Document:

Exhibit 10.19 to ATC 2006 10-K

     

    EXHIBIT
      10.19

    

     

    EXECUTIVE
      EMPLOYMENT AGREEMENT

     

    This
      Employment Agreement ("Agreement") is entered into as of January 19, 2007 by
      and
      between Donald T. Johnson Jr., a natural person ("Executive"), and Aftermarket
      Technology Corp., a Delaware corporation (“ATC”). As used herein, the “Company”
refers to ATC and/or any subsidiary of ATC. The parties hereto agree as
      follows:

     

        1.  Employment.

        

            (a)  Full
      Time and Best Efforts.
      Subject
      to the terms set forth herein, the Company agrees to employ Executive as
      Chairman, President and Chief Executive Officer of ATC and Executive hereby
      accepts such employment. While employed by the Company, Executive will devote
      his full time, best efforts and attention to the performance of his duties
      hereunder and to the business and affairs of ATC and its
      subsidiaries.

     

            (b)  Duties.
      Executive shall perform such duties for the Company as are customarily
      associated with the above management positions, consistent with the Bylaws
      of
      the Company and as required by the Board of Directors of ATC.

     

            (c)  Company
      Policies.
      The
      employment relationship between the parties shall be governed by the general
      employment policies and practices of the Company, except that when the terms
      of
      this Agreement differ from or are in conflict with such employment policies
      and
      practices, this Agreement shall control.

     

        2.  Compensation
      and Benefits.

     

            (a)  Salary.
      Executive shall receive for services to be rendered hereunder an annual base
      salary of $560,000, retroactive to January 1, 2007, payable on the
      Company’s regular payroll dates, subject to increase at the discretion of the
      Company, and subject to standard withholdings for taxes and social security
      and
      the like.

     

            (b)  Incentive
      Plans.
      Executive shall participate in the Company’s incentive plans as follows:
      (i) the 2007 Incentive Compensation Plan at a target bonus of 90% of base
      salary, (ii) subsequent annual Incentive Compensation Plans at a target
      bonus to be established by the Board of Directors, (iii) the 2006-2008
      Long-Term Incentive Plan through (A) a grant of 29,400 shares of restricted
      stock, (B) a grant of 87,700 options to purchase common stock, and
      (C) a cash bonus targeted at $504,000, and (iv) subsequent Long-Term
      Incentive Plans at levels to be established by the Board of Directors. Such
      participation shall be subject to and on a basis consistent with the terms,
      conditions and administration of the incentive plans. Executive understands
      that
      (x) the Company shall have discretion to establish incentive plan
      objectives for Executive and to determine his level of achievement of those
      objectives, and (y) any such plan may be modified or eliminated in the
      Company’s sole discretion in accordance with applicable law and the terms of
      such plan, provided that any such modification or elimination shall not apply
      to
      Executive unless such modification or elimination also applies to all other
      plan
      participants on a substantially comparable basis.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

            (c)  Participation
      in Benefit Plans.
      While
      employed by the Company, Executive shall be entitled to participate in any
      group
      medical, dental, health and accident, disability insurance, life insurance
      (at a
      minimum of $1.5 million in Company-paid coverage), retirement income, deferred
      compensation or similar plan or program of the Company to the extent that he
      is
      eligible under the general provisions thereof. The Company may, in its
      discretion and from time to time, establish additional management benefit
      programs as it deems appropriate. Executive understands that any such plans
      may
      be modified or eliminated in the Company's discretion in accordance with
      applicable law. 

     

            (d)  Vacation.
      Executive shall be entitled to five weeks paid vacation. The days selected
      for
      Executive's vacation must be mutually agreeable to the Company and
      Executive. 

     

        3.  Perquisites.

     

            (a)  Financial
      Planning/Club Dues Allowance.
      Executive will receive reimbursement for up to $20,000 of expenses incurred
      during a calendar year for (i) personal financial/tax planning,
      (ii) estate planning (including legal fees), (iii) club (e.g.,
      country
      club, health club, social club) dues, (iv) home office and internet
      service, and (v) other matters similar to the foregoing. 

     

            (b)  Automobile.
      Executive shall be entitled to an annual automobile allowance of $24,000,
      retroactive to January 1, 2007, subject to applicable withholding.

     

        4.  Business
      Expenses.
      Executive shall be reimbursed for documented and reasonable business expenses
      in
      connection with the performance of his duties hereunder.

     

        5.  Termination
      of Employment.
      The date
      on which Executive's employment by the Company ceases, under any of the
      circumstances provided in Section 5(a)-(g), shall be defined herein as the
      "Termination Date." All capitalized terms used in this Section 5 without
      definition will have the meanings set forth in Section 5(l).

     

            (a)  End
      of
      Employment Term.
      Unless
      terminated earlier pursuant to Section 5(b)-(g), Executive’s employment
      will terminate on December 31, 2007, provided that

     

                (i)  on
      December 31, 2007 the employment term will automatically renew until
      December 31, 2008 unless the Company gives Executive written notice of
      nonrenewal on or before September 30, 2007, and

     

                (ii)  if
      the
      employment term automatically renews pursuant to clause (i), then on
      December 31, 2008 it shall automatically renew until December 31, 2009
      unless the Company gives Executive written notice of nonrenewal on or before
      September 30, 2008. 

     

    Within
      ten business days after the Termination Date, Executive shall receive payment
      for all accrued salary through the Termination Date and the Earned Benefits.
      Executive shall also receive the LTIP Payment under a particular Long-Term
      Incentive Plan upon the completion of the Company’s audited consolidated
      financial statements for the last year of such Long-Term Incentive Plan (e.g.,
      2008 in the case of the 2006-2008 Long-Term Incentive Plan). Except as provided
      above, no compensation of any kind or severance payment will be
      payable

     

    
      
        
        

      

      
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    under
      this Agreement due to a termination pursuant to this Section 5(a), except
      that if a Change in Control occurs within 18 months prior to Executive’s
      termination pursuant to this Section 5(a), such termination shall be
      treated as a Company termination without Cause and Executive shall be entitled
      to the payments and benefits provided in Section 5(f).

     

            (b)  Termination
      for Cause.
      The
      Company may terminate Executive's employment at any time for Cause immediately
      upon written notice to Executive of the circumstances leading to such
      termination for Cause. If Executive's employment is terminated for Cause,
      Executive shall receive payment for all accrued salary through the Termination
      Date (which in this event shall be the date upon which notice of termination
      is
      given) and the Earned Benefits. The Company shall have no obligation to pay
      severance of any kind nor to make any payment in lieu of notice if Executive
      is
      terminated for Cause.

     

            (c)  Voluntary
      Termination.
      Executive may voluntarily terminate his employment with the Company at any
      time
      upon 90 days’ prior written notice. Within ten business days after the
      Termination Date, Executive shall receive payment for all accrued salary through
      the Termination Date and the Earned Benefits, after which no further
      compensation of any kind or severance payment will be payable under this
      Agreement.

     

            (d)  Termination
      Upon Death.
      Executive’s employment will terminate upon his death. Within ten business days
      after the Termination Date, Executive’s estate shall receive payment for all
      accrued salary through the Termination Date and the Earned Benefits. Executive’s
      estate shall also receive the LTIP Payment under a particular Long-Term
      Incentive Plan upon the completion of the Company’s audited consolidated
      financial statements for the last year of such Long-Term Incentive Plan. Except
      as provided above, no compensation of any kind or severance payment will be
      payable under this Agreement due to a termination pursuant to this
      Section 5(d).

     

            (e)  Termination
      Upon Disability.
      The
      Company may terminate Executive's employment in the event Executive suffers
      a
      disability that renders Executive unable to perform the essential functions
      of
      his position, even with reasonable accommodation in compliance with the
      Americans with Disabilities Act, for three consecutive months. A termination
      in
      such circumstances shall be treated as a Company termination without Cause
      and
      Executive shall be entitled to the payments and benefits provided in
      Section 5(f) and Section 5(i)(i). The foregoing shall not affect any
      rights that Executive may have under applicable workers’ compensation laws or
      any disability plan of the Company.

     

            (f)  Termination
      Without Cause.
      The
      Company may terminate Executive's employment without Cause at any time upon
      30
      days’ prior written notice. Within ten business days after the Termination Date,
      Executive shall receive payment for all accrued salary through the Termination
      Date and the Earned Benefits. Executive shall also receive the LTIP Payment
      under a particular Long-Term Incentive Plan upon the completion of the Company’s
      audited consolidated financial statements for the last year of such Long-Term
      Incentive Plan. In addition, the Company shall pay Executive as severance an
      amount equal to 200% of the sum of Executive’s annual base salary plus his
      target bonus under the 2007 Incentive Compensation Plan. Subject to
      Section 11, the severance shall be paid in equal installments on each of
      the Company’s regular payroll dates during the two-year period following the

     

    
      
        
        

      

      
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    Termination
      Date, unless the Termination Date occurs within 18 months after a Change in
      Control, in which case the severance will be paid in a single lump sum within
      ten business days after the Termination Date. The Company will pay up to
      $25,000 of
      the
      cost of an executive level individualized career transition program through
      a
      professional outplacement firm mutually selected by the Company and the
      Executive if such program is initiated within 30 days after the Termination
      Date. If Executive dies after the Termination Date, the payment or payments
      due
      thereafter under this Section 5(f) shall be made to Executive’s estate but
      the career transition benefits shall terminate as of the date of death. As
      a
      condition to receiving the payments and benefits provided by this
      Section 5(f) (other than payment for all accrued salary through the
      Termination Date and the Earned Benefits, which shall be payable in any case),
      Executive shall execute and deliver to the Company on the Termination Date
      a
      general release in the form attached hereto as Exhibit A.

     

            (g)  Fundamental
      Changes.
      If the
      Company (i) materially diminishes Executive's duties, authority,
      responsibility or compensation without performance justification, or
      (ii) breaches this Agreement in any material respect, Executive may
      terminate his employment, provided that Executive has given the Company 30
      days’
written notice prior to such termination and the Company has not cured such
      diminution or breach, as the case may be, by the end of such 30-day period.
      A
      termination in such circumstances shall be treated as a Company termination
      without Cause and Executive shall be entitled to the payments and benefits
      provided in Section 5(f) and Section 5(i)(i).

     

            (h)  Medical
      Coverage.
      Except
      in the case of Executive’s death or termination for Cause, until the fifth
      anniversary of the Termination Date the Company will provide continued
      medical-related insurance coverage to Executive at the levels and at the rates
      applicable from time to time to comparable active employees of the Company.
      Medical-related insurance coverage includes health, dental, vision and/or
      cancer. COBRA continuation coverage eligibility shall commence as of the day
      following the end of the five-year period. Notwithstanding the above, coverage
      under each of these plans shall cease on the date (i) Executive fails to
      pay timely the premium required by such plan, (ii) Executive becomes
      eligible for coverage under Medicare or the group health plan of any other
      employer, (iii) the Company terminates such plan as to all its employees,
      or (iv) Executive dies.

     

            (i)  Vesting
      of Restricted Stock and Stock Options.
      All of
      Executive’s restricted stock and unvested stock options that are outstanding as
      of the Termination Date will be treated as follows following the Termination
      Date:

     

                (i)  In
      the
      case of termination pursuant to Section 5(a) or Company termination without
      Cause, such restricted stock and options will continue to vest after the
      Termination Date according to their vesting schedules notwithstanding the fact
      that Executive has ceased to be an employee of the Company.

     

                (ii)  In
      the
      case of Executive’s death, such restricted stock and options shall fully vest as
      of the Termination Date.

     

    
      
        
        

      

      
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                (iii)  In
      the
      case of voluntary resignation, such restricted stock and options will terminate
      on the Termination Date unless the Board determines that Executive
      hasprovided an orderly transition to his successor, in which case such
      restricted stock and options will continue to vest after the Termination Date
      according to their vesting schedules notwithstanding the fact that Executive
      has
      ceased to be an employee of the Company.

     

                (iv)  In
      the
      case of termination for Cause, such restricted stock and options will terminate
      on the Termination Date.

     

    Except
      in
      the case of termination for Cause, each option that is vested as of the
      Termination Date or subsequently vests pursuant to this Section 5(i) shall
      remain in effect and be exercisable until the tenth anniversary of the date
      of
      grant of such option.

     

            (j)  No
      Other Payments or Benefits.
      Except
      as otherwise expressly provided in this Agreement, (i) after the
      Termination Date Executive will not be entitled to any payments from the Company
      and (ii) on the Termination Date Executive’s participation in and coverage
      under the Company’s benefit programs (including the ATC Retirement Savings Plan
      (i.e.,
      the
      401(k) plan) and the Company’s group life and disability insurance plans) shall
      cease; provided that Executive shall retain any right to convert to individual
      coverage as permitted under these insurance plans and to any vested benefits
      under the 401(k) plan and the Company’s stock option plans.

     

            (k)  Withholding.
      Any
      amounts payable under this Section 5 shall be subject to standard withholdings
      for taxes and social security and the like.

     

            (l)  Definitions.

     

                (i)  "Cause"
      means
      the occurrence or existence of any of the following with respect to Executive,
      as determined by the Company in its sole discretion: 

     

                    (A)  a
      material breach by Executive of (x) his duty not to engage in any
      transaction that represents, directly or indirectly, self-dealing with the
      Company or any of its affiliates that has not been approved by the Company,
      or
      (y) the terms of this Agreement, if in any such case such material breach
      remains uncured after the lapse of 30 days following the date that the Company
      has given Executive written notice thereof; 

     

                    (B)  the
      material breach by Executive of any duty referred to in clause (A) above as
      to
      which at least one written notice has been given pursuant to 

    clause
      (A); 

     

                    (C)  any
      act
      of dishonesty, misappropriation, embezzlement, intentional fraud or similar
      conduct involving the Company or any of its affiliates; 

     

                    (D)  the
      conviction or the plea of nolo contendere or the equivalent in respect of a
      felony involving moral turpitude; 

     

                    (E)  any
      intentional damage of a material nature to any property of the Company or any
      of
      its affiliates; or 

    
      
        
        

      

      
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                    (F)  the
      repeated non-prescription use of any controlled substance or the repeated use
      of
      alcohol or any other non-controlled substance that, in the reasonable
      determination of the Company renders Executive unfit to serve in his capacity
      as
      an employee of the Company or its affiliates. 

     

                (ii)  “Change
      in Control”
      means
      the first to occur of the following:

     

                    (A)  any
      sale
      or transfer or other conveyance, whether direct or indirect, of all or
      substantially all of the assets of the Company, on a consolidated basis, in
      one
      transaction or a series of related transactions, unless, immediately after
      giving effect to such transaction, at least 85% of the total voting power
      normally entitled to vote in the election of directors, managers or trustees,
      as
      applicable, of the transferee is “beneficially owned” by persons who,
      immediately prior to the transaction, beneficially owned 100% of the total
      voting power normally entitled to vote in the election of directors of the
      Company; 

     

                    (B)  any
      Person or Group is or becomes the "beneficial owner," directly or indirectly,
      of
      more than 35% of the total voting power in the aggregate of all classes of
      capital stock of the Company then outstanding normally entitled to vote in
      elections of directors; 

     

                    (C)  during
      any period of 12 consecutive months, individuals who at the beginning of such
      12-month period constituted the Company’s Board of Directors (together with any
      new directors whose election by such Board or whose nomination for election
      by
      the shareholders of the Company was approved by a vote of a majority of the
      directors then still in office who were either directors at the beginning of
      such period or whose election or nomination for election was previously so
      approved) cease for any reason to constitute a majority of the Company’s Board
      of Directors then in office; or 

     

                    (D)  a
      reorganization, merger or consolidation of the Company the consummation of
      which
      results in the outstanding securities of any class of the Company’s capital
      stock being exchanged for or converted into cash, property and/or a different
      kind of securities, unless, immediately after giving effect to such transaction,
      at least 85% of the total voting power normally entitled to vote in the election
      of directors, managers or trustees, as applicable, of the entity surviving
      or
      resulting from such reorganization, merger or consolidation is “beneficially
      owned” by persons who, immediately prior to the transaction, beneficially owned
      100% of the total voting power normally entitled to vote in the election of
      directors of the Company.

     

                (iii)  “Earned
      Benefits”
      means
      any (A) bonus that is payable to Executive pursuant to the terms of
      (x) the 2006 annual Incentive Compensation Plan that has not been paid
      prior to the Termination Date and (y) the annual Incentive Compensation
      Plan for any subsequent year in the case of a termination pursuant to
      Section 5(a) if the Termination Date occurs on or before the last day of
      such annual Incentive Plan, (B) vacation time that has accrued and not been
      used as of the Termination Date, (C) other entitlements to cash payments
      that have accrued and not been paid as of the Termination Date, and (D) any
      deferred compensation earned by Executive prior to termination. Notwithstanding
      other 

     

    

    
      
        
        

      

      
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    provisions
      of this Agreement regarding the timing of payment of Earned Benefits,
      (x) the 2007 annual Incentive Compensation Plan bonus will not be paid
      until the completion of the Company’s 2007 audited consolidated financial
      statements, and (y) deferred compensation will be paid as provided in the
      Company’s deferred compensation plan.

     

                (iv)  “LTIP
      Payment”
      means
      the amount, if any, that would have been payable to Executive under the cash
      award component of any Long-Term Incentive Plan if he had remained employed
      by
      the Company through December 31 of the last year of such Plan multiplied by
      a fraction (A) the numerator of which is the number of days starting
      January 1 of the first year of such Long-Term Incentive Plan (e.g.,
      January 31, 2006 in the case of the 2006-2008 Long-Term Incentive Plan)
      through the Termination Date and (B) the denominator of which is the number
      of days in such Long-Term Incentive Plan (e.g., 1,095 in the case of the
      2006-2008 Long-Term Incentive Plan).

     

                (v)  “Person” and “Group”
      have the
      meanings used for purposes of Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended, whether or not such sections apply to the
      transaction in question.

     

        6.  Proprietary
      Information Obligations.
      Prior to
      and/or while employed by the Company, Executive has had and/or will have access
      to and has become and/or will become acquainted with the confidential and
      proprietary information of the Business (as defined in Section 8) and the
      Company and its affiliates, including but not limited to confidential and
      proprietary information or plans regarding customer relationships; personnel;
      sales, marketing, and financial operations and methods; trade secrets; formulas;
      devices; secret inventions; processes and other compilations of information,
      records, and specifications (collectively "Proprietary Information"). Executive
      shall not disclose any of the Proprietary Information directly or indirectly,
      or
      use it in any way, either while employed by the Company, or at any time
      thereafter, except as required in the course of his employment hereunder or
      as
      authorized in writing by the Company. All files, records, documents,
      computer-recorded information, drawings, specifications, equipment and similar
      items relating to the Business or the Company or its affiliates, whether
      prepared by Executive or otherwise coming into his possession prior to or while
      employed by the Company, shall remain the exclusive property of the Company
      or
      such affiliate and shall not be removed from the premises of the Company or
      its
      affiliate under any circumstances whatsoever without the prior written consent
      of the Company, except when (and only for the period) necessary to carry out
      Executive's duties hereunder, and if removed shall be immediately returned
      upon
      any termination of his employment and no copies thereof shall be kept by
      Executive.

     

        7.  Noninterference.
      While
      employed by the Company and for a period of three years thereafter, Executive
      shall not, without the prior written consent of the Company, interfere with
      the
      Company or any of its affiliates by directly or indirectly soliciting,
      attempting to solicit, inducing, or otherwise causing or assisting any person
      who is then employed by the Company or any of its affiliates to terminate such
      employment in order to become an employee, consultant or independent contractor
      to or for any employer other than the Company or such
      affiliate.

    
      
        
        

      

      
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        8.  Noncompetition.
      Executive agrees that while employed by the Company and during the 24 months
      after the Termination Date, he will not, without the prior consent of the
      Company, directly or indirectly, have an interest in, be employed by, be
      connected with, or have an interest in (as an employee (whether full-time,
      part-time or temporary), consultant, officer, director, partner, stockholder,
      joint venturer, promoter or lender), any person or entity owning, managing,
      controlling, operating or otherwise participating or assisting in any business
      that is either (i) similar to the Business (or any portion thereof) and
      would benefit from the disclosure of the Company’s trade secrets or (ii) in
      competition with the Business (or any portion thereof) in any of the 50 states
      in the United States of America; provided, however, that the foregoing shall
      not
      prevent Executive from being a stockholder of less than 1% of the issued and
      outstanding securities of any class of a corporation listed on a national
      securities exchange or designated as national market system securities on an
      interdealer quotation system by the National Association of Securities Dealers,
      Inc. Without limiting the generality of the foregoing, a business will be deemed
      to be in competition with the Business at a given point in time if any of the
      customers of such business were customers of the Business at any time during
      the
      18 months preceding the time in question. As used herein, “Business” means
      any and all of the businesses in which the Company is engaged as of the
      Termination Date.

     

         9.  Remedies.
      Executive acknowledges that a breach or threatened breach by Executive of any
      the provisions of Sections 6, 7 or 8 will result in the Business and the
      Company and its affiliates suffering irreparable harm that cannot be calculated
      or fully or adequately compensated by recovery of damages alone. Accordingly,
      Executive agrees that the Company shall be entitled to interim, interlocutory
      and permanent injunctive relief, specific performance and other equitable
      remedies, in addition to any other relief to which the Company may become
      entitled should there be such a breach or threatened breach.

     

        10.  Excise
      Tax Gross-Up Payment.
      If
      Executive’s employment is terminated by the Company without Cause within 18
      months after a Change in Control and Executive becomes subject to the excise
      tax
      imposed by Internal Revenue Code (“Code”) Section 4999 (the “Parachute Excise
      Tax”) with respect to any amounts paid or payable to Executive under this
      Agreement, then the Company and Executive agree that:

     

            (a)  If
      the
      aggregate of all “parachute payments” (as such term is used under Code Section
      280G) does not exceed 330% of the “base amount” (as such term is used under Code
      Section 280G), then the parachute payment shall be reduced to 299.99% of such
      base amount;

     

            (b)  If
      the
      aggregate of all parachute payments exceeds 330% of the base amount, then the
      Company shall pay to Executive a tax gross-up payment so that after payment
      by
      or on behalf of Executive of all federal, state and local excise, income,
      employment, Medicare and any other taxes (including any related penalties and
      interest) resulting from the payment of the parachute payments and the tax
      gross-up payments to Executive by the Company, Executive retains on an after-tax
      basis an amount equal to the amount that Executive would have retained if
      Executive had not been subject to the Parachute Excise Tax;

    
      
        
        

      

      
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            (c)  The
      computation of the excess parachute payment in accordance with Code Section
      280G
      shall be done by a nationally recognized and reputable independent accounting
      or
      valuation firm selected and paid for by the Company.

     

            (d)  Executive
      shall notify the Company in writing of any claim by the Internal Revenue Service
      that, if successful, would require the payment by the Company of any tax
      gross-up payments. Such notification shall be given as soon as practicable
      but
      no later than ten (10) business days after Executive is informed in writing
      of
      such claim and shall apprise the Company of the nature of such claim and the
      date on which such claim is requested to be paid. Executive shall not pay such
      claim prior to the expiration of the thirty (30)-day period following the date
      on which Executive gives such notice to the Company (or such shorter period
      ending on the date that any payment of taxes with respect to such claim is
      due).
      If the Company notifies Executive in writing prior to the expiration of such
      period that it desires to contest such claim, Executive shall:

     

                (i)  give
      the
      Company any information reasonably requested by the Company relating to such
      claim,

     

                (ii)  take
      such
      action in connection with contesting such claim as the Company shall reasonably
      request in writing from time to time, including, without limitation, accepting
      legal representation with respect to such claim by an attorney reasonably
      selected by the Company,

     

                (iii)  cooperate
      with the Company in good faith in order effectively to contest such claim,
      and

     

                (iv)  permit
      the Company to participate in any proceedings relating to such
      claim;

     

    provided,
      however, that the Company shall bear and pay directly all costs and expenses
      (including additional interest and penalties) incurred in connection with such
      contest and shall indemnify and hold Executive harmless, on an after-tax basis,
      for any excise tax or income tax (including interest and penalties with respect
      thereto) imposed as a result of such representation and payment of costs and
      expenses. Without limitation on the foregoing provisions of this Section 10,
      the
      Company shall control all proceedings taken in connection with such contest
      and,
      at its sole option, may pursue or forego any and all administrative appeals,
      proceedings, hearings and conferences with the taxing authority in respect
      of
      such claim and may, at its sole option, either direct Executive to pay the
      tax
      claimed and sue for a refund or contest the claim in any permissible manner,
      and
      Executive agrees to prosecute such contest to a determination before any
      administrative tribunal, in a court of initial jurisdiction and in one or more
      appellate courts, as the Company shall determine; provided, however, that if
      the
      Company directs Executive to pay such claim and sue for a refund, the Company
      shall advance the amount of such payment to Executive, on an interest-free
      basis
      and shall indemnify and hold Executive harmless, on an after-tax basis, from
      any
      excise tax or income tax (including interest or penalties with respect thereto)
      imposed with respect to such advance or with respect to any imputed income
      with
      respect to such advance; and further provided that any extension of the statute
      of limitations relating to payment of taxes for 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    the
      taxable year of Executive with respect to which such contested amount is claimed
      to be due is limited solely to such contested amount. Furthermore, the Company’s
      control of the contest shall be limited to issues with respect to which a
      gross-up payment would be payable hereunder and Executive shall be entitled
      to
      settle or contest, as the case may be, any other issue raised by the Internal
      Revenue Service or any other taxing authority.

     

               (e)  If,
      after
      the receipt by Executive of an amount advanced by the Company pursuant to this
      Section 10, Executive becomes entitled to receive any refund with respect to
      such claim, Executive shall (subject to the Company’s complying with the
      requirements of this Section 10) promptly pay to the Company the amount of
      such
      refund (together with any interest paid or credited thereon after taxes
      applicable thereto). If, after the receipt by Executive of an amount advanced
      by
      the Company pursuant to this Section 10, a determination is made that Executive
      shall not be entitled to any refund with respect to such claim and the Company
      does not notify Executive in writing of its intent to contest such denial of
      refund prior to the expiration of thirty (30) days after such determination,
      then such advance shall be forgiven and shall not be required to be repaid
      and
      the amount of such advance shall offset, to the extent thereof, the amount
      of
      gross-up payment required to be paid.

     

        11.  Code
      Section 409A.
      Notwithstanding anything in this Agreement or elsewhere to the
      contrary:

     

            (a)  If
      payment or provision of any amount or other benefit that is “deferred
      compensation” subject to Section 409A of the Code at the time otherwise
      specified in this Agreement or elsewhere would subject such amount or benefit
      to
      additional tax pursuant to Section 409A(a)(1)(B) of the Code, and if payment
      or
      provision thereof at a later date would avoid any such additional tax, then
      the
      payment or provision thereof shall be postponed to the earliest date on which
      such amount or benefit can be paid or provided without incurring any such
      additional tax. In the event this Section 11 requires a deferral of any payment,
      such payment shall be accumulated and paid in a single lump sum on such earliest
      date without interest.

     

            (b)  If
      any
      payment or benefit permitted or required under this Agreement, or otherwise,
      is
      reasonably determined by either party to be subject for any reason to a material
      risk of additional tax pursuant to Section 409A(a)(1)(B) of the Code, including
      when final regulations are issued thereunder, then the parties shall negotiate
      in good faith on appropriate provisions to avoid such risk without materially
      changing the economic value of this Agreement to either party.

     

        12.  Miscellaneous.

     

            (a)  Notices.
      Any
      notices provided hereunder must be in writing and shall be deemed effective
      upon
      the earlier of (i) personal delivery (including personal delivery by
      telecopy, if a copy is sent by mail or overnight delivery), (ii) the
      business day following being sent through an overnight delivery service, or
      (iii) the third business day after mailing by first class mail to the
      recipient at the address indicated below:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    To
      the
      Company:

     

    Aftermarket
      Technology Corp.
1400
      Opus
      Place, Suite 600

    Downers
      Grove, IL 60515

    Attention: General
      Counsel

    Facsimile: (630)
      663-8221

     

    To
      Executive:

     

    Donald
      T.
      Johnson Jr.

    3643
      White Eagle Drive

    Naperville,
      IL 60564

     

    With
      a
      copy to:

     

    Jeffrey
      B. Rock

    Hasselberg,
      Rock, Bell & Kuppler LLP

    4600
      Brandywine Drive, Suite 200

    Peoria,
      IL 61614-5591

    Facsimile: (309)
      688-9430

     

    or
      to
      such other address or to the attention of such other person as the recipient
      party will have specified by prior written notice to the sending
      party.

     

            (b)  Severability.
      The
      provisions of this Agreement are severable and, if any court of competent
      jurisdiction determines that any provision contained in this Agreement shall,
      for any reason, be invalid, illegal or unenforceable in any respect, such
      invalidity, illegality or unenforceability shall not affect any other provision
      of this Agreement, and this Agreement shall be reformed and construed so that
      such invalid or illegal or unenforceable provision would be valid, legal and
      enforceable to the maximum extent possible.

     

            (c)  Entire
      Agreement.
      This
      Agreement supersedes all prior and contemporaneous oral understandings and
      agreements with respect to the subject matter hereof.

     

            (d)  Counterparts.
      This
      Agreement may be executed on separate counterparts, any one of which need not
      contain signatures of more than one party, but all of which taken together
      will
      constitute one and the same agreement.

     

            (e)  Successors
      and Assigns.
      This
      Agreement is intended to bind and inure to the benefit of and be enforceable
      by
      Executive and the Company, and their respective successors and assigns, except
      that Executive may not delegate any of his duties hereunder and he may not
      assign any of his rights hereunder without the prior written consent of the
      Company.

     

            (f)  Attorney's
      Fees.
      If any
      legal proceeding is necessary to enforce or interpret the terms of this
      Agreement, or to recover damages for breach therefore, the prevailing party
      shall be entitled to reasonable attorney's fees, as well as costs and
      disbursements, in addition to any other relief to which he or it may be
      entitled.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

            (g)  Amendments;
      No Waivers.
      Any
      provision of this Agreement may be amended or waived if such amendment or waiver
      is in writing and signed, in the case of an amendment, by all parties hereto,
      and in the case of a waiver, by the party against whom the waiver is to be
      effective. No waiver by a party of any breach of this Agreement shall be deemed
      to extend to any prior or subsequent breach or affect in any way any rights
      arising by virtue of any prior or subsequent breach. No failure or delay by
      a
      party in exercising any right, power or privilege hereunder shall operate as
      a
      waiver thereof nor shall any single or partial exercise thereof preclude any
      other or further exercise thereof or the exercise of any other right, power
      or
      privilege. The rights and remedies herein provided shall be cumulative and
      not
      exclusive of any rights or remedies provided by law.

     

            (h)  Governing
      Law and Venue.
      This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      internal laws (without reference to choice or conflict of laws) of the State
      of
      Illinois. The parties to this Agreement hereby irrevocably consent to the
      exclusive venue and jurisdiction of the state and federal courts sitting in
      the
      State of Illinois for any matter or controversy concerning either the existence
      or enforcement of this Agreement and hereby waive any contention that Illinois
      is an improper or inconvenient forum.

     

            (i)  Construction.
      The
      captions herein are included for convenience of reference only and shall be
      ignored in the construction or interpretation hereof. Neither party hereto,
      nor
      its respective counsel, shall be deemed the drafter of this Agreement, and
      all
      provisions of this Agreement shall be construed in accordance with their fair
      meaning, and not strictly for or against either party hereto. 

     

        IN
      WITNESS
      WHEREOF, the parties have executed this Agreement effective as of the date
      first
      above written.

     

    
      	 
	
               

               

            
	
              
                
Donald
                T. Johnson Jr.

            

    

     

     

    
      	 	 
	AFTERMARKET
              TECHNOLOGY CORP.
	 
 	 
 
	By:  	 
	
            	
              
                
Joseph
                Salamunovich

            
	
            	
              Vice
                President

            

    

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    GENERAL
      RELEASE

     

        THIS
      GENERAL
      RELEASE is entered into by the undersigned (“Employee”) as of the date appearing
      next to Employee’s signature hereto.

     

        WHEREAS,
      Employee’s employment with Aftermarket Technology Corp. and/or one of its
      subsidiaries (Aftermarket and its subsidiaries being referred to collectively
      as
      the “Company”) is being terminated and the Company will provide Employee with
      certain benefits upon the termination of employment provided that, among other
      things, Employee executes and delivers this General Release;

     

        NOW,
      THEREFORE, Employee agrees as follows:

     

    1.  General
      Release.
      Employee
      hereby 

     

       (a)  releases
      and discharges the Company and its officers, directors, employees, benefit
      plan
      administrators and trustees, and agents (collectively, the “Released Parties”)
      from any and all claims, liabilities, demands and causes of action, whether
      known or unknown, fixed or contingent, that Employee may have or claim to have
      against any of the Released Parties relating to, or arising out of, Employee’s
      employment with the Company or the termination thereof, and 

     

       (b)  covenants
      not to initiate or participate in (except pursuant to a lawful subpoena) any
      lawsuit or other legal proceeding asserting any such claims, liabilities,
      demands or causes of action. 

     

    This
      General Release shall be broadly construed to include, but not be limited to,
      all claims under any federal, state, or local laws, statutes, regulations,
      or
      ordinances (including those prohibiting employment discrimination, such as
      the
      federal Age Discrimination in Employment Act), and all claims in contract or
      tort including, but not limited to, claims for breach of contract, negligence,
      defamation, and wrongful or retaliatory discharge. This General Release does
      not
      include any claim Employee may have (i) based upon facts occurring after
      the date that Employee executes this General Release or (ii) relating to
      benefits or payments to which Employee is entitled after the Termination Date
      (as defined in that certain Executive Employment Agreement dated as of January
      ___, 2007 between Employee and the Company) pursuant to the Executive Employment
      Agreement.

     

    2.  Knowing
      and Voluntary.
      Employee
      acknowledges and agrees that: (a) Employee has read and understands this
      General Release in its entirety; (b) Employee has been advised in writing
      to consult with an attorney concerning this General Release before signing
      it;
      (c) Employee has 21 calendar days after receipt of this General
      Release to consider its terms before signing it; (d) Employee has the right
      to revoke this General Release in full within seven calendar days of signing
      it
      and that none of the terms and provisions of this General Release shall become
      effective or be enforceable until such revocation period has expired;
      (e) nothing contained in this General Release waives any claim that may
      arise after the date of its execution; and (f) Employee is executing this
      General Release knowingly and voluntarily, without duress or reservation of
      any
      kind, and after giving the matter full and careful consideration.

     

        IN
      WITNESS
      WHEREOF, the undersigned has executed this General Release as of the date set
      forth below.

    

     

      	 	 
	 Executed:
              __________________________, 20___	EMPLOYEE:
	 
 	 
	 	 
	 	
              
                
[NAME]Exhibit 10.11.6

 

Exhibit 10.11.6

(FOUR-YEAR TIME BASED VESTING)

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 amounts 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	 	 	 	 
	 

	 	 	 	 	 	 

 

 

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.

1

 

          (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 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 to the Grant Notice);

               (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 to the Grant Notice).

          (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.

2

 

     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 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,

3

 

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 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. The 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.

4

 

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

5

 

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 Governing Law; Severability. This Agreement shall be administered, interpreted
and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof.
Should any provision of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable.

     5.8 Conformity to Securities Laws. Holder acknowledges that the Plan is intended to
conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and
any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder,
and state securities laws and regulations. Notwithstanding anything herein to the contrary, the
Plan shall be administered, and the Option is granted and may be exercised, only in such a manner
as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws,
rules and regulations.

     5.9 Amendments. This Agreement may not be modified, amended or terminated except by
an instrument in writing, signed by Holder or such other person as may be permitted to exercise the
Option pursuant to Section 4.1 and by a duly authorized representative of the Company.

6

 

     5.10 No Employment Rights. If Holder is an Employee, nothing in the Plan or this
Agreement shall confer upon Holder any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are expressly reserved, to discharge Holder at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided otherwise in a written
agreement between the Company and Holder.

     5.11 Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Holder and his or her heirs, executors, administrators,
successors and assigns.

7

 

EXHIBIT B

TO STOCK OPTION GRANT NOTICE

VESTING AND EXERCISABILITY PROVISIONS

     Capitalized terms used in this Exhibit B and not defined below shall have the meanings
given them in the Grant Notice and the Stock Option Agreement.

     1. Time-Based Vesting. Subject to any accelerated vesting and exercisability pursuant
to paragraph 2 below (which shall be in addition to the vesting and exercisability under this
paragraph 1), and other provisions of the Grant Notice and the Stock Option Agreement, the shares
of Common Stock subject to the Option shall vest and become exercisable in installments as follows:

	 	 	 
	Percentage of the Total Shares
Subject to the Option that only Vest
and Become Exercisable

	 	Vesting Date
	 
	 	 
	25% of Total Number of Shares Subject
to the Option

	 	First Anniversary of the Grant Date
	 
	 	 
	25% of Total Number of Shares Subject
to the Option

	 	Second Anniversary of the Grant Date
	 
	 	 
	25% of Total Number of Shares Subject
to the Option

	 	Third Anniversary of the Grant Date
	 
	 	 
	25% of the Total Number of Shares
Subject to the Option

	 	Fourth Anniversary of the Grant Date

The vesting and exercisability of the Option as to shares of Common Stock specified in this
paragraph 1 shall be cumulative. The Option shall vest and become exercisable as to shares of
Common Stock pursuant to this paragraph 1 only if Holder is an Employee, Director or Consultant of
the Company or any of its Subsidiaries on the applicable Vesting Date.

     2. Change in Control Accelerated Vesting.

          (a) Change in Control within 30 Months after the Grant Date. In the event of a Change
in Control on or before the date that is thirty (30) months after the Grant Date, if Holder is an
Employee, Director or Consultant on the date that is ninety (90) days after the date of occurrence
of such Change in Control, then twenty-five percent (25%) of the total number of shares of Common
Stock subject to the Option shall vest and become exercisable on such date.

          (b) Change in Control More than 30 Months after the Grant Date. In the event of a
Change in Control after the date that is thirty (30) months after the Grant Date, if Holder is an
Employee, Director or Consultant on the date that is ninety (90) days after the date

B-1

 

of occurrence of such Change in Control, then fifty percent (50%) of the total number of
shares of Common Stock subject to the Option shall vest and become exercisable on such date.

          (c) Termination of Employment in the Event of a Change in Control. In the event of a
Change in Control, if Holder has a Termination of Employment by reason of discharge by the Company
other than for Cause (as defined below), or by reason of resignation by Holder for Good Reason (as
defined below), during the period commencing ninety (90) days prior to such Change in Control and
ending twelve (12) months after such Change in Control, then the remaining unvested shares of
Common Stock subject to the Option shall vest and become exercisable on the date of Holder’s
Termination of Employment (or, if later, immediately prior to the date of the occurrence of such
Change in Control).

          (d) Definitions of Cause and Good Reason. For purposes of this Exhibit B, the
terms “Cause” and “Good Reason” shall have the meanings given to such terms in Holder’s employment
agreement with the Company in effect on the Grant Date and if Holder does not have an employment
agreement or Holder’s employment agreement does not include definitions of “Cause” and “Good
Reason”, the terms shall be defined for purposes of this Exhibit B as follows:

               (i) “Cause” shall mean termination of Holder’s employment by the Company (or the Parent, any
Subsidiary or any successor thereof): (A) upon Holder’s willful failure substantially to perform
Holder’s duties with the Company (or the Parent, any Subsidiary or any successor thereof) (other
than any such failure resulting from Holder’s incapacity due to physical or mental illness or any
such actual or anticipated failure after Holder’s issuance of a Notice of Termination (as described
below) for Good Reason), as reasonably determined by the Company, or, if Holder is then employed in
a position as Senior Vice President of the Company or a more senior officer of the Company, by the
Board of Directors of the Company after a written demand for substantial performance is delivered
to Holder by the Company, or the Board of Directors of the Company, as the case may be, which
demand specifically identifies the manner in which the Company or the Board of Directors of the
Company, as the case may be, believes that Holder has not substantially performed such duties,
provided that Holder shall have been given a reasonable period, not to exceed fifteen (15) days, in
which to cure such failure (provided such failure is capable of being cured), (B) upon Holder’s
willful failure substantially to follow and comply with the specific and lawful directives of the
Company or, if Holder is then employed in a position as a Senior Vice President of the Company or a
more senior officer of the Company, by the Board of Directors of the Company (or the Board of
Directors of the Parent) or duly adopted policies of the Company which are consistent with Holder’s
duties with the Company (or the Parent, any Subsidiary or any successor thereof), as reasonably
determined by the Company or, if Holder is then employed in a position as a Senior Vice President
of the Company or a more senior office of the Company, by the Board of Directors of the Company
(other than any such failure resulting from Holder’s incapacity due to physical or mental illness
or any such actual or anticipated failure after Holder’s issuance of a Notice of Termination for
Good Reason), after a written demand for substantial performance is delivered to Holder by the
Company or the Board of Directors of the Company, as the case may be, which demand specifically
identifies the manner in which the Company or the Board of Directors of the Company, as the case
may be, believes that Holder has not substantially performed such directives, provided that the
Holder shall have been given a reasonable period not to exceed

B-2

 

fifteen (15) days in which to cure such failure (provided such failure is capable of being
cured), (C) upon Holder’s commission of an act of fraud or dishonesty impacting or involving the
Company (or the Parent, any Subsidiary or any successor thereof), (D) upon Holder’s willful
engagement in illegal conduct or gross misconduct affecting the Company, or (E) upon the Holder’s
being convicted of, or pleading nolo contendere to, the commission of a felony.

               (ii) “Good Reason” shall mean, without Holder’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 a Notice of Termination given
in respect thereof: (A) the continuous assignment to Holder of any duties materially inconsistent
with Holder’s positions with the Company (or the Parent, any Subsidiary or any successor thereof),
a significant adverse alteration in the nature or status of Holder’s responsibilities or the
conditions of Holder’s employment with the Company (or the Parent, any Subsidiary or any successor
thereof), or any other action that results in a material diminution in Holder’s position,
authority, title, duties or responsibilities with the Company (or the Parent, any Subsidiary or any
successor thereof); (B) reduction of Holder’s annual base salary as in effect on the Grant Date or
as the same may be increased from time to time thereafter; (C) the relocation of the Company’s
offices at which Holder is principally employed to a location more than sixty (60) miles from such
location; (D) the Company’s failure (or the failure of the Parent, any Subsidiary or any successor)
to pay Holder any portion of Holder’s current compensation; (E) the Company’s failure (or the
failure of the Parent, any Subsidiary or any successor) to continue in effect any material
compensation or benefit plan in which Holder participates, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or
the Company’s failure to continue Holder’s participation therein (or in such substitute or
alternative plan) on the basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Holder’s participation relative to other participants; (F) the
Company’s failure (or the failure of the Parent, any Subsidiary or any successor) to continue to
provide Holder with benefits substantially similar in the aggregate to those enjoyed by Holder
under any of the Company’s life insurance, medical, health and accident, disability, pension,
retirement, or other benefit plans in which Holder or Holder’s eligible family members were
participating immediately prior thereto, or the taking of any action by the Company (or the Parent,
any Subsidiary or any successor thereof) which would directly or indirectly materially reduce any
of such benefits; or (G) the continuation or repetition, after written notice of objection from
Holder, of harassing or denigrating treatment of Holder by the Company, the Parent, any Subsidiary
or any successor thereof inconsistent with Holder’s position with the Company. Holder’s right to
terminate employment with the Company or the Parent, Subsidiary or any successor thereof pursuant
to this subparagraph shall not be affected by Holder’s incapacity due to physical or mental
illness. Holder’s continued employment with the Company or the Parent, Subsidiary or any successor
thereof shall not constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason thereunder.

          (e) Condition to Accelerated Vesting and Exercisability. The accelerated vesting and
exercisability of shares of Common Stock subject to the Option pursuant to subparagraph 2(c) shall
be conditioned on the Holder’s delivery to the Company of an executed General Release and the
Holder’s non-revocation of such General Release during the time period for such revocation set
forth therein.

B-3

 

     3. Limit on Vesting. In no event will the Option become vested and/or exercisable for
more than 100% of the shares of Common Stock subject to the Option pursuant to the provisions of
this Exhibit B.

B-4

 

EXHIBIT C

TO STOCK OPTION GRANT NOTICE

FORM OF EXERCISE NOTICE

     Effective as of today,                                         ,                     the
undersigned (“Holder”) hereby elects to exercise Holder’s option to purchase                                        
            shares of the Common Stock (the “Shares”) of Leap Wireless International, Inc. (the
“Company”) under and pursuant to the Leap Wireless International, Inc. 2004 Stock Option,
Restricted Stock and Deferred Stock Unit Plan (the “Plan”) and the Stock Option Grant Notice and
Non-Qualified Stock Option Agreement dated                                         , (the “Option
Agreement”). Capitalized terms used herein without definition shall have the meanings given in the
Option Agreement.

	 	 	 	 	 	 	 
	Grant Date:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Number of Shares as to which Option is
Exercised:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	Exercise Price per Share:

	 	$                                         	 	 	 	 
	 
	 	 	 	 	 	 
	Total Exercise Price:

	 	$                                         	 	 	 	 
	 
	 	 	 	 	 	 
	Certificate to be issued in name of:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	Cash Payment delivered herewith:	 	$                                         (Representing
the full Exercise Price for the
Shares, as well as any
applicable withholding tax)

	 	 	 
	Type of Option:

	 	The Option is a Non-Qualified Stock Option and is not
an incentive stock option within the meaning of Section
422 of the Code.

     1. Representations of Holder. Holder acknowledges that Holder has received, read and
understood the Plan and the Option Agreement. Holder agrees to abide by and be bound by their terms
and conditions.

     2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any’ other rights as a stockholder shall exist
with respect to Shares subject to the Option, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date the Shares are issued, except as provided in Section 10.3 of the Plan.

     3. Tax Consultation. Holder understands that there are tax consequences to Holder as
a result of Holder’s purchase or disposition of the Shares. Holder represents that Holder has
consulted with any tax consultants Holder deems advisable in connection with the purchase or
disposition of the Shares and that Holder is not relying on the Company for any tax advice.

     4. Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire

C-1

 

agreement of the parties and supersede in their entirety all prior undertakings and agreements
of the Company and Holder with respect to the subject matter hereof.

	 	 	 	 	 	 	 
	ACCEPTED BY:	 	SUBMITTED BY
	LEAP WIRELESS INTERNATIONAL, INC.	 	HOLDER:	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Print Name:

	 	 	 	Print Name:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	Address:	 	 
	 

	 	 
	 	 	 	 

C-2

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