EXHIBIT
10.7
AMENDED AND RESTATED
SEVERANCE BENEFITS AGREEMENT
This
Amended and Restated Severance Benefits Agreement (this
“Agreement”) by and between
(“Executive”), Leap Wireless International, Inc., a
Delaware corporation (“Leap”), and Cricket
Communications, Inc., a Delaware corporation
(“Cricket”) (individually, a “Party” and
collectively, the “Parties”) is made and entered into
as of [Insert Date] (the “Effective Date”). Leap and
Cricket are hereinafter collectively referred to as the
“Companies.”
WHEREAS,
Leap, Cricket and Executive entered into a Severance Benefits
Agreement, dated as of
(the “Prior Agreement”); and
WHEREAS,
Leap, Cricket and Executive desire to amend and restate the Prior
Agreement to revise the definitions of “Cause” and
“Good Reason,” to conform to the requirements of
Section 409A of the Code (as defined below) and the Treasury
Regulations thereunder, or certain exemptions from Section 409A of
the Code, and to make additional revisions as set forth herein;
and
WHEREAS,
Executive is an officer of Leap and Cricket, and is presently
employed by Cricket; and
WHEREAS,
Cricket desires to provide Executive with certain severance
benefits as an incentive to remain in the employ of Cricket;
and
WHEREAS,
the Boards of Directors of Leap and Cricket have determined that it
is in the best interests of Leap and Cricket, respectively, and
their stockholders, to enter in this amendment and restatement of
the Prior Agreement.
NOW,
THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged
by each Party hereto, the Parties hereby agree as follows:
1.
Term of Agreement . This Agreement shall
commence on the Effective Date and shall continue in effect through
December 31, 2008; provided, however, that commencing on
December 31, 2008 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, Leap or Cricket shall have given notice to
Executive that the term of this Agreement shall not be further
extended. [Revise 2008 dates for agreements entered into after
December 31, 2008].
2.
Severance Benefits .
a.
Severance Benefits . In the event of the Involuntary
Termination (as defined below) of Executive during the term of this
Agreement, Executive shall be entitled to the following:
(i)
Cricket shall pay promptly to Executive, following the date of the
Involuntary Termination, Executive’s accrued, unpaid base
salary through the date of the Involuntary Termination, and Leap
and Cricket, as applicable, shall pay all other amounts to which
Executive is then entitled under any compensation or benefit plan
of Leap and Cricket in accordance with the terms and conditions of
such plans.
(ii)
Cricket shall pay to Executive, following the date of the
Involuntary Termination and in accordance with Section 2(i), a
lump sum severance benefit in cash (the “Severance
Payment”) in the amount set forth on Attachment A
hereto.
(iii)
To the extent Executive elects continuation health care coverage
for Executive and his or her eligible dependents under
Section 4980B(f) 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 (“COBRA Coverage”), Executive
shall not be required to pay premiums for such COBRA Coverage for
the time period set forth on Attachment A hereto,
commencing on the date of Involuntary Termination (or, if earlier,
until Executive is eligible for comparable coverage with a
subsequent employer).
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b. |
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Cause . For purposes of this Section 2,
“Cause” shall mean any one or more of the following
occurrences: |
(i)
Executive’s material breach of any provision of the Employee
Confidentiality and Invention Assignment Agreement or any other
agreement between Executive and Cricket (or any parent or
subsidiary of Cricket or any successor thereof), after a written
notice from Cricket 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;
(ii)
Executive’s conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for
(a) any felony, or (b) other illegal conduct (other than
minor traffic violations) that is likely to inflict or has
inflicted material injury on the business of Cricket (or any parent
or subsidiary of Cricket or any successor thereof);
(iii)
Executive’s commission of an act of fraud, embezzlement or
dishonesty, whether prior to or subsequent to the date hereof upon
Cricket (or any parent or subsidiary of Cricket or any successor
thereof);
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(iv)
Executive’s willful neglect of or willful failure to
substantially perform (A) Executive’s duties with
Cricket (or any parent or subsidiary of Cricket or any successor
thereof) or (B) the lawful and reasonable directions of the
Board of Directors of Cricket (or any parent or subsidiary of
Cricket or any successor thereof which employs Executive or for
which Executive serves as an officer) or of the individual to whom
Executive reports( 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 Cricket 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
(v)
Executive’s gross misconduct affecting or material violation
of any duty of loyalty to Cricket (or any parent or subsidiary of
Cricket or any successor thereof).
c. Good Reason . For purposes
of this Section 2, “Good Reason” shall mean,
without Executive’s express written consent, the occurrence
of any of the following circumstances:
(i)
a material diminution in Executive’s authority, duties or
responsibilities with Cricket (or any parent or subsidiary of
Cricket or any successor thereof), including, without limitation,
the continuous assignment to Executive of any duties materially
inconsistent with Executive’s position with Cricket (or any
parent or subsidiary of Cricket or any successor thereof), or a
material negative change in the nature or status of
Executive’s responsibilities or the conditions of
Executive’s employment with Cricket (or any parent or
subsidiary of Cricket or any successor thereof);
(ii)
a material diminution in Executive’s annualized cash and
benefits compensation opportunity, which shall include
Executive’s base compensation, Executive’s annual
target 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;
(iii)
a material change in the geographic location at which Executive
must perform his or her duties (and Cricket and Executive agree
that any involuntary relocation of Cricket’s offices (or the
offices of any parent or subsidiary of Cricket 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
(iv)
any other action or inaction that constitutes a material breach by
Cricket (or any parent or subsidiary of Cricket or any successor
thereof) of its obligations to Executive under this
Agreement.
Executive’s right to terminate employment with Cricket (or
any parent or
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subsidiary of
Cricket or any successor thereof) pursuant to this
Section 2(c) shall not be affected by Executive’s
incapacity due to physical or mental illness. Executive’s
continued employment with Cricket (or any parent or subsidiary of
Cricket 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 Cricket 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. Cricket (or any parent or subsidiary of
Cricket 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.
d.
Involuntary Termination . For purposes of this Agreement,
“Involuntary Termination” shall mean
(a) Executive’s Separation from Service by reason of a
termination of employment by the Cricket other than for Cause, or
(b) Executive’s Separation from Service by reason of
resignation of employment with the Cricket for Good Reason.
Executive’s Separation from Service by reason of resignation
from employment with the Cricket for Good Reason shall be treated
as involuntary. Executive’s Separation from Service by reason
of resignation from employment with Cricket for Good Reason shall
be an “Involuntary Termination” only if such Separation
from Service occurs within one (1) year following the initial
existence of the event or condition constituting Good Reason.
Executive’s Separation from Service by reason of
Executive’s death or disability shall not constitute an
Involuntary Termination.
e.
Separation from Service . For purposes of this Agreement,
“Separation from Service,” with respect to Executive
means Executive’s “separation from service,” as
defined in Treasury Regulation Section 1.409A-1(h).
g.
Date of Termination . For purposes of this Agreement,
“Date of Termination” shall mean the date of
Executive’s Separation from Service.
h.
General Release . In consideration of, and as a condition to
receiving, the severance benefits to be provided to Executive under
Sections 2(a)(ii) and (iii), Executive shall execute and
deliver to the Companies the “General Release” set
forth on Attachment B hereto on or after the date of the
Involuntary Termination and not later than twenty-one
(21) days after the date of the Involuntary Termination (or,
in the event that the Involuntary Termination of Executive is in
connection with an exit incentive or other employment termination
program offered to a group or class of employees, not later than
forty-five (45) days after the date of the Involuntary
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 to the Companies the General Release in accordance with
this Section 2(f) within fifty-five (55) days following the
Date of Termination, or Executive revokes the General Release in
accordance with the terms thereof, Executive shall not receive the
severance benefits set forth in Sections 2(a)(ii) and
(iii).
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i.
Timing of Severance Payment . Subject to Section 3(b),
the Severance Payment provided for in Section 2(a)(ii) shall
be made not later than the tenth (10 th ) day following
the date on which the General Release by Executive becomes
irrevocable.
3. Code
Section 409A .
a.
Short-Term Deferral Exemption . This Agreement is not
intended to provide for any deferral of compensation subject to
Section 409A of the Code and, accordingly, the Severance
Payment payable under Section 2(a)(ii) shall be paid not later
than the later of: (i) the fifteenth (15 th ) day of the
third (3 rd ) month
following Executive’s first taxable year in which such
severance benefit is no longer subject to a substantial risk of
forfeiture, and (ii) the fifteenth (15 th ) day of the
third (3 rd ) month
following first taxable year of the Companies in which such
severance benefit is no longer subject to substantial risk of
forfeiture, as determined in accordance with Section 409A of
the Code and any Treasury Regulations and other guidance issued
thereunder.
b.
Delayed Distribution under Section 409A of the Code.
Notwithstanding anything to the contrary in this Agreement, if
Executive is a Specified Employee on the date of Executive’s
Involuntary Termination, to the extent that the payments or
benefits under this Agreement are subject to Section 409A of
the Code and the delayed payment or distribution of all or any
portion of such amounts to which Executive is entitled under this
Agreement is required in order to avoid a prohibited distribution
under Section 409A(a)(2)(B)(i) of the Code, then such portion shall
be paid or distributed to Executive during the thirty (30) day
period commencing on the earlier of (a) the expiration of the
six (6)-month period measured from the date of Executive’s
Separation from Service or (b) the date of Executive’s
death. Upon the expiration of the applicable six (6) month
period under Section 409A(a)(2)(B)(i) of the Code, all
payments deferred pursuant to this Section 3(b) shall be paid in a
lump sum payment to Executive . Any remaining payments due
under the Agreement shall be paid as otherwise provided
herein.
c.
Transition Relief . As provided in Internal Revenue Notice
2006-79 and 2007-86, notwithstanding any other provision of this
Agreement, with respect to an election or amendment to change a
time and form of payment under this Agreement made on or after
January 1, 2007 and on or before December 31, 2007, the
election or amendment may apply only to amounts that would not
otherwise be payable in 2007 and may not cause an amount to be paid
in 2007 that would not otherwise be payable in 2007.
d.
Definition of Service Provider . For purposes of this
Agreement, “Service Provider” means Executive or any
other “service provider,” as defined in Treasury
Regulation Section 1.409A-1(f).
e.
Definition of Service Recipient . For purposes of this
Agreement, “Service Recipient,” with respect to
Executive, means Cricket and all persons considered part of the
“service recipient,” as defined in Treasury
Regulation Section 1.409A-1(g), as determined from time
to time. As provided in Treasury
Regulation Section 1.409A-1(g),
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the
“Service Recipient” shall mean the person for whom the
services are performed and with respect to whom the legally binding
right to compensation arises, and all persons with whom such
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