EXHIBIT 10.34
SEVERANCE BENEFITS AGREEMENT
This Severance Benefits Agreement (this "Agreement") by and between Robert
J. Irving ("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 May 27, 2003 (the "Effective Date"). Leap and Cricket are
hereinafter collectively referred to as the "Companies."
WHEREAS, Executive was previously employed by Leap;
WHEREAS, Cricket is an indirect, wholly-owned subsidiary of Leap;
WHEREAS, Executive's employment was transferred to Cricket and Executive
is presently employed by Cricket;
WHEREAS, Cricket filed a petition under chapter 11 of Title 11 of the
United States Bankruptcy Code (the "Petition") in the United States Bankruptcy
Court for the Southern District of California (the "Bankruptcy Court");
WHEREAS, Cricket desires to provide Executive with certain severance
benefits as an incentive to remain in the employ of Cricket, subject to the
approval of this Agreement by the Bankruptcy Court; and
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 the first anniversary of the effective
date of a plan of reorganization for Cricket under Chapter 11 of the United
States Bankruptcy Code (the "Term of the Agreement").
2. SEVERANCE BENEFITS.
a. Severance Benefits. In the event that, during the period
commencing on the Section 2 Effective Date (as set forth in Section 2(h))
and during the remaining Term of the Agreement, Executive's employment is
terminated by Cricket other than for Cause (as defined below), or by
Executive for Good Reason (as defined below), Executive shall be entitled
to the following:
(i) Cricket shall pay Executive a lump sum payment in cash
(the "Severance Payment") equal to seventy-five percent (75%) of the
Executive's annual base salary as in effect as of the Date of
Termination (as defined below).
(ii) To the extent Executive elects continuation health care
coverage for Executive and his 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 nine month period
commencing on the Date of Termination (or, if earlier, until
Executive is eligible for comparable coverage with a subsequent
employer).
b. Cause. For purposes of this Section 2, "Cause" shall mean
termination of Executive's employment by Cricket: (i) upon Executive's
willful and continued failure substantially to perform Executive's duties
with Cricket (other than any such failure resulting from Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure after Executive's issuance of a Notice of Termination
(as defined below) for Good Reason), after a written demand for
substantial performance is delivered to Executive by the Board of
Directors of Cricket (the "Cricket Board"), which demand specifically
identifies the manner in which the Cricket Board believes that Executive
has not substantially performed such duties, (ii) upon Executive's willful
and continued failure substantially to follow and comply with the specific
and lawful directives of the Cricket Board, as reasonably determined by
the Cricket Board (other than any such failure resulting from Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure after Executive's issuance of a Notice of Termination
for Good Reason), after a written demand for substantial performance is
delivered to Executive by the Cricket Board, which demand specifically
identifies the manner in which the Cricket Board believes that Executive
has not substantially performed such directives, (iii) upon Executive's
willful commission of an act of fraud or dishonesty resulting in material
and demonstrable damage to Cricket, or (iv) upon Executive's willful
engagement in illegal conduct or gross misconduct that is materially and
demonstrably damaging to Cricket. For purposes of this Section 2(b), no
act, or failure to act, on Executive's part shall be deemed "willful"
unless done, or omitted to be done, by Executive not in good faith.
Notwithstanding the foregoing, Executive's employment shall not be deemed
terminated for "Cause" pursuant to this Section 2(b) 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 two-thirds (2/3) of the
entire membership of the Cricket Board at a meeting of the Cricket Board
(after reasonable notice to Executive, an opportunity for Executive,
together with Executive's counsel, to be heard before the Cricket Board
and a reasonable opportunity to cure (provided such conduct is capable of
being cured)), finding that, in the Cricket Board's good faith opinion,
Executive has committed the conduct set forth above in this Section 2(b)
and specifying the particulars thereof in reasonable detail.
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 unless such circumstances are cured
(provided such circumstances are capable of being cured) prior to the Date
of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to Executive of any duties inconsistent with
Executive's position, a significant adverse alteration in the nature or
status of Executive's responsibilities or the conditions of Executive's
employment, or any other action that results in a material diminution in
Executive's position, authority, title, duties or responsibilities; (ii)
reduction of Executive's annual
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base salary as in effect on the Effective Date or as the same may be
increased from time to time thereafter; (iii) the relocation of Cricket's
offices at which Executive is principally employed to a location more than
thirty (30) miles from such location; (iv) Cricket's failure to pay
Executive any portion of Executive's current compensation; (v) Cricket's
failure to continue in effect any material compensation or benefit plan in
which Executive participates, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect to
such plan, or Cricket's failure to continue Executive's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of Executive's participation relative to other
participants; (vi) Cricket's failure to continue to provide Executive with
benefits substantially similar in the aggregate to those enjoyed by
Executive under any of Cricket's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans in which
Executive or Executive's eligible family members were participating
immediately prior thereto, or the taking of any action by Cricket which
would directly or indirectly materially reduce any of such benefits; (vii)
Cricket's failure to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement; or (viii) the continuation or
repetition, after written notice of objection from Executive, of harassing
or denigrating treatment of Executive by Cricket inconsistent with
Executive's position with Cricket. Executive's right to terminate
employment with Cricket 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 shall not constitute consent
to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
d. Notice of Termination. Any purported termination of
Executive's employment by Cricket for Cause or by Executive for Good
Reason shall be communicated by Notice of Termination to the other party
hereto in accordance with Section 4. "Notice of Termination" shall mean a
written notice that shall indicate the specific termination provision in
this Section 2 relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for the termination of
employment under the provision so indicated.
e. Date of Termination. For purposes of this Section 2, "Date of
Termination" shall mean the date specified in the Notice of Termination
(which, in the case of a termination by Cricket for Cause shall not be
less than thirty (30) days after the date such Notice of Termination is
given, and in the case of a termination by Executive for Good Reason shall
not be less than fifteen (15) nor more than sixty (60) days after the date
such Notice of Termination is given).
f. General Release. In consideration of, and as a condition to
receiving, the benefits to be provided to Executive under this Section 2,
Executive shall execute and deliver to the Companies the "General Release"
set forth on Exhibit A 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 Cricket 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
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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 to the
Companies the General Release in accordance with this Section 2(f), or
Executive revokes the General Release in accordance with the terms
thereof, Executive shall not receive the benefits set forth in this
Section 2.
g. Omitted.
h. Petition. This Section 2 shall be subject to and shall only be
effective upon the occurrence of the approval of this Agreement by the
Bankruptcy Court. The date on which the Bankruptcy Court approves this
Agreement is the "Section 2 Effective Date." In the event that this
Agreement is not approved by the Bankruptcy Court, this Agreement shall be
null and void in its entirety and of no further force or effect and the
Change in Control Agreements shall remain in full force and effect.
i. Timing of Payments. The payments provided for in this Section
2 shall be made not later than the tenth day following the date on which
the General Release by Executive becomes irrevocable.
3. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and shall be binding upon the Companies and their respective
successors and assigns, including any purchaser of all or substantially all of
their respective assets, and shall be binding upon Executive's assigns,
executors, administrators, beneficiaries, or their legal representatives.
4. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the last known mailing address of the respective Party, provided
that all notices to Cricket shall be directed to the attention of the Cricket
Board with a copy to the Secretary of Cricket, and all notices to Leap shall be
directed to the attention of the Board of Directors of Leap with a copy to the
Secretary of Leap, or to such other address as any Party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
5. NON-COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS. In
consideration of the benefits to be provided to Executive under Section 2 of
this Agreement, and in order to protect the goodwill of Cricket, Executive
hereby agrees to the following covenants.
a. Non-Compete. For a period of nine (9) months commencing on the
Date of Termination, Executive shall not, directly or indirectly, own,
manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director,
officer, employee, partner, consultant or otherwise with, any profit or
nonprofit business or organization which, directly or indirectly competes
with, or in any way interferes with, the business of Cricket or any of its
respective affiliates in any region in which Cricket is then operating or
has firm plans to operate.
b. Confidentiality. For the period of three years commencing on
the
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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 Cricket, 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 Cricket and shall not be retained by Executive or furnished to any
third party, in any form except as provided herein; provided, however,
that Executive shall not be obligated to treat as confidential, or return
to Cricket copies of any Confidential Information that (i) was publicly
known at the time of disclosure to Executive, (ii) becomes publicly known
or available thereafter other than by any means in violation of this
Agreement or any other duty owed to Cricket by any person or entity, or
(iii) is lawfully disclosed to Executive by a third party. As used in this
Agreement, the term "Confidential Information" means: information
disclosed to Executive or known by Executive as a consequence of or
through Executive's relationship with Cricket, about the customers,
employees, business methods, technical operations, public relations
methods, organization, procedures or finances, including, without
limitation, information of or relating to customer lists, of Cricket and
its affiliates.
c. Non-Solicitation. For the period commencing on the Date of
Termination and terminating on the third anniversary thereof, Executive
shall not, either on Executive's own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venture,
owner or shareholder or otherwise on behalf of any other person, firm or
corporation, directly or indirectly solicit or attempt to solicit away
from Cricket, or any of its affiliates, any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of Cricket, or any of its affiliates; provided,
however, that a general advertisement to which an employee of Cricket, or
any of its affiliates, responds shall in no event be deemed to result in a
breach of this Section 5(c).
d. Breach of Covenants. In the event that Executive breaches any
of the provisions of this Section 5, or threatens to do so, in addition to
and without limiting or waiving any other remedies available to Cricket in
law or in equity, Cricket shall be entitled to immediate injunctive relief
in any court having the capacity to grant such relief, to restrain such
breach or threatened breach and to enforce this Section 5. Executive
acknowledges that it is impossible to measure in money the damages that
Cricket will sustain in the event that Executive breaches or threatens to
breach this Section 5 and, in the event that Cricket institutes any action
or proceeding to enforce this Section 5 seeking injunctive relief,
Executive hereby waives and agrees not to assert or use as a defense a
claim or defense that Cricket has an adequate remedy at law. Also, in
addition to any other remedies available to Cricket in law or in equity,
in the event that Executive breaches the provisions of this Section 5 in
any material respect, Executive shall forfeit Executive's right to further
benefits under Section 2 and Executive shall be obligated to repay to
Cricket the benefits that Executive has received under Section 2. If a
court or arbitrator shall hold that the duration, scope or area
restriction or other provision of this Section 5 is unreasonable under the
circumstances now or then existing,
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the Parties hereto agree that the maximum duration, scope or area
restriction reasonable under the circumstances shall be substituted for
the stated duration, scope or area restriction.
6. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and such officer of Cricket and Leap as may
be specifically designated thereby. No waiver by any Party hereto at any time of
any breach by any other Party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other Party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
any Party which are not expressly set forth in this Agreement. Executive
acknowledges that Executive has consulted with counsel (or has had a reasonable
opportunity to consult with counsel) and is fully aware of Executive's rights
and obligations under this Agreement. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles. All references to
sections of any federal, state or local law shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. The Section headings contained in this Agreement are for convenience only,
and shall not affect the interpretation of this Agreement.
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7. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
8. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
9. ARBITRATION; DISPUTE RESOLUTION, ETC. Any disagreement, dispute,
controversy or claim arising out of or relating to this Agreement or the
interpretation of this Agreement or any arrangements relating to this Agreement
or contemplated in this Agreement or the breach, termination or invalidity
thereof shall be settled by final and binding arbitration administered by the
American Arbitration Association ("AAA") in San Diego, California in accordance
with its then existing National Rules for the Resolution of Employment Disputes.
In the event of such an arbitration proceeding, the Parties shall select a
mutually acceptable neutral arbitrator from among the AAA panel of arbitrators.
In the event the Parties cannot agree on an arbitrator, the Administrator of AAA
will appoint an arbitrator. Neither the Parties nor the arbitrator shall
disclose the existence, content, or results of any arbitration hereunder without
the prior written consent of all Parties. Except as provided herein, the Federal
Arbitration Act shall govern the interpretation, enforcement and all
proceedings. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the state of California, or federal law, or both, as
applicable and the arbitrator is without jurisdiction to apply any different
substantive law. The arbitrator shall have the authority to entertain a motion
to dismiss and/or a motion for summary judgment by any party and shall apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Judgment upon the award may be entered in any court having jurisdiction
thereof. Cricket shall pay all fees and expenses of the Arbitrator regardless of
the result and shall provide all witnesses and evidence reasonably required by
Executive to present Executive's case. Cricket shall pay to Executive all
reasonable arbitration expenses and legal fees incurred by Executive if
Executive prevails in enforcing or obtaining his or her rights or benefits
provided by this Agreement. Such payments shall be made within five (5) days
after Executive's request for payment accompanied with such evidence of fees and
expenses incurred as Cricket reasonably may require.
10. AT-WILL EMPLOYMENT. Nothing in the foregoing diminishes or alters
Cricket's policy of at-will employment for all employees, where both Cricket and
Executive may terminate the employment relationship at any time and for any
reason, with or without cause or notice.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the Parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
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IN WITNESS WHEREOF, the Parties have signed their names as of the day and
year first above written.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ Stewart D. Hutcheson
---------------------------------
Name: Stewart D. Hutcheson
------------------------------
Title: Chief Financial Officer
------------------------------
CRICKET COMMUNICATIONS, INC.
By: /s/ Stewart D. Hutcheson
---------------------------------
Name: Stewart D. Hutcheson
------------------------------
Title: Chief Financial Officer
------------------------------
EXECUTIVE
By: /s/ Robert J. Irving
---------------------------------
Name: Robert J. Irving
------------------------------
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EXHIBIT A
GENERAL RELEASE
1. GENERAL RELEASE OF CLAIMS. In consideration of the benefits under
Section 2 of the Severance Benefits Agreement (the "Agreement"), effective as of
________________, by and between Leap Wireless International, Inc. ("Leap"),
Cricket Communications, Inc. ("Cricket") (collectively, the "Companies") and
________________ ("Employee"), Employee does hereby for himself or herself and
his or her spouse, beneficiaries, heirs, successors and assigns, release, acquit
and forever discharge the Companies and their respective stockholders, officers,
directors, managers, employees, representatives, related entities, successors
and assigns, and all persons acting by, through or in concert with them (the
"Releasees") of and from any and all claims, actions, charges, complaints,
causes of action, rights, demands, debts, damages, or accountings of whatever
nature, except for criminal activity, known or unknown, which Employee may have
against the Releasees based on any actions or events which occurred prior to the
date of this General Release, including, but not limited to, those related to,
or arising from, Employee's employment with the Companies, or the termination
thereof, any claims under Title VII of the Civil Rights Act of 1964, the Federal
Age Discrimination and Employment Act and the California Fair Employment and
Housing Act, but excluding claims under the Agreement (collectively, "Claims").
This General Release shall not, however, constitute a waiver of any of
Employee's rights under the Agreement or under any outstanding stock option
granted to Employee, or under the terms of any employee benefit plan of the
Companies in which Employee is a participant.
2. RELEASE OF UNKNOWN CLAIMS. In addition, Employee expressly
waives all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIM FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
3. OLDER WORKER'S BENEFIT PROTECTION ACT. Employee agrees and
expressly acknowledges that this General Release includes a waiver and release
of all claims which Employee has or may have under the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. Section 621, et seq. ("ADEA"). The
following terms and conditions apply to and are part of the waiver and release
of the ADEA claims under this General Release:
a. That the Agreement and this General Release are written
in a manner calculated to be understood by Employee.
b. The waiver and release of claims under the ADEA
contained in this General Release do not cover rights or claims that may
arise after the date on which Employee signs this General Release.
c. The Agreement provides for consideration in addition to
anything of value to which Employee is already entitled.
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d. Employee is advised to consult an attorney before
signing this General Release.
e. Employee is afforded twenty-one (21) days (or, in the
event that the termination of Employee's employment is in connection with
an exit incentive or other employment termination program, forty-five (45)
days) after Employee is provided with this General Release to decide
whether or not to sign this General Release. If Employee executes this
General Release prior to the expiration of such period, Employee does so
voluntarily and after having had the opportunity to consult with an
attorney.
f. In the event that the termination of Employee's
employment is in connection with an exit incentive or other employment
termination program, Employee is provided with written information,
calculated to be understood by the average individual eligible to
participate, as to:
(i) any class, unit, or group of individuals covered
by such program, any eligibility factors for such program, and any
time limits applicable to such programs; and
(ii) the job titles and ages of all individuals
eligible or selected for the program, and the ages of all
individuals in the same job classification or organizational unit
who are not eligible or not selected for the program.
g. Employee will have the right to revoke this General
Release within seven (7) days of signing this General Release. In the
event this General Release is revoked, this General Release will be null
and void in its entirety, and Employee will not receive the benefits
described in Section 2 of the Agreement.
h. If Employee wishes to revoke the General Release,
Employee shall deliver written notice stating his intent to revoke this
General Release to Cricket's President on or before the seventh (7th) day
after the date hereof.
4. NO ASSIGNMENT OF CLAIMS. Employee represents and warrants to
the Releasees that there has been no assignment or other transfer of any
interest in any Claim which Employee may have against the Releasees, or any of
them, and Employee agrees to indemnify and hold the Releasees harmless from any
liability, claims, demands, damages, costs, expenses and attorneys' fees
incurred as a result of any person asserting any such assignment or transfer of
any rights or Claims under any such assignment or transfer from such party.
5. NO SUITS OR ACTIONS. Employee agrees that if he or she
hereafter commences, joins in, or in any manner seeks relief through any suit
arising out of, based upon, or relating to any of the Claims released hereunder,
or in any manner asserts against the Releasees any of the Claims released
hereunder, then he or she will pay to the Releasees against whom such suit or
Claim is asserted, in addition to any other damages caused thereby, all
attorneys' fees incurred by such Releasees in defending or otherwise responding
to said suit or Claim.
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6. NO ADMISSION. Employee further understands and agrees that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Releasees.
EMPLOYEE
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<<Name>>
Date:
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