5
(other than any unpaid portion of his salary and accrued benefits
earned up to the Date of Termination).
5.10 Further
Agreements . As further consideration for the benefits to be
provided under this Paragraph 5 (other than any unpaid portion
of his salary and accrued benefits earned up to the Date of
Termination), EXECUTIVE hereby agrees as follows:
5.10.1
Confidentiality . For the period of three (3) years
commencing on the Date of Termination, EXECUTIVE shall not,
directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined
below). EXECUTIVE agrees that, upon termination of
EXECUTIVE’s employment with the Company, all Confidential
Information in EXECUTIVE’s possession that is in writing or
other tangible form (together with all copies or duplicates
thereof, including computer files) shall be returned to the Company
and shall not be retained by EXECUTIVE or furnished to any third
party, in any form except as provid
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