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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10- K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One) 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004 OR

t

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to Commission file number 0- 29752 .

LEAP WIRELESS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) 10307 Pacific Center Court, San Diego, CA (Address of Principal Executive Offices) (858) 882- 6000
(Registrant's Telephone Number, Including Area Code)

33- 0811062 (I.R.S. Employer Identification No.) 92121 (Zip Code)

Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.0001 par value
(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  NO t Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- K or any amendment to this Form 10- K.  Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b- 2). YES t NO  As of June 30, 2004, the aggregate market value of the registrant's voting and nonvoting common stock held by non- affiliates of the registrant was approximately $737,000, based on the closing price of Leap's common stock on the OTC Bulletin Board on June 30, 2004, of $.02 per share. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  No t The number of shares of registrant's common stock outstanding on May 11, 2005 was 60,000,000.

Table of Contents EXPLANATORY NOTE This annual report on Form 10- K for the year ended December 31, 2004 includes consolidated financial statements of Leap Wireless International, Inc. (the Predecessor Company) for the seven months ended July 31, 2004 and consolidated financial statements of Leap Wireless International, Inc. (the Successor Company) for the five months ended December 31, 2004. The audited consolidated financial statements of the Predecessor Company incorporate restatement adjustments relating to the previously issued unaudited interim consolidated financial information for the one month and seven months ended July 31, 2004. The previously issued unaudited interim consolidated financial information of the Predecessor Company has been restated to properly present various liabilities, including asset retirement obligations and deferred rent, upon the adoption of fresh start reporting as of July 31, 2004. See Note 2 to our consolidated financial statements included as part of this annual report for additional information. Note 16 to the consolidated financial statements includes restated unaudited quarterly financial data relating to the one month interim period ended July 31, 2004 of the Predecessor Company and the two month interim period ended September 30, 2004 of the Successor Company. LEAP WIRELESS INTERNATIONAL, INC. ANNUAL REPORT ON FORM 10- K For the Year Ended December 31, 2004 TABLE OF CONTENTS
Page

Item 1. Item 2. Item 3. Item 4. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. EXHIBIT 4.1 EXHIBIT 10.5.1 EXHIBIT 10.7 EXHIBIT 10.11 EXHIBIT 10.11.1 EXHIBIT 10.12.4 EXHIBIT 10.13 EXHIBIT 10.15 EXHIBIT 10.16.1 EXHIBIT 10.16.2 EXHIBIT 10.16.3 EXHIBIT 10.16.4 EXHIBIT 21.1 EXHIBIT 31.1 EXHIBIT 31.2 EXHIBIT 32.1 EXHIBIT 32.2

PART I Business Properties Legal Proceedings Submission of Matters to a Vote of Security Holders PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accounting Fees and Services PART IV Exhibits and Financial Statement Schedules

1 23 24 25

26 28 30 47 48 87 87 90 90 93 102 104 105 107

i

Table of Contents PART I As used in this report, the terms "we," "our," "ours" and "us" refer to Leap Wireless International, Inc., a Delaware corporation, and its subsidiaries, unless the context suggests otherwise. Unless otherwise specified, information relating to population and potential customers, or POPs, is based on 2005 population estimates provided by Claritas Inc. Forward- Looking Statements; Cautionary Statement Except for the historical information contained herein, this report contains "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current forecast of certain aspects of Leap's future. You can identify most forward- looking statements by forward- looking words such as "believe," "think," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar expressions in this report. Such statements are based on currently available operating, financial and competitive information and are subject to various risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated or implied in our forward- looking statements. Such risks, uncertainties and assumptions include, among other things: our ability to attract and retain customers in an extremely competitive marketplace; our ability to attract, motivate and retain an experienced workforce; changes in economic conditions that could adversely affect the market for wireless services; the impact of competitors' initiatives; our ability to successfully execute service expansion plans; failure of network systems to perform according to expectations; our ability to comply with the covenants in our senior secured credit facilities; failure of the Federal Communications Commission, or the FCC, to approve the transfers (a) to a third party of the wireless licenses covered by the asset purchase agreement between Cricket Communications, Inc., the third party and the other parties to such agreement, and (b) to Alaska Native Broadband 1 License, LLC of the wireless licenses for which it was the winning bidder in the FCC's Auction #58; global political unrest, including the threat or occurrence of war or acts of terrorism; and other factors detailed in the section entitled "Risk Factors" included in Item 1 below. All forward- looking statements in this report should be considered in the context of these risk factors. We undertake no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward- looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward- looking statements. Accordingly, users of this report are cautioned not to place undue reliance on the forward- looking statements. Item 1. Business Leap Wireless International, Inc., or Leap, together with its wholly- owned subsidiaries, is a wireless communications carrier that offers digital wireless service in the United States. Leap operates through its subsidiaries; Leap has no independent operations or sources of operating revenue other than through dividends and distributions, if any, from its operating subsidiaries. Cricket Communications, Inc. and its subsidiaries that operate Cricket's wireless communications business are collectively referred to in this report as Cricket or the Cricket Companies. Leap and the Cricket Companies are collectively referred to in this report as the Company. 1

Table of Contents Leap was formed in 1998 by Qualcomm Incorporated, or Qualcomm. Qualcomm distributed the common stock of Leap in a "spin- off" distribution to Qualcomm's stockholders in September 1998. Under a license from Leap, the Cricket service was first introduced in Chattanooga, Tennessee in March 1999 by Chase Telecommunications, Inc., a company that Leap acquired in March 2000. On April 13, 2003, or the Petition Date, Leap, Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of California, or the Bankruptcy Court. Our Fifth Amended Joint Plan of Reorganization, or Plan of Reorganization, was confirmed by the Bankruptcy Court on October 22, 2003. The effectiveness of our Plan of Reorganization was conditioned upon, among other things, the receipt of required regulatory approvals from the FCC for the transfer of wireless licenses associated with the change of control that occurred upon our emergence from bankruptcy. We received the requisite FCC approvals on August 5, 2004 and, on August 16, 2004, or the Effective Date, Leap, Cricket and each of their subsidiaries that filed for Chapter 11 relief emerged from bankruptcy. For a description of our bankruptcy proceedings, see "- Chapter 11 Proceedings Under the Bankruptcy Code" below. Cricket Business Overview Cricket Service The Cricket Companies offer wireless service in the United States under the brand "Cricket®." On December 31, 2004, Cricket had approximately 1,570,000 customers located in 39 markets throughout the United States. These markets are located in 47 basic trading areas, or BTAs, covering a total population of approximately 26.7 million potential customers. At December 31, 2004, we owned wireless licenses covering approximately 53.0 million potential customers in 31 states. In February 2005, our subsidiary Cricket Licensee (Reauction), Inc. was named the winning bidder in the FCC's Auction #58 for four wireless licenses covering approximately 11.1 million potential customers with an aggregate purchase price of $166.9 million. The transfers of wireless licenses to Cricket Licensee (Reauction), Inc. were subject to FCC approval. The FCC approved these transfers on May 13, 2005. In addition, in November 2004 we acquired a 75% non- controlling membership interest in, and we are a secured lender to, Alaska Native Broadband 1, LLC (referred to as ANB 1), whose wholly- owned subsidiary Alaska Native Broadband 1 License, LLC (referred to as ANB 1 License) was named the winning bidder in Auction #58 for nine wireless licenses covering approximately 10.1 million potential customers with an aggregate purchase price of $68.2 million. The transfers of wireless licenses to ANB 1 License are subject to FCC approval. Although we expect that such approvals will be issued in the normal course, we cannot assure you that the FCC will grant such approvals. In March 2005, subsidiaries of Leap signed an agreement to sell 23 wireless licenses and the operating assets in our Michigan markets for $102.5 million. We have not launched commercial operations in most of the markets covered by the licenses to be sold. Completion of the transaction is subject to FCC approval and other customary closing conditions. Although we expect to receive such approval and satisfy such conditions in the normal course, we cannot assure you that the FCC will grant such approval or that the other conditions will be satisfied. Including the licenses we acquired in Auction #58, we would own wireless licenses covering approximately 60.2 million potential customers if this sale is completed and after we close our acquisition of the Fresno, California license which we have previously agreed to purchase. Our service allows customers to make and receive virtually unlimited calls within a local calling area and receive virtually unlimited calls from any area for a flat monthly rate. Cricket customers may sign up for additional feature packages and may also make long distance calls on a perminute basis or as part of packaged offerings. In addition to our basic Cricket service, we also offer a plan that bundles domestic long distance at a higher price. Additionally, we offer a premium plan, which includes virtually unlimited local and domestic long distance service, and virtually unlimited use of multiple calling features and messaging services for a flat rate. We also offer a plan that provides discounts on additional lines of service that are added to an existing qualified account. 2

from. Appealing Value Proposition. in March 2005. feel that they cannot control the cost of service.the.art CDMA networks that deliver high capacity and outstanding quality and that can be easily upgraded to support enhanced capacity. We believe many potential customers view wireless service as expensive. Early in 2005. We also reduce our general operating costs through streamlined billing procedures and the control of customer care expenses. Our innovative Cricket service is designed to attract new customers by removing the price and complexity barriers that we believe have prevented many potential customers from using wireless service. We have designed the Cricket service to appeal to consumers who value virtually unlimited mobile calling with a predictable monthly bill. Jump service prepaid customers also receive voicemail. In addition. Understandable Service.way calling at no additional charge. We have deployed numerous state. Cricket's Jump service prepaid customers can also receive free unlimited inbound calls as long as there is a balance in their prepaid account. improved data services. and who make the majority of their calls from within their local areas. we expanded our available international long distance destinations to many additional countries and enhanced our product portfolio by adding instant messaging and multimedia (picture) messaging. Most other wireless cellular and PCS service providers offer consumers a complex array of rate plans that typically include additional charges for minutes above a set maximum. As a result. This approach may result in monthly service charges that are higher than their customers expect. and three.minute costs that are among the lowest in the industry. predictable and affordable wireless services that are a competitive alternative to traditional wireless and landline services.minute prepaid service.cost provider of wireless services in each of our markets. and customized ringtones." to bring Cricket's value proposition to customers who prefer active control over their wireless usage. call waiting. We believe this enables us to operate superior networks that support planned customer growth and high usage. work and play. Our Jump service allows customers to place local as well as domestic and international long distance calls to more than 70 countries at per. include games and applications that utilize the BREW (a registered trademark of Qualcomm) handset application software platform. to introduce an away. which are now available in most of our markets. our service plans are designed to attract customers by offering simple. Our offerings combine high quality service in simple packages at highly competitive prices that provide a "high value/low price" proposition for customers. while avoiding rural areas and corridors between markets. we began upgrading our networks to permit us to offer our customers a number of additional features to enhance the Cricket service. In addition. Control and Minimize Costs. 3 .Table of Contents Our business model is different from most other wireless cellular and PCS business models. This strategy allows us to realize higher utilization rates on our networks for more efficient use of network capital and also reduces our network operating costs. These enhancements. "Jumptm by Cricket. We continually focus on enhancing our Cricket service with new offerings to meet the needs of our growing customer base. These strategies allow us to be a low. Cricket Business Strategy Simple. Commencing in the second quarter of 2004. In addition.of. we believe our CDMA networks provide a better platform than competing technologies to expand into other wireless services based on advances in digital technology in the future. however. In addition. caller ID. this strategy allows us to more efficiently purchase wireless licenses for new markets because it allows us to acquire only those wireless licenses that we deem to be appropriately priced and to avoid acquiring wireless licenses simply to provide continuous geographic coverage across broad areas. To become one of the lowest cost providers in the industry. Cricket does not require credit checks or term commitments with early termination fees for customers subscribing to its service. we are focused on streamlining marketing and distribution operations and maintaining lower customer acquisition costs. Leverage CDMA Technology. we minimize our capital costs by engineering highquality. or find existing service offerings too confusing.home calling option (roaming) in the first half of 2005 for our customers who occasionally travel away from their home calling area. In addition. efficient networks that cover only the urban and suburban areas of our markets where most of our potential customers live. We intend. Unlike most other prepaid wireless offerings. we launched our first per.

party Internet retailers sell the Cricket service over the Internet and. Some third. 2004. As a result of these marketing strategies and our unlimited calling value proposition. Network and Operations. together with one such retailer.S. In order to reach our target segments. is one of the lowest in the industry. to a lesser extent.Table of Contents Strategic Expansion. we advertise primarily on radio stations and. and Cricket's customers use an average of 1. that consumers who are not likely to meet credit approval or enter into long. Management's Discussion and Analysis of Financial Condition and Results of Operations . the costs of sales by the indirect and web channels are largely variable costs. positions Cricket well for continued growth. Cricket's approach is to continue increasing existing market penetration while minimizing expenses associated with sales. (2) does the market satisfy internally developed criteria that indicate attractive penetration potential. Cricket's service plans are designed so that a potential customer can make a purchase decision with little or no sales assistance. California license which we have agreed to purchase and the licenses we acquired in Auction #58 reflect this expansion strategy.commerce. and industry analysis indicates.500 minutes per month on plans that do not have monthly usage limits for calls within a customer's home calling area. and Cricket's own website and Internet dealers (the web channel). or CPGA. including local market authorized dealers.term contractual commitments represent a large portion of the remaining growth potential in the U. subscribe to post. with our selection of potential new markets based upon our evaluation of criteria such as: (1) does the market enhance an existing Cricket market cluster. See "Item 7. concentrated 4 . Our customer acquisition cost. Wireless penetration was approximately 62% in the U. distribution and marketing by focusing on improving the sales process for customers and by offering easy to understand service plans and attractive handset pricing and promotions. as of December 31.term commitments.S. Cricket's service is based on providing customers with levels of usage equivalent to landline service at prices substantially lower than most of our wireless competitors for similar usage. wireless market. national retail chains and distributors (the indirect channel). We believe our success depends on operating our CDMA networks to provide high.S. while Cricket's indirect channel and web channel generate the other 65% of sales. we believe our expenditures on advertising are generally at much lower levels than those of traditional wireless carriers. in local publications and television commercials.term commitments. Customers can read about the Cricket service at the point of sale and learn virtually all they need to know about the service without consulting a complicated plan summary or a specialized salesperson. The Fresno." contained in this report. We also maintain a Cricket website (www. For Cricket. Sales and Distribution. and (3) does the market contain sufficient population density for Cricket to offer services on a cost competitive basis. e. Those customers typically use 700 minutes per month on plans that have price penalties for minutes used in excess of the amount allocated as their monthly limit. Cricket's service and its wireless handsets are sold through three main channels: Cricket's own retail locations and kiosks (the direct channel). Cricket authorized dealers and distributors. we have also developed and launched Internet sales on our Cricket website. while the operation of our direct channel locations involves substantial fixed costs. wireless market in 2004 occurred in the prepaid segment.S. Cricket Business Operations Market Opportunity.mycricket. The majority of existing wireless customers in the U. where customers do not submit to credit checks or sign long.pay services that require credit approval and a contractual commitment from the subscriber for a period of one year or greater. Cricket believes that its strategy of not requiring credit approvals or long.Performance Measures. Cricket service does not require a credit check or long. and customer service purposes.com) for informational. We combine mass and local marketing strategies and tactics to build brand awareness of the Cricket service within the communities we serve. Cricket believes. along with the value pricing associated with its unlimited plans. We believe our sales costs are lower than traditional wireless providers in part because of this streamlined sales approach. Cricket's direct channel sells approximately 35% of the new Cricket handsets sold. We intend to seek additional opportunities for market expansion.term service commitment. The highest rate of growth in the U.

The balance of the proceeds of approximately $60 million will be used for general corporate purposes. The holders of Leap common stock. For a more detailed description of our capital requirements and liquidity. and approximately $40 million in principal amount of remaining indebtedness to the FCC (net of the repayment of $45 million of principal and accrued interest to the FCC on the Effective Date).8 million. We engage an independent third party to test the network call quality offered by Cricket and its competitors. Many of our Cricket networks are in local population centers of self. 5 . and we used a portion of the proceeds from the $500 million term loan included as a part of such facilities to redeem Cricket's 13% senior secured pay. While reorganizing under Chapter 11.out and launch commercial operations in these markets. Leap.in.Liquidity and Capital Resources" contained in this report. to repay our remaining approximately $41 million of outstanding indebtedness and accrued interest to the FCC and to pay transaction fees and expenses of $6. 2004 (referred to as the Effective Date).Table of Contents capacity with good in. For a description of the terms of the revolving credit facility and term loan under the Credit Agreement." The following is a summary of the material actions that occurred as of the Effective Date of the Plan of Reorganization: A new board of directors of Leap was appointed. we received the regulatory approvals from the FCC required for our emergence from bankruptcy. see "Item 7.in. Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the United States Bankruptcy Court for the Southern District of California (jointly administered as Case Nos. 2003. The appeal of our service in any given market is not dependent on the Cricket service having ubiquitous coverage in the rest of the country or in regions surrounding our markets. Chapter 11 Proceedings Under the Bankruptcy Code Plan of Reorganization On April 13.building coverage rather than the broad. All of the outstanding shares of Leap common stock. 2004.A11). Our Plan of Reorganization implemented a comprehensive financial reorganization that significantly reduced our outstanding indebtedness.possession" under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11.4 billion to debt with an estimated fair value of approximately $412.term debt was reduced from a book value of more than $2.kind notes due 2011 with a face value of $350 million and an estimated fair value of $372.1 million potential customers. and we expect to seek additional capital to increase our liquidity and help assure we have sufficient funds for the build. Management's Discussion and Analysis of Financial Condition and Results of Operations . 03. Capital Requirements and Projected Investments. On August 5. A Leap subsidiary was the winning bidder in FCC's Auction #58 for four wireless licenses covering approximately 11. warrants and options did not receive any distributions under the Plan of Reorganization. each of the debtors continued to manage its properties and operate its business as a "debtor. We believe that we can deploy our capital more efficiently by tailoring our networks only to our target population centers and by omitting underutilized cell sites that connect those population centers.kind notes. see Item 7. consisting of Cricket 13% senior secured pay. our long. According to the most current results. issued on the Effective Date.New Credit Agreement.8 million. 2003. We currently plan to build. On the Effective Date of the Plan of Reorganization.contained communities where we believe roaming is not an important component of wireless service for our existing target customers. geographically dispersed coverage provided by traditional wireless carriers.A11 to 03. "Management's Discussion and Analysis of Financial Condition and Results of Operations .4 million. Our Plan of Reorganization was confirmed by the Bankruptcy Court on October 22.out and initial operation of these markets.03535.in. warrants and options were cancelled. We entered into new syndicated senior secured credit facilities in January 2005. Cricket regularly ranks first or second in network quality within its core market footprints. Leap and Cricket satisfied the remaining conditions to the Plan of Reorganization and the Plan of Reorganization became effective on August 16.03470.

A. As a result.. Leap had transferred $68.petition indebtedness.8 million of funds to the Leap Creditor Trust to be distributed to holders of allowed Leap general unsecured claims. a director of Leap). on the Effective Date of the Plan of Reorganization. as described below. and approximately $278. 14. 96. or Senior Notes. Inc. 2004. L. currently in litigation in Chile. Dondero.1 million shares. Inc. Cricket redeemed these notes in January 2005. This remaining FCC debt was repaid in January 2005. plus accrued interest. Leap's equity interest in IAT Communications. Leap also transferred other assets as specified in the Plan of Reorganization. or 2.6 billion net book value of debt outstanding under Cricket's senior secured vendor credit facilities and approximately $738. Leap. and approximately $2. Prior to August 16. 2004.9 million shares. note payable to GLH. on a pro rata basis. was cancelled in full. which was formed for the benefit of Leap's general unsecured creditors as contemplated by the Plan of Reorganization. and Cricket owns 100% of the issued and outstanding shares of each of the reorganized wireless license holding companies and the reorganized property holding companies. a director of Leap) pursuant to which Leap granted demand registration rights to such entities and agreed to prepare and file a resale shelf registration statement relating to the shares of new Leap common stock received by such entities under the Plan of Reorganization. as well as new Cricket 13% senior secured pay. with the cash proceeds from such liquidation to be distributed to the holders of allowed Leap general unsecured claims. or Senior Discount Notes. Certain executory contracts and unexpired leases were assumed by the reorganized debtors. Any cash held in reserve by Leap immediately prior to the Effective Date of the Plan of Reorganization that remains following satisfaction of all allowed administrative claims and allowed priority claims against 6 . The notes were guaranteed by Leap and its direct and indirect domestic subsidiaries and secured by all of their personal property and owned real property. Leap entered into a Registration Rights Agreement with Highland Capital Management. with reorganized Cricket responsible for paying the cure amounts associated with such contracts and leases.5% senior notes. Leap owns 100% of the issued and outstanding shares of reorganized Cricket and certain other reorganized subsidiaries. (a beneficial stockholder of Leap and an affiliate of James D. or an aggregate of 57. other than indebtedness owed to the FCC.5% senior discount notes. including approximately $1. which were to be liquidated by the Leap Creditor Trust. nine wireless licenses with a net book value of approximately $1. Mark H..7 million of unpaid principal and approximately $8. All of the debtors' pre.3 million of cash. and Qualcomm term loan. which had no carrying value at August 16. 2004.3 million of accrued interest in connection with the reinstatement of our FCC debt. for distribution to holders of allowed Leap general unsecured claims on a pro rata basis. Rachesky.000 of unjust enrichment penalties. We paid the FCC approximately $36.2 million net book value of debt outstanding under Leap's 12.000 shares of new Leap common stock pursuant to a settlement agreement. The Leap Creditor Trust. received 3. in installments scheduled for April and July 2005. Also.P.in. We agreed to repay the approximately $40 million remaining outstanding principal amount of FCC debt.5% of the issued and outstanding shares of new Leap common stock. The holders of Cricket's senior secured vendor debt claims received. certain causes of action.1 million at August 16.kind notes due 2011. and MHR Institutional Partners II LP and MHR Institutional Partners IIA LP (beneficial stockholders of Leap and affiliates of Dr. These other assets included a $35 million note receivable from Endesa. Leap also issued warrants to purchase 600. The holders of general unsecured claims against Cricket and Leap's other direct and indirect subsidiaries received no distributions under the Plan of Reorganization.5% of the issued and outstanding shares of new Leap common stock. S.Table of Contents Leap issued 60 million shares of new Leap common stock for distribution to two classes of our creditors. Cricket and their subsidiaries implemented certain restructuring transactions intended to streamline their corporate structure.

Wayne. AR(1) Jonesboro. 2004.976. NM Roswell.195. AZ(1) Merced.578 3. CO(1) Ft.917.D C.660 2. Collins. AZ(1) Tucson. NM(1) Gallup. The wireless licenses set forth in the table cover approximately 53.Table of Contents Leap will be distributed to the Leap Creditor Trust.364 521. MN Jackson. MI(1)(2) Grand Rapids. AL(2) Blytheville.134. ID Peoria.363 370. AR(2) Nogales.889 385. CO(1) Lakeland.944 2.519. KS Wichita. MI(2) Saginaw. NE(1) Omaha.0 million potential customers.867 413.000 1. NM(1) Reno.037 524. MI(1)(2) Lansing.284 317.024. NY(1) Utica.544 363.276.558 1. NV(1) Buffalo. Market Population Total MHz Channel Block Anchorage. MI(1)(2) Kalamazoo.692 890. AR(1)(2) Fort Smith.487 185. CO(1) Greeley. ND Lincoln. AR(1) Little Rock.582 355.576 41.582 361. AR(1)(2) Hot Springs.168 226.131 456.649 30 15 15 15 30 30 15 10 20 20 15 20 10 15 15 15 15 10 10 10 20 10 15 15 30 30 15 15 10 10 15 15 10 25 25 10 25 25 10 10 10 25 10 10 10 10 10 10 10 10 15 15 15 10 15 15 15 15 10 10 10 15 10 15 10 C C C C C C C C C C C C C C C C C F F F C F C C C C C C F E C C F C.179 1. NY Watertown.418 1. IN Coffeyville. NE(1) Albuquerque.997 675.233 640.Bay City.6 million remained in reserve by Leap and was included in restricted cash.052 141. MI Mount Pleasant.D C.491 930.097 58. CO(1) Pueblo. Cricket had restricted cash and cash equivalents of $20.916 658.D D D E E E F F F C C C F C C C C C E C C F C F . MS(2) Charlotte/Gastonia.571 150.413 785.772 60.985 254.781 992. MI Traverse City. KS(1) Owensboro. NC(1) Greensboro/Winston.556 1. AL(2) Tuscaloosa. NY(1)(3) Plattsburgh.370 649. CA(1) Visalia.475 685.507 101.010 68.514 166.977 273. NM Santa Fe.8 million that included funds set aside or pledged to satisfy payments and administrative and priority claims against the Cricket Companies following their emergence from bankruptcy. ND Grand Forks.970 121. GA(1) Macon. CA(1) Denver/Boulder.D D D D C. GA(1) Boise.197 262. AR(1) Russellville.351. AZ Phoenix.612 366.972 524. AR(1)(2) Pine Buff.846 123.523 233. MI(1)(2) Flint.038 79. IL Evansville.746 296. GA Columbus. NY(2) Syracuse. NC(1) Hickory. NY(2) Dayton/Springfield.410 231. On the same date.365 519.161 1.D D C. approximately $9. Wireless Licenses The following table shows the wireless licenses that we owned at December 31.884 195. MI(2) Muskegon.495 567.064 101.057 140. FL Albany.239 143. MI(2) Duluth. KY Adrian.433 693. and cash restricted for other purposes. CA(1) Modesto. including licenses we have agreed to sell to a third party.274 338.214.333 733.407 244. MI(2) Jackson. AR Fayetteville.931 210. OH(1) 490.949 290.167 535. At December 31. IN Ft. 2004. AK Birmingham.186 257.Salem/High Point. NC Fargo. ID(1) Lewiston.084 324. MI(2) Battle Creek. MS(2) Vicksburg.

062 203.008.491 991. UT(1) Salt Lake City/Ogden.646 1. OR(1) Salem/Corvallis.820 127.575 123. TN(1) Knoxville. TX Lufkin.075 585. WA(1) Appleton.E (1) Designates markets where we offer Cricket service. Details are shown in the table below. OH(1) Tulsa. TN(1) Clarksville. PA Pittsburgh/Butler/Uniontown/Washington/Latrobe.836 1.553 10 15 10 15 15 10 20 10 10 15 15 15 15 15 15 10 15 15 15 10 10 10 20 C C C C C C C C E C C C C C C C C C C E E D D.682 788. TN(1) Eagle Pass.173. WI Eau Claire. TN(1) Memphis.073 334. (2) Designates markets with respect to which we have agreed to sell the related wireless license (or a portion of the related wireless license) to a third party. Marshfield.731.514 227.336 2. MN Stevens Point. OH Sandusky.453. (3) Designates a wireless license which we have agreed to exchange for a wireless license covering the same market area with the same amount of MHz.529 1.420 473.079 555.153 324. WI Total 100. TX Provo.311 1. Winona. 7 .272 53.597 218. but in a different frequency block. OR(1) Johnstown. TN(1) Nashville/Murfreesboro. PA(1) Chattanooga. Wisconsin Rapids.411 777. OH Toledo.055 138. WI. WI(2) La Crosse.Marion. UT(1) Spokane.104 424. OH(1) Steubenville.607.Oshkosh. OK(1) Eugene.065 270.835 167.868.

2005. Market Population Total MHz Channel Block Birmingham. The FCC approved the grants of these licenses on May 13.186 257.867 693. including a determination by the FCC that ANB 1 License is qualified as a small business or very small business.365 519.579. was granted on May 13.1 million potential customers for which ANB 1 License was named the winning bidder in Auction #58 in February 2005 with an aggregate purchase price of $68. The transfers of these licenses are subject to FCC approval. 2005.503 377.0 million potential customers that we have agreed to sell to a third party. including obtaining third party consents and finalizing and signing a transition services agreement. The grants of these licenses were subject to FCC approval.000 5. and we are a secured lender to. "Consolidation of Variable Interest Entities.037 140. NY Watertown.controlling membership interest in. MO Houston. MI(1) Kalamazoo.D D C C. We have begun to invest significant resources in building out the Fresno market. Upon completion of the sale. Although we expect to obtain such approval and satisfy such conditions. The transfers of these licenses are subject to FCC approval and other closing conditions.134. MI(1) Flint. The following table shows wireless licenses covering approximately 8. entitled to hold licenses designated by the FCC as "Entrepreneurs' Block" licenses. MI(1) Mount Pleasant. We have determined that our investment in ANB 1 is required to be consolidated under FASB Interpretation.944 121. Cricket will no longer offer service in these designated markets.571 101.407 244.413 290.Table of Contents Cricket has agreed to purchase a wireless license for Fresno.010. CA Kansas City.233 262.D D D C D E E C C E (1) Designates wireless licenses or portions of wireless licenses used in commercial operations that we have agreed to sell along with associated network assets and subscribers. Market Population Total MHz Channel Block San Diego. Alaska Native Broadband.9 million.095 2.2 million. LLC. we cannot assure you that the FCC will grant such approval or that the other conditions will be satisfied. AR Russellville.0 million potential customers.010 370. AL Tuscaloosa.239 992. California covering approximately 1.418 203. Although we expect ANB 1 8 . AL Fayetteville.889 385. MS Plattsburgh. MI(1) Grand Rapids.931 210.owned subsidiary ANB 1 License participated in Auction #58. AR Adrian. MI Traverse City. as defined by FCC regulations. Our application to the FCC for consent to acquire this license. TX Temple.1 million potential customers for which our subsidiary Cricket Licensee (Reauction). The FCC's order approving the transfer may be challenged during the 40. MI Jackson. No. MI Muskegon. AR Little Rock. WI Total 1.010.351.161.D C. 46.R. NY Eau Claire. AR Fort Smith. MI Jackson. was named the winning bidder in Auction #58 in February 2005 with an aggregate purchase price of $166.410 231.695 15 15 10 10 5 15 25 25 10 15 25 10 10 15 10 10 10 10 15 10 C C C C C C C." The following table shows wireless licenses covering approximately 10.000 1.772 60. ANB 1.day period following the date of such approval.712 11. or ANB. MI Battle Creek. MS Vicksburg.128.576 101. although initially opposed by a third party. The following table shows wireless licenses covering approximately 11. whose wholly. Inc. owns a 25% controlling membership interest in ANB 1 and is the sole manager of ANB 1.274 338.310 10 10 10 10 C C C C Arrangements with Alaska Native Broadband In November 2004 we acquired a 75% non. or FIN. TX Total 3.153 8.

Cricket has a tagalong right to participate in the sale.582 964.5 million in additional funds to finance its initial working capital requirements. TX El Paso. Subject to FCC approval. ANB 1 contributed these funds to its subsidiary.0 million to fund ANB 1 License's auction eligibility deposit with the FCC.214 256. TX San Antonio. Following such period. gross negligence or willful misconduct.0 million and $3. if ANB 1 or ANB 1 License proposes to transfer any wireless licenses or other material assets to a third party. Lexington. If ANB fails to qualify as an "entrepreneur" and a "very small business" under FCC rules (other than due to a change in FCC rules). if a member desires to transfer its interests in ANB 1 to a third party. members of ANB 1 generally may not transfer their membership interests without Cricket's prior consent. the consummation of the sale will be subject to FCC approval. we cannot assure you that such approval will be granted.000 1. ANB and Cricket increased their aggregate equity capital contributions to ANB 1 to $1. several of Cricket's protective provisions cease to apply.013. ANB is liable to Cricket only to the extent of ANB's $1. KY Louisville. Cricket has a right of first refusal to purchase such interests on the same terms as those negotiated with the third party.241.out milestone requirements with respect to its wireless licenses. ANB. the aggregate purchase price for the nine licenses. subject to certain protective provisions for the benefit of Cricket. Cricket's consent to the sale of any of ANB 1 License's wireless licenses or a sale of equity interests in ANB 1.0 million liquidation preference. ANB 1 License paid these borrowed funds. referred to in this report as the ANB 1 LLC Agreement. or other limited circumstances.0 million of equity contributions. CO. payable in cash. In December 2004. 9 . as the sole manager of the company. KY Las Cruces. together with the $4. Under the ANB 1 LLC Agreement.2 million. Cricket's principal agreements with the ANB entities are summarized below. NM Cincinnati.967 10 10 10 10 10 10 10 10 10 C C C C C C C C C In March 2005. OH Austin. ANB's failure to qualify as an "entrepreneur" and a "very small business" under FCC rules.292 785. respectively. once ANB 1 License satisfies the FCC's initial five.0 million. Market Population Total MHz Channel Block Colorado Springs. respectively. Cricket previously loaned ANB 1 License $8. Cricket has committed to loan ANB 1 License up to $4. has the exclusive right and power to manage. which governs the parties' rights and interests with respect to their investments in ANB 1. and ANB receives a $2.539. Limited Liability Company Agreement. If Cricket breaches its obligation to pay the purchase price.2 million.655 10. ANB 1 License. which investments were completed in March 2005. Also in March 2005. TX Total 583.0 million equity capital contribution to ANB 1. including among others.591 2. ANB has a 30. Cricket has the right to remove ANB as the manager of ANB 1 in the event of ANB's fraud. Cricket made loans under its senior secured credit facility with ANB 1 License in the aggregate principal amount of $56.122. to the FCC to increase its total FCC payments to $68. ANB's insolvency or bankruptcy.0 million.Table of Contents License will receive such approval in the normal course.day option to sell its entire membership interests in ANB 1 to Cricket for a purchase price of $2. Under the senior secured credit facility.year build. Under the ANB 1 LLC Agreement. operate and control ANB 1 and its business and affairs. During the first seven years following the initial grant of wireless licenses to ANB 1 License.293 2. In turn.0 million. and as a result of such failure ANB 1 License ceases to retain the benefits it received in Auction #58.235 196. Under the ANB 1 LLC Agreement. Under the ANB 1 LLC Agreement. If exercised. TX Bryan. Cricket has a right of first refusal to purchase such licenses or assets on the same terms as those negotiated with the third party. ANB and Cricket agreed to make aggregate equity investments in ANB 1 of up to $1. or in lieu of exercising this right. Cricket and ANB entered into an amended and restated limited liability company agreement.0 million and $3. payable prior to Cricket's equity and debt investments in ANB 1 and ANB 1 License.105 1.543.

The facility consists of an $84. facilities and operations. Cricket's commitment under the working capital sub. commencing at the end of the first quarter following the amortization commencement date. The initial term of the management services agreement is eight years. In addition. including a pledge of ANB 1's membership interests in ANB 1 License. borrowings accrue interest at a rate of 12% per annum.out milestone requirements with respect to its wireless licenses. such as Virgin Mobile. The amortization commencement date under the facility occurs 30 days after the date that ANB 1 License satisfies the FCC's initial five. network equipment. and Cricket are parties to a senior secured credit agreement. Nextel and Nextel Partners.voice services. Management Agreement. Competition Generally. ANB also has entered into a negative pledge agreement with respect to its entire membership interests in ANB 1.S. ANB 1 License. are also now available from personal communications service providers and enhanced specialized mobile radio carriers such 10 .facility to finance ANB 1 License's initial working capital requirements. ANB 1.facility and no borrowings outstanding under the working capital sub. terms of service and pricing. finances. Qwest Wireless and others. Loans may be prepaid at any time without premium or penalty.voice services. ANB 1 License had outstanding borrowings of $64.facility. Instead. We also face competition from resellers. or (3) the termination by ANB 1 License of the management services agreement for convenience. U. T.year build. referred to in this report as the Cricket Credit Agreement. We believe that our primary competition in the U.S. wireless market is with national and regional wireless service providers including Alltel. e. subject to extension until the closing of the sale if ANB has then exercised its right to sell its entire membership interests in ANB 1 to Cricket. including data transmission.Mobile. the telecommunications industry is very competitive. wireless providers increasingly are competing in the provision of both voice and non. Cricket and ANB 1 License are parties to a management services agreement. including its product offerings. The management services agreement also may be terminated by ANB 1 License if Cricket fails to pay the purchase price for ANB's membership interests under the ANB 1 LLC Agreement or by ANB 1 License for convenience with one year's prior written notice to Cricket. pursuant to which Cricket has agreed to loan ANB 1 License up to $89. agreeing to keep such membership interests free and clear of all liens and encumbrances. pursuant to which Cricket will provide management services to ANB 1 License in exchange for a monthly management fee based on Cricket's costs of providing such services plus a markup for administrative overhead. Under the Cricket Credit Agreement. with all accrued interest added to the outstanding principal balance of loans until the amortization commencement date.0 million plus capitalized interest.year notice period for termination. Borrowings under the Cricket Credit Agreement are guaranteed by ANB 1 and are secured by a first priority security interest in all of the assets of ANB 1 and ANB 1 License. Sprint (and Sprint affiliates). Under the management services agreement. resellers buy wireless telephone capacity from a licensed carrier and resell services through their own distribution network to the public. Cingular. Loans must be prepaid with the proceeds of any refunds received by ANB 1 License from the FCC. The management services agreement may be terminated by ANB 1 License or Cricket if the other party materially breaches its obligations under the agreement. which provide wireless services to customers but do not hold FCC licenses or own facilities.5 million sub. ANB 1 License will need to obtain additional capital from Cricket or another third party to build out and launch its networks.mail and Internet access.2 million principal amount under the acquisition sub.Table of Contents Senior Secured Credit Agreement. accrued interest and other amounts owing under the Cricket Credit Agreement become due and payable following expiration of the applicable one.facility expires on the earliest to occur of: (1) the amortization commencement date. At April 30. Non. ANB 1 License retains full control and authority over its business strategy.5 million sub. Loans under the Cricket Credit Agreement must be repaid in 16 quarterly installments of principal plus accrued interest.facility to finance the purchase of wireless licenses in Auction #58 and a $4. Cellular and Verizon Wireless. 2005. wireless licenses. If ANB 1 License terminates the management services agreement for convenience. text messaging. (2) the termination by Cricket of the management services agreement between Cricket and ANB 1 License due to a breach by ANB 1 License. all borrowings.

including many markets where we currently provide service. which may make their services more attractive to customers. As wireless service is becoming a viable alternative to traditional landline phone service. disaggregation or leasing of PCS and other wireless licenses. system coverage. modification. Competition for subscribers among wireless communications providers is based principally upon the services and features offered. the FCC completed Auction #58. some competitors have announced unlimited service plans at rates similar to Cricket's service plan rates in markets in which we have launched service. economic conditions and competitors' discount pricing and bundling strategies. There has also been an increasing trend towards consolidation of wireless service providers through joint ventures. the FCC has adopted rules that allow the partitioning. that we do not currently intend to market. and that market other services. cable operators and other competitors. customer service. to the extent that products or services that we offer. such as Voice over Internet Protocol or VoIP. extensive network coverage and vast financial resources and we may be unable to compete successfully with these larger companies. non. pace or financial impact of legal or policy changes that could be adopted in these proceedings. Also. they may be able to offer prospective customers discounts or equipment subsidies that are substantially greater than those that could be offered by us. In addition. we are also increasingly competing directly with traditional landline telephone companies for customers. construction. on our ability to distinguish our Cricket service from competitors through marketing and through our ability to anticipate and respond to other competitive factors affecting the industry. Our ability to compete successfully will depend. The FCC is pursuing policies designed to increase the number of wireless licenses available in each of our markets. operation. changes in consumer preferences.Table of Contents as Nextel. Licensing of PCS Systems. state regulatory agencies. provides us with the means to react effectively to price competition. may depend upon negotiations with such wireless operators. Decisions by these bodies could have a significant impact on the competitive market structure among wireless providers and on the relationships between wireless providers and other carriers. Competition is also increasing from local and long distance wireline carriers who have begun to aggressively advertise in the face of increasing competition from wireless carriers. ownership and interconnection arrangements of wireless communications networks are regulated to varying degrees by the FCC. For example. market penetration and customer retention. such as roaming capability. Continuing technological advances in the communications field make it difficult to predict the nature and extent of additional future competition. we expect these types of consolidations to lead to the creation of larger competitors with considerable spectrum resources. We are unable to predict the scope. Broadband PCS systems 11 . in part. In many cases. landline telephone service and Internet access. including cable television access. sale. Congress.way wireless products and services to decline. market prices for two. Government Regulation The licensing.voice services are offered in conjunction with or as adjuncts to voice services. in which additional PCS spectrum was auctioned in numerous markets. We may also compete in the future with companies that offer new technologies. and we anticipate that competition will continue to cause. Because many of the wireless operators in our markets have substantially greater financial resources than we do. all of which could adversely affect our operating margins. combined with the differentiated value proposition that our Cricket service represents in the wireless marketplace. Competition has caused. demographic trends. In addition. discriminatory behavior by such operators or their refusal to negotiate with us could adversely affect our business. Some of our competitors offer these other services together with their wireless communications service. Over time. the courts and other governmental bodies. capacity and price. the technical quality of their wireless systems. in February 2005. A broadband PCS system operates under a license granted by the FCC for a particular market on one of six frequency blocks allocated for broadband PCS. including new services that may be introduced. we cannot predict the effect that the market forces or the conduct of other operators in the industry will have on our business. reorganizations and acquisitions. While we believe that our cost structure. and continues to allocate and auction additional spectrum that can be used for wireless services. These mandates may impose significant financial obligations on us and other wireless providers.

If a licensee does not receive a renewal expectancy. the majority of them C. and in some cases. Our PCS licenses are in good standing with the FCC. The FCC awards two broadband PCS licenses for each major trading area and four licenses for each BTA.Table of Contents generally are used for two. We were able to successfully negotiate a settlement of these consequences with the FCC and the Department of Justice which provided for an immediate payment of $45 million to the FCC with the balance of monies payable in April and July 2005.Block licenses as a publicly traded corporation with widely dispersed voting power and a very small business under FCC rules.Block license and a 10 MHz F. as defined by the FCC. a 30 MHz C.U. the FCC affirmed its July 1999 order. generally. generally are used for non.auctions.S. we would owe approximately $2. Over time.S.Block and FBlock licenses could cause a number of adverse consequences. the FCC has determined that designated entities who qualify as small businesses or very small businesses. The FCC's rules also allow for publicly traded corporations with widely dispersed voting power. and (2) has substantially complied with applicable FCC rules and policies and the Communications Act. we paid the FCC the remaining principal and accrued interest balance of approximately $41 million as called for by our settlement agreement. In connection with its review of our application seeking such consent.and F. the FCC determined that as a result of our restructuring in bankruptcy: we were no longer qualified as an "Entrepreneur" to hold several of our C. an installment loan from the federal government for a significant portion of the dollar amount of the winning bids in the FCC's initial auctions of C. In addition. On August 5. Treasury.Block and F.voice applications such as paging and data service and are separately licensed. Under existing law. including the ineligibility to hold licenses for which the FCC's minimum coverage requirements have not been met. that are designated as "Entrepreneurs' Blocks. such as bidding credits in C.way voice applications. subject to a comparative hearing.Block and F.Block license. The settlement further required us to use reasonable efforts to complete a refinancing on or prior to January 31. Subsequently. The FCC's rules provide a formal presumption that a PCS license will be renewed. On January 10. Narrowband PCS systems. can receive additional benefits. the FCC determined that we were entitled to acquire C. the FCC has also further split licenses in connection with re. no more than 20% of an FCC licensee's capital stock may be owned. by a foreign government or its representatives 12 . All PCS licenses have a 10. Thus.Block licenses and to qualify as small or very small businesses. favorable and substantially above a level of mediocre service that might only minimally warrant renewal. the FCC approved the transfer of our licenses and we subsequently emerged from the bankruptcy process.Block licenses. or voted by non. may award the license to another party.in. six licensees are authorized to compete in each area. or BTAs.kind notes that we issued upon our emergence from bankruptcy and our remaining indebtedness to the FCC. the triggering of FCC unjust enrichment rules and the acceleration of installment payments owed to the U.Block licenses. A failure by an entity to maintain its qualifications to own C." if the PCS licensee (1) has provided substantial service during its past license term. directly or indirectly. PCS markets into 51 large regions called major trading areas.Block and F. which are comprised of 493 smaller regions called basic trading areas. 2005 which generated sufficient proceeds to repay the senior secured pay. The FCC's spectrum allocation for PCS includes two licenses.S. then the FCC will accept competing applications for the license renewal period and." The FCC generally requires holders of these licenses to meet certain threshold financial size qualifications.Block spectrum auctions or re. and the other three are for 10 MHz each. to hold C. The FCC permits licensees to split their licenses and assign a portion to a third party on either a geographic or frequency basis or both. In July 2000. 2005. as defined by a complex set of FCC rules.year term.Block or F. 2004. the FCC approved the transfer to us of a number of other PCS licenses. we were required to seek FCC consent to the change in control of our FCC spectrum licenses.7 million of indebtedness to the FCC would become immediately due and payable. in contrast.Block licenses.$4 million in unjust enrichment penalties. Because our emergence from bankruptcy involved a change in control of the Company. The FCC defines substantial service as service which is sound. The two major trading area licenses authorize the use of 30 MHz of spectrum. One of the basic trading area licenses is for 30 MHz of spectrum. and $76. citizens or their representatives. The FCC has segmented the U. In July 1999.Block and F. at the end of which they must be renewed.auctions of PCS spectrum. called a "renewal expectancy. creating additional 15 MHz and 10 MHz licenses.

Absent an agreement with affected broadband PCS entities or an extension.designated entities once the licensee has met its five. A C.quarter of the population of the licensed area within five years. PCS licensees have been required to coordinate frequency usage with existing fixed microwave licensees in the 1850 to 1990 MHz band. 2005. in general we believe the FCC will approve or grant such requests or applications in due course. Because an FCC license is necessary to lawfully provide PCS service. The FCC now engages in a case. a failure to comply with FCC coverage requirements could cause the revocation of the relevant wireless license or the imposition of fines and/or other sanctions. are presumptively consistent with the public interest with respect to investors from certain nations.U. the FCC no longer limits the amount of PCS and other commercial mobile radio spectrum that an entity may hold in a particular geographic market. as of January 1. remaining microwave incumbents in the PCS spectrum are responsible for avoiding interference with a PCS licensee's network. The FCC may prohibit or impose conditions on assignments and transfers of control of licenses. Although we cannot assure you that the FCC will approve or act in a timely fashion upon any pending or future requests for approval of assignment or transfer of control applications that we file. the FCC requires 13 . In general. PCS Construction Requirements. Foreign ownership above the 25% holding company level may be allowed if the FCC finds such higher levels consistent with the public interest.third of the population within five years and two. Pursuant to an order released in December 2001.year coverage requirement.controlling interests in an entity that holds an FCC license generally may be bought or sold without FCC approval. although we could seek a declaratory ruling from the FCC allowing the foreign ownership or could take other actions to reduce our foreign ownership percentage in order to avoid the loss of our licenses. These initial requirements are met for most 10 MHz licenses when adequate service is offered to at least one. General FCC Obligations.Table of Contents or by a foreign corporation. Such transfers will remain subject to certain costs and reimbursements to the government of any bidding credits or outstanding principal and interest payments owed to the FCC. even up to 100%. The transition and cost sharing plans expired on April 4. with limited exceptions. In an effort to balance the competing interests of existing microwave users and newly authorized PCS licensees. To secure a sufficient amount of unencumbered spectrum to operate our PCS systems efficiently and with adequate population coverage within an appropriate time period. Transfer and Assignment of PCS Licenses.case review of transactions that involve the consolidation of spectrum licenses. incumbent microwave licensees will be required to return their operating authorizations to the FCC following six months written notice from a PCS entity that such entity intends to turn on a PCS system within the interference range of the incumbent microwave licensee. our business plans would be adversely affected. All PCS licensees must satisfy minimum geographic coverage requirements within five and/or ten years after the license grant date.Block or F. We have no knowledge of any present foreign ownership in violation of these restrictions. Subsequent to that date. we have previously needed to relocate one or more of these incumbent fixed microwave licensees and have also been required (and may continue to be required) to participate in the cost sharing related to microwave licenses that have been voluntarily relocated by other PCS licensees or the existing microwave operators. Since 1996. If an FCC licensee is controlled by another entity (as is the case with Leap's ownership and control of subsidiaries that hold FCC licenses).S.thirds of the population within ten years after the license grant date. The FCC has a number of other complex requirements and proceedings that affect our operations and that could increase our cost or diminish our revenues. 2003. up to 25% of that entity's capital stock may be owned or voted by non. The Communications Act and FCC rules require the FCC's prior approval of the assignment or transfer of control of a license for a PCS system. the FCC could revoke our wireless licenses.by. those licensees will share the cost of the relocation. If our foreign ownership were to exceed the permitted level. citizens or their representatives. by a foreign government or its representatives or by a foreign corporation. Non. The FCC has ruled that higher levels of foreign ownership. and for 30 MHz licenses when adequate service is offered to at least one. the FCC has adopted a transition plan to relocate such microwave operators to other spectrum blocks and a cost sharing plan so that if the relocation of an incumbent benefits more than one PCS licensee. if the FCC were to disapprove any such filing. For example.Block license may be transferred to non.

a failure to comply with these requirements could subject us to significant penalties. rules governing spam. rate averaging and integration requirements. to date. Absent a waiver. including enhanced emergency 911 services that provide the caller's telephone number and detailed location information to emergency responders. financial condition or results of operations. These requirements are all the subject of pending FCC or judicial proceedings. including PCS providers. as well as a requirement that emergency 911 services be made available to users with speech or hearing disabilities. and we are unable to predict how they may affect our business. number pooling rules. Negotiated interconnection agreements are subject to state approval. They will also determine the amount of revenue we receive for terminating calls originating on the networks of local exchange carriers and other telecommunications carriers. and FCC rules provide that all local exchange carriers must enter into compensation arrangements with commercial mobile radio service carriers for the exchange of local traffic. The FCC has the authority to order interconnection between commercial mobile radio service operators and incumbent local exchange carriers. For wireless service providers. telemarketing and truth. we are entitled to receive compensation when we transport and terminate a local call that originated on a wireline local exchange network. as well as state arbitration proceedings. will directly impact the nature and costs of facilities necessary for the interconnection of our network with other telecommunications networks. If an agreement cannot be reached.by. and the industry as a whole. rules governing billing and subscriber privacy. on a competitively neutral and nondiscriminatory basis. FCC rules also require that local exchange carriers and most commercial mobile radio service providers. States may also impose competitively neutral requirements that are necessary for universal service. As a commercial mobile radio services provider. to protect the public safety and welfare. including PCS providers like Leap. allow customers to change service providers without changing telephone numbers. State. Our obligations to implement these services occur on a market. to ensure continued service quality and to safeguard the rights of consumers. Local and Other Regulation. State and local governments are permitted to manage public rights of way and can require fair and reasonable compensation from telecommunications providers. the scope of state authority to maintain existing requirements or to adopt new requirements is unclear. We also are subject or potentially subject to universal service obligations. this mandate is referred to as wireless local number portability. We negotiate interconnection arrangements for our network with major incumbent local exchange carriers and other independent telephone companies. Some of these requirements pose technical and operational challenges to which we. rules that require wireless service providers to configure their networks to facilitate electronic surveillance by law enforcement officials. parties to interconnection negotiations can submit outstanding disputes to state authorities for arbitration. Similarly. and the outcome of such proceedings may affect the manner in which we are charged or compensated for the exchange of traffic. State legislators.commercial mobile radio service interconnection and other intercarrier compensation arrangements. under certain circumstances. so long as the compensation required is publicly disclosed by the state or local government. have not yet developed clear solutions. The FCC is currently considering changes to the local exchange.market basis as emergency service providers request the implementation of enhanced emergency 911 services in their locales. public utility commissions and other state agencies are becoming increasingly active in efforts to regulate wireless carriers and the service they provide. among others. whereby each carrier compensates the other for terminating local traffic originating on the other carrier's network. we are required to pay compensation to a wireline local exchange carrier that transports and terminates a local call that originated on our network. Congress has given the FCC the authority to preempt states from regulating rates or entry into commercial mobile radio service. rules governing wireless resale and roaming obligations. for the use of such rights of way by telecommunications carriers. The FCC also has adopted rules governing the porting of wireline telephone numbers to wireless carriers. The FCC's interconnection rules and rulings. including PCS.inbilling and rules requiring us to offer equipment and services that are accessible to and usable by persons with disabilities. or WLNP. including efforts to conserve numbering resources and efforts 14 .Table of Contents wireless carriers to make available emergency 911 services. While a state may not impose requirements that effectively function as barriers to entry or create a competitive disadvantage. The FCC. has denied all state petitions to regulate the rates charged by commercial mobile radio service providers.

any materials filed with the SEC may be read and copied by the public at the SEC's Public Reference Room at 450 Fifth Street. This website is not part of this filing. 15 .Table of Contents aimed at regulating service quality. and to address complaints by subscribers invoking them. Cricket employed approximately 1.0330. warranties and returns. Inflation We believe that inflation has not had a material effect on our results of operations. has tended to be higher in the second and third quarters.400 full time employees. DC 20549. Other FCC and Federal Trade Commission rules also regulate the disclosure and sharing of subscriber information. Washington. advertising. State legislatures and regulators are considering imposing additional requirements on companies to further protect the privacy of wireless customers. our annual reports on Form 10. or churn.gov. Financial Information Concerning Segments and Geographical Information Financial information concerning the Company's operating segment and the geographic area in which it operates is set forth in Note 14 to the consolidated financial statements included in Item 8 of this report. are available free of charge at www. The Communications Act and FCC rules. current reports on Form 8.sec. As a result. and customer turnover. In addition. rebates. We have developed and comply with a policy designed to protect the privacy of our customers and their personal information. both of which have the ability to reduce or outweigh certain seasonal effects.leapwireless. NW. The location and construction of our PCS antennas and base stations and the towers we lease on which such antennas are located are subject to FCC and Federal Aviation Administration regulations. Seasonality The Company's customer activity is influenced by seasonal effects related to traditional retail selling periods and other factors that arise from Cricket's target customer base.com. and Leap had no employees. our business is sensitive to promotional activity and competitive actions. Privacy. We cannot assure you that any state or local regulatory requirements currently applicable to our systems will not be changed in the future or that regulatory requirements will not be adopted in those states and localities that currently have none.SEC. could adversely affect our operating results. 2004. Employees As of December 31.Q.800. Our need to comply with these rules. state and local environmental and historic preservation regulations. Availability of Public Reports As soon as is reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission. and any amendments to those reports. impose various rules on us intended to protect against the disclosure of customer proprietary network information. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1. land use or other requirements.K. Such changes could impose new obligations on us that could adversely affect our operating results. quarterly reports on Form 10. They are also available free of charge on the SEC's website at www. or SEC. new sales activity is generally highest in the first and fourth quarters. However. for example. federal. We are obligated to comply with a variety of federal and state privacy and consumer protection requirements. and other consumer protection measures.K. and state and local zoning.

In the first quarter of 2003.2 million for the year ended December 31. We may not generate profits in the future on a consistent basis or at all.8 million for the transition period from September 1. In addition. During the fourth quarter of 2004. In addition. net) for the five months ended December 31. but decreased by approximately 4. We Face Increasing Competition Which Could Have A Material Adverse Effect On Demand For The Cricket Service In general. Many competitors have substantially greater financial and other resources than we have. Potential customers may perceive the Cricket service to be less appealing than other wireless plans. During the first and second quarters of 2004.000 net customers in the third quarter of 2004. Wireline carriers have begun to advertise aggressively in the face of increasing competition from wireless carriers. cable operators and other competitors. 2003. These competitive offerings could adversely affect our ability to maintain our pricing and market penetration. Our current business plans assume that we will increase our customer base over time. we gained approximately 30. that failure could have a negative effect on our financial condition and on the value of the common stock of Leap. Our competitors may attract more customers because of their stronger market presence and geographic reach.3 million (excluding reorganization items. and varying national economic conditions.000 customers. Net customers increased by approximately 18. respectively. $483.000 net customers. We believe that this uneven growth over the last several quarters generally reflects seasonal trends in customer activity. our larger competitors may be able to purchase equipment. or in replacement of. respectively. we experienced net losses of $597. $0. Wireline carriers are also offering unlimited national calling plans and bundled offerings that include wireless and data services. the competitive pressures of the wireless telecommunications market have caused other carriers to offer service plans with large bundles of minutes of use at low prices which are competing with the predictable and virtually unlimited Cricket calling plans. but lost approximately 8. the competition in the wireless telecommunications market. which offer more features and options. 1999.000 net customers but we lost approximately 54. 2002. 1999.000 during the fourth quarter of 2003. providing us with increased economies of scale. If we are unable to 16 . 2004 and the seven months ended July 31. and we may not be able to compete successfully. We may not be successful in our efforts to persuade potential customers to adopt our wireless service in addition to.Table of Contents RISK FACTORS Risks Related to Our Business and Industry We Have Experienced Net Losses Since Inception And We May Not Be Profitable In The Future We experienced losses of $8. we experienced a net increase of approximately 65. As consolidation in the industry creates even larger competitors. 1999 to December 31. We compete as a mobile alternative to landline service providers in the telecommunications industry.3 million for the year ended December 31. promotional activity. supplies and services at lower prices than we can. including the ability to roam outside of the home service area. Some competitors have announced rate plans substantially similar to the Cricket service plan (and have also introduced products that consumers perceive to be similar to Cricket's service plan) in markets in which we offer wireless service. Because of their size and bargaining power.700 customers and 9. 2001. our attenuated spending on capital investments and advertising while we were in bankruptcy. their current landline service.000 net customers in the second quarter of 2003. 2004. If we fail to achieve consistent profitability. we gained approximately 1.4 million for the year ended December 31. any purchasing advantages our competitors have may increase.8 million for the year ended December 31. We May Not Be Successful In Increasing Our Customer Base Which Would Force Us To Change Our Business Plans And Financial Outlook And Would Likely Negatively Affect The Price Of Our Stock Our growth on a quarter by quarter basis has varied substantially in the recent past.6 million for the fiscal year ended August 31. the telecommunications industry is very competitive. $75. 2000. and $164.6 million and $49. $664. Some competitors also offer prepaid wireless plans that are being advertised heavily to demographic segments that are strongly represented in Cricket's customer base.000 in the third quarter of 2003.

that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Securities and Exchange Commission on February 7. 2004 and the two month period ended September 30. Our Business And Stock Price May Be Adversely Affected Section 404 of the Sarbanes. the standards that must be met for management to assess our internal control over financial reporting are new and require significant documentation and testing." restatement of financial statements in prior filings with the SEC is a strong indicator of the existence of a material weakness in internal control over financial reporting. see "Item 9A. and in connection with preparing for our annual audit. As a result of this review. 2004 with respect to turnover and staffing levels in our accounting and financial reporting departments (arising in part in connection with the Company's now completed bankruptcy proceedings). As more fully described in Note 2 to our consolidated financial statements included in this report. our CEO and CFO concluded that certain material weaknesses in our internal control over financial reporting existed as of December 31. As a result of these material weaknesses. The existence of one or more material weaknesses or significant deficiencies could result in errors in our financial statements. 2005. In connection with their evaluation of our disclosure controls and procedures. Our assessment may identify the need for remediation of our internal control over financial reporting. 2004. Or If We Have Other Material Weaknesses Or Significant Deficiencies In Our Internal Control Over Financial Reporting Following publication of a letter regarding accounting for leases issued by the Office of the Chief Accountant of the U. or combination of control deficiencies. fresh. 2004 should be restated to correct these accounting errors.Oxley Act of 2002 requires companies to do a comprehensive evaluation of their internal control over financial reporting.K for the fiscal year ending December 31. our management and Audit Committee concluded that the Company's unaudited interim financial statements for the one and seven month periods ended July 31.S. 2005. including our site retirement and remediation obligations. According to the PCAOB's Auditing Standard No. If Our Internal Control Over Financial Reporting Does Not Comply With The Requirements Of The Sarbanes. Controls and Procedures" contained in this report. our management will be required to assess and issue a report concerning our internal control over financial reporting. and our independent auditors will be required to attest to and report on management's assessment. Controls and Procedures. the application of leaserelated accounting principles. "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. If we cannot produce reliable financial reports.Q for the three months ended September 30. we will be required to document and test our internal control over financial reporting. And Our Business And Stock Price May Be Adversely Affected If We Do Not Remediate These Material Weaknesses. and substantial costs and resources may be required to rectify any internal control deficiencies. We Have Identified Material Weaknesses In Our Internal Control Over Financial Reporting. we would be forced to change our current business plans and financial outlook and there would likely be a material negative affect on the price of our common stock. we reviewed our accounting for leases. Reporting on our compliance with Section 404 of the Sarbanes. To comply with this statute. 2.Oxley Act Of 2002. and our business and financial condition could be harmed. we may be unable to obtain additional financing to operate and expand our business. See "Item 9A. However. We recently concluded that certain material weaknesses existed in our internal control over financial reporting." If management cannot 17 .start reporting oversight.Oxley Act will first be required in connection with the filing of our Annual Report on Form 10.Table of Contents attract and retain a growing customer base. For a description of these material weaknesses and the steps we are undertaking to remediate these material weaknesses. the market price of our stock could decline significantly. A "material weakness" is a control deficiency. we identified accounting errors in our unaudited interim financial statements included in the Company's Quarterly Report on Form 10. investors could lose confidence in our reported financial information. We have been conducting a rigorous review of our internal control over financial reporting in order to become compliant with the requirements of Section 404. and account reconciliation procedures. our CEO and CFO concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this report.

inability to make calls while outside of the home service calling area. we may be unable to obtain additional financing to operate and expand our business. A high rate of customer turnover would reduce revenues and increase the total marketing expenditures required to attract the minimum number of replacement customers required to sustain our business plan. In addition. Our operating costs can also increase substantially as a result of customer credit card and subscription fraud and dealer fraud. and our business and financial condition could be harmed. which. Our present and future debt financing could have important consequences. Because we do not require customers to sign long. However. our rate of customer turnover may be affected by other factors. frequently referred to as "churn. 2005. Require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness. we also evaluate our service offerings and the demands of our target customers and may modify. We have implemented a number of strategies and processes to detect and prevent efforts to defraud us. Our strategies to address customer turnover may not be successful. and we believe that our efforts have substantially reduced the types of fraud we have identified. 2005. as a result. And If We Fail To Maintain Compliance With The Covenants Under Our Senior Secured Credit Facilities. We cannot assure you that these service offerings will be successful or prove to be profitable. This existing indebtedness bears interest at a variable rate.term service commitment or passing a credit check." is an important business metric in the telecommunications industry because it can have significant financial effects. customer care concerns. and 18 .term commitments or pass a credit check. or if our auditors cannot timely attest to management's assessment or if they identify significant deficiencies or material weaknesses in our internal control over financial reporting as of December 31. changes in our business and the industry in which we operate. our service is available to a broader customer base than many other wireless providers and. thereby reducing the availability of our cash flows to fund working capital. some of our customers may be more likely to terminate service for inability to pay than the average industry customer. number portability and other competitive factors. acquisitions and other general corporate purposes. investors could lose confidence in our reported financial information. Subscription or Dealer Fraud. to the extent we raise additional capital in the future. capital expenditures. it could: Increase our vulnerability to general adverse economic and industry conditions. Our Indebtedness Could Adversely Affect Our Financial Health. Our Primary Business Strategy May Not Succeed In The Long Term A major element of our business strategy is to offer consumers a service that allows them to make virtually unlimited calls within their Cricket service area and receive unlimited calls from any area for a flat monthly rate without entering into a long. Any Such Failure Could Materially Adversely Affect Our Liquidity And Financial Condition As of April 30. From time to time. we had approximately $500 million of outstanding indebtedness and. or reacting to. if our strategies are not successful in detecting and controlling fraud in the future. handset issues. in turn. Limit our flexibility in planning for. Our Ability To Become Profitable Will Decrease Customer turnover. could have a material adverse effect on our business. it would have a material adverse impact on our financial condition and results of operations. financial condition and results of operations. but we have entered into interest rate hedging agreements with respect to $250 million of our debt which mitigates the interest rate risk. This strategy may not prove to be successful in the long term. change or adjust our service offerings or offer new services. the market price of our stock could decline significantly. including the size of our calling areas. 2005. For example. we expect to obtain much of such capital through debt financing.Table of Contents favorably assess the effectiveness of our internal control over financial reporting as of December 31. If We Experience High Rates Of Customer Turnover or Credit Card.

could result in the acceleration of all of our debt. the development and commercial acceptance of wireless data services. The Credit Agreement also contains various affirmative and negative covenants. including turnover of individuals at the chief executive officer. However. vice president and other management levels. Certain class action lawsuits have been filed in the industry claiming damages for alleged health 19 .K constituted a default under the Credit Agreement. but we cannot guarantee that we will be fully protected against all losses associated with a product that is found to be defective.user requirements and preferences. president and chief operating officer.Table of Contents Reduce the value of stockholders' investments in Leap because debt holders have priority regarding our assets in the event of a bankruptcy or liquidation. If we incur additional indebtedness. and may interfere with various electronic medical devices. may have a material adverse impact on our ability to effectively manage and operate our business. senior vice president. we could be held liable with the equipment manufacturers and suppliers for products we sell if they are later found to have design or manufacturing defects. Risks Associated With Wireless Handsets Could Pose Product Liability. Since we announced reorganization discussions and filed for Chapter 11. we have experienced higher than normal employee turnover. And We May Lose Customers If We Fail To Keep Up With These Changes The wireless communications industry is experiencing significant technological change. We generally have indemnification agreements with the manufacturers who supply us with handsets to protect us from direct losses associated with product liability. we cannot assure you that we will be able to obtain a waiver in the future should a default occur. if not cured or waived. In addition. The loss of key individuals. even if the handsets we sell meet the regulatory safety criteria. We do not. The Loss Of Key Personnel And Difficulty Attracting And Retaining Qualified Personnel Could Harm Our Business We believe our success depends heavily on the contributions of our employees and on maintaining our experienced workforce. including cancer. including hearing aids and pacemakers. the risks associated with our leverage could increase substantially. The Wireless Industry Is Experiencing Rapid Technological Change. We Expect To Be Able To Incur Substantially More Debt. the Credit Agreement governing our senior secured credit facilities contains restrictive covenants that limit our ability to engage in activities that may be in our long. Health And Safety Risks That Could Adversely Affect Our Business We do not manufacture handsets or other equipment sold by us and generally rely on our suppliers to provide us with safe equipment. as evidenced by the ongoing improvements in the capacity and quality of digital technology. This Could Increase The Risks Associated With Our Leverage The covenants in our Credit Agreement allow us to incur substantial additional indebtedness in the future. Our failure to comply with any of these covenants could result in an event of default that. and we may lose customers if we fail to keep up with these changes. The cost of implementing future technological innovations may be prohibitive to us. however. Our suppliers are required by applicable law to manufacture their handsets to meet certain governmentally imposed safety criteria. Any such acceleration would have a material adverse affect on our liquidity and financial condition and on the value of the common stock of Leap. Media reports have suggested that the use of wireless handsets may be linked to various health concerns. Our failure to timely file this Annual Report on Form 10.term best interest. and particularly the cumulative effect of such losses. generally provide employment contracts to our employees and the uncertainties associated with our bankruptcy and our emergence from bankruptcy have caused many employees to consider or pursue alternative employment. including covenants that require us to maintain compliance with certain financial leverage and coverage ratios. shorter development cycles for new products and enhancements and changes in end. Although we were able to obtain a limited waiver of this default.

we may be forced to enter into a licensing or royalty agreement with the third party.party retailers fail to comply with their contracts. Results Of Operations And Financial Condition We depend heavily on suppliers and contractors with specialized expertise in order for us to efficiently operate our business. Whether or not an infringement claim was valid or successful. specialized suppliers with products or services from another source. Because of the costs and time lags that can be associated with transitioning from one supplier to another. contractors and third. interest groups have requested that the FCC investigate claims that wireless technologies pose health concerns and cause interference with airbags. including reports of batteries that have overheated. In addition. which could decrease demand for our services. Concerns over radio frequency emissions and defective products may discourage the use of wireless handsets. If we cannot reach a mutually agreeable resolution with the third party. 20 . Generally. hearing aids and other medical devices. We have begun to evaluate the third party's position but have not yet reached a conclusion as to the validity of its position. A Failure By Such Parties To Provide The Agreed Services Could Materially Adversely Affect Our Business. However. We Rely Heavily On Third Parties To Provide Specialized Services. Concerns over these safety risks and the effect of any legislation that has been and may be adopted in response to these risks could limit our ability to sell our wireless service. We May Be Subject To Claims Of Infringement Regarding Telecommunications Technologies That Are Protected By Patents And Other Intellectual Property Rights Telecommunications technologies are protected by a wide array of patents and other intellectual property rights. There also are some safety risks associated with the use of wireless handsets while driving. or requiring us to redesign our business operations or systems to avoid claims of infringement. In the past. involving us in costly and time. some suppliers. or at all). our suppliers. but we cannot provide assurance to our investors about the effect of any such license. it could adversely affect our business by diverting management attention. if one or more Cricket customers were harmed by a defective product provided to us by the manufacturer and subsequently sold in connection with our services. In addition. As a result. fail to meet our performance expectations or refuse to supply us in the future. including software suppliers. including batteries in a handset sold by Cricket and other wireless providers.party retailers have not always performed at the levels we expect or at the levels required by their contracts. The media has also reported incidents of handset battery malfunction. Any such disruption could have a material adverse affect on our business. A third party with a large patent portfolio has contacted us and suggested that we need to obtain a license under a number of its patents in connection with our current business operations.Table of Contents problems arising from the use of wireless handsets. our business could be substantially disrupted if we were required to replace the products or services of one or more major. but we cannot guarantee that we will be fully protected against all losses associated with an infringement claim. especially if the replacement became necessary on short notice. If key suppliers. our business could be severely disrupted. We understand that the third party has initiated similar discussions with other telecommunications carriers. Malfunctions have caused at least one major handset manufacturer to recall certain batteries used in its handsets.consuming litigation. our ability to add and maintain customers for Cricket service could be materially adversely affected by negative public reactions. results of operations and financial condition. are the exclusive sources of their specific products. contractors or third. requiring us to enter into royalty or licensing agreements (which may not be available on acceptable terms. We do not currently expect that such an agreement would materially adversely affect our business. We generally have indemnification agreements with the manufacturers and suppliers who provide us with the equipment and technology that we use in our business to protect us against possible infringement claims. there are multiple sources for the types of products we purchase. third parties may assert infringement claims against us from time to time based on our general business operations or the specific operation of our wireless networks.

the Federal Aviation Administration. our competitive position and business prospects could be materially adversely affected. We offer service plans that bundle certain features.start reporting under American Institute of Certified Public Accountants' Statement of Position 90.500 minutes per month. service quality may suffer. but we design our networks to accommodate our expected high call volume. long distance and virtually unlimited local service for a fixed monthly fee to more effectively compete with other telecommunications providers. we recorded an impairment charge of $171. and may vary significantly in the future. could increase with limited warning.7. We own less spectrum in many of our markets than our competitors. the Environmental Protection Agency. In particular. if future wireless use by Cricket customers exceeds the capacity of our networks. However. Governmental regulations and orders can significantly increase our costs and affect our competitive position compared to other telecommunications providers. We are unable to predict the scope. including successful bid prices in FCC auctions and selling prices observed in wireless license transactions.7. a sudden large sale of spectrum by one or more wireless providers occurs. If we are unable to cost. "Financial Reporting by Entities in Reorganization under the Bankruptcy Code. the fair value estimated by management based in part on information provided by an independent valuation consultant. State regulatory agencies are increasingly focused on the quality of service and support that wireless carriers provide to their customers and several agencies have proposed or enacted new and potentially burdensome regulations in this area. valuation swings could occur if: consolidation in the wireless industry allowed or required carriers to sell significant portions of their wireless spectrum holdings. Our Costs Of Providing Service Could Increase. we could face capacity problems and our costs of providing the services could increase. long distance rates and the charges for interconnecting telephone call traffic between carriers can be affected by governmental regulatory actions (and in some cases are subject to regulatory control) and." or SOP 90.1 million to reduce the carrying value of our wireless licenses to their estimated fair value. Which Could Have A Material Adverse Effect On Our Competitive Position Cricket customers currently use their handsets approximately 1.Table of Contents Regulation By Government Agencies May Increase Our Costs Of Providing Service Or Require Us To Change Our Services Our operations are subject to varying degrees of regulation by the FCC. the Occupational Safety and Health Administration and state and local regulatory agencies and legislative bodies. and we consistently assess and implement technological improvements to increase the efficiency of our wireless spectrum. 21 . the Federal Trade Commission. as a result of our adoption of fresh. However. The fair values of our wireless licenses are based primarily on available market prices. The market values of wireless licenses have varied dramatically over the last several years. we increased the carrying value of our wireless licenses to $652. Further. and some markets are experiencing substantially higher call volumes.6 million at July 31. We may be forced to raise the price of Cricket service to reduce volume or otherwise limit the number of new customers. or incur substantial capital expenditures to improve network capacity. 2004. Future Declines In The Fair Value Of Our Wireless Licenses Could Result In Future Impairment Charges During the three months ended June 30. Adverse decisions or regulations of these regulatory bodies could negatively impact our operations and costs of doing business. If Call Volume Under Our Cricket Flat Price Plans Exceeds Our Expectations. 2003.effectively provide our products and services to customers. as a result. or market prices decline as a result of the bidding activity in recently concluded or upcoming FCC auctions. pace or financial impact of regulations and other policy changes that could be adopted by the various governmental entities that oversee portions of our business. If customers exceed expected usage.

Accordingly. strategic alliances or significant agreements by us or by our competitors. You are not able to compare information reflecting our post. the value of our wireless licenses could be subject to non. We assess potential impairments to indefinite.cash impairment charges in the future. Our Stock Price May Be Volatile The trading prices of the securities of telecommunications companies have been highly volatile.lived and/or our indefinite. our current and future balance sheets and results of operations will not be comparable in many respects to our balance sheets and consolidated statements of operations data for periods prior to our adoption of fresh.lived assets on our balance sheet. Because Our Consolidated Financial Statements Reflect Fresh. recruitment or departure of key personnel.lived assets and/or our long. including property and equipment and certain intangible assets.start reporting. A significant impairment loss could have a material adverse effect on our operating income and on the carrying value of our wireless licenses on our balance sheet. but the shares may be less liquid in that market than they would be on the NASDAQ National Market or a national securities exchange. Including Goodwill.Table of Contents In addition. when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable.lived assets. the price of wireless licenses could decline as a result of the FCC's pursuit of policies designed to increase the number of wireless licenses available in each of our markets. the carrying values of our wireless licenses and our long. If the market value of wireless licenses were to decline significantly in the future.Start Reporting Adjustments Made Upon Our Emergence From Bankruptcy.start reporting on July 31. Leap's common shares are quoted for trading by market makers on the OTC Bulletin Board. Leap issued 60 million shares of common stock for distribution to two classes of our creditors.lived assets. A significant impairment loss could have a material adverse effect on our operating results and on the carrying value of our goodwill or other indefinite. this may ultimately result in a non. among other things: variations in our operating results. Leap's outstanding shares of common stock are not currently listed on the NASDAQ National Market or any national securities exchange and Leap cannot guarantee that an application to list its shares will be granted.Lived Assets.emergence balance sheet data. Declines In Our Operating Performance Could Ultimately Result In An Impairment Of Our Indefinite. Risks Related to Our Common Stock Our Shares Are Not Listed With the NASDAQ National Market Or A National Securities Exchange And May Have Limited Trading On the Effective Date of our Plan of Reorganization. the trading price of our common stock is likely to be subject to wide fluctuations. among other things.lived assets and the related depreciation and amortization expense. Thus. If we do not achieve our planned operating results. Factors affecting the trading price of our common stock may include.cash impairment charge related to our long. Or Our Long. annually and when there is evidence that events or changes in circumstances indicate that an impairment condition may exist. 2004. new services or service enhancements.start reporting. announcements of technological innovations. Our ability to access equity capital markets may be restricted in the future if the trading market for Leap's common stock lacks sufficient liquidity. including goodwill and wireless licenses. 22 . results of operations and changes in financial condition to information for periods prior to our emergence from bankruptcy. changed considerably from that reflected in our historical consolidated financial statements. Financial Information In Our Current And Future Financial Statements Will Not Be Comparable To Our Financial Information From Prior Periods As a result of adopting fresh. Including Property and Equipment We assess potential impairments to our long.Lived Assets.lived intangible assets. without making adjustments for fresh.

7% of our common stock. takeover or other business combination. alter or repeal our bylaws. This concentration of ownership could have the effect of delaying. We use these buildings for sales.out additional markets. Tennessee. in two office buildings in San Diego. and require that all stockholder actions be taken at a meeting of our stockholders. As of April 30. cell sites and switch and warehouse facilities. including stores ranging in size from 1. consolidation or sale of all or substantially all of our assets and other matters. authorize the issuance of "blank check" preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt. product development.050 square feet to 4. Item 2. prohibit stockholder action by written consent. marketing. and establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings. California for our headquarters. deferring or preventing a change in control or impeding a merger or consolidation.100 square feet. delay or prevent a change in control of our company. Cricket had leased regional offices in Denver. which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder and which may discourage. we will lease additional or substitute office facilities. Cricket also leases approximately 90 retail locations in its markets. as well as kiosks and retail spaces within another store. delay or prevent a change in control of our company or changes in our management that the stockholders of Leap may deem advantageous. 26 switch locations and three warehouse facilities that range in size from approximately 3. These provisions: require super. and market conditions in our industry and the economy as a whole. 23 . Properties Leap currently leases space. engineering and administrative purposes. These stockholders have the ability to exert substantial influence over all matters requiring approval by our stockholders. provide that the board of directors is expressly authorized to make. We do not own any real property. Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting to discourage. Colorado and Nashville. and as we build.600 cell site locations. As we continue to develop existing Cricket markets.000 square feet. totaling approximately 99. Additionally.Table of Contents changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock.000 square feet to approximately 20. Cricket has 22 additional office leases in its individual markets that range from 2.500 square feet to 13. Delay Or Prevent A Change In Control Of Our Company Or Changes In Our Management And Therefore Depress The Trading Price Of Our Common Stock.618 square feet. 2005. These offices consist of approximately 15.600 square feet. Provisions In Our Amended And Restated Certificate Of Incorporation And Bylaws Or Delaware Law Might Discourage. we currently lease approximately 2. retail stores.majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws. Our Directors and Affiliated Entities Have Substantial Influence Over Our Affairs Our directors and entities affiliated with them beneficially own in the aggregate approximately 28. we are subject to Section 203 of the Delaware General Corporation Law. These stockholders will be able to influence the election and removal of directors and any merger.600 square feet and 17. respectively. In addition.900 square feet.

Securities Litigation On December 31. Legal Proceedings Bankruptcy Proceedings On the Petition Date. Mississippi. we do not believe that the resolution of these issues will have a material adverse effect on our consolidated financial statements. the receipt of required regulatory approvals from the FCC for the transfer of wireless licenses associated with the change of control that occurred upon Leap's emergence from bankruptcy. filed a lawsuit against various officers and directors of Leap in the Circuit Court of the First Judicial District of Hinds County. 2005. Leap and Cricket satisfied the remaining conditions to the Plan of Reorganization. punitive or exemplary damages in the amount of not less than three times compensatory damages. We do not believe that the resolution of the outstanding claims filed against us in bankruptcy will have a material adverse impact on the Company's consolidated financial statements. the Plan of Reorganization became effective. On August 16. Leap received the requisite approvals from the FCC on August 5.Table of Contents Item 3. Leap likely did not mail notice of its bankruptcy filings or the proceedings in the Bankruptcy Court to these governmental authorities. If the claims are resolved through the Bankruptcy Court. Leap purchased certain FCC wireless licenses from AWG and paid for those licenses with shares of Leap stock. plaintiffs seek rescission and/or damages according to proof at trial of not less than the aggregate amount paid for the Leap stock (alleged in the complaint to have a value of approximately $57.petition claims against Leap have (and holders of pending general unsecured claims against Leap may have) a pro rata beneficial interest in the assets of the Leap Creditor Trust. LLC.petition taxes and for obligations incurred by us during the course of the Chapter 11 proceedings) and filed further objections by the Bankruptcy Court deadline of January 17. The effectiveness of the Plan of Reorganization was conditioned upon. several members of American Wireless Group. including interest. Generally. The Leap Creditor Trust is defending unsecured claims asserted against Leap in bankruptcy. The complaint alleges that Leap failed to disclose to AWG material facts regarding a dispute between Leap and a third party relating to that party's claim that it was entitled to an increase in the purchase price for certain wireless licenses it sold to Leap. In connection with the Chapter 11 proceedings. On October 22. referred to in this report as AWG. Parties who were required to. although the Company believes that the true value of these asserted or potential claims is lower. if any. referred to herein as the Whittington Lawsuit. The final deadline for such claims. our obligations have been discharged with respect to general unsecured claims for pre. plus interest.emergence claims against us were required to file proofs of claim. and the Company emerged from Chapter 11 bankruptcy. Plaintiffs contend that the named defendants are the controlling group that was responsible for Leap's alleged failure to disclose the material facts regarding the third party dispute and the risk that the shares held by the plaintiffs might be diluted if the third party was successful in an arbitration proceeding. We reviewed the remaining claims filed against us (consisting primarily of claims for pre. was October 15. In any event. among other things. although the holders of allowed general unsecured pre.3 million. the Bankruptcy Court established deadlines by which the holders of pre. or in the alternative. against Leap with respect to periods prior to the bankruptcy. we expect any payment on the claims will be paid from restricted cash previously reserved to satisfy allowed administrative claims and allowed priority claims against Leap. and costs and expenses. to dismiss the 24 . Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the United States Bankruptcy Court for the Southern District of California. the Bankruptcy Court entered an order confirming the Plan of Reorganization. 2004.petition obligations. Defendants filed a motion to compel arbitration. file proofs of claim before the applicable deadlines are barred from asserting such claims against us in the future. but who failed to. Foreign governmental authorities have asserted or are likely to assert tax claims of approximately $6. 2003. 60 days after the Effective Date of the Plan of Reorganization. from Leap Creditor Trust funds. relating to claims that arose during the course of the bankruptcy. 2004. 2004. We are exploring methods to bring the claims of these foreign authorities within the bankruptcy claims resolution process. In their complaint.8 million in June 2001 at the closing of the license sale transaction). and the Leap Creditor Trust will pay settlements or judgments. Leap is not a defendant in the Whittington Lawsuit. 2002. Leap.

2005. therefore. and certain of its officers and directors. punitive or exemplary damages in the amount of not less than three times compensatory damages. Defendants filed a motion to compel arbitration or. no accrual has been made in our consolidated financial statements as of December 31. and that any failure to disclose such information did not cause any damage to the plaintiffs. in the alternative. and costs and expenses. Leap is often involved in various claims arising in the course of business. However. from such claims cannot be determined with certainty. from the AWG and Whittington Lawsuits and the related indemnity claims of the defendants against Leap is not probable and estimable. during the year ended December 31. Item 4. The plaintiffs alleged that the defendants were responsible for the dissemination of a series of material misrepresentations to the market during the class period. Those lawsuits were all virtually identical to one another. that they failed to plead facts that show that they are entitled to relief. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of Leap's stockholders. On August 26. against the same individual defendants named in the Whittington Lawsuit. noting that plaintiffs as members of AWG agreed to arbitrate disputes pursuant to the license purchase agreement. through the solicitation of proxies or otherwise. several of the defendants have indemnification agreements with the Company. Although Leap is not a defendant in either the Whittington or AWG Lawsuits. in the United States District Court for the Southern District of California on behalf of all persons who purchased or otherwise acquired Leap's common stock from February 11. seeking monetary damages and other relief. In its complaint. 2004. to dismiss the AWG Lawsuit. in the opinion of Leap's management. AWG filed a lawsuit in the Circuit Court of the First Judicial District of Hinds County. 2002 through July 24. The plaintiffs did not file an amended complaint and a court order voluntarily dismissing the action with prejudice was issued on January 7. 2004. 2003. The complaint generally sets forth the same claims made by the plaintiffs in the Whittington Lawsuit. In a related action to the action described above. Management believes that the liability. No class was certified in the lawsuit. plaintiff seeks rescission and/or damages according to proof at trial of not less than the aggregate amount paid for the Leap stock (alleged in the complaint to have a value of approximately $57. the court granted the defendants' motion to dismiss. nine securities class action lawsuits were filed against Leap. 2002. 2003.Table of Contents Whittington Lawsuit. stating that the amended complaint failed to plead any facts which show that any representations were made by Leap or any other defendants or that any of the alleged misrepresentations caused a change in the value of Leap's shares. 25 . plus interest. if any. The defendants filed a motion to dismiss the amended complaint. On December 5. but granted the plaintiffs leave to amend their complaint. that Leap made adequate disclosure of the relevant facts regarding the third party dispute. 2004 related to these contingencies. referred to herein as the AWG Lawsuit. plus costs and expenses related to bringing the actions. on June 6. thereby artificially inflating the price of Leap's common stock.8 million in June 2001 at the closing of the license sale transaction). if any. Leap's D&O insurers have not filed a reservation of rights letter and have been paying defense costs. the ultimate liability for such claims will not have a material adverse effect on Leap's consolidated financial statements. making arguments similar to those made in their motion to dismiss the Whittington Lawsuit. Leap is not a defendant in the AWG Lawsuit. The complaint sought an unspecified amount of damages. The amount of the liability. Mississippi.

2004. Any future payment of dividends to our stockholders will depend on decisions that will be made by our board of directors and will depend on then existing conditions. the last reported sale price of Leap's common stock on the OTC Bulletin Board was $24. Prices for our new common stock are prices on the OTC Bulletin Board from August 16.05 per share.01 0.75 19. Prices for our old common stock are prices on the OTC Bulletin Board through August 15. Overthe. the trading prices of our new common stock are set forth separately from the trading prices of our old common stock.11 0.09 0. without retail mark.02 0. 2004 New Common Stock Third Quarter beginning August 16. 2004 under the symbol "LWINQ. Dividends Leap has never paid or declared any cash dividends on its common stock and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. 2002. to fund our growth.02 0. Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters Our common stock traded on the OTC Bulletin Board until August 16. 2004 through December 31.01 On May 11.80 28. 26 . including our financial condition. 2005. contractual restrictions.counter market quotations reflect inter.00 0.000 shares of common stock outstanding held by approximately 35 holders of record.down or commission and may not necessarily represent actual transactions.21 0. The following table sets forth the high and low sales prices per share of our common stock for the quarterly periods indicated.05 0. 2004.up. 2004 Fourth Quarter 27. all of our formerly outstanding common stock was cancelled in accordance with our Plan of Reorganization and our former common stockholders ceased to have any ownership interest in us. We intend to retain future earnings. The terms of our senior secured credit facilities entered into in January 2005 restrict our ability to declare or pay dividends." When we emerged from our Chapter 11 proceedings on August 16.01 0. As of May 11.dealer prices. 2005. The new shares of our common stock issued under our Plan of Reorganization now trade on the OTC Bulletin Board under the symbol "LEAP. 2004.10 19.07 0.04 0.000.21 0." Prior to December 11.06 0.2003 First Quarter Second Quarter Third Quarter Fourth Quarter Calendar Year . our common stock was listed on the NASDAQ under the symbol "LWIN. there were 60." Because the value of one share of our new common stock bears no relation to the value of one share of our old common stock. which correspond to our quarterly fiscal periods for financial reporting purposes. if any. High($) Low($) Old Common Stock Calendar Year .2004 First Quarter Second Quarter Third Quarter through August 15. Market for Registrant's Common Equity. capital requirements and business prospects.03 0. mark.Table of Contents PART II Item 5.

2004 pursuant to our Plan of Reorganization. consultants and independent directors. see "Item 11. Inc.$ - - . 2004 Stock Option.Table of Contents Securities Authorized For Issuance Under Equity Compensation Plans The following table provides information as of December 31.800.000 (1) All of the Leap common stock. The 2004 Plan authorizes discretionary grants to our employees. Reflects shares authorized for issuance under Leap's 2004 Stock Option. 2004 with respect to compensation plans (including individual compensation arrangements) under which Leap's common stock is authorized for issuance. and to the employees and consultants of our subsidiaries.Employee Benefit Plans" contained in this report. acting pursuant to a delegation of authority from the board of directors. of stock options.average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans(1) Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders(2) Total . Executive Compensation . the compensation committee of our board of directors.07 of our Plan of Reorganization. 27 (2) . Restricted Stock and Deferred Stock Unit Plan adopted by the compensation committee of our board of directors on December 30.$ - 4. approved the Leap Wireless International. Restricted Stock and Deferred Stock Unit Plan effective December 30.000. 2004 as contemplated by the Company's confirmed Plan of Reorganization.800. The aggregate number of shares of common stock subject to awards under the 2004 Plan will be no more than 4. Number of securities to be issued upon exercise of outstanding options(1) Weighted. 2004. restricted stock and deferred stock units. For a description of the terms of the 2004 Plan. warrants and options outstanding immediately prior to the effectiveness of our Plan of Reorganization were cancelled as of August 16. Following our emergence from bankruptcy. in accordance with Section 5.800.$ .000 4.

378) (300.432 . Financial Statements and Supplementary Data.177) (20.709) (85.942) (94.222) (152.694 $ 215.589 364 (683.358) 13.260) (1.718 Total revenues Operating expenses: Cost of service (exclusive of items shown separately below) Cost of equipment Selling and marketing General and administrative Depreciation and amortization Impairment of indefinite. except per share data) The following selected financial data are derived from our consolidated financial statements and have been restated for the seven months ended July 31.624) 48.092) (185. For a description of fresh.257) - (78.647 $ 58.345 (229." References in these tables to "Predecessor Company" refer to the Company on or prior to July 31.997) (81. 2003 2002 2001 2000(4) Statement of Operations Data(1): Revenues: Service revenues Equipment revenues $ 285. 2004 (As Restated) Predecessor Company Year Ended December 31.140) (26.067) (1.000) 26.323) - - (333.296 618.475 255.195) - 779 (83.344) (122.917 $ 50.883) (31.821) (54.lived intangible assets Impairment of long. These tables should be read in conjunction with "Item 7.987) (172.324) (113.477 (112.966 313. References to "Successor Company" refer to the Company after July 31. 2004 Seven Months Ended July 31.196 643.510) (202.299) 1.922) - (522.939) 4.lived assets and related charges Total operating expenses Gains on sale of wireless licenses Operating income (loss) Equity in net loss of and writedown of investments in and loans receivable from unconsolidated wireless operating companies Interest income Interest expense Foreign currency transaction gains (losses).Table of Contents Item 6.938) (57.223) (162.600) (360.355) (115.148) (82.160) (51. see Note 3 to the consolidated financial statements included in Item 8 of this report.594) - (4.315) 143.404) (252. net Gain on sale of wholly owned subsidiaries 344.988) (97.247 40. The financial statements of the Successor Company are not comparable in many respects to the financial statements of the Predecessor Company because of the effects of the consummation of the Plan of Reorganization as well as the adjustments for fresh. Successor Company Five Months Ended December 31.740) - (54.235) (86.360 481.371) - 6.054) (16.494) (199.375) (454. 2004 to reflect adjustments that are further discussed in Note 2 to the consolidated financial statements included in Item 8 of this report.start reporting.616) - 10.633 (217.051) (119. 2004.116. 2004.566 $ 107. after giving effect to the implementation of freshstart reporting.919) - - - (626) (24.812 (16.243) (181.518) (167. Management's Discussion and Analysis of Financial Condition and Results of Operations. Selected Financial Data SELECTED CONSOLIDATED FINANCIAL DATA (In thousands.514) (177.647 751.317 (79.915) (287.072.100) (284.438 (40.730 567.110) (75.640) (24.713 398.164 50.779) 532 (1." and "Item 8.563) - - (171.599 9.402) (39.451 $ 83.781 39.start reporting.424 (178.

052) (640. net Income (loss) before income taxes Income taxes Net income (loss) $ Basic and diluted net loss per common share(2) Shares used in per share calculations(2): Basic and Diluted (117) (293) (176) 39.91) $ (14.088) 962.168) 917.978) - (482.978) (23.19) $ (14.190 $ (597.372 (47.27) $ (0.975) (322) 47.861 25.001) 8.591 33.975) - 47.799) $ (483.444 (443.372 - (4.356 (4. net Income (loss) before reorganization items and income taxes Reorganization items.461) - (45.602 (2.14) $ 15.58 $ (10.437) $ (664.518 (3.297) $ (168) $ (0.461) (4.398 28 .Gain on issuance of stock by unconsolidated wireless operating company Gain on sale of unconsolidated wireless operating company Other income (expense).540) (8.824) (4.629) $ 913.623 58.166) (589.821) (482.385) (8.143) (146.604 44.242) (640.000 58.01) 60.443 32.

2000. Successor Company 2004 2003 Predecessor Company 2002 2001 2000 Balance Sheet Data(1): Cash and cash equivalents $ Working capital (deficit)(3) Restricted cash.755 2.420) 189. 44 and 64. We subsequently divested our entire interest in Smartcom on June 2.7 million loss on early extinguishment of debt from extraordinary items to other income (expense) as a result of our adoption of Statement of Financial Accounting Standards (SFAS) No.144. Amendment of FASB Statement No. Refer to Notes 2 and 5 to the consolidated financial statements included in Item 8 of this report for an explanation of the calculation of basic and diluted net loss per common share.878 142.482 371.786) 358.895 1. 1999.860 $ 242. "Rescission of FASB Statements No.507 602.141 $ 84.Table of Contents As of December 31. We have presented the principal and interest balances related to our outstanding debt obligations as current liabilities in the consolidated balance sheets as of December 31.647.756.407 897.090.843 - 25.676.979 $ 338. cash equivalents and short. We have reclassified a $4.878 1. 145.254.809) (2.450.404 (2.845 65.356) (296.163.702 - 40.term debt(3) Total stockholders' equity (deficit) (1) 141.258 For the first six months of the year ended December 31. the financial results of Smartcom are included in the selected consolidated financial data as a result of our acquisition of the remaining 50% interest in Smartcom that we did not already own on April 19. and Technical Corrections.070 $ 100. 2000. 2003 and 2002.355 55." 29 (2) (3) (4) .922 2. as a result of the then existing defaults under the underlying agreements.term investments Total assets Long.373 31.954 1. 4.850 (893. 13.440 583.469.471 1.427 2.

Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the U. In connection with our emergence from Chapter 11. On August 16. Our Cricket service is a simple and affordable wireless alternative to traditional landline service.kind notes due 2011 with a face value of $350 million and an estimated fair value of $372.Chapter 11 Proceedings Under the Bankruptcy Code" and Note 1 to the consolidated financial statements included in Item 8 of this report.start reporting because 30 Item 7. Cricket operates in 39 markets in 20 states stretching from New York to California. Our revenues come from the sale of wireless services. . we were required to apply fresh.quality. Cricket provides mobile wireless services targeted to meet the needs of customers who are under. On April 13.7.Start Reporting.year $500 million term loan and a five. a new Board of Directors of Leap was appointed. Our Business.in.000 customers. See Note 2 to the consolidated financial statements in Item 8 of this report for additional information. see "Item 1. see "Item 1. Business .8 million and had approximately $40 million of remaining indebtedness to the FCC. whether we believe we can obtain sufficient customer penetration in the market and whether the market is sufficiently densely populated for us to offer services on a cost competitive basis. our previously existing stock. 2004.570. options and warrants were cancelled. For a more detailed description of our business. We conduct our business primarily through the Cricket Companies. Overview Restatement of Previously Reported Unaudited Interim Consolidated Financial Information. Leap and Cricket satisfied the final conditions to our Plan of Reorganization and it became effective. Voluntary Reorganization Under Chapter 11. we adopted the fresh.served by traditional communications companies. The new facilities consist of a six. See "Liquidity and Capital Resources" below. we issued new Cricket 13% senior secured pay. $110 million revolving credit facility. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in Item 8 of this report.S. Business" above. On January 10. On that date. 2004. 2004.kind notes and to repay the remaining indebtedness to the FCC. 2003. At December 31. Under SOP 90. Bankruptcy Court for the Southern District of California. When the Plan of Reorganization became effective on August 16.7. 2005. The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations gives effect to certain restatement adjustments made to the previously unaudited interim financial information of the Predecessor Company for the one and seven month periods ended July 31.Table of Contents Management's Discussion and Analysis of Financial Condition and Results of Operations MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is based upon our consolidated financial statements as of the dates and for the periods presented in this report. handsets and accessories to customers. we had approximately 1. 2004 and the Successor Company for the two months ended September 30. 2004. Our Plan of Reorganization implemented a comprehensive financial reorganization that significantly reduced our outstanding indebtedness. Our liquidity and capital resources come primarily from the operations and assets of Cricket. Fresh. Factors we consider when expanding our Cricket service into new markets include whether the new market will complement an existing Cricket market cluster.year. from borrowings under our revolving credit facility and from offerings of debt and/or equity in the capital markets from time to time. and we issued 60 million shares of new Leap common stock for distribution to two classes of creditors. For a more detailed description of our bankruptcy proceedings. all.in. Cricket service offers customers virtually unlimited anytime minutes within the Cricket calling area over a high.digital CDMA network. Leap.start reporting provisions of SOP 90. we entered into new senior secured credit facilities and used a portion of the proceeds from the $500 million term loan included as a part of such facilities to redeem Cricket's 13% senior secured pay.

The amount remaining after allocation of the reorganization value to our identified tangible and intangible assets is reflected as goodwill. and (ii) holders of Leap common shares immediately before the bankruptcy court confirmed our Plan of Reorganization received less than fifty percent of the common stock issued by Leap on the date it emerged from bankruptcy.start reporting. 2004. All material conditions to the effectiveness of the Plan of Reorganization were satisfied on August 5. reorganization value represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the reorganization. for purposes of this discussion.start reporting in our consolidated financial statements as of July 31. This overview is intended to be only a summary of significant matters concerning our results of operations and financial condition. 2004. In this report. the Predecessor Company's results for the period from January 1. Under SOP 90. In addition.start reporting.e. 2004. 2004 through August 5. 2004. 2003. including the consolidated financial statements in Item 8. 2004 have been combined with the Successor Company's results for the period from August 1." and stated our liabilities. Consistent with fresh.7.start reporting. 2004 through December 31. at the present value of amounts expected to be paid. 141. 2004 and the immateriality of the results of operations for the period from August 1. The valuation consultant and two other valuation firms engaged by us also provided management with information that management utilized in determining the fair market value of our network assets and wireless licenses. 2004 to the month ended July 31. other than deferred taxes. which is subject to periodic evaluation for impairment.Table of Contents (i) the reorganization value of our assets immediately before the date of confirmation was less than the sum of all the allowed claims and post petition liabilities. In implementing fresh. and is referred to as the "Successor Company" for periods after July 31. The financial statements of the Successor Company are not comparable in many respects to the financial statements of the Predecessor Company because of the effects of the consummation of the Plan of Reorganization as well as the adjustments for fresh. the Company is referred to as the "Predecessor Company" for periods on or prior to July 31. under fresh. In light of the proximity of August 5. For a more detailed description of fresh. Management used these values in connection with the allocation process described below. "Business Combinations.start reporting. 2004. and the fair value of our trademarks and customer relationships. It should be read in conjunction with the management discussion below and all of the business and financial information contained in this report. 2004 through July 31. However. we recorded the effects of the consummation of the Plan of Reorganization as well as adjustments for fresh.start accounting.start reporting. the enterprise value (i. These combined results are compared to the Predecessor Company's results for the year ended December 31. we are deemed to be a new entity for financial reporting purposes. our accumulated deficit was eliminated and new equity was issued according to the Plan of Reorganization. we allocated our reorganization value to our assets in conformity with procedures specified by SFAS No. see Note 3 to the consolidated financial statements included in Item 8 of this report. 2004. We engaged a third party valuation consultant to assist management in estimating our enterprise value as of July 31. Results of Operations As a result of our emergence from Chapter 11 bankruptcy and the application of fresh. 31 . 2004. debt plus equity) may be used to calculate our reorganization value.

001) (640.143) (146.935) (138.5 million.000).Table of Contents Financial Performance The following table presents the consolidated statement of operations data for the periods indicated (in thousands).000.092) (185. In March 2004. the total potential customer base covered under our 39 operating markets was approximately 26. 2004.909 643.242) (589.561 $ (1.052) (597.371) (176) (443.223) (162. Since their introduction.000 customers compared to approximately 1. Year Ended December 31.987) (172.136) (179. 2003. 2004 2003 2002 Revenues: Service revenues Equipment revenues Total revenues Operating expenses: Cost of service (exclusive of items shown separately below) Cost of equipment Selling and marketing General and administrative Depreciation and amortization Impairment of indefinite.072.334) 904.344) (122. and net customer additions (losses) during these periods were approximately 97.740) 39.054) (181.162) 1.566 $ 107.000 customers at December 31. The financial data for the year ended December 31.789) (410) (49. net Income (loss) before income taxes Income taxes Net income (loss) $ $ 684.799) Year Ended December 31.378) (300.lived assets and related charges Total operating expenses Gains on sale of wireless licenses Operating loss Interest income Interest expense Gain on sale of unconsolidated wireless operating company Other income (expense). the 32 . compared to the year ended December 31. we introduced a plan that provides virtually unlimited local and long distance calling for a flat rate and also introduced a plan that provides discounts on additional lines added to an existing qualified account.895 (8.919) (16.100) 6.821) (664.549) 962.781 826.375) 779 (83.444 912. 2004.000 and 735.942) (26.518 (3. net Loss before reorganization items and income taxes Reorganization items.939) 364 (454.694 50.701) 532 (30.978) (640.624) (252. we had approximately 1.000 and (39.007 751.098 $ 141.589 (360. 2004 presented below represents the combination of the Predecessor and Successor Companies' results for that period. 2004 Compared to Year Ended December 31. respectively.978) (23.475 (193. 2003.818) (626) (199.730 567. service revenues increased $40.lived intangible assets Impairment of long. respectively. At December 31.140) (24.473.323) (856. Our basic Cricket service offers customers virtually unlimited calls within their Cricket service area at a flat price and in November 2003 we added two other higher priced plans which include different levels of bundled features.260) 4. 2004.116.235) (86.7 million.562) (91.296 618.915) (287.570. Gross customer additions for the years ended December 31.404) (252. The increase in service revenues was due to a combination of the increase in net customers and an increase in average revenue per customer.243) (171. or 6%.437) $ (1.385) (8.812 (20. 2004 and 2003 were 808.345 (229. 2003 At December 31. During the year ended December 31.

The primary driver of the increase in revenue per handset sold was the implementation of a policy to increase handset prices commencing in the fourth quarter of 2003. even though service revenues increased by 6%. 2004. 00. compared to the year ended December 31. usage. 2003. subject to potential decreases in average selling prices caused by future promotions or in response to pricing actions from competitors.8 million. compared to the year ended December 31.21 in July 2003.5 million due primarily to increased handset sales volume and an increase in the average cost per handset as our sales mix shifted from moderately priced to higher end handsets.Table of Contents higher priced service plans have represented a significant portion of our gross customer additions and have increased our average service revenue per subscriber. This increase in equipment cost was offset by cost. we expect that the change in equipment revenues will generally reflect changes in the volume of handsets sold.related activities of approximately $15. activation fees included in equipment revenue increased by $9.9 million. 2004.1 million in software maintenance expenses in the current year. a net decrease of $2. 2003. These decreases were offset in part by increases of $2. 2004. partially offset by a $2. offset in part by increases in promotional activity and in dealer compensation costs in 2004.9 million of the increase in equipment revenues resulted from higher average net revenue per handset sold. or 7%.0 million of the $24.related expenses. The decrease in general and administrative expenses was primarily due to a decrease of $4. Although equipment revenue growth significantly outpaced equipment cost increases in 2004 due to the reasons discussed above. general and administrative expenses decreased $23. until our adoption of Emerging Issues Task Force ("EITF") Issue No. selling and marketing expenses increased $5. For the year ended December 31. or 3%. compared to the year ended December 31.9 million increase.3 million in cell site costs as a result of our rejection of surplus cell site leases in the bankruptcy proceedings. cost of service decreased $6.reduction initiatives in reverse logistics and other equipment.8 million in network related costs. 2003. For the year ended December 31. we invested in additional staffing and resources to improve the customer sales and service experience in our retail locations. or 15%. The increase in selling and marketing expenses was primarily due to increases of $6.3 million for the year ended December 31. "Accounting for Revenue Arrangements with Multiple Deliverables" in July 2003.9 million of the $24. 2003.2 million in legal costs compared to the corresponding period in the prior year. 2004. For the year ended December 31. primarily reflecting the classification of costs directly related to our bankruptcy filings and incurred after the Petition Date as reorganization expenses. Activation fees were included in service revenues for the first two quarters of fiscal 2003. 2004 compared to the year ended December 31. or 32%. generally resulting from the renegotiation of several supply agreements during the course of our bankruptcy. 2004. 2003. 2003.0 million in employee and facility related costs.3 million reduction in property tax related to the decreased value of fixed assets as a result of the bankruptcy. compared to the year ended December 31.7 million. compared to the year ended December 31.1 million in employee. and a $3. of which higher prices contributed $15. For the year ended December 31.9 million increase. or 4%. 2004. Additionally. 00.2 million in call center and billing costs resulting from improved operating efficiencies and cost reductions negotiated during the course of our bankruptcy. 33 .9 million increase in employee.21. In addition. cost of equipment increased $7. there was a decrease of $9. Approximately $24. was partially offset by the impacts of increased promotional activity in 2004 and by the elimination of activation fees as an element of service revenue. equipment revenues increased $34. 2004.2 million.related costs and $6. Equipment costs increased by $22.3 million. as compared to the year ended December 31. and higher handset sales volumes contributed the remaining $9. The decrease in cost of service resulted from a net decrease of $5. and the introduction and customer adoption of new products. During the year ended December 31. We generally expect that cost of service in 2005 will increase with growth in customers. for the year ended December 31.1 million. During the latter half of 2003 and throughout 2004. at which time they began to be included in equipment revenues. In 2005. 2003 due to the inclusion of activation fees in equipment revenue for all of 2004 versus only the last two quarters in 2003 as a result of our adoption of EITF Issue No. we generally expect changes in equipment revenue in 2005 to more closely track changes in equipment cost. The increase in service revenues resulting from the higher priced service offerings for the year ended December 31.7 million in insurance costs and a reduction of $15.

in.start accounting. The Successor Company can utilize available Predecessor Company net operating losses to reduce its taxable income.000 and net customers declined by approximately 39. During the three months ended June 30. 2003. we experienced a net decrease of approximately 4. we had not experienced a decline in total customers from one quarter to another. or 75%.9 million attributable to net gain on the discharge of liabilities. income tax expense increased by $0. However. 2004.513. We believe that this decline was due in part to the uncertainty caused by our announcement of filing for bankruptcy protection and our anticipated reorganization. depreciation and amortization expenses decreased $47. At December 31. 2003. we performed an analysis of the operating performance of our third. 2003. 2003. At March 31. utilization of Predecessor Company NOLs generally offsets goodwill rather than reducing book tax expense. Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11. or 16%.kind notes. 2003.start accounting. 2004. 2003. a net addition of 1. and we continued to analyze their performance as we worked to improve our handset distribution strategies.party dealers and distributors.000 in the number of Cricket customers. the total potential customer base covered under our 39 operating markets was approximately 25. Year Ended December 31.000. we had approximately 1. compared to the year ended December 31.petition liabilities. The decrease in interest expense resulted from the application of SOP 90. 2003 Compared to Year Ended December 31.start accounting at July 31. 2003. and $1. 2003. gross customer additions were approximately 735. In addition. depreciation and amortization expense for the year ended December 31. During the year ended December 31.512.4 million of interest income earned while we were in bankruptcy. which included a decline of approximately 2.000 customers.1 million of income from the settlement of certain pre. senior secured vendor credit facilities. financial advisory and valuation services and related expenses directly associated with our Chapter 11 filings and reorganization process. senior discount notes. The increase in income tax expense resulted primarily from increased deferred tax liabilities resulting from higher amortization of wireless licenses for income tax purposes for the year ended December 31. note payable to GLH.000 customers during the final three months of the year. 2004 compared to the prior year.5 million related to identifiable intangible assets recorded upon the adoption of fresh. and Qualcomm term loan. we began accruing interest on the newly issued 13% senior secured pay. The decrease in depreciation expense was primarily due to the revision of the estimated useful lives of network equipment and the reduction in the carrying value of property and equipment as a result of fresh. reorganization items consisted primarily of $5. 2003.petition liabilities that were subject to compromise.party 34 . 2003. or 4%. Upon our emergence from bankruptcy. As a result.473. commencing on the Petition Date.9 million. Although promotional activity resulted in a net increase in our customers of approximately 18. Cricket had 1. we revised our incentive structure with our third. we experienced a net decline of approximately 54. 2004. with the balance of $963. compared to the year ended December 31.4 million. During the year ended December 31. compared to the year ended December 31. the quarter in which Leap.6 million. Previously. During the year ended December 31. In addition.000 at December 31. we cease to accrue interest and amortize debt discounts and debt issuance costs on pre. the cancellation of equity upon our emergence from bankruptcy and the application of fresh.000 during the three months ended September 30. partially offset by $2. we discontinued our relationship with a substantial number of dealers and distributors who represented a small portion of our equipment sales and who were not performing to our standards.000 customers compared to approximately 1. The 13% notes were refinanced in January 2005 and replaced with a $500 million term loan that accrues interest at a variable rate. 2004. 2004 included amortization expense of $14. 2002.0 million of professional fees for legal.7 which required that. 2002.000 customers from December 31. During the year ended December 31.800 customers as a result of our discontinuation of service in Hickory. North Carolina as of September 30.Table of Contents During the year ended December 31. 2004. we ceased to accrue interest and to amortize our debt discounts and debt issuance costs for our senior notes. 2002 At December 31. 2003. interest expense decreased $62.3 million. During the year ended December 31. As a result of our analysis. The effect of these events was compounded by a significant reduction in our advertising campaigns during the first and second quarters of 2003.

priced.000 for the year ended December 31.479. service revenues increased $75.2 million. in each case for the reasons described above. or 10%. we renegotiated several of our executory contracts with our vendors. equipment revenues rose because we increased the selling prices of our handsets so that the selling price for the majority of our handsets was at or near the cost of the handset.1 million. a decrease in amounts paid for handsets.5 million were directly related to acquiring new customers. selling and marketing expenses decreased $35. or 29%.5 million and an increase in engineering and other operational costs of approximately $7. compared to the year ended December 31. In addition. The decrease in selling and marketing expenses was primarily 35 . 00. During the year ended December 31. cost of equipment decreased $80. During the year ended December 31. 2003 from 1. partially offset by a decrease in payroll related costs of approximately $9. In addition. As a result.9 million. 2003. an increase in software maintenance expenses of approximately $8. The increase in cost of service was primarily attributable to an increase of approximately $10.Table of Contents dealers and distributors to benefit high performing dealers and distributors. to a lesser extent.21 on July 1.party dealers and distributors are included as reductions to equipment revenue. cost of service increased $18. compared to the year ended December 31. However. Equipment revenues for the year ended December 31.8 million because we changed our practice of offering instant or in. 2002 and. These increases in equipment revenue were partially offset by a decrease in the number of handsets sold to new customers or sold as replacement handsets for existing customers of 636. Equipment revenues increased sharply in 2003 while at the same time cost of equipment declined. The increase in service revenues was primarily due to an increase in our average service revenue per customer resulting from the launch of a new higher. combined with an increase in average subscribers to 1. approximately $6.in rebates have a lower redemption rate than instant rebates.9 million.4 million in our long distance costs as a result of the increased long distance usage resulting from the introduction of service plans that include large bundles of available long distance minutes each month. The effect of these factors was partially offset by a change in our handset sales practices which eliminated any allocation of the handset price to service revenues. or 112%. or 35%. The decrease in cost of equipment was due to a 35% decrease in the number of handsets sold (partially as a result of our efforts commencing in 2002 to reduce fraudulent sales) and. 2003. 2003. sales incentives offered to customers and volume.priced monthly service plans and increased incentives for sales that utilize our cost saving strategies such as Web activation and automatic bill payments via a customer's credit card. $57. 2003.414. or 32%.21 in July 2003.) Equipment revenues also increased approximately $9.based sales incentives offered to our third. During the year ended December 31. 2003. 2002.6 million because we began immediately recognizing activation fees as equipment revenues after our adoption of EITF Issue No.1 million.2 million of activation fees which we commenced charging during the fourth quarter of 2002 and which were included in service revenues until our adoption of EITF Issue No.store handset rebates to customers and instead began offering mail. 2002. compared to the year ended December 31. 2003. and fulfillment costs and warranty repair costs are included in cost of equipment. In conjunction with the bankruptcy proceedings. to a lesser extent. we focused our rebate program on customers who remained on service for several months. 00. In connection with these changes. $39. (Mail. 2003 also increased approximately $9. equipment revenues increased $57.1 million. we no longer allocate any portion of the handset price to service revenues. compared to the prior year. We do not believe that this change represented a trend in the relationship between equipment revenues and cost of equipment. occurred because we stopped including the first month of service in the handset purchase price in the fourth quarter of 2002. which together result in a negative gross margin on the sale of handsets. bundled plan during the third quarter of 2002. 2003.000.000 average subscribers for the year ended December 31. or 13%. 2002. 2002. 2002. During the year ended December 31.6 million. for the year ended December 31. 2003. we increased incentives for sales of higher.in rebates to new customers that were only redeemable if the customer continued on Cricket service for three months. This change is discussed in greater detail below. For the year ended December 31. Cost of service also rose as a result of an increase in the number of average subscribers.0 million.2 million of our total losses on equipment revenues of $64. During the year ended December 31. compared to the year ended December 31. The largest portion of this increase. compared to the year ended December 31.

2 million in insurance costs.1 million of professional fees for legal.7 which requires that.off of capitalized costs associated with cell sites that we no longer expected to use in the business.9 million of interest income earned while we were in bankruptcy. For the year ended December 31. 2003. 2003.petition liabilities that are subject to compromise. compared to the year ended December 31. commencing on the Petition Date. or 64%.2 million in excise taxes. During the year ended December 31. we recorded charges of $20. Inc.8 million of debt forgiveness income from the settlement of certain pre. 2002.8 million compared to the year ended December 31. we recorded an impairment charge of $171. The goodwill related to our June 2000 acquisition of the remaining interest in Cricket Communications Holdings that we did not already own. 2003. compared to the year ended December 31. 2003. Management estimated the fair value of our wireless licenses based on the information available to it. and $2.9 million to our then remaining goodwill balance. offset by $34.1 million in payroll and related costs. The decrease in interest income resulted from the application of SOP 90.operative advertising reimbursements to our third. compared to the year ended December 31.5 million. a decrease of $4.term debt subject to compromise in accordance with SOP 90.6 million resulting from management's increased focus on the effective use of advertising and from cash conservation during the course of our bankruptcy proceedings. In addition. we ceased to accrue interest and to amortize our debt discounts and debt issuance costs for our senior notes. 2003.petition liabilities. 2003.Table of Contents due to a decrease in advertising and related costs of approximately $27.8 million in legal costs (excluding legal costs directly associated with our reorganization proceedings after the Petition Date). or 88%. income tax expense decreased $15. The decrease in income tax expense was related primarily to a one. financial advisory and valuation services and related expenses directly associated with our Chapter 11 filings and reorganization process. interest income decreased $5." 36 . or 13%. interest expense decreased $146. Reorganization items for the year ended December 31. 2002. we cease accruing interest and amortizing debt discounts and debt issuance costs on pre.1 million related to the write. the note payable to GLH. The decrease in interest expense resulted from the application of SOP 90. depreciation and amortization increased $12. 2003. partially offset by an increase of approximately $3.4 million. For the year ended December 31. we also recorded an impairment charge of $26.3 million of income from the reversal of certain pre. 2003 consisted of $174.7 which requires that we classify interest earned during the bankruptcy proceedings as a reorganization item.0 million in call center costs. and the Qualcomm term loan.1 million to reduce the carrying value of our wireless licenses to their estimated fair value. or 4%. 2002 to increase the valuation allowance on our deferred tax assets in connection with ceasing amortization of wireless licenses pursuant to our adoption of SFAS No. 2002. and a decrease of approximately $3.. compared to the year ended December 31. As a result. 2002.party dealers and distributors and a decrease of approximately $2. For the year ended December 31. During the year ended December 31. senior discount notes.3 million. a decrease of approximately $5.petition liabilities related to contracts rejected in bankruptcy.off of debt discounts and capitalized debt issuance costs associated with our long. For the year ended December 31. For the year ended December 31. including a valuation report prepared by a third. The increase in depreciation and amortization resulted from a larger base of network. senior secured vendor credit facilities.6 million in co.6 million. we recognized $3. a decrease of approximately $5. $2.7 million in connection with the disposal of certain network assets and the write.7 and $12.2 million in payroll and related costs. The decrease in general and administrative expenses was primarily due to a reduction of approximately $5.4 million in expense for accrued costs related to certain leases that we ceased using before the contractual termination date. computer and other equipment in service. 2002. general and administrative expenses decreased $23.time income tax expense of $15. During the year ended December 31.9 million recorded during the three months ended March 31. "Goodwill and Other Intangible Assets.party consultant in connection with the confirmation hearing for our Plan of Reorganization. 2002. 142.

These metrics include average revenue per user per month (ARPU). In addition. cash costs per user per month (CCU). ARPU provides management with a useful measure to compare our subscriber revenue to that of other wireless communications providers. that are included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the consolidated balance sheet.GAAP financial measures. to track changes in our average cost of acquiring new subscribers over time. ARPU is an industry metric that measures service revenue divided by the weighted average number of customers. We deduct customers who do not pay their first monthly bill from our gross customer additions. including changes in our service offerings and fees.efficiency of our customer acquisition efforts. We believe investors use CCU primarily as a tool to track changes in our non.GAAP Financial Measures" below for a reconciliation of CPGA and CCU to the most directly comparable GAAP financial measures. which measures turnover in our customer base. consolidated statement of operations or consolidated statement of cash flows. or is subject to adjustments that have the effect of including amounts. and to forecast future service revenue. gain or loss on sale of handsets to existing customers and costs associated with handset replacements and repairs (other than warranty costs which are the responsibility of the handset manufacturers). Management uses CPGA to measure the efficiency of our customer acquisition efforts. CPGA is an industry metric that represents selling and marketing costs and the gain or loss on sale of handsets (generally defined as cost of equipment less equipment revenue). excluding costs unrelated to initial customer acquisition. or is subject to adjustments that have the effect of excluding amounts. which measures the non. See "Reconciliation of Non. Management uses CCU as a tool to evaluate the non. which tends to increase CPGA because we incur the costs associated with this customer without receiving the benefit of a gross customer addition. divided by the weighted average number of customers. management supplements the information provided by financial statement measures with several customer focused performance metrics that are widely used in the telecommunications industry.selling cash cost of operating our business on a per customer basis. 37 . CCU does not include any depreciation and amortization expense. that are excluded from the most directly comparable measure so calculated and presented. and churn. to track changes in average customer revenues over time. CCU is an industry metric that measures cost of service. In addition. divided by the number of months during the period being measured. which measures the average cost of acquiring a new customer. CPGA provides management with a useful measure to compare our per customer acquisition costs with those of other wireless communications providers. general and administrative costs. We believe investors use CPGA primarily as a tool to track changes in our average cost of acquiring new customers and to compare our per customer acquisition costs to those of other wireless communications providers. Management uses ARPU to identify average revenue per customer. CPGA and CCU are non.K promulgated by the Securities and Exchange Commission. A nonGAAP financial measure. CCU provides management with a useful measure to compare our nonselling cash costs per customer with those of other wireless communications providers. which measures service revenue per customer.selling cash expenses associated with ongoing business operations on a per customer basis. to track changes in these non. Costs unrelated to initial customer acquisition include the revenues and costs associated with the sale of handsets to existing customers as well as costs associated with handset replacements and repairs (other than warranty costs which are the responsibility of the handset manufacturers).selling cash costs over time.selling cash costs to those of other wireless communications providers. divided by the total number of gross new customer additions during the period being measured. and to help evaluate how changes in our business operations affect non. and to help evaluate how changes in our sales and distribution strategies affect the cost. We believe investors use ARPU primarily as a tool to track changes in our average revenue per customer and to compare our per customer service revenues to those of other wireless communications providers. to help evaluate how changes in our business.selling cash costs per customer. cost per gross customer addition (CPGA). divided by the number of months during the period being measured. within the meaning of Item 10 of Regulation S. or (b) includes amounts. In addition.Table of Contents Performance Measures In managing our business and assessing our financial performance. is a numerical measure of a company's financial performance or cash flows that (a) excludes amounts.selling cash costs over time and to compare our non. affect average revenue per customer.

2004 (As Restated) December 31. 2004 to reflect adjustments that are further discussed in Note 2 to the consolidated financial statements included in Item 8 of this report. The following table shows metric information for 2004: Three Months Ended March 31. and to help evaluate how changes in our business affect customer retention.28 142 18. customers who do not pay their first monthly bill are deducted from our gross customer additions.1% 37. 2004 Year Ended December 31. In addition.47 $ 3.97 $ 141 $ 18. 2004 September 30.29 $ 159 $ 18. is calculated as the net number of customers that disconnect from our service divided by the weighted average number of customers divided by the number of months during the period being measured.08 $ 3. Management uses churn to measure our retention of customers. as a result. churn provides management with a useful measure to compare our customer turnover activity to that of other wireless communications providers. 2004 June 30.5% 37.Table of Contents Churn.28 $ 141 $ 18. 2004 and the two months ended September 30. an industry metric that measures customer turnover. to measure changes in customer retention over time. We believe investors use churn primarily as a tool to track changes in our customer retention over time and to compare our customer retention to that of other wireless communications providers. For purposes of 38 .9% Summary of Quarterly Results of Operations The following table presents the Predecessor and Successor Companies' combined condensed consolidated quarterly statement of operations data for 2004 (unaudited) (in thousands). It has been derived from our consolidated financial statements which have been restated for the interim periods for the one month ended July 31.38 $ 4.45 $ 124 $ 20. these customers are not included in churn.74 $ 4. As noted above.1% 37.7% 36. 2004 ARPU CPGA CCU Churn $ $ $ 37.91 3.

774) 963.025 $ 33.635) (21.403) (45.The following table reconciles total costs used in the calculation of CPGA to selling and marketing expense. 2004 (As Restated) December 31.382 (2.934 1.169 608 (6. that are calculated based on industry conventions and are not calculated based on GAAP.823) 19 (220.008) (1.944) (17.GAAP" financial measures within the meaning of Item 10 of Regulation S.822 205.927) (2.153) (23.183) (5.257) (1.lived assets and related charges Total operating expenses Gains on sale of wireless licenses Operating income (loss) Interest income Interest expense Other income (expense).025) (26.204 (11.051 $ 37.531) 1. the financial data for the three months ended September 30.218) (1.Table of Contents this discussion.086) (1.GAAP Financial Measures We utilize certain financial measures.999) (5.771 172.610) (75. 2004 Revenues: Service revenues Equipment revenues Total revenues Operating expenses: Cost of service (exclusive of items shown separately below) Cost of equipment Selling and marketing General and administrative Depreciation and amortization Impairment of long.009) 458 (201.941 206.643) 4. 2004 presented below represents the combination of the Predecessor and Successor Companies' results for that period.079) (22.019) (23.383 $ (6. net Loss before reorganization items and income taxes Reorganization items.145) $ 957.709) (15.521 172.049) (272) (24.676 170. CPGA . 2004 September 30.755) (23.939) (33. net Income (loss) before income taxes Income taxes Net income (loss) $ 169.270) 532 2.061) (2.574) (30.169) (35. 2004 June 30. 2004 and for the year ended December 31. The financial data for the three months ended September 30.689) (55.464) $ (28. Three Months Ended March 31.922) (76. 2004 39 .034) (44.000) (43.577 (48.461) - (47.827) (40.253) (38.K promulgated by the SEC.647) Reconciliation of Non.777) - (229.183) (1.275) (51.313 (16.701 206.554) (266) (46.156 960. Certain of these financial measures are considered "non. as described above.030) $ (18.636 33.386 $ 36.026) (360) (51.907 206.908) (615) (205. which we consider to be the most directly comparable GAAP financial measure to CPGA.

957 18.157 $ 220.020 18.529.939 $ 40. and cash available from borrowings under our revolving credit facility. We may also generate liquidity from offerings of debt and/or equity in the capital markets.average number of customers and CCU): Three Months Ended March 31. 2004 Selling and marketing expense $ Plus cost of equipment Less equipment revenue Less net loss on equipment transactions unrelated to initial customer acquisition Total costs used in the calculation of CPGA $ Gross customer additions CPGA $ 23.536. anticipated cash flows from operations.562 (141.08 $ 85.202 $ 1. we had a total of $254.537. 2004 June 30. 2004 Cost of service $ Plus general and administrative expense Plus net loss on equipment transactions unrelated to initial customer acquisition Total costs used in the calculation of CCU $ Weighted.The following table reconciles total costs used in the calculation of CCU to cost of service.going operation of our business.Table of Contents presented below represents the combination of the Predecessor and Successor Companies' results for those periods (in thousands.453 2.169 $ 51.543. 2004 (As Restated) December 31.635 (33.181) 25. and cash restricted for other purposes.314 18.570 $ 206.74 $ 346.253 $ 43.average number of customers CCU $ 48. 2004 presented below represents the combination of the Predecessor and Successor Companies' results for those periods (in thousands.445 $ 180.403 193.090) (15.453) (2.407 807. 2004. which we consider to be the most directly comparable GAAP financial measure to CCU.941 124 $ 25.term investments. 40 .771) 21.090 15. we may also generate additional liquidity through the sale of assets that are not required for the on.935 179. From time to time.624 3.676) 23.941) 91. The financial data for the three months ended September 30.277 $ 1.362 18. cash equivalents and short. 2004.667) (3. 2004 (As Restated) December 31. cash equivalents and short. At December 31.136 138. 2004 June 30.484 159 $ 114.153 (36. cash equivalents and short.4 million that included funds set aside or pledged to satisfy remaining administrative claims and priority claims against Leap and the Cricket Companies.610 47.235 $ 200.827 $ 33.768 $ 1.971 5.91 Liquidity and Capital Resources Our principal sources of liquidity are our existing cash.667 3.term investments.000 $ 38.275 $ 35. We believe that our existing cash and investments.term investments of $31. and available credit facilities will be sufficient to meet our operating and capital requirements through at least the next 12 months.574 $ 44.755 (37. 2004 September 30.689 46. 2004 and for the year ended December 31.868 142 CCU .2 million in unrestricted cash.019 (33.498. we also had restricted cash.521) 23.47 $ 84.971) (5. cash generated from operations. 2004 Year Ended December 31.181 90. except gross customer additions and CPGA): Three Months Ended March 31.38 $ 86.922 51.941 1. 2004 September 30.315 141 $ 35. As of December 31. except weighted.694 $ 1. 2004 Year Ended December 31.034 $ 30.909) (3.449 20.128 141 $ 28.

2 million net book value of debt outstanding under Leap's senior notes. 2003. Investing Activities Cash used in investing activities was $96. and to pay transaction fees and expenses of $6. and costs associated with the initial development of markets covered by licenses acquired or to be acquired as a result of Auction #58 (including costs to be incurred by ANB 1 in connection with the initial development of licenses ANB 1 41 .cash items including depreciation.8 million.6 million during the year ended December 31. for the build. offset by the purchase of investments of $134. was cancelled in full.4 million.0 million.5 million and the purchase of property and equipment of $77. 2004 was $36. financial advisory and valuation services directly associated with our Chapter 11 filings and reorganization process. which was undrawn at closing. and $1. We currently expect to incur between $175 million and $230 million in capital expenditures for the year ending December 31. Credit Facilities In connection with the Plan of Reorganization.8 million (including call premium) plus accrued interest of $20.cash interest expense of $92. The balance of the proceeds of approximately $60 million will be used for general corporate purposes.year $500 million term loan.6 million reduction in changes in working capital compared to the corresponding period of the prior year and a decrease of $109.New Credit Agreement" below. there were no borrowings outstanding under the revolving credit facility.0 million of cash received from vendor settlements (net of cure payments) made in connection with assumed and settled executory contracts and leases. On January 10. offset by adjustments for non. Financing Activities Cash used in financing activities during the year ended December 31.5 million of interest income earned while the Company was in bankruptcy. 2005.4 million during the year ended December 31.year $110 million revolving credit facility. we incurred approximately $77. senior discount notes. a $55.3 million and net proceeds from the sale of wireless licenses of $2.6 billion net book value of debt outstanding under Cricket's senior secured vendor credit facilities and approximately $738. 2004 compared to cash provided by operating activities of $44. all of our pre. Cricket entered into a new senior secured credit agreement referred to as the Credit Agreement. to repay approximately $41 million in principal amount of debt and accrued interest owed to the FCC. which was fully drawn at closing. a net decrease in restricted investments of $22.0 million for professional fees for legal. we used a portion of the proceeds from the $500 million term loan to redeem Cricket's 13% senior secured pay. note payable to GLH.out of the Company's existing Visalia and Modesto/ Merced markets. other than indebtedness owed to the FCC. and Qualcomm term loan. Capital Expenditures and Other Asset Acquisitions and Dispositions During the year ended December 31. (as administrative agent and letter of credit issuer).in.0 million and payments of $8.Table of Contents Operating Activities Cash provided by operating activities was $190. In January 2005.0 million. amortization and non. offset by $2. see ". 2004. The new facilities under the Credit Agreement consist of a six. 2005. primarily for maintenance and improvement of our existing wireless networks. with a syndicate of lenders and Bank of America.petition indebtedness.2 million. 2005. At April 30.kind notes for $372.2 million in capital expenditures.7 million which consisted of the partial repayment of the FCC debt upon our emergence from bankruptcy. N.4 million during the year ended December 31. This discharged indebtedness included approximately $1. 2004 and consisted primarily of the sale and maturity of investments of $90. For a description of the terms of the revolving credit facility and term loan under the Credit Agreement.A.6 million in cash used for reorganization activities. and a five. Cash used for reorganization items consisted primarily of a cash payment to the Leap Creditor Trust in accordance with the Plan of Reorganization of $1.out and launch of the Fresno.1 million. California market and the related expansion and network change. The increase was primarily attributable to a decrease in the net loss. Inc.

we have committed to loan ANB 1 License up to $4. In March 2005.0 million equity contribution to ANB 1. cash equivalents and short.controlling membership interest in Alaska Native Broadband 1 LLC. In March 2005. The closing of the sale is subject to the purchaser's completion of due diligence and other conditions customary for a sale of this type.. Completion of the transaction is subject to FCC approval and other customary closing conditions. to increase its total amounts paid to the FCC to $68.Arrangements with Alaska Native Broadband. We expect that we will seek additional capital to increase our liquidity and help assure we have sufficient funds for the build.owned subsidiary Alaska Native Broadband 1 License LLC. In addition. 2005. including obtaining third party consents and finalizing a transition services agreement. Additional cash requirements for the launch are expected to be less than $8 million.2 million. whose wholly. Under our senior secured credit facility with ANB 1 License. 2004). we will lease back space at the tower sites for our networks. cash obtained from borrowings under our revolving credit facility and cash generated from operations and other transactions. Our application to the FCC for consent to acquire this license. although initially opposed by a third party involved in the bankruptcy of the seller.owned subsidiary. 42 . the aggregate purchase price for its nine licenses. We expect to finance these $175 to $230 million of capital expenditures with our existing cash. cash obtained from borrowings under our revolving credit facility and cash generated from operations and other transactions. we paid $151. We expect to finance these costs in 2005 with our existing cash. We currently expect that the capital expenditures for the build. we made a $3. we cannot assure you that the FCC will grant such approval or that the other conditions will be satisfied. see "Item 1.000.$25 million (excluding the cost of purchasing the license).term investments.9 million to the FCC. which in turn contributed such amounts to ANB 1 License. Business . was named the winning bidder in Auction #58 for nine wireless licenses covering approximately 10.8 million was paid as a deposit as of December 31. cash equivalents and short. or ANB 1.1 million potential customers. because our investment in ANB 1 is required to be consolidated under FIN No.out and initial operation of the new markets.1 million potential customers. Cricket has agreed to purchase a wireless license to provide service in Fresno. Inc.Table of Contents expects to acquire as a result of its participation in Auction #58. will be between $20. 46R). In March 2005.term investments.outs.5 million. Although we expect to receive such approval and satisfy such conditions. our wholly. For a description of the terms of the ANB 1 limited liability company agreement and our senior secured credit facility with ANB 1 License. subsidiaries of Leap signed an agreement to sell 23 wireless licenses and our operating assets in our Michigan markets for $102. we also announced an agreement for the sale of approximately 140 cell towers and cell tower related assets for approximately $18 million. In February 2005. Cricket Licensee (Reauction).out and launch of the Fresno market. in November 2004 we acquired a 75% non. Also in March 2005. We are currently developing plans for such build.9 million. increasing the total amount paid to the FCC for Auction #58 to $166. was granted on May 13.0 million equity contribution from its controlling member. The FCC approved the grants of these licenses on May 13." We currently expect to build out and launch commercial operations in the markets covered by the licenses we expect to acquire as a result of Auction #58. was named the winning bidder in the FCC's Auction #58 for four wireless licenses covering approximately 11. we made loans under our senior secured credit facility with ANB 1 License in the aggregate amount of $56.out costs and working capital requirements. ANB 1 License will need to obtain additional capital from Cricket or another third party to build out and launch its networks.5 million in additional funds to finance its initial build. 2005. as well as for the related expansion of the Visalia and Modesto/ Merced markets. In March 2005. California for approximately $27. LLC.1 million (of which $1. Under the agreement. We have begun to invest significant resources in building out this market. or ANB 1 License.2 million. plus the reimbursement of certain construction expenses not to exceed $500. Alaska Native Broadband. the aggregate purchase price for the four licenses. together with a $1. ANB 1 License paid such monies to the FCC.

2005.457 18. Subsequent to December 31.9 million. 2005.800 . and a five.$ - .0 million for each year 2005 through 2009 and $475.078 601.800 39. Under the Credit Agreement. 46. followed by four quarterly payments of $118. we incurred the following additional contractual obligations which are not included in the table above: Future minimum contractual obligations for the $500 million term loan under the new credit facilities executed on January 10. The table above also does not include the following contractual obligations relating to ANB 1.863 (1) Amounts shown for Cricket's senior secured pay.year $110 million revolving credit facility.941 $ 18. three or six months. which contribution was made in March 2005.2 million was loaned to ANB 1 License in March 2005 in full satisfaction of such contractual obligations.25 million each.941 33.122 13. As noted elsewhere in this report.950 $ 13.S.122 $ 43.9 million.75 million each.500 54.500 180.$ - 350. The facilities under the new Credit Agreement consist of a six. which commitment remained undrawn at April 30. New Credit Agreement On January 10.863 393. 2004 regarding certain future minimum contractual obligations for Leap and the Cricket Companies for the next five years and thereafter (in thousands): Year Ended December 31.5 percent.0 million in 2010. 2004.year $500 million term loan.in.5 percent. two.357 $ 5. with interest periods of one.979 $ 25. or bank base rate plus 1. The commitment of the lenders under the $110 million revolving credit facility may be reduced in the event mandatory prepayments are required under the Credit Agreement and by one. which was fully drawn at closing.024 $ 33. as selected by Cricket. we entered into a new senior secured Credit Agreement with a syndicate of lenders and Bank of America. (3) Cricket's obligation to loan to ANB 1 License up to $4.R: (1) Cricket's obligation to contribute to ANB 1 $3.$ - .balance sheet arrangements at December 31.457 $ 15. commencing March 31.Table of Contents Certain Contractual Obligations. under which $56. N.term debt(1) $ Fresno license purchase Origination fees for ANB 1 investment Operating leases Total $ 389. (2) Cricket's obligation to loan up to $84. Contractual obligations to purchase wireless licenses for which we were the winning bidder in Auction #58 for an aggregate purchase price of approximately $166. this debt was repaid in January 2005. Outstanding borrowings under the term loan must be repaid in 20 quarterly payments of $1. we increased our payment to the FCC to $166. consisting of principal payments of $5. in March 2005.000 - 5.5 million to finance its initial build. 2005. 2005. Commitments and Contingencies The table below summarizes information as of December 31.kind notes and U.950 15. the full amount of the purchase price. government financing include principal only.0 million to ANB if ANB exercises its right to sell its membership interests in ANB 1 to Cricket following the initial build. a company which we consolidate under FIN No.twelfth of the original aggregate 43 . 2004. and (4) Cricket's obligation to pay $2. the term loan bears interest at LIBOR plus 2. commencing March 31.out costs and working capital requirements.745 126. 2010. Off.A. Total 2005 2006 2007 2008 2009 Thereafter Long.979 $ 25. which was undrawn at closing.out of ANB 1 License's wireless licenses.5 million to ANB 1 License to finance its purchase of wireless licenses in Auction #58.$ - . (as administrative agent and letter of credit issuer).0 million in equity capital.Balance Sheet Arrangements We had no material off.

each as reflected in any such amended financial statements.in.75 percent per annum when the utilization exceeds 50 percent.sixth of the original aggregate revolving credit commitment on January 1. (3) to grant liens. provided that (i) such amendment does not reduce EBITDA. a maximum total leverage ratio. and the reported amounts of revenues and expenses. Critical Accounting Policies and Estimates Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements which have been prepared in accordance with GAAP. as defined in the Credit Agreement. The remaining proceeds from the term loan borrowing of approximately $60 million will be used for general corporate purposes. a director of Leap) participated in the syndication of our new Credit Agreement in the following amounts: $100 million of the $500 million term loan and $30 million of the $110 million revolving credit facility. L. Under the Credit Agreement. 2005. and waived any default that may occur under the Credit Agreement if we amend our financial statements for the fiscal quarter ended September 30. with restrictions on the use of proceeds. 2009 (each such fractional reduction to be net of all prior reductions) based on certain leverage ratios and other tests. a maximum senior secured leverage ratio and a minimum fixed charge coverage ratio. We are also required to maintain compliance with financial covenants which include a minimum interest coverage ratio. In addition. We expect that we will meet all of the requirements of the waiver in a timely manner. with the rate subject to adjustment based on our leverage ratio. we were not able to deliver such financial statements to the administrative agent under the Credit Agreement by such date. as a result. The commitment fee on the revolving credit facility is payable quarterly at a rate of 1. On April 15.kind notes. Borrowings under the revolving credit facility will accrue interest at LIBOR plus 2. 2008 and by one. (a beneficial shareholder of Leap and an affiliate of James D. Cricket and all of their direct and indirect domestic subsidiaries. we obtained a waiver of certain defaults and potential defaults under the Credit Agreement. We had not completed the preparation of our audited financial statements for the year ended December 31. sell assets or property. Proceeds from the term loan borrowing were used by us to redeem Cricket's $350 million 13% senior secured pay. The waiver also extended our obligation to provide our unaudited financial statements for the quarter ended March 31. we will be required to pay down the facilities under certain circumstances if we issue debt or equity. including limitations on our ability: (1) to incur additional debt or sell assets. 2004 and (ii) neither "Indebtedness. 2005 to the administrative agent until June 15. On an 44 . the disclosure of contingent assets and liabilities. The new credit facilities are guaranteed by Leap and all of its direct and indirect domestic subsidiaries (other than ANB 1 and its subsidiary) and are secured by all present and future personal property and owned real property of Leap. Affiliates of Highland Capital Management. to pay approximately $43 million of call premium and accrued interest on such notes.P. and to pay transaction fees and expenses. 2005. as selected by Cricket. we have requested and received from the required lenders under the Credit Agreement a waiver of our obligations to provide such audited financial statements to the administrative agent until May 16. two. 2005 was a default under the Credit Agreement.5 percent. and (4) to pay dividends and make certain other restricted payments. three or six months. to repay approximately $41 million in principal amount of debt and accrued interest owed to the FCC. may be more than $10 million greater than the amounts previously reported by us in the original financial statements for the corresponding period.0 percent per annum when the utilization of the facility (as specified in the Credit Agreement) is less than 50 percent and at 0. 2004 or for any earlier period. to less than $217 million for the four quarters ended September 30." as defined in the Credit Agreement.5 percent. Accordingly. The failure to deliver such financial statements by March 31. nor total liabilities. or bank base rate plus 1. we are subject to certain limitations. Dondero.Table of Contents revolving credit commitment on January 1. (2) to make certain investments and acquisitions. with interest periods of one. These principles require us to make estimates and judgments that affect the reported amounts of assets and liabilities. receive certain extraordinary receipts or generate excess cash flow (as defined in the Credit Agreement). 2005. 2005 and. 2004 by March 31.

" on July 1. Upon our adoption of EITF Issue No.based incentives paid to our third.. handsets and accessories. service revenues for customers who pay in arrears are recognized only after the service has been rendered and payment has been received. upon the adoption of SFAS No.month basis.party dealers and distributors are recorded as inventory until they are sold to and activated by customers. Amounts received in advance for wireless services from customers who pay in advance are initially recorded as deferred revenues and are recognized as service revenue as services are rendered. including assumptions as to future events. We have determined that our wireless licenses meet the definition of indefinite. We record an estimate for returns of handsets and accessories at the time of recognizing revenue. Direct costs associated with customer activations are expensed as incurred. "Accounting for Revenue Arrangements with Multiple Deliverables. activation fees and other service fees. Returns of handsets and accessories have historically been insignificant. Amounts due from third. we began allocating activation fees to the other elements of the multiple element arrangement on a relative fair value basis. Because we do not require any of our customers to sign long. we evaluate our estimates and judgments. together with other capitalized costs including legal costs and microwave relocation costs). 142 on January 1.e.party dealers and distributors are recognized as a reduction of revenue and as a liability when the related service or equipment revenue is recognized. Accordingly. Therefore.to. we ceased amortizing our wireless license costs. including those related to revenue recognition and the valuation of long.start accounting. Wireless Licenses Wireless licenses are initially recorded at cost (i. we allocate the activation fees entirely to equipment revenues and recognize the activation fees when received. Because the fair values of our handsets are higher than the total consideration received for the handsets and activation fees combined. Other intangible assets were recorded 45 . 2003. Actual results may differ from our estimates. Handsets sold by third.21. 00. and other service fees are recognized when received.party dealers and distributors for handsets are recorded as deferred revenue upon shipment of the handsets by us to such dealers and distributors and are recognized as equipment revenues when service is activated by customers. The costs of handsets and accessories sold are recorded in cost of equipment. 2002.lived and intangible assets. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Revenues and Cost Recognition Cricket's business revenues arise from the sale of wireless services. Goodwill and Other Intangible Assets Goodwill represents the excess of reorganization value over the fair value of identified tangible and intangible net assets recorded in connection with fresh. Revenues and related costs from the sale of accessories are recognized at the point of sale.Table of Contents ongoing basis. Equipment revenues arise from the sale of handsets and accessories. Revenues and related costs from the sale of handsets are recognized when service is activated by customers.lived intangible assets under SFAS No. estimates are subject to an inherent degree of uncertainty. the purchase price paid for the wireless licenses at the time of acquisition. 142 because we expect to continue to provide wireless service using the relevant licenses for the foreseeable future and the wireless licenses may be renewed every ten years for a nominal fee. Cost of service generally includes direct costs and related overhead. We believe that the following significant accounting policies and estimates involve a higher degree of judgment and complexity than others. some of our customers may be more likely to terminate service for inability to pay than the customers of other wireless providers. Sales incentives offered without charge to customers and volume. of operating our networks. We also charge customers for service plan changes. Revenues from service plan change fees are deferred and recorded to revenue over the estimated customer relationship period. Wireless services are generally provided on a month. excluding depreciation and amortization. By their nature.term service commitments or submit to a credit check. provided that we continue to meet the service and geographic coverage provisions required by the FCC. Customers have limited rights to return handsets and accessories based on time and/or usage.

"Share. Estimates of fair value of our wireless licenses are based primarily on available market prices. Management concluded that our wireless licenses in our operating markets should be combined into a single unit of accounting because these wireless licenses as a group represent the highest and best use of the assets." we assess potential impairments to our long. and would be measured as the amount by which the asset's carrying value exceeds its fair value. Impairment of Indefinite. among other factors. the valuation allowance will be reduced with a corresponding offset to goodwill.line basis over their estimated useful lives of four years. This process involves calculating the actual current tax liability together with deferred income taxes associated with temporary differences resulting from differing treatments of items for tax and accounting purposes. We previously adopted EITF Issue No.Lived Assets In accordance with SFAS No. Significant management judgment is required in determining the provision for income taxes.07. including successful bid prices in FCC auctions and selling prices observed in wireless license transactions. when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. The Company has recorded a full valuation allowance on its net deferred tax asset balances for all periods presented because of its history of losses and due to uncertainties related to utilization of deferred tax assets.start accounting and consist of trademarks. 144. the FASB issued Statement No. 123R. 02. 123R requires that a company measure the cost of equity.Lived Intangible Assets In accordance with SFAS No. including goodwill and wireless licenses." which revises SFAS No. 123.lived asset (or group of such assets) is less than its carrying value.lived intangible assets be combined into a single unit of accounting for purposes of testing impairment if they are operated as a single asset and.lived assets. are essentially inseparable from one another.Lived Intangible Assets." EITF Issue No. 02.lived intangible assets. SFAS No. An impairment loss is recognized when the fair value of the asset is less than its carrying value. 142.Based Payment. and customer relationships. Income Taxes The Company calculates income tax expense for each jurisdiction in which it operates. Impairment of Long. Any required impairment loss would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. including property and equipment and certain intangible assets.date fair value of the award (with limited exceptions).line basis over their estimated useful lives of fourteen years. and that the value of the wireless licenses would not be significantly impacted by a sale of one or a portion of the wireless licenses. An impairment loss may be required to be recognized when the undiscounted cash flows expected to be generated by a long. To the extent that the Company believes that recovery is not likely. it must establish a valuation allowance. The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income. we assess potential impairments to our indefinite. annually and when there is evidence that events or changes in circumstances indicate that an impairment condition may exist. We have chosen to conduct our annual test for impairment during the third quarter of each year. That cost will be 46 . as such. Recent Accounting Pronouncements In December 2004.07 requires that separately recorded indefinite. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable. "Accounting for the Impairment or Disposal of Long. which are being amortized on a straight.based service awards based on the grant. "Unit of Accounting for Testing Impairment of Indefinite.Table of Contents upon adoption of fresh. deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets.Lived Assets. which are being amortized on a straight. Any required impairment loss would be measured as the amount by which the asset's carrying value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations.

153 is required for nonmonetary exchanges occurring in the third quarter beginning July 1. "Accounting for Nonmonetary Transactions. our outstanding floating rate debt totaled $500 million. 2006. If an equity. 153 is based on the principle that nonmonetary asset exchanges should be recorded and measured at the fair value of the assets exchanged. In accordance with this requirement. the fair value of that award will be remeasured subsequently at each reporting date through the settlement date. Leap does not currently engage in any hedging activities against foreign currency exchange rates. will have a material effect on our consolidated financial position or our results of operations. This standard requires exchanges of productive assets to be accounted for at fair value. After completion of the refinancing." has been delayed until the implementation guidance provided by a FASB staff position on the issue has been finalized.01 in our annual financial statements for the fiscal year ended December 31. 29.based award is modified after the grant date. In March 2004.tax loss and decrease cash flow by $5 million. "Exchanges of Nonmonetary Assets. Item 7A. A company will initially measure the cost of each liability based service award based on the award's initial fair value. We implemented the disclosure provisions of EITF Issue No. a 100 basis point increase in the interest rate would increase pre. changes in interest rates would not significantly affect the fair value of the debt. when released. Assuming the outstanding balance on the new floating rate debt remains constant over a year.pricing models adjusted for the unique characteristics of those instruments. Adoption of SFAS No. Pursuant to the Plan of Reorganization. The grant. Hedging Policy. 2004.than temporary impairments of certain investments. incremental compensation expense will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. No compensation expense is recognized for the cost of equity.date fair value of employee stock options and similar instruments will be estimated using option." and amended Accounting Principles Board Opinion No." SFAS No. Changes in fair value during the requisite service period will be recognized as compensation expense over that period. 2005 we refinanced our fixed rate debt with floating rate debt. On December 15. We have not yet determined the impact that the adoption of SFAS No. 03. We have not yet determined the impact that the adoption of SFAS No.Table of Contents recognized as compensation expense over the period during which an employee is required to provide service in exchange for the award or the requisite service period (usually the vesting period). 47 . 2004 and do not anticipate that the implementation of the recognition and measurement guidance. The terms of the Credit Agreement require that we enter into interest rate hedging agreements in an amount equal to at least 50% of our outstanding indebtedness for borrowed money.ThanTemporary Impairment and Its Application to Certain Investments. 153 will have on our consolidated financial position or our results of operations. the Board decided to retain the guidance in APB 29 for assessing whether the fair value of a nonmonetary asset is determinable within reasonable limits. "The Meaning of Other. In addition. 2004 the FASB issued Statement No.01. 123R will have on our consolidated financial position or our results of operations. 153. On January 10. The primary base interest rate is the three month LIBOR. Leap's policy is to maintain interest rate hedges when required by credit agreements. The disclosure guidance was unaffected by the delay and is effective for fiscal years ending after June 15. The effective date of the recognition and measurement guidance in EITF Issue No.based awards for which employees do not render the requisite service. Adoption of SFAS No. As a result. with certain exceptions. 2005. 123R is required for our first quarter beginning January 1. the FASB ratified the consensus of the EITF regarding the recognition and measurement of other. the Company emerged from bankruptcy with fixed rate debt only. unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance (as defined). rather than at carryover basis. 03. we entered into an interest rate hedging agreement with respect to $250 million of our debt in April 2005. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk.

2004. Inc. the accompanying consolidated balance sheet and the related consolidated statements of operations. As discussed in Note 1 to the consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. in all material respects. assessing the accounting principles used and significant estimates made by management. evidence supporting the amounts and disclosures in the financial statements.start accounting as of July 31. 2005 48 Item 8. . and its subsidiaries (Successor Company) at December 31. 2003. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). An audit includes examining. the United States Bankruptcy Court for the Southern District of California confirmed the Company's Fifth Amended Joint Plan of Reorganization (the "plan") on October 22. The plan was consummated on August 16.Table of Contents Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Leap Wireless International. PricewaterhouseCoopers LLP San Diego. Consummation of the plan terminated all rights and interests of equity security holders as provided for in the plan. Inc. In connection with its emergence from bankruptcy. 2004 to December 31. on a test basis. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 2004 and the Company emerged from bankruptcy. the Company adopted fresh. the financial position of Leap Wireless International. 2004 in conformity with accounting principles generally accepted in the United States of America.: In our opinion. of cash flows and of stockholders' equity present fairly. and evaluating the overall financial statement presentation. 2004 and the results of their operations and their cash flows for the period from August 1. These financial statements are the responsibility of the Company's management. California May 16. We believe that our audit provides a reasonable basis for our opinion.

in all material respects. 2003 in conformity with accounting principles generally accepted in the United States of America. the Company and substantially all of its subsidiaries voluntarily filed a petition on April 13. and its subsidiaries (Predecessor Company) at December 31. An audit includes examining. 2003 and the results of their operations and their cash flows for the period from January 1. the accompanying consolidated balance sheet and the related consolidated statements of operations. the financial position of Leap Wireless International. Inc. Inc. on a test basis. 2003 with the United States Bankruptcy Court for the Southern District of California for reorganization under the provisions of Chapter 11 of the Bankruptcy Code. 2004. 2004 and the Company emerged from bankruptcy. The Company's Plan of Reorganization was consummated on August 16. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).: In our opinion. of cash flows and of stockholders' equity (deficit) present fairly.start accounting as of July 31. and evaluating the overall financial statement presentation. 2004 to July 31. In connection with its emergence from bankruptcy. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. assessing the accounting principles used and significant estimates made by management.Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Leap Wireless International. California May 16. 2005 49 . We believe that our audits provide a reasonable basis for our opinion. the Company adopted fresh. These financial statements are the responsibility of the Company's management. and for each of the two years in the period ended December 31. Our responsibility is to express an opinion on these financial statements based on our audits. 2004. evidence supporting the amounts and disclosures in the financial statements. As discussed in Note 1 to the consolidated financial statements. PricewaterhouseCoopers LLP San Diego.

$.355 45.based compensation Accumulated deficit Accumulated other comprehensive income (loss) Total stockholders' equity (deficit) Total liabilities and stockholders' equity (deficit) $ 141.000 shares issued and outstanding Additional paid. $.923 204.469.677 2.157 248.056 49. except share data) Successor Company December 31.224 shares issued and outstanding Successor Company common stock authorized 160.term investments Funds distributed to Leap Creditor Trust (Note 1) Inventories Other current assets Total current assets Property and equipment.373 72.461 33.207 371.704.352 652.741 $ 64.083 31.619 151.629) 81 1. 58. $.680 39.482 $ 1.048.427 25.478.611 576.144 346. 60.090.112 54. net Goodwill Other intangible assets.090.756.000. CONSOLIDATED BALANCE SHEET (In thousands.term debt (Note 7) Other long.156.252 $ 2.000.800 17.term investments Restricted cash.000 shares.070 65.520 55. cash equivalents and short.093 40.145 330.Table of Contents LEAP WIRELESS INTERNATIONAL.811 55.0001 par value.0001 par value.816 35.authorized 10.482 $ 1.in capital Unearned stock.786 $ 84.000.401.850 (893.460 817.954 67.000.356) $ 2. 2004 Predecessor Company December 31. INC.843 See accompanying notes to consolidated financial statements.070 620. no shares issued and outstanding Predecessor Company common stock authorized 300.075 560.632 - 193.141 113.485 74.term debt (Note 7) Other current liabilities Total current liabilities Long.000 shares.000 shares.843 $ 91.522 - - - 6 6 1. net Other assets Total assets Liabilities and Stockholders' Equity (Deficit) Accounts payable and accrued liabilities Current maturities of long.0001 par value. 50 .term liabilities Total liabilities Liabilities subject to compromise (Note 6) Commitments and contingencies (Notes 1 and 11) Stockholders' equity (deficit): Predecessor Company and Successor Company preferred stock . net Wireless licenses.431) (920) 1. 2003 Assets Cash and cash equivalents Short.410 (421) (2.392 (8.653 329.756.

2004 and $257.589 (360.997) (81.378) (300.713 398. net Income (loss) before income taxes Income taxes Net income (loss) Basic and diluted net income (loss) per common share $ 285.475 (79.988) (97.356 (4.143) (146.451 $ 83.345 (16.Table of Contents LEAP WIRELESS INTERNATIONAL.052) (640.235) (86.260) 4.647 $ 58.323) (333.781 344.088) 962.987) (172.243) (181.190 $ (597.404) (252.19) $ (14.821) $ (8.58 $ (10.978) (23.939) 364 (454.160) (51.324) (113.942) - - (171.461) (4.3 million for the seven months ended July 31.629) $ 913.730 567.514) (177.195) (293) (83.594) (117) (4.740) 39.116.437) $ (664.91) .375) 779 (1.148) (82.566 $ 107. 2004 Seven Months Ended July 31.494) (199.938) (57. 2003) Gain on sale of unconsolidated wireless operating company Other income (expense).168) (45.344) (122.438 1.385) (8.647 751.196 643. except per share data) Successor Company Five Months Ended December 31.296 618.915) (287.072.371) (176) (229. 2002 Revenues: Service revenues Equipment revenues Total revenues Operating expenses: Cost of service (exclusive of items shown separately below) Cost of equipment Selling and marketing General and administrative Depreciation and amortization Impairment of indefinite.110) (75.402) (39.100) 6.054) (16. 2003 Year Ended December 31. INC.140) (26.978) (640.166) (443.799) $ (0.461) (4.223) (162.518 (3.444 917. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands.lived intangible assets Impairment of longlived assets and related charges Total operating expenses Gains on sale of wireless licenses Operating income (loss) Interest income Interest expense (contractual interest expense was $156.5 million for the year ended December 31.779) 532 (40.919) - (626) (24.360 481.14) $ 15.600) - (1.812 (522.694 50.242) (589.922) 10. net Loss before reorganization items and income taxes Reorganization items.001) (4. 2004 (As Restated) (See Note 2) Predecessor Company Year Ended December 31.092) (185.

Shares used in per share calculations: Basic and diluted 60.623 58.591 See accompanying notes to consolidated financial statements.604 44.000 58. 51 .

611) (62.Table of Contents LEAP WIRELESS INTERNATIONAL.923 (22.243 - 287. net Change in deferred tax liability Long.069 (260.494 - 300.589) 146.816) (43.575 (1.188 (26. net (8.140 12.761 8. 2003 Year Ended December 31.324 - 177. cash equivalents and investments.772) 16.166 (805) (532) (962. 2002 Operating activities: Net income (loss) $ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Gain on sale of unconsolidated wireless operating company Equity in net loss of and writedown of investments in unconsolidated wireless operating company Interest accrued to loans receivable and payable.671) 4.865 8.333 9.723 (5.695 24.518) 16.421) 916 4.761 2.437) $ (664. INC.562 (115.247) 4.735 15.810 (44.119 (5.190 $ (597.494 12. 2004 Seven Months Ended July 31.816) - 69.623 44.lived intangible asset impairment charge Other Changes in assets and liabilities: Inventories Other assets Accounts payable and accrued liabilities Other liabilities Net cash provided by (used in) operating activities before reorganization activities Net cash used for reorganization activities Net cash provided by (used in) operating activities Investing activities: Purchase of property and equipment Refund of deposits for wireless licenses Net proceeds from sale of wireless licenses Net proceeds from sale of unconsolidated wireless operating company Purchase of investments Sale and maturity of investments Restricted cash.942 (39.cash compensation Gains on sale of wireless licenses Reorganization items.lived asset impairment charge Indefinite.941) (47.910) 194. net Non.368) 32.752 - 126.021 3.345 .525) (102.059) (5.935 (5.752 120. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Successor Company Five Months Ended December 31.242 7.726 69.731 380 38.496) 159.245) 144.370 626 (17.323 26.343) 166 82.000 (87.615) 255.537 (33.010 243 (4.675) (4.722 (134.444) 3. 2004 (As Restated) (See Note 2) Predecessor Company Year Ended December 31.054 171.181) 84.201) 58.799) 75.241) 2.129) (183.919 993 14.051 (364) (22.713 24.629) $ 913.338) 67.433 (183.

Net cash provided by (used in) investing activities Financing activities: Proceeds from loans payable to banks and long.term debt Repayment of loans payable to banks.278) (50.178) 463 (5.727) (13.464 (36.324 84.742) 50 - 35.979 100.692) (16.531) 31.253) 154.term debt Issuance of common stock.299) (56. 52 .233 (142.070 154.860 See accompanying notes to consolidated financial statements.897 (20.394 $ (4.949) (36. net Payment of debt financing costs Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ (46. notes payable and long.727) - - (4.141 $ 70.070 $ 10.790) 100.860 84.119) 242.394 141.

except share data) Accumulated Other Comprehensive Income (Loss) Common Stock Shares Amount Additional Paid.410 (421) (2. 2003 Components of comprehensive income: Net income.337 $ (5. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (In thousands.356) - - - - 913.based compensation Predecessor Company balance at December 31. As Restated Net unrealized holding gains on investments 36.440 - - - - (664.422) 21.994) (1.138) $ (786.967 569 58.based compensation Amortization of stock.156.048.704.658 - - - 8.450.431 2 8.799) (1.431) (920) (893.Based Compensation Accumulated Deficit Total Predecessor Company balance at December 31.437) - - - - - 271 271 - - - - - - (597.174) (1.449) - - - - - (1.094 - - 2.379 (986) (1. 2001 Components of comprehensive loss: Net loss Foreign currency translation adjustment Net unrealized holding losses on investments Total comprehensive loss Issuance of common stock: Arbitration award Employee stock options and benefit plans Unearned stock.156.432 $ 358.704.664 $ 4 $ 1.148.224 6 1.174) - - - - - - (667.166) 35 - - - - - - - - 353 (322) - 322 243 - - 353 243 58.437) - (597.786) - - - - (597.660 704.237 .799) - (1.Table of Contents LEAP WIRELESS INTERNATIONAL.based compensation Amortization of stock.195) $ 1.583) - 3.190 - 913.191) (296.449) (664. INC.189 6 1.190 - - - - - 47 - 47 913.967 (3. 2002 Components of comprehensive loss: Net loss Net unrealized holding gains on investments Total comprehensive loss Issuance of common stock: Stock issued to employees Employee stock options and benefit plans Unearned stock.020.583 569 - - 2.In Capital Unearned Stock.based compensation Predecessor Company balance at December 31.979.

start reporting: Elimination of Predecessor equity securities.629) - - - - - 81 81 - - - - - - (8.478.Total comprehensive income. 53 .478. 2004 Components of comprehensive loss: Net loss Net unrealized holding gains on investments Total comprehensive loss Successor Company balance at December 31.000.000.000 $ 6 $ 1.000 6 1.392 - 1.based compensation Application of fresh.224) (6) (1. As Restated Successor Company balance at August 1.392 $ . As Restated Issuance of common stock: Employee stock options and benefit plans Unearned stock.469.478.398 - - - - (8.704.316) 60.155.639 60. As Restated Issuance of Successor equity securities and fresh.850 See accompanying notes to consolidated financial statements.629) - (8.154.205) - 1.start adjustments. 2004 - - 31 (1.$ (8.236) 53 - 873 (1.478.392 - - - 1.548) 60.000 6 1.based compensation Amortization of stock.241 - 2.629) $ 81 $ 1.205 (837) - - 31 (837) (58.000.613.135.

in. the receipt of required regulatory approvals from the Federal Communications Commission (the "FCC") for the transfer of wireless licenses associated with the change of control that occurred upon Leap's emergence from bankruptcy. from its operating subsidiaries.8 million. 2003.4 billion to debt with an estimated fair value of $412. 2004. the Company's long. anticipated cash flows from operations.8 million. together with its wholly owned subsidiaries. The Plan of Reorganization implemented a comprehensive financial reorganization that significantly reduced the Company's outstanding indebtedness." Leap and the Cricket Companies are collectively referred to herein as "the Company. Chapter 11 Proceedings Under the Bankruptcy Code On April 13. INC. after giving effect to the implementation of fresh. 2003. and approximately $40 million of remaining indebtedness to the FCC (net of the repayment of $45 million of principal and accrued interest to the FCC on the Effective Date). Leap received the requisite approvals from the FCC on August 5. the Plan of Reorganization became effective. The following is a summary of the material actions that occurred as of the Effective Date of the Plan of Reorganization: A new board of directors of Leap was appointed. and the Company emerged from Chapter 11 bankruptcy.03535. Leap. The Company believes that its existing cash and investments.03470. References to "Successor Company" refer to the Company after July 31.Table of Contents LEAP WIRELESS INTERNATIONAL. On October 22. While in bankruptcy. is a wireless communications carrier that offers digital wireless service in the United States under the brand "Cricket®. of Leap. Leap and Cricket satisfied the remaining conditions to the Plan of Reorganization.term debt was reduced from a book value of more than $2. Cricket and their debtor subsidiaries. and available credit facilities will be sufficient to meet its operating and capital requirements through the next 12 months.A11). Cricket and its subsidiaries that operate Cricket's wireless communications business are collectively referred to herein as the "Cricket Companies. 54 . including certain technical amendments thereto (the "Plan of Reorganization").in. references in these financial statements to "Predecessor Company" refer to the Company on or prior to July 31." As of December 31 2004. 2004. On August 16.start reporting. consisting of new Cricket 13% senior secured pay. The effectiveness of the Plan of Reorganization was conditioned upon. issued on the Effective Date. On the Effective Date of the Plan of Reorganization. the Bankruptcy Court entered an order confirming the Fifth Amended Joint Plan of Reorganization dated as of July 30.A11 to 03. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. ("Cricket"). 2003 (the "Petition Date"). 03. Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court for the Southern District of California (the "Bankruptcy Court") (jointly administered as Case Nos. if any. ("Leap"). 2004 (the "Effective Date"). warrants and options were cancelled." Leap conducts operations through its subsidiaries and has no independent operations or sources of operating revenue other than through dividends. warrants and options did not receive any distributions under the Plan of Reorganization. All of the outstanding shares of Leap common stock. among other things. The holders of Leap common stock. each of the debtors continued to manage its properties and operate its business as a "debtor. Inc. Cricket Communications. As discussed in Note 3. the Company provided wireless service in 39 markets.kind notes due 2011 with a face value of $350 million and an estimated fair value of $372. Cricket service is operated by Leap's wholly owned subsidiary. 2004.possession" under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11. a Delaware corporation. Inc. The Company and its Emergence from Chapter 11 Leap Wireless International.

Leap also transferred other assets as specified in the Plan of Reorganization. Rachesky. nine wireless licenses with a net book value of approximately $1.in. The notes were guaranteed by Leap and its direct and indirect domestic subsidiaries and the notes were secured by all of their personal property and owned real property. in installments scheduled for April and July 2005. Mark H. Leap's equity interest in IAT Communications. These other assets included a $35 million note receivable from Endesa. was cancelled in full. received 3.5% of the issued and outstanding shares of new Leap common stock. with reorganized Cricket responsible for paying the cure amounts associated with such contracts and leases.A. as described below. 96. L. currently in litigation in Chile. Leap had transferred $68. All of the debtors' pre. for distribution to holders of allowed Leap general unsecured claims on a pro rata basis. Leap also issued warrants to purchase 600. Also. (a beneficial shareholder of Leap and an affiliate of James D. Cricket and their subsidiaries implemented certain restructuring transactions intended to streamline their corporate structure. The Company paid the FCC approximately $36. The holders of Cricket's senior secured vendor debt claims received.5% senior discount notes ("Senior Discount Notes"). As a result. S. as well as new Cricket 13% senior secured pay. a director of Leap) and MHR Institutional Partners II LP and MHR Institutional Partners IIA LP (beneficial shareholders of Leap and affiliates of Dr. Leap entered into a Registration Rights Agreement with Highland Capital Management. As discussed in Note 15 of these consolidated financial statements. Certain executory contracts and unexpired leases were assumed by the reorganized debtors.1 million shares. other than indebtedness owed to the FCC.6 billion net book value of debt outstanding under Cricket's senior secured vendor credit facilities and approximately $738. and approximately $2.000 shares of new Leap common stock pursuant to a settlement agreement. or an aggregate of 57.8 million of funds to the Leap Creditor Trust to be distributed to holders of allowed Leap general unsecured claims.1 million at August 16.petition indebtedness. Cricket redeemed these notes in January 2005. on a pro rata basis. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Leap issued 60 million shares of new Leap common stock for distribution to two classes of the Company's creditors. which was formed for the benefit of Leap's general unsecured creditors as contemplated by the Plan of Reorganization. which had no carrying value at August 16.000 of unjust enrichment penalties. the Company repaid the remaining FCC debt in January 2005.5% senior notes ("Senior Notes"). The Company agreed to repay the approximately $40 million remaining outstanding principal amount of FCC debt.Table of Contents LEAP WIRELESS INTERNATIONAL. and approximately $278. Leap. The holders of general unsecured claims against Cricket and Leap's other direct and indirect subsidiaries received no distributions under the Plan of Reorganization. The Leap Creditor Trust. Prior to August 16. note payable to GLH. INC. including approximately $1.2 million net book value of debt outstanding under Leap's 12.P. ("GLH") and Qualcomm term loan. a director of Leap) pursuant to which Leap granted demand registration rights to such entities and agreed to prepare and file a resale shelf registration statement relating to the shares of new Leap common stock received by such entities under the Plan of Reorganization.kind notes due 2011.5% of the issued and outstanding shares of new Leap common stock.9 million shares. or 2.3 million of accrued interest in connection with the reinstatement of the Company's FCC debt.7 million of unpaid principal and approximately $8. plus accrued interest. 14. As discussed in Note 15 of these consolidated financial statements. certain causes of action. with the cash proceeds from such liquidation to be distributed to the holders of allowed Leap general unsecured claims. on the Effective Date of the Plan of Reorganization. 2004.3 million of cash. which were to be liquidated by the Leap Creditor Trust. Dondero. 2004. Inc. 2004. Inc. 55 ..

The adjustments necessary to correct these overstatements include: reversing $3.5 million to its fair value as of the freshstart date. were used to estimate and record the liability for future asset retirement obligations. approximately $9. and cash restricted for other purposes. and reducing $4.start reporting.0 million related to the inadvertent duplicate recording of liabilities to certain creditors upon recording the effect of the Plan of Reorganization. On the same date. senior secured vendor credit facilities.start reporting.petition liabilities that were subject to compromise be reported separately on the balance sheet at an estimate of the amount that would ultimately be allowed by the Bankruptcy Court. realized gains and losses and provisions for losses related to the Chapter 11 filings as reorganization items.9 million as of July 31. reducing deferred revenue by $3. note payable to GLH and Qualcomm term loan. 2004. the Company ceased accruing interest and amortizing debt discounts and debt issuance costs for its pre. 2004. there were none that had a significant effect on the Company's financial statements as of the date of emergence. Management also determined that the deferred income tax liability associated with wireless licenses revalued upon the adoption of fresh. 2004. Summary of Significant Accounting Policies Restatement of Previously Reported Unaudited Interim Consolidated Financial Information Restatement adjustments relating to the Predecessor Company as of July 31. and for the one and seven month periods then ended: In connection with the Company's emergence from bankruptcy and adoption of fresh. However. the date of adoption of fresh. At December 31. which included its Senior Notes.7 million of vendor obligations.9 million understatement of the liability as of July 31. In addition. an adjustment to correct errors arising from inadequate account reconciliation procedures.8 million of deferred rent liability to $0 as required by fresh. Accounting Under Chapter 11 As of the Petition Date. and Cricket owns 100% of the issued and outstanding shares of each of the reorganized wireless license holding companies and the reorganized property holding companies. Note 2. management determined that incorrect assumptions. "Financial Reporting by Entities in Reorganization under the Bankruptcy Code.8 million that included funds set aside or pledged to satisfy payments and administrative and priority claims against the Cricket Companies following their emergence from bankruptcy.2 million.6 million remained in reserve by Leap and was included in restricted cash.Table of Contents LEAP WIRELESS INTERNATIONAL.7.7 requires that the Company's pre. the Company overstated its liabilities by a net amount of $4. The two following additional adjustments partially offset the impact of these items. Cricket had restricted cash and cash equivalents of $20. In connection with a review of the Company's leases. resulting in a $7. commencing as of the Petition Date and continuing while in bankruptcy. 2004. 56 . The per share effects of each of the above adjustments were not material. recording the discharge through the Chapter 11 proceeding of $1.start reporting.7.start reporting was understated by $0. the Company implemented American Institute of Certified Public Accountants' Statement of Position ("SOP") 90. In accordance with SOP 90. INC." SOP 90. SOP 90. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Leap owns 100% of the issued and outstanding shares of reorganized Cricket and certain other reorganized subsidiaries. principally related to the expected remediation date. Cash held in reserve by Leap immediately prior to the Effective Date of the Plan of Reorganization that remains following satisfaction of all allowed administrative claims and allowed priority claims against Leap will be distributed to the Leap Creditor Trust. changes in accounting principles required to be adopted under accounting principles generally accepted in the United States within twelve months of emerging from bankruptcy are required to be adopted at the date of emergence. Senior Discount Notes.petition debt that was subject to compromise.7 also requires separate reporting of certain expenses.

the Company amended certain leases.314 74.516 908.168 84.Table of Contents LEAP WIRELESS INTERNATIONAL.1 million was recorded to cost of service for the two month period ended September 30. as well as new and renewed leases. which is reflected in cost of service.335) 959. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The impact of the above adjustments required to correct the errors in the Predecessor Company consolidated financial statements as of and for the seven month period ended July 31. was increased by $0.335) 954. In addition. 2004 Previously Reported (Unaudited) As Restated Consolidated Balance Sheet Data: Goodwill and other intangible assets Accounts payable and accrued liabilities Other current liabilities Other long. the terms of certain leases were revised for accounting purposes.term liabilities $ $ $ $ 500.49 $ $ $ 962.365 16. INC. and the related rent expense. 2004. 2004 relating to an increase in the asset retirement obligation from July 31.601 23. In preparing for its annual audit.36 Restatement adjustments relating to the Successor Company's results of operations for the two month unaudited interim period ended September 30. Quarterly Financial Data. net Net income Basic and diluted net income per common share $ $ $ 957.437 16.assessed the lease term and lease classification.124 (3. 2004 was as follows (in thousands): One Month Ended July 31.4 million for the two months ended September 30. 2004: During the course of the Company's bankruptcy. 2004 to give effect to previously unrecognized rent expense arising in connection with fixed rent escalation provisions over the applicable lease term.58 The impact of the above adjustments required to correct the errors relating to the unaudited interim financial information of the Predecessor Company presented in Note 16.28 $ $ $ $ 69.619 95. the Company also identified other errors in the previously reported unaudited interim financial information for the two months ended September 30. 2004 was as follows (in thousands): As of July 31. 2004.444 913. the Company re. For such leases.577 Seven Months Ended July 31. 2004 Previously Reported (Unaudited) As Restated (Unaudited) Revenues Operating loss Net income Basic and diluted net income per common share $ $ $ $ 69.190 15.548 99.262 15. These errors resulted from inadequate account reconciliation procedures and led to the understatement of service revenue by 57 .440 $ $ $ $ 495. As a result. an adjustment of $0. 2004 Previously Reported (Unaudited) As Restated Consolidated Statement of Operations Data: Reorganization gain.811 14. for the one month period ended July 31.124 (3.

882 (2. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities. 2004 was as follows (in thousands): Two Months Ended September 30. By their nature. The per share effects of each of the above adjustments were not material.04) $ $ $ $ 137. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. (ii) management expected.Table of Contents LEAP WIRELESS INTERNATIONAL.possession. 2004 relating to the above adjustments. respectively).982) (0. and the reported amounts of revenues and expenses. management expected that Leap and its subsidiaries would retain substantially all of their assets through the date of the Company's emergence from bankruptcy. Quarterly Financial Data. (iii) Leap had the power to elect or cause the election of the Board of Directors of each of its subsidiaries during the course of the bankruptcy.9 million. Reorganization Items Reorganization items represent amounts incurred by the Predecessor Company as a direct result of the Chapter 11 reorganization and are presented separately in the Predecessor Company's consolidated statements of operations. and (iv) except for assets that were to be transferred to the Leap Creditor Trust. INC. the understatement of equipment revenue by $0. that Leap would remain the ultimate parent of each of its subsidiaries (other than two subsidiaries whose stock was pledged as collateral for the GLH note and the Qualcomm term loan. for the two month period ended September 30. the Company continued to present the financial statements of Leap and its wholly owned subsidiaries on a consolidated basis because: (i) Leap and each of its subsidiaries that had filed for bankruptcy continued to manage its properties and operate its business as a debtor. While in bankruptcy.in. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) $0.572) (0.3 million and the understatement of realized investment gains by $0.586 4. the disclosure of contingent assets and liabilities. 2004 Previously Reported (Unaudited) As Restated (Unaudited) Revenues Operating income Net loss Basic and diluted net loss per common share $ $ $ $ 136. The impact of the above adjustments required to correct the errors relating to the unaudited interim financial information of the Successor Company presented in Note 16.3 million.783 5.504 (1. and the Plan of Reorganization contemplated. estimates are subject to an inherent degree of uncertainty. 58 . Actual results could differ from management's estimates.03) Principles of Consolidation The consolidated financial statements include the accounts of Leap and its wholly owned subsidiaries.4 million for the two months ended September 30. Use of Estimates in Financial Statement Preparation The consolidated financial statements are prepared using accounting principles generally accepted in the United States of America. The Company also recorded additional income tax expense of $0.

party dealers and distributors are recognized as a reduction of revenue and as a liability when the related 59 .063) 2. 2004 (As Restated) Year Ended December 31.954 (174. 00.6 million. Activation fees included in equipment revenues during the five months ended December 31. "Accounting for Revenue Arrangements with Multiple Deliverables. excluding depreciation and amortization. Because the fair values of the Company's handsets are higher than the total consideration received for the handsets and activation fees combined. Revenues from service plan change fees are deferred and recorded to revenue over the estimated customer relationship period. respectively.to.party dealers and distributors are recorded as inventory until they are sold to and activated by customers. Revenues and related costs from the sale of accessories are recognized at the point of sale. The costs of handsets and accessories sold are recorded in cost of equipment.073) 36." on July 1. and other service fees are recognized when received. of operating the Company's networks. Amounts due from third.242) Revenues and Cost of Revenues Cricket's business revenues arise from the sale of wireless services.21.1 million and $11. the Company allocates the activation fees entirely to equipment revenues and recognizes the activation fees when received. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the components of reorganization items. in the Predecessor Company's consolidated statements of operations (in thousands): Predecessor Company Seven Months Ended July 31. Direct costs associated with customer activations are expensed as incurred. Activation fees included in equipment revenues for the year ended December 31.873 $ (12. Equipment revenues arise from the sale of handsets and accessories.start accounting $ (5. service revenues for customers who pay in arrears are recognized only after the service has been rendered and payment has been received.Table of Contents LEAP WIRELESS INTERNATIONAL.party dealers and distributors for handsets are recorded as deferred revenue upon shipment of the handsets by the Company to such dealers and distributors and are recognized as equipment revenues when service is activated by customers. Sales incentives offered without charge to customers and volume. 2004 totaled $7.444 $ (146. 2003.petition interest income Net gain on discharge of liabilities and the net effect from application of fresh. 2003 totaled $9.based incentives paid to the Company's third. Handsets sold by third. Amounts received in advance for wireless services from customers who pay in advance are initially recorded as deferred revenues and are recognized as service revenue as services are rendered. handsets and accessories. 2004 and the seven months ended July 31. Revenues and related costs from the sale of handsets are recognized when service is activated by customers. net $ 962.005) 2.8 million.436 963. 2003 Professional fees Gain on settlement of liabilities Adjustment of liabilities to allowed amounts Post.month basis. In connection with the adoption of Emerging Issues Task Force ("EITF") Issue No. Wireless services are generally provided on a month. The Company also charges customers for service plan changes.940 - Total reorganization items. Cost of service generally includes direct costs and related overhead.500 (360) 1. some of its customers may be more likely to terminate service for inability to pay than the customers of other wireless providers. net. the Company began allocating activation fees to the other elements of the multiple element arrangement on a relative fair value basis. INC. activation fees and other service fees. Because the Company does not require any of its customers to sign longterm service commitments or submit to a credit check. Accordingly.

in. The specific identification method is used to compute the realized gains and losses on debt and equity securities.S.for.S." to account for its investments in marketable securities. Cash and Cash Equivalents The Company considers all highly liquid investments with maturity at the time of purchase of three months or less to be cash equivalents. The net unrealized gains or losses on available. Under the equity method.term investments consist primarily of amounts that the Company has set aside to satisfy allowed administrative claims and allowed priority claims against the Company through the Effective Date of the Plan of Reorganization and investments in money market accounts or certificates of deposit that have been pledged to secure operating obligations.out method. Customers have limited rights to return handsets and accessories based on time and/or usage. If the carrying value of an investment exceeds its fair value and the decline in value is determined to be other. Property and Equipment Property and equipment are initially recorded at cost. the Company used the equity method when it exercised significant influence but did not control the entity.sale and stated at fair value as determined by the most recently traded price of each security at each balance sheet date.temporary. while expenditures that do not enhance the asset or extend its useful life are 60 .term U. Government agencies. Restricted cash. are capitalized. and other securities such as prime. obligations of U. advances to and financial guarantees for the investee. short.income securities. an impairment loss is recognized for the difference. Investments are periodically reviewed for impairment. INC. The Company applies Statement of Financial Accounting Standards ("SFAS") No. "Accounting for Certain Investments in Debt and Equity Securities.rated commercial paper and investment grade corporate fixed. obligations of U. Government agencies and other securities such as prime. The Company has not experienced any significant losses on its cash and cash equivalents. Investments in Unconsolidated Wireless Operating Companies For certain foreign investments in corporate entities held until divested in 2002. Treasury securities.income securities.term commercial paper and investment grade corporate fixed. The Company invests its cash with major financial institutions in money market funds.S. Such earnings or losses of the Company's investees were adjusted to reflect the amortization of any differences between the carrying value of the investment and the Company's equity in the net assets of the investee. Inventories Inventories consist of handsets and accessories not yet placed into service and units designated for the replacement of damaged customer handsets.for.income investments with an original maturity of greater than three months such as U. Treasury securities.Table of Contents LEAP WIRELESS INTERNATIONAL. including certain labor costs. cash equivalents and short.than.rated short. Investments Short. and are stated at the lower of cost or market using the first.S. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) service or equipment revenue is recognized. Investments are classified as available.term investments consists of highly liquid fixed. first.sale securities are reported as a component of comprehensive income (loss). Returns of handsets and accessories have historically been insignificant. 115. limited to the extent of the Company's investment in. Additions and improvements. the investment is originally recorded at cost and adjusted to recognize the Company's share of net earnings or losses of the investee.

8 1. for the five months ended December 31. during the construction period. The estimated useful lives for the Company's other property and equipment. Depreciation is applied using the straight. and three to seven years for furniture. In connection with the adoption of fresh. and a review of industry averages for similar property and equipment. fixtures and retail and office equipment. As a result of this re.start reporting. Internal Use Software Costs associated with the acquisition or development of software for internal use are capitalized and amortized using the straight.progress.8 11.lived intangible assets under SFAS No. 2004 Network equipment: Switches Switch power equipment Cell site equipment. the Company capitalizes interest and salaries and related costs of engineering and technical operations employees. which included a review of the Company's historical usage of and expected future service from existing property and equipment. The following table summarizes the depreciable lives for network equipment (in years): Prior Depreciable Life Revised Depreciable Life Average Remaining Life at July 31. to the extent time and expense are contributed to the construction effort. Wireless Licenses Wireless licenses are initially recorded at cost.start reporting. or $0. the Company re. 2002. depreciation expense and net loss were reduced by approximately $51. which have remained unchanged.progress until the network or assets are placed in service. As a component of construction. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) charged to operating expenses as incurred.86 per share.8 The Company's network construction expenditures are recorded as construction. the Company changed the depreciable lives for certain network equipment assets.assessed the carrying values and useful lives of its property and equipment. "Goodwill and Other Intangible Assets" because the Company expects to continue to provide wireless service using the relevant licenses for the foreseeable future and the wireless licenses may be renewed every ten years for a nominal fee.line method over the expected useful life of the software. 2004 compared to what they would have been if the useful lives had not been revised.assessment. and site acquisitions and improvements Towers Antennae 5 5 5 5 2 10 15 7 15 3 6.in.8 11.in. These network equipment assets that were previously depreciated over periods ranging from two to five years are now depreciated over periods ranging from three to fifteen years. As a result of this change. the Company ceased amortizing its 61 . Upon emergence from Chapter 11 and adoption of fresh.3 million.8 3. Property and equipment to be disposed of by sale or exchange is carried at the lower of carrying value or fair value less costs to sell. which ranges from three to five years. INC.line method over the estimated useful lives of the assets once the assets are placed in service. 142. are three to five years for computer hardware and software. at which time the assets are transferred to the appropriate property and equipment category. 142 on January 1. upon the adoption of SFAS No.Table of Contents LEAP WIRELESS INTERNATIONAL. Therefore. provided that the Company continues to meet the service and geographic coverage provisions required by the FCC. The Company determined that its wireless licenses met the definition of indefinite. the Company reduced the carrying value of property and equipment to its estimated fair market value.

Table of Contents LEAP WIRELESS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) wireless license costs. Wireless licenses to be disposed of by sale or exchange are carried at the lower of carrying value or fair value less costs to sell. At December 31, 2004 and 2003, wireless licenses to be disposed of by sale or exchange were not significant. In connection with the adoption of fresh- start reporting, the Company increased the carrying value of wireless licenses to their estimated fair market values. Goodwill and Other Intangible Assets Goodwill represents the excess of reorganization value over the fair value of identified tangible and intangible net assets recorded in connection with fresh- start accounting. Other intangible assets were recorded upon adoption of fresh- start accounting and consist of trademarks, which are being amortized on a straight- line basis over their estimated useful lives of fourteen years, and customer relationships, which are being amortized on a straight- line basis over their estimated useful lives of four years. Impairment of Indefinite- Lived Intangible Assets In accordance with SFAS No. 142, the Company assesses potential impairments to its indefinite- lived intangible assets, including goodwill and wireless licenses, annually and when there is evidence that events or changes in circumstances indicate that an impairment condition may exist. The Successor Company has chosen to conduct its annual test for impairment during the third quarter of each year. An impairment loss is recognized when the fair value of the asset is less than its carrying value, and would be measured as the amount by which the asset's carrying value exceeds its fair value. Any required impairment loss would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. Estimates of fair value of the Company's wireless licenses are based primarily on available market prices, including successful bid prices in FCC auctions and selling prices observed in wireless license transactions. Due to a decline in the value of the Company's wireless licenses, it recorded an impairment charge of $171.1 million during the year ended December 31, 2003 to reduce the carrying value of its wireless licenses to their estimated fair value. Management estimated the fair value of the Company's wireless licenses based on the information available to it, including a valuation report prepared by a third- party consultant in connection with the confirmation hearing for the Company's Plan of Reorganization. In developing its valuation, the firm the Company engaged utilized a market- based approach. The firm considered then- current market conditions, including information on recently announced wireless license sale transactions, the strategic significance of the Company's wireless licenses to potential acquirers, the size of the markets covered by the Company's wireless licenses, the amount of spectrum included in each wireless license and the availability of spectrum from other sellers in the markets covered by such wireless licenses. The firm's valuation assumed that the Company's licenses would be sold in an orderly manner between a willing seller and a willing buyer rather than in a liquidation or forced sale scenario. In its valuation report, the firm noted that market conditions for wireless licenses were weak and that recent wireless license sale transactions had been arranged at large discounts to the prices for comparable licenses auctioned by the FCC in Auction 35, which concluded more than two and onehalf years prior to the date at which the firm valued the Company's wireless licenses. The report also stated that significant amounts of spectrum were for sale and that the pool of potential buyers was generally limited to national and regional carriers with highly specific needs. In addition, the firm's report noted that there was a significant lack of debt financing available for the build- out of new markets, and that the national and regional carriers were generally focused on improving their balance sheets and were generally deferring opportunities to acquire spectrum to fill expected future needs. In preparing its valuation, the firm analyzed the market for each of the Company's licenses and, based on its analysis, estimated the value of each license at a discount to the winning net bids in Auction 35 for 62

Table of Contents LEAP WIRELESS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) license(s) covering the same market or, if licenses for the same market were not included in Auction 35, at a discount to the average of the winning net bids in Auction 35 for wireless licenses covering markets of comparable size. These discounts generally ranged from approximately 18% to 90% of comparable winning net bids in Auction 35. In the aggregate, the firm's valuation of the Company's wireless licenses implied a discount to Auction 35 values of approximately 70%. During the year ended December 31, 2002, the Company also recorded an impairment charge of $26.9 million to its then remaining goodwill balance. The goodwill related to the Company's June 2000 acquisition of the remaining interest in Cricket Communications Holdings that it did not already own. The Company previously adopted EITF Issue No. 02- 07, "Unit of Accounting for Testing Impairment of Indefinite- Lived Intangible Assets." EITF Issue No. 02- 07 requires that separately recorded indefinite- lived intangible assets be combined into a single unit of accounting for purposes of testing impairment if they are operated as a single asset and, as such, are essentially inseparable from one another. Management concluded that the Company's wireless licenses in its operating markets should be combined into a single unit of accounting because these wireless licenses as a group represent the highest and best use of the assets, and that the value of the wireless licenses would not be significantly impacted by a sale of one or a portion of the wireless licenses, among other factors. Impairment of Long- Lived Assets In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets," the Company assesses potential impairments to its long- lived assets, including property and equipment and certain intangible assets, when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss may be required to be recognized when the undiscounted cash flows expected to be generated by a long- lived asset (or group of such assets) is less than its carrying value. Any required impairment loss would be measured as the amount by which the asset's carrying value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. During the seven months ended July 31, 2004 and the years ended December 31, 2003 and 2002, the Company recorded impairment charges of $0.6 million, $24.1 million and $16.3 million, respectively, related to the disposal of certain network assets, capitalized costs and related charges associated with cell sites that the Company no longer expects to use in its business. Operating Leases The Company accounts for its operating leases in accordance with SFAS No. 13 and FASB Technical Bulletin No. 85- 3. Rent expense is recorded on a straight- line basis over the initial lease term and those renewal periods that are reasonably assured as determined at lease inception. The difference between rent expense and rent paid is recorded as deferred rent included in other current liabilities in the consolidated balance sheets. Debt Discount and Deferred Financing Costs Debt discount and deferred financing costs are amortized and recognized as interest expense under the effective interest method over the expected term of the related debt. During the year ended December 31, 2003, the Company ceased amortizing debt discounts and deferred financing costs related to debt in default subject to compromise and expensed the remaining unamortized debt discounts and debt issuance costs totaling $174.1 million related to debt in default, subject to compromise. 63

Table of Contents LEAP WIRELESS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. Advertising costs totaled $13.4 million for the five months ended December 31, 2004, $12.5 million for the seven months ended July 31, 2004 and $29.6 million and $57.0 million, respectively, for the years ended December 31, 2003 and 2002. Stock- based Compensation The Company measures compensation expense for its employee and director stock- based compensation plans using the intrinsic value method. Stock- based compensation is amortized over the related vesting periods of the stock awards using an accelerated method. All outstanding stock options of the Predecessor Company were cancelled upon emergence from bankruptcy in accordance with the Plan of Reorganization. For the period from August 1, 2004 through December 31, 2004, no stock- based compensation awards were outstanding. The following table shows the effects on net income (loss) and income (loss) per share as if the Predecessor Company had applied the fair value provisions of SFAS No. 123, "Accounting for Stock- Based Compensation" (in thousands, except per share data):
Predecessor Company Seven Months Ended July 31, 2004 (As Restated)

Year Ended December 31, 2003

Year Ended December 31, 2002

Net income (loss): As reported Add back stock- based compensation expense (benefit) included in net income (loss) Less pro forma compensation (expense) benefit, net Pro forma net income (loss)

$

913,190

$

(597,437) $

(664,799)

(837)

243

569

6,209 $ 918,562 $

(10,805) (607,999) $

(17,280) (681,510)

Basic and diluted net income (loss) per common share: As reported $ Pro forma $

15.58 15.67

$ $

(10.19) $ (10.37) $

(14.91) (15.28)

Income Taxes Current income tax benefit (expense) is the amount expected to be receivable (payable) for the current year. A deferred tax asset and/or liability is computed for both the expected future impact of differences between the financial statement and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be "more likely than not" realized. Tax rate changes are reflected in income in the period such changes are enacted. Basic and Diluted Net Income (Loss) Per Common Share Basic earnings per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share reflect the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options and warrants calculated using the treasury stock method. 64

Table of Contents LEAP WIRELESS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements In December 2004, the FASB issued SFAS No. 123R, "Share- Based Payment," which revises SFAS No. 123. SFAS No. 123R requires that a company measure the cost of equity- based service awards based on the grant- date fair value of the award (with limited exceptions). That cost will be recognized as compensation expense over the period during which an employee is required to provide service in exchange for the award or the requisite service period (usually the vesting period). No compensation expense is recognized for the cost of equity- based awards for which employees do not render the requisite service. A company will initially measure the cost of each liability based service award based on the award's current fair value; the fair value of that award will be remeasured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation expense over that period. The grant- date fair value of employee stock options and similar instruments will be estimated using option- pricing models adjusted for the unique characteristics of those instruments. If an equity- based award is modified after the grant date, incremental compensation expense will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. Adoption of SFAS No. 123R is required for the Company's first quarter beginning January 1, 2006. The Company has not yet determined the impact that the adoption of SFAS No. 123R will have on its consolidated financial position or its results of operations. On December 15, 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets," and amended Accounting Principles Board Opinion No. 29, "Accounting for Nonmonetary Transactions." SFAS No. 153 is based on the principle that nonmonetary asset exchanges should be recorded and measured at the fair value of the assets exchanged, with certain exceptions. This standard requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance (as defined). Adoption of SFAS No. 153 is required for nonmonetary asset exchanges occurring in the third quarter beginning July 1, 2005. The Company has not yet determined the impact that the adoption of SFAS No. 153 will have on its consolidated financial position or its results of operations. In March 2004, the FASB ratified the consensus of the EITF regarding the recognition and measurement of other- than temporary impairments of certain investments. The effective date of the recognition and measurement guidance in EITF Issue No. 03- 01, "The Meaning of Other- ThanTemporary Impairment and Its Application to Certain Investments," has been delayed until the implementation guidance provided by a FASB staff position on the issue has been finalized. The disclosure guidance was unaffected by the delay and is effective for fiscal years ending after June 15, 2004. The Company implemented the disclosure provisions of EITF Issue No. 03- 01 in its annual financial statements for the fiscal year ended December 31, 2004 and does not anticipate that the implementation of the recognition and measurement guidance, when released, will have a material effect on the Company's consolidated financial position or its results of operations. Note 3. Fresh- Start Reporting The Company has adopted the fresh- start accounting provisions of SOP 90- 7. Under SOP 90- 7, the Company was required to apply fresh- start reporting because (i) the reorganization value of the assets of the Company immediately before the date of confirmation was less than the sum of all the allowed claims and post petition liabilities, and (ii) holders of Leap's common shares immediately before the Bankruptcy Court confirmed the Company's Plan of Reorganization received less than fifty percent of the common stock issued by Leap on the date it emerged from bankruptcy. All material conditions to the effectiveness of the Plan of Reorganization were resolved on August 5, 2004 and the Plan of Reorganization became effective on 65

to determine that the reorganization value of the Successor Company's assets was approximately $2. as used in these financial statements.start reporting in the Company's consolidated financial statements as of July 31.start reporting. The amount remaining after allocation of the reorganization value to the Company's identified tangible and intangible assets is reflected as goodwill. 2004 are not comparable in many respects to the Company's financial statements for prior periods. "Business Combinations.7. 2004 was between $1. 2004. reorganization value represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the reorganization. the Company's accumulated deficit was eliminated and new equity was issued according to the Plan of Reorganization. under fresh. The adjustments to the Predecessor Company's consolidated balance sheet at July 31. In addition. Under fresh. after giving effect to the implementation of fresh. 2004 resulting from the application of fresh. debt plus equity) may be used to calculate the reorganization value of the Company. Under SOP 90. 2004 through August 5.start reporting. $2. 2004. to represent management's best estimate of the Company's enterprise value for purposes of SOP 90.9 billion and $2. The Company engaged a third party valuation consultant to assist the Company in estimating the Company's enterprise value as of July 31. 2004. which is subject to periodic evaluation for impairment.e.Table of Contents LEAP WIRELESS INTERNATIONAL. 2004 and the immateriality of the results of operations for the period from August 1. a new entity is deemed to be created for financial reporting purposes.start reporting. 2004. The valuation consultant estimated that the Company's enterprise value at July 31. 2004.2 billion. 141. 2004. the Company recorded the effects of the consummation of the Plan of Reorganization as well as adjustments for fresh." and stated its liabilities. the valuation consultant reviewed information about the Company and conducted a discounted cash flow analysis using projected financial information supplied by the Company and an analysis of the market value and trading multiples of selected publicly. The financial statements of the Company after July 31. each as of the date of adoption of fresh. the Company allocated its reorganization value to its assets in conformity with procedures specified by SFAS No. 2004 to the month ended July 31. Management used such information in connection with the allocation process described below. The Company selected the midpoint of the range.start accounting are summarized below. In implementing fresh.debt operating liabilities. enterprise value (i. the term "Company" refers to the Predecessor Company and its operations for periods on or prior to July 31.. INC. The Company engaged valuation firms to provide management with information that management utilized in determining the fair market value of the Company's network assets and wireless licenses. and the fair value of the Company's trademarks. other than deferred taxes. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) August 16.05 billion. In light of the proximity of August 5. at the present value of amounts expected to be paid.start reporting.held companies in lines of business similar to the Company's business. and refers to the Successor Company and its operations for periods after July 31. The Company then adjusted the enterprise value for cash in excess of that necessary for normal operations and for the value of non.start reporting. The summary should be reviewed in 66 . In formulating its estimate. Therefore.start reporting. Consistent with fresh. and customer relationships and to evaluate other potential intangible assets.1 billion.7.

961) (873) 416.998 1.000e (14)e 506.741 47.003 34.723.791e 329.523 59.478.073 67 .478.995 652.754) $ 506.675 6 1.Start Adjustments (As Restated) Successor Company July 31.638e (6.098.041) (586.584 27.297 372.750c 1.464)a $ (1.Table of Contents LEAP WIRELESS INTERNATIONAL.140 $ 74.799 66. 2004 (As Restated) Assets Cash and cash equivalents $ Short.271 592. net Wireless licenses.739 36.122.433 74.790 34.902 675.000 16.122.874.754) $ (1.term investments Restricted cash.742 $ 94.based compensation Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity (deficit) Total liabilities and stockholders' equity (deficit) $ $ 152.898b $ (4)b 14.739 33.d 873d (42.347 558.386)e 95.741 48.619 166.584 2.398.100)a (36.652)a (68.533)e 1. INC.052 42.708 1.575 2.619e 166.604 329.141 (2.term debt Other long.723.689d 53d 963.398 1.394 94.601 210.790)a (1.652a (1.236 (53) (2.160 $ (70.400)a (107.472) (36.230 6 1.392 - (944.135.750 23. 2004 Reorganization Adjustments (As Restated) Fresh.352)e 94.term debt Other current liabilities Total current liabilities Long.160 $ (107.720a.094b (5. net Goodwill Other intangible assets Other assets Total assets Liabilities and Stockholders' Equity (Deficit) Accounts payable and accrued liabilities Current maturities of long.577 269.398.377) (82.254) (1.term liabilities Total liabilities Liabilities subject to compromise Stockholders' equity (deficit): Common stock Additional paid. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) conjunction with the Company's consolidated financial statements and corresponding notes contained elsewhere in this report (in thousands): Predecessor Company July 31.655 68.377)e $ 154.in capital Unearned stock.724)e $ 2.348 372.645) 1.403b (1.667 $ 2. cash equivalents and shortterm investments Funds distributed to Leap Creditor Trust Inventories Other current assets Total current assets Property and equipment.230)b -d 909.155.314 77.569)e 247.667 $ 364.913 52.241e - 643.335 548.073 $ 69.394 435.235 1.

531 1.386 10. 68 . To record the issuance of new senior secured pay. 2003 Short. the Company may be required to record impairment charges.773 24.150 $ 1.term investments restricted pursuant to Plan of Reorganization U.083 $ 65. liabilities and stockholders' deficit to fair value.S. To record the assumption or discharge of liabilities subject to compromise and the cancellation of Predecessor Company debt and other liabilities compromised pursuant to the Plan of Reorganization. cash equivalents and short.term Investments: Bank deposits $ Cash. Cash Equivalents and Short.Table of Contents LEAP WIRELESS INTERNATIONAL. government or government agency securities $ 3.440 4. 2004 Predecessor Company December 31.130 64.680 40. In addition.954 As of December 31. a permanent and sustained decline in the market value of the Company's outstanding common stock below the Company's enterprise value less debt could also result in the requirement to recognize impairment charges in future periods. Financial Instruments Investments Investments consisted of the following (in thousands): Successor Company December 31.S. and record goodwill and other intangible assets for the reorganization value in excess of net assets. To record the cancellation of the old common stock and other equity and the issuance of new common stock and warrants in accordance with the Plan of Reorganization. Note 4.033 110.811 1. INC. in accordance with fresh. in accordance with the Plan of Reorganization.066 31.427 $ 3. To adjust the carrying value of assets.kind notes. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (a) (b) (c) (d) (e) Adjustments reflected in the condensed consolidated balance sheet above are as follows: To record the transfer of Leap assets to the Leap Creditor Trust. If these estimates or the assumptions underlying these estimates change in the future. all of the Company's short.050 $ 1.in. government or government agency securities restricted pursuant to the Plan of Reorganization Money market funds $ 113.681 $ Restricted Cash. classified as available for sale. The fair values of goodwill and intangible assets reported in the Successor Company's consolidated balance sheet were estimated based upon the Company's estimates of future cash flows and other factors including discount rates.term Investments: Commercial paper Mutual funds U.term investments were debt securities with contractual maturities of less than one year.start reporting.355 55. 2004 and 2003.

681 3. Loans payable to the U.170 64.Table of Contents LEAP WIRELESS INTERNATIONAL.050 4.369 $ 3 212 $ (11) (384) $ 3.033 110.S.S. 69 .4 million as of December 31.534 $ 117. 2004 and 2003 (in thousands): Successor Company Cost Unrealized Gain Unrealized Loss Fair Value 2004 Mutual funds U. approximate fair value due to their short.S.541 $ Unrealized Gain 89 $ Unrealized Loss (3) (16) $ 4.805 $ 209 $ (40) (333) $ 1.term maturities.531 117.S.for.term investments.S. government or government agency restricted pursuant to the Plan of Reorganization $ 2.063 $ 89 - $ (13) $ 3. government or government agency securities U. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Available. which approximates its fair value. government or government agency securities U.614 Predecessor Company Cost Fair Value 2003 Commercial paper U.sale securities were comprised as follows at December 31. INC.944 110. 2004. accounts receivable and accounts payable and accrued liabilities.394 $ 69.386 69. Cricket's 13% senior secured credit facilities had a carrying value. government or government agency restricted pursuant to the Plan of Reorganization $ 1. government carry fixed rates of interest and the carrying value approximates the fair value. including cash equivalents and short.197 Fair Value of Financial Instruments The carrying values of certain of the Company's financial instruments. of $371.130 64.

598 26.171 54. 70 .598) Accumulated depreciation $ Accounts payable and accrued liabilities: Trade accounts payable Accrued payroll and related benefits Other accrued liabilities 576.025 3.7 million thereafter.093 $ 64.Table of Contents LEAP WIRELESS INTERNATIONAL.in.000 166. 2004 was $14.075 $ 35.9 million. 2003 Property and equipment.510.9 million. INC.438) (1.485 $ 49.579 42.184 13.progress $ 599.919 100.711 72. net: Customer relationships Trademarks $ 129.9 million. respectively. $34.000 Accumulated amortization customer relationships Accumulated amortization trademarks $ (13.502 5.923 $ $ Supplementary Information for Other Intangible Assets (in thousands): Successor Company December 31.718 23.5 million and $2. net: Network equipment Computer equipment and other Construction.000 37.461 Amortization expense for the five months ended December 31.5 million.723 1.285 11. $21.352 $ 817.330 $ 15.827 $ Other current liabilities: Accrued taxes Deferred revenue Accrued interest Other 91.860 18.300 9. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5.101) 151.532 4. Supplementary Financial Information Supplementary Balance Sheet Information (in thousands): Successor Company December 31.673 (693.145 1. 2004 Predecessor Company December 31. and $22.385.266 (60.914) $ 1.6 million.358 39. 2004 Other intangible assets.383 637.031 24. Estimated amortization expense for intangible assets for 2005 through 2009 is $34. $34.741 $ 21.

2004 Predecessor Company Year Ended December 31.830 3. 2004 Seven Months Ended July 31. 71 .935 86 2.vested restricted stock Senior Note and Senior Discount Note warrants Qualcomm warrant Warrant to Chase Telecommunications Holdings Warrant to MCG 600 5.485 (9. all outstanding options and warrants to purchase Leap common stock were cancelled in connection with the cancellation of the Predecessor Company's common stock as of the Effective Date of the Plan of Reorganization.800) - - (7.402 2.cash investing and financing activities: Long. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Supplementary Cash Flow Information (in thousands): Successor Company Five Months Ended December 31.975) 1.375 95 - 6.690 Supplementary Basic and Diluted Net Income (Loss) per Common Share Information: The weighted average number of shares outstanding were the same for the calculation of basic net earnings (loss) per common share and diluted net earnings (loss) per common share for all periods presented in the statement of operations.375 95 - 8.830 3.405) 2.312 76 2.660 - - - 3.375 95 - Pursuant to the Plan of Reorganization.830 3. 2003 2002 Employee stock options Non. The following shares were not included in the computation of diluted net earnings (loss) per share as their effect would be antidilutive (in thousands): Successor Company Five Months Ended December 31. 2004 Predecessor Company Year Ended December 31. 2003 2002 Supplementary disclosure of cash flow information: Cash paid for interest $ Cash paid for income taxes Cash provided by (paid for) reorganization activities: Payments to Leap Creditor Trust Payments for professional fees Cure payments Interest income Supplementary disclosure of non.Table of Contents LEAP WIRELESS INTERNATIONAL.168 $ 372 36. 2004 Seven Months Ended July 31.984 1.864) (40.390 - - - 8.$ 76 18.006 774 - (990) (67. INC.term financing to purchase equipment Issuance of common stock related to purchase price adjustment for wireless licenses (Note 12) Deferred income tax liabilities on purchase of wireless licenses 8.227 $ 240 .940 - - - - 177.

The notes were guaranteed by Leap and all of its direct and indirect subsidiaries (other than Cricket which was the primary obligor under the notes).kind notes due 2011 with a face value of $350 million and an estimated fair value of $372.8 million. The Company classified the principal and interest balances outstanding under its U.Kind Notes Issued Under Plan of Reorganization On the Effective Date of the Plan of Reorganization. Government Financing The balance in current maturities of long.357.675 9.term debt at December 31. government financing as a short. The following table summarizes the components of liabilities subject to compromise in the Predecessor Company's consolidated balance sheet (in thousands): Predecessor Company December 31.S. INC. Payments of principal and interest under the Company's U. Cricket entered into a new Credit Agreement and a portion of the proceeds from the term loan facility under the Credit Agreement was used to redeem Cricket's 13% senior secured pay.S.in.1 million (net of a $2.484 15.25% to 7.Table of Contents LEAP WIRELESS INTERNATIONAL. The original terms of the notes included interest rates generally ranging from 6. U. which constituted an event of default of the underlying notes. Cricket issued new 13% senior secured pay. or other events.6 million discount) incurred as part of the purchase price for wireless licenses. 2003 consisted entirely of debt obligations to the FCC of $74.in.kind notes. Adjustments to liabilities subject to compromise resulted from negotiations. The notes were secured by all of the personal property and owned real property of Leap and its direct and indirect subsidiaries and by all of the stock of Leap's direct and indirect subsidiaries.S.annually in February and August.4 million.590 2.0% per annum (9. Debt Senior Secured Pay. other than principal and interest payable to the FCC. the carrying value of the notes was $371.522 Note 7. rejection of certain executory contracts and certain unexpired leases. implementation of the Plan of Reorganization. 72 .term liabilities Total liabilities subject to compromise $ 18. Liabilities Subject to Compromise Liabilities subject to compromise refer to liabilities of the Predecessor Company incurred prior to the Petition Date that are with unrelated parties.773 $ 2. the seventh anniversary of the Effective Date of the Plan of Reorganization. As noted below.75% per annum on the note associated with the Denver license) and quarterly principal and interest payments until the originally scheduled maturities ranging from September 2006 to June 2007. government financing were stayed during the pendency of the Chapter 11 proceedings. Substantially all of the Predecessor Company's pre. The notes bore interest at 13% per annum. 2004. 2003 Accounts payable and accrued liabilities Debt in default subject to compromise Other current liabilities Other long.kind notes were scheduled to mature on August 16.in.petition liabilities.401. The pay. in January 2005. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 6. actions of the Bankruptcy Court. 2011.in. Interest on the notes was payable semi. have been classified as liabilities subject to compromise in the Predecessor Company's consolidated balance sheet. 2003 as a result of the Company's Chapter 11 filings. As of December 31.term obligation as of December 31.

484 $ Amounts presented for the Senior Notes. 2003 Senior Notes Senior Discount Notes Senior secured vendor credit facilities Note payable to GLH Qualcomm term loan $ 224.357. On the Effective Date of the Plan of Reorganization. New Credit Agreement As described in Note 15. the Company paid the FCC.in. 2005 which consists of a term loan and a revolving credit facility.000 of unjust enrichment penalties." and determined that Leap would not be a "small business" or "very small business" following its emergence from bankruptcy.7 million for unpaid principal and approximately $8. interest and fees accrued through the Petition Date. plus accrued interest.Table of Contents LEAP WIRELESS INTERNATIONAL. 2005 generating net proceeds sufficient to redeem the 13% senior secured pay.3 million of accrued interest in connection with the reinstatement of its FCC debt. The remaining obligation to the FCC was secured by the wireless licenses that were originally purchased with installment payment financing from the FCC. on the Effective Date of the Plan of Reorganization. The Company repaid the remaining FCC debt in January 2005. The Company also agreed in the settlement agreement to use reasonable efforts to complete a refinancing on or prior to January 31. the note payable to GLH and the Qualcomm term loan include principal and interest accrued through the Petition Date. was cancelled in full.643 1. Debt in Default Subject to Compromise Predecessor Company debt in default subject to compromise.284 8. all of the Company's pre. The FCC's order and settlement agreement also required the applicable license subsidiaries to repay approximately $40 million in principal amount that remained outstanding on the Effective Date. Pursuant to the Plan of Reorganization and a settlement agreement between Cricket. and to pay transaction fees and expenses. to repay approximately $41 million in principal and accrued interest owed to the FCC. Amounts presented for the Senior Discount Notes include accreted principal and interest accrued through the Petition Date. the FCC denied Leap's request for a waiver of certain FCC regulations relating to Leap's status as a "small business" or "very small business. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In its order approving the change of control of the Company's wireless licenses.541 2.393 1.petition indebtedness. Amounts presented for the senior secured vendor credit facilities include principal.in. is summarized as follows (in thousands): Predecessor Company December 31. approximately $36. to pay approximately $43 million of call premium and accrued interest on such notes. certain license subsidiaries and the FCC. and approximately $278. A portion of the proceeds from the term loan borrowing was used by the Company to redeem Cricket's $350 million of 13% senior secured pay. 2003. which is included in liabilities subject to compromise at December 31. other than indebtedness owed to the FCC.kind notes that Cricket issued upon emergence from bankruptcy and to repay the Company's remaining indebtedness to the FCC.kind notes.623 504. to the FCC in installments scheduled for April and July 2005.618. INC. 73 . the Company entered into two credit facilities under a new senior secured credit agreement on January 10.

Table of Contents LEAP WIRELESS INTERNATIONAL.168 $ 3. 2004 Seven Months Ended July 31.725 428 4.166 $ 6.920 795 7. 2004 (As Restated) Predecessor Company Year Ended December 31.049 Deferred provision: Federal State 3. 2004 (As Restated) Predecessor Company Year Ended December 31.417 8.075 $ - (206.561) $ - 321.050 1.419 - (337.deductible expenses Gain on reorganization and adoption of freshstart reporting Other Change in valuation allowance $ (1.647 9.468 398 3.435 22.772 23. 2003 2002 Amounts computed at statutory federal rate $ Loss on sale of foreign investee State income tax.701 4.821 74 .134 118 3.166 $ 191.052 $ 20.821 A reconciliation of the amount computed by applying the statutory federal income tax rate to the income tax provision is summarized as follows (in thousands): Successor Company Five Months Ended December 31.647 1. INC.596 1.715 8.573 287 175 736 7.051 4. net of federal benefit Foreign income tax benefit Goodwill impairment Non.001) (42.866 $ 4.285) $ - (224. 2004 Seven Months Ended July 31.422) - 15.422 1. Income Taxes The components of the Company's income tax provision are summarized as follows (in thousands): Successor Company Five Months Ended December 31.052 $ 276. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8.337 2.153 4.168 $ 20.697) 455 1.317 23. 2003 2002 Current provision: Federal State Foreign $ 302 302 $ 13 13 $ 337 337 $ (618) 20 1.

as well as certain state NOLs.434 4.399) (15. Leap issued 21. In connection with the Company's emergence from bankruptcy.845 273 966 823. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the Company's deferred tax assets (liabilities) are summarized as follows (in thousands): Successor Company December 31. ("MCG") pursuant to a binding arbitration award. 2004.752) (40. 2004 Predecessor Company December 31.100 19. Management has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. 2003 Deferred tax assets: Net operating loss carryforwards Capital loss carryforwards Goodwill Debt discounts and issue costs Deferred charges Reserves and allowances Property and equipment Other Gross deferred tax assets Valuation allowance Deferred tax liabilities: Wireless licenses Property and equipment Intangible assets Net deferred tax liability $ $ 189. 1998. In addition. The Company's issuance of these shares caused an "ownership change" as defined under Internal Revenue Code Section 382. At December 31. there was a significant reduction of its outstanding indebtedness and an additional ownership change.559 37. Accordingly. of one preferred purchase right (a "Right") for each share of common stock.533 13. as amended.157) The Company's net deferred tax assets at December 31. 2004 are subject to a full valuation allowance. The valuation allowance is based on available evidence.250 11.7.424 91. Pursuant to the Rights Plan.063 (779.100) (15.020. the Company realized cancellation of indebtedness income of approximately $232 million which reduced its NOLs. Stockholders' Equity Predecessor Company Stockholder Rights Plan In September 1998.427 32. Inc.333) (55.Table of Contents LEAP WIRELESS INTERNATIONAL.352 304.041 15.087 16. future decreases in the valuation allowance will be accounted for as a reduction in goodwill.271 29. INC. As a result. Note 9.281) $ $ 666.281) (59.431 shares of common stock to MCG PCS. including the Company's historical operating losses. the Company's ability to utilize its net operating loss and capital loss carryforwards is subject to an annual limitation. Pursuant to SOP 90.0001 par 75 . In August 2002.135) (58.499 (245. the Company has federal capital loss carryforwards of approximately $75 million which expire in 2007. payable on September 16. The additional ownership change further limits the Company's ability to utilize its net operating losses and capital loss carryforwards. the Board of Directors declared a dividend. $. the Company's Board of Directors adopted a Stockholder Rights Plan (the "Rights Plan"). the Company estimates it had federal NOLs of approximately $468 million which begin to expire in 2022.

Leap adopted the Leap Wireless International. Inc. holders other than an Acquiring Person would have had the right (subject to termination) to receive the Company's common stock or other securities having a market value (as defined) equal to twice the purchase price of the Right. Similar Rights generally were issued in respect of shares of common stock subsequently issued.83 per share.01 per Right.548. of the Company outstanding at the close of business on September 11. The Rights. but not in part. the Successor Company issued warrants to MCG to purchase 600. which would have expired on September 10. In conjunction with the distribution of the Rights. and $1. all of the Predecessor Company's outstanding warrants were cancelled.299. as ordered by an arbitrator. the Company's Board of Directors designated 300.94 96. 2004. $. were $1. the Company amended the Rights Plan to permit the issuance of 21. INC.853 $ 4. respectively. 2003: Shares Issuable Upon Exercise Exercise Price Warrant to Chase Telecommunications Holdings. Note 10.000 shares of Preferred Stock as Series A Junior Participating Preferred Stock and reserved such shares for issuance upon exercise of the Rights. acquired beneficial ownership of 15% or more of the Company's outstanding shares of common stock. The Company's contribution expenses for the five months ended December 31. non. subject to annual limits.632. All of MCG's warrants were outstanding as of December 31.thousandth share of Series A Junior Participating Preferred Stock. 2004 and the seven months ended July 31. Inc Warrant to Senior and Senior Discount noteholders Warrant to Qualcomm 94.415 shares of its common stock to pay a purchase price adjustment to MCG.999 2.043. respectively.qualified stock options. Upon exercise.000 shares of common stock of reorganized Leap at an exercise price of $16.0001 par value. in connection with its acquisition of wireless licenses in Buffalo and Syracuse. which warrants expire on March 23.Based Compensation and Benefit Plans Employee Savings and Retirement Plan The Company's 401(k) plan allows eligible employees to contribute up to 30% of their salary. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) value.Table of Contents LEAP WIRELESS INTERNATIONAL. On the Effective Date of the Plan of Reorganization. the Company's Rights Plan was terminated and all rights thereunder were cancelled. 2009. Warrants The Predecessor Company had the following warrants outstanding at December 31. make additional contributions based upon earnings. at a purchase price of $350 (subject to adjustment). at the Company's option at any time for a price of $. The Rights were exercisable only if a person or group (an "Acquiring Person"). At December 31.000 and $613. Stock.854 3. restricted stock 76 .000.000 6.829. Successor Company Stock Option Plan In December 2004. no shares of Preferred Stock were outstanding. 2004 were $428. 2003 and 2002. 2008. Also on the Effective Date. 2003. New York.80 6. were redeemable in whole.375. Restricted Stock and Deferred Stock Unit Plan (the "2004 Plan").000.11 On the Effective Date of the Plan of Reorganization. The Company matches a portion of the employee contributions and may.000. at its discretion. In August 2002. which allows the Board of Directors (or the compensation committee thereof) to grant incentive stock options. 2004 Stock Option. Each Right entitled the registered holder to purchase from the Company a one one. 1998. other than Qualcomm with respect to its exercise of the warrants granted to it or acquired by it in connection with the Company's February 2000 units offering. and for the years ended December 31.

adopted the 1999 Stock Option Plan (the "1999 Cricket Plan") that allowed the Cricket Communications Holdings Board of Directors to grant options to selected employees.year period and were exercisable for up to ten years from the grant date. INC. A total of 500. which subsequently merged into Cricket. options to purchase common stock were granted to non. and to the employees and consultants of the Company's subsidiaries. Under Leap's 1998 Non. vested over a five. options vested over a four.year period and were exercisable for up to ten years from the grant date. each outstanding unexpired and unexercised option under the 1999 Cricket Plan was converted into a stock option to purchase 0. a total of 2.000 shares of common stock were reserved for issuance. In June 1999. A total of 2. Incentive stock options were exercisable at a price not less than 100% of the fair market value of the common stock on the date of grant.000. The 1998 Plan provided for the grant of both incentive and non. The 1999 Cricket Plan provided for the grant of both incentive and nonqualified stock options.11% of Cricket Communications Holdings that it did not already own in a subsidiary merger on June 15.Qualified Stock Option Plan (the "2001 Plan") allowed the Board of Directors to grant non.250. Generally.qualified stock options were exercisable at a price not less than 85% of the fair market value of the common stock on the date of grant. The following paragraphs describe these other plans. Under Leap's 2000 Stock Option Plan (the "2000 Plan"). 2004. Generally.000 shares of common stock were reserved for issuance under the 2001 Plan. the 1999 Cricket Plan was used to grant options in Leap common stock. A total of 4. The options were exercisable at a price equal to the fair market value of the common stock on the date of grant. In connection with Leap's purchase of the remaining 5. options vested over a five.qualified stock options. options under the 1998 Plan vested over a five. Generally. all options to purchase Leap common stock issued under such plans and outstanding immediately prior to the Effective Date were cancelled.000 shares of common stock were reserved for issuance under the 1998 Plan.315 shares of Leap common stock.000 shares of common stock were reserved for issuance under the 1998 Non.000 shares of Leap common stock are reserved for issuance under the 2004 Plan. Non. The number of options that could have been granted to officers and directors of the Company under the 2001 Plan was limited. 2000. Non.qualified stock options were exercisable at a price not less than 85% of the fair market value of the common stock on the date of grant.employee directors on an annual basis. 77 . directors and consultants to purchase shares of Cricket Communications Holdings common stock. Leap had adopted and granted options under various option plans. consultants and independent directors.000 shares of Cricket Communications Holdings common stock were reserved for issuance under the 1999 Cricket Plan.Employee Directors Plan.500. directors and consultants to the Company to purchase shares of Leap's common stock. A total of 8. no options or other awards were outstanding under the 2004 Plan.qualified stock options were exercisable at a price not less than 85% of the fair market value of the common stock on the date of grant.600. At December 31. Terms of the 2000 Plan were comparable to the terms of the 1998 Plan. Predecessor Company Stock Option Plans Prior to the Effective Date.qualified options to selected employees. Incentive stock options were exercisable at a price not less than 100% of the fair market value of the common stock on the date of grant. which are no longer effective. Leap's 1998 Stock Option Plan (the "1998 Plan") allowed the Board of Directors to grant options to selected employees. directors and consultants of the Company to purchase shares of Leap's common stock. Non. A total of 7.year period and were exercisable for up to ten years from the grant date. On the Effective Date of the Plan of Reorganization.800.Table of Contents LEAP WIRELESS INTERNATIONAL.year period and were exercisable for up to ten years from the grant date. Subsequent to June 15.Employee Directors Stock Option Plan (the "1998 NonEmployee Directors Plan"). 2000. Cricket Communications Holdings. Leap's 2001 Non. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and deferred stock units to the Company's employees.

729. $28.143 235 14 525 426 423 321 8 4.Table of Contents LEAP WIRELESS INTERNATIONAL.338.185 (2. $42.05 6. 4. 2003 Options cancelled July 31.261) 0 8.20 to $96.34 14.95 and $10.04 72. 2002 Options cancelled December 31.44 to $12. 2 5 4 674 422 514 815 1.94 12.39 0.22 6.49 31.48 to $0.935 8. INC.48.52 to $42.15 2.84 5.72 to $1.58 2.67 58.30.08.65 0. 3. $0.95 At December 31. and 2001 Plan follows (number of shares in thousands): Options Outstanding Options Available for Grant Number of Shares Weighted Average Exercise Price December 31.467) 6.Employee Directors Plan.810 (2. the 1999 Cricket Plan.45 6.466 5.39 0. 1998 Non.67 6.73 10.Employee Directors Plan.39 7.02 16.223 301 28 891 654 863 527 12 6.03 72.31 to $0.74 to $5.31 10.49 to $3.38 3.73.51 31.76 13.20 17.48 14.170) (142) 8. $1.$ 1 1 170 254 397 811 1.67 8. $5.31.402 (1.71 $ 8.11 3.00.185) 2.43. $8.48 The following table summarizes information about stock options outstanding under the 1998 Plan.529 $ 2.25 0.61 8.55 6.01 to $28.80 to $64.66 $12.47.90 1. 2004.48 .61.170 3.59 4.96 $ 0. $3.935) 0 23.29 5.87 31.000 and 4. 2000 Plan.67 to $19.58 2. $0.20 to $0.94 14.51.79. 78 . 2003 (number of shares in thousands): Options Outstanding Weighted Average Remaining Contractual Life (in Years) Options Exercisable Weighted Average Exercise Price Weighted Average Exercise Price Exercise Prices Number of Shares Number of Shares $0.19.93 20.06 3.25 0.25 20.71.935 (6. 1999 Cricket Plan. the 1998 Non.65 0.795 1.729 $ 0.63 58.79.65 to $2.62 to $8.09 10. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A summary of stock option transactions for the 1998 Plan.19 4.64 5. $19.19 4.57 8.12 3. the 2000 Plan and the 2001 Plan at December 31. $1. $2.91 7. 2001 Options granted Options cancelled Options exercised December 31.70 6.09 to $1. 2003 and 2002. $0.261 (5. respectively. $64.000 options were exercisable by employees of the Company at a weighted average exercise price of $12.90 1.64.

A total of 275. In August 2002. The new options had the same vesting schedule as the old options and were exercisable as to vested shares six months after the date of grant. Leap's shareholders approved the adoption of the 2001 Executive Officer Deferred Bonus Stock Plan (the "2001 Executive Officer Plan"). eligible employees (excluding officers and outside directors) were given the opportunity to cancel certain stock options previously granted to them in exchange for an equal number of new stock options to be granted at a future date. 2001. all shares previously issued under the 1998 ESP Plan were cancelled pursuant to the Plan of Reorganization. In April 2001. For the year ended December 31. On the Effective Date.418 shares were allocated under the plan and the Company's matching contribution amounted to $141. to be issued to the participant upon eligible retirement. Leap suspended all employee contributions to the 1999 Executive Officer Plan and the 2001 Executive Officer Plan. Predecessor Company Stock Option Exchange Program In November 2001. Employees could authorize the Company to withhold up to 15% of their compensation during any offering period. For the year ended December 31. In August 2002.Table of Contents LEAP WIRELESS INTERNATIONAL. On the Effective Date. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Predecessor Company Employee Stock Purchase Plan Leap's 1998 Employee Stock Purchase Plan (the "1998 ESP Plan") allowed eligible employees to purchase shares of common stock at 85% of the lower of the fair market value of such stock on the first or the last day of each offering period. A total of 500.507 shares were issued under the 1999 and 2001 Executive Officer Plans combined. On November 1.69 per share. For the year ended December 31. 236.000 shares of common stock were reserved for issuance under the 1999 Executive Officer Plan.tax basis. On the Effective Date. Terms of the 2001 Executive Officer Plan were comparable to the 1999 Executive Officer Plan. Predecessor Company Executive Retirement Plan Leap's voluntary retirement plan allowed eligible executives to defer up to 100% of their income on a pre.000 shares of common stock were reserved for issuance under the 1998 ESP Plan. provided the individual was still employed or providing service on such date. The exercise price of the new options was the fair market value of Leap's common stock on the date of grant. all shares allocated for benefits under the plan were cancelled pursuant to the Plan of Reorganization. INC. 2002. all shares allocated for benefits under the plans were cancelled pursuant to the Plan of Reorganization. participants received up to a 50% match of their contributions (up to a limit of 20% of their base salary plus bonus) in the form of the Company's common stock based on the then current market price. 2002. On a quarterly basis. 2002. The Exchange Program 79 . with the number of share units calculated by dividing the deferred bonus amount by the fair market value of Leap's common stock on the bonus payday. the Board of Directors approved a stock option exchange program (the "Exchange Program"). 2002. Predecessor Company Executive Officer Deferred Stock Bonus Plans Leap's Executive Officer Deferred Stock Plan (the "1999 Executive Officer Plan") provided for mandatory deferral of 25% and voluntary deferral of up to 75% of executive officer bonuses. The participation deadline for the program was December 18. Leap also credited to a matching account that number of share units equal to 20% of the share units credited to the participants' accounts. Bonus deferrals were converted into share units credited to the participant's account. at least six months and one day from the date the old options were cancelled. Matching share units were to vest ratably over three years on each anniversary date of the applicable bonus payday. Under this program. the Company suspended all employee contributions to the executive retirement plan. The plan authorized up to 100. Share units represented the right to receive shares of Leap's common stock in accordance with the plan.000 shares of common stock to be allocated to participants. 68.357. subject to certain limitations. Leap suspended contributions to the 1998 ESP Plan. 260.000 shares of common stock were reserved for issuance under the 2001 Executive Officer Plan. A total of 25.932 shares were issued under the 1998 ESP Plan at a weighted average price of $4.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) resulted in the voluntary cancellation of options to purchase approximately 770.651 shares of common stock with exercise prices ranging from $14. pursuant to the Exchange Program. Leap granted new stock options to purchase 683.5 7. Commitments and Contingencies Cricket has agreed to purchase a wireless license to provide service in Fresno.0% 7.50 per share. On the Effective Date.3% 102. In June 2002.0% 120. Predecessor Company Pro Forma Information For purposes of pro forma disclosures.3 Stock options granted below fair value: 2000 Plan Stock options granted at fair value: 1998 Plan.97 to $92.4% 1. 2004).318 shares of common stock with an exercise price of $1.4 0. California for approximately $27. 2002 3.Employee Directors Plan. 2000 Plan and 2001 Plan 1999 Cricket Plan 1998 ESP Plan $ 1.Scholes optionpricing model using the following weighted average assumptions: Predecessor Company Year Ended December 31. 2002 Risk. 1998 Non.000.5% 113.43 1.8% 0. plus the reimbursement of certain construction expenses not to exceed $500.11 6. Note 11. all options granted in connection with the Exchange Program were cancelled pursuant to the Plan of Reorganization. 2004 and 2003.free interest rate: 1999 Cricket Plan 1998 ESP Plan All other plans Volatility: 1999 Cricket Plan 1998 ESP Plan All other plans Dividend yield (all plans) Expected life (years): 1999 Cricket Plan 1998 ESP Plan All other plans The weighted average estimated grant date fair values of stock options were as follows: Predecessor Company Year Ended December 31.58 per share.Table of Contents LEAP WIRELESS INTERNATIONAL.22 $ $ $ 2. INC. 80 .98 No options were granted during the years ended December 31. The sale is subject to FCC approval.1 million (of which $1.8 million has been paid as a deposit as of December 31. the fair value of options granted has been estimated at the date of grant using the Black.3% 3.

The effectiveness of the Plan of Reorganization was conditioned upon. A party involved in the bankruptcy of the seller filed an objection with the FCC to the Company's application for consent to assign the license. although the Company believes that the true value of these asserted or potential claims is lower.emergence claims against the Company were required to file proofs of claim. and the Company emerged from Chapter 11 bankruptcy. If the claims are resolved through the Bankruptcy Court. 2005. punitive or exemplary damages in the amount of not less than three times compensatory damages. The Company is exploring methods to bring the claims of these foreign authorities within the bankruptcy claims resolution process. the Company expects any payment on the claims will be paid from restricted cash previously reserved to satisfy allowed administrative claims and allowed priority claims against Leap. On the Petition Date. plus interest. although the holders of allowed general unsecured pre. The FCC's order approving the transfer may be challenged during the 40.day period following the approval date. Leap is not a defendant in the Whittington Lawsuit. Leap purchased certain FCC wireless licenses from AWG and paid for those licenses with shares of Leap stock. The Company reviewed the remaining claims filed against it (consisting primarily of claims for prepetition taxes and for obligations incurred by the Company during the course of the Chapter 11 proceedings) and filed further objections by the Bankruptcy Court deadline of January 17.Table of Contents LEAP WIRELESS INTERNATIONAL. 2004. The final deadline for such claims. the Plan of Reorganization became effective. Leap likely did not mail notice of its bankruptcy filings or the proceedings in the Bankruptcy Court to these governmental authorities. In their complaint. the receipt of required regulatory approvals from the FCC for the transfer of wireless licenses associated with the change of control that occurred upon Leap's emergence from bankruptcy. LLC. On October 22. Leap received the requisite approvals from the FCC on August 5. Leap and the Cricket Companies satisfied the remaining conditions to the Plan of Reorganization. the Company does not believe that the resolution of these issues will have a material adverse effect on the Company's consolidated financial statements.8 million in June 2001 at the closing of the license sale transaction). The FCC granted its approval of the transfer on May 13. including interest. but who failed to. Foreign governmental authorities have asserted or are likely to assert tax claims of approximately $6. Parties who were required to. 2004. referred to herein as the Whittington Lawsuit. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and an application seeking consent to assign the license to Cricket is pending before the FCC. several members of American Wireless Group. was October 15. the Bankruptcy Court established deadlines by which the holders of pre.3 million. On December 31. 2004. file proofs of claim before the applicable deadlines are barred from asserting such claims against the Company in the future. plaintiffs seek rescission and/or damages according to proof at trial of not less than the aggregate amount paid for the Leap stock (alleged in the complaint to have a value of approximately $57. In any event. 2005. The Company does not believe that the resolution of the outstanding claims filed against it in bankruptcy will have a material adverse impact on the Company's consolidated financial statements. the Bankruptcy Court entered an order confirming the Plan of Reorganization.petition claims against Leap have (and holders of pending general unsecured claims against Leap may have) a pro rata beneficial interest in the assets of the Leap Creditor Trust. The complaint alleges that Leap failed to disclose to AWG material facts regarding a dispute between Leap and a third party relating to that party's claim that it was entitled to an increase in the purchase price for certain wireless licenses it sold to Leap. Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the United States Bankruptcy Court for the Southern District of California. On August 16. 2002. Plaintiffs contend that the named defendants are the controlling group that was responsible for Leap's alleged failure to disclose the material facts regarding the third party 81 . Mississippi. relating to claims that arose during the course of the bankruptcy. and costs and expenses. filed a lawsuit against various officers and directors of Leap in the Circuit Court of the First Judicial District of Hinds County. 2003. against Leap with respect to periods prior to the bankruptcy. Leap.petition obligations. 60 days after the Effective Date of the Plan of Reorganization. INC. referred to as AWG. In connection with the Chapter 11 proceedings. among other things. Generally the Company's obligations have been discharged with respect to general unsecured claims for pre.

A third party with a large patent portfolio has contacted the Company and suggested that it needs to obtain a license under a number of its patents in connection with the Company's current business operations. from the AWG and Whittington Lawsuits and the related indemnity claims of the defendants against Leap is not probable and estimable. Scheduled future minimum rental payments required for all noncancelable operating leases at December 31. plus interest. INC. from such claims cannot currently be reasonably estimated. 2004 are as follows (in thousands): Year Ending December 31: 2005 2006 2007 2008 2009 Thereafter Total $ 54. making arguments similar to those made in their motion to dismiss the Whittington Lawsuit. and that any failure to disclose such information did not cause any damage to the plaintiffs.950 13. no accruals have been made in the Company's consolidated financial statements as of December 31. 2004 related to these contingencies.941 18. The complaint generally sets forth the same claims made by the plaintiffs in the Whittington Lawsuit. Although Leap is not a defendant in either the Whittington or AWG Lawsuits. The Company is often involved in various other claims arising in the course of business. 2004 for such claims. In the opinion of the Company's management. certain equipment and sites for towers and antennas required for the operation of its wireless networks in the United States. therefore. Leap's D&O insurers have not filed a reservation of rights letter and have been paying defense costs. no accrual has been made in the Company's consolidated financial statements as of December 31. AWG filed a lawsuit in the Circuit Court of the First Judicial District of Hinds County. seeking monetary damages and other relief. The Company understands that the third party has initiated similar discussions with other telecommunications carriers.078 $ 82 . on June 6. The amount of the liability. several of the defendants have indemnification agreements with the Company. the ultimate liability for such claims will not have a material adverse effect on the Company's consolidated financial statements. Defendants filed a motion to compel arbitration or in the alternative. referred to herein as the AWG Lawsuit. dismiss the Whittington Lawsuit. In its complaint.8 million in June 2001 at the closing of the license sale transaction). if any. Leap is not a defendant in the AWG Lawsuit. that they failed to plead facts that show that they are entitled to relief. therefore.Table of Contents LEAP WIRELESS INTERNATIONAL. noting that plaintiffs as members of AWG agreed to arbitrate disputes pursuant to the license purchase agreement. punitive or exemplary damages in the amount of not less than three times compensatory damages. The Company has entered into non. that Leap made adequate disclosure of the relevant facts regarding the third party dispute. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) dispute and the risk that the shares held by the plaintiffs might be diluted if the third party was successful in an arbitration proceeding. Management believes that the liability. against the same individual defendants named in the Whittington Lawsuit. Mississippi.cancelable operating lease agreements to lease its facilities.457 15. In a related action to the action described above. The Company does not currently expect that the resolution to this matter will have a material adverse effect on the Company's financial statements. if any. plaintiff seeks rescission and/or damages according to proof at trial of not less than the aggregate amount paid for the Leap stock (alleged in the complaint to have a value of approximately $57.122 43.863 180. Defendants filed a motion to compel arbitration or in the alternative.745 33. dismiss the AWG Lawsuit. 2003. and costs and expenses.

2002 related to the sale. The Company has determined that its investment in ANB 1 is required to be consolidated under FASB Interpretation ("FIN") No. Investment in Pegaso In September 2002.5 million.A.Table of Contents LEAP WIRELESS INTERNATIONAL. 2003.4 million and $60." Such consolidation requirements did not have a material impact on the Company's consolidated financial statements for the year ended December 31. As of and for the years ended December 31. Cricket and another party formed Alaska Native Broadband 1 LLC ("ANB 1") for the purpose of participating in the FCC's Auction #58 (Note 15) with nominal investments. S. The Company received total consideration of $2.8 million and recognized a gain of $4. 46.2 million. ("Pegaso") to Telefónica Móviles. The Company recorded a gain of $39. Note 15. In August 2002. As there was no cash consideration given or received by the Company as part of the transaction. "Consolidation of Variable Interest Entities. S. de C. 2004. Cricket entered into a senior secured credit agreement (the "Credit Agreement") with a syndicate of lenders and Bank of America. N. pursuant to a binding arbitration award. respectively.0 million and recognized a gain of $0. Segment and Geographic Data The Company operated in a single operating segment as a wireless communications carrier that offers digital wireless service in the United States. 2002. The Company received total consideration of $4. Note 13. respectively. In December 2004.0 million to ANB 1 which is recorded in other assets. (as administrative agent and letter of credit issuer). the Company completed the sale of its 20.A. 2004. the Company loaned $8. 83 . 2004.A.7 million for the five months ended December 31.1% interest in the outstanding capital stock of Pegaso Telecomunicaciones. Acquisitions and Dispositions of Wireless Licenses During the seven months ended July 31.431 shares of its common stock with a fair value at the time of issuance of $8.1 million and $31. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Rent expense totaled $24.5 million.6 million. 2003 and 2002.8 million for the years ended December 31. the Company received $15. 2003 and 2002.7 million.lived assets related to operations in the United States. Investments in Alaska Native Broadband and Pegaso Alaska Native Broadband Investments In November 2004. In addition. and $58.7 million as an adjustment to the purchase price of certain wireless licenses purchased during the year ended December 31. Subsequent Events Credit Agreement On January 10. During the year ended December 31. the Company completed the sale of wireless licenses with an aggregate net carrying value of $0. 2004 and the seven months ended July 31. 2005. for cash proceeds of $22.V. INC. all of the Company's revenues and long. the Company issued an additional 21.5 million in its results of operations for the year ended December 31.2 million.020. the wireless licenses received were recorded at the net carrying value of the wireless licenses exchanged. Note 12. During the year ended December 31. the Company completed the exchange of wireless licenses with an aggregate net carrying value of $7. Note 14.8 million in proceeds for the repayment of the Pegaso notes. 2002. 2004.R. the Company completed the sale of wireless licenses with an aggregate net carrying value of $1.

to repay approximately $41 million in principal amount of debt and accrued interest owed to the FCC. The commitment of the lenders under the revolving credit facility may be reduced in the event mandatory prepayments are required under the Credit Agreement and by one. including limitations on its ability: to incur additional debt or sell assets. two. 2005 and. three or six months.kind notes.5 percent with interest periods of one. a director of Leap) participated in the syndication of the Company's new Credit Agreement in the following amounts: $100 million of the $500 million term loan and $30 million of the $110 million revolving credit facility. to make certain investments and acquisitions. sells assets or property. The commitment fee on the revolving credit facility is payable quarterly at a rate of 1. Cricket and all of their direct and indirect domestic subsidiaries. and to pay transaction fees and expenses. and to pay dividends and make certain other restricted payments. to pay approximately $43 million of call premium and accrued interest on such notes. 2008 and by one.5 percent.year $110 million revolving credit facility. and waived any default that may occur under the Credit Agreement if the Company amends its financial statements for the fiscal quarter ended 84 . In addition.75 million each. ANB 1 and ANB 1 License) and are secured by all present and future personal property and owned real property of Leap. The new credit facilities are guaranteed by Leap and all of its direct and indirect domestic subsidiaries (other than Cricket. three or six months or bank base rate plus 1. (a beneficial shareholder of Leap and an affiliate of James D. Accordingly. the Company requested and received from the required lenders under the Credit Agreement a waiver of the Company's obligations to provide such audited financial statements to the administrative agent until May 16. The maturity date for outstanding borrowings under the revolving credit facility is January 10. commencing March 31. On April 15.25 million each.5 percent. 2005. and an undrawn five. commencing March 31. was not able to deliver such financial statements to the administrative agent under the Credit Agreement by such date.5 percent. 2005 to the administrative agent until June 15.P. 2010. the Company will be required to pay down the facilities under certain circumstances if it issues debt or equity. as selected by Cricket. The Company had not completed the preparation of its audited financial statements for the year ended December 31. as selected by Cricket. as a result. 2005.in. 2005 was a default under the Credit Agreement. receives certain extraordinary receipts or generates excess cash flow (as defined in the Credit Agreement). two.0 percent per annum when the utilization of the facility (as specified in the Credit Agreement) is less than 50 percent and at 0. the Company is subject to certain limitations. with interest periods of one. Under the Credit Agreement. L. which is the primary obligor. the term loan bears interest at the London Interbank Offered Rate (LIBOR) plus 2. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The new facilities under the Credit Agreement consist of a six. Outstanding borrowings under the term loan must be repaid in 20 quarterly payments of $1. 2005. The waiver also extended the Company's obligation to provide its unaudited financial statements for the quarter ended March 31. a maximum senior secured leverage ratio and a minimum fixed charge coverage ratio. Dondero. Under the Credit Agreement. or bank base rate plus 1. followed by four quarterly payments of $118.75 percent per annum when the utilization exceeds 50 percent. the Company obtained a waiver of certain defaults and potential defaults under the Credit Agreement.Table of Contents LEAP WIRELESS INTERNATIONAL. which was fully drawn at closing. Borrowings under the revolving credit facility would currently accrue interest at LIBOR plus 2. 2005. 2004 by March 31. Affiliates of Highland Capital Management. with the rate subject to adjustment based on the Company's leverage ratio. INC. to grant liens.year $500 million term loan. 2009 (each such amount to be net of all prior reductions) based on certain leverage ratios and other tests. The remaining note proceeds of approximately $60 million will be used for general corporate purposes.twelfth of the original aggregate revolving credit commitment on January 1. A portion of the proceeds from the term loan borrowing were used by the Company to redeem Cricket's 13% senior secured pay. The Company is also subject to financial covenants which include a minimum interest coverage ratio. The failure to deliver such financial statements by March 31. 2010. a maximum total leverage ratio. with restrictions on the use of proceeds.sixth of the original aggregate revolving credit commitment on January 1.

The transfers of wireless licenses to ANB 1 License are subject to FCC approval. In March 2005. the Company also announced an agreement for the sale of approximately 140 cell towers and cell tower related assets for approximately $18 million. 85 . net non. INC.Table of Contents LEAP WIRELESS INTERNATIONAL. Acquisitions and Dispositions In March 2005. in February 2005. the Company will owe approximately $5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) September 30. under the terms of the 2004 Plan. provided certain conditions are met. the Company granted a total of 839.000 shares of Leap common stock are reserved for issuance under the 2004 Plan.owned subsidiary. Upon transfer of the wireless licenses to ANB 1 License. The transfers of wireless licenses to Cricket Licensee (Reauction). In March 2005.800.658. FCC approval and other customary closing conditions.5 million of origination fees to a third party. the aggregate purchase price for the four licenses.qualified stock options to executive officers and employees of the Company and members of the Board of Directors for recognition of current and future service on the Board and other committees. Winning Bids in Auction #58 In February 2005. Inc.0 million of equity contributions. the aggregate purchase price for the nine licenses. there can be no assurance that the FCC will grant such approvals. were subject to FCC approval. Cricket Licensee (Reauction). the Company will lease back space at the tower sites for its networks. increasing its total amounts paid to the FCC to $166. 2004 or for any earlier period.2 million. Inc. A total of 4. subsidiaries of Leap signed an agreement to sell 23 wireless licenses and the Company's operating assets in its Michigan markets for up to $102. In addition. Completion of the transaction is subject to. In March 2005. Cricket's wholly.5 million.2 million. paid to the FCC additional payments in the amount of $151. a subsidiary of ANB 1 (Note 13) was named the winning bidder in Auction #58 for nine wireless licenses for $68. was named the winning bidder in the FCC's Auction #58 for four wireless licenses. Cricket Licensee (Reauction).9 million. Although the Company expects that such approvals will be issued in the normal course. The closing of the sale is subject to the purchaser's completion of due diligence and other conditions customary for a sale of this type. The FCC approved the grants of these licenses on May 13. Cricket made loans under its senior secured credit facility with ANB 1 License in the aggregate principal amount of $56.2 million.9 million. 2005. The Company expects that it will meet all of the requirements of the waiver in a timely manner. to the FCC to increase its total FCC payments to $68. Inc. Issuance of Stock Option Grants During the first quarter of 2005.. including obtaining third party consents. ANB 1 License paid these borrowed funds. together with $4. among other things. Under the agreement.

except per share data): Year Ended December 31. 86 .847 $ (63.335) 5.644 $ (227. During the one month ended July 31.680) (243. (As Restated)(1) Three Months Ended December 31. 2004. and ceased accruing interest and amortizing debt issuance costs on all of its debt in default subject to compromise. Three Months Ended June 30.504 4. During the three months ended June 30.1 million of professional fees for legal.719) (4. 2004 and the quarter ended December 31. 2004 and each quarterly period for 2003 is as follows (in thousands.822 $ 205.577 (22.417) (0.03) (0. INC. the Company recorded an impairment charge of $171. financial advisory and valuation services directly associated with the Company's Chapter 11 filings and reorganization process. 2004 and the Predecessor Company for the first and second quarters of 2004.48) (0. (As Restated)(1) Successor Company Two Months Ended September 30. in the opinion of management.451) (172. Revenues $ Operating income (loss) Net income (loss)(2) Basic and diluted net income (loss) per common share 206.81) 188.Table of Contents LEAP WIRELESS INTERNATIONAL. the Company recorded a net reorganization gain of $963. During the three months ended December 31.8 million of debt forgiveness income from the settlement of certain pre. 2003.701 $ 69.1 million to reduce the carrying value of its wireless licenses.922 (28.934 (28. 2004 Predecessor Company Three Months Ended March 31.28) 185.16) 192.145) 959.647) (0.356) (47. offset by $34. Quarterly Financial Data (Unaudited) The following financial information reflects all normal recurring adjustments that are.2 million relating to the net gain on discharge of liabilities and net effect from the application of fresh.257) (15.030) (18.982) (6.763) (2.538) (2.11) Predecessor Company Q1 Q2 Q3 Q4 Revenues Operating loss Net loss(3) Basic and diluted net loss per common share (1) (2) (3) $ 183. necessary for a fair presentation of the Company's results of operations for the interim periods.008) (3. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 16.1 million related to the adjustment of the Company's liabilities subject to compromise to their expected allowed amounts and $12. the Company recorded charges of $174.start accounting. One Month Ended July 31.365 (1.petition liabilities. Summarized data for the Successor Company for the two months ended September 30.31) 16.124 $ 137.883 $ (40.36 Year Ended December 31. 2003 (0. the one month ended July 31. 2003.888) (133.783 $ 206.95) See discussion in Note 2 of these consolidated financial statements.

of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of December 31. These material weaknesses resulted in restatement to the Company's consolidated financial statements as discussed in the first paragraph above. "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. existed in the Company's internal control over financial reporting as of December 31. As required by SEC Rule 13a15(b). Accordingly. As a result of the material weaknesses. and the understatement of asset retirement obligations and deferred income tax liability. 2004." restatement of financial statements in prior filings with the SEC is a strong indicator of the existence of a material weakness. Item 9A. to allow for timely decisions regarding required disclosure. 2004 and the two month period ended September 30. with the participation of the Company's CEO and CFO. Based upon that evaluation. or combination of control deficiencies. Securities and Exchange Commission on February 7. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. the Company's management and its Audit Committee concluded that the Company's unaudited interim financial statements for the one and seven month periods ended July 31. Management. results of operations and cash flows for the periods presented.Table of Contents Item 9. As a result of this review. investment gains and the tax effect of these errors. A "material weakness" is a control deficiency.K are presented in accordance with accounting principles generally accepted in the United States of America. the Company's CEO and CFO concluded that certain control deficiencies.K fairly present in all material respects the Company's financial condition. 2004. 2004. including its chief executive officer ("CEO") and chief financial officer ("CFO"). 2. with participation by the Company's CEO and CFO. The Company performed additional analyses and other post. 2004 should be restated to correct these accounting errors. has designed the Company's disclosure controls and procedures to provide reasonable assurance of achieving the desired objectives. these errors included the overstatement of deferred rent and certain vendor obligations.closing procedures in order to conclude that its consolidated financial statements included in this Annual Report on Form 10. as discussed below. According to the PCAOB's Auditing Standard No. including its site retirement and remediation obligations. 2004. management believes that despite these material weaknesses. the errors included the understatement of lease. each of which constituted a material weakness. summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to management. the consolidated financial statements included in this Annual Report on Form 10. the Company reviewed its accounting for leases. the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective at the reasonable assurance level as of December 31. 2004. For the two month period ended September 30. processed. management conducted an evaluation.related expenses. that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. For the one and seven month periods ended July 31. and in connection with preparing for its annual audit. the Company identified accounting errors in its unaudited interim financial statements included in the Company's Quarterly Report on Form 10.S. the end of the period covered by this report. The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded. as appropriate. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Following publication of a letter regarding accounting for leases issued by the Office of the Chief Accountant of the U. As more fully described in Note 2 to our Consolidated Financial Statements included in this report. 2004. service and equipment revenue. 87 .Q for the three months ended September 30. The Company's management and Audit Committee discussed the proposed restatement with the Company's independent registered public accounting firm. 2005.

The Company has been unable to maintain a sufficient complement of qualified staff in its accounting and financial reporting functions and. to serve as the Company's controller. Insufficient Staffing in the Accounting and Financial Reporting Functions. chief accounting officer.Table of Contents The material weaknesses. additional analyses. appropriately qualified and experienced personnel in the areas of accounting and financial reporting to fill both newly created and currently vacant roles.going effort to implement Section 404 of the Sarbanes. the Company is undertaking an expansion of its accounting and financial reporting department. in large part. will result in a permanent increase in the complement of staffing in its accounting and financial reporting functions. 2004. This material weakness contributed to the following three control deficiencies which are individually considered to be material weaknesses. as a result of staff turnover. The Company is actively recruiting a chief financial officer (this office is currently filled by an acting chief financial officer). The Company has been hiring. The Company has taken the following actions between February and May 2005 to remediate this material weakness: reviewed the terms of over 2. from (1) the significantly increased workload placed on its accounting and financial reporting staff during the Company's bankruptcy and the months after the Company's emergence from bankruptcy during which it was implementing fresh. the Company identified errors in assumptions that resulted in the incorrect accounting for rent expense and remediation obligations associated with its leases. The Company's accounting and financial reporting functions require additional personnel with appropriate skills and training to identify and address the application of technical accounting literature.Oxley Act of 2002. along with its emergence from bankruptcy and the associated reduction of employee uncertainty with respect to the Company's prospects. and (2) the departure of some staff members during the Company's bankruptcy and in the first several months after its emergence due to concerns about the Company's prospects.500 cell. and has instituted programs to enhance retention. Errors in the Application of Lease. switch and other leases and re. In its efforts to remediate this material weakness. 88 . Management believes these documentation efforts will be instrumental in remediating this material weakness and expects to have filled a substantial number of the open positions in the near future. Additionally. and continues to actively recruit. who is expected to commence employment in May 2005. the Company has suffered from an associated lack of knowledge transfer to new employees within these functions. The Company also recently hired a new vice president.site. 2004 and the two months ended September 30. made necessary adjustments in its 2004 consolidated financial statements. corrected the errors identified in its condensed consolidated interim financial statements for the one and seven month periods ended July 31.assessed lease term assumptions to assure proper accounting for the rent expense and asset retirement obligations with respect to these leases.start reporting. In its review of its lease accounting. The Company believes that its insufficient complement of staffing and high turnover resulted. the Company has hired a firm to assist with documentation of controls and procedures pertaining to internal control over financial reporting as part of its on. and other remediation procedures are described more fully below.Related Accounting Principles. The Company believes these steps.

review and approval of account reconciliations. and made necessary adjustments in its 2004 consolidated financial statements. 2004. and educated accounting department personnel regarding correct lease accounting procedures. 2004 in connection with the Company's emergence from bankruptcy. together with the expected hiring of additional qualified personnel as described above. together with the expected hiring of additional qualified personnel as described above. The Company is in the process of remediating this material weakness with respect to its inadequate account reconciliation procedures by taking the following actions: establishing and communicating additional procedures for the analysis. having supervisory personnel review and approve all account reconciliations. correcting the related errors identified in its condensed consolidated interim financial statements for the one and seven month periods ended July 31.Table of Contents changed its internal control over financial reporting to identify the procedures to follow for appropriate lease accounting. Inadequate Account Reconciliation Procedures. together with the expected hiring of additional qualified personnel as described above. corrected the errors identified in its unaudited interim condensed consolidated financial statements for the one and seven month periods ended July 31. 2004. 2004 and the two months ended September 30. the Company identified several errors resulting from inadequate oversight of the fresh.Start Reporting Adjustments. The Company believes these errors occurred as a result of the substantial additional workload on its accounting staff in connection with fresh. will be effective in remediating this material weakness in the near future. In preparing for its annual audit. our investments were re.start reporting to remediate this material weakness: reviewed the fresh.start reporting and the insufficient staffing levels and the associated lack of knowledge transfer to new employees within these functions as described above. The changes to the Company's internal controls over financial reporting described above were implemented after December 31. 89 .start reporting. with the implementation of fresh. or are reasonably likely to materially affect. will be effective in remediating this material weakness in the near future. 2004 that have materially affected. the Company's internal controls over financial reporting. The Company has taken the following actions between February and May 2005 with respect to its fresh.start reporting adjustments made in connection with the Company's emergence from bankruptcy. 2004.start reporting adjustments recorded as of July 31. Management believes these steps. Management believes these steps. Fresh. In preparing for its annual audit. will be effective in remediating this material weakness in the near future.start reporting. In addition.start reporting. The Company determined that it overstated deferred rent and certain vendor obligations which should have been eliminated as a result of the emergence from bankruptcy and the implementation of fresh. and making necessary adjustments in its 2004 consolidated financial statements.valued at fair market value but the Company did not have the reconciliation procedures in place to separately track the gains and losses on such investments subsequent to the implementation of fresh. the Company identified errors that resulted from inadequate reconciliation of deferred revenue that should have been recognized as service revenue. Management believes these steps. (b) Changes in Internal Controls Over Financial Reporting There were no changes in the Company's internal controls over financial reporting during the Company's fiscal quarter ended December 31.

Mr. Inc.A. Mr. MD James D. James D. Mr. president and director in February 2005. Rachesky served in various positions at Icahn Holding Corporation. L. Douglas Hutcheson Robert V. Rachesky holds a B. MD has served as a member and chairman of our board of directors since August 2004. S.B. from the Stanford University School of Medicine.Table of Contents Item 9B. Harkey was a partner with the law firm Cracken & Harkey. LaPenta Michael B. Dondero served as chief investment officer of a subsidiary of Protective Life Insurance Company.. Dr.D. Harkey has served as chief executive officer and chairman of Consolidated Restaurant Companies.P. Harkey obtained his B. Hutcheson served as vice president. Dondero holds degrees in accounting and finance. as our senior vice president. which is an investment manager of various private investment funds that invest in inefficient market sectors. and American Banknote Corp.L. Dondero is the founder of Highland Capital Management. Rachesky. since 1997. from the Stanford University School of Business.P.. Jr. Rachesky. Motient Corporation. from the University of Texas at Austin and an M. product development and strategic planning from July 2000 to March 2002. a chartered financial analyst and a certified management accountant. Dr. President and Director Director Director Mark H.B. from 1989 until 1992. Inc. From 1990 through June 1996. and has served as its president since 1993. and is a certified public accountant. has served as a member of our board of directors since March 2005. L. Since 1998. LLP. Harkey. Mr. Mr. including special situation equities and distressed investments. with honors and a J. as our senior vice president. Harkey. From 1992 to 1998.S. business development from March 1999 to July 2000 and as our vice president. Dr. Dr. Harkey & Street. Item 10. and Novadel Pharma Inc. including as a senior investment officer and for the last three years as sole managing director and acting chief investment advisor. business development from September 1998 to March 1999. He also serves on the Board of Directors of Total Entertainment Restaurant Corporation and on the Executive Board of Circle Ten Council of the Boy Scouts of America.D. Dondero completed financial training at Morgan Guaranty Trust Company. Harkey was founder and managing director of Capstone Capital Corporation and Capstone Partners.B. in molecular aspects of cancer from the University of Pennsylvania. Mr. Mr. Dondero is also currently a member of the board of directors of NeighborCare. Mr. Directors Other Information PART III Directors and Executive Officers of the Registrant Name Age Position with the Company Mark H. as our senior vice president and chief strategy officer from March 2002 to August 2002. None. Targoff 46 42 44 49 59 60 Chairman of the Board Director Director Chief Executive Officer.. Inc. marketing in the 90 . Rachesky is the founder and president of MHR Fund Management LLC. Inc. from the University of Virginia. John D. Douglas Hutcheson was appointed as our chief executive officer. beta gamma sigma. S. Prior to founding Highland Capital Management. Dondero has served as a member of our board of directors since August 2004. Jr. Inc. as our senior vice president and chief financial officer from August 2002 to January 2004. From February 1995 to September 1998. Dondero John D.A. having previously served as our president and chief financial officer from January 2005 to February 2005. as our executive vice president and chief financial officer from January 2004 to January 2005. L. and an M. and as chief executive officer and vice chairman of Consolidated Restaurant Operations. a M.A. Rachesky also serves as a member of the board of directors of Neose Technologies. Mr.C. Mr. and has been manager of the investment firm Cracken. from Stanford University School of Business.

Previously. General Counsel and Secretary Senior Vice President. Targoff holds a B. chief financial officer and director of L. a company that seeks controlling investments in telecommunications and related industry companies and serves as its chief executive officer. Targoff was a partner in the New York law firm of Willkie Farr & Gallagher. Mr.. Targoff was president and chief operating officer of Loral Space & Communications Limited. From April 1996. Inc. Stephens Dean M. in accounting from Iona College in New York. Name Age Position with the Company Albin F. Mr. LaPenta has served as a member of our board of directors since March 2005. LaPenta is on the Board of Trustees of Iona College. in addition to serving as chairman of the boards of directors of two small private telecommunications companies. Executive Officers Biographical information for the executive officers of Leap who are not directors is set forth below. 2005. Moschner also was a principal and the vice chairman of Diba. in mechanical engineering from California Polytechnic University and an M. Mr. LLC. LaPenta was a vice president of Lockheed Martin and was vice president and chief financial officer of Lockheed Martin's C3I and Systems Integration Sector. Human Resources Acting Chief Financial Officer and Treasurer Albin F. from Brown University and a J. Prior to the April 1996 acquisition of Loral. until April 1997.. Executive officers serve at the discretion of the Board of Directors and until their successors have been duly elected and qualified. the public owner of Globalstar. a member of the board of directors and ultimately president and chief executive officer of Zenith Electronics from October 1991 to July 1996.Table of Contents Wireless Infrastructure Division at Qualcomm Incorporated.. From its formation in January 1996 through January 1998.D. Operations Senior Vice President. Umetsu David B. Luvisa 52 55 39 49 48 44 Executive Vice President and Chief Marketing Officer Executive Vice President and Chief Technical Officer Senior Vice President. Viasat. Mr. Leonard C. Targoff was senior vice president of Loral Corporation until January 1996. Mr. Davis Robert J.S. Targoff was also the president of Globalstar Telecommunications Limited.3 Communications Holdings.1 Investment Partners.B. Michael B. Targoff and Co.. having previously served as senior vice president. Infocrossing. Mr. from University of California. an investment firm seeking investments in the biometrics area. a development stage internet software company. unless sooner removed by the Board of Directors. a telecommunications company that he founded and that was acquired by Verizon in December 2000. LaPenta served as president. from April 1997 until his retirement from those positions effective April 1. Mr. Moschner has served as our executive vice president and chief marketing officer since January 2005. Mr. Inc. Mr. and served as senior vice president of operations.B. Before joining Loral Corporation in 1981. Irvine. Targoff serves as a member of the board of directors of Kayne Anderson MLP Investment Company.E. There are no family relationships between any director or executive officer and any other director or executive officer. Hutcheson holds a B. He is founder of Michael B. Prior to this. Mr. He previously served in a number of other executive positions with Loral since he joined that company in 1972. Inc. when Loral Corporation was acquired by Lockheed Martin Corporation. Inc. Prior to joining Verizon. Moschner Glenn T. Robert V. marketing from September 2004 to January 2005. Mr. Jr. Mr. the Board of Trustees of The American College of Greece and the Board of Directors of Core Software Technologies. Moschner holds a master's in electrical engineering from Syracuse University and a B. Mr.. Inc. Loral's global mobile satellite system. he was Loral's senior vice president and controller. Irving. Mr.A. Mr.A. LaPenta is the Chairman and Chief Executive Officer of L. Targoff has served as a member of our board of directors since September 1998. in electrical engineering from the City College of New York. a position he held since 1981. from Columbia University School of Law. 91 . and Communications and Power Industries.A. Moschner was president and chief executive officer of OnePoint Services. LaPenta received a B. Mr. Moschner was president of Verizon Card Services from December 2000 to November 2003. Inc.

" as set forth in Item 401(h)(2) of SEC Regulation S. Davis holds a B. general counsel and secretary for IRT Corporation. Targoff. Kennedy School of Government of Harvard University and a J.Table of Contents Glenn T. from Harvard Law School. Mr. vendor finance. From September 1996 to April 2000. Irving served as administrative counsel for Rohr. having previously served as our vice president of finance and treasurer from May 2002 to February 2005 and as our vice president of finance from September 1998 to May 2002. PacTel Cellular. these procedures 92 .McCaw joint venture. engineering operations and launch deployment from June 2002 to January 2004. human resources operations for Qualcomm Incorporated. where he was responsible for Qualcomm's vendor financing activities worldwide. Audit Committee Financial Experts Our Board of Directors has determined that Michael B. Stephens was employed by Pfizer Inc. Mr. Luvisa has served as our acting chief financial officer and treasurer since February 2005.P. Umetsu served as vice president. Honolulu Cellular.. Irving. RAM Mobile Data (now Cingular Mobile Data). Before joining Leap. Mr. Stephens has served as our senior vice president. Mr. Mr. Stephens was vice president. in finance from The Wharton School at the University of Pennsylvania. a corporation that designed and manufactured x.year career. Generally. Robert J. Midwest Region from March 2000 to July 2001. Before Qualcomm. Northwestern Bell and the United States Air Force. from Stanford University. mergers & acquisitions and corporate funding. Before joining IRT Corporation.A. Mr. Irving was admitted to the California Bar Association in 1982.K. Inc. Mr. CMT Kansas/ Missouri in various management positions culminating in his role as vice president and general manager. in mathematics and economics from Brown University. and meets the NASDAQ standards of independence adopted by the SEC for membership on an audit committee. Mr. David B. Mr. Mr. has served as our as senior vice president. In other capacities at Hughes Electronics. he was the chief financial officer of a finance company associated with Galaxy Latin America. Umetsu served in various telecommunications operations roles for 24 years with AT&T Wireless. a corporation that designed and manufactured aerospace products from 1991 to 1998.ray inspection equipment. Davis was market manager for the PacTel. and as our senior legal counsel from September 1998 to August 2002. currently the only member of the Audit Committee. Jr.S. AT&T Advanced Mobile Phone Service. Dunn & Crutcher. Mr. engineering operations and launch development from April 2000 to June 2002. as our senior vice president. Luvisa was director of project finance at Qualcomm Incorporated. in economics. Dean M. Mr.. engineering and technical operations for Cellular One in the San Francisco Bay Area.A. Irving holds a B. Mr. general counsel and secretary since May 2003. Umetsu has served as our executive vice president and chief technical officer since January 2005. legal from August 2002 to May 2003. Luvisa graduated summa cum laude from Arizona State University with a B. Before Cellular One. Stockholder Nominees Nominations of persons for election to the Board of Directors may be made at the annual meeting of stockholders by any stockholder who is entitled to vote at the meeting and who has complied with the notice procedures set forth in Section 8 of the Amended and Restated Bylaws of Leap. operations since July 2001.D. and prior to that was vice president. where he served in a number of human resources positions over a 14. Irving was an attorney at Gibson. having previously served as our executive vice president and chief operating officer from January 2004 to January 2005. from Howard University. having previously served as our vice president. Davis spent six years with Cellular One. an M. Mr. Umetsu holds a B. Before joining Qualcomm Incorporated. Davis has served as our senior vice president.S. where he graduated cum laude. Mr. having previously served as our regional vice president.P. Leonard C. an affiliate of DirecTV and Hughes Electronics. and earned an M. meets the definition of an "audit committee financial expert. from The John F. McCaw Communications. Prior to joining Cricket. Previously. Stephens holds a B.A. and as vice president. From December 1995 to September 1998. Before Cellular One.A. Luvisa was responsible for project finance. from the University of Central Arkansas.B. Mr. human resources since our formation in June 1998.

who succeeded Mr.192 .962 2003 $ 290.954 27. To Leap's knowledge. 2004.423 $ 233.846 $ .com.186 . Code of Ethics We have adopted a Code of Business Conduct and Ethics that applies to all of our directors.$ . 2004.833 6.$ 378.686 .785(3) $ 10.$ .604 23.percent beneficial owners are required by SEC regulations to furnish Leap with copies of all Section 16(a) forms they file.$ .$ . and written representations that no Form 5 is required. Harvey P. White as chief executive officer. 2004. principal financial officer and principal accounting officer.$ 23. to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of Leap.631 . Officers.Leapwireless.923 $ 159.644 2003 $ 2002 $ 240.115 $ 273.890 7.816 $ 602. officers and employees. Executive Compensation The following table sets forth compensation information with respect to Leap's chief executive officer and other four most highly paid executive officers for the fiscal year ended December 31.133 $ 4. commenced his employment with us in May 2004 and resigned from his position with us in February 2005.361 2002 $ 2004 $ 262. and persons who beneficially own more than ten percent of a registered class of Leap's equity securities.808 583. Human Resources David B.$ 21. Mr. 2003 and 2002.$ 17.than.678(3) $ 4.385 $ 248.028 2003 $ 2002 $ 2004 $ 265.3(e) during the year ended December 31. directors and greater.136 . or the named executive officers.$ .$ 11. William M.Term Compensation Annual Compensation(1) Name and Principal Positions At Leap Other Annual Compensation(2) Securities Underlying Options (#) All Other Compensation(11) Year Salary Bonus S.065 . White. Davis Senior Vice President.841(4) $ 22.$ 532. resigned from his position with us in June 2004. including all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors and the nominee's written consent to being named in the proxy and to serving as a director if elected.135 13. Stockholders are encouraged to review the Bylaws which are filed as an exhibit to this report for a complete description of the procedures.234(4) $ .Table of Contents require stockholders to give timely notice in writing to the Secretary of Leap.$ 28.936(4) $ .279(3) $ 2003 $ 2002 $ 2004 $ 271.$ 22. all Section 16(a) filing requirements applicable to its officers.090 $ 100.269 $ 105. Douglas Hutcheson Chief Executive Officer.tenpercent beneficial owners were complied with.$ 93 14.259(5) 3.160 405. and Forms 5 and amendments thereto furnished to Leap with respect to the year ended December 31. The information set forth in the following tables reflects compensation earned by the named executive officers for services they rendered to us during the 12 months ended December 31.ten.269 $ 284. including our principal executive officer.than.377 16.640 .568 95.692 $ 250. based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Leap pursuant to Rule 16a. Stephens Senior Vice President.404 $ 136.$ . 2004.130 26.692 $ 311. Our Code of Business Conduct and Ethics is posted on our website www. Operations 2004 $ 334.420 17.381(3) $ 24. directors and greater. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires Leap's directors and executive officers.284(4) $ 129. our former chairman of the board and chief executive officer. Umetsu Executive Vice President and Chief Technical Officer Leonard C. Item 11. Summary Compensation Table Long. Freeman. President and Director Glenn T.527 5.

255(10) - $ $ 517.Table of Contents Long. as follows: Mr. $175. as follows: Mr.000.000. White voluntarily reduced his annual salary from $787.000. See "Emergence Bonus Agreements" and "Employment Agreements.985 $ $ 16. under Leap's paid time.000 or 10% of the total of annual salary and bonus for the relevant year. Also includes emergence bonuses for 2004 as follows: Mr. Mr. Irving. Davis. Beginning in January 2002. he or she can elect to be paid for two days. which would reduce his or her accrued time off by two days.534. $25.601 965 - $ 13. Davis.000.400.Term Compensation Annual Compensation(1) Name and Principal Positions At Leap Other Annual Compensation(2) Securities Underlying Options (#) All Other Compensation(11) Year Salary Bonus Robert J. Umetsu. $175. Jr. and Mr. Mr. Includes matching 401(k) contributions.500 to $487. reducing his or her accrued time off by two days. Hutcheson.000 options for the purchase of Leap common stock. Mr. Represents amounts paid to Mr. and Executive Officer Deferred Stock Bonus Plan.793 196.804. Mr. Umetsu.063(7) $ 233.000(6) $ 2004 $ 251. $70. $250. Davis. Senior Vice President. Because the exercise price of the options was greater than the market price of Leap's common stock on the date of surrender.800. $300. $45. Mr. $92. as permitted by the note. $86.Amended and Restated Executive Employment Agreement with S.197(3) $ 7.692(8) $ 230. $10.536(4) $ 53. White Former Chairman of the Board and Chief Executive Officer William M. Umetsu's payment of a note to Leap in the amount of $300.517 2002 $ 2004 $ 732. Irving was granted a total of 26. the Effective Date of the Plan of Reorganization.820 60.off program. White. White's earnings through June 2004.100. Stephens.756 9. A portion of these bonuses will be paid after the date of this report." Includes retention bonuses awarded to executive officers in February 2003. $79. $80. and Mr.775 2003 $ 2002 $ 224. Represents additional compensation resulting from Mr. Represents Mr. Mr. Irving. Irving.269(7) - $ 421. Mr.000 by surrender of options to purchase Leap common stock. Mr. an employee with sufficient accrued time off may elect to receive two days of pay for each paid day off the employee takes.440 - $ 35. no amounts are shown with respect to certain "perquisites" where the aggregate amounts of such perquisites for a named executive officer do not exceed the lesser of either $50. matching benefits under Leap's Executive Retirement Plan. Mr. Hutcheson. $25. Douglas Hutcheson. and Mr.836 payable in connection with the transaction.900 $ $ 98. as follows: 94 (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) .112 26. In September 2002. For example.000. Stephens. the amount of the note was treated as additional compensation to Mr. Freeman Former Chief Executive Officer and Director Officer (1) 2004 $ 249.000. as previously agreed by Leap. Irving.000. $60.750 $ 348. Mr. financial planning services. $69. Mr. 2004.882 2003 $ 498.000. These options were cancelled unexercised on August 16. Freeman's earnings beginning in June 2004. Umetsu in 2002.757 33. Freeman in connection with his relocation expenses. executive benefits payments. Umetsu.053 2003 $ - $ - $ - - $ - 2002 $ - $ - $ - - $ - As permitted by rules established by the SEC.087(4) $ $ 16.000.500.589(7) $ 33. In June and July 2002. Also includes reimbursement to Mr.000.731 $ 386. General Counsel and Secretary Harvey P.769(9) $ 120. Hutcheson.456 - $ 52. Stephens. if an employee takes one day off. $175.000. Mr. Umetsu of taxes of $268. Includes enhanced goal payments awarded to executive officers in August 2004. Represents Mr.

028 28.500 $ 6.919 for the year ended December 31.$ .972 $ . Davis Robert J.$ .962 23.$ .831 $ 15.000 $ 5.604 23.377 $ 6. the Effective Date of the Plan of Reorganization.$ . 2004 There were no exercises of options to purchase common stock of Leap by the named executive officers during the 12 months ended December 31.$ .$ 4.$ .757 33.$ 9.$ 2.748 $ 4.095 $ 8. Freeman 2004 $ 2003 $ 2002 $ 6. acting pursuant to a delegation of authority from the board of directors.420 17.955 $ 5.$ 22.$ .377 16.864 $ 33.882(3) 52.500 $ 6. 2004 were cancelled on August 16.$ .859 $ 13. EMPLOYEE BENEFIT PLANS Equity Compensation Plans All of the outstanding shares of Leap common stock.361 21.139 $ . which represents the dollar value of the benefits of premiums paid by Leap for a split. 2004 pursuant to our Plan of Reorganization.784 $ 14. All vested and unvested shares of common stock issued under the Executive Officer Deferred Stock Bonus Plan and all benefits thereunder were cancelled on August 16.000 $ 5.$ .$ . Douglas Hutcheson 2004 $ 2003 $ 2002 $ 2004 $ 2003 $ 2002 $ 2004 $ 2003 $ 2002 $ 2004 $ 2003 $ 2002 $ 2004 $ 2003 $ 2002 $ 2004 $ 2003 $ 2002 $ 6.$ 54 $ .507 $ 7.$ . the Effective Date of the Plan of Reorganization.$ .053 - (1) (2) (3) (4) All shares of common stock issued under the Executive Retirement Matching Contribution Plan and all benefits thereunder were cancelled on August 16.$ .500 $ 6. White William M. 2004.000 $ 2. Irving.500 $ 6.500 $ 6.631 35.$ .$ 71. 2004.160 17.$ 466 $ .517 517.388 $ 7. the Effective Date of the Plan of Reorganization. 2004.766 $ .000 $ 5.798 $ 13.198 $ 7.112 421.829 $ 9.Table of Contents Matching 401(k) Contributions Executive Benefits Payments Financial Planning Services Executive Retirement Contributions(1) Deferred Stock Matching(2) Total Other Compensation Name Year S.661 $ 4.$ . Includes payment to Mr. 2002.593 $ 10.07 of the Plan of Reorganization.$ . approved the Leap Wireless 95 .746 $ .500 $ 6. as contemplated by Section 5.887 $ .$ 97 $ .022 $ 4.$ .756(4) Glenn T. Includes $466.$ .$ .159 $ 10.757 $ 22.$ .979 $ 18.493 $ 37.568 95.902 $ 6.$ . the compensation committee of our board of directors.$ . 2004.644 11.$ 4. 2003.386 $ 12.dollar life insurance policy (unrelated to term life insurance coverage).500 $ .511 $ 5.$ .500 $ 6.$ .$ . Following our emergence from bankruptcy.594 in June 2004 pursuant to a severance agreement approved by the Bankruptcy Court on May 13.010 $ 38.000 $ 5.711 $ 9.$ . OPTION GRANTS IN LAST FISCAL YEAR There were no options granted by the Company to any of the named executive officers during the year ended December 31.553 $ .954 27.$ .500 $ 9.$ .$ .500 $ 6.500 $ 6.144 $ 5. Jr. Umetsu Leonard C. warrants and options were cancelled as of August 16.$ .$ . All options to purchase common stock granted to the named executive officers prior to December 31. 2004.130 26. OPTION EXERCISES IN 2004 AND OPTION VALUES AT DECEMBER 31.$ . Such payments were suspended in September 2002.775 13.500 $ 6. Stephens David B.$ .072 $ 6.$ 348 $ 386 $ 10.$ .$ .000 $ 5.577 $ 3.737 $ 2.$ .817 $ 13. White in the amount of $376. Harvey P.

the board of directors may determine to grant to one or more members of the board of directors or to one or more officers the authority to make grants to individuals who are not directors or executive officers.800. and a participant granted a deferred stock unit award generally will have no voting or dividend rights prior to the time when the stock is distributed. director or consultant prior to vesting. 2004. directorship or consultancy (12 months in the event such termination results from death or disability). As appropriate. Unless otherwise provided in the applicable award agreement. will determine the terms and conditions of. provided that incentive stock options must meet the requirements of Section 422 of the Internal Revenue Code of 1986. and to the employees and consultants of our subsidiaries. independent directors and consultants.000. The Administrator may allow non. six months after such termination). The 2004 Plan also provides for the grant of incentive stock options.Table of Contents International. participants generally have all of the rights of a stockholder with respect to restricted stock. the 2004 Plan for awards granted to the Company's independent directors and. with respect to these awards. The Administrator may provide that the stock will be distributed pursuant to a deferred stock unit award on a deferred basis pursuant to a timely irrevocable election by the participant. 96 . The aggregate number of shares of common stock subject to awards under the 2004 Plan will be no more than 4. The 2004 Plan will generally be administered by the compensation committee of the Company's board of directors (the "Administrator"). of stock options. Deferred stock units represent the right to receive shares of stock on a deferred basis. Any dividends or other distributions paid on restricted stock will also be subject to restrictions to the same extent as the underlying stock. (2) the participant's termination of employment or service with the Company (or in the case of any officer who is a "specified employee" as defined in Section 409A(a)(2)(B)(i) of the Code. and interpret and administer. consultants and independent directors. The 2004 Plan provides that an option holder may exercise his or her option for three months following termination of employment. Restricted Stock and Deferred Stock Unit Plan effective December 30.qualified stock options to be transferable to certain permitted transferees (i. Deferred Stock Units. Restricted Stock. The issuance of the stock distributable pursuant to a deferred stock unit award may not occur prior to the earliest of: (1) a date or dates set forth in the applicable award agreement. Restricted stock may be issued for a nominal purchase price and may be subject to vesting over time or upon attainment of performance targets. the term "Administrator" refers to the board of directors. The deferred stock unit award will specify when the stock is to be distributed. an option will terminate immediately in the event of an option holder's termination for cause. however. Stock distributed pursuant to a deferred stock unit award will not be issued before the deferred stock unit award has vested. as amended ("the Code").e. Administration. 2004 Stock Option. for administrative convenience. Inc. The board of directors. which may only be granted to employees. with the consent of the Administrator. Options may be granted with terms determined by the Administrator.qualified stock options to employees. The exercise price for stock options granted under the 2004 Plan will be set by the Administrator and may not be less than par value (except for incentive stock options and stock options granted to independent directors which must have an exercise price not less than fair market value on the date of grant). In addition. Options granted under the 2004 Plan will generally have a term of 10 years. With respect to options granted to employees. pursuant to qualified domestic relations orders. The 2004 Plan authorizes discretionary grants to our employees. Awards Generally Not Transferable. Stock Options. except. as described below. Award agreements related to restricted stock may provide that restricted stock is subject to repurchase by the Company in the event that the participant ceases to be an employee. Awards under the 2004 Plan are generally not transferable during the award holder's lifetime. The 2004 Plan provides for discretionary grants of non. restricted stock and deferred stock units. (3) an unforeseeable financial emergency affecting the participant. immediate family members for estate planning purposes). Stock distributed pursuant to deferred stock units may be issued for a nominal purchase price and deferred stock units may be subject to vesting over time or upon attainment of performance targets. or (4) a change in control.. Under no circumstances may the time or schedule of distribution of stock pursuant to a deferred stock unit award be accelerated. administration of the 2004 Plan may be revested in the board of directors.

as chairman of the Compensation Committee. See "Compensation of Directors" and "Awards to Executives under the 2004 Plan" below regarding recent awards under the 2004 Plan.third on January 1. as defined in the 2004 Plan).041. Michael Targoff non.third on January 1. without prior stockholder approval. Employee Savings and Retirement Plan Our 401(k) plan allows eligible employees to contribute up to 30% of their salary. in each case in recognition of their service on our board of directors without compensation since our emergence from bankruptcy on August 16. 2003 and 2002. and $1. 2005. 2005.900 shares of our common stock. Rachesky. reduce the exercise price per share of the shares subject to any outstanding option.qualified stock options to purchase 21. Amendment and Termination. in recognition of their current service on the board of directors. Targoff. regulation or rule. In connection with their appointment as directors of the Company on March 11. transaction or event. In addition. $1. non. was granted non. Each of these option awards vests one. John Harkey and Robert LaPenta non.043. 2004. one. 2005. the board of directors granted to Dr. Term of the 2004 Plan.third on January 1.632. termination. In the event of certain changes in the capitalization of the Company or certain corporate transactions involving the Company and certain other events (including a change in control.qualified stock options to purchase 7. We match a portion of the employee contributions and may. the board granted each of Messrs.qualified stock options to purchase 18. as Chairman of the Board. 2007 and one. 2005 and March 14. amend the 2004 Plan so as to increase the number of shares of stock that may be issued under the 2004 Plan.third on January 1.qualified stock options to purchase 5. or amend the 2004 Plan in any manner which would require stockholder approval to comply with any applicable law. The board of directors may also modify the 2004 Plan from time to time. Each of these option awards vests one. Mark Rachesky and Mr. James Dondero non. The board of directors may terminate the 2004 Plan at any time with respect to any shares not then subject to an award under the 2004 Plan. except that the board of directors may not. and granted to each of Dr. was granted non. Dondero.000. The exercise price for each of these stock options is $26. 2004. 2006 and one. Compensation of Directors On March 11.qualified stock options to purchase an additional 2. as chairman of the Audit Committee. Dondero and Targoff non. at our discretion. on March 11. cash. which option awards 97 .qualified stock options to purchase 7. were $1. The exercise price for each of these stock options is $26.third on January 1.out.000.51 per share. 2008.Table of Contents Changes in Control and Corporate Transactions.51 per share. make additional contributions based upon earnings. one. unless our board of directors terminates the 2004 Plan at an earlier date.300 shares of our common stock and granted to each of Messrs. substitution or conversion of such awards.500 shares of our common stock.000 shares of our common stock. a period of significant development for the Company and its business. the board of directors granted to Mr.000 shares of our common stock and Mr. respectively.000.500 shares our common stock. respectively. Mr. and additional non.qualified stock options to purchase an additional 1. The Company will give award holders 20 days' prior written notice of certain changes in control or other corporate transactions or events (or such lesser notice as the Administrator determines is appropriate or administratively practicable under the circumstances) and of any actions the Administrator intends to take with respect to outstanding awards in connection with such change in control. 2007. assumption. Award holders will also have an opportunity to exercise any vested awards prior to the consummation of such changes in control or other corporate transactions or events (and such exercise may be conditioned on the closing of such transactions or events).000 shares of our common stock. which option awards vested fully on the award date. the Administrator will make appropriate adjustments to awards under the 2004 Plan and is authorized to provide for the acceleration. 2006. The 2004 Plan will be in effect until December 2014.qualified stock options to purchase 30.third on the award date. Our contribution expenses for the years ended December 31. subject to annual limits.200 shares of our common stock.

Hutcheson will receive the final installment of his 2008 annual performance bonus without regard to whether he is employed by Cricket on the date such final installments are paid to senior executives of Cricket. Mr. Hutcheson will receive an annual base salary of $350. disability. 2005. 2008. The amount of any annual performance bonus will be determined in accordance with Cricket's prevailing annual performance bonus practices that are used to determine annual performance bonuses for the senior executives of Cricket generally. This description of the Resignation Agreement with Mr. and an opportunity to earn an annual performance bonus. one. Leap also reimburses directors for reasonable and necessary expenses. 2006. Special exercise and termination rules apply if the option. In addition. and will automatically vest in full upon a change of control of the Company. Rachesky and Messrs. Under the Resignation Agreement. Mr. 2005. effective as of February 25.holder ceases to be a non.Table of Contents vest one. The option awards will vest according to the schedules described above.employee director of the Company. 2005. Each of the option awards to non.third on January 1. Hutcheson. Mr. Hutcheson's term of employment under the Amended and Restated Executive Employment Agreement expires on December 31. among Mr. Mr. Douglas Hutcheson Effective as of February 25. Freeman as of May 24. Douglas Hutcheson in connection with Mr. Freeman received a severance payment of $1. as amended. Under the Amended and Restated Executive Employment Agreement. None of these directors or former directors has at any time been an officer or employee of Leap or any of its subsidiaries. subject to adjustment pursuant to periodic reviews by Leap's Board of Directors. Freeman resigned as the chief executive officer and as a director of Leap. or cause (as defined in the 2004 Plan). the Amended and Restated Executive Employment Agreement also specifies that Mr. The Amended and Restated Executive Employment Agreement amends. This Resignation Agreement superseded the Executive Employment Agreement entered into by Cricket and Mr.holder continues to serve as a non. Freeman. Harkey and $26. Mr. Cricket and Leap. Freeman is qualified in its entirety by reference to the full text of the Resignation Agreement. Hutcheson is entitled to participate in all insurance and benefit plans generally available to Cricket's executive officers.third on January 1. then Mr. 2004. Freeman On February 24. under which Mr. The exercise price for these option awards is $26. Hutcheson's appointment as chief executive officer of Cricket and Leap. Cricket and Leap entered into an Amended and Restated Executive Employment Agreement with S.000. unless extended by mutual agreement. 2008. Employment Agreements Resignation Agreement with William M.employee directors described above has a term of ten years. Cricket and their domestic subsidiaries. Hutcheson is employed by Cricket on December 31.holder's relationship with the Company is terminated as a result of death.45 for Mr. LaPenta. Mr. provided that the relevant option. restates and supersedes the Executive Employment Agreement dated January 10. 2005. Dondero and Targoff. Former directors Robert Dynes and Thomas Page also served on the Compensation Committee during 2004. Amended and Restated Executive Employment Agreement with S. Freeman also relinquished all rights to any stock options.third on January 1. In the event Mr. 2007 and one.000. as defined in the 2004 Plan. Compensation Committee Interlocks and Insider Participation The current members of Leap's Compensation Committee are Dr. including their travel expenses incurred in connection with attendance at board and board committee meetings. Freeman has executed a general release as a condition to his receipt of the severance payment. restricted stock and deferred stock unit awards from Leap. 2008. Mr.000.51 per share for Mr. a copy of which is filed as an exhibit to this report. Hutcheson's annual target performance bonus will be 80% of his base salary. Hutcheson is also to receive a success 98 . Cricket and Leap entered into a Resignation Agreement with William M.employee director. provided that the options terminate 90 days after the option.

Hutcheson's employment is terminated by reason of his discharge without cause or his resignation for good reason. to a strategic investor. Mr.55 per share under the 2004 Plan. Hutcheson's agreement to provide consulting services to Cricket or Leap for up to three days per month for up to a one. which conditional grant is not effective until such filing takes place. This gross.4 and A.month period). such payment is conditioned on Mr. Hutcheson non.up payment. as the case may be. If Mr. he will be entitled only to his accrued base salary through the date of termination. Hutcheson's employment is terminated as a result of his death or disability.current base salary for a period of nine months.0001 per share. The forms of award agreements for these awards are attached as Attachments A.000 and.000. if Mr. A. and (4) if he elects continuation health coverage under COBRA. Hutcheson's employment was terminated by reason of his resignation for good reason.year period for a fee of $1. Hutcheson also received a conditional grant of restricted stock awards to purchase 9. state and local income and employment taxes payable by him with respect to the gross. a lump sum payment in an amount equal to the excess (if any) of his 2005 target performance bonus over any portion of his 2005 performance bonus already paid to him. in each case within one year of a change in control. subject to the filing by Leap of a Registration Statement on Form S.0001 per share. subject to the filing by Leap of a Registration Statement on Form S. or shares of stock of Leap or Cricket having 50% or more of the voting rights of the total outstanding stock of Leap or Cricket.Table of Contents bonus payment of $150.qualified stock options to purchase 75. A.1. if Mr. Cricket will pay to Mr.500 per day. Hutcheson is still employed by Cricket on such date) and the date on which Mr. as applicable. Also effective January 5. Hutcheson a stay bonus in a lump sum payment equal to his then.000 on the earlier to occur of September 30. and which conditional grants are not effective until such filing takes place. Effective January 5. then if Mr. the Compensation Committee granted Mr. and he is subject to excise tax pursuant to Section 4999 of the Internal Revenue Code as a result of any payments to him. Hutcheson's employment is terminated as a result of his discharge by Cricket without cause or if he resigns with good reason. 2005 (provided Mr. the Compensation Committee conditionally granted Mr.000 shares of Leap's common stock at $. A. then Cricket will pay him a "gross.35 per share. he will be entitled to receive (1) a lump sum payment equal to his then. and his pro rata share of his target performance bonus for the year in which his death or termination occurs. Hutcheson ceases to be employed by Cricket (other than as a result of a termination for cause).up payment" equal to the sum of the excise tax and all federal. 2005. 2005.000 shares of Leap's common stock at $.0001 per share and deferred stock unit awards to purchase 30. 2005.3. (2) continued payment of his then. commencing nine months following his date of termination (which amounts will be reduced by any amounts received by Mr.8 with respect to the 2004 Plan.5 to his Amended and Restated Executive Employment 99 . during the term of the Amended and Restated Executive Employment Agreement. Mr. Cricket will pay the premiums for such continuation health coverage for a period of 18 months (or. as applicable. on February 24. Under the terms of the Amended and Restated Executive Employment Agreement. all or substantially all of Cricket's assets. he will be entitled only to his accrued base salary through the date of death or termination. if earlier. The agreement also provides that if Mr. Hutcheson from employment with a subsequent employer or for services as an independent contractor during such nine. Mr.8 with respect to the 2004 Plan.901 shares of Leap's common stock at $26. If. Hutcheson continues his employment with Cricket or its successor for two months following the closing of such sale. Hutcheson will be required to execute a general release as a condition to his receipt of any of these severance benefits.current monthly base salary for a period of nine months.487 shares of Leap's common stock at $. Hutcheson was granted additional non. until he is eligible for comparable coverage with a subsequent employer). If Mr. Hutcheson restricted stock awards to purchase 90. (3) if such termination or resignation occurs on or prior to December 31.106 shares of Leap's common stock at $26.up payment will not exceed $1.qualified stock options to purchase 85. 2005. Under the Amended and Restated Executive Employment Agreement. are sold with the approval of or pursuant to the active solicitation of the Board of Directors of Leap or Cricket. Hutcheson's employment is terminated as a result of his discharge by Cricket for cause or if he resigns without good reason.2.current monthly base salary for a period of 18 months.

Hutcheson's employment is terminated by reason of discharge by Cricket other than for cause. The material terms of such awards are described in Leap's Current Report on Form 8. and the continuation of certain benefits for nine months. If. In addition. Hutcheson is qualified in its entirety by reference to the full text of the Amended and Restated Executive Employment Agreement. The Bankruptcy Court approved the new severance agreements on May 13. 2008. The description of the Amended and Restated Executive Employment Agreement with Mr. and shall vest in their entirety on December 31. willful commission of acts of fraud or dishonesty. Hutcheson agrees to provide consulting services to Cricket or Leap for up to five days per month for up to a oneyear period for a fee of $1. which is filed as an exhibit to this report. For purposes of the severance agreements. "cause" means: willful and continued failure to substantially perform job duties and follow and comply with lawful directives of the Board. or (2) such remaining unvested shares subject to his stock options and restricted stock awards will vest and/or become exercisable on the third anniversary of the date of grant (for the January 5. or if he resigns for good reason. if Mr. 2003 and ending on August 16.K filed with the Securities and Exchange Commission on January 11. position. "Good reason" includes: the diminution of the responsibility. Hutcheson will be required to execute a general release as a condition to his receipt of the foregoing accelerated vesting. after February 28. Hutcheson is an employee. Hutcheson on February 24. except that the additional stock options and restricted stock awards granted to Mr.year period. 2008 (for the February 24.500 per day. Cricket's breach of the severance agreement. during the period commencing on May 13. In consideration of any benefits provided under these agreements. salary or aggregate benefits of the executive officer. 2003.Table of Contents Agreement. 2006 and 2007 (in each case in approximately March of the following year). the executive officer is terminated by Cricket other than for cause or if the executive officer resigns for good reason. the executive officer will release Leap and Cricket from their existing claims and agree not to solicit the employees of Cricket for a period of three years. and the prior severance agreements between Leap and its officers were terminated. director or consultant of Leap or Cricket on such date. a copy of which is filed as an exhibit to this report. 2005 awards). Mr. 2005 (the first anniversary of the Effective Date of the Plan of Reorganization for Cricket under Chapter 11 of the Bankruptcy Code). Severance Agreements Leap and Cricket entered into new severance agreements with each of their executive officers to ensure that they would have the continued attention and dedication of their executive officers during the bankruptcy filing by Leap and Cricket. 2005. which is incorporated herein by reference. or willful engagement in illegal conduct or gross misconduct that is materially damaging to Cricket. 100 . 2005 awards) and on December 31. any remaining unvested shares subject to his stock options and restricted stock awards will vest and/or become exercisable on the last day of such one. the executive officer is entitled to: 75% of the executive officer's annual base salary. or the involuntary relocation of the executive officer. 2005 will vest with respect to up to 30% of the shares subject to such stock options and restricted stock awards upon Leap's achievement of certain EBITDA and net customer addition targets for each of fiscal years 2005. in each case if Mr. 2006 (1) if Mr.

30. Senior Vice President. Stephens.520 shares.8 with respect to the 2004 Plan and are not effective until such filing takes place. 27. as to an additional number of shares equal to 50% of the then unvested shares subject to such stock option or restricted stock award. Stephens. Davis. and the restricted stock awards described above vest on February 28. Hutcheson. 2008. Change in Control Vesting of Stock Options and Restricted Stock. which grants are conditioned on the filing of a Registration Statement on Form S. Stephens.000. Irving. as to an additional number of shares equal to 50% of the then unvested shares subject to such stock option or restricted stock award. Senior Vice President. Vesting.750 shares. and Leonard C. Human Resources $87. 76.8 shortly after filing this report. 23. 24. Irving.Summary Compensation Table.500. 85. an executive officer will be entitled to accelerated vesting and/or exercisability in the event of a change in control only if he is an employee. In addition. 23.750 shares. unless such cessation of employment occurs as a result of a termination for cause. there will be no further additional performance.560 shares.Table of Contents Emergence Bonus Agreements Effective as of February 17. Mr.250 shares.750 shares. in each case subject to accelerated vesting in increments ranging from a minimum of 10% to a maximum of 30% of the applicable award per year if the Company meets certain performance targets in 2005 and 2006 based on adjusted EBITDA and net customer additions. Executive Compensation. Executive Vice President and Chief Technical Officer $125. 29. 161. Leap entered into Emergence Bonus Agreements with four senior executive officers in connection with the emergence bonuses such officers were awarded in 2004 (See Item 11.007 shares. Robert J. each stock option and restricted stock award will automatically accelerate and become exercisable and/or vested (1) immediately prior to the change in control.487 shares.404 shares. Hutcheson. but the shares of common stock distributable pursuant to the deferred stock unit awards will not be distributed until the earliest of: (1) August 15. The deferred stock units are fully vested. Following the date of a change in control. General Counsel and Secretary $87. Mr. Operations $87.404 shares.250 shares.500. Mr. Shares of restricted stock were granted in the following amounts: Mr. Hutcheson. Umetsu. or (3) the date immediately prior to a change in control. our board of directors and our Compensation Committee (again with the approval of the board) have granted restricted stock awards and deferred stock unit awards to the executive officers of Leap. director or consultant on the effective date of such accelerated vesting and/or exercisability. Change in Control prior to January 1. We expect to file this Registration Statement on Form S. Davis. Davis. Mr. Mr. Our board of directors and our Compensation Committee (with the approval of the board) have granted non. Except as otherwise described below. The portions of the 2004 emergence bonus covered by the respective Emergence Bonus Agreements are: Glenn T.500. Umetsu. Davis.) The agreements provided that a portion of the emergence bonuses awarded in 2004 would not be paid to the executives until the earlier of September 30.qualified stock options to the executive officers of Leap. The stock options and restricted stock awards listed above will also become exercisable and/or vested on an accelerated basis in connection with certain changes in control. Irving.Note 3.106 shares. 2006. 9. and Mr. 2005. 25. 8. Jr. (2) on the first anniversary of the occurrence date of the change in control. Suspension of Performance. Irving. and (3) on the second anniversary of 101 . 8. David B. 2005. The stock options described above become exercisable on the third anniversary of the date of grant. In the event of a change in control prior to January 1.000 shares.250 shares. Mr. and Mr. 2006.Based Vesting.based vesting and/or exercisability applicable to stock options and restricted stock awards based on our adjusted EBITDA and net customer addition performance. Mr. Senior Vice President. and Mr. 99. Stephens. 24. Mr. Awards to Executives under the 2004 Plan Awards. 2005 or the date on which such executives cease to be employed by Cricket. Mr..660 shares. (2) the executive officer's termination of employment or service with the Company. Deferred stock unit awards were made with respect to the following shares: Mr. Umetsu. Options for the following number of shares of our common stock were granted: Mr. Umetsu.

2007. 2006. Change in Control on or after January 1. each stock option and restricted stock award will automatically accelerate and become exercisable and/or vested (1) immediately prior to the change in control. Information with respect to beneficial ownership has been furnished by each director. 2005. Beneficial ownership is determined in accordance with the rules of the SEC. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table contains information about the beneficial ownership of our common stock for: each stockholder known by us to beneficially own more than 5% of our common stock. as to 25% of the then unvested shares subject to such stock option or restricted stock award. and (2) on the first anniversary of the occurrence date of the change in control. as to any remaining unvested shares subject to such stock option or restricted stock award. Discharge Without Cause or Resignation for Good Reason in the Event of a Change in Control. as to any remaining unvested shares subject to such stock option or restricted stock award. In the event an employee has a termination of employment by reason of discharge by the Company other than for cause. 2005 are deemed 102 . during the period commencing 90 days prior to a change in control and ending 12 months after such change in control. the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Item 12. if later. each of our named executive officers. Change in Control during 2006. In the event of a change in control on or after January 1. beneficial owner of more than 5% of our common stock or selling stockholder and by Schedules 13D and 13G.000 shares of common stock outstanding on May 11. In the event of a change in control during 2006. copies of which are filed as exhibits to this report. to our knowledge. immediately prior to the change in control.Table of Contents the occurrence date of the change in control. This description of the awards under the 2004 Plan is qualified in its entirety by reference to the full text of the 2004 Plan and the various award agreements. as to an additional number of shares equal to 85% of the then unvested shares subject to such stock option or restricted stock award. as to any remaining unvested shares subject to such stock option or restricted stock award. officer. In computing the number of shares beneficially owned by a person and the percentage ownership of that person. and (2) on the first anniversary of the occurrence date of the change in control. Such acceleration will occur upon termination of employment or. 2007. and all directors and executive officers as a group. shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after May 11. The terms "cause" and "good reason" are defined in the applicable award agreements. each stock option and restricted stock award will automatically accelerate and become exercisable and/or vested (1) immediately prior to the change in control. 2006. as to an additional number of shares equal to 75% of the then unvested shares subject to such stock option or restricted stock award. filed with the SEC. or (2) if the change in control occurs on or after January 1. each of our directors. each stock option and restricted stock award will automatically accelerate and become exercisable and/or vested (1) if the change in control occurs prior to January 1. as to any remaining unvested shares subject to such stock option or restricted stock award.000. Except as indicated by footnote and subject to community property laws where applicable. The percentage of ownership indicated in the following table is based on 60. or as a result of the executive officer's resignation for good reason.

Ltd. while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person.D. and (i) 1. Beneficial Ownership(1) Number of Shares Percent of Total 5% Stockholders.232.1 5.665. Bishop Square Redmonds Hill.428 3.746 11.415. ("Crusader").407.3 9.309. Harvey P.C. (e) 194. (f) 552.442.342 shares of common stock held by Highland Loan Funding V.763. Mr. and each disclaims beneficial ownership of these shares of common stock except to the extent of their pecuniary interest therein. (h) 951. San Diego.P.C.378 8. L.708 shares of common stock held by Highland Equity Focus Fund. Freeman All executive officers and directors as a group (14 persons) 4. ("Harbert Distressed"). Umetsu Leonard C. Falcone. its managing member ("HMC Investors"). Consists of (a) 76.(5) James D.. ("HLF").Table of Contents outstanding.1 9. Harbert and Mr. ("Focus"). (2) The address for this entity is c/o International Fund Services. M. L. Harbert.. Irving. ("PAM Capital"). Officers and Directors Entities affiliated with Harbert Distressed Investment Master Fund.000 5.923 7. Ltd. (1) Unless otherwise indicated. ("HMC Manager").525 5. L. Jr. HMC Investors. HMC Investors.(2) Entities affiliated with Highland Capital Management. 10307 Pacific Center Court. HMC Manager.106 5. 103 (3) . LaPenta(8) Michael B. Mr. a member of HMC Investors and Michael D.000 10 0 0 0 61 0 0 17. the address for each person or entity named below is c/o Leap Wireless International. L. Birmingham. Limited ("Legacy").P. Targoff(8) S. (d) 190.794 shares of common stock held by Highland Crusader Offshore Partners.446 3. Stephens David B. Harkey. White William M. Luce is One Riverchase Parkway South.504 shares of common stock held by PAM Capital Funding. (b) 76. (c) 2. Mr.L. In such capacities.(7)(8) John D.L. These shares of common stock may be deemed to be beneficially owned by HMC Distressed Investment Offshore Manager.928 shares of common stock held by ML CBO IV (Cayman).6 * * * * * * * * * * 28.(8) Robert V. Luce. Luce exercise shared voting and dispositive power with respect to these shares of common stock.137 shares of common stock held by Highland Floating Rate Limited Liability Company ("Highland LLC").(3) MHR Institutional Advisors II LLC(4) MHR Institutional Partners IIA LP(4) Entities affiliated with Third Point Management Company L.449. Falcone is 555 Madison Avenue. L. L. The address for HMC Investors.137 shares of common stock held by Highland Floating Rate Advantage Fund ("Highland Advantage"). Rachesky.148 shares of common stock held by Highland Legacy. Inc.038. The address for HMC Manager and Mr. Davis Robert J.1 19.340. a member of HMC Investors.7 * Represents beneficial ownership of less than 1.P. Ltd. the investment manager of Harbert Distressed Investment Master Fund. Third Floor.6 14.0 6. Alabama 35244.615 5. Dondero(6)(8) Mark H. (g) 52.C.P.P.000 10. Jr. ("ML CBO"). a member of HMC Manager and the portfolio manager of Harbert Distressed and Raymond J.748 shares of common stock held in accounts for which Highland Capital Management. Douglas Hutcheson Glenn T. New York New York 10022. L.L. Dublin Ireland L2. Harbert and Mr. Ltd.0% of the outstanding shares of common stock. California 92121. Philip Falcone. 16th Floor.

New York. Rachesky is the managing member of Institutional Advisors II and as such. New York 10019. (5) (6) (7) (8) Includes shares issuable upon exercise of options. Highland Advantage and Highland LLC. Rachesky. ("Strand") is the general partner of HCMLP. Rachesky is 40 West 57th Street. we entered into a settlement agreement with MCG and other entities to settle various disputes. The address for Mr. 24th Floor. 7. On January 30. he may be deemed to be a beneficial owner of these shares. Dallas. a Delaware limited partnership ("Institutional Partners IIA"). Dondero disclaims beneficial ownership of the shares of common stock held by these entities. Consists of the shares in footnote 4 above. he may be deemed to be an indirect beneficial owner of these shares. MHR Institutional Partners IIA LP (these entities are 104 .8% of our issued and outstanding stock in August 2002. Cricket paid $750.000 shares of Leap common stock. The address for HLF.000). HCMLP and Mr. LaPenta.Table of Contents ("HCMLP") has investment discretion. Dondero is a director and the President of Strand. Dallas. except to the extent of their pecuniary interest therein.000 shares.000 shares.378 shares of common stock held for the account of MHR Institutional Partners II LP. Consists of the shares in footnote 3 above. $0. Loeb is the managing member of Third Point Management Company L. Queensgate House. as follows: (a) exercisable as of March 11. HCMLP serves as collateral manager for HLF.83 per share. ML CBO. Mr.O. MCG dismissed its appeal of the Bankruptcy Court's confirmation order of Leap's Plan of Reorganization. may be deemed to be an indirect beneficial owner.0001 par value per share. except to the extent of his pecuniary interest therein. Certain Relationships and Related Transactions Transactions with MCG PCS. Dr. and PAM Capital. Dondero is Two Galleria Tower. Other Transactions In August 2004. Pursuant to certain management agreements. The address for this entity is 40 West 57th Street. The address for Mr. ("Third Point") and as such.L. 2005: Mr. Pursuant to an arbitration award. and Mr. 5. Focus.000 to MCG. Dondero. Mr. 7.issuance provisions.340. Mr. Suite 1300. at an exercise price of $16. Loeb and Third Point is 360 Madison Avenue. Dondero also serves as a director of the Company. New York.000 shares.C.300 shares. Highland LLC. HCMLP is the investment manager for Focus. On August 16. Legacy. George Town. 10. South Church Street. pursuant to the settlement agreement. MCG was issued approximately 35. Strand and Mr. and Leap issued to MCG PCS. Item 13. Box 1093 GT. The warrants to purchase Leap common stock were issued without registration under the Securities Act of 1933 in reliance on the provisions of Section 4(2) of the Securities Act of 1933.300 shares. 2005: Mr. 2009. Dondero expressly disclaim beneficial ownership of the securities described above. Harkey. ML CBO. Pursuant to this settlement agreement. Inc. Texas 75240. The warrants expire on March 23.415. 2004.dilution and net. 24th Floor. warrants to purchase 600. Highland Advantage. Cayman Islands. Legacy. (4) Consists of (a) 3. Mr. Grand Cayman. 5. and contain customary anti. and PAM Capital is P.428 shares of common stock held for the account of MHR Institutional Partners IIA LP. Mr. The address for Strand. MHR Institutional Advisors II LLC ("Institutional Advisors") is the general partner of Institutional Partners II and Institutional Partners IIA. Dondero is Two Galleria Tower. 13455 Noel Road. Dr. and (b) exercisable as of March 14. including MHR Institutional Partners II LP. Daniel S. New York New York 10017. Dr. Suite 1300. 2004. Dondero is the President and a director of Strand and as such. Texas 75240. New York 10019. Inc. 24th Floor. as well as the general partner of Crusader. Targoff. we entered into a registration rights agreement with certain holders of our common stock. 13455 Noel Road. Strand Advisors. we agreed to pay a portion of MCG's attorneys' fees and expenses incurred in connection with the cases brought against us (subject to a maximum of $750. Inc. Rachesky disclaims beneficial ownership of the shares of common stock held by these entities. a Delaware limited partnership ("Institutional Partners II") and (b) 8. In such capacity. Institutional Advisors may be deemed to be the beneficial owner of these shares of common stock. Crusader. HCMLP. The address for Dr.

105 (2) (3) .related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements and are not reported under "Audit Fees.related fees(2) Tax fees(3) All other fees(4) Total $ 1. whereby we granted them registration rights with respect to the shares of common stock issued to them on the Effective Date.925 $ 803 118 393 149 1. These services included assistance regarding federal. acquisitions and international tax planning. L. tax advice and tax planning (domestic and international). a director of Leap) participated in the syndication of our new Credit Agreement in the following amounts: $100 million of the $500 million term loan and $30 million of the $110 million revolving credit facility. LLP ("PwC")." For the year ending December 31. consultations on accounting for bankruptcy and other accounting matters. and the employee benefit plan audits. We have entered into indemnification agreements with each of our executive officers and directors. Pursuant to this registration rights agreement. We are also required to effect a "shelf" registration statement pursuant to which these holders may sell their shares of common stock on a delayed or continuous basis. Principal Accounting Fees and Services The following table summarizes the aggregate fees billed to the Company by its independent auditors. and they are obligated to indemnify us for material misstatements or omissions attributable to them. Rachesky. pursuant to which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions in a registration statement that are attributable to us. 2004 and 2003 (in thousands): 2004 2003 Audit fees(1) Audit. Affiliates of Highland Capital Management. L. state and international tax compliance. M. this category included fees related to the preparation of an employment and fee application related to providing ongoing services while the Company operated in bankruptcy. settlement or payment of a judgment in some circumstances. one of our directors) and Highland Capital Management. 2003. we are required to register for sale shares of common stock held by these holders upon demand of a holder of a minimum of 15% of our common stock on the Effective Date of the Plan of Reorganization or when we register for sale to the public shares of our common stock. Dondero.Table of Contents affiliated with Mark H. we have purchased a policy of directors' and officers' liability insurance that insures our directors and officers against the cost of defense. 2004. this category included consultations on accounting for bankruptcy and other accounting matters and the employee benefit plan audits. PricewaterhouseCoopers. we are obligated to pay all the expenses of registration.463 $ $ (1) Audit fees consist of fees billed for professional services rendered for the audit of the Company's consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by PwC in connection with statutory and regulatory filings or engagements. other than underwriting fees.D. The registration rights agreement contains crossindemnification provisions.589 47 245 44 1.P. Tax fees consist of fees billed for professional services rendered for tax compliance. discounts and commissions. one of our directors).P. Dondero. In the event that we register shares of common stock held by these entities. Item 14. For the year ending December 31. Those indemnification agreements require us to indemnify these individuals to the fullest extent permitted by Delaware law. for the years ended December 31.. (a beneficial shareholder of Leap and an affiliate of James D. Audit. In addition. (this entity is affiliated with James D.

In 2004. the Audit Committee determined that such services are compatible with the provision of independent audit services. this category included fees related to summarizing billable hours and audit fees for bankruptcy fee applications.approved in accordance with these procedures. During 2004 all services were pre.force related cost structure and organization.Table of Contents (4) All other fees consist of fees for products and services other than the services reported above. In considering the nature of the services provided by PwC. The Audit Committee discussed these services with PwC and Company management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes. this category included fees related to the Company's participation in a benchmarking study on the Company's work. as well as the Public Company Accounting Oversight Board. 106 .Oxley Act of 2002. In 2003. The Audit Committee requires that all services performed by PwC are pre.approved prior to the services being performed.

Form of Common Stock Certificate.1(7) Fifth Amended Joint Plan of Reorganization dated as of July 30. Inc. by and between Cricket Communications.Table of Contents PART IV Item 15. and its directors and officers. the seven months ended July 31. 2004 and the years ended December 31. MHR Institutional Partners II LP. 2004 and 2003 Consolidated Statements of Operations for the five months ended December 31. Documents filed as part of this report: 1. 107 . Registration Rights Agreement dated as of August 16. as modified to reflect all technical amendments subsequently approved by the Bankruptcy Court.2(2) 2. effective as of November 28. 2004 Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at December 31. the seven months ended July 31. 2003.1(5)# 10. 2003 and 2002 Consolidated Statements of Stockholders' Equity (Deficit) for the five months ended December 31. Inc. 2004. Form of Indemnity Agreement to be entered into by and between Leap Wireless International. Exhibits and Financial Statement Schedules (a) Financial Statements and Financial Statement Schedules. 2003. 2004 and the years ended December 31.2. 2003 and 2002 Consolidated Statements of Cash Flows for the five months ended December 31. L. Inc. Inc. 2004 and the years ended December 31. 2004. Financial Statement Schedules: All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. 1999. Amendment #1 to System Equipment Purchase Agreement.1(4) 3. 2004. 2000. effective as of September 20. (b) Exhibits EXHIBIT INDEX Exhibit Number Description 2.2(4) 10. 2003 and 2002 Notes to the Consolidated Financial Statements 2.2(6) 10. Order Confirming Debtors' Fifth Amended Joint Plan of Reorganization dated as of July 30. System Equipment Purchase Agreement. Amended and Restated Certificate of Incorporation of Leap Wireless International. 2004.P. and Ericsson Wireless Communications Inc. the seven months ended July 31. MHR Institutional Partners IIA LP and Highland Capital Management. 2003. Disclosure Statement Accompanying Fifth Amended Joint Plan of Reorganization dated as of July 30. by and between Cricket Communications.1(1) 2. Amended and Restated Bylaws of Leap Wireless International. (including exhibits thereto). and Ericsson Wireless Communications Inc.3(3) 3.1* 4. (including exhibits thereto). Financial Statements: The financial statements of Leap listed below are set forth in Item 8 of this report for the year ended December 31. Inc.2(4) 4. by and among Leap Wireless International Inc..

by and among Leap Wireless International.. Inc.2(7) Description Form of Amendment to System Equipment Purchase Agreement.. Schedule to Form of Amendment to System Equipment Purchase Agreement. Amendment No.3. (including exhibits thereto). Inc. 2003.6(10) 10. 10. and Ericsson Wireless Communications Inc.. Inc. 2 to Amended and Restated System Equipment Purchase Agreement. and Ericsson Wireless Communications Inc. 7 to the Amended and Restated System Equipment Purchase Agreement by and between Cricket Communications.2. Inc. and Cricket Communications.2.2. Amendment #11 to System Equipment Purchase Agreement. Amendment No. and Lucent Technologies Inc. 5 to the Amended and Restated System Equipment Purchase Agreement by and between Cricket Communications.5(9) 10.3(8) 10. by and between Cricket Communications. Inc. Amendment No. Inc. Amended and Restated Settlement Agreement. Inc. Inc. Amendment #6 to System Equipment Purchase Agreement.3. Inc. Inc..6(13) 10. (including exhibits thereto). 2002. and Lucent Technologies Inc. effective March 22. 2004. 1 to Amended and Restated System Equipment Purchase Agreement. Inc. 4 to Amended and Restated System Equipment Purchase Agreement by and between Cricket Communications. 2002. Amendment No.. Inc. entered into as of September 29. Inc.4. Inc. Amendment No.. and Lucent Technologies Inc.3.2(20) 108 . 2002. and Lucent Technologies Inc. Inc. effective as of December 22.4(8) 10. by and between Cricket Communications. Inc. executed as of September 23. 2004. Inc. Cricket and Holdings and which are listed on Exhibit "A" thereto.2(11) 10. and Ericsson Wireless Communications Inc.Table of Contents Exhibit Number 10. entered into as of March 22.. and Nortel Networks Inc.2. 2004. 2002. Amendment No.3(12) 10. (including exhibits thereto). and Nortel Networks Inc.7(20) 10.3.4(14) 10.3. and Cricket Communications Holdings. Cricket Performance 3. Amendment No. entered into as of March 22. 1 to the Amended and Restated System Equipment Purchase Agreement by and between Lucent Technologies Inc. by and between Cricket Communications. (including exhibits thereto). 2003. by and between Cricket Communications.5(9) 10. by and between Cricket Communications. Amendment No. 3 to Amended and Restated System Equipment Purchase Agreement by and between Cricket Communications. and Nortel Networks Inc. effective as of January 1. 2 to the Amended and Restated System Equipment Purchase Agreement by and between Lucent Technologies Inc. Cricket Communications. and Lucent Technologies Inc. and Lucent Technologies Inc.. 6 to the Amended and Restated System Equipment Purchase Agreement by and between Cricket Communications.3.4(12) 10.1(11) 10. effective as of February 5. entered into as of June 30. effective as of December 23. on behalf of themselves and certain other related debtors and debtors in possession whose cases are being jointly administered with the bankruptcy cases of Leap Wireless International. Inc.3(6) 10. by and between Cricket Communications. effective as of February 4. and Ericsson Wireless Communications Inc. Amendment No. Amended and Restated System Equipment Purchase Agreement... effective as of February 7. by and between Cricket Communications.1(14) 10. 2005.2. 2003. effective March 22.3. Inc. and Cricket Communications. 2002. effective as of May 12.4. 2001. 2000. Amended and Restated System Equipment Purchase Agreement.

2(17)# 10. LLC.5. among Cricket Communications. Umetsu. Freeman. 2004. and David B. by and between Cricket Communications. 10.Employee Director Stock Option Grant Notice and Non. Inc. Inc.14.3(18) 10. Form of Non. and S.7*# 10. Indemnity Agreement.1* 10. dated October 26. between Leap Wireless International. Inc. 2005. as collateral agent. and Manford Leonard.9(16)# 10. 2004. between Cricket Communications.14. Inc.. Severance Benefits Agreement. between Leap Wireless International. 2005.. Leap Wireless International. Inc. Credit Agreement. between Leap Wireless International. dated February 17.16. Cricket Communications.15* 10.14. 2003. Cricket Communications.. and Albin F. Resignation Agreement by and among Leap Wireless International.3* 10.1(17)# 10. Inc. Inc. Inc. 2005.. by and among Cricket Communications. Security Agreement. Inc.Table of Contents Exhibit Number 10. Amendment. and certain officers of Leap and Cricket. dated February 17.16.. 2005.A.1*# 10. 2005. Leap Wireless International.Qualified Stock Option Agreement. Inc. and Leonard C. Form of Stock Option Grant Notice and Non. Subsidiary Guaranty. dated as of January 10. 2004. dated May 27. 2005. Emergence Bonus Agreement. Inc. 2004.. dated January 10. dated February 17.13*# 10. 2005. Inc. and Glenn T. the lenders party thereto and Bank of America. Amended and Restated Executive Employment Agreement among Leap Wireless International.12. LLC.5. dated January 10.16.16. Leap Wireless International. N.2(18) 10.8(16)# 10. Employment offer letter dated January 31. made by the Subsidiary Guarantors in favor of the secured parties under the Credit Agreement.. dated January 10. Inc. 2004. among Cricket Communications. made by Leap Wireless International. between Leap Wireless International.5(15)# Description Form of Severance Benefits Agreement by and between Leap Wireless International. Inc. Moschner. Emergence Bonus Agreement. dated January 26. Inc.. LLC. Inc. Credit Agreement. dated February 25.4* 109 . Irving..2* 10.2(15)# 10. and Alaska Native Broadband 1. Form of Deferred Stock Unit Award Grant Notice and Deferred Stock Unit Award Agreement. and Robert J.. Emergence Bonus Agreement. Stephens.. Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement.12.11. the Subsidiary Guarantors and Bank of America. Alaska Native Broadband 1 License. and Alaska Native Broadband 1. 2005.1(18) 10.12. as administrative agent and L/C issuer. 2005. dated January 10. Inc.. and Al Moschner. by and between Leap Wireless International. between Leap Wireless International. Inc. by and among Cricket Communications. dated as of December 22. Inc. Alaska Native Broadband 1 License. Irving. 2005. N. Inc.12(17)# 10. Cricket Communications.Qualified Stock Option Agreement..4*# 10. Douglas Hutcheson. and William M. Consulting Agreement. and Robert J.1* 10. Parent Guaranty. 2004 Stock Option. Cricket Communications.A. dated as of August 1. Inc. Restricted Stock and Deferred Stock Unit Plan. dated as of December 22. LLC. and Manford Leonard. Inc. Schedule to form of Severance Benefits Agreement. Emergence Bonus Agreement.3(17)# 10. Davis. 2005. Inc. Jr. dated February 17. Letter Agreement. 2005. by and between Cricket Communications. Inc.14(18) 10.10(16)# 10. dated as of October 26. to the Credit Agreement.11* 10. in favor of the secured parties under the Credit Agreement.12.

2003. as filed with the SEC on August 12.2* 32. 2001. 2004. regardless of any general incorporation language in such filing. 2003. Inc. Filed as an exhibit to Leap's Current Report on Form 8. filed with the SEC on August 20. as filed with the SEC on September 14. Filed as an exhibit to Leap's Current Report on Form 8. as filed with the SEC on November 21.1** 32. Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes. filed with the SEC on August 11. 2004.Q for the fiscal quarter ended September 30. 2003.Oxley Act of 2002. as filed with the SEC on May 17. as filed with the SEC on November 13. as filed with the SEC on May 14. 2002. 2001. 2002. filed with the SEC on November 6. and incorporated herein by reference.Table of Contents Exhibit Number 21. Filed as an exhibit to Leap's Quarterly Report on Form 10. and incorporated herein by reference. Filed as an exhibit to Leap's Quarterly Report on Form 10. # Management contract or compensatory plan or arrangement in which one or more executive officers or directors participates. Filed as an exhibit to Leap's Quarterly Report on Form 10. dated July 30.Q for the fiscal quarter ended September 30. 2002. and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934. (1) Filed as an exhibit to Leap's Current Report on Form 8. 2003.K.2 under the Securities Exchange Act of 1934. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b. and incorporated herein by reference.Q for the quarter ended March 31. and are not to be incorporated by reference into any fling of Leap Wireless International. Filed as an exhibit to Leap's Quarterly Report on Form 10. 2000. Inc. 2000. and incorporated herein by reference. 1998 and incorporated herein by reference. 2003. 2004. as filed with the SEC on November 14.K.1* 31. dated July 30.K. Filed as an exhibit to Leap's Quarterly Report on Form 10. as amended (File No. and incorporated herein by reference.Oxley Act of 2002. as filed with the SEC on May 15. * Filed herewith.C.K for the fiscal year ended December 31. and incorporated herein by reference. 110 . and incorporated herein by reference. Filed as an exhibit to Leap's Quarterly Report on Form 10.Q for the fiscal quarter ended March 31. whether made before or after the date hereof. ** These certifications are being furnished solely to accompany this annual report pursuant to U.1* 31. Filed as an exhibit to Leap's Quarterly Report on Form 10. Filed as an exhibit to Leap's Registration Statement on Form 10. 2003. 2002. and incorporated herein by reference. Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes. 2003.Oxley Act of 2002. as amended. filed with the SEC on May 7. 2004.Q for the fiscal quarter ended June 30. 2001. 2004. § 1350. 2004. dated August 16. 2000.S. dated October 22.29752). and incorporated herein by reference.Q for the fiscal quarter ended March 31. (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Filed as an exhibit to Leap's Current Report on Form 8. and incorporated herein by reference. as filed with the SEC on March 2.Q for the quarter ended September 30. Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes. Filed as an exhibit to Leap's Annual Report on Form 10.2** Description Subsidiaries of Leap Wireless International. 0.K/A. and incorporated herein by reference. 2004. Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes. and incorporated herein by reference.Oxley Act of 2002.

K.K for the fiscal year ended December 31. dated December 31. Filed as an exhibit to Leap's Current Report on Form 8. 2003.Table of Contents (14) Filed as an exhibit to Leap's Amendment No.K. Filed as an exhibit to Leap's Quarterly Report on Form 10. as filed with the SEC on September 23. Filed as an exhibit to Leap's Annual Report on Form 10. 2004. and incorporated herein by reference. Filed as an exhibit to Leap's Current Report on Form 8. filed with the SEC on January 11. Filed as an exhibit to Leap's Current Report on Form 8. (15) (16) (17) (18) (19) (20) Filed as an exhibit to Leap's Quarterly Report on Form 10. 2004. 2005. and incorporated herein by reference. 1 to Annual Report on Form 10.Q for the fiscal quarter ended September 30. and incorporated herein by reference. and incorporated herein by reference. filed with the SEC on January 14. 2003. and incorporated herein by reference. 2003. as filed with the SEC on November 22. 2005. dated January 5. and incorporated herein by reference. 2005. dated January 10. filed with the SEC on March 28. as filed with the SEC on April 16. 111 . 2005. and incorporated herein by reference. 2004. 2002.K/A for the year ended December 31. 2003. as filed with the SEC on May 13. 2005. 2004.Q for the fiscal quarter ended June 30.K.

President and Director (Principal Executive Officer) Vice President. transferable on the books of the Corporation in person or by duly authorized attorney on surrender of this certificate properly endorsed.0001 PAR VALUE. 2005 May 16.Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. Luvisa Chief Executive Officer. Harkey. Jr. 2005 Director Director Chairman of the Board and Director Director COMMON STOCK NUMBER --------------------------LEAP (LEAP(TM) LOGO) EXHIBIT 4. Signature Title Date /s/ S. this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Douglas Hutcheson S. This certificate shall not be valid until countersigned and registered by the Transfer Agent and . /s/ Robert V. LaPenta Robert V. Harkey. 2005 By: /s/ S. Rachesky /s/ Michael B. the registrant has duly caused this report to be signed on its behalf by the undersigned. Treasurer and Acting Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Director May 16. Dondero James D. INC. Chief Executive Officer. LEAP WIRELESS INTERNATIONAL. 2005 May 16. Douglas Hutcheson S. Douglas Hutcheson. Finance. LaPenta /s/ Mark H. INC. 2005 May 16. 2005 May 16. Targoff Michael B. 2005 May 16. President and Director Pursuant to the requirements of the Securities Exchange Act of 1934. John D. Jr.1 COMMON STOCK SHARES -------------------------------- INCORPORATED UNDER THE CUSIP 521863 30 8 LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT ____________________________________________________________ IS THE RECORD HOLDER OF ________________________________________________________ FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK. Douglas Hutcheson /s/ Dean M. Rachesky Mark H. Dondero /s/ John D. May 16. OF LEAP WIRELESS INTERNATIONAL. 2005 /s/ James D. $. thereunto duly authorized. Luvisa Dean M. Targoff 112 May 16.

For Value Received. STOCKBROKERS.____________ Custodian __________________ (Cust} (Minor) TEN ENTas tenants by the entireties under Uniform Gifts to Minors Act ______________________________________ JT TENas joint tenants with right of survivorship (State) and not as tenants in common UN1F TRF MIN ACT.1: Glenn P. PURSUANT TO S. designations.5. IF IT IS LOST.Registrar. INC.K. WITNESS the facsimile seal of the Corporation and the signatures of its duly authorized officers. RULE 17Ad-15. assign(s) and transfer(s) unto ________________________________________________________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ________________________________________________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS. (BANKS. SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM). KEEP THIS CERTIFICATE IN A SAFE PLACE. or other special rights of each class of stock of the Corporation or series thereof and the qualifications.__________ Custodian (until age _________) COM PROPas community property (Cust) __________________ under Uniform Transfers (Minor) to Minors Act ____________________________ (State) Additional abbreviations may also be used though not in the above list. preferences and relative participating. The following abbreviations. Dated __________________________ THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NOTICE: NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR. Stephens . Exhibit 10. Signature Guaranteed THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION. and do hereby irrevocably constitute and appoint _______________________________________________________________________________________________________ attorney-in-fact to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. ________________________________________________ hereby sell(s).1 Schedule to Form of Severance Benefits Agreement Pursuant to Instruction 2 to Item 601 of Regulation S.C.5. optional.E. INCLUDING ZIP CODE. OF ASSIGNEE) ________________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________ shares of the capital stock represented by the within Certificate. Such requests shall be made to the Corporation's Secretary at the principal office of the Corporation. (SEAL) Dated: SECRETARY EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER COUNTERSIGNED AND REGISTERED TRANSFER AGENT AND REGISTRAR BY AUTHORIZED SIGNATURE LEAP WIRELESS INTERNATIONAL. limitations or restrictions of such preferences and/or rights. WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. STOLEN OR DESTROYED THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. shall be construed as though they were written out in full according to applicable laws or regulations: TEN COMas tenants in common UNIF GIFT MIN ACT. Umetsu Leonard C. this Schedule sets forth a list of those executive officers of Leap Wireless International. when used in the inscription on the face of this certificate. who have executed the form of Severance Benefits Agreement filed as Exhibit 10. Inc. The Corporation shall furnish without charge to each stockholder who so requests a statement of the powers.

including. ("Cricket" and together with Leap. and the expense reimbursement check described in this Section." RECITALS WHEREAS. Inc. the "Company"). or policy of the Company. program. 2005 (the "Termination Date"). and WHEREAS. . Resignation From Board. The payments described in this Section shall be subject to all applicable taxes and withholding. 3. The Employment Agreement shall be superseded entirely by this Agreement. AGREEMENT NOW. Inc. the adequacy of which is hereby acknowledged. Executive will have received all monies. under the Employment Agreement. Freeman (the "Executive"). Executive hereby resigns from his position as a member of the Board of Directors of each of Leap and Cricket (and each of their respective domestic affiliates and subsidiaries) effective as of the Termination Date. benefits or other amounts to which he is entitled pursuant to any policies. Executive acknowledges and agrees that the payments and benefits described in this Section constitute the only compensation. THEREFORE. reflecting (a) his earned but unpaid base salary through the Termination Date and (b) all accrued. stock options. and to resolve amicably all of their obligations to each other.term equity. and WHEREAS. Executive hereby resigns as an employee of Cricket effective as of the Termination Date. which expenses shall be submitted to Cricket with supporting receipts and/or documentation no later than twenty. Executive is currently employed by Cricket as its Chief Executive Officer. or other compensation he earned or was due during his employment by Cricket. Cricket. unused vacation due Executive through the Termination Date. the Parties hereby agree as follows: 1. Executive and Leap and Cricket wish to enter into this Agreement for the purpose of terminating and superseding the Employment Agreement in its entirety.. Executive and Cricket wish to terminate their employment relationship through Executive's resignation effective as of February 25. Employment and Officer Status. 4. and serves on the Board of Directors of each of Leap and Cricket and their domestic subsidiaries. vacation pay. without limitation. Executive shall execute any additional documentation necessary to effectuate such resignations. in consideration of the mutual covenants contained in this Agreement. a Delaware corporation ("Leap"). and hereby waives and relinquishes any claim to such Equity. bonuses. or long. Leap. and for other good and valuable consideration. Executive and Cricket entered into an Executive Employment Agreement made and entered into as of May 24. Executive acknowledges and agrees that with his final check.five (35) days after the Termination Date. will reimburse Executive for any and all reasonable and necessary business expenses incurred by Executive in connection with the performance of his job duties prior to the Termination Date. 2. commissions. Executive further acknowledges and agrees that he currently holds no rights to stock. Cricket Communications.based incentive compensation from the Company (collectively "Equity") under the Employment Agreement or pursuant to any plan. and William M. Executive acknowledges and agrees that on the Termination Date. and WHEREAS. serves as the Chief Executive Officer of Leap. Davis EXHIBIT 10. Cricket and the Executive are sometimes referred to herein as a "Party" or collectively as the "Parties. Executive's separation from employment shall be reflected in Cricket's records as a voluntary resignation. Cricket will issue Executive his final paycheck.7 RESIGNATION AGREEMENT This Resignation Agreement (the "Agreement") is hereby entered into by and between Leap Wireless International. within thirty. Cricket and Executive each acknowledge and agree that they do not have any claims against the other based on or arising under the Employment Agreement. 2004 (the "Employment Agreement"). and the Employment Agreement shall be of no further force or effect. or deferred stock units in either Leap or Cricket. Compensation Through the Termination Date. practices or benefit programs maintained by Leap or Cricket related to compensation and benefits.one (21) days after the Termination Date. Executive hereby resigns from his position as Chief Executive Officer (and any other officer positions he may hold) of Leap and Cricket (and each of their respective domestic affiliates and subsidiaries) effective as of the Termination Date. Employment Agreement. restricted stock. Executive shall execute any additional documentation necessary to effectuate such resignations.David B. expense reimbursement.

vendors. without Executive's having given notice of revocation. or other participation in. regulatory status. 8. and subject in all respects to (i) Executive's execution and delivery to the Company of the General Release attached hereto as Exhibit A (the "General Release"). business plans. observations or data without the written consent of Leap's Board of Directors. the provisions of this Agreement shall be held in strictest confidence by the Parties and shall not be publicized or disclosed in any manner whatsoever. Executive continues to be bound by the Invention Disclosure. Promptly following the execution of this Agreement. without limitation.000. finances.5. in lieu of any payments or benefits to which Executive may have been entitled pursuant to the Employment Agreement. proposals or methods. Cricket agrees to reimburse Executive for his reasonable and actual expenses incurred in providing any cooperation or assistance contemplated by this Agreement (subject to the exception in clause (ii) of the preceding sentence). costs. suppliers. inventions. accounting. 2 7. Severance Payment. in confidence. Proprietary Information. provided.000) (subject to applicable withholding at the minimum permissible rate) in a lump sum by wire transfer to the account specified on Schedule 1 hereto with immediately available funds on the next business day following the date on which the General Release becomes irrevocable.446. however. Executive acknowledges that certain information. however. Executive further agrees that he will not disclose to any person or use for his own account any of the above described trade secret information. rule or regulation or other legal compulsion or in order to assert any rights under this Agreement. tax 3 preparers. compensation paid to employees or other terms of employment) are the sole property of the Company and constitute trade secrets of the Company. processes. and (ii) the Company shall have no obligation to compensate Executive under this Section 8 for his cooperation or assistance in any matter in which he is named as a defendant or respondent. auditors. Executive agrees to return all files. Executive acknowledges that any unauthorized use of the above described confidential information will cause irreparable harm to the Leap and Cricket and their affiliates and will give rise to an immediate action by any of them for injunctive relief. During a period of thirty days following the Termination Date (but not while Executive is on vacation). contractual relationships. judicial. in accordance with the terms thereof. shareholders. or other proceeding arising from any charge. (b) the Parties may disclose this Agreement in confidence to their respective attorneys. (c) Leap may disclose this Agreement as necessary to fulfill standard or legally required SEC or corporate reporting or disclosure requirements. Upon the Termination Date. he shall not be required to travel in connection with the assistance requested by the Company pursuant to this Section 8. Further. for any cooperation or assistance requested by the Company. marketing plans. business practices. Cricket shall pay Executive a severance payment in the gross amount of One Million Dollars ($1. prices. and (ii) the expiration of the seven day revocation period following the execution and delivery of the General Release as described therein. 6. except to the extent Executive elects to and is eligible to continue his medical and dental benefits at his sole expense pursuant to COBRA. complaint or other action which has been or may be filed relating to the period during which Executive was employed by Cricket. any administrative.4888.com. Except as expressly set forth in Section 10. or e. customer lists. or other matters. potential customers. financial information or other Company property (excluding documents that have been publicly filed with the SEC) which are in the Executive's possession or control without making copies thereof. Unless Executive agrees. (d) the Parties may disclose this Agreement insofar as such . Executive's entitlement to benefits from Leap or Cricket. Executive shall provide such assistance as the Company may reasonably request in connection with negotiating a roaming agreement with Sprint. that: (a) Executive may disclose this Agreement. or with respect to which Executive requests indemnification pursuant to Section 12.mail to mmovsovich@kirkland. financial. and in its defense of. customers. counsel to Executive by telephone to 212. to his immediate family. The Company will provide prompt notice of the payment of such amount to Michael Movsovich. Except as provided in this Agreement. information with respect to the Company's and its affiliates' operations. that (i) the first five hours of assistance requested by the Company shall be performed without compensation. 9. Except as required pursuant to applicable law. with a five hour minimum. observations and data obtained by him during the course of or related to his employment with the Company (including. and eligibility to participate in the benefit plans of Leap and Cricket. accountants. Confidentiality and Proprietary Rights Agreement that he signed during his employment. products. principals. Cooperation Clause. Entitlement to Benefits. Executive agrees to provide reasonable assistance to the Company (including the Board of Directors of Leap and any special committees of the Board of Directors of Leap) and its counsel and accountants in any financial audits or internal investigation involving securities. shall cease on the Termination Date. provided. Confidentiality of Agreement. The Company shall compensate Executive at the rate of $275 per hour. and financial advisors.

or in such other form as the Parties mutually agree to. Within five (5) days of the Termination Date. in addition to and without limiting or waiving any other remedies available to the Company in law or in equity. Executive shall not. Except as required by law. This Agreement supersedes and terminates the Employment Agreement. neither Party shall have any further obligation to the other under the Employment Agreement. this Agreement and its exhibits represent the sole and entire agreement between the Parties with respect to the subject matters contained herein and supersede all prior documents. to restrain such breach or threatened breach and to enforce Section 11(a). Cricket. For the period commencing on the Termination Date and terminating on the second anniversary thereof. employee. owner. agreements. firm or corporation. written or oral. The Parties acknowledge and agree that there are no collateral agreements or representations. The provisions of this Agreement are severable. and Executive shall not make any additional or inconsistent public statements regarding Executive's resignation. or duplicating any data reflecting the Company's proprietary information. and Executive and his agents and affiliates. and director prior to the Termination Date to the same extent as during his employment to the fullest extent provided by law. responds shall in no event be deemed to result in a breach of this Section 11(a).000. No provision of this Agreement may be altered. officer. removing. joint venturer. Executive acknowledges that it is impossible to measure in money the damages that the Company will sustain in the event that Executive breaches or threatens to breach Section 11(a) and. unless in response to a prior statement or communication by a Party in violation of this Section 10. agreements. a. Non. Except as expressly stated herein. Except as required by law or court order. or any of its affiliates. either on Executive's own account or jointly with or as a manager. 11. agents and affiliates to likewise refrain from making such public statements. and settlement of all Claims between the Parties other than those expressly set forth in this Agreement. Upon the Parties' execution of this Agreement. or any of its affiliates. consultant. 4 12. Miscellaneous Provisions. b. c. Executive will continue to be indemnified by any applicable insurance policies. In the event that Executive breaches the provisions of Section 11(a). on or during the six (6) months immediately preceding the date of such solicitation or offer. shall not disparage or otherwise publish or communicate derogatory statements or opinions about the other to any third party. Leap. shareholder or otherwise. directly or indirectly solicit or attempt to solicit away from the Company. and (e) Executive may inform third parties that he voluntarily resigned from his positions with Leap and Cricket. rule. Mutual Nondisparagement. Press Release. and Leap and Cricket shall cause their directors. incurred in connection with the negotiation and review of this Agreement. 14.Solicitation. Cricket hereby agrees to reimburse Executive for his reasonable legal fees and expenses. the Company will make only statements consistent with the foregoing. on the other hand. Executive hereby waives and agrees not to assert or use as a defense a claim or defense that the Company has an adequate remedy at law. . and the directors. Attorneys' Fees. agents. Internal communications among the senior management personnel or the Board of Directors of Leap or Cricket shall not be considered communications to a third party for purposes of this Section. instruments. 13. however. agent. certificate of incorporation. on behalf of any other person. partner. in the event that the Company institutes any action or proceeding to enforce Section 11(a) seeking injunctive relief. or amendment is agreed to in writing and signed by Executive on the one hand and Leap and Cricket on the other.disclosure may be necessary to enforce its terms or as otherwise required by law. is or was an officer or employee of the Company. unless in response to a prior statement or communication by the other side in violation of this Section 10. 10. up to a maximum of $5. or any of its affiliates. regarding the terms and conditions of Executive's employment with the Company. any of its officers or employees or offer employment to any person who. Indemnification. Cricket. Leap. negotiations and discussions between the Parties with respect to the subject matters contained herein. that a general advertisement to which an officer or employee of the Company. or threatens to do so. instruments. the separation of Executive's employment with the Company. b. provided. a. Each Party shall be responsible for compliance by its directors. which writing expressly states the intent of the Parties to modify this Agreement. or accessories of the Company in his custody for the purpose of conducting the business of the Company without deleting. modification. or bylaws of the Company and as otherwise required by law for his actions as an employee. Return of Equipment. 15. as the case may be. and affiliates. the Company shall be entitled to immediate injunctive relief in any court having the capacity to grant such relief. Executive shall return to the Company in good working order any equipment. on the one hand. modified or amended unless such alteration. regulation or other legal compulsion. account to the Company to its reasonable satisfaction for all such equipment. If any provision is held to be invalid or unenforceable it shall not affect the validity or enforceability of any other provision. Leap shall issue a press release regarding Executive's resignation in the form attached hereto as Exhibit B. or if not returned. or accessories. agents and affiliates of Leap and Cricket. officer.

No waiver by any Party hereto at any time of any breach of. /s/ William M. VOLUNTARILY. or sent by overnight courier service as follows: If to Leap or Cricket. EXECUTIVE LEAP WIRELESS INTERNATIONAL. each of which shall be deemed to be an original as against any Party that has signed it. h. and by facsimile. or compliance with. The language in the Agreement shall not be construed for or against any particular Party. if any. New Jersey 07059 With a copy to: Kirkland & Ellis LLP 153 E. Executive acknowledges that the payments and benefits provided in this Agreement may have tax ramifications to him. [Signature Page Follows] 7 IN WITNESS WHEREOF. 10307 Pacific Center Court San Diego.d. f. This Agreement shall be construed as a whole in accordance with its fair meaning and in accordance with the laws of the State of California. UNDERSTANDS ALL OF ITS TERMS. Freeman By: Name: Its: /s/ S. five days after the date of the posting of the mail or the day immediately following the date when deposited with the overnight courier. EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT CAREFULLY. or sent by certified or registered mail. at: William M. e. AND WITHOUT DURESS. the prevailing party shall be entitled to recover his or its costs and expenses. 53rd Street New York. Douglas Hutcheson Chief Financial Officer . Douglas Hutcheson S. but all of which together will constitute one and the same instrument. or other tax advisor regarding the tax consequences he may face. If any Party to this Agreement brings an action to enforce his or its rights hereunder. return receipt requested and postage prepaid. The headings used herein are for reference only and shall not affect the construction of this Agreement. legal counsel. Any and all notices or other communications or deliveries required or permitted to be given or made shall be in writing and delivered personally. at: Leap Wireless International. FREELY. i. incurred in connection with such suit. INC. NY 10022 Attention: Michael Movsovich. Esq. including court costs and attorneys' fees. any condition or provision of this Agreement to be performed by any other Party hereto shall be deemed a waiver of similar or dissimilar provisions or conditions at the 5 same or at any prior or subsequent time. Inc. The Company has provided no tax or other advice to Executive on such matters and Executive is free to consult with an accountant. Freeman William M. the Parties hereto have executed this Agreement on the dates indicated below. g. This Agreement may be executed in one or more counterparts. California 92121 Attention: General Counsel If to the Executive. Freeman 12 Orchard Way Warren. or at such other address as any party may specify by notice given to such other party in accordance with this Section 15(j). The date of giving of any such notice shall be the date of 6 hand delivery. AND AGREES TO THOSE TERMS KNOWINGLY. j.

through or in concert with them (the "Releasees") of and from any and all claims. EXECUTIVE INTENDS TO. the "Company") and William M. claims for unpaid wages and failure to pay wages under the California Labor Code (collectively. but not limited to. WHICH READS AS FOLLOWS: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE. any Claims arising out of. beneficiaries. WITH FULL AWARENESS AND UNDERSTANDING OF THE ABOVE PROVISIONS. ET SEQ. based upon. long. stock options. and all persons acting by. THE FOLLOWING TERMS AND CONDITIONS APPLY TO AND ARE PART OF THE WAIVER AND RELEASE . related entities. the Federal Age Discrimination and Employment Act. or accountings of whatever nature. restricted stock. In consideration of the benefits under Section 6 of the Resignation Agreement (the "Agreement"). debts. INC. or the termination thereof. the Civil Rights Act of 1866. or any other form of equity interest in either Leap or Cricket (which rights are hereby relinquished). Inc. deferred stock units. representatives. 29 U. 2005 CRICKET COMMUNICATIONS. charges. or arising from.C. 3. officers. however. ("Leap"). Douglas Hutcheson Name: S. acquit and forever discharge Cricket. General Release of Claims. and their respective present and former stockholders. ("Cricket" and together with Leap. EXECUTIVE AGREES AND EXPRESSLY ACKNOWLEDGES THAT THIS GENERAL RELEASE INCLUDES A WAIVER AND RELEASE OF ALL CLAIMS WHICH EXECUTIVE HAS OR MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967. Freeman ("Executive"). 1871 and 1991. demands. actions. Cricket Communications. any claims under Title VII of the Civil Rights Act of 1964. SECTION 621. release. managers. Douglas Hutcheson Its: Chief Financial Officer Dated: February 24. causes of action. by and among Leap Wireless International. Leap. agreement or compensation arrangement between Executive and the Company. Executive does hereby for himself and his spouse.S. which Executive may have against the Releasees based on any actions or events which occurred prior to the date of this General Release. damages. employees. complaints. each of the entities affiliated with a present director of Leap. AS AMENDED. "Claims"). AND HEREBY DOES. successors and assigns. the Executive Employment Agreement between Cricket and Executive dated May 24. Older Workers' Benefit Protection Act. This General Release shall not. those related to. or relating to Executive's rights to stock. rights. including. successors and assigns. the Americans with Disabilities Act. the Equal Pay Act. Inc. 2005 8 EXHIBIT A GENERAL RELEASE 1. known or unknown. AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. constitute a waiver of any of Executive's rights under the Agreement or to any vested benefits under the Company's 401(k) plan. 2004. the Family and Medical Leave Act. By: /s/ S.Dated: February 24. 2005 Dated: February 24. EXECUTIVE HEREBY WAIVES ANY RIGHTS HE MAY HAVE UNDER SECTION 1542. including. Executive's employment with Cricket. as amended. RELEASE THE 9 RELEASEES FROM CLAIMS WHICH EXECUTIVE DOES NOT PRESENTLY KNOW OR SUSPECT TO EXIST AT THIS TIME. without limiting the generality of the foregoing. or any contract. heirs. IN ADDITION. EXECUTIVE EXPRESSLY WAIVES ALL RIGHTS UNDER SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA. ("ADEA"). the California Fair Employment and Housing Act. their subsidiaries. the California Occupational Safety and Health Act.based incentive compensation.term equity. directors. 2. Release of Unknown Claims.

Executive does so voluntarily and after having had the opportunity to consult with an attorney. 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. EXECUTIVE ___________________________________ William M. If Executive executes this General Release prior to the expiration of such period. That the Agreement and this General Release are written in a manner calculated to be understood by Executive. based upon. d. this General Release will be null and void in its entirety. If Executive wishes to revoke the General Release. Executive 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. Executive represents and warrants to the Releasees that there has been no assignment or other transfer of any interest in any Claim which Executive may have against the Releasees. 4. c. or relating to any of the Claims released hereunder. h. Executive is afforded twenty. Executive has executed this General Release on the date indicated below.OF ALL CLAIMS INCLUDING BUT NOT LIMITED TO THE ADEA CLAIMS UNDER THIS GENERAL RELEASE: a. No Suits or Actions. although Executive may waive such period by signing the General Release sooner. Freeman Date:_____________________________ 11 EXHIBIT B [FORM OF AGREED. f. or in any manner asserts against the Releasees any of the Claims released hereunder. claims. or any of them. in addition to any other damages caused thereby. damages. e. IN WITNESS WHEREOF. The Agreement provides for consideration in addition to anything of value to which Executive is already entitled. costs. 6. 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 Executive signs this General Release. 10 5. demands. and Executive agrees to indemnify and hold the Releasees harmless from any liability. and Executive will not receive the benefits described in Section 6 of the Agreement. or in any manner seeks relief through any suit arising out of. b.11 EXECUTION COPY CREDIT AGREEMENT BY AND AMONG . Executive is advised to consult an attorney before signing this General Release. In the event this General Release is revoked. then he will pay to the Releasees against whom such suit or Claim is asserted. No Assignment of Claims. joins in. Executive agrees that if he hereafter commences. No Admission.one (21) days after Executive is provided with this General Release to decide whether or not to sign this General Release. Executive shall deliver written notice stating his intent to revoke this General Release to Cricket's General Counsel on or before the seventh (7th) day after the date hereof. Executive will have the right to revoke this General Release within seven (7) days of signing this General Release. all attorneys' fees incurred by such Releasees in defending or otherwise responding to said suit or Claim.UPON PRESS RELEASE] 12 Schedule 1 Wire Transfer Instructions 13 EXHIBIT 10.

the "CREDIT AGREEMENT") is entered into as of December 22.3270 (rel. state. "AUCTION BENEFITS" shall have the meaning given to that term in the LLC Agreement. any Governmental Entity. provided.Out and operate the ANB. "ANB. that if ANB has exercised the Put (as defined in the LLC Agreement) in accordance with the terms of the LLC Agreement prior to such Amortization Commencement Date. or (c) as an Auction related bid withdrawal payment. with respect to a Person. 15.. ordinance. including. order. LLC (AS BORROWER) AND ALASKA NATIVE BROADBAND 1. Lender and the Loan Parties wish to make and establish a line of credit for Borrower in the aggregate amount not to exceed the Loan Commitment Amount for the purposes of Borrower participating as a bidder and obtaining Licenses in the Auction. statute.1 LICENSE SYSTEM" shall mean the Commercial Mobile Radio Service system(s) constructed and operated. LLC. a Delaware limited liability company. (AS LENDER) AND ALASKA NATIVE BROADBAND 1 LICENSE. the FCC Rules. Alaska Native Broadband 1 License. a Delaware limited liability company ("GUARANTOR. DA 04. "ANB" shall mean Alaska Native Broadband. amended and restated.CRICKET COMMUNICATIONS. DA 04. or to be constructed and operated. regulation. AGREEMENT NOW THEREFORE. 2004 CREDIT AGREEMENT This Credit Agreement (as amended. "APPLICABLE LAW" shall mean with respect to any Person. injunction or decree or any interpretation or administration of any of the foregoing by. LLC (AS GUARANTOR) December 22. by Borrower for the purpose of providing service authorized under a License or Licenses. Inc. 2004 (the "EFFECTIVE DATE"). "AMORTIZATION COMMENCEMENT DATE" shall mean the date that is thirty (30) days after the Substantial Completion Date. "AUCTION FUNDS" shall mean funds paid by the Borrower to the FCC in accordance with FCC Rules (a) to become eligible to participate in the Auction. which shall be used solely to participate in the Auction and to pay the net winning bids for licenses for which Borrower is the Winning Bidder. "ACQUISITION SUB. to pledge all of its membership interests in Guarantor. applicable to such Person or its Affiliates or their respective assets. and to Build. without limitation. local or foreign law. 16. including to make any required deposits or down payments to the FCC in connection therewith. any other Person directly or indirectly Controlling. (b) as a down payment or winning bid payment for any license for which Borrower is the Winning Bidder.3005 (rel. subject to the terms and conditions set forth herein. Sep. LLC. the Amortization Commencement Date shall be extended to the date of the closing of the Put as set forth in the LLC Agreement. LLC. 2004) and Public Notice. Oct.1 License Systems. rule. by and among Cricket Communications. the parties hereto agree as follows: SECTION 1. "AUCTION" shall mean the auction of broadband personal communications service licenses being conducted by the FCC designated by the FCC as Auction No. INC. and in each case as amended. 58 and described by the FCC in Public Notice. supplemented or otherwise modified from time to time. RECITALS WHEREAS. and Alaska Native Broadband 1. Judgment. Controlled by or under Common Control with such Person at any time during the period for which the determination of affiliation is being made. a Delaware limited liability company ("BORROWER"). "AUCTION DATE" shall mean the date the first round of the bidding in the Auction commences. however. 2004). "ANB NEGATIVE PLEDGE AGREEMENT" shall mean the ANB Negative Pledge Agreement in substantially the form of Exhibit A pursuant to which ANB agrees not to cause or permit any liens or encumbrances to attach to any or all of its membership interests in Guarantor or. . a Delaware corporation ("LENDER"). DEFINED TERMS The following terms shall have the following meanings in this Credit Agreement: "AFFILIATE" shall mean.LIMIT" shall mean $65. as the same may be rescheduled or modified by the FCC.0 million. the "LOAN PARTIES"). in consideration of the mutual covenants contained herein. any federal. under certain circumstances. whether in effect as of the Effective Date or thereafter." and together with Borrower.

Section 24.4. unless. 47 C. assets. service mark. shall 3 . of the assets of Borrower.5 million.2(b)(iv)) or by Borrower pursuant to Section 10.2(a)(v) thereof. liabilities. "CONTROL" (including the correlative meanings of the terms "Controlled by. or (ii) changes in general economic conditions or the securities markets generally.R.712(b) and 24. which shall be used by Borrower to fund the Build.F.203.LIMIT" shall mean an amount equal to $4.2(b). or (ii) any sale.Out and initial operation of the ANB. logo.R. "BORROWER CHANGE IN CONTROL EVENT" shall be deemed to have occurred if (a) there shall be consummated (i) any consolidation or merger of Borrower in which Borrower is not the continuing or surviving entity. Sections 24. 2 "BORROWER OBLIGATIONS" shall mean the collective reference to the payment and performance by Borrower of each covenant and agreement of Borrower contained in this Credit Agreement and the other Loan Documents to which Borrower is a party or by which it is bound. "CLAIMS" shall have the meaning set forth in Section 8.OUT LOAN REQUEST" shall have the meaning set forth in Section 2. in either case. exchange or other transfer (in one transaction or a series of related transactions) of all. other than a merger of Borrower in which the holders of the equity securities of Borrower immediately prior to the merger have the same proportionate ownership of the voting equity securities of the surviving entity immediately after the merger.1 License Systems. lease. to ANB and Cricket. an interest in excess of five percent (5%). if any.OUT" shall mean the construction and associated operation by Borrower. brand or other similar intellectual property owned.2(a)(iii). "BUILD.OUT SUB. however. "BIDDING CREDIT" shall mean a "bidding credit" as defined in the FCC Rules at 47 C. of a Commercial Mobile Radio Service system in accordance with the FCC Rules. is engaged to provide management or technical services to Borrower in the nature of those provided by Lender under the Management Agreement.3. or (c) Borrower ceases to be a wholly."BALANCE AMOUNT" shall have the meaning set forth in Section 2. "COMMERCIAL MOBILE RADIO SERVICE" or "CMRS" shall mean a commercial mobile radio service as defined in 47 C. provided.F. properties. if any. prospects or condition (financial or otherwise) of Borrower.1(b). licensed or otherwise controlled by any direct competitor of Lender (other than Borrower or Guarantor) or any entity in which any direct competitor of Lender (other than Borrower or Guarantor) owns.F.related bid withdrawal payments. directly or indirectly.2(b) thereof (other than Section 10. except for any such effects resulting directly or indirectly from (i) changes in the wireless industry generally. (d) the date on which Borrower enters into any contract or agreement pursuant to which (i) any direct competitor of Lender or any entity in which any direct competitor of Lender owns. Section 20. the Build. "BUILD. or substantially all. "COMMITMENT PERIOD" shall mean the period commencing on the Effective Date and expiring on the earliest to occur of (a) the Amortization Commencement Date. "BORROWER" shall have the meaning set forth in the preamble hereto. "BUSINESS" shall have the meaning given to that term in the LLC Agreement "BUSINESS DAY" shall mean a day other than (a) a Saturday or Sunday or (b) a day on which banking institutions are authorized or required by law or executive order to remain closed in New York City. an interest in excess of five percent (5%).owned Subsidiary of Guarantor. the Lender has consented thereto or (e) the Mandatory Prepayment Date. "BUILD. trade name. that in the event the Required Capital Contributions have not been fully expended by Borrower in paying to the FCC the amount of the net winning bids for Licenses for which it was the Winning Bidder and any Auction.717(b). (b) the member(s) of Borrower approve any plan or proposal for the liquidation or dissolution of Borrower.Out Sub." "Controlling" and "under Common Control with") as used with respect to any Person.R. (b) the date that the LLC Agreement is terminated by either party pursuant to Section 13. including payment of management fees. "BORROWER MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business. directly or indirectly. (c) the date on which the Management Agreement has been terminated (following the expiration of the applicable notice period) by Lender pursuant to Section 10. or (ii) Borrower has the right or obligation to use any trademark.Limit shall be reduced by the amount of the unused portion of the Required Capital Contributions.

instrumentality. as in effect from time to time. "GUARANTOR" shall have the meaning set forth in the preamble hereto. "GUARANTOR PLEDGE AGREEMENT" shall mean the Pledge Agreement in substantially the form attached hereto as Exhibit C pursuant to which Guarantor shall pledge to Lender all Guarantor's membership interests in Borrower as security for the Obligations. costs. agency. regulatory authority. "JUDGMENT" shall mean any judgment. "FINAL PRINCIPAL AMOUNT" shall have the meaning set forth in Section 2. the Guarantor Pledge Agreement and the Security Agreement. . any regional or municipal authority. including without limitation. reimbursement obligations. suit.3(c). Section 3) and the other Loan Documents to which it is a party or by which it is bound. "DEFAULT RATE" shall have the meaning set forth in Section 2. exchange or other transfer (in one transaction or a series of related transactions) of all. without limitation. any governmental department. writ. "GUARANTOR MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business. and public notices of the FCC. liabilities. rulings. including any bankruptcy court. judicial or administrative body. fees. whether through the ownership of voting securities. investigation. "FCC" shall mean the Federal Communications Commission or any successor thereto. "FUNDING DATE" shall mean each date on which Lender makes a Loan to Borrower.2(a)(i). and any notice of any of the foregoing. "CONTROL AGREEMENT" shall mean the Control Agreement(s) substantially in the form of Exhibit B pursuant to which each of the Loan Parties shall permit Lender to establish control of any deposit and/or securities accounts either of them has with any banking or brokerage institution. "EVENT OF DEFAULT" shall have the meaning set forth in Section 7. prospects or condition (financial or otherwise) of Guarantor. having jurisdiction over the matter or matters in question. expenses and otherwise. or arbiter. other than a merger of Guarantor in which the holders of the equity securities of Guarantor immediately prior to the merger have the same proportionate ownership of the voting equity securities of the surviving entity immediately after the merger. and effective orders. arbitration. commission. hearing or other activity or procedure that could result in a Judgment. "INITIAL LOAN DATE" shall have the meaning set forth in Section 2. including without limitation the FCC. justice or magistrate.mean the possession. action. "CREDIT AGREEMENT" shall have the meaning set forth in the preamble hereto. "GUARANTOR OBLIGATIONS" means all liabilities and obligations of Guarantor that may arise under or in connection with the Credit Agreement (including. assets. "LENDER" shall have the meaning set forth in the preamble hereto. directly or indirectly. or substantially all. except for any such effects resulting directly or indirectly from (i) changes in the wireless industry generally. board. injunction. as the same may be modified or amended from time to time hereafter. "INITIAL LOAN AMOUNT" shall have the meaning set forth in Section 2. lease. award or decree of any court. "FCC RULES" shall mean the Communications Act of 1934. or (b) the member(s) of Guarantor approve any plan or proposal for the liquidation or dissolution of Guarantor. "GOVERNMENTAL ENTITY" shall mean any government or political subdivision thereof. whether on account of guarantee obligations. by contract or otherwise. order. perfect and/or maintain the security interests granted by the Loan Parties and ANB under the ANB Negative Pledge Agreement. "DOWN PAYMENT AMOUNT" shall have the meaning set forth in Section 2.3(e).8. "LITIGATION" shall mean any claim. as amended.1. of the assets of Guarantor. "EFFECTIVE DATE" shall have the meaning set forth in the preamble hereto. or (ii) changes in general economic conditions or the securities markets generally. "GAAP" shall mean United States generally accepted accounting principles. or (ii) any sale. "FINANCING STATEMENTS" shall mean such UCC financing statements and other instruments reasonably required by Lender to create.2(a)(i). ministry. the rules and regulations established by the FCC and codified in Title 47 of the Code of Federal Regulations. proceeding. "LICENSE" shall mean any license (a) issued by the FCC to the Borrower for which Borrower is a Winning Bidder or (b) any other license issued by the FCC (i) now to the Borrower or (ii) hereafter held by Borrower. of the power to direct or cause the direction of management policies of such Person. properties. "INITIAL APPLICATION DATE" shall have the meaning set forth in Section 5. indemnities. judge. bureau. and any order of or by any other Governmental Entity.2(a)(ii). "GUARANTOR CHANGE IN CONTROL EVENT" shall be deemed to have occurred if (a) there shall be consummated (i) any consolidation or merger of Guarantor in which Guarantor is not the 4 continuing or surviving entity.

joint venture organization. tenders.5 million. (b) liens for taxes. surety or appeal bonds. "LOAN PARTIES" shall have the meaning set forth in the preamble hereto.9(b). which liens encumber only the equipment acquired with such indebtedness. or to secure the performance of bids. certificate or other document at any time executed and delivered pursuant to or in connection with the LLC Agreement. "PERSON" shall mean any natural person. by and between Lender and ANB dated as of the Effective Date. entity or business of any kind. joint stock company. the Management Agreement. for each Refund. Each advance made under the Note is a Loan. as contemplated by the LLC Agreement. (c) liens. business trust. amended and restated. "MANDATORY PREPAYMENT DATE" shall mean the date on which Borrower receives a refund of Auction Funds (less any amounts retained by the FCC) because (a) Borrower is not the Winning Bidder for any licenses or (b) Borrower is the Winning Bidder for a license or licenses and the FCC does not grant at least one such license to Borrower. as amended. which liens encumber only the equipment acquired with such purchase money indebtedness. provided. which . or bonds for the release of attachments or for stay of execution. as the same may be amended."LLC AGREEMENT" shall mean the Amended and Restated Limited Liability Company Agreement of Alaska Native Broadband 1.eight (48) months after the Amortization Commencement Date. "NOTE" shall mean that certain Promissory Note in the form attached hereto as Exhibit D. which aggregate sum in no event shall exceed $69. however. leases or for purposes of like general nature in the ordinary course of business. fees. the Management Agreement or the Trademark License Agreement. as amended from time to time. the Security Agreement. amended and restated. not to exceed in the aggregate the Loan Commitment Amount. as the same may be amended. "REFUND DATE" shall mean. "LOANS" shall mean the loans to Borrower evidenced by the Note. If Cricket fails to make at least $3 million of capital contributions to Guarantor. "REQUIRED CAPITAL CONTRIBUTIONS" shall mean the capital contributions required to be made to Borrower by Guarantor. (d) purchase money liens on tangible personal property in the nature of office equipment utilized in the normal operation of the business of Borrower. instrument. deposits or pledges made to secure statutory obligations. corporation. the Loan Documents shall not include the LLC Agreement. the date on which Borrower receives such Refund. instruments. supplemented or otherwise modified from time to time after the Effective Date. supplemented or otherwise modified from time to time. limited liability company. partnership. then "Required Capital Contributions" shall mean capital contributions made to Borrower by Guarantor. supplemented or otherwise modified from time to time after the Effective Date. executed by Borrower in favor of Lender and delivered by Borrower to Lender in accordance with the terms of this Credit Agreement. LLC. the Guarantor Pledge Agreement. Inc. "PERMITTED LIENS" shall mean (a) any and all liens and security interests created pursuant to any of the Loan Documents. "MANAGEMENT AGREEMENT" shall mean the Management Services Agreement dated as of the Effective Date by and between Borrower and Lender. "MATURITY DATE" shall mean the date that is forty. assessments and governmental charges not delinquent or that are being contested in good faith by appropriate proceedings. the Note. amended and restated. "LOAN DOCUMENTS" shall mean this Credit Agreement. 5 "LOAN COMMITMENT AMOUNT" shall mean the aggregate sum of (a) the Acquisition Sub-Limit and (b) the Build-Out Sub-Limit. which shall not be less $4 million (provided Cricket has made capital contributions to Guarantor of at least $3 million). unincorporated organization. the ANB Negative Pledge Agreement and all other agreements. that Borrower shall have set aside on its books and shall maintain adequate reserves for the payment of same in conformity with GAAP. a Delaware limited liability company. contracts (other than for the payment of borrowed money). certificates and other documents at any time executed and delivered pursuant to or in connection herewith or therewith. and (e) liens for indebtedness permitted 6 under the terms of Section 6. the Trademark License Agreement or any agreement. For the avoidance of doubt. association. firm. "REFUND" shall mean any Auction Funds that are refunded to Borrower. "POPS" shall have the meaning commonly given to such term in the United States telecommunications industry and shall be based on 2004 population statistics provided by Claritas. the Control Agreement(s).

8 . however. "WORKING CAPITAL" shall mean a reasonable amount of working capital (including without limitation the payment of all fees and expenses) as determined in accordance with the 7 operating budget of Borrower. with respect to any legal entity.203 of the FCC Rules. without the prior written consent (which may be delivered by electronic mail. SECTION 2. "SUBSTANTIAL COMPLETION DATE" shall mean the date on which Guarantor has notified Cricket. "WINNING BIDDER" shall mean a Person who is the winning bidder in the Auction for a license offered by the FCC therein (a) as set forth in the FCC's post. Lender shall make the following Loans to Borrower in accordance with the following schedule: (i) On the date (the "INITIAL LOAN DATE") that is two (2) Business Days prior to the date on which Borrower is required under FCC Rules to make an upfront payment to become eligible to participate in the Auction. pursuant to the LLC Agreement. provided.0 million. less (D) the Initial Loan Amount. either directly or through Guarantor (but not the Bidding Manager acting on its own volition or in accordance with the Bidding Protocol (as defined in the LLC Agreement)). under the Bidding Protocol (which consent shall be deemed given by Cricket if the member of the Auction Committee (as defined in the Bidding Protocol) appointed by Cricket has approved thereof). "SECURITY AGREEMENT" shall mean the Security Agreement dated as of the Effective Date by and between Lender and the Loan Parties in substantially the form attached hereto as Exhibit E. that the Build. TERMS OF LOAN 2. directly or indirectly. facsimile transmission or otherwise) of Lender or of Cricket Communications. in each case. any other corporation. 2. (ii) In the event that Borrower is a Winning Bidder. less (C) the Required Capital Contributions. if any. plus (B) the aggregate amount of any bid withdrawal payment obligations incurred by Borrower in the Auction.Out of the ANB. the "INITIAL LOAN AMOUNT"). which budget is approved in accordance with the LLC Agreement.shall not be less than $1 million. general or limited partnership. "TRADEMARK LICENSE AGREEMENT" shall mean a Trademark License Agreement that may be entered into by Lender and Borrower. at any time during the Commitment Period. Lender shall make a Loan to Borrower in the amount of up to $8. "SUBSIDIARY" shall mean. Lender shall make a Loan to Borrower in an amount equal to the following formula (to the extent such sum is greater than zero): (A) the Down Payment Amount. limited liability company. Borrower shall use the entire proceeds of the foregoing Loan (if any) and the Required Capital Contributions to timely pay the Down Payment Amount to the FCC in accordance with FCC Rules. causes Borrower to bid on a license that was not a target license as set forth in the Bidding Protocol or causes Borrower to purchase a targeted license by bidding materially in excess of the established bid limits for such license. a. trust or other entity of which the outstanding capital stock possessing a majority of voting power in the election of directors or their equivalent is owned or controlled by such entity. joint venture. Subject to the terms and conditions and in reliance upon the representations and warranties set forth in this Credit Agreement. as requested in writing by Borrower at least two (2) Business Days prior to the Initial Loan Date (such requested Loan amount. Subject to the terms and conditions and in reliance upon the representations and warranties set forth in this Credit Agreement.1 THE LOANS. Inc.Auction public notice identifying Auction winning bidders or (b) by virtue of having accepted the FCC's offer of a license for the amount of its final Auction bid therefor following the default of the winning bidder for that license described in clause (a). then on the date that is two (2) Business Days prior to the date on which Borrower is required to submit sufficient funds to bring its total amount of money on deposit with the FCC to twenty percent (20%) of the aggregate amount of Borrower's net winning bids (the "DOWN PAYMENT AMOUNT").1 License System for each of the Licenses satisfies the construction requirements of Section 24. all of which Borrower shall timely pay to the FCC in accordance with FCC Rules to become eligible to participate in the Auction. Lender agrees to make Loans to Borrower from time to time during the Commitment Period in an aggregate principal amount not to exceed at any time the Loan Commitment Amount.2 PROCEDURE FOR BORROWING. limited liability partnership. Lender shall have no obligation to make any Loans if ANB.

c. b.2(a) in excess of the Acquisition Sub.Out Loan Request shall provide the following information (i) the amount of the Loan. then to the principal balance outstanding. Subject to the terms and conditions and in reliance upon the representations and warranties set forth in this Credit Agreement. a.2(b) in excess of the BuildOut Sub. without premium or penalty. then on the date that is two (2) Business Days prior to the date on which Borrower shall be required to submit the then remaining balance of the aggregate amount of its net winning bids to the FCC (the "BALANCE AMOUNT"). Partial or total prepayments of the Loans shall be credited first to any charges or other amounts due to Lender under the terms of this Credit Agreement. (iv) In no event shall Lender be required to make an aggregate amount of Loans under this Section 2. at which time the entire remaining balance of principal and accrued interest together with all other amounts due and owing under the Loan Documents to the extent not paid shall be due and payable. Until the Amortization Commencement Date. a "BUILD. together with accrued interest to the date of such prepayment on the amount prepaid.2(a)(iii). specifying the date and amount of prepayment.Out and initial operation of the ANB.2(a) that are not remitted to the FCC. and any remaining Required Capital Contributions to timely pay the Balance Amount to the FCC in accordance with FCC Rules.OUT LOAN REQUEST") for Borrower to fund the Build. All payments by Borrower hereunder and under the Loan Documents shall be made to Lender. during or after the Auction and prior to the date on which Borrower is granted any Licenses). in whole or in part. within five (5) Business Days of a written request of Borrower (each.(iii) In the event that Borrower is a Winning Bidder.10 in immediately available funds on the date on which such payment shall be due. Within three (3) Business Days after any Refund Date. Interest shall accrue on the aggregate principal balance from time to time outstanding hereunder at a rate equal to Twelve Percent (12. which shall not exceed the reasonable amount necessary to fund Borrower's Build. For the avoidance of doubt.Limit. If timely paid in accordance with preceding sentence. the amount specified in such notice. c. including Working Capital (including for expenses incurred prior to. Amounts prepaid may not be reborrowed. d.00%) per annum. the "FINAL PRINCIPAL AMOUNT"). Lender shall make a Loan to Borrower in an amount equal to the following formula (to the extent such sum is greater than zero): (A) the Balance Amount. Borrower may at any time and from time to time prepay the Loans.sixteenth (1/16) of the Final Principal Amount together with interest installments equal to the amount of the unpaid interest accrued on the outstanding Final Principal Amount until the Maturity Date. e. all interest accrued on the aggregate outstanding principal balance of the Loans shall be added to and become a part of the outstanding principal amount of the Loans on and as of the last day of each calendar quarter and on and as of the day immediately prior to the Amortization Commencement Date (such amount outstanding on the day immediately prior to the Amortization Commencement Date.2(b) until Buyer has expended all of the Required Capital Contributions and any such excess Loan proceeds other than as necessary for its reasonable Working Capital requirements. b. In no event shall Lender be obligated to make an aggregate amount of Loans under this Section 2.2(a)(ii). then to accrued interest due and payable on the Loans. or if Borrower has any excess proceeds from Loans under Section 2. Borrower shall prepay to Lender the principal amount of the Loans in an amount equal to the Refund received on such Refund Date. Borrower shall use the proceeds of any Loan made pursuant to this Section 2. Borrower shall have no obligation to pay any unpaid accrued interest on the principal amount of the Loans so prepaid. Lender's obligation to make new Loans to Borrower shall terminate upon the expiration of the Commitment Period. at its address set forth in Section 8. d. up to the aggregate principal amount of all Loans previously 9 made to Borrower. and (ii) wiring instructions. If any such notice is given. shall be due and payable on the date specified therein. if any. Each Build.Limit. Lender shall make Loans to Borrower from time to time.Out expenses and Working Capital for the following calendar quarter. upon at least three (3) Business Days' notice to Lender. Notwithstanding anything foregoing to the contrary any and all interest that is added to the principal balance of the Loans shall not count against the Loan Commitment Amount. compounded quarterly. . Borrower shall not be obligated to make Loans under this Section 2. less (B) the Required Capital Contributions to the extent that the Required Capital Contributions were not expended in full in making the payment set forth in Section 2. On each quarterly anniversary of the Amortization Commencement Date Borrower shall pay principal installments equal to one.1 License Systems. 2.3 INTEREST RATES AND PAYMENTS. if the aggregate amount of the net winning bids for the Licenses purchased by Borrower in connection with the Auction does not exceed the Required Capital Contributions.

(ii) ANB shall have executed and delivered to Lender the ANB Negative Pledge Agreement. Lender shall have received from the Loan Parties' counsel (which counsel shall be reasonably acceptable to Lender) such legal opinions as to due formation. or constitute a default under. (iv) The Loan Parties shall have executed and delivered such Financing Statements and other instruments (other than the Control Agreements) reasonably required by Lender to create. b. and in the case of Guarantor. Notwithstanding any provision hereof to the contrary. Except for the Loan of the Initial Loan Amount.in. (B) Each Loan Party is in full compliance with the covenants set forth in Section 6.000 13% Senior Secured Pay. in favor of Lender in the property described therein. Lender shall not be required to make any Loan to Borrower under this Credit Agreement unless Lender has repaid and discharged its existing $350. the Loan Parties shall have executed and delivered such Control Agreements reasonably required by Lender to create. a. become an Event of Default) shall have occurred or be continuing. and due execution and delivery (but not as to FCC regulatory matters) with respect to each of ANB and the Loan Parties. if required pursuant to the ANB Negative Pledge Agreement. (x) Each Loan Party shall have delivered to Lender an officer's certificate signed by an officer of each such Loan Party certifying that as of such Funding Date: (A) The representations and warranties of the Loan Parties contained in Section 5 and of the Loan Parties and ANB in the Loan Documents are true and correct in all material respects at and as of the Funding Date as though then made. (viii) With respect to the initial Loan under the Credit Agreement. the Note or any of the other Loan Documents remains past due (whether at the stated maturity. with the notice or passage of time or both. such Loan is permitted under the terms of the LLC Agreement. by acceleration or otherwise) for five (5) days or more. (v) Prior to the date that is two business days prior to the commencement of the Auction. (iii) Guarantor shall have executed and delivered the Guarantor Pledge Agreement and the Security Agreement. the LLC Agreement or any other agreement to which Borrower is a party or by which it is bound. and the organizational documents of Borrower and such Loan does not conflict with or result in a breach of the terms. Lender shall have received customary reports of searches of filings made with Governmental Entities showing that there are no liens on the assets of any Loan Party other than Permitted Liens. conditions or provisions of. 2. Lender shall not be required to make any Loan to Borrower under this Credit Agreement unless as of the applicable Funding Date.e. due authorization. subject to any Permitted Lien. perfect and/or maintain the security interests created pursuant to the Security Agreement. all outstanding principal amount of Loans and accrued interest thereon. all of ANB's membership interests in Guarantor. each of the following conditions has been satisfied to Lender's satisfaction: 10 (i) Borrower shall have executed and delivered to Lender the Note and the Security Agreement. (E) All consents required to be received in connection with the Loan and the Loan Documents from any Governmental Entity shall have been received. (D) No Event of Default (or other event that if not timely cured or corrected would. shall be due and payable upon the termination (following the expiration of the applicable notice period) of the Management Agreement by Borrower pursuant to Section 10. As long as any payment due under this Credit Agreement.payment until such overdue amount is paid in full (whether after or before Judgment). perfect and/or maintain the security interests created pursuant to the Security Agreement. (ix) Prior to the date that is two business days prior to the commencement of the Auction. (vii) Lender shall have received evidence satisfactory to it that the Financing Statements and other instruments delivered to Lender have been filed in all appropriate filing offices and that such filed Financing Statements perfect first priority security interests.000. together with all other amounts due and owing under the Loan Documents to the extent not paid. such overdue amount shall accrue interest at a rate (the "DEFAULT RATE") equal to the lesser of Fifteen Percent (15%) per annum or the maximum rate permitted by Applicable Law. (vi) Lender shall have a perfected first priority security interest in all of Guarantor's membership interests in Borrower and.4 CONDITIONS PRECEDENT TO LENDER'S OBLIGATION TO MAKE ANY LOAN. f. Section 3. 11 (C) Borrower has taken all action necessary to authorize it to incur the Loan.Kind . as Lender shall reasonably request. from the date of such non.2(a)(v) thereof.

surrendered or released. perfect or insure any lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 3 or any property subject thereto. the Borrower Obligations.2 AMENDMENTS. and all proceeds and products thereof. for the payment of the Borrower Obligations may be sold. b. extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by Lender upon the guarantee contained in this Section 3 or acceptance of the guarantee contained in this Section 3. the prompt and complete payment and performance by Borrower when due (whether at the stated maturity. and any collateral security.1 GUARANTEE. Lender has no obligation to protect. 2. as Lender may deem advisable from time to time (with the consent of Borrower. 3. and all proceeds and products thereof. notice of dishonor and all other notices of any kind to or upon Borrower or Guarantor with respect to the Borrower Obligations and any exemption rights that either Loan Party may have. SECTION 3. absolute and unconditional guarantee of payment and performance without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document. in whole or in part. surrendered or released by Lender (in accordance with the terms thereof). WITH RESPECT TO THE BORROWER OBLIGATIONS. Guarantor understands and agrees that the guarantee contained in this Section 3 shall be construed as a continuing. in reliance upon the guarantee contained in this Section 3. contracted or incurred. shall conclusively be deemed to have been created. be renewed. in whole or in part. on the other hand. any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto . protest. supplemented or terminated. demand for payment and notice of default notice of nonpayment. A first priority security interest in the membership interests of Borrower. accelerated.Notes due 2011 or Lender has obtained the requisite consent of the holders of such Notes to make such Loans in accordance with the terms and conditions of the indenture for such Notes. or any collateral security or guarantee therefor or right of offset with respect thereto. GUARANTEE 3. and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended. from time to time. and Lender. shall be created by and subject to the provisions of the ANB Negative Pledge Agreement. guarantees to Lender and its respective successors. modified. Lender's security interest in the foregoing shall be created by and subject to the provisions of the Guarantor Pledge Agreement. Lender's security interest in the foregoing. a. guarantee or right of offset at any time held by Lender. To the extent required by the ANB Negative Pledge Agreement. 12 b. waived. unconditionally and irrevocably. Guarantor waives any right or claims of right to cause a marshalling of Borrower's assets to the fullest extent permitted by Applicable Law. 3. and all proceeds and products of such assets. any demand for payment of any of the Borrower Obligations made by Lender may be rescinded by it. extended. a first priority security interest in the membership interests of Guarantor. ETC. may. and the Borrower Obligations. if required hereunder or thereunder). indorsees. or the liability of any other Person upon or for any part thereof. presentment. transferees and assigns.3 GUARANTEE ABSOLUTE AND UNCONDITIONAL. modified. by acceleration or otherwise) of the Borrower Obligations. c. Guarantor hereby. Guarantor waives diligence. waived. now owned or hereafter acquired. exchanged. on the one hand. amended. likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 3. and any of them. compromised. The Loans and all amounts outstanding from time to time under the Loan Documents shall be secured by: a. Guarantor waives any and all notice of the creation. or renewed. Guarantor shall remain obligated hereunder notwithstanding that. secure. Lender's security interest in the foregoing shall be created by and subject to the provisions of the Security Agreement. A first priority security interest (subject to Permitted Liens) in all assets of the Loan Parties. extended. and all dealings between Borrower and Guarantor. amended or waived.5 SECURITY DOCUMENTS. if any. increased. renewal. without any reservation of rights against Guarantor and without notice to or further assent by Guarantor.

but shall be under no obligation to. or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. Lender acknowledges and consents to the priority of payments provided for in Section 8. of Lender against Guarantor.1 ORGANIZATION AND STANDING.5(d) of the LLC Agreement. Borrower or any substantial part of its property. and shall not impair or affect the rights and remedies. set off or counterclaim (other than a defense of payment or performance in full hereunder) that may at any time be available to or be asserted by Borrower or any other Person against Lender. bankruptcy. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against Guarantor. implied or available as a matter of law. liquidation or reorganization of Borrower.2 AUTHORIZATION BY LENDER. or upon or as a result of the appointment of a receiver.at any time or from time to time held by Lender. 4. No payments made in accordance with the requirements of that section shall constitute a default of Guarantor's obligations to Lender hereunder or otherwise.4 REINSTATEMENT. or might be construed to constitute. or be reinstated. Guarantor hereby guarantees that payments hereunder will be paid to Lender without set off or counterclaim (other than compulsory counterclaims) in United States dollars in immediately available funds at the address of Lender set forth in Section 8. and any failure by Lender to make any such demand. or any release of Borrower or any other Person or any such collateral security. or otherwise. to pursue such other rights or remedies or to collect any payments from Borrower or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset. insolvency. as the case may be. intervenor or conservator of. This Credit Agreement has been duly and validly executed and delivered by Lender and constitutes the legal. make a similar demand on or otherwise pursue 13 such rights and remedies as it may have against Borrower or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto. Notwithstanding the foregoing. with or without the giving of notice or the lapse of time. Neither the execution. 3. or both. valid and binding obligation of Lender enforceable 14 against Lender in accordance with its terms. whether express. guarantee or right of offset.5 PAYMENTS. (ii) conflict with or result in a breach of the terms. except as such enforceability may be limited by (i) bankruptcy. delivery and performance of this Credit Agreement by Lender nor the consummation by Lender of the transactions contemplated herein will. REPRESENTATIONS AND WARRANTIES OF LENDER Lender hereby represents and warrants to the Loan Parties as follows: 4. 3. or any part thereof. in bankruptcy or in any other instance. conditions or . b. dissolution. or collateral agent or similar officer for. Lender may. (i) violate any Applicable Law to which Lender is subject. Lender is a corporation duly organized. a. all as though such payments had not been made. 3.10. validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to execute and deliver this Credit Agreement and to perform its obligations hereunder. (b) any defense. an equitable or legal discharge of Borrower for the Borrower Obligations or of Guarantor under the guarantee contained in this Section 3.6 COORDINATION WITH PUT PRICE. of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by Lender upon the insolvency. or (c) any other circumstance whatsoever (with or without notice to or knowledge of Borrower or Guarantor) that constitutes. if at any time payment. The guarantee contained in this Section 3 shall continue to be effective. shall not relieve Guarantor of any Guarantor Obligations. SECTION 4. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings.

or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. Borrower has all requisite power and authority to execute. deliver and perform its obligations under this Credit Agreement and all other Loan Documents to which it is a party.provisions of. any license or permit of Borrower or any material contract to which Borrower is a party or by which Borrower may be bound or affected. or (iii) except with respect to Borrower's participation in the Auction and procurement and retention of any Licenses by Borrower. delivery and performance of this Credit Agreement or the other Loan Documents by Guarantor nor the consummation by Guarantor of the transactions contemplated herein or therein will. a. consent. delivery and performance of this Credit Agreement. require Lender to obtain any authorization. validly existing and in good standing under the laws of the State of Delaware with all requisite power and authority to own its properties." under the FCC Rules and to holding any FCC license under provisions of Applicable Law governing alien ownership of common carrier radio licenses to the extent of any alien ownership directly or indirectly attributable to Lender under the FCC Rules. (i) violate any Applicable Law to which Borrower is subject 15 (other than relating to any Loan Party's qualification as an "entrepreneur" and a "very small business. conditions or provisions of. permits and authorizations necessary for the conduct of its business. Guarantor has taken all action necessary to authorize this Credit Agreement and all other Loan Documents to which it is a party. executed and delivered by Borrower and are legal. (ii) conflict with or result in a breach of the terms. the Note or the other Loan Documents by Borrower nor the consummation by Borrower of the transactions contemplated herein or therein will. as to all of which the Loan Parties make no representation or warranty hereunder). SECTION 5. and is duly qualified to do business as a foreign limited liability company in good standing in each jurisdiction where the ownership of its properties or the conduct of its business makes such qualification necessary. b. approval or waiver from.1 ORGANIZATION AND STANDING OF LOAN PARTIES. executed and delivered by Guarantor and are legal. or both. and except with respect to the exercise of certain of Lender's remedies under the Loan Documents. may be bound or affected. d. any Governmental Entity or other Person. with or without the giving of notice or the lapse of time. insolvency. except in those jurisdictions where failure so to qualify will not permanently impair title to a material amount of its properties. REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES The Loan Parties hereby jointly and severally represent and warrant to Lender as follows: 5. or constitute a default under. or to make any filing with. its certificate of formation or limited liability company agreement. any Governmental Entity or other Person. and conduct its business as now being conducted. as to all of which the Loan Parties ." under the FCC Rules and to holding any FCC license under provisions of Applicable Law governing alien ownership of common carrier radio licenses to the extent of any alien ownership directly or indirectly attributable to Lender under the FCC Rules. deliver and perform its obligations under this Credit Agreement. Neither the execution. (i) violate any Applicable Law to which Guarantor is subject (other than relating to Guarantor's qualification as an "entrepreneur" or "very small business. or other similar laws affecting the enforcement of creditors' rights generally or (ii) general principles of equity. 5. Guarantor has all requisite power and authority to execute. or to make any filing with. consent. c. and all such documents have been duly authorized. valid and binding obligations of Borrower enforceable in accordance with their terms. permits or licenses or its rights to enforce in all material respects contracts against others or expose it to substantial liabilities in such jurisdictions. except as such enforceability may be limited by (i) bankruptcy. require Borrower to obtain any authorization. approval or waiver from. or (iii) except with respect to Borrower's participation in the Auction and procurement and retention of any Licenses by Borrower and except with respect to the exercise of certain of Lender's remedies under the Loan Documents. Each Loan Party has all licenses (other than FCC licenses). and all such documents have been duly authorized. Borrower has taken all action necessary to authorize this Credit Agreement. Each Loan Party is a limited liability company duly organized. the Note and all other Loan Documents to which it is a party. or both. insolvency. except as such enforceability may be limited by (i) bankruptcy. with or without the giving of notice or the lapse of time. the certificate of incorporation or bylaws of Lender or any material agreement or commitment to which Lender is a party or by which Lender or any of Lender's assets.2 AUTHORIZATION BY THE LOAN PARTIES. valid and binding obligations of Guarantor enforceable in accordance with their terms. Neither the execution. or constitute a default under. the Note and all other Loan Documents to which it is a party. CONSENTS.

consent. 17 . 5. covenants or conditions contained in any provision of its constitutive documents or contained in any other material agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject. Neither Loan Party is in material default under or in material violation in the performance.9 BUSINESS AND FINANCIAL EXPERIENCE.8 FCC QUALIFICATIONS. Each of the Loan Parties by reason of its own business and financial experience or that of its professional advisors have the capacity to protect its own interests in connection with the transactions contemplated hereby.720(b)(2) of the FCC Rules. Neither Loan Party is in default under any such indebtedness. (ii) conflict with or result in a breach of the terms. any license or permit of Guarantor or any material contract to which Guarantor is a party or by which Guarantor may be bound or affected.4 COMPLIANCE WITH APPLICABLE LAW. approval or waiver from. 5. Guarantor has no Subsidiaries other than Borrower. ANB qualifies and. the LLC Agreement. or (iii) except with respect to Borrower's participation in the Auction and procurement and retention of any Licenses by Borrower and except with respect to the exercise of certain of Lender's remedies under the Loan Documents.make no representation or warranty hereunder). (b) has or could have a Borrower Material Adverse Effect or Guarantor Material 16 Adverse Effect. for so long as may be required under FCC Rules in order for Borrower to retain the Auction Benefits will qualify. including the Loans.709(a)(1). as an "entrepreneur" and a "very small business" under FCC Rules. Borrower has no Subsidiaries. or to make any filing with. 5.6 ABSENCE OF DEFAULTS. 5. 24. require Guarantor to obtain any authorization. to the knowledge of the Loan Parties there is no Litigation pending against either Loan Party that (a) seeks to enjoin or obtain damages in respect of the consummation of the transactions contemplated hereby. Each Loan Party has complied and presently is in compliance in all material respects with all Applicable Law.3 LITIGATION.10 ACCURACY AND COMPLETENESS OF INFORMATION.Out. 5. observance or fulfillment of any of the obligations. or (c) draws into questions the validity or enforceability of any Loan Document or the Management Agreement. including but not limited to Sections 1. 5. Neither Loan Party has any indebtedness outstanding except the indebtedness permitted pursuant to the terms of this Credit Agreement and obligations under the Loan Documents. conditions or provisions of.7 INDEBTEDNESS." 5. or constitute a default under. the Auction and the Build. As of the Effective Date. 5. its certificate of formation.5 SUBSIDIARIES. except (i) to the extent that failure to comply with the same does not or will not have a Borrower Material Adverse Effect or Guarantor Material Adverse Effect and (ii) the Loan Parties make no representation or warranty with respect to the FCC Rules relating to any Loan Party's qualification as an "entrepreneur" or "very small business. any Governmental Entity or other Person. and 24.2110(b)(1). No representation or warranty of the Loan Parties contained in this Credit Agreement or the other Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not materially misleading.

Each Loan Party shall at all times observe and perform in all material respects all of the covenants. down payments. promptly upon request of Lender. including Working Capital.2 COMPLIANCE WITH OTHER AGREEMENTS. Each Loan Party shall at all times keep proper books and records of accounts in which full. ETC.SECTION 6. deliver to Lender copies of all such documents.5.Out and the initial operation by Borrower of the ANB. Borrower shall.7 ASSETS AND INSURANCE. 6. COVENANTS OF THE LOAN PARTIES Each of the Loan Parties hereby covenants and agrees with Lender as follows: 6.3 PAYMENT. the Note and the other Loan Documents. conditions and obligations required to be performed by it under the Management Agreement and under the Trademark License Agreement (if any) and all other material agreements to which it is a party or by which it is bound. a. Each of the Loan Parties shall use 100% of the Loan proceeds under this Credit Agreement solely for the following purposes: (a) to make deposits. Lender may but is not obligated to satisfy such obligations in whole or in part and any payments made and expenses incurred in doing so shall constitute principal indebtedness hereunder governed by the terms of the Note and shall be paid or reimbursed by Borrower upon demand by Lender.6 BOOKS AND RECORDS.5 COMPLIANCE WITH LAWS.4 EXISTENCE. as to taxes. permits and authorizations necessary to the conduct of its business. 6. assessments and governmental charges. such compliance to include. true and correct entries shall be made of its transactions in accordance with GAAP consistently applied and shall permit representatives of Lender to examine such books and records upon reasonable request. b. construction and operating budgets. materials. or payments for Licenses in accordance with the Auction. 6. as contemplated by the LLC Agreement and the Management Agreement in connection with Licenses.1 USE OF PROCEEDS. If the LLC Agreement is terminated by either party pursuant to Section 13. Borrower shall promptly pay to Lender with interest the obligations due or to become due at the times and places and in the amount and manner specified in this Credit Agreement.Out and the initial operation of the ANB.1 License Systems. and (c) all licenses. except to the extent the failure to observe and perform such covenants. all at such times during such normal business hours as Lender shall reasonably request. assessments and governmental charges imposed upon it or upon its property except to the extent 18 contested in good faith by appropriate proceedings and for which any reserves required by GAAP have been established. TAXES. (b) its good standing and its right to carry on its business and operations in Delaware and in each other jurisdiction in which the character of the properties owned or leased by it or the business conducted by it makes such qualification necessary and the failure to be in good standing would preclude such Loan Party or Lender from enforcing its rights with respect to any material assets or expose such Loan Party to any material liability. In the event any Loan Party fails to satisfy its obligations under this Section 6. receipts and other information reasonably requested by Lender from time to time relating to the Build. . Borrower will apply as promptly as reasonably practicable and permitted under the FCC Rules to obtain a refund of all such refundable Auction Funds. bid withdrawal payments. conditions and obligations will not have a Borrower Material Adverse Effect. Each Loan Party shall maintain: (a) its limited liability company existence under the laws of Delaware.1(b) or if the Borrower is at any time entitled under applicable FCC Rules to any refunds of Auction Funds. 6. without limitation. invoices.1 License Systems. paying before the same become delinquent all taxes. 6. 6. and (b) to finance the Build. Each Loan Party shall permit representatives of Lender to discuss its affairs and finances with the principal officers of such Loan Party and its independent public accountants. Each Loan Party shall comply in all material respects with all Applicable Law.

from time to time. such other information regarding the business. create. suit. c. a monthly report of significant operating and financial statistics including. but in any event within ninety (90) days after the end of each fiscal year. if any. Quarterly Statements. and (v) contain contractual liability coverage insuring performance by such Loan Party of the indemnity provisions of the Loan Documents. (c) adequate public liability insurance against tort claims that may be asserted against such Loan Party and (d) such other insurance coverage for other hazards as Lender may from time to time reasonably require to protect its rights and benefits under this Credit Agreement and the other Loan Documents. 6. As soon as practicable following the end of each fiscal year. other than in the ordinary course of business (together with a copy of such FCC notice). As soon as possible following the end of each calendar month in each fiscal year. subscriber churn statistics. accompanied by the report thereon of independent certified public accountants and accompanying notes to financial statements. but in any event within thirty (30) days after the end of such month. Inc. Monthly Statements. a comparable rating service) general policy holder's rating of "A" or better and financial size category of Class XII or higher and otherwise reasonably satisfactory to Lender. the indebtedness created under this Credit Agreement. minutes of use. b. assume. (or if no longer in existence. Within five (5) Business Days after a Loan Party becomes aware of their occurrence.five (45) days after the end of such quarter. (iv) provide for thirty (30) days prior written notice to Lender of any cancellation or nonrenewal of such policy.current Alfred M. prepared in accordance with GAAP. each Loan Party shall maintain in full force and effect from and after the first Initial Grant Date (a) an adequate errors and omissions insurance policy. number of subscribers. (iii) be written as primary policy coverage and not contributing with or in excess of any coverage that Lender may carry.If Borrower is a Winning Bidder in the Auction. All commercial general liability and property damage insurance policies and any other insurance policies required to be carried hereunder by each Loan Party shall (i) be issued by insurance companies with a then. Each Loan Party shall promptly deliver to Lender upon receipt and from time to time upon Lender's request either a copy of each such policies of insurance or certificates evidencing the coverages required hereunder. and (iii) the receipt by either Loan Party or both Loan Parties of any notice from the FCC. suit. or otherwise become or remain directly or indirectly liable with respect to any indebtedness. Each Loan Party shall maintain a system of accounting (as to its own operations and financial condition) established and administered in accordance with sound business practices 19 such as to permit the preparation of financial statements in accordance with GAAP and furnish or cause to be furnished to Lender: a. average revenues per subscriber. directly or indirectly.9 INDEBTEDNESS. Best Company. incur. operations. Annual Statements. acquisition costs and capital expenditures statistics and such additional statistics and information as may be approved for internal use by such Loan Party. e. or any material development in any action. to the extent applicable. guarantee. on a consolidated basis. 6. but in any event within forty. on all properties of a character usually insured by organizations engaged in the same or similar business against loss or damage of a kind customarily insured against by such organizations. Neither Borrower nor Guarantor shall. (b) such other insurance coverage. an unaudited statement of income and statement of cash flows for such quarter and an unaudited balance sheet as of the end of such quarter on a consolidated basis. As soon as practicable following the end of each fiscal quarter. (ii) designate Lender as loss payee and additional insured. proceeding or arbitration pending or threatened against such Loan Party. except: a.8 FINANCIAL STATEMENTS AND OTHER REPORTS. affairs and financial condition of such Loan Party as Lender may reasonably request. (ii) any Event of Default or other breach by such Loan Party of any covenant or agreement in this Credit Agreement or any of the other Loan Documents. prepared in accordance with GAAP. the audited statement of income and audited statement of cash flows for such fiscal year and the audited balance sheet as of the end of such fiscal year. proceeding or arbitration against such Loan Party. notice of each of the following events: (i) the commencement of any action. . d.

for any obligation of any other Person by endorsement. or liquidate.11 NEGATIVE COVENANTS. purchase. purchase money financing of telecommunications equipment incurred by Borrower of up to $2. promptly take all such action as may be necessary duly to discharge. except: (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States. purchase money financing for tangible personal property in the nature of office equipment utilized in the ordinary course of business. transfer or otherwise dispose of. Conduct. surety or otherwise. b. lease. conduct or otherwise engage in. (c) commercial paper maturing no more than two hundred seventy (270) days from the date of creation thereof and. or otherwise dispose of its property or assets now owned or hereafter acquired except in the ordinary course of business. or acquire. except as expressly permitted under the terms of this Credit Agreement.11(b) above or own any assets related thereto. any Person. Create or permit to exist at any time. d. in each case maturing within one year from the date of acquisition thereof. refinancings or refundings of any of the foregoing that do not increase the principal amount of the indebtedness so refinanced or refunded. that for so long as Cricket Communications. lien. sell. Undertake any of the activities permitted by Section 6. or cause to be discharged all such mortgages. has granted its approval under the terms of the LLC Agreement: a. charges or other encumbrances.1 or better by S&P. Neither Borrower nor Guarantor shall. Inc. in one transaction or a series of transactions. including certificates of deposit issued by. transact or otherwise engage in. or convey. or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof. the approval of Lender shall be deemed given with respect to any action taken by Borrower or Guarantor that may be taken without the approval of Cricket Communications. directly or indirectly. or.1 or better by Moody's or A. liens. c.20 b. except in connection with (i) the Loans and (ii) indebtedness permitted pursuant to the terms of this Credit Agreement. is a member of Guarantor. whether now owned or hereafter acquired. directly or indirectly. and (e) Guarantor's investment in Borrower. make or own any investment in any Person. or time deposits maturing within one (1) year from the date of creation thereof with. all or substantially all of its business or property. at the time of acquisition. convey.0 million in the aggregate if the terms of such financing are more favorable to Borrower than the terms of the Loans. and shall. however. charge or other encumbrance against any of its property or assets now owned or hereafter acquired. e. d. ("Moody's"). 6. Enter into any transaction of merger or consolidation. Sell. (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and. at the time of acquisition. or stock or other evidence of beneficial ownership of. any business or operations other than the Business. guaranty. at its sole cost and expense. Inc. Inc. any office located in the United States of any bank or trust company that is organized under the laws of the United States or any state thereof and whose certificates of deposit are rated P. e. f. Each Loan Party agrees that it shall not take any of the actions set forth in this Section 6. 6. acquire by purchase or otherwise all or substantially all the business or property of. except for Permitted Liens. security interest. any mortgage. renewals. current trade obligations incurred in the ordinary course of business and not overdue (unless the same are being contested in good faith and by appropriate proceedings and adequate reserves are maintained therefor in accordance with GAAP). lease. or commit to transact. 21 c. redeem or retire any membership interests in such Loan Party now or hereafter outstanding for value. having the highest rating obtainable from either S&P or Moody's. wind up or dissolve itself (or suffer any liquidation or dissolution). (d) demand deposits. which approval may be withheld in Lender's sole and absolute discretion. provided.10 INVESTMENTS. pledge. contingently or otherwise. other than through or by Borrower. extensions. under the terms of the LLC Agreement or for which Cricket Communications. Become liable. security interests. having the highest rating obtainable from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service. replacements. transfer. pledges. Inc. .11 without the prior written approval of Lender.

provided. liquidator or custodian of itself or of all or a substantial part of its property. Failure to Pay.4(a)(v) and 2.g.4(a)(ix) to be satisfied on or prior to the date that is two business days prior to the commencement of the Auction. distribution or return of capital. obligation. Borrower may invest excess funds in investments permitted under Section 6.1 EVENTS OF DEFAULT. or incur. to pay its debts generally as they mature. condition or agreement contained in this Credit Agreement or any covenant. Enter into any agreement containing any provision that would be violated or breached by any borrowing hereunder or by the performance of its obligations hereunder or under any document executed pursuant hereto. 22 6. including the LLC Agreement (except that the LLC Agreement may be amended or modified in accordance with its terms). (C) makes a general assignment for the benefit of its or 23 . other than a leasehold or license interest in real property.14 INDEPENDENCE OF COVENANTS. Bankruptcy or Insolvency Proceedings. assume or suffer to exist any indebtedness or other consensual liabilities or financial obligations other than as may be incurred. EVENTS OF DEFAULT AND THEIR EFFECT 7. j.11 shall constitute an Event of Default immediately upon the occurrence thereof and without any cure period. another covenant shall not avoid the occurrence of an Event of Default if such action is taken or condition exists. condition or agreement under any of the other Loan Documents and such failure shall continue for thirty (30) days after the earlier of (i) notice thereof from Lender or (ii) the actual knowledge of such failure by either Loan Party. Borrower fails to pay when due any principal payment.13 FURTHER ASSURANCES. i. (B) is unable. the fact that it would be permitted by an exception to. or admits in writing its inability. or be otherwise within the limitations of.5(d) of the LLC Agreement provides for payments to ANB. (i) Either Loan Party (A) applies for or consents to the appointment of a receiver. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants. or b. that a failure to observe any covenant set forth in Section 6. Each of the following shall constitute an Event of Default under this Credit Agreement and the Note (each. SECTION 7. obligation. lease. Amend or modify its certificate of formation or limited liability company agreement. Neither Loan Party shall purchase or acquire any fee interest or other estate in real property.12 REAL PROPERTY. h. trustee. create. (2) Borrower may make distributions to Guarantor (and Guarantor to its members) for tax distributions and (3) Borrower may make distributions to Guarantor for the payment of Guarantor's expenses to the extent consistent with Guarantor's annual business plan and budget under the LLC Agreement. each Loan Party shall promptly and duly execute and deliver such further instruments and documents and take such further action as Lender may reasonably determine in its sole discretion to be necessary or advisable to further carry out and consummate the transactions contemplated by the Loan Documents and to perfect or protect the full benefits of this Credit Agreement and the other Loan Documents. Borrower shall use its commercially reasonable efforts to cause the conditions set forth in Sections 2. Own. except expressly in accordance with its limited liability company agreement. 6. interest or other payment required under the terms of the Note that is not cured within five (5) days after the date on which such payment is due and payable. manage or otherwise operate any properties or assets other than in connection with the Business. Make any dividend. Either Loan Party fails to observe or perform in any material respect any covenant. created or assumed or as may exist in connection with the Business (including without limitation the Loans and other obligations incurred by such Loan Party hereunder). and at the expense of the Loan Parties. however. At any time and from time to time.10. 6. except that (1) Borrower may make distributions to Guarantor (and Guarantor to ANB) to the extent that Section 8. or c. Notwithstanding the foregoing. a. an "EVENT OF DEFAULT"): a. upon the written request of Lender. b. Breaches of Other Covenants.

Any Loan Party (i) defaults in making payments of any indebtedness permitted under Section 6.2 REMEDIES UPON EVENT OF DEFAULT. legal or equitable remedy available under Applicable Law. acquiescence in or approval of any such action or proceeding or the relief requested is granted sooner. or for foreclosure hereunder. demand. provided. or e. then Lender may do any or all of the following: (i) terminate or reduce the commitment of Lender to make Loans to Borrower under this Credit Agreement. securing or relating thereto. a. at law or in bankruptcy. Representations and Warranties. that any such default by a Loan Party shall not be an Event of Default hereunder if and to the extent that. . notice or ruling of the FCC. Any representation or warranty made by either Loan Party herein or in any other Loan Document is breached in any material respect and not cured prior to the expiration of any applicable cure period or is false or misleading in any material respect. or for the appointment of a receiver or receivers for the collateral subject to the applicable Loan Documents or for the recovery of judgment for the indebtedness secured thereby or for the enforcement of any other proper. if such qualification is then required under FCC Rules in order for Borrower to retain the Auction Benefits. protest or other notice of any kind. b. if any. Change in Control. that ANB has ceased to qualify as an "entrepreneur" and a "very small business" under FCC Rules. The occurrence of any Borrower Change in Control Event or Guarantor Change in Control Event. or is not. and for so long as. the commitment of Lender shall immediately terminate and all Borrower Obligations shall automatically become immediately due and payable without notice or demand of any kind. or d. (E) becomes insolvent (as such term may be defined or interpreted under Applicable Law). which default permits the lender thereunder to declare such indebtedness to be due and payable prior to its stated maturity. 7. (D) is dissolved or liquidated in full or in part. Cross Default.1(i).1(c). reorganization. ANB or any Loan Party admits.2(b)(iv) thereof). The termination (following the expiration of any applicable notice period) of the Management Agreement by Lender pursuant to Section 10. dissolution or liquidation law of any jurisdiction now or hereafter in effect is filed against any Loan Party or all or any part of its properties and such application is not dismissed within thirty (30) days after the date of its filing or such Loan Party shall file any answer admitting or not contesting such petition or application or indicates its consent to. Lender may proceed to protect and enforce this Credit Agreement. Sections 1. or it is determined in an order. anything in this Credit Agreement or in any other Loan Document to the contrary notwithstanding and (iii) enforce its rights under any one or more of the Loan Documents in accordance with Applicable Law. and whether for the specific performance of any covenant or agreement herein contained or in execution or aid of any power herein granted. perfected and prior to all other liens and security interests (other than Permitted Liens). or (G) takes any action for the purpose of effecting any of the foregoing or (ii) a case or proceeding under the bankruptcy laws of the United States now or hereafter in effect or under any insolvency. or h. readjustment of debt. provided that upon the occurrence of any Event of Default under Section 7. Any Loan Document ceases to be in full force and effect or any lien in favor of Lender ceases to be. or i. or g.any of its creditors.709(a)(1) and 24. whereupon the Borrower Obligations hereunder and under the Note shall immediately become due and payable without presentment. Termination of LLC Agreement.2110(b). Loan Documents.1(e) or 7. (F) commences a voluntary case or other proceeding seeking liquidation. however. provided in the instrument or agreement under which such indebtedness was created. such Loan 24 Party's default is proximately caused by Cricket's failure to satisfy its funding obligations under this Agreement or the LLC Agreement. reorganization or other relief with respect to itself or its debts under any bankruptcy.720(b)(2) of the FCC Rules. (ii) defaults in making any payment of any interest on such indebtedness beyond the period of grace. Termination of Management Agreement. or f. the Note and the other Loan Documents by suit or suits or proceedings in equity. insolvency or other similar law now or hereafter in effect. all of which are hereby expressly waived. receivership. Loss of Status. Upon the occurrence of any Event of Default and at any time thereafter so long as any Event of Default shall be continuing.9 on the scheduled due date with respect thereto. 7. valid. If any Event of Default shall occur. The termination of the LLC Agreement in accordance with its terms. including but not limited to.2(b) thereof (other than Section 10. or j. (ii) declare all obligations of Borrower hereunder and under the Note to be immediately due and payable. or (iii) defaults in the observance or performance of any other agreement or condition relating to such indebtedness or contained in any instrument or agreement evidencing. 24.

c. Borrower shall pay to Lender forthwith upon demand any and all expenses, costs and other amounts due hereunder or under the other Loan Documents before, after or during the exercise of any of the foregoing remedies, including without limitation all reasonable legal fees and other reasonable costs and expenses incurred by Lender by reason of the occurrence of any Event of Default, the enforcement of this Credit Agreement and the other Loan Documents and/or the preservation of Lender's rights hereunder and under the other Loan Documents. SECTION 8. MISCELLANEOUS 8.1 ENTIRE AGREEMENT; AMENDMENT. This Credit Agreement (including the attached Exhibits) constitutes the sole understanding of the parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements, commitments or understandings with respect to such matters. No amendment, modification or alteration of the terms or provisions of this Credit Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto. 25 8.2 SUCCESSORS AND ASSIGNS. This Credit Agreement may not be assigned by either Loan Party without the consent of Lender, which consent may be withheld in its sole and absolute discretion. Lender may assign this Credit Agreement to an Affiliate of Lender without the consent of the Loan Parties, provided that such Affiliate of Lender agrees to be bound by all of the terms hereof, provided further that, unless Borrower otherwise consents in its sole and absolute discretion, Lender shall remain obligated under this Credit Agreement to make all Loans required hereunder. No such permitted assignment shall relieve any party hereto of any liability for a breach of this Credit Agreement by such party or its assignee. This Credit Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs or successors in interest. 8.3 RIGHTS AND REMEDIES. Unless otherwise provided herein, the rights and remedies of Lender hereunder and under the other Loan Documents shall not be mutually exclusive, and the exercise of one or more remedies by Lender pursuant to this Credit Agreement, the other Loan Documents or Applicable Law shall not preclude the exercise by Lender of any other remedy. 8.4 INDEMNITY; REIMBURSEMENT OF LENDER. a. Each Loan Party agrees to indemnify, defend and hold Lender harmless from and against any and all claims, demands, losses, judgments and liabilities (including but not limited to, liabilities for penalties) of any nature ("CLAIMS"), and to reimburse Lender for all reasonable costs and expenses, including but not limited to attorneys' fees and expenses, arising from any of the Loan Documents or the exercise of any right or remedy granted to Lender hereunder or thereunder, other than any Claim (including of Borrower) arising from Lender's gross negligence, willful misconduct or bad faith, or from Lender's failure to comply with its obligations under this Agreement. In no event shall Lender be liable for any matter or thing in connection with the Loan Documents other than to account for moneys actually received by Lender in accordance with the terms hereof. In addition, in no event shall Lender be liable for any indirect, incidental, consequential or special damages (including without limitation damages for harm to business, lost revenues, lost savings, or lost profits suffered by any of the Loan Parties or other Persons), regardless of the form of action, whether in contract, warranty, strict liability, or tort, including without limitation negligence of any kind whether active or passive, and regardless of whether Lender or the Loan Parties knew of the possibility that such damages could result. b. All indemnities contained in this Section 8.4 and elsewhere in this Credit Agreement shall survive the expiration or earlier termination of this Credit Agreement. 8.5 HIGHEST LAWFUL RATE. Anything herein to the contrary notwithstanding, the obligations of Borrower on the Note shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent that contracting for or receipt thereof would be contrary to provisions of any Applicable Law to Lender limiting the highest rate of interest that may be lawfully contracted for, charged or received by Lender, as determined by a final 26

Judgment of a court of competent jurisdiction. Any interest paid in excess of such highest rate shall be applied to the principal balance of the Borrower Obligations. 8.6 COUNTERPARTS. This Credit Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. 8.7 MODIFICATION AND WAIVER. The parties by mutual written agreement may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall only be valid if set forth in an instrument in writing signed on behalf of such party. No waiver by Lender in any one case shall require Lender to give any subsequent waiver. 8.8 PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day and such extension of time shall in such case be included in computing interest, if any, in connection with such payment. 8.9 EXPENSES. Except as specifically provided herein, each party hereto shall pay all costs and expenses incurred by it or on its behalf in connection with this Credit Agreement and the transactions contemplated hereby, including, without limiting the generality of the foregoing, fees and expenses of its own consultants, accountants and counsel. Notwithstanding the foregoing, Borrower shall pay, immediately when due, all present and future stamp and other like duties and applicable taxes, if any, to which this Credit Agreement may be subject or give rise. 8.10 NOTICES. All notices and other communications given to or made upon any party hereto in connection with this Credit Agreement shall, except as otherwise expressly herein provided, be in writing and mailed via certified mail, sent by Federal Express or other similar express delivery service for next day delivery, faxed (with a confirming copy sent by such express delivery service for next day delivery) or hand delivered to the respective parties, as follows: If to Lender: Cricket Communications, Inc. 10307 Pacific Center Court San Diego, CA 92121 Attention: Tim Ostrowski Fax: (858) 882- 6040

27
With a copy (which shall not constitute notice) to: Latham & Watkins LLP 12636 High Bluff Drive, Suite 300 San Diego, CA 92130 Attention: Barry M. Clarkson Fax: (858) 523-5450 Alaska Native Broadband 1 License, LLC c/o ASRC Wireless Services 3900 C Street, Suite 801 Anchorage, AK 99503 Attention: Conrad N. Bagne Fax: (907) 339-6028 Kirkland & Ellis LLP Citigroup Center 1513 East 53rd Street New York, NY 10022

If to Borrower:

With a copy (which shall not constitute notice) to:

If to Guarantor:

With a copy (which shall not constitute notice) to:

Attention: Michael A. Brosse Fax: (212) 446-6460 Alaska Native Broadband 1, LLC c/o ASRC Wireless Services 3900 C Street, Suite 801 Anchorage, AK 99503 Attention: Conrad N. Bagne Fax: (907) 339-6028 Kirkland & Ellis LLP Citigroup Center 1513 East 53rd Street New York, NY 10022 Attention: Michael A. Brosse Fax: (212) 446-6460

or in accordance with any subsequent written direction delivered in accordance with this Section from the recipient party to the sending party. All such notices and other communications shall, except as otherwise expressly herein provided, be effective upon delivery if delivered by hand; in the case of certified mail, three Business Days after the date sent; in the case of any fax, when received; or in the case of express delivery service, the day after delivery of the notice to such service with charges prepaid. 8.11 SEVERABILITY. In case any one or more of the provisions contained in this Credit Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect by a court or other authority of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect 28 any other provision hereof and this Credit Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and, in lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Credit Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, it being the intent of the parties to maintain the benefit of the bargain for all parties. 8.12 REFORMATION. a. If the FCC should (i) change any FCC Rule in a manner that would adversely affect the enforceability of this Credit Agreement or any of the other Loan Documents, (ii) directly or indirectly reject or take action to challenge the enforceability of this Credit Agreement or any of the other Loan Documents or (iii) take any other steps whatsoever, on its own initiative or by petition from another Person, to (A) challenge or deny the transactions contemplated hereby or thereby, (B) challenge or deny the eligibility of Borrower to realize the Auction Benefits as a result of the transactions contemplated hereby or thereby or (C) challenge or deny the eligibility of Borrower to hold any License, or to avoid unjust enrichment repayment obligations (as provided in 47 C.F.R. Section 1.2111) in connection with acquiring or holding any License, as a result of the transactions contemplated hereby or thereby, then the parties shall promptly consult with each other and negotiate in good faith to reform and amend this Credit Agreement and the other Loan Documents so as to eliminate or amend to make unobjectionable any portion that is the subject of any FCC action, provided, that the relative economic and other rights and benefits expected to be derived by the parties hereunder are preserved. Neither party shall take any action that is reasonably likely to contribute to such FCC action. b. If the FCC should determine that a portion of this Credit Agreement or any of the other Loan Documents, after having been reformed pursuant to paragraph (a) above, continues to violate FCC Rules, then such provisions shall be null and void and the remainder of this Credit Agreement and the other Loan Documents shall continue in full force and effect, provided, that the relative economic and other rights and benefits expected to be derived by the parties hereunder are preserved. 8.13 GOVERNING LAW. This Credit Agreement shall be construed in accordance with and governed by the laws of the State of Delaware applicable to agreements made and to be performed wholly within such jurisdiction. 8.14 ARBITRATION.

a. Arbitration. Any controversy or claim arising out of or relating to this Credit Agreement or any of the other Loan Documents, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Within 15 days after the commencement of arbitration, each party shall select one Person to act as arbitrator and the two selected shall select a third arbitrator within 10 days of their appointment. If the arbitrators selected by the parties are 29 unable or fail to agree upon the third arbitrator, the third arbitrator shall be selected by the American Arbitration Association. The place of arbitration shall be Denver, Colorado or such other place as the parties may agree. The arbitrators shall be knowledgeable in the wireless telecommunications industry and public auctions of FCC licenses. b. Interim Relief. Any party may apply to the arbitrators seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either party also may, without waiving any remedy under this Credit Agreement or any of the other Loan Documents, seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunal's determination of the merits of the controversy). c. Discovery. Consistent with the expedited nature of arbitration, each party will, upon the written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim on which the producing party may rely in support of or in opposition to any claim or defense. Any dispute regarding discovery, or the relevance or scope thereof, shall be determined by the arbitrators, which determination shall be conclusive. All discovery shall be completed within 45 days following the appointment of the arbitrators. d. Depositions. At the request of a party, the arbitrators shall have the discretion to order examination by deposition of witnesses to the extent the arbitrators deems such additional discovery relevant and appropriate. Depositions shall be limited to a maximum of three per party and shall be held within 20 days of the making of a request. Each deposition shall be limited to a maximum of four hours duration. All objections are reserved for the arbitration hearing except for objections based on privilege and proprietary or confidential information. e. Award. The award shall be made within 90 days of the filing of the notice of intention to arbitrate, and the arbitrators shall agree to comply with this schedule before accepting appointment. However, this time limit may be extended by agreement of the parties and the arbitrators if necessary. f. Consent to Consolidation of Arbitrations. Each party irrevocably consents to consolidating any arbitration proceeding under this Credit Agreement and/or any of the other Loan Documents with any other arbitration proceedings involving any party that may be then pending that are brought under the LLC Agreement, the Trademark License Agreement, the Management Agreement or that certain Agreement of even date herewith by and among Lender, Council Tree Communications, Inc., a Delaware corporation, and, for purposes of Section 3(l) only, Leap Wireless International, Inc., a Delaware corporation (to the extent provided therein). 8.15 LENDER'S DISCRETION. Unless this Credit Agreement shall otherwise expressly provide, Lender shall have the right to make any decision, grant or withhold any consent, and exercise any other right or remedy hereunder in its sole and absolute discretion. 30 8.16 HEADINGS. The descriptive headings in this Credit Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Credit Agreement. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS] 31

By: /s/ Robert J. LLC Its Manager By ASRC Wireless Services. the parties hereto have signed this Credit Agreement. on the date first written above.. LLC Its Manager By ASRC Wireless Services. hereunto duly authorized. FORM OF GUARANTOR PLEDGE AGREEMENT D. INC. Irving Name: Robert J. LLC By Alaska Native Broadband 1.11. INC. LLC (AS GUARANTOR) January 26. 1 TO CREDIT AGREEMENT BY AND AMONG CRICKET COMMUNICATIONS. Inc. or have caused this Credit Agreement to be signed in their respective names by an officer. CRICKET COMMUNICATIONS. FORM OF CONTROL AGREEMENT C. LLC By Alaska Native Broadband. Irving Title: SVP ALASKA NATIVE BROADBAND 1 LICENSE. 2005 AMENDMENT NO.IN WITNESS WHEREOF.. FORM OF SECURITY AGREEMENT EXHIBIT 10. FORM OF ANB NEGATIVE PLEDGE AGREEMENT B. FORM OF NOTE E. (AS LENDER) AND ALASKA NATIVE BROADBAND 1 LICENSE. Its Manager By: /s/ Conrad Bagne Name: Conrad Bagne Title: President ALASKA NATIVE BROADBAND 1.1 AMENDMENT NO. LLC Its sole member By Alaska Native Broadband. 1 TO CREDIT AGREEMENT . Its Manager By: /s/ Conrad Bagne Name: Conrad Bagne Title: President 32 EXHIBITS: A. Inc. LLC (AS BORROWER) AND ALASKA NATIVE BROADBAND 1.

Except as expressly amended hereby. a Delaware limited liability company ("GUARANTOR. and WHEREAS.12. on the date first written above. the Build. which shall be used solely to participate in the Auction and to pay the net winning bids for licenses for which Borrower is the Winning Bidder. 2004 (as amended.5 million. however." "'BUILD.Out and initial operation of the ANB." Section 2. 1 IN WITNESS WHEREOF. LLC Its sole member By Alaska Native Broadband. CRICKET COMMUNICATIONS. 1 to Credit Agreement ("AMENDMENT NO. including to make any required deposits or down payments to the FCC in connection therewith. the Build. supplemented or otherwise modified from time to time. provided. the parties hereto agree as follows: Section 1. LLC By Alaska Native Broadband 1. 2004 STOCK OPTION. if any.Out Sub. amended and restated. that in the event the Required Capital Contributions have not been fully expended by Borrower in paying to the FCC the amount of the net winning bids for Licenses for which it was the Winning Bidder and any Auction. INC. and the Loan Commitment Amount. LLC. Inc.0 million. The definitions for the terms "Acquisition Sub. Inc. including payment of management fees. 1") is entered into as of January 26.LIMIT' shall mean an amount equal to $4. 2005.Limit.LIMIT' shall mean $84. the Credit Agreement remains in full force and effect in accordance with its terms.4 LEAP WIRELESS INTERNATIONAL.Limit. LLC Its Manager By ASRC Wireless Services. a Delaware corporation ("LENDER")..Out Sub.This Amendment No. Alaska Native Broadband 1 License. LLC By Alaska Native Broadband. LLC." and "Loan Commitment Amount" shall be deleted in their entirety and replaced with the following definitions: "'ACQUISITION SUB.1 License Systems. By: --------------------------------Name: ------------------------------Title: ALASKA NATIVE BROADBAND 1 LICENSE.Limit shall be reduced by the amount of the unused portion of the Required Capital Contributions. the parties hereto have signed this Amendment No. Lender and each of the Loan Parties entered into that certain Credit Agreement dated as of December 22. Its Manager By: Name: Conrad Bagne Title: President 2 EXHIBIT 10..Limit. Lender and each of the Loan Parties desire to amend the Credit Agreement to increase the Acquisition SubLimit. hereunto duly authorized. which aggregate sum in no event shall exceed $89. AGREEMENT NOW THEREFORE.Limit. the "CREDIT AGREEMENT"). RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN . by and among Cricket Communications. which shall be used by Borrower to fund the Build. Inc. 1 to Credit Agreement to be signed in their respective names by an officer." "Build.OUT SUB.5 million. Its Manager By: Name: Conrad Bagne Title: President ALASKA NATIVE BROADBAND 1. the "LOAN PARTIES"). 1 to Credit Agreement.related bid withdrawal payments. INC.Limit and (b) the BuildOut Sub.. in consideration of the mutual covenants contained herein.Out Sub. a Delaware limited liability company ("BORROWER"). LLC Its Manager By ASRC Wireless Services." and together with Borrower. or have caused this Amendment No." "'LOAN COMMITMENT AMOUNT' shall mean the aggregate sum of (a) the Acquisition Sub. and Alaska Native Broadband 1. to ANB and Cricket. RECITALS WHEREAS.

the Plan and this Grant Notice in their entirety. the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement. each of which are incorporated herein by reference. Inc. Holder agrees to be bound by the terms and conditions of the Plan.Qualified Stock Option Agreement (this "AGREEMENT") is attached. Restricted Stock and Deferred Stock Unit Plan (the "PLAN"). This Option is subject to all of the terms and conditions as set forth herein and in the Non. California 92121 ___________________________ Stock Option Grant Notice to Non. (the "COMPANY"). conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan or the Option. the Stock Option Agreement and the Plan. pursuant to its 2004 Stock Option. Unless otherwise defined herein. 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 increments indicated in the vesting provisions set forth in subsection (_) of Section 1 of Exhibit B to this Grant Notice. By his or her signature and the Company's signature below. INC.Employee Directors EXHIBIT A TO STOCK OPTION GRANT NOTICE NON.STOCK OPTION GRANT NOTICE AND NON-QUALIFIED STOCK OPTION AGREEMENT (FOR NON-EMPLOYEE DIRECTORS) Leap Wireless International. (the "COMPANY") has granted to Holder an option under the Company's 2004 Stock Option. Leap Wireless International.QUALIFIED STOCK OPTION AGREEMENT Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this Non. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in the Grant Notice. an option to purchase the number of shares of the Company's Common Stock set forth below (the "OPTION"). Holder hereby agrees to accept as binding. Holder has reviewed the Stock Option Agreement. HOLDER By: ________________________________ By: ________________________________ Print Name: ________________________ Print Name: ________________________ Title: _____________________________ Address: ___________________________ Address: 10307 Pacific Center Court ___________________________ San Diego. ARTICLE I GENERAL . 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 this Grant Notice. and as otherwise provided in Section 2 of Exhibit B. 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. LEAP WIRELESS INTERNATIONAL. Inc.Qualified Stock Option Agreement attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT") and the Plan. hereby grants to the holder listed below ("HOLDER").

(a) Subject to Sections 3.Employee Directors .2(c). effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE").2 Duration of Exercisability. unless such termination occurs by reason of Holder's death or Disability (as defined below). or (iii) The expiration of one (1) year following the date of Holder's Termination of Employment.8. Termination of Directorship or Termination of Consultancy. The purchase price of the shares of Common Stock subject to the Option shall be as set forth in the Grant Notice.1(b) No portion of the Option which has not become vested and exercisable at Termination of Employment. 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. shall thereafter become vested and exercisable. without commission or other charge.3 (ii) The expiration of ninety (90) days following the date of Holder's Termination of Employment. as applicable. Except as provided in Sections 5. After the death of Holder. as applicable. Exhibits to Grant Notice to Non. upon the terms and conditions set forth in the Plan and this Agreement. 3.3. (b) For purposes of this Agreement.2 Incorporation of Terms of Plan. ARTICLE III PERIOD OF EXERCISABILITY 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.3. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference. as applicable. or 3.1 Grant of Option.Qualified Stock Option and shall not be an incentive stock option within the meaning of Section 422 of the Code.2 Purchase Price. except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Holder. "Disability" means permanent and total disability within the meaning of Section 22(e)(3) of the Code. only Holder may exercise the Option or any portion thereof. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.1 Person Eligible to Exercise.1 Defined Terms. the Option shall become vested and exercisable on the dates and in the increments indicated in the vesting provisions set forth in the applicable subsection of Section 1 of Exhibit B to the Grant Notice (as indicated in the Grant Notice). ARTICLE IV EXERCISE OF OPTION 4. The increments provided for in the vesting provisions set forth in the applicable subsection of Section 1 of Exhibit B to the Grant Notice (as indicated in the Grant Notice) are cumulative. The Option shall be a Non. .1 Commencement of Exercisability. by reason of Holder's death or Disability.1. (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. prior to the time when the Option becomes unexercisable under Section 3.2(b) and 5. during the lifetime of Holder. Each such increment which becomes vested and exercisable pursuant to such vesting provisions shall remain vested and exercisable until it becomes unexercisable under Section 3. Termination of Directorship or Termination of Consultancy. ARTICLE II GRANT OF OPTION 2. 1. 2. 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. Expiration of Option. and as otherwise provided in Section 2 of Exhibit B to the Grant Notice.3 and 5. any exercisable portion of the Option may. Termination of Directorship or Termination of Consultancy.

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 (b) Subject to Section 6. 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. 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. 4. The shares of Common Stock deliverable upon the exercise of the Option. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. such payment may be made. The Administrator may.transfer orders covering such shares. any combination of the consideration provided in the foregoing paragraphs (i). subject to Section 10.3: (a) An Exercise Notice in writing signed by Holder or any other person then entitled to exercise the Option or portion thereof. Such shares shall be fully paid and nonassessable. The Option. 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. signed by Holder or the other person then entitled to exercise such Option or portion thereof.Employee Directors . Share certificates evidencing Common Stock issued on exercise of the Option shall bear an appropriate legend referring to the Exhibits to Grant Notice to Non. or any exercisable portion thereof. not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act. or any portion thereof. in its absolute discretion.3. or (ii) With the consent of the Administrator.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. 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. in whole or in part. and (d) The receipt by the Company of full payment for such shares.4 of the Plan. and such registration is then effective in respect of such shares. which the . 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. if then wholly exercisable.4. or (iii) To the extent permitted under applicable laws. Any exercisable portion of the Option or the entire Option.Employee Directors . and (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4. or (iv) With the consent of the Administrator. through the delivery of shares of Common Stock which have been owned by Holder for at least six (6) months. 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.4 Conditions to Issuance of Stock Certificates. however. appropriate proof of the right of such person or persons to exercise the Option. including payment of any applicable withholding tax. that payment of such proceeds is made to the Company upon settlement of such sale. (ii) and (iii). 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). 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. 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. may be exercised solely by delivery to the Secretary of the Company or the Secretary's office of all of Exhibits to Grant Notice to Non. in such form as is prescribed by the Administrator.3 Manner of Exercise. stating that the Option or portion thereof is thereby exercised. 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. and may issue stop.2the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3. stating that the shares of Common Stock are being acquired for Holder's own account. Without limiting the generality of the foregoing.2 Partial Exercise.3provisions of this subsection (c) and the agreements herein. 4. such notice complying with all applicable rules established by the Administrator. and (c) A bona fide written representation and agreement. provided.1 by any person or persons other than Holder. 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. The written representation and agreement referred to in the first sentence of this subsection (c) shall. 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). damage.

including payment of any applicable withholding tax.5agent. the Option may be transferred to one or more Permitted Transferees.3. 4. Exhibits to Grant Notice to Non. 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 . levy. subject to the terms and conditions set forth in Section 10.5 Rights as Stockholder. interpretation and application of the Plan as are consistent therewith and to interpret. (b) Holder agrees that.Employee Directors . (c) Unless transferred to a Permitted Transferee in accordance with Section 5.3(b). it may make appropriate notations to the same effect in its own records. garnishment or any other legal or equitable proceedings (including bankruptcy). prior to the time when the Option becomes unexercisable under Section 3. 5. the Company and all other interested persons. 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. pledged. and that. in order to ensure compliance with the restrictions referred to herein.2 Option Not Transferable. the Company may issue appropriate "stop transfer" instructions to its transfer Exhibits to Grant Notice to Non. contracts or engagements of Holder or his or her successors in interest or shall be subject to disposition by transfer. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. pursuant to a DRO. anticipation. pledge. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration. and (e) The receipt by the Company of full payment for such shares.4 of the Plan. unless and until the shares underlying the Option have been issued. (a) Subject to Section 5. the Option may not be sold. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder.1 Administration. in its absolute discretion. In its absolute discretion. 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. subject to the consent of the Administrator. if any. except to the extent that such disposition is permitted by the preceding sentence. and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. attachment. encumbrance.2(b). nor have any of the rights or privileges of.4ARTICLE V OTHER PROVISIONS 5. and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts.1 of the Plan.2(b). amend or revoke any such rules. if the Company transfers its own securities. (b) Notwithstanding any other provision in this Agreement. No member of the Administrator shall be personally liable for any action. this Agreement or the Option. determination or interpretation made in good faith with respect to the Plan. After the death of Holder.Administrator shall.Transfer Orders. with the consent of the Administrator and to the extent the Option is not intended to qualify as an Incentive Stock Option. subject to Section 10. in its absolute discretion. 5. alienation. which may be in the form of consideration used by the Holder to pay for such shares under Section 4. Holder of the Option shall not be. assigned or transferred in any manner other than by will or the laws of descent and distribution or. deem necessary or advisable. during the lifetime of Holder. (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. 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. and any attempted disposition thereof shall be null and void and of no effect. determine to be necessary or advisable.3 Restrictive Legends and Stop. 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. (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. only Holder may exercise the Option or any portion thereof unless it has been disposed of pursuant to a DRO.Employee Directors . any exercisable portion of the Option may.

5.shall have been so transferred. to discharge Holder at any time for any reason whatsoever.Employee Directors . rules and regulations. 5. 2006 if Holder is an Employee. OR (b) One.9 Amendments. Time. except to the extent expressly provided otherwise in a written agreement between the Company and Holder.1 by written notice under this Section 5. 5.Employee Directors .65. either party may hereafter designate a different address for notices to be given to that party. with the subsection applicable to the Option indicated in the Grant Notice: (a) The shares of Common Stock subject to the Option shall be vested and fully exercisable in their entirety on the Grant Date. 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. 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.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. one. Any notice which is required to be given to Holder shall. the Plan shall be administered. and this Agreement shall inure to the benefit of the successors and assigns of the Company.Based Vesting. Exhibits to Grant Notice to Non. Director or Consultant on that date. 5. rules and regulations. administrators.8 Conformity to Securities Laws. Subject to the restrictions on transfer herein set forth.6 Titles. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable. 5. only in such a manner as to conform to such laws. the other provisions shall nevertheless remain effective and shall remain enforceable. Notwithstanding anything herein to the contrary. and state securities laws and regulations. executors.11 Successors and Assigns. Severability.third of the shares of Common Stock subject to the Option shall vest and become exercisable on January 1.10 No Employment Rights. The Company may assign any of its rights under this Agreement to single or multiple assignees. To the extent permitted by applicable law.third of the shares of Common Stock subject to the Option shall be vested and fully exercisable on the Grant Date.4 Shares to Be Reserved. and the Option is granted and may be exercised. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof.third of the shares of Common Stock subject . 5. which are expressly reserved. the shares of Common Stock subject to the Option shall vest and become exercisable according to the vesting provisions set forth in one of the following alternative subsections. successors and assigns.7 Governing Law.7EXHIBIT 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. Subject to any accelerated vesting and exercisability pursuant to Section 2 below. This Agreement may not be modified. 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. This Agreement shall be administered. By a notice given pursuant to this Section 5. if Holder is then deceased. 1. be given to the person entitled to exercise his or her Option pursuant to Section 4. Exhibits to Grant Notice to Non. 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. this Agreement shall be binding upon Holder and his or her heirs. with or without cause. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws.5 Notices. amended or terminated except by an instrument in writing. and one. If Holder becomes an Employee.5. 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. 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.

Holder agrees to abide by and be bound by their terms and conditions.third of the shares of Common Stock subject to the Option shall vest and become exercisable on January 1. This Exercise Notice. notwithstanding the exercise of the Option. 3. Inc. 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. 2. In the event of a Change in Control. (the "OPTION AGREEMENT"). Representations of Holder. 2004 Stock Option. 2007 if Holder is an Employee.to the Option shall vest and become exercisable on January 1. Limit on Vesting. Holder understands that there are tax consequences to Holder as a result of Holder's purchase or disposition of the Shares. and one. 2007 if Holder is an Employee. Exhibits to Grant Notice to Non. 4. 2006 if Holder is an Employee. Director or Consultant on that date. Director or Consultant immediately prior to such Change in Control. except as provided in Section 10. the unvested shares of Common Stock subject to the Option shall then vest and become fully exercisable in their entirety. 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.Employee Directors .______________ . _____________ the undersigned ("HOLDER") hereby elects to exercise Holder's option to purchase _____________ shares of the Common Stock (the "SHARES") of Leap Wireless International.third of the shares of Common Stock subject to the Option shall vest and become exercisable on January 1. no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to the Option. 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). Tax Consultation. if Holder is an Employee. Change in Control Accelerated Vesting.1agreement 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. Director or Consultant on that date. Director or Consultant on that date. (the "COMPANY") under and pursuant to the Leap Wireless International. 3.3 of the Plan.1EXHIBIT C TO STOCK OPTION GRANT NOTICE FORM OF EXERCISE NOTICE Effective as of today. read and understood the Plan and 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: TYPE OF OPTION: $____________ _____________________________________ $______________ (Representing the full Exercise Price for the Shares. Holder acknowledges that Holder has received. one. 2008 if Holder is an Employee. 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.Qualified Stock Option Agreement (For Non. OR (c) One. Director or Consultant on that date. .third of the shares of Common Stock subject to the Option shall vest and become exercisable on January 1. Capitalized terms used herein without definition shall have the meanings given in the Option Agreement. 2. 1. Rights as Stockholder. the Plan and the Option Agreement constitute the entire Exhibits to Grant Notice to Non. Entire Agreement.Employee Directors . as well as any applicable withholding tax) The Option is a Non-Qualified Stock Option and is not an incentive stock option within the meaning of Section 422 of the Code. The Plan and Option Agreement are incorporated herein by reference. Restricted Stock and Deferred Stock Unit Plan (the "Plan") and the Stock Option Grant Notice and Non. Inc.Employee Directors) dated .

1. acts. or responsibilities necessary or advisable to carry out the job duties of Chief Executive Officer of the Parent.time basis and shall have the normal duties. 2005 (the "Effective Date") by and among CRICKET COMMUNICATIONS.3 Commencing on February 25. The Company is a subsidiary of the Parent. however. or other . 2005 and continuing during the Employment Period. INC. Notwithstanding the provisions of Paragraph 1. subject to Company.2 Commencing on February 25. the Company and various of their respective subsidiaries.. that at all times during his employment EXECUTIVE shall be subject to the direction and policies and procedures from time to time established by the Board of Directors of the Company. as reasonably assigned by the Board of Directors of the Parent from time to time. a Delaware corporation (the "Company"). EXECUTIVE shall devote substantially all of his time to the activities of the Company working from the Company's headquarters in San Diego. LEAP WIRELESS INTERNATIONAL. EXECUTIVE shall use all reasonable commercial efforts to do and perform all services. as reasonably assigned by the Board of Directors of the Company from time to time. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXECUTIVE shall be subject to the direction and policies and procedures from time to time established by the Board of Directors of the Parent.related business travel. 2005. responsibility and authority of the Chief Executive Officer of the Company. EXECUTIVE shall serve as Chief Executive Officer of the Company on a full. provided. EXECUTIVE's duties to the Company shall be those customarily assigned to an executive holding similar positions in a comparable corporation engaged in a business similar to the business of the Company. EXECUTIVE shall serve as the Chief Executive Officer of the Parent." This Agreement amends. an individual currently residing in San Diego. EXECUTIVE shall devote such of his time as is appropriate (in light of his position with the Company) to the activities of the Parent working from the Parent's headquarters in San Diego. restates and supercedes the Executive Employment Agreement among the Parties made and entered into as of January 10. EXECUTIVE is currently employed by the Company and serves as an officer of the Parent. Hutcheson. the Parent and EXECUTIVE are hereinafter collectively referred to as the "Parties.2. provided. 1. as specified by the Parent's Board of Directors from time to time. as amended. and EXECUTIVE hereby accepts and continues employment by the Company.2- EXHIBIT 10. or responsibilities necessary or advisable to carry out the job duties of the Chief Executive Officer of the Company. In his role as Chief Executive Officer of the Parent.ACCEPTED BY: SUBMITTED BY LEAP WIRELESS INTERNATIONAL. 2005 and continuing during the Employment Period. acts. however. California ("EXECUTIVE"). The Company. AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of January 10. responsibilities and authority of the Chief Executive Officer of the Parent. EMPLOYMENT.13 CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. upon the terms and conditions set forth in this Agreement. as specified by the Company's Board of Directors from time to time. EXECUTIVE shall use all reasonable commercial efforts to do and perform all services. California. INC. INC. that at all times during his service as Chief Executive Officer of the Parent. 1.1 The Company hereby employs EXECUTIVE." and individually referred to as a "Party.. HOLDER: By:_________________________________ By:_________________________________ Print Name:__________________________ Print Name: _________________________ Title:_______________________________ Address:_____________________________ Exhibits to Grant Notice to Non. and Stewart D. EXECUTIVE shall have the normal duties. for the period beginning on the Effective Date and ending as provided in Paragraph 3 hereof (the "Employment Period"). California. a Delaware corporation (the "Parent").Employee Directors . or other business locations. EXECUTIVE's duties to the Parent shall be those customarily assigned to an executive holding similar positions in a comparable corporation engaged in a business similar to the business of the Parent. 1.

and (ii) the date on which EXECUTIVE ceases to be employed by the Company. 3. 2." 3. and upon such terms and conditions. COMPENSATION AND BENEFITS.1 EXECUTIVE shall be employed pursuant to the terms of this Agreement for a term beginning on the Effective Date and expiring at midnight on December 31. 2008. however. EXECUTIVE's annual target performance bonus ("Target Performance Bonus") shall be eighty percent (80%) of EXECUTIVE's Base Salary.000) on (or promptly after) the earliest to occur of the following events: (i) September 30. on the date on which the final installments of the 2008 annual performance bonuses for senior executives are paid. Executive shall not receive any compensation or benefits for such services other than the compensation and benefits provided for in this Agreement.1 During his employment with the Company. so long as his services do not materially and adversely affect EXECUTIVE's ability to perform his duties hereunder as reasonably determined by the Parent's Board of Directors.8 below). as shall be mutually agreed upon by the Company. . that. with the degree of loyalty and care prescribed by law.2 below).23. shall be referred to as the "Employment Period. such salary subject to adjustment from time to time pursuant to periodic reviews by the Company's Board of Directors (with input. and no other boards of directors or similar obligations. Inc. the Parent and EXECUTIVE and set forth in a written amendment to this Agreement. 4.weekly in accordance with the Company's normal payroll practices for EXECUTIVE. and during the Employment Period. if any. with the amount of such bonus to be paid to EXECUTIVE determined in accordance with the Company's prevailing annual performance bonus practices that are used to determine annual performance bonuses for the senior executives of the Company generally.2 The Company and the Parent agree that EXECUTIVE may devote up to three business days per month pursuing outside business interests provided such business interests do not compete with the Company's or the Parent's business.3 Notwithstanding Paragraphs 3. 4. from the Compensation Committee of the Board of Directors of Parent). EXECUTIVE's employment may terminate in accordance with Paragraph 5 and. Company shall pay EXECUTIVE a salary (the "Base Salary") of three hundred fifty thousand dollars ($350.000) as follows: (i) Not later than fourteen (14) days after the Effective Date.related business travel. This Employment Agreement is a personal services contract whereby the Company and Parent are engaging the services of EXECUTIVE. EXECUTIVE shall faithfully and diligently devote EXECUTIVE's full business time and efforts to the performance of his duties as the Chief Executive Officer of the Company (except as otherwise provided in Paragraph 1.4 The EXECUTIVE shall be entitled to the following benefits during the Employment Period: .3 During the Employment Period.business locations.2 The Company shall pay EXECUTIVE a success bonus in the amount of three hundred thousand dollars ($300. unless such cessation of employment occurs as a result of a termination for Cause. provided that EXECUTIVE shall be permitted to continue to serve on the boards of directors/trustees/advisors of Scientific Materials. calculated as set forth above.2 This Agreement and EXECUTIVE's employment hereunder may be extended for such period following December 31. in the event of such termination. including any extension period contemplated in Paragraph 3. and San Diego Children's Museum. then EXECUTIVE shall be paid any final installment of his 2008 annual performance bonus.2. 2008. payable bi. LOYAL AND CONSCIENTIOUS PERFORMANCE. 2. unless approved by the Parent's Board of Directors. provided EXECUTIVE is still employed by the Company on such date. subject to Parent. provided. 4.3 above and Paragraph 2. the Company shall pay EXECUTIVE a lump sum payment in cash in the amount of one hundred fifty thousand dollars ($150.1 Beginning with the Effective Date.000). 4. 2. in the event EXECUTIVE is employed by the Company on December 31. the Employment Period shall end on the Date of Termination (as defined in Paragraph 5. The term of employment. 4.2 below. 2008. and (ii) The Company shall pay EXECUTIVE an additional lump sum payment in cash in the amount of one hundred fifty thousand dollars ($150. and EXECUTIVE shall be eligible to be paid an annual performance bonus with respect to each calendar year (including 2004). 3. without regard to whether EXECUTIVE is then employed by the Company.1 and 3. 2005. TERM OF EMPLOYMENT.000) per year.

5. as the case may be. 5.e. . In the event that. whichever is applicable. Inc. health.8 If. to a strategic investor (i. and the like.44. respectively. which may be maintained by the Company for the benefit of its executive officers.of. dental and disability insurance policies and plans.pocket expenses incurred by him in the course of performing his duties under this Agreement (whether such reimbursement is sought before or after termination of this Agreement). as applicable). during the Employment Period. Parent. EXECUTIVE's employment is terminated for disability. on terms no less favorable than other such . subject to the Company's requirements with respect to reporting and documentation of such expenses pursuant to Company policy.day period resulting from EXECUTIVE's incapacity due to a physical or mental disability after attempts to reasonably accommodate EXECUTIVE's disability have failed. the Company and EXECUTIVE agree to confer and negotiate in good faith any appropriate adjustments to the compensation and benefits payable pursuant to this Paragraph 4.(a) All benefits to which other executive officers of the Company are entitled as determined by the Company's Board of Directors. the Parent shall grant. which shall accrue and may be used by EXECUTIVE in accordance with the Company's then prevailing PTO practices. EXECUTIVE shall also be entitled to paid holidays and paid personal/sick days. Not later than sixty (60) days after the Effective Date. entertainment and other business expenses. to EXECUTIVE the awards described in Exhibit A hereto (the "Awards") under the Plan. except that EXECUTIVE's heirs. participation in any and all retirement plans.1 EXECUTIVE's employment under this Agreement shall terminate without notice upon the date of EXECUTIVE's death.1 or Attachment A. the Stock Option Grant Notice and Non. Such lump sum cash payment shall be made within fifteen (15) days following the expiration of the two (2) month period. 4. Parent and the Company will perform an annual performance review of EXECUTIVE and a review of EXECUTIVE's compensation and benefits relative to compensation and benefits provided to executives holding similar positions in comparable corporations engaged in a business similar to the business of Parent and the Company. 4. Restricted Stock and Deferred Stock Unit Plan (the "Parent Plan"). all rights of EXECUTIVE to compensation hereunder shall automatically terminate immediately upon his death. (b) Four (4) weeks of Scheduled Time Off ("STO") per year under the Company's Paid Time Off ("PTO") policy.2 or Attachment A. group life insurance policies and plans.Qualified Stock Option Agreement (attached as Attachment A. 4. including a pro rata share of EXECUTIVE's Target Performance Bonus for the year in which his termination occurs. TERMINATION OF EMPLOYMENT.3 hereto). an investor whose primary business is not financial investing) the Company shall pay to EXECUTIVE a stay bonus in a lump sum payment in cash in an amount equal to EXECUTIVE's Base Salary (at the annual rate then in effect) for a period of eighteen (18) months. or cause to be granted. and shall be subject to the terms and conditions of the Plan (as in effect from time to time). 4. during the Employment Period.4 hereto.5 The Company shall reimburse EXECUTIVE for all reasonable out.3participants. 5. The terms and conditions of the Awards shall be set forth in the Restricted Stock Award Grant Notice and Restricted Stock Award Agreement (attached as Attachment A. including a pro rata share of EXECUTIVE's Target Performance Bonus for the year of his death. are sold with the approval of or pursuant to the active solicitation of the Board of Directors of the Company or the Board of Directors of the Parent. 2006. . all or substantially all of the assets of the Company or shares of stock of the Company or Parent having fifty percent (50%) or more of the voting rights of the total outstanding stock of the Company or Parent. medical.5 hereto. bonus and incentive payment programs (provided that such participation would not duplicate Executive's bonus entitlement pursuant to Paragraph 4. to the extent consistent with the Company's policies in effect from time to time with respect to travel.7 The Parent has adopted the Leap Wireless International. EXECUTIVE shall be entitled to any unpaid portion of his salary and accrued benefits earned up to the Date of Termination. In the event of EXECUTIVE's death. as applicable) and the Deferred Stock Unit Award Grant Notice and Deferred Stock Unit Award Agreement (attached as Attachment A.9 Not later than March 31. including but not limited to.2 The Company may terminate EXECUTIVE's employment under this Agreement after thirty (30) days notice in the event that EXECUTIVE is unable to substantially perform his duties for an aggregate period of sixty (60) days during any 180.3). in a manner consistent with the Company's policies and practices for senior executives.6 All of EXECUTIVE's compensation shall be subject to applicable federal and state withholding taxes and any other employment taxes as are required to be collected or withheld by the Company. if the EXECUTIVE continues his Employment with the Company (or its successor) for a two (2) month period commencing on the date of the closing of such sale. 2004 Stock Option. and following such reviews. personal representatives or estate shall be entitled to any unpaid portion of his salary and accrued benefits earned up to the date of his death.

5.2 in the event that EXECUTIVE has been paid or is entitled to a payment under Paragraph 4. In the event that. (e) EXECUTIVE shall not be required to mitigate the amount of any payment provided for in this Paragraph 5. provided. otherwise payable under Paragraph 4. if EXECUTIVE fails to furnish the statement within thirty (30) days of the Company's request or furnishes a materially false statement. after a written demand for substantial performance is delivered to EXECUTIVE by the Board of Directors of the Company. during the remaining Employment Period. provided that the EXECUTIVE shall have been given a reasonable period. or by EXECUTIVE for Good Reason. (ii) upon EXECUTIVE's willful failure substantially to follow and comply with the specific and lawful directives of the Board of Directors of the Company (or the Board of Directors of the Parent) which are consistent with EXECUTIVE's duties with the Company (or the Parent). "Cause" shall mean termination of EXECUTIVE's employment by the Company: (i) upon EXECUTIVE's willful failure substantially to perform EXECUTIVE's duties with the Company (or the Parent) (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).4 The Company may terminate EXECUTIVE's employment under this Agreement other than for Cause. no payments shall be made to EXECUTIVE under this Paragraph 5. (b) The Company shall pay EXECUTIVE (i) a severance benefit in the form of a lump sum payment in cash in an amount equal to the EXECUTIVE's Base Salary (at the annual rate then in effect) for a period of nine (9) months which shall be made within thirty (30) days after the date of termination and (ii) monthly payments for nine months commencing on the first day of the ninth month following the date of termination equal to the EXECUTIVE's Base .3 The Company may terminate EXECUTIVE's employment under this Agreement for Cause (as defined in Paragraph 5. if earlier. which demand specifically identifies the manner in which the Board of Directors of the Company believes that EXECUTIVE has not substantially performed such duties. bonuses and fees for services) therefrom. or any remaining installments thereof. (d) To the extent EXECUTIVE elects continuation health care coverage for EXECUTIVE and his eligible dependents under Section 4980B of the Internal Revenue Code of 1986.5. that the EXECUTIVE receives from employment with a subsequent employer or for services as an independent contractor during the period during which the monthly payments are paid. until EXECUTIVE is eligible for comparable coverage with a subsequent employer).2 and 5. and Sections 601.8.608 of the Employee Retirement Income Security Act of 1974. or otherwise. "COBRA Coverage"). EXECUTIVE shall be entitled to the following: (a) EXECUTIVE shall be entitled to any unpaid portion of his salary and accrued benefits earned up to the Date of Termination. except as provided in Paragraphs 5.be required to pay premiums for such COBRA Coverage for the eighteen (18) month period commencing on the Date of Termination (or. EXECUTIVE's employment is terminated by the Company for Cause during the Employment Period.4 be reduced by any compensation or benefits earned by EXECUTIVE as the result of employment by another employer or self. Notwithstanding the foregoing. EXECUTIVE shall not.6 below).4. in its sole discretion.6(15) days. over (ii) any portion of EXECUTIVE's annual performance bonus for 2005 already paid to EXECUTIVE. as amended from time to time (collectively. if any.2. in which to cure such failure (provided such failure is capable of being cured). 5. (c) In the event that the Date of Termination occurs on or prior to December 31. as reasonably determined by the Company. Upon written request from the Company.3. by retirement benefits.4. not to exceed fifteen . and EXECUTIVE may terminate his employment under this Agreement for Good Reason (as defined in Paragraph 5. reduce or permanently discontinue any further monthly payments under this Paragraph 5. shall the amount of any payment or benefit provided for in this Paragraph 5.5 For purposes of this Paragraph 5. EXECUTIVE's employment is terminated by the Company other than for Cause. EXECUTIVE shall be entitled to any unpaid portion of his salary and accrued benefits earned up to the Date of Termination. the Company shall pay EXECUTIVE an additional lump sum payment in cash in an amount equal to the excess (if any) of: (i) EXECUTIVE's Target Performance Bonus for 2005. In the event that. EXECUTIVE shall furnish the Company with a statement as to whether he is employed or acting as an independent contractor and the amount of compensation (including salary. that the monthly severance benefit shall be reduced by the amount. wages. as reasonably determined by the Board of Directors of the Company (other than any such failure resulting . 2005.employment. as amended from time to time (the "Code"). however. by offset against any amount claimed to be owed by EXECUTIVE to the Company.4.5Salary.4.4. made not more than monthly during the period during which such monthly payments are paid.5 below).4 by seeking other employment or otherwise nor. Such lump sum cash payment shall be made within thirty (30) days after the Date of Termination and shall be in lieu of any annual performance bonus with respect to 2005. the Company may.

7 Any purported termination of EXECUTIVE's employment by the Company for Cause or other than for Cause. or by EXECUTIVE for Good . "Good Reason" shall mean. 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 continuous assignment to EXECUTIVE of any duties materially inconsistent with EXECUTIVE's positions with the Company (or the Parent). unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan. shall be communicated by Notice of Termination to the other party hereto in accordance with Paragraph 10. EXECUTIVE's right to terminate employment with the Company pursuant to Paragraph 5.2 of this Agreement which includes the obligation to assume the Company's obligations under this Agreement. title. health and accident. disability. authority. of harassing or denigrating treatment of EXECUTIVE by the Company inconsistent with EXECUTIVE's position with the Company or (viii) if a successor to Company does not retain EXECUTIVE'S services for at least one year on substantially the same terms as Sections 4. both in terms of the amount of . provided that the EXECUTIVE 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). without EXECUTIVE's express written consent. pension. after written notice of objection from EXECUTIVE. Notwithstanding the foregoing. 5. duties or responsibilities with the Company (or the Parent). a significant adverse alteration in the nature or status of EXECUTIVE's responsibilities or the conditions of EXECUTIVE's employment with the Company (or the Parent). in the case of a termination by the Company for Cause may occur immediately upon giving the Notice of Termination. or a waiver of rights with respect to. The determination of whether the EXECUTIVE's employment shall be terminated for "Cause" shall be made by the Board of Directors of the Company in its sole discretion. medical. at which the EXECUTIVE. or (vii) the continuation or repetition. in the case of a termination by the Company other than for Cause. EXECUTIVE's employment shall not be deemed terminated for "Cause" pursuant to this Paragraph 5.6 For purposes of this Paragraph 5. (vi) the Company's failure to continue to provide EXECUTIVE with benefits substantially similar in the aggregate to those enjoyed by EXECUTIVE under any of the Company's life insurance. or other benefit plans in which EXECUTIVE or EXECUTIVE's eligible family members were participating immediately prior thereto.8 For purposes of this Paragraph 5. EXECUTIVE's continued employment with the Company shall not constitute consent to. "Date of Termination" shall mean the date specified in the Notice of Termination (which.5 has occurred. (iii) upon EXECUTIVE's commission of an act of fraud or dishonesty materially impacting or involving the Company (or the Parent). 5. (iv) the Company's failure to pay EXECUTIVE any portion of EXECUTIVE's current compensation.7benefits provided and the level of EXECUTIVE's participation relative to other participants. or by EXECUTIVE for Good Reason. after a written demand for substantial performance is delivered to EXECUTIVE by the Board of Directors of the Company.4 shall not be affected by EXECUTIVE's incapacity due to physical or mental illness. responsibilities and authority of such positions shall not constitute "Good Reason. or (iv) upon EXECUTIVE's willful engagement in illegal conduct or gross misconduct. but only after the EXECUTIVE has commuted for a period of one year to the new location (with the Company bearing the reasonable cost of such commuting). and. any circumstance constituting Good Reason thereunder. The appointment or election of EXECUTIVE as Chief Executive Officer of the Company (or the Parent) and the assignment to EXECUTIVE of the duties.5 unless and until there shall have been delivered to EXECUTIVE a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors of the Company at a meeting of the Board of Directors of the Company held within three (3) days (or such longer time period as the Board of Directors of the Company may determine) after the Company provides the EXECUTIVE with notice that it has determined that an event described in clauses (i) through (iv) of this Paragraph 5. together with EXECUTIVE's counsel may be heard for a period of no more than three (3) hours before the Company.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).1 and 4. (iii) the relocation of the Company's offices at which EXECUTIVE is principally employed to a location more than sixty (60) miles from such location. retirement. or the Company's failure to continue EXECUTIVE's participation therein (or in such substitute or alternative plan) on the basis not materially less favorable. or any other action that results in a material diminution in EXECUTIVE's position." 5. (ii) reduction of EXECUTIVE's annual Base Salary as in effect on the Effective Date or as the same may be increased from time to time thereafter. (v) the Company's failure to continue in effect any material compensation or benefit plan in which EXECUTIVE participates. "Notice of Termination" shall mean a written notice that shall indicate the specific termination provision in this Paragraph 5 relied upon and shall set forth in reasonable detail any facts and circumstances claimed to provide a basis for the termination of employment under the provision so indicated. or the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits. which demand specifically identifies the manner in which the Board of Directors of the Company believes that EXECUTIVE has not substantially performed such directives.

that a general advertisement to which an officer or employee of the Company. 5.10.UP.10. EXECUTIVE acknowledges that it is impossible to measure in money the damages that the Company will sustain in the event that EXECUTIVE breaches or threatens to breach Paragraph 5.Up . EXECUTIVE shall forfeit EXECUTIVE's right to further benefits under Paragraph 5 and EXECUTIVE shall be obligated to repay to the Company the benefits that EXECUTIVE has received under Paragraph 5. in the event of EXECUTIVE's death. a "Gross.five (45) days after the Date of Termination (or. the benefits to be provided to EXECUTIVE under this Paragraph 5 (other than any unpaid portion of his salary and accrued benefits earned up to the Date of Termination). the Parent. in the event that the termination of EXECUTIVE's employment with the Company is in connection with an exit incentive or other employment termination program offered to a group or class of employees.10 As further consideration for the benefits to be provided under this Paragraph 5 (other than any unpaid portion of his salary and accrued benefits earned up to the Date of Termination). Also. to restrain such breach or threatened breach and to enforce Paragraph 5.1 seeking injunctive relief.9.8Paragraph 5 (other than any unpaid portion of his salary and accrued benefits earned up to the Date of Termination). the date EXECUTIVE is provided with the information required in accordance with Section 3(f) of the General Release)).1. the Parent. or threatens to do so. if EXECUTIVE's employment terminates by reason of EXECUTIVE's death or disability. shall not be less than fifteen (15) nor more than sixty (60) days after the date such Notice of Termination is given).1 In the event that the EXECUTIVE'S employment under this Agreement is (i) terminated by the Company other than for Cause or (ii) by the EXECUTIVE for Good Reason. on or during the six (6) months immediately preceding the date of such solicitation or offer. EXECUTIVE shall not receive the benefits set forth in this . a "Payment" and collectively. provided. or EXECUTIVE revokes the General Release in accordance with the terms thereof. EXECUTIVE hereby waives and agrees not to assert or use as a defense a claim or defense that the Company or the Parent has an adequate remedy at law. either on EXECUTIVE's own account or jointly with or as a manager. in the event that EXECUTIVE breaches the provisions of Paragraph 5. partner. however.1. the "Payments") would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"). In the event that EXECUTIVE fails to execute and deliver the General Release in accordance with this Paragraph 5. joint venturer. responds and any employment resulting from such response shall in no event be deemed to result in a breach of this Paragraph 5. if later. (b) In the event that EXECUTIVE breaches the provisions of Paragraph 5.2) shall be made not later than the tenth day following the date on which the General Release by EXECUTIVE becomes irrevocable. the "General Release" set forth on Exhibit B hereto on or after the Date of Termination and not later than twenty. employee. in addition to and without limiting or waiving any other remedies available to the Company or the Parent in law or in equity.10.one (21) days after the Date of Termination (or. 6. consultant. the Parent. owner or shareholder or otherwise on behalf of any other person. or any of their respective affiliates. 6.4. EXECUTIVE shall not. EXECUTIVE (or.11 Notwithstanding the foregoing provision of this Paragraph 5. any of their respective officers or employees or offer employment to any person who. or any of their respective affiliates. EXECUTIVE hereby agrees as follows: (a) For the period commencing on the Date of Termination and terminating on the second anniversary thereof.9 In consideration of.1 in any material respect. firm or corporation.10. in addition to any other remedies available to the Company or the Parent in law or in equity.10. or any of their respective affiliates.1. or. directly or indirectly solicit or attempt to solicit away from the Company. is or was an officer or employee of the Company. the Company or the Parent shall be entitled to immediate injunctive relief in any court having the capacity to grant such relief. the date of such termination. 5. not later than forty. then EXECUTIVE shall be entitled to receive from the Company one or more additional payments (individually. as in effect on the Effective Date) and it is determined under this Paragraph 6 that any payment or benefit to EXECUTIVE or for EXECUTIVE's benefit or on EXECUTIVE's behalf (whether . the payments provided for in this Paragraph 5 (other than unpaid salary earned prior to termination and the monthly severance payments pursuant paragraph 5. in each case within one (1) year of a Change in Control (as defined in the Parent Plan. the executor or legal representative of his estate) shall execute and deliver to the Company and to the Parent.Reason. PARACHUTE PAYMENT EXCISE TAX GROSS. in the event that the Company or the Parent institutes any action or proceeding to enforce Paragraph 5.9paid or payable or distributed or distributable) pursuant to the terms of this Agreement or any other agreement. arrangement or plan with the Company or any Affiliate (as defined below) (individually. officer. agent. 5. and as a condition to receiving.10.1 and.

10(c) For purposes of determining the amount of the Gross. such Payments shall be treated as "parachute payments" within the meaning of Section 280G of the Code. (e) EXECUTIVE shall notify the Company in writing of any claim by the Internal Revenue Service that. . unless and except to the extent that.Up Payment in EXECUTIVE's adjusted gross income. (d) Any determination by the Accountants shall be binding upon the Company and EXECUTIVE. the "Gross. it is possible that the Gross. or more than the Company should have paid pursuant to this Paragraph 6 (the "Overpayment"). Such notification shall be given as soon as practicable 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.Payment" and collectively. reasonably acceptable to the EXECUTIVE. in the opinion of the Accountants. the "Accountants" shall mean the Company's independent certified public accountants serving immediately prior to the "change in the ownership or effective control of a corporation" or "change in the ownership of a substantial portion of the assets of a corporation". employment tax and Excise Taxes (including any interest or penalties imposed with respect to such taxes) on the Gross. EXECUTIVE shall be deemed to pay federal income taxes at the highest applicable marginal rate of federal income taxation for the calendar year in which the GrossUp Payment is to be made and to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Gross. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder." or such "parachute payments" are otherwise not subject to such Excise Tax. In the event it is determined that there has been an Overpayment. such that the net amount of the Payments and the Gross. and to have otherwise allowable deductions for federal. For purposes of this Paragraph 6. any person acquiring ownership or effective control of the Company or the Parent or ownership of a substantial portion of the assets of the Company or the Parent. any successor to all or substantially all of the business and/or assets of the Company or the Parent. All fees and expenses of the Accountants shall be borne solely by the Company. as defined in Code Section 280G.Up Payment made will have been an amount less than the Company should have paid pursuant to this Paragraph 6 (the "Underpayment").day period following the date on which EXECUTIVE gives such notice to the Company (or such . state and local income tax. In the event that the Accountants are also serving as the accountants or auditors for the individual. with respect to which the determination is being made. For the purposes of this Paragraph 6.Up Payments retained by EXECUTIVE after the payment of all Excise Taxes (and any interest or penalties imposed with respect to such Excise Taxes) on the Payments.Up Payment.Up Payment. such Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the "base amount. if successful. In the event that the Company exhausts its remedies pursuant to Paragraph 6 and EXECUTIVE is required to make a payment of any Excise Tax. to make the determinations required hereunder (which accounting firm shall then be referred to as the Accountants hereunder). or any person whose relationship to the Company.Up Payment within fifteen (15) business days of the receipt of notice from EXECUTIVE or the Company that EXECUTIVE has received or will receive a Payment. the Underpayment shall be promptly paid by the Company to or for EXECUTIVE's benefit (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code. Company shall appoint another nationally recognized public accounting firm. would require the payment by the Company of the Gross. the Parent or such person is such as to require attribution under Section 318(a) of the Code. as defined in Code Section 280G. net of the maximum reduction in federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of EXECUTIVE's adjusted gross income). To the extent practicable. EXECUTIVE shall not pay such claim prior to the expiration of the 30. any GrossUp Payment with respect to any Payment shall be paid by the Company at the time EXECUTIVE is entitled to receive the Payment and in no event will any Gross. including whether and when any Gross. an "Affiliate" shall mean Parent.Up Payment is to be made. and all federal.Up Payment is required and the amount of such Gross. and the assumptions to be utilized in arriving at such determinations shall be made by the Accountants (as defined below) which shall provide EXECUTIVE and the Company with detailed supporting calculations with respect to such Gross.Up Payment. the Overpayment shall be promptly paid by EXECUTIVE to the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax. shall be equal to the Payments.Up Payments").Up Payment be paid later than five days after the receipt by EXECUTIVE of the Accountant's determination. (b) For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax.Up Payments provided for in this Paragraph 6. entity or group effecting the "change in the ownership or effective control of a corporation" or "change in the ownership of a substantial portion of the assets of a corporation". with respect to which the determination is being made. (a) All determinations required to be made under this Paragraph 6. state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross.

Up Payment would be payable hereunder and EXECUTIVE shall be entitled to settle or contest. the Company's control of the contest shall be limited to issues with respect to which a Gross. and shall be arranged so as to reasonably accommodate EXECUTIVE's vacation or other personal affairs. as the case may be.tax basis. on an interest. including.1. 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 EXECUTIVE for and hold EXECUTIVE harmless from. in a court of initial jurisdiction and in one or more appellate courts. may pursue or forgo any and all administrative appeals. if later. at its sole option. (f) Without limiting the foregoing provisions of this Paragraph 6. any . upon the written request of the Company and reasonable advance notice. and shall indemnify EXECUTIVE for and hold EXECUTIVE harmless from. in no event shall the Company's liability for Gross. any other issue raised by the Internal Revenue Service or any other taxing authority. or both) for up to three (3) days per month for up to a one (1) year period following his Date of Termination. and if any such Gross. interest and/or penalties with respect to such claim is due). the Company shall pay to EXECUTIVE on such day an estimate. In the event that the amount of the estimated Gross. Furthermore. and EXECUTIVE agrees to prosecute such contest to a determination before any administrative tribunal. The Company and the EXECUTIVE shall mutually use their best efforts to schedule the date or dates on which EXECUTIVE will provide the requested consulting services so as not to prevent EXECUTIVE from being gainfully employed by a subsequent employer. however. payable . the Company shall advance the amount of such payment to EXECUTIVE. if the EXECUTIVE terminated his employment for Good Reason. Notwithstanding any other provision of this Paragraph 6. provided. without limitation. any Gross. he shall forfeit his right to the payment of any GrossUp Payments or indemnification hereunder.2 In the event of the termination of EXECUTIVE's employment with the Company. such excess shall constitute a loan by the Company to EXECUTIVE.Up Payment to be made to EXECUTIVE pursuant to this Section 6 shall be made not later than the tenth day following the date on which the General Release by EXECUTIVE becomes irrevocable (or. if any.000). If the Company notifies EXECUTIVE in writing prior to the expiration of such period that it desires to contest such claim.126. (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time. on an after.Up Payment cannot be finally determined on or before such day.shorter period ending on the date that any payment of taxes. provided. as determined in good faith by the Company. the tenth day following the date the "change in the ownership or effective control of a corporation" or "change in a substantial portion of the assets of a corporation" occurs). . if the Gross. however. (g) Notwithstanding the foregoing provisions of this Paragraph 6.Up Payments or indemnification had previously been paid by the Company to the EXECUTIVE hereunder. the Company shall control all proceedings taken in connection with such contest and.000. further. any Excise Tax or income or other taxes (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 (including as a result of any forgiveness by the Company of such advance). either direct EXECUTIVE to pay the tax claimed and sue for a refund or contest the claim in any permissible manner. provided. provide consulting services to the Company (or to the Parent at the direction of the Company.free basis. EXECUTIVE shall promptly repay such amount or amounts to the Company within five (5) business days following the Company's written demand therefor. he shall. that if the Company directs EXECUTIVE to pay such claim and sue for a refund. (h) Notwithstanding the foregoing provisions of this Paragraph 6. on an aftertax basis. provided.Up Payment exceeds the amount subsequently determined to have been due. as the Company shall determine. EXECUTIVE shall: (i) give the Company any information reasonably requested by the Company relating to such claim. accepting legal representation with respect to such claim by an attorney reasonably selected by the Company.500 for each day on which he provides consulting services pursuant to such written request from the Company.Up Payments as indemnification under this Paragraph 6 exceed one million dollars ($1. if EXECUTIVE refuses or otherwise fails to perform the requested consulting services.Up Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the Date of Termination. proceedings. hearings and conferences with the taxing authority in respect of such claim and may. and (iv) permit the Company to participate in any proceedings relating to such claims. of the minimum amount of such Gross Up Payment and shall pay the remainder of such Gross. however. (iii) cooperate with the Company in good faith in order to effectively contest such claim. at its sole option. that any extension of the statute of limitations relating to the payment of taxes for the taxable year of EXECUTIVE with respect to which such contested amount is claimed to be due is limited solely to such contested amount.11Excise Tax or income or other taxes (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses. The EXECUTIVE shall be entitled to payment by the Company in the amount of $1.

PROPRIETARY AND CONFIDENTIAL INFORMATION. claims. provided. Hutcheson 855 San Antonio Place San Diego. the Parent or EXECUTIVE under this Agreement shall be given in writing and shall be personally delivered (and receipted for) or sent by facsimile (with confirmation of receipt). addressed as follows: If to the Company: Cricket Communications. 10. 8. NOTICES. 7.6000 Facsimile: (858) 882. Confidentiality and Proprietary Rights Agreement which. 9. and to prevent loss of. This Agreement shall be binding upon and inure to the benefit of the Company and its successors.139. return receipt requested. At the conclusion of EXECUTIVE's employment with the Company. EXECUTIVE will account to the Company to its reasonable satisfaction as to the present location of all such instruments or accessories and the business purpose for their placement at such location. benefits and awards under the Severance Agreement and releases the Parent and the Company from any liability or obligation for any and all rights. among other matters. any equipment. consistent with good business judgment to preserve in good working order. instruments or accessories of the Company in his custody for the purpose of conducting the business of the Company. Attention: General Counsel 10307 Pacific Center Court San Diego. by and among EXECUTIVE. EXECUTIVE will promptly surrender the same to the Company at the conclusion of his employment. Attention: General Counsel 10307 Pacific Center Court San Diego. . claims.1 In consideration of the execution and delivery of this Agreement by the Company and the Parent.on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). 7. administrators. CA 92121 Telephone: (858) 882. From and after the Effective Date. requires EXECUTIVE to maintain the confidentiality of certain Company information. beneficiaries. or sent by recognized commercial overnight courier. TERMINATION OF SEVERANCE BENEFITS AGREEMENT. EXECUTIVE executed the Company's standard form of Invention Disclosure.1 All notices or demands of any kind required or permitted to be given by the Company. estate. the Parent and the Company (the "Severance Benefits Agreement") is hereby terminated effective as of the Effective Date. ASSIGNMENT AND BINDING EFFECT. Upon request. assigns and legal representatives.2 EXECUTIVE will exercise reasonable care. however. Neither this Agreement nor any rights or obligations under this Agreement shall be assignable by either party without the prior express written consent of the other party. 10. 8. Confidentiality and Proprietary Rights Agreement shall remain in full force and effect in accordance with the terms and conditions thereof. CA 92121 Telephone: (858) 882-6000 Facsimile: (858) 882-6010 If to EXECUTIVE: Stewart D.6080 If to the Parent: Leap Wireless International. he agrees to return such instruments or accessories to the Company or to account for same to the Company's reasonable satisfaction.1 This Agreement shall be binding upon and inure to the benefit of EXECUTIVE and EXECUTIVE's heirs. EXECUTIVE waives any and all rights. Such Invention Disclosure. 7. that the Company may assign this Agreement and its rights and obligations hereunder to any successor in interest to the Company. executors. and legal representatives. subject to reasonable wear and tear from authorized usage. postage prepaid. Inc. 2003. CA 92106 Telephone: (619) 226-4225 Any such written notice shall be deemed received when personally delivered or . Inc.1 Prior to the execution of this Agreement. benefits or awards due EXECUTIVE thereunder. or mailed by certified mail. dated May 30. or if not surrendered. the Severance Agreement.

power or remedy by either party hereto shall constitute a waiver thereof or shall preclude any other or further exercise of the same or any other right.1 from the EXECUTIVE. 12. and supersede all prior oral and written employment agreements or arrangements between the Parties. duties or obligations of the Company or of EXECUTIVE shall be brought and adjudicated exclusively in San Diego County.2 The Company hereby agrees to pay EXECUTIVE's reasonable legal fees and expenses up to five thousand dollars $5. 16.1 This Agreement may be executed in any number of counterparts. 12. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of California. or single or partial exercise of any right.1 This Agreement is made in San Diego. the Company and the Parent. California. which offer is rejected (the "Offer") and the arbitration award is in an amount less than the Offer. however.1 No term. except with the written consent of the Party against whom the waiver is claimed. the parties shall bear their own costs and expenses (including legal expenses). the Company shall be entitled to recover reasonable fees and costs. whether involving remedies at law or in equity. including legal expenses) incurred in the arbitration or in any action to enforce the arbitration or this Paragraph 16. or any lawsuit to enforce a resulting arbitration award. power or remedy. -14- 11. 13. covenant or condition of this Agreement or any breach thereof shall be deemed waived. and the normal rule of construction to the effect any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. 15. WAIVER. SEVERABILITY. 16. 14.15Company makes a binding offer to settle the dispute (subject only to reasonable and customary conditions) for an amount of money. delay in exercising. Either Party may change its address for notices by giving notice to the other Party in the manner specified in this section. INTEGRATION AND AMENDMENT. .1 This Agreement and the Invention Disclosure. each of which when so executed and delivered shall together constitute an original thereof. California or in such other location as the parties may agree. This Agreement cannot be amended or modified except by a written agreement signed by EXECUTIVE.1 The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. without regard. condition or breach shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term. 18. invalid or illegal. CONSTRUCTION. REPRESENTATIONS AND WARRANTIES. INTERPRETATION. CHOICE OF LAW. 2005. COUNTERPARTS. 13. 17. invalidity.1 In any arbitration of a controversy or claim arising out of or relating to this Agreement or the breach thereof.upon receipt in the event of facsimile or overnight courier. ATTORNEYS' FEES. or had an opportunity to review and revise. and any waiver of any such term. 14. as amended. this Agreement. Any controversy or claim arising out of or relating to this Agreement or breach hereof. 16. The Parties acknowledge that each Party and its counsel has reviewed and revised. Confidentiality and Proprietary Rights Agreement referred to in Paragraph 7. No failure to exercise.to the conflicts of law principles thereof.000 incurred in connection with the negotiation of this Agreement and any related agreements and documents.1 The unenforceability. including without limitation. provided. covenant. or three (3) days after its deposit in the United States mail by certified mail as specified above. the Executive Employment Agreement among the Parties made and entered into as of January 10. condition or breach. 15. 17. that if the .1 contain the entire agreement of the parties relating to the subject matter hereof. or arising out of or relating to the rights. covenant. or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable. 11.

subject to vesting conditions and repurchase and transfer restrictions set forth in Exhibit 1 A-1 attached hereto. INC. bylaws. create in any party the right to accelerate. terminate.2 Company Representatives and Warranties. the Parties have executed this Agreement as of the date first above written. deliver and perform its obligations under this Agreement. 18. The Company has full corporate power and authority to execute. contract. Stephens Name: Leonard C. whether involving remedies at law or in equity. at a purchase price of $. Douglas Hutcheson By: /s/ Leonard C.0001 per share. does not and will not (i) violate any constitution. duties or obligations of the Company or of EXECUTIVE shall be settled by binding arbitration conducted in San Diego County. (ii) Conflicts. Human Resources THE PARENT: LEAP WIRELESS INTERNATIONAL. regulation. valid and binding obligation of the Company.1 Any controversy or claim arising out or relating to this Agreement. 19.18. 19. Stephens Name: Leonard C. injunction. By: /s/ Leonard C. Award of 9. Stephens Title: Senior Vice President. or the breach hereof. California. lease. INC. and this Agreement constitutes the legal.487 shares of Parent Common Stock. rule. from entering into and performing each of the terms and covenants contained in this Agreement. subject to vesting conditions and . The AAA's administrative fees and the costs of the arbitrator shall be borne by the Company. or other governing documents or (ii) conflict with. at a purchase price of $. modify. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN 1. delivery and performance of this Agreement by the Company. result in a breach of. contractually or otherwise. or arising out of or relating to the rights. or court to which the Company is subject or any provision of its Certificate of Incorporation. or cancel. [SIGNATURE PAGE FOLLOWS] .16Resolution of Employment Disputes of the American Arbitration Association ("AAA") in effect at the time. ARBITRATION. THE COMPANY: EXECUTIVE: CRICKET COMMUNICATIONS. or other arrangement to which the Company is a party or by which the Company is bound or to which any of the Company `s assets is subject. license. Restricted Stock Awards: Award of 90. result in the acceleration of. enforceable against the Company in accordance with its terms. constitute a default under.0001 per share ("Parent Common Stock").18EXHIBIT A AWARDS UNDER THE LEAP WIRELESS INTERNATIONAL. judgment. and all rights or remedies of the Company and of the EXECUTIVE to the contrary are hereby expressly waived.1 EXECUTIVE Representations and Warranties. Stephens Title: Senior Vice President. and by an arbitrator appointed pursuant to. or in such other location as the parties may agree.000 shares of the Parent's Common Stock. order. the National Rules for the . governmental agency. 2004 STOCK OPTION.0001 per share. decree. ruling. charge. instrument.17IN WITNESS WHEREOF. EXECUTIVE represents and warrants that he is not restricted or prohibited. in accordance with. (i) Due Authorization. /s/ S. The execution. and that his execution and performance of this Agreement will not violate or breach any other agreement between EXECUTIVE and any other person or entity. and the judgment upon the award rendered pursuant thereto shall be in writing and may be entered in any court having jurisdiction. Human Resources . INC. par value $. statute. or require any notice under any agreement. or other restriction of any government.

Deferred Stock Unit Award: Award of 30. Stock Option Grants: repurchase and transfer restrictions set forth in Exhibit A-4 attached hereto. the Restricted Stock Agreement and the Plan. INC. Hutcheson GRANT DATE: ______________. his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit C. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN RESTRICTED STOCK AWARD GRANT NOTICE AND RESTRICTED STOCK AWARD AGREEMENT Leap Wireless International. at an exercise price of $26. pursuant to its 2004 Stock Option. Holder has reviewed the Restricted Stock Agreement. Inc. subject to vesting and exercisability conditions set forth in Exhibit A-2 attached hereto. 2005 PURCHASE PRICE PER SHARE: $0. hereby grants to the holder listed below ("HOLDER"). the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement. If Holder is married. Grant of option to purchase 75. LEAP WIRELESS INTERNATIONAL.106 shares of Parent Common Stock. Hutcheson Title: ______________________________ Title: _______________________________ Address: 10307 Pacific Center Court Address: _____________________________ San Diego.19ATTACHMENT A-1 LEAP WIRELESS INTERNATIONAL. INC.35 per share. 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.000 shares of Deferred Stock Units. fully vested and subject to deferred purchase conditions set forth in Exhibit A-3 attached hereto. Holder hereby agrees to accept as binding.55 per share. conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan. at an exercise price of $26.0001 per share TOTAL NUMBER OF SHARES OF RESTRICTED STOCK: VESTING SCHEDULE: [__________] The Shares shall be released from the Company's Repurchase Option set forth in Section 3. 3. 2004 STOCK OPTION. By his or her signature and the Company's signature below. Restricted Stock and Deferred Stock Unit Plan (the "PLAN").0001 per share. each of which are incorporated herein by reference. Unless otherwise defined herein.901 shares of Parent Common Stock. Grant of option to purchase 85.2. the Restricted Stock Agreement and this Grant Notice. (the "COMPANY"). subject to vesting and exercisability conditions set forth in Exhibit A. this Grant Notice or the Restricted Stock Agreement.5 attached hereto. HOLDER: By: _________________________________ By: __________________________________ Print Name: _________________________ Print Name: Stewart D. the Plan and this Grant Notice in their entirety.1 of the Restricted Stock Agreement on the dates and in the percentages indicated in Exhibit B to this Grant Notice. the right to purchase the number of shares of the Company's Common Stock set forth below (the "SHARES") at the purchase price set forth below. . This Restricted Stock award is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the "RESTRICTED STOCK AGREEMENT") and the Plan. California _____________________________ 92121 . Holder agrees to be bound by the terms and conditions of the Plan. HOLDER: Stewart D. at a purchase price of $.

the Company irrevocably grants to Holder the right to purchase the number of shares of Common Stock set forth in the Grant Notice (the "SHARES"). in its absolute discretion.1shall not be required to issue or deliver any Shares 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. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") indicated in the Grant Notice. reverse stock split. Except as otherwise provided herein. 2.2 Incorporation of Terms of Plan. subject to the restrictions herein. The Shares. 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. Inc. Holder shall have all the rights of a stockholder with respect to said Shares. The Shares are subject to the terms and conditions of the Plan which are incorporated herein by reference. effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE"). including payment of any applicable withholding tax. however. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice. in its absolute discretion. deem necessary or advisable.EXHIBIT A TO RESTRICTED STOCK AWARD GRANT NOTICE RESTRICTED STOCK AWARD AGREEMENT Pursuant to the Restricted Stock Award Grant Notice ("GRANT NOTICE") to which this Restricted Stock Award Agreement (this "AGREEMENT") is attached. upon the terms and conditions set forth in the Plan and this Agreement. recapitalization. ARTICLE II GRANT OF RESTRICTED STOCK 2. The payment of the purchase price shall be paid by cash or check. The purchase price of the Shares shall be as set forth in the Grant Notice.4 of the Plan. 2.4 Conditions to Issuance of Stock Certificates. reclassification. and (d) The lapse of such reasonable period of time following the Issuance Date as the Administrator may from time to time establish for reasons of administrative convenience.1 Defined Terms. which in the discretion of the Administrator may be in the form of consideration used by Holder to pay for such Shares. 1. combination. (the "COMPANY") has granted to Holder the right to purchase the number of shares of Restricted Stock under the Company's 2004 Stock Option. that any and all cash dividends paid on such Shares and any and all shares of Common Stock. 2.1 Grant of Restricted Stock. capital stock or other securities received by or distributed to Holder with respect to the Shares as a result of any stock dividend stock split. the Company shall issue the Shares (which shall be issued in Holder's name). provided. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. which the Administrator shall. determine to be necessary or advisable. upon delivery of the Shares to the escrow holder pursuant to Article IV. The issuance of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the parties or on such other date as the Company and Holder shall agree (the "ISSUANCE DATE"). or any portion thereof. Subject to the provisions of Article IV below. 2. Such Shares shall be fully paid and nonassessable.2 Purchase Price.5 Rights as Stockholder. and (e) The receipt by the Company of full payment for such Shares. 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. Leap Wireless International. or similar change in the capital structure of the Company shall also be subject to the Repurchase Option (as defined in Section 3. ARTICLE I GENERAL 1. subject to Section 10. on the Issuance Date.3 Issuance of Shares. including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares. The Company .1 below) and the restrictions on transfer in Section 3. without commission or other charge.4 below until such restrictions on the underlying Shares lapse or are removed pursuant .

to this Agreement. at the Company's option. 3. to repurchase all or any portion of the Unreleased Shares (as defined below in Section 3.3shall. Termination of Directorship or Termination of Consultancy. as applicable. deliver and deposit with the Secretary of the Company. ARTICLE III RESTRICTIONS ON SHARES 3.1. for a period of sixty (60) days. shall be liable for the debts. anticipation. The Repurchase Option shall lapse and terminate one hundred fifty (150) days after Holder has a Termination of Employment. such Unreleased Shares. as applicable. encumbrance. before all of the Shares are released from the Company's Repurchase Option (as defined below). alienation.1 Repurchase Option.1 Escrow of Shares. repurchased by the Company pursuant to the Repurchase Option pursuant to Section 3. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. Upon release of the Unreleased Shares. commencing ninety (90) days after the date Holder has a Termination of Employment. The Unreleased Shares and stock assignment shall be held by the Secretary of the Company. Any of the Shares which. attachment.in. or such other person designated by the Administrator. The Shares shall be released from the Company's Repurchase Option as indicated in Exhibit B to the Grant Notice. Upon delivery of such notice and the payment of the Aggregate Repurchase Price. and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. no Unreleased Shares or any dividends or other distributions thereon or any interest or right therein or part thereof. and any attempted disposition thereof shall be null and void and of no effect. but not the obligation.1.2time (the "Repurchase Option") at the original cash purchase price per share (the "Repurchase Price"). any share certificates representing the Unreleased Shares. have an irrevocable. upon the date of such Termination (as reasonably fixed and determined by the Company). The Repurchase Option shall be exercisable by the Company by written notice to Holder or Holder's executor (with a copy to the escrow agent appointed pursuant to Section 4. Unless otherwise permitted by the Administrator pursuant to the Plan.3) at such . if any. or until such time as this Agreement no longer is in effect. ARTICLE IV ESCROW OF SHARES 4. upon execution of this Agreement.4. in escrow. garnishment or any other legal or equitable proceedings (including bankruptcy).fact to assign and transfer unto the Company. Termination of Directorship or Termination of Consultancy. To insure the availability for delivery of Holder's Unreleased Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 3.4 Restrictions on Transfer." 3. Subject to the provisions of Section 3.2 below.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Holder. the escrow agent shall deliver to Holder the certificate or certificates representing . or any other person designated by the Administrator as escrow agent. any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4. levy. pursuant to the Joint Escrow Instructions of the Company and Holder attached as Exhibit E to the Grant Notice. In the event any of the Shares are released from the Company's Repurchase Option. pledge. as his or her attorney.1 and any dividends or other distributions thereon. exclusive option. together with the stock assignment duly endorsed in blank.2 Release of Shares from Repurchase Restriction. any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4. Any of the Shares released from the Company's Repurchase Option shall thereupon be released from the restrictions on transfer under Section 3.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Company. contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer. the Company shall. and . by delivery to Holder or Holder's executor with such notice of a check in the amount of the Repurchase Price times the number of Shares to be repurchased (the "Aggregate Repurchase Price"). Holder hereby appoints the Secretary of the Company.1. as applicable. attached to the Grant Notice as Exhibit D to the Grant Notice. if Holder has a Termination of Employment. In the event the Company repurchases any Shares under this Section 3.1 below) and shall be exercisable.3 Unreleased Shares. or such other person designated by the Administrator. Termination of Directorship or Termination of Consultancy. the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto. 3. until such Unreleased Shares are released from the Company's Repurchase Option. until the Company exercises its Repurchase Option as provided in Section 3. have not yet been released from the Company's Repurchase Option are referred to herein as "Unreleased Shares. from time to time.

if Holder is subject to Section 16 of the Exchange Act. stock split. The provisions of this Agreement shall apply. "restriction" includes the right of the Company to repurchase the Shares pursuant to its Repurchase Option set forth in Section 3. EVEN IF HOLDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HOLDER'S BEHALF 5. recapitalizations and the like occurring after the date hereof. this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. this Agreement or the Shares. reclassification. Holder understands that Holder will recognize ordinary income for federal income tax purposes under Section 83 of the Code. ARTICLE V OTHER PROVISIONS 5. 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. interpretation and application of the Plan as are consistent therewith and to interpret.1. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder. In its absolute discretion. Holder has reviewed with Holder's own tax advisors the federal. the Administrator shall make appropriate and equitable adjustments in the Unreleased Shares subject to the Repurchase Option and the number of Shares.such Shares in the escrow agent's possession belonging to Holder in accordance with the terms of the Joint Escrow Instructions attached as Exhibit E to the Grant Notice. consistent with any adjustment under Section 10. A form of election under Section 83(b) of the Code is attached to the Grant Notice as Exhibit F. determination or interpretation made in good faith with respect to the Plan. or such other person designated by the Administrator.1 and the Joint Escrow Instructions. Holder hereby authorizes and directs the Secretary of the Company. or its designee. provided. 4. 5. In this context. Holder understands that Holder may elect to be taxed for federal income tax purposes at the time the Shares are purchased rather than as and when the Repurchase Option lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the date of purchase. the Plan. the Company and all other interested persons. combination. the Shares and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b. In the event of any stock dividend.3 No Liability for Actions in Connection with Escrow.3 of the Exchange Act) that are requirements for the application of such exemptive rule.4Grant Notice and this Agreement. No member of the Administrator shall be personally liable for any action.2 Taxes. reverse splits. however. The Company. If any dividends or other distributions are paid on the Unreleased Shares held by the escrow agent pursuant to this Section 4. reverse stock split. If the Shares are held in book entry form.1 Adjustment for Stock Split. combinations. amend or revoke any such rules. then such entry will reflect that the Shares are subject to the restrictions of this Agreement. to any and all shares of capital stock or other securities which may be issued in respect of. and shall be appropriately adjusted for any stock dividends. Holder understands that Holder (and not the Company) shall be responsible for Holder's own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. Notwithstanding any other provision of the Plan or this Agreement. that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement. to transfer the Unreleased Shares as to which the Repurchase Option has been exercised from Holder to the Company. recapitalization. 5.2 Transfer of Repurchased Shares. or in substitution of the Shares. such dividends or other distributions shall also be subject to the restrictions set forth in this Agreement and held in escrow pending release of the Unreleased Shares with respect to which such dividends or other distributions were paid from the Company's Repurchase Option. state. local and foreign tax consequences of this investment and the transactions contemplated by the . HOLDER ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b). shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.3 of the Plan. 4. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration. in exchange for. Holder is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.3 Limitations Applicable to Section 16 Persons. and the escrow agent shall be discharged of all further obligations hereunder. to the full extent set forth herein with respect to the Shares.4 Administration. . To the extent permitted by applicable law. or similar change in the capital structure of the Company. splits.

signed by Holder and by a duly authorized representative of the Company. Notwithstanding anything herein to the contrary. . with or without cause. which are expressly reserved.8 Governing Law. it may make appropriate notations to the same effect in its own records.11 No Employment Rights. 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. 5. (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. If Holder is an Employee. 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. only in such a manner as to conform to such laws. 5. The Company may assign any of its rights under this Agreement to single or multiple assignees.5. administrators. 5. if any. 5.7 Titles. in order to ensure compliance with the restrictions referred to herein. rules and regulations. the Plan shall be administered.7EXHIBIT B . By a notice given pursuant to this Section 5. This Agreement shall be administered. This Agreement may not be modified. executors. (a) Any share certificate(s) evidencing the Shares issued hereunder shall be endorsed with the following legend and any other legend required by any applicable federal and state securities laws: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY .6Subsidiaries. except to the extent expressly provided otherwise in a written agreement between the Company and Holder. and this Agreement shall inure to the benefit of the successors and assigns of the Company. either party may hereafter designate a different address for notices to be given to that party. and the Shares are to be issued. successors and assigns. 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 .10 Amendments. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof.6 Notices. and that. and state securities laws and regulations. 5.6.12 Successors and Assigns. To the extent permitted by applicable law. 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. the Company may issue appropriate "stop transfer" instructions to its transfer agent. A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 5. Severability. rules and regulations.9 Conformity to Securities Laws. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable.5 Restrictive Legends and Stop. 5. this Agreement shall be binding upon Holder and his or her heirs. amended or terminated except by an instrument in writing. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.5AND THE STOCKHOLDER. 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. to discharge Holder at any time for any reason whatsoever. 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. Subject to the restrictions on transfer herein set forth. the other provisions shall nevertheless remain effective and shall remain enforceable. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws. (b) Holder agrees that. if the Company transfers its own securities.Transfer Orders.

Based Accelerated Vesting.1.Based Vesting. or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B.5% Maximum [***] 15% 2005 EBITDA (in thousands) Threshold [***] Target [***] Maximum [***] 12. 2005 PERFORMANCE.BASED VESTING SCHEDULE Threshold [***] 10% 2005 Net Adds Target [***] 12. then a number of the Unreleased Shares shall be released from the Company's Repurchase Option on the applicable Performance Vesting Effective Date equal to the number obtained by multiplying the percentage determined in accordance with the following table.5% Maximum [***] 15% 2006 EBITDA (in thousands) Threshold [***] Target [***] Maximum [***] 12. then a certain percentage of the Unreleased Shares shall be released in accordance with the provisions of paragraphs (a) and (b) below. however. If the Company's EBITDA (as defined below) and the Company's Net Adds (as defined below) both equal or exceed the respective Achievement Threshold amounts for 2005 as set forth in paragraph (a) below and/or both equal or exceed the respective Achievement Threshold amounts for 2006 as set forth in paragraph (b) below. (a) Fiscal Year 2005. Director or Consultant on such date.5% 15% 20% 22.5% 30% *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. that no Unreleased Shares shall be released pursuant to paragraphs (a) or (b) below if either the Company's EBITDA or Net Adds do not at least equal the Achievement Threshold amount for the applicable year. 3 and 4 below.5% 22. 2.5% 30% . Performance. if the Holder is an Employee. (b) Fiscal Year 2006.1The percentage of Unreleased Shares which shall be released from the Company's Repurchase Option if performance is between the Achievement Threshold amount and the Achievement Target amount.5% 15% 20% 22. then a number of the Unreleased Shares shall be released from the Company's Repurchase Option on the applicable Performance Vesting Effective Date equal to the number obtained by multiplying the percentage determined in accordance with the following table. by the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). by the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). provided. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for the Fiscal Year 2005 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below). 2006 Net Adds Threshold Target [***] [***] 10% 12. 1. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for Fiscal Year 2006 equal or exceed the EBITDA and Net Add Achievement Thresholds (as set forth below). Time. the Unreleased Shares shall be released from the Company's Repurchase Option in their entirety on the third anniversary of the Grant Date.5% 22. .TO RESTRICTED STOCK AWARD GRANT NOTICE VESTING PROVISIONS Capitalized terms used in this Exhibit B and not defined below shall have the meanings given them in the Agreement to which this Exhibit B is attached. Subject to any accelerated vesting pursuant to paragraphs 2.

K for the relevant Fiscal Year. If the Company adopts a pre. the term "FISCAL YEAR" means the Company's fiscal year ending December 31. 3.3(i) Minimum Vesting for Fiscal Year 2006.cash impairment of assets (tangible and intangible) and related non. or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. (vii) non. Except as otherwise provided in subparagraph 2(i). equitably adjust the Net Adds Achievement Levels set forth in paragraphs (a) and (b) to reflect the Company's changed scope of operations. the Administrator shall. 2005. For purposes of this Exhibit B. "end of period customers" on the last day of such Fiscal Year less "end of period customers" on the last day of the preceding Fiscal Year. Continued Service Condition.Based Vesting. .1. as applicable. equitably adjust the EBITDA Achievement Levels and/or the Net Adds Achievement Levels to reflect the Company's changed scope of operations. (c) Definition of EBITDA.paid card based service offering. (v) charges and expenses related to stock based compensation awards. (j) Termination of Performance. (g) Definition of Fiscal Year. the term "NET ADDS" means. Director or Consultant on December 31. the term "EBITDA" for a Fiscal Year means the Company's consolidated net income or loss for such period before extraordinary items and before the cumulative effect of any change in accounting principles plus (a) the following to the extent deducted in calculating such consolidated net *** Certain information on this page has been omitted and filed separately with the Commission.nine (39) markets. or ceases to operate in any existing market. Cricket Communications Inc. Change in Control Accelerated Vesting. (h) Definition of Performance Vesting Effective Date.cash dividends or other distributions made with respect to qualified preferred stock as contemplated by the Credit Agreement negotiated among the Company. in its discretion. (iii) depreciation and amortization expense. in its discretion. the Administrator shall. the administrative agent identified therein and others posted to IntraLinks on December 23. (iv) non. For purposes of this Exhibit B. Notwithstanding the foregoing provisions of this paragraph 2. Notwithstanding the other provisions of this paragraph 2 (other than subparagraph 2(j)). no Unreleased Shares shall be released from the Company's Repurchase Option under this paragraph 2 on or after the date of occurrence of a Change in Control. then the minimum number of Unreleased Shares that shall be released from the Company's Repurchase Option under this subparagraph 2 on the Performance Vesting Effective Date for Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal Year 2006) shall be twenty percent (20%) of the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). (f) Release of Shares Cumulative. the date of the public announcement by the Company of EBITDA or Net Adds. The EBITDA Achievement Levels and Net Adds Achievement Levels set forth in paragraphs (a) and (b) are designed to be measured against the Company's performance in its existing thirty. 2004 and (viii) other nonrecurring expenses reducing such consolidated net income or loss which do not represent a cash item in such period or any future period (including losses attributable to the sale of assets other than in the ordinary course of business) and minus (b) the following to the extent included in calculating such consolidated net income or loss: (i) income tax credits for such period. (d) Definition of Net Adds. For purposes of this Exhibit B. Confidential treatment has been requested with respect to the omitted portions. the term "PERFORMANCE VESTING EFFECTIVE DATE" means. (e) Adjustments for Future Changes in the Company's Business. . The release of Unreleased Shares from the Company's Repurchase Option under paragraphs (a) and (b) shall be cumulative.. as applicable.cash charges. (ii) all gains arising in relation to the sale of assets other than in the ordinary course of business and (iii) all noncash items increasing such consolidated net income or loss for such period. For purposes of this Exhibit B. for the relevant Fiscal Year. if the Holder is an Employee. with respect to any Fiscal Year. with respect to the release from the Company's Repurchase Option of Unreleased Shares to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005 or 2006.cash reorganization expenses and charges. (vi) net non. (ii) all income tax expense deducted in arriving at such consolidated net income or loss. but in no event shall the Company make such public announcement later than the date on which the Company files its Form 10. .The percentage of Unreleased Shares which shall be released from the Company's Repurchase Option if performance is between the Achievement Threshold amount and the Achievement Target amount. If the Company commences operations in any new markets. Director or Consultant of the Company or any of its Subsidiaries on the applicable Performance Vesting Effective Date. Unreleased Shares shall only be released from the Company's Repurchase Option pursuant to this paragraph 2 if Holder is an Employee.2income or loss: (i) consolidated interest expense.

if later. upon written request of the Company and reasonable advance notice. then seventy.five percent (75%) of the Unreleased Shares shall be released from the Company's Repurchase Option. (c) Change in Control on or after January 1. Director or Consultant immediately prior to such Change in Control. consulting services to the Company (or to the Parent at the direction of the Company. In the event of a Change in Control.500 per day. (a) Accelerated Vesting in the Event of Termination of Employment by the Company Other than for Cause or by Holder for Good Reason After February 28. 4. 2007. In the event of a Change in Control on or after January 1.1 . immediately prior to the date of the occurrence of such Change in Control). Holder agrees to keep the EBITDA and Net Adds achievement levels set forth in this Exhibit B confidential and not to disclose such thresholds to any third party without the prior written consent of the Company. and does provide. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. during the period commencing ninety (90) days prior to such Change in Control and ending twelve (12) months after such Change in Control. Limit on Release of Shares. In the event of a Change in Control prior to January 1. and (iii) if the Holder is an Employee. and shall be arranged so as to reasonably accommodate Holder's vacation or other personal affairs. or by reason of resignation by the Holder for Good Reason after February 28. Director or Consultant immediately prior to such Change in Control. 6. In the event of a Change in Control during 2006. 5. and (ii) if Holder is an Employee. or by reason of resignation by Holder for Good Reason (as defined below).five percent (25%) of the Unreleased Shares shall be released form the Company's Repurchase Option and (ii) if the . (i) if the Holder. Confidentiality. (b) Change in Control during 2006. (i) if Holder is an Employee. (d) Termination of Employment in the Event of a Change in Control. Director or Consultant immediately prior to such Change in Control. on the date of Holder's Termination of Employment (or. In no event will more than 100% of the Unreleased Shares be released from the Company's Repurchase Option pursuant to the provisions of this Exhibit B. 2006.4Change in Control occurs on or after January 1. then any remaining Unreleased Shares shall be released from the Company's Repurchase Option. Inc. in each case. . (b) Definitions of Cause and Good Reason. then the remaining Unreleased Shares shall be released from the Company's Repurchase Option. then eighty. by and between Holder.(a) Change in Control prior to January 1.five percent (85%) of the Unreleased Shares shall be released from the Company's Repurchase Option and (ii) if the Holder is an Employee. 2006. Accelerated Vesting in the Event of Termination of Employment. 2006. 2005. twenty. Director or Consultant on the second anniversary of the date of the occurrence of such Change in Control. and (ii) if Holder is an Employee.5ATTACHMENT B. or (ii) such remaining Unreleased Shares shall otherwise be released from the Company's Repurchase Option on the third anniversary of the Grant Date. The Company and the Holder shall mutually use their best efforts to schedule the date or dates on which the Holder will provide the requested consulting services so as not to prevent the Holder from being gainfully employed by a subsequent employer. as amended from time to time (the "EMPLOYMENT AGREEMENT"). Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. 2006.revocation of such General Release during the time period for such revocation set forth therein. the Company and Cricket Communications. 2006. agrees to provide. if Holder has a Termination of Employment by reason of discharge by the Company other than for Cause (as defined below). the remaining Unreleased Shares shall be released from the Company's Repurchase Option on the last day of the one year period.9 of the Employment Agreement and the Holder's non. if Holder is an Employee. In the event of Holder's Termination of Employment by reason of discharge by the Company other than for Cause. or both) for up to five (5) days a month for up to a one (1) year period for a fee of $1. (i) if Holder is an Employee. For purposes of this Exhibit B.. 2006. Director or Consultant on the first anniversary of the date of occurrence of such change in Control. 2007. (c) Condition to Release of Shares. then fifty percent (50%) of the Unreleased Shares shall be released from the Company's Repurchase Option. then any then remaining Unreleased Shares shall be released from the Company's Repurchase Option. The release of Unreleased Shares from the Company's Repurchase Option pursuant to this paragraph 4 shall be conditioned on the Holder's delivery to the Company of an executed General Release in accordance with Section 5. the terms "CAUSE" and "GOOD REASON" shall have the meanings given to such terms in that certain Amended and Restated Executive Employment Agreement dated as of January 10. then (i) if the Change in Control occurs prior to January 1. then an additional fifty percent (50%) of the Unreleased Shares shall be released from the Company's Repurchase Option. the remaining Unreleased Shares shall be released from the Company's Repurchase Option.

5% 15% 2005 Net Adds Target [***] 12.25% (midpoint of 12.5%.based payout schedule by finding the halfway point at each defined level of Net Adds. This means the actual payout must fall 1/3 of the way between 16.5% and 20%.5%) 2005 Net Adds Target [***] 16.5% Maximum [***] 15% 2005 EBITDA (in thousands) 20% 22. Thus the interpolated. Since EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]). First we determine where [***] lies in the range of [***] to [***]. PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12. So the actual performance of [***] net adds falls 1/3 of the way between [***] net adds (target) and [***] net adds (maximum).based payout schedule looks like this: Threshold [***] 11. The length of the range is [***] [***] = [***] net adds.6PROBLEM: Neither the net adds performance nor the EBITDA performance fall exactly on a specified payout. Thus the payout is (1/3)*(18. At [***] net adds.2005 EBITDA: [***] . At [***] net adds. Starting with either measure will yield the same result.5%)+12. the EBITDA.75%. .08% .12. the EBITDA. Thus the payout is (1/2)*(20%. [***] is [***] above the range minimum ([***] .75%.5%) 2005 EBITDA Actual [***] (midpoint of [***]and [***]) To determine the actual payout given this range.based payout would be halfway between 15% and 22. PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***]and [***]).based payout would be halfway between 12. At [***] net adds. so we can interpolate an EBITDA.5% .5% and 20%.between the schedule.5% for threshold EBITDA performance and 20% for target EBITDA performance.Payout = 17.25% (midpoint of 10% and 12.5%. but performance in EBITDA falls somewhere in. the EBITDA. the actual payout should be halfway between the scheduled payouts of 12. SOLUTION: Use straight line interpolation for both measures.METHODOLOGY FOR LINEAR INTERPOLATION Threshold [***] Threshold 10% [***] Target [***] Maximum [***] 12.25%)+16.5% and 20%) Maximum [***] 18.25% .line interpolation to determine the final payout. SOLUTION: Start with the net adds payout column and use straight.25% Example 2: .25% and 18. EBITDA.Payout = 16.[***] = [***]). Confidential treatment has been requested with respect to the omitted portions. Example 1: 2005 EBITDA: [***] 2005 Net Adds: [***] PROBLEM: The net adds performance falls exactly on a specified payout range.16.75% (midpoint of 15% and 22.5% 30% The EBITDA amounts in the following examples are shown in thousands.based payout would be halfway between 10% and 12.2005 Net Adds: [***] *** Certain information on this page has been omitted and filed separately with the Commission.5% 22. we interpolate a payout at [***] net adds based on the scheduled payouts at [***] and [***].

set forth in the Agreement. spouse of Stewart D. California 92121 Ladies and Gentlemen: As escrow agent (the "ESCROW AGENT") for both Leap Wireless International. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "COMPANY") exercises the Company's Repurchase Option as defined in the Agreement). [_______] shares of the Common Stock of LEAP WIRELESS INTERNATIONAL.. Inc. hereby sells. and the undersigned recipient of stock of the Company (the "HOLDER").1EXHIBIT D TO RESTRICTED STOCK AWARD GRANT NOTICE STOCK ASSIGNMENT FOR VALUE RECEIVED. Hutcheson.*** Certain information on this page has been omitted and filed separately with the Commission.2005 Signature of Spouse . [________________________]. Inc. 2005 Secretary Leap Wireless International. Confidential treatment has been requested with respect to the omitted portions. Hutcheson. a Delaware corporation. INC. INC.2005. Inc. 10307 Pacific Center Court San Diego. a Delaware corporation (the "COMPANY"). assigns and transfers unto LEAP WIRELESS INTERNATIONAL. ____ Stewart D. The purpose of this assignment is to enable the Company to exercise its "Repurchase Option.in. . you are hereby authorized and directed to hold in escrow the documents delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement ("AGREEMENT") between the Company and the undersigned (the "Escrow"). the Company shall give to the Holder and you a written notice specifying the number of shares of stock to be purchased. and the undersigned dated [___________]. a Delaware corporation. the purchase price and the time ." as set forth in the Restricted Stock Award Agreement.7EXHIBIT C TO RESTRICTED STOCK AWARD GRANT NOTICE CONSENT OF SPOUSE I. Stewart D. the undersigned.. In consideration of issuing to my spouse the shares of the common stock of Leap Wireless International. INC. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement. . This Stock Assignment may be used only in accordance with the Restricted Stock Award Agreement between LEAP WIRELESS INTERNATIONAL. I hereby appoint my spouse as my attorney. Dated: [_______________]. including the stock certificate and the Assignment in Blank. have read and approve the foregoing Agreement. [____] herewith and do hereby irrevocably constitute and appoint [____________________] to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of Leap Wireless International. Dated: _______________..1EXHIBIT E TO RESTRICTED STOCK AWARD GRANT NOTICE JOINT ESCROW INSTRUCTIONS ________________. Inc. in accordance with the following instructions: 1. Hutcheson INSTRUCTIONS: Please do not fill in the blanks other than the signature line. standing in its name of the books of said corporation represented by Certificate No. without requiring additional signatures on the part of Holder.

excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders. 7. modified. unless the Company's Repurchase Option has been exercised.for a closing hereunder at the principal office of the Company. may rely upon the advice of such counsel. amended. and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney. you will deliver to Holder a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not repurchased pursuant to the Repurchase Option set forth in Section 3. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto.1 of the Agreement. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder. If at the time of termination of this escrow you should have in your possession any documents. to the Company or its assignee. In the event of any such termination. modified or revoked only by a writing signed by all of the parties hereto. 10. You shall not be liable in any respect on account of the identity. you are directed (a) to date the stock assignments necessary for the repurchase and transfer in question. (b) to fill in the number of shares being repurchased and transferred. 13.fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. but no more than once per calendar month.in. The Company will reimburse you for any reasonable attorneys' fees with respect thereto. Subject to the provisions of this paragraph and the Agreement. together with the certificate evidencing the shares of stock to be repurchased and transferred. the necessary parties hereto shall join in furnishing such instruments. judgments or decrees of any court. 3. 9. 14.fact for Holder while acting in good faith. including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to. . set aside. notwithstanding any such order. you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written . you will deliver to Holder a certificate or certificates representing so many shares of stock as are not then subject to the Repurchase Option. Holder does hereby irrevocably constitute and appoint you as Holder's attorney. .212. authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. you shall deliver all of the same to the Holder and shall be discharged of all further obligations hereunder. securities. or other property belonging to Holder. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder. the securities. You shall not be liable for the expiration of any rights under any applicable state. the Company shall appoint a successor Escrow Agent. Within one hundred twenty (120) days after any voluntary or involuntary termination of Holder's services to the Company for any or no reason. annulled. and may pay such counsel reasonable compensation therefor.in. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation. Your duties hereunder may be altered. you shall not be liable to any of the parties hereto or to any other person. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. firm or corporation by reason of such compliance.14. 2. Holder shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 11. vacated or found to have been entered without jurisdiction. 8. 5. In case you obey or comply with any such order. or notice of transfer of. The Holder and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice. Upon written request of Holder. and (c) to deliver the same. 6. judgment or decree being subsequently reversed. As of the date of closing of the repurchase indicated in such notice. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you. judgment or decree.

18. and construed and enforced in accordance with. INC. if any by written notice under this Section 15. Very truly yours. By: ___________________________________ Name: Title: Address: 10307 Pacific Center Court San Diego. Inc. par value $0.3IN WITNESS WHEREOF. California 92121 -4- EXHIBIT F TO RESTRICTED STOCK AWARD GRANT NOTICE FORM OF 83(B) ELECTION AND INSTRUCTIONS These instructions are provided to assist you if you choose to make an election under Section 83(b) of the Internal Revenue Code. any party may hereafter designate a different address for notices to be given to that party. PLEASE CONSULT WITH YOUR PERSONAL TAX ADVISOR AS TO WHETHER AN ELECTION OF THIS NATURE WILL BE IN YOUR BEST INTERESTS IN LIGHT OF YOUR PERSONAL TAX SITUATION. Inc. (Signature Page Follows) . By a notice given pursuant to this Section 15. decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected. Any notice. but you shall be under no duty whatsoever to institute or defend any such proceedings. The steps outlined below should be followed to ensure the election is mailed and filed correctly and in a timely manner. and their respective successors and permitted assigns. the parties have executed these Joint Escrow Instructions as of the date first written above. you do not become a party to the Agreement. These Joint Escrow Instructions shall be governed by. 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. . which is required to be given to Holder. you become a party hereto only for the purpose of said Joint Escrow Instructions. PLEASE NOTE: If you make the Section 83(b) election. 17. with respect to the shares of common stock. LEAP WIRELESS INTERNATIONAL. be given to Holder's designated beneficiary. 16. the laws of the State of Delaware. as amended. shall. 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 obtained by the United States Postal Service. of Leap Wireless International.0001. and any notice to be given to the Holder or you shall be addressed to the address given beneath Holder's and your signatures on the signature page to this Agreement. without regard to conflicts of law thereof. California 92121 HOLDER: ________________________________________ Stewart D. Address: 10307 Pacific Center Court San Diego. Secretary. Leap Wireless International.agreement of the parties concerned or by a final order. if the Holder is then deceased. transferred to you. By signing these Joint Escrow Instructions. 15. Hutcheson Address _______________________________ _______________________________ ESCROW AGENT: By: ________________________________ Robert Irving. the election is irrevocable. This instrument shall be binding upon and inure to the benefit of the parties hereto. The executed original of the Section 83(b) election must be filed with the Internal Revenue Service not later than 30 days after the date the shares were transferred to you. PLEASE NOTE: There is no remedy for failure to file on time. ALSO.

should sign Section 83(b) election form as well. 4.. par value $0. 1. your postmarked receipt is your proof of having timely filed the Section 83(b) election if you do not receive confirmation from the Internal Revenue Service. Dated: _____________. address and taxpayer identification number of the Taxpayer's spouse are (complete if applicable): _____________________ _____________________ _____________________ SSN: Description of the property with respect to which the election is being made: __________________(_____) shares of Common Stock. Enclose a self. of Leap Wireless International. Taxpayer Signature ________________________ The undersigned spouse of Taxpayer joins in this election. Inc. par value $0.1. Please consult your personal tax advisor for the address of the office of the Internal Revenue Service to which you should mail your election form. 2. However.1Dated: _____________. Retain the Internal Revenue Service file stamped copy (when returned) for your records. The taxable year to which this election relates is calendar year 200_. The name. Inc. .83. 3. Send the cover letter with the originally executed Section 83(b) election form and one (1) copy via certified mail. (Complete if applicable). Nature of restrictions to which the property is subject: The Shares are subject to repurchase at their original purchase price if unvested as of the date of termination of employment.) 2. return receipt requested to the Internal Revenue Service at the address of the Internal Revenue Service where you file your personal tax returns.stamped at the post office. .addressed. We suggest that you have the package date.1ATTACHMENT 1 TO EXHIBIT F ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B) The undersigned taxpayer hereby elects. The fair market value at the time of transfer (determined without regard to any lapse restrictions.3(a)) of the Shares was $___________ per Share. The date on which the property was transferred was _________.0001 per share. Prepare the cover letter to the Internal Revenue Service (sample letter attached as Attachment 2). as defined in Treasury Regulation Section 1. as amended. 5. if any.0001 per share. (Your spouse. a Delaware corporation (the "Company"). 5. pursuant to Section 83(b) of the Internal Revenue Code of 1986. address and taxpayer identification number of the undersigned taxpayer are: Stewart D. Hutcheson _____________________ _____________________ SSN: The name. to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer's receipt of shares (the "Shares") of Common Stock. 200_. Spouse's Signature ________________________ Signature(s) Notarized by: . for its records and one (1) copy must be attached to your federal income tax return for the applicable calendar year.stamped copy to you. directorship or consultancy with the Company. stamped envelope so that the Internal Revenue Service may return a date. The amount paid by the taxpayer for Shares was $0.0001 per share. 6. 4. 3. The post office will provide you with a white certified receipt that includes a dated postmark. 200_. Complete Section 83(b) election form (attached as Attachment 1) and make four (4) copies of the signed election form. One (1) copy must be sent to Leap Wireless International. of the Company. 7.2ATTACHMENT 2 TO EXHIBIT F SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE . A copy of this statement has been furnished to the Company. 200_.

the Stock Option Agreement and the Plan. being made by the taxpayer referenced above. each of which are incorporated herein by reference. Inc. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN STOCK OPTION GRANT NOTICE AND NON. (the "COMPANY"). pursuant to its 2004 Stock Option. Inc. Very truly yours. hereby grants to the holder listed below ("HOLDER"). 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.Qualified Stock Option Agreement attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT") and the Plan.QUALIFIED STOCK OPTION AGREEMENT Leap Wireless International. Please acknowledge receipt of the enclosed materials by stamping the enclosed copy of the Election and returning it to me in the self. 2004 STOCK OPTION. Hutcheson _________________. the Stock Option Agreement and this Grant Notice. This Option is subject to all of the terms and conditions as set forth herein and in the Non. INC. Holder agrees to be bound by the terms and conditions of the Plan. Hutcheson Enclosures cc: Leap Wireless International. 200_ VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Internal Revenue Service [Address where taxpayer files returns] Re: Election under Section 83(b) of the Internal Revenue Code of 1986 Taxpayer:________________________________________________________________ Taxpayer's Social Security Number:_______________________________________ Taxpayer's Spouse:_______________________________________________________ Taxpayer's Spouse's Social Security Number:______________________________ Ladies and Gentlemen: Enclosed please find an original and one copy of an Election under Section 83(b) of the Internal Revenue Code of 1986. Restricted Stock and Deferred Stock Unit Plan (the "Plan").__________________. HOLDER: GRANT DATE: EXERCISE PRICE PER SHARE: TOTAL NUMBER OF SHARES SUBJECT TO THE OPTION: EXPIRATION DATE: TYPE OF OPTION: Stewart D. The shares of Common Stock subject to the Option (rounded down to the next whole number of shares) shall vest and become exercisable on the dates and in the percentages indicated in Exhibit B to this Grant Notice. conclusive and final all decisions or interpretations of the Administrator of the Plan upon any .1ATTACHMENT A-2 LEAP WIRELESS INTERNATIONAL. VESTING SCHEDULE: By his or her signature and the Company's signature below. . 2015 This Option is a Non-Qualified Stock Option and is not an incentive stock option within the meaning of Section 422 of the Code. Stewart D. an option to purchase the number of shares of the Company's Common Stock set forth below (the "OPTION"). the Plan and this Grant Notice in their entirety. as amended. Unless otherwise defined herein. Holder hereby agrees to accept as binding. Holder has reviewed the Stock Option Agreement. 2005 $___________ per share [_____] __________________.addressed stamped envelope provided herewith. the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement.

Qualified Stock Option and shall not be an incentive stock option within the meaning of Section 422 of the Code. effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE"). Hutcheson Title:_______________________________ Address:_____________________________ _____________________________ EXHIBIT A TO STOCK OPTION GRANT NOTICE NON. The purchase price of the shares of Common Stock subject to the Option shall be as set forth in the Grant Notice. The Option shall be a Non.3. without commission or other charge. (b) No portion of the Option which has not become vested and exercisable at Termination of Employment. ARTICLE II GRANT OF OPTION 2. Leap Wireless International.QUALIFIED STOCK OPTION AGREEMENT Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this Non. upon the terms and conditions set forth in the Plan and this Agreement. 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. Termination of Directorship or Termination of Consultancy. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice. LEAP WIRELESS INTERNATIONAL. 3.3 Expiration of Option. Inc. (the "COMPANY") has granted to Holder an option under the Company's 2004 Stock Option. 1. 2.1 Defined Terms. California 92121 HOLDER: By:__________________________________ Print Name: Stewart D. ARTICLE III PERIOD OF EXERCISABILITY 3.1 Grant of Option.2 Purchase Price. 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.Qualified Stock Option Agreement (this "AGREEMENT") is attached. (a) The Option may not be exercised to any extent by anyone after . 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. The installments provided for in the vesting schedule set forth in Exhibit B to the Grant Notice are cumulative. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference.1applicable.questions arising under the Plan or the Option. By:_____________________________ Print Name:_____________________ Title:__________________________ Address: 10307 Pacific Center Court San Diego.1 Commencement of Exercisability. except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Holder.3 and 5. ARTICLE I GENERAL 1.2 Incorporation of Terms of Plan. 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. INC.2 Duration of Exercisability. as . (a) Subject to Sections 3.8. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in the Grant Notice. shall thereafter become vested and exercisable.

2 Partial Exercise.the first to occur of the following events: (i) The expiration of ten (10) years from the Grant Date. or any exercisable portion thereof.3. "Disability" means permanent and total disability within the meaning of Section 22(e)(3) of the Code. 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. unless such termination occurs by reason of Holder's death or Disability (as defined below) or the Holder's termination by the Company for Cause (as defined in Exhibit B hereto). with respect to any shares of Common Stock that become exercisable pursuant to subparagraph 2(j) or subparagraph 4(a) of Exhibit B hereto. any combination of the consideration provided in the foregoing paragraphs (i). ARTICLE IV EXERCISE OF OPTION 4. 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). After the death of Holder.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 (iv) With the consent of the Administrator. in its absolute discretion. and (c) A bona fide written representation and agreement. Except as provided in Sections 5. the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an . signed by Holder or the other person then entitled to exercise such Option or 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. 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. or (iii) To the extent permitted under applicable laws. or (iv) The date of Termination of Employment. by reason of Holder's death or Disability. 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.3. (b) For purposes of this Agreement. through the delivery of shares of Common Stock which have been owned by Holder for at least six (6) months. 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. 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. or (iii) The expiration of one (1) year following the date of Holder's Termination of Employment. if then wholly exercisable. The Option. 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. such payment may be made. as applicable. 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. (ii) and (iii). stating that the shares of Common Stock are being acquired for Holder's own account. Any exercisable portion of the Option or the entire Option. if later. only Holder may exercise the Option or any portion thereof. The Administrator may.24. such notice complying with all applicable rules established by the Administrator. ninety (90) days following the date such shares become exercisable). . stating that the Option or portion thereof is thereby exercised.2(c). or (ii) With the consent of the Administrator. and (b) Subject to Section 6. provided. damage. as applicable (or. during the lifetime of Holder. or (ii) The expiration of ninety (90) days following the date of Holder's Termination of Employment. in such form as is prescribed by the Administrator.3: (a) An Exercise Notice in writing signed by Holder or any other person then entitled to exercise the Option or portion thereof. in whole or in part. 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. 4.1 Person Eligible to Exercise. Without limiting the generality of the foregoing. Termination of Directorship or Termination of Consultancy.3 Manner of Exercise. 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. Termination of Directorship or Termination of Consultancy for Cause (as defined in Exhibit B hereto). that payment of such proceeds is made to the Company upon settlement of such sale. prior to the time when the Option becomes unexercisable under Section 3. Termination of Directorship or Termination of Consultancy. any exercisable portion of the Option may.2(b) and 5.

deem necessary or advisable. interpretation and application of the Plan as are consistent therewith and to interpret.1 by any person or persons other than Holder. nor have any of the rights or privileges of. alienation. contracts or engagements of Holder or his or her successors in interest or shall be subject to disposition by transfer. levy. this Agreement or the Option. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. The shares of Common Stock deliverable upon the exercise of the Option. and (e) The receipt by the Company of full payment for such shares. 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. assigned or transferred in any manner other than by will or the laws of descent and distribution or. Holder of the Option shall not be. and (d) The receipt by the Company of full payment for such shares.4ARTICLE V OTHER PROVISIONS 5.transfer orders covering such shares.1 Administration. . not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act. 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. .2 Option Not Transferable. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. pledge. The written representation and agreement referred to in the first sentence of this subsection (c) shall. subject to Section 10. 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. pledged. except to the extent that such disposition is permitted by the preceding sentence. 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.3(b).4 of the Plan. garnishment or any other legal or equitable proceedings (including bankruptcy). 4. 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. unless and until the shares underlying the Option have been issued. however. No member of the Administrator shall be personally liable for any action. and any attempted disposition thereof shall be null and void and of no effect. 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. determine to be necessary or advisable. in its absolute discretion. 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.5 Rights as Stockholder.3and may issue stop.3(b). The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration. anticipation. which the Administrator shall. and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. attachment. or any portion thereof. the Company and all other interested persons. determination or interpretation made in good faith with respect to the Plan. amend or revoke any such rules.Option exercise does not violate the Securities Act. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder.4 of the Plan. 4. in its absolute discretion. the Option may not be sold. appropriate proof of the right of such person or persons to exercise the Option. 5. pursuant to a DRO. (a) Subject to Section 5. In its absolute discretion. subject to Section 10. including payment of any applicable withholding tax.4 Conditions to Issuance of Stock Certificates. 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. Such shares shall be fully paid and nonassessable. and all restrictions applicable to such shares have lapsed. and (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4. Neither the Option nor any interest or right therein shall be liable for the debts. encumbrance. subject to the consent of the Administrator.2(b). . and such registration is then effective in respect of such shares.

rules and regulations. any exercisable portion of the Option may. 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. and state securities laws and regulations. be given to the person entitled to exercise his or her Option pursuant to Section 4. in order to ensure compliance with the restrictions referred to herein. To the extent permitted by applicable law. 5. and that. .10 No Employment Rights. 5. rules and regulations. 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. 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. with or without cause. only in such a manner as to conform to such laws. during the lifetime of Holder.5agent. 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. 5. 5. only Holder may exercise the Option or any portion thereof unless it has been disposed of pursuant to a DRO. Subject to the restrictions on transfer herein set forth. subject to the terms and conditions set forth in Section 10. This Agreement shall be administered. to discharge Holder at any time for any reason whatsoever. (b) Holder agrees that.1 of the Plan.8 Conformity to Securities Laws. if the Company transfers its own securities.9 Amendments. executors.(b) Notwithstanding any other provision in this Agreement.11 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees. prior to the time when the Option becomes unexercisable under Section 3. (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.5.65. 5. (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. the other provisions shall nevertheless remain effective and shall remain enforceable.5 Notices.5. Severability. 5. it may make appropriate notations to the same effect in its own records. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. this Agreement shall be binding upon Holder and his or her heirs. By a notice given pursuant to this Section 5. After the death of Holder. except to the extent expressly provided otherwise in a written agreement between the Company and Holder. and this Agreement shall inure to the benefit of the successors and assigns of the Company. Notwithstanding anything herein to the contrary. 5. signed by Holder or such other person as may be permitted to exercise the Option pursuant to Section 4. (c) Unless transferred to a Permitted Transferee in accordance with Section 5.7 Governing Law. 5. Any notice which is required to be given to Holder shall. which are expressly reserved. This Agreement may not be modified.1 by written notice under this Section 5. 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.3. either party may hereafter designate a different address for notices to be given to that party. amended or terminated except by an instrument in writing. the Plan shall be administered. the Option may be transferred to one or more Permitted Transferees. If Holder is an Employee. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof. if any.1 and by a duly authorized representative of the Company. and the Option is granted and may be exercised. with the consent of the Administrator and to the extent the Option is not intended to qualify as an Incentive Stock Option. if Holder is then deceased. .6 Titles.2(b).3 Restrictive Legends and Stop. 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. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable.Transfer Orders.4 Shares to Be Reserved. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws. 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. 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. the Company may issue appropriate "stop transfer" instructions to its transfer .

If the Company's EBITDA (as defined below) and the Company's Net Adds (as defined below) both equal or exceed the respective Achievement Threshold amounts for 2005 as set forth in paragraph (a) below and/or both equal or exceed the Achievement Threshold amounts for 2006 as set forth in paragraph (b) below. successors and assigns.5% 30% *** Certain information on this page has been omitted and filed separately with the Commission. then a certain percentage of the number of shares of Common Stock subject to the Option shall vest and become exercisable in accordance with the provisions of paragraphs (a) and (b) below. 2006 Net Adds Threshold Target Maximum [***] [***] [***] 2006 EBITDA (in thousands) Threshold [***] Target [***] 10% 12. provided. if either the Company's EBITDA or Net Adds do not at least equal the Achievement Threshold amount for the applicable year. Director or Consultant on that date. . (b) Fiscal Year 2006. then the Option shall vest and become exercisable as to that number of shares of Common Stock equal to the number obtained by multiplying the percentage determined in accordance with the following table. if Holder is an Employee. (a) Fiscal Year 2005. that no shares subject to the Option shall vest and become exercisable pursuant to paragraphs (a) or (b) below. Subject to any accelerated vesting and exercisability pursuant to paragraphs 2.7EXHIBIT 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.5% . 2.5% 15% 22. Performance. 2005 PERFORMANCE.Based Vesting. Confidential treatment has been requested with respect to the omitted portions. Time. 1. however.Based Accelerated Vesting. by the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice). the shares of Common Stock subject to the Option shall vest and become exercisable in their entirety on the third anniversary of the Grant Date.5% 12.5% 15% 12.1The percentage for determining the number of shares of Common Stock that shall vest and become exercisable if performance is between the Achievement Threshold amount and the Achievement Target amount or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for Fiscal Year 2005 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below).5% 20% 22.administrators.1. . 3 and 4 below. then the Option shall vest and become exercisable as to that number of shares of Common Stock equal to the number obtained by multiplying the percentage determined in accordance with the following table. If the Company's EBITDA and Net Adds for Fiscal Year 2006 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below).BASED VESTING SCHEDULE 2005 Net Adds Threshold Target Maximum [***] [***] [***] 2005 EBITDA (in thousands) Threshold [***] Target [***] Maximum [***] 10% 12. by the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice).5% 20% 15% 22.

equitably adjust the EBITDA Achievement Levels and/or the Net Adds Achievement Levels to reflect the Company's changed scope of operations. the Company's "end of period customers" on the last day of such Fiscal Year less "end of period customers" on the last day of the preceding Fiscal Year. Except as otherwise provided in subparagraph 2(j). If the Company commences operations in any new markets.based accelerated vesting and exercisability under this paragraph 2 on or after the date of the occurrence of a Change in Control. Confidential treatment has been requested with respect to the omitted portions. For purposes of this Exhibit B.Based Vesting. 2005. Director or Consultant on December 31.cash items increasing such consolidated net income or loss for such period.cash dividends or other distributions made with respect to qualified preferred stock as contemplated by the Credit Agreement negotiated among the Company. if Holder is an Employee. the administrative agent identified therein and others posted to IntraLinks on December 23. Notwithstanding the other provisions of this paragraph 2 (other than subparagraph 2(i)). For purposes of this Exhibit B.1. (vii) non.Maximum [***] 15% 22. as applicable. 2004 and (viii) other non. (e) Adjustments for Future Changes in the Company's Business.5% 30% The percentage for determining the number of shares of Common Stock that shall vest and become exercisable if performance is between the Achievement Threshold amount and the Achievement Target amount or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. (d) Definition of Net Adds.K for the relevant Fiscal Year.2at such consolidated net income or loss. If the Company adopts a pre. as applicable. For purposes of this Exhibit B.. Continued Service Condition. the Administrator shall. (iii) depreciation and amortization expense. the term "FISCAL YEAR" means the Company's fiscal year ending December 31. The vesting and exercisability of the Option as to shares of Common Stock under paragraphs 2(a) and 2(b) shall be cumulative. (v) charges and expenses related to stock based compensation awards. the Option shall vest and become exercisable as to shares of Common Stock pursuant to this paragraph 2 if Holder is an Employee. (f) Accelerated Vesting Cumulative. (c) Definition of EBITDA. in its discretion.nine (39) markets.3(i) Termination of Performance.recurring expenses reducing such consolidated net income or loss which do not represent a cash item in such period or any future period (including losses attributable to the sale of assets other than in the ordinary course of business) and minus (b) the following to the extent included in calculating such consolidated net income or loss: (i) income tax credits for such period. for the relevant Fiscal Year.cash reorganization expenses and charges. the Option shall not vest and become exercisable as to any additional shares of Common Stock pursuant to performance. . but in no event shall the Company make such public announcement later than the date on which the Company files its Form 10. equitably adjust the Net Adds Achievement Levels set forth in paragraphs (a) and (b) to reflect the Company's changed scope of operations. the Administrator shall.cash impairment of assets (tangible and intangible) and related non. (iv) non. (g) Definition of Performance Vesting Effective Date. with respect to vesting and exercisability to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005 or 2006. the term "PERFORMANCE VESTING EFFECTIVE DATE" means. (j) Minimum Vesting For Fiscal Year 2006. in its discretion. . Director or Consultant of the Company or any of its Subsidiaries on the applicable Performance Vesting Effective Date. Notwithstanding the foregoing provisions of this paragraph 2. (vi) net non. For purposes of this Exhibit B. (ii) all income tax expense deducted in arriving *** Certain information on this page has been omitted and filed separately with the Commission. with respect to any Fiscal Year.paid card based service offering. then the minimum additional number of shares of Common Stock that shall vest and become exercisable under this paragraph 2 on the Performance Vesting Effective Date for Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal Year 2006) . the term "NET ADDS" means. or ceases to operate in any existing market. (h) Definition of Fiscal Year.cash charges. The EBITDA Achievement Levels and Net Adds Achievement Levels set forth in paragraphs (a) and (b) are designed to be measured against the Company's performance in its existing thirty. (ii) all gains arising in relation to the sale of assets other than in the ordinary course of business and (iii) all non. Cricket Communications Inc. the term "EBITDA" for a Fiscal Year means the Company's consolidated net income or loss for such period before extraordinary items and before the cumulative effect of any change in accounting principles plus (a) the following to the extent deducted in calculating such consolidated net income or loss: (i) consolidated interest expense. the date of the public announcement by the Company of EBITDA or Net Adds.

the terms "CAUSE" and "GOOD REASON" shall have the meanings given to such terms in that certain Amended and Restated Executive Employment Agreement dated as of January 10. the Option shall then vest and become exercisable as to an additional number of shares of Common Stock equal to fifty percent (50%) of the number of then unvested shares of Common Stock subject to the Option. In the event of a Change in Control. and shall be arranged so as to reasonably accommodate Holder's vacation or other personal affairs. (i) if Holder is an Employee.500 per day. (i) if the Holder. The . or by reason of resignation by the Holder for Good Reason after February 28. if later. 2007. 2006. the Option shall then vest and become exercisable as to the remaining unvested shares of Common Stock subject to the Option. (b) Definitions of Cause and Good Reason. the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to fifty percent (50%) of the number of then unvested shares of Common Stock subject to the Option and (ii) if Holder is an Employee. (c) Condition to Accelerated Vesting and Exercisability. (i) if Holder is an Employee. 2005. Director or Consultant immediately prior to such Change in Control. . Director or Consultant on the second anniversary of the date of the occurrence of such Change in Control. if Holder is an Employee.4(d) Termination of Employment in the Event of a Change in Control. Inc. Accelerated Vesting in the Event of Termination of Employment.five percent (75%) of the number of then unvested shares of Common Stock subject to the Option. and does provide. the remaining unvested shares of Common Stock subject to the Option shall vest and become exercisable on the last day of the one (1) year period. twenty. and (iii) if Holder is an Employee. and (ii) if Holder is an Employee. In the event of a Change in Control during 2006.shall equal twenty percent (20%) of the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice). or (ii) such remaining unvested shares of Common Stock subject to the Option shall otherwise vest and become exercisable on the third anniversary of the Grant Date. and (ii) if Holder is an Employee. the Option shall then vest and become exercisable as to any then remaining unvested shares of Common Stock subject to the Option. In the event of Holder's Termination of Employment (without regard to any consulting services provided pursuant to this paragraph (a)) by reason of discharge by the Company other than for Cause. In the event of a Change in Control prior to January 1. (a) Termination of Employment by the Company Other than for Cause or by Holder for Good Reason After February 28. 2006. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. consulting services to the Company (or to the Parent at the direction of the Company. as amended from time to time (the "EMPLOYMENT AGREEMENT").five percent (25)% of the number of then unvested shares of Common Stock subject to the Option shall vest and become exercisable and (ii) if the change in Control occurs on or after January 1. agrees to provide. (b) Change in Control during 2006.five percent (85%) of the number of then unvested shares of Common Stock subject to the Option. Change in Control Accelerated Vesting. the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to eighty.. the Option shall then vest and become exercisable as to the remaining unvested shares of Common Stock subject to the Option. or by reason of resignation by Holder for Good Reason (as defined below). 2006. during the period commencing ninety (90) days prior to such Change in Control and ending twelve (12) months after such Change in Control. 3. then (i) if the Change in Control occurs prior to January 1. if the Holder has a Termination of Employment by reason of discharge by the Company other than for Cause (as defined below). by and among Holder. (a) Change in Control prior to January 1. 2006. For purposes of this Exhibit B. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. or both) for up to five (5) days a month for up to a one (1) year period for a fee of $1. Director or Consultant immediately prior to such Change in Control. 2007. 4. Director or Consultant immediately prior to such Change in Control. The Company and the Holder shall mutually use their best efforts to schedule the date or dates on which the Holder will provide the requested consulting services so as not to prevent the Holder from being gainfully employed by a subsequent employer. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to seventy. (c) Change in Control on or after January 1. the Company and Cricket Communications. 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. 2006. immediately prior to the date of the occurrence of such Change in Control). In the event of a Change in Control on or after January 1. 2006. upon written request of the Company and reasonable advance notice.

25% Example 2: . the EBITDA.5% . SOLUTION: Start with the net adds payout column and use straight. .accelerated vesting and exercisability of shares of Common Stock subject to the Option pursuant to this paragraph 4 shall be conditioned on the Holder's delivery to the Company of an executed General Release in accordance with Section 5.5%.7SOLUTION: Use straight line interpolation for both measures.based payout schedule by finding the halfway point at each defined level of Net Adds.based payout would be halfway between 15% and 22. Starting with either measure will yield the same result.5% and 20%.2005 Net Adds: [***] PROBLEM: Neither the net adds performance nor the EBITDA performance fall exactly on a specified payout. but performance in EBITDA falls somewhere in. the EBITDA. 5.based payout would be halfway between 12. PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12. so we can interpolate an EBITDA.1 METHODOLOGY FOR LINEAR INTERPOLATION 2005 Net Adds Threshold Target Maximum [***] [***] [***] 2005 EBITDA (in thousands) Threshold [***] Target [***] Maximum [***] 10% 12. . the actual payout should be halfway between the scheduled payouts of 12. Limit on Vesting. Confidentiality.based payout schedule looks like this: Threshold [***] 11. PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]).2005 EBITDA: [***] . Since EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]).25% Maximum [***] 18.9 of the Employment Agreement and the Holder's non.5%)+12. Example 1: .2005 Net Adds: [***] PROBLEM: The net adds performance falls exactly on a specified payout range.Payout = 16. At [***] net adds.between the schedule.line interpolation to determine the final payout. At [***] net adds.75% Actual . the EBITDA. Confidential treatment has been requested with respect to the omitted portions.5% 30% The EBITDA amounts in the following examples are shown in thousands.5% 15% 12. *** Certain information on this page has been omitted and filed separately with the Commission. Thus the payout is (1/2)*(20%.5% for threshold EBITDA performance and 20% for target EBITDA performance.2005 EBITDA: [***] . Thus the interpolated.25% 2005 Net Adds Target [***] 16.5% and 20%.based payout would be halfway between 10% and 12.12. At [***] net adds. .5%. 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. EBITDA.56.5% 15% 22.5% 20% 22.6ATTACHMENT B.revocation of such General Release during the time period for such revocation set forth therein. Holder agrees to keep the EBITDA and Net Adds achievement levels set forth in this Exhibit B confidential and not to disclose such thresholds to any third party without the prior written consent of the Company.

5%) (midpoint of 12. Tax Consultation. Holder acknowledges that Holder has received.25% .75%. 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.1ACCEPTED BY: LEAP WIRELESS INTERNATIONAL. Inc.Payout = 17. INC. SUBMITTED BY HOLDER: . 200__ Stock Option. as well as any applicable withholding tax) TYPE OF OPTION: The Option is a Non. 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).2005 EBITDA [***] (midpoint of [***] and [***]) (midpoint of 10% and 12. 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: ___________________________ . Entire Agreement. no right to vote or receive dividends or any' other rights as a stockholder shall exist with respect to Shares subject to the Option. This means the actual payout must fall 1/3 of the way between 16. This Exercise Notice. The Plan and Option Agreement are incorporated herein by reference. notwithstanding the exercise of the Option. Restricted Stock and Deferred Stock Unit Plan (the "Plan") and the Stock Option Grant Notice and Non.5% and 20%) (midpoint of 15% and 22.75%. 3.3 of the Plan. Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.08% *** Certain information on this page has been omitted and filed separately with the Commission. read and understood the Plan and the Option Agreement. Rights as Stockholder.______________ . Inc. .25%)+16.16. . 1. (the "COMPANY") under and pursuant to the Leap Wireless International. Confidential treatment has been requested with respect to the omitted portions.25% and 18.[***] = [***]). The length of the range is [***] [***] = [***] net adds. 2. First we determine where [***] lies in the range of [***] to [***].Qualified Stock Option Agreement dated _______________. 2005. the Plan and the Option Agreement constitute the entire 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. So the actual performance of [***] net adds falls 1/3 of the way between [***] net adds (target) and [***] net adds (maximum). we interpolate a payout at [***] net adds based on the scheduled payouts at [***] and [***]. ______________ the undersigned ("HOLDER") hereby elects to exercise Holder's option to purchase _______________ shares of the Common Stock (the "SHARES") of Leap Wireless International. Holder understands that there are tax consequences to Holder as a result of Holder's purchase or disposition of the Shares.5%) To determine the actual payout given this range. Thus the payout is (1/3)*(18. 4. 2005 _____________________________________ $____________ $____________ _____________________________________ $______________ (Representing the full Exercise Price for the Shares. (the "OPTION AGREEMENT").8EXHIBIT C TO STOCK OPTION GRANT NOTICE FORM OF EXERCISE NOTICE Effective as of today. [***] is [***] above the range minimum ([***] . 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. Representations of Holder. Holder agrees to abide by and be bound by their terms and conditions.Qualified Stock Option and is not an incentive stock option within the meaning of Section 422 of the Code. except as provided in Section 10.

Inc.2 Incorporation of Terms of Plan. Hutcheson ______________________. INC. Hutcheson Title:________________________________ Address:_____________________________ Address:10307 Pacific Center Court San Diego. California 92121 EXHIBIT A TO DEFERRED STOCK UNIT AWARD GRANT NOTICE DEFERRED STOCK UNIT AWARD AGREEMENT Pursuant to the Deferred Stock Unit Award Grant Notice ("GRANT NOTICE") to which this Deferred Stock Unit Award Agreement (this "AGREEMENT") is attached. the Plan and this Grant Notice in their entirety.1 Defined Terms. the Deferred Stock Unit Agreement and the Plan. The Deferred Stock Units are subject to all of the terms and conditions as set forth herein and in the Deferred Stock Unit Award Agreement attached hereto as Exhibit A (the "DEFERRED STOCK UNIT AGREEMENT") and the Plan. By his or her signature and the Company's signature below. ARTICLE I GENERAL 1. Unless otherwise defined herein. Holder hereby agrees to accept as binding. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice. the Deferred Stock Unit Agreement and this Grant Notice. each of which are incorporated herein by reference. The Deferred Stock Units shall be distributable in accordance with Section 2. Leap Wireless International. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") indicated in the Grant Notice. 2005 $0. 1. pursuant to its 2004 Stock Option. Restricted Stock and Deferred Stock Unit Plan (the "PLAN").4 of the Deferred Stock Unit Agreement. (the "COMPANY"). hereby grants to the holder listed below ("HOLDER"). 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. By:___________________________________ By:_________________________________ Print Name:___________________________ Print Name: Stewart D. HOLDER: INC.By:____________________________ By:_________________________________ Print Name:____________________ Print Name: _________________________ Title:_________________________ Address:_____________________________ . HOLDER: GRANT DATE: PURCHASE PRICE PER DEFERRED STOCK UNIT: TOTAL NUMBER OF DEFERRED STOCK UNITS: Stewart D. .0001 per share ______________________ VESTING SCHEDULE: DISTRIBUTION SCHEDULE: The Deferred Stock Units shall be immediately vested. the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Deferred Stock Unit Agreement.2ATTACHMENT A-3 LEAP WIRELESS INTERNATIONAL. LEAP WIRELESS INTERNATIONAL. The Deferred Stock Units and the shares of Common Stock issuable with respect thereto are subject to the terms and conditions of the Plan which are incorporated herein by reference. 2004 STOCK OPTION. Holder agrees to be bound by the terms and conditions of the Plan. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN DEFERRED STOCK UNIT AWARD GRANT NOTICE AND DEFERRED STOCK UNIT AWARD AGREEMENT Leap Wireless International. this Grant Notice or the Deferred Stock Unit Agreement. Holder has reviewed the Deferred Stock Unit Agreement. (the "COMPANY") has granted to Holder the number of Deferred Stock Units under the Company's 2004 Stock Option. conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan. the number of Deferred Stock Units set forth below (the "DEFERRED STOCK UNITS"). Inc.

which in the discretion of the Administrator may be in any form permitted by Section 10. signed by Holder or the other person then entitled to purchase the shares of Common Stock issuable with respect to the vested Deferred Stock Units. not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act. subject to all of the terms and conditions in the Plan and this Agreement. The Administrator may. and such registration is then effective in respect of such shares. Without limiting the generality of the foregoing. stating that such shares of Common Stock are being purchased. and may issue stop. and (iii) A bona fide written representation and agreement.2 Purchase Price. (a) Shares of Common Stock shall be available for purchase by Holder (or in the event of Holder's death. damage. 2. 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.2herein.1the Plan and this Agreement. VESTING AND DISTRIBUTION OF DEFERRED STOCK UNITS 2. 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. and that Holder or the other person then entitled to purchase the shares of Common Stock issuable with respect to the vested Deferred Stock Units will indemnify the Company against and hold it free and harmless from any loss. On the Grant Date. to his or her estate) with respect to such Holder's vested Deferred Stock Units granted to Holder pursuant to this Agreement.3 Vesting of Deferred Stock Units. such notice complying with all applicable rules established by the Administrator. and (iv) In the event the shares of Common Stock issuable with respect to the vested Deferred Stock Units shall be purchased .4 Distribution of Deferred Stock Units. in its absolute discretion.ARTICLE II GRANT. subject to the terms and provisions of . (i) A Purchase Notice in writing signed by the Holder or any other person then entitled to purchase the shares of Common Stock issuable with respect to the vested Deferred Stock Units. Share certificates evidencing Common Stock issued pursuant to the Deferred Stock Units shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements . in such form as is prescribed by the Administrator. a "DISTRIBUTION Event"): (i) the date Holder has a Termination of Employment. Such notice shall be substantially in the form attached as Exhibit B to the Grant Notice (or such other form as is prescribed by the Administrator). for a period of thirty (30) days commencing following the earliest to occur of the following events (each. the Company irrevocably grants to Holder an award of the number of Deferred Stock Units indicated in the Grant Notice. 2005. or (iii) August 15. A Deferred Stock Unit shall represent the right to purchase a share of Common Stock at the time the Deferred Stock Unit is available for distribution on a deferred basis in accordance with the terms and conditions of the Plan and this Agreement. 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. Termination of Consultancy or Termination of Directorship.4 of the Plan.transfer orders covering such shares. stating that the shares of Common Stock are being acquired for Holder's own account. 2. including payment of any applicable withholding tax. the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired by Holder does not violate the Securities Act. (ii) the date immediately prior to a Change in Control.The written representation and agreement referred to in the first sentence of this subsection (c) shall. The purchase price of the shares of Common Stock issuable pursuant to the Deferred Stock Units shall be as set forth in the Grant Notice. however. effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE"). Holder may purchase the shares of Common Stock issuable with respect to his or her vested Deferred Stock Units by delivery to the Secretary of the Company or the Secretary's office of all of the following within thirty (30) days following the occurrence of the Distribution Event. as applicable.1 Grant of Deferred Stock Units. the Deferred Stock Units will be fully vested and shall not be subject to forfeiture. (b) Following a Distribution Event. without commission or other charge. and (ii) Full payment (in cash or by check) for the shares of Common Stock to be purchased by Holder. 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. 2.

a stockholder of the Company in respect of any shares issuable pursuant to the Deferred Stock Units unless and until such shares shall have been issued by the Company to Holder. 2. as permitted by the Code and the regulations and other guidance thereunder. ARTICLE III OTHER PROVISIONS 3. splits. combination. shares of Common Stock shall be issuable pursuant to a Deferred Stock Unit at such times and upon such events as are specified in this Agreement only to the extent issuance under such terms will not cause the Deferred Stock Units or the shares of Common Stock issuable pursuant to the Deferred Stock Units to be includible in the gross income of Holder under Section 409A of the Code prior to such times or the occurrence of such events. garnishment or any other legal or equitable proceedings (including bankruptcy). and any attempted disposition thereof shall be null and void and of no effect. or any portion thereof. no Deferred Stock Units or shares of Common Stock issuable with respect thereto or any interest or right therein or part thereof shall be liable for the debts. nor have any of the rights or privileges of. appropriate proof of the right of such person or persons to purchase such shares of Common Stock. Except as otherwise provided herein.4(b) by any person or persons other than Holder. The Company shall not be required to issue or deliver any shares of Common Stock with respect to the Deferred Stock Units 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. encumbrance. under federal.4(b) and 2. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. the Holder shall not be.4(b) in a single lump sum distribution. pledge. 2. Such shares shall be fully paid and nonassessable. and . The provisions of this Agreement shall apply. attachment.4 of the Plan. combinations. . appropriate adjustments shall be made in the Deferred Stock Units and/or the shares of Common Stock issuable with respect thereto. or in exchange for. the Company (or other employer corporation) is required to withhold upon issuance of such shares in accordance with Section 10. (d) All distributions shall be made by the Company in the form of whole shares of Common Stock (and cash in an amount equal to the value of any fractional Deferred Stock Unit. state or local tax law.pursuant to this Section 2. and shall be appropriately adjusted for any stock dividends.6. anticipation. including payment of all amounts which. such Deferred Stock Units shall terminate. in its absolute discretion. to the full extent set forth herein with respect to the Deferred Stock Units and the shares of Common Stock issuable with respect thereto. (e) Neither the time nor form of distribution of the Deferred Stock Units under this Agreement may be changed. or similar change in the capital structure of the Company. If Holder does not purchase the shares of Common Stock issuable with respect to any vested Deferred Stock Units within thirty (30) days following the occurrence of a Distribution Event. (c) Subject to the conditions of Sections 2. to any and all shares of capital stock or other securities which may be issued in respect of. recapitalizations and the like occurring after the date hereof. except as may be provided under the Plan. The shares of Common Stock deliverable with respect to the Deferred Stock Units. reverse splits. alienation.3 of the Plan. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. recapitalization.7 Rights as Stockholder. 2. deem necessary or advisable. contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer. In the event of any stock dividend. in substitution of the Deferred Stock Units and the shares of Common Stock issuable with respect thereto. reverse stock split. in its absolute discretion. and (d) The lapse of such reasonable period of time following the applicable Distribution Event as the Administrator may from time to time establish for reasons of administrative convenience.6 Conditions to Issuance of Stock Certificates. which the Administrator shall. (f) Notwithstanding the foregoing. and (e) The receipt by the Company of full payment for such shares. determine to be necessary or advisable. reclassification.5 Restrictions on Transfer. determined based on the Fair Market Value as of the distribution date). Unless otherwise permitted by the Administrator pursuant to the Plan.3(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. levy. consistent with any adjustment under Section 10. the Company shall distribute any shares of Common Stock purchased pursuant to this Section 2. stock split.1 Adjustment for Stock Split.

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. if any. and state securities laws and regulations.6 Notices. this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. 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. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable.3. 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. Notwithstanding any other provision of the Plan or this Agreement. No member of the Administrator shall be personally liable for any action. (a) Any share certificate(s) evidencing the shares of Common Stock issued hereunder shall be endorsed with any legend required by any applicable federal and state securities laws. 3. determination or interpretation made in good faith with respect to the Plan. 3.2 Taxes.3 of the Exchange Act) that are requirements for the application of such exemptive rule. only in such a manner as to conform to such laws. this Agreement or the Deferred Stock Units. if Holder is subject to Section 16 of the Exchange Act. Severability. In its absolute discretion. To the extent permitted by applicable law. the Company and all other interested persons. . 3. either party may hereafter designate a different address for notices to be given to that party. interpretation and application of the Plan as are consistent therewith and to interpret. This Agreement shall be administered. 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. 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.8 Governing Law. the Plan shall be administered. the other provisions shall nevertheless remain effective and shall remain enforceable. (b) Holder agrees that.4 Administration. and that. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) . in order to ensure compliance with the restrictions referred to herein. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder. the Deferred Stock Units and the shares of Common stock issuable with respect thereto and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b. 3. Notwithstanding anything herein to the contrary. the Company may issue appropriate "stop transfer" instructions to its transfer agent.5 Restrictive Legends and Stop. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof.4state and local taxes applicable to the taxable income of Holder resulting from the grant of the Deferred Stock Units or the distribution of the shares of Common Stock issuable with respect thereto. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. Notwithstanding anything to the contrary in this Agreement. rules and regulations. 3.9 Conformity to Securities Laws. The Company shall not be obligated to deliver any new certificate representing shares of Common Stock issuable with respect to the Deferred Stock Units to Holder or his legal representative unless and until Holder or his legal representative shall have paid or otherwise satisfied in full the amount of all federal. To the extent permitted by applicable law.Transfer Orders. rules and regulations.3 Limitations Applicable to Section 16 Persons. it may make appropriate notations to the same effect in its own records.7 Titles. 3.5and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws. if the Company transfers its own securities.6. By a notice given pursuant to this Section 3. and the Deferred Stock Units are granted. (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. state or local tax law to be withheld with respect to the issuance or distribution of the Deferred Stock Units or shares of Common Stock issuable with respect thereto. the Company shall be entitled to require payment to the Company or any of its Subsidiaries in cash or deduction from other compensation payable to Holder of any sums required by federal. the Plan. amend or revoke any such rules. . The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration. 3.

Representations of Holder. except to the extent expressly provided otherwise in a written agreement between the Company and Holder. The Plan and Award Agreement are incorporated herein by reference. unsecured creditor of the Company with respect to the Deferred Stock Units. Entire Agreement. Unsecured Obligations. except as provided in Section 10. _______. Tax Consultation. Holder understands that there are tax consequences to Holder as a result of Holder's purchase or disposition of the Shares. Rights as Stockholder. Inc. This Agreement may not be modified. (the "AWARD AGREEMENT").12 Successors and Assigns. Holder acknowledges that Holder has received. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") and the Deferred Stock Unit Award Grant Notice and Deferred Stock Unit Award Agreement dated____________. this Agreement shall be binding upon Holder and his or her heirs. 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). 200__ _____________________________________ $____________ $____________ _____________________________________ $______________ (Representing the full Purchase Price for the Shares. 3. which are expressly reserved. 3.3 of the Plan. The Company may assign any of its rights under this Agreement to single or multiple assignees. as well as any applicable withholding tax) 1. Inc. 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. This Purchase Notice. successors and assigns. with or without cause. _______. the Plan and the Award Agreement constitute the entire 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.6EXHIBIT B TO DEFERRED STOCK UNIT AWARD GRANT NOTICE FORM OF PURCHASE NOTICE Effective as of today. . administrators. .10 Amendments. Holder shall have only the rights of a general.13 Unfunded. unless and until shares of Common Stock shall be distributed to Holder under the terms and conditions of this Agreement.11 No Employment Rights. amended or terminated except by an instrument in writing.1ACCEPTED BY: LEAP WIRELESS INTERNATIONAL. 3. The obligations of the Company under the Plan and this Agreement shall be unfunded and unsecured. 2. Capitalized terms used herein without definition shall have the meanings given in the Award Agreement. Subject to the restrictions on transfer herein set forth. ____________. executors. Holder agrees to abide by and be bound by their terms and conditions. INC. If Holder is an Employee. notwithstanding the delivery of this Purchase Notice. 3. to discharge Holder at any time for any reason whatsoever. and nothing contained herein shall be construed as providing for assets to be held in trust or escrow or any other form of segregation of the assets of the Company for the benefit of Holder or any other person. and this Agreement shall inure to the benefit of the successors and assigns of the Company. read and understood the Plan and the Award Agreement. 4. the undersigned ("Holder") hereby elects to purchase shares of the Common Stock (the "SHARES") of Leap Wireless International. 2004 Stock Option. (the "COMPANY") under and pursuant to the Leap Wireless International. no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares.3. 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. GRANT DATE: NUMBER OF SHARES BEING PURCHASED: PURCHASE PRICE PER SHARE: TOTAL PURCHASE PRICE: CERTIFICATE TO BE ISSUED IN NAME OF: CASH PAYMENT DELIVERED HEREWITH: ___________________________ . SUBMITTED BY HOLDER: . signed by Holder and by a duly authorized representative of the Company. 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.

Holder hereby agrees to accept as binding. this Grant Notice or the Restricted Stock Agreement. hereby grants to the holder listed below ("HOLDER"). the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement.2ATTACHMENT A-4 LEAP WIRELESS INTERNATIONAL. the Plan and this Grant Notice in their entirety. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") indicated in the Grant Notice. HOLDER: INC. Holder agrees to be bound by the terms and conditions of the Plan. This Restricted Stock award is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the "RESTRICTED STOCK AGREEMENT") and the Plan. Inc. ARTICLE I . Hutcheson Title:_______________________________ Address:_____________________________ . INC. pursuant to its 2004 Stock Option. HOLDER: Stewart D. his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit C. Unless otherwise defined herein. 2005 PURCHASE PRICE PER SHARE: $0. the Restricted Stock Agreement and the Plan.1 of the Restricted Stock Agreement on the dates and in the percentages indicated in Exhibit B to this Grant Notice. (the "COMPANY") has granted to Holder the right to purchase the number of shares of Restricted Stock under the Company's 2004 Stock Option. each of which are incorporated herein by reference.0001 per share TOTAL NUMBER OF SHARES OF RESTRICTED STOCK: [__________] VESTING SCHEDULE: The Shares shall be released from the Company's Repurchase Option set forth in Section 3. Inc. Holder has reviewed the Restricted Stock Agreement. By his or her signature and the Company's signature below. Leap Wireless International. LEAP WIRELESS INTERNATIONAL. conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN RESTRICTED STOCK AWARD GRANT NOTICE AND RESTRICTED STOCK AWARD AGREEMENT Leap Wireless International. (the "COMPANY"). Hutcheson Title: ____________________________ Title: ____________________________ Address: 10307 Pacific Center Court Address: ___________________________ San Diego. Hutcheson GRANT DATE: ______________. 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 right to purchase the number of shares of the Company's Common Stock set forth below (the "SHARES") at the purchase price set forth below.By:_________________________________ By:_________________________________ Print Name:__________________________ Print Name: Stewart D. If Holder is married. California 92121 ___________________________ EXHIBIT A TO RESTRICTED STOCK AWARD GRANT NOTICE RESTRICTED STOCK AWARD AGREEMENT Pursuant to the Restricted Stock Award Grant Notice ("GRANT NOTICE") to which this Restricted Stock Award Agreement (this "AGREEMENT") is attached. the Restricted Stock Agreement and this Grant Notice. 2004 STOCK OPTION. Restricted Stock and Deferred Stock Unit Plan (the "PLAN"). By: _______________________________ By: _______________________________ Print Name: _______________________ Print Name: Stewart D.

commencing ninety (90) days after the date Holder has a Termination of Employment.2 Incorporation of Terms of Plan.GENERAL 1.1 Grant of Restricted Stock. combination. ARTICLE III RESTRICTIONS ON SHARES 3. ARTICLE II GRANT OF RESTRICTED STOCK 2. exclusive option.4 of the Plan.4 below until such restrictions on the underlying Shares lapse or are removed pursuant to this Agreement. 2. The payment of the purchase price shall be paid by cash or check. as applicable. without commission or other charge.3 Issuance of Shares. The Shares are subject to the terms and conditions of the Plan which are incorporated herein by reference. subject to Section 10. and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. the Company irrevocably grants to Holder the right to purchase the number of shares of Common Stock set forth in the Grant Notice (the "SHARES"). 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. before all of the Shares are released from the Company's Repurchase Option (as defined below). Subject to the provisions of Section 3. The issuance of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the parties or on such other date as the Company and Holder shall agree (the "ISSUANCE DATE"). upon delivery of the Shares to the escrow holder pursuant to Article IV. reclassification. the Company shall issue the Shares (which shall be issued in Holder's name). and (e) The receipt by the Company of full payment for such Shares. Such Shares shall be fully paid and nonassessable. which in the discretion of the Administrator may be in the form of consideration used by Holder to pay for such Shares. have an irrevocable. reverse stock split. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.1 Defined Terms. subject to the restrictions herein.1 below) and the restrictions on transfer in Section 3. The Company shall not be required to issue or deliver any Shares prior to fulfillment of all of the following conditions: . effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE"). Termination of Directorship or Termination of Consultancy. 1. or any portion thereof. Except as otherwise provided herein. Holder shall have all the rights of a stockholder with respect to said Shares. if Holder has a Termination of Employment. determine to be necessary or advisable. Subject to the provisions of Article IV below. in its absolute discretion. in its absolute discretion.2 Purchase Price. 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. and (d) The lapse of such reasonable period of time following the Issuance Date as the Administrator may from time to time establish for reasons of administrative convenience. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. which the Administrator shall. however. but not the obligation.4 Conditions to Issuance of Stock Certificates. for a period of sixty (60) days.2 below. to repurchase all or any portion of the Unreleased Shares (as defined below in Section 3. as applicable. on the Issuance Date. The Shares.1(a) The admission of such Shares to listing on all stock exchanges on which such Common Stock is then listed. 2. upon the date of such Termination (as reasonably fixed and determined by the Company). Termination of Directorship or Termination of Consultancy. or similar change in the capital structure of the Company shall also be subject to the Repurchase Option (as defined in Section 3.1 Repurchase Option.3) at such time (the "Repurchase Option") at the original cash purchase price per share (the . including payment of any applicable withholding tax. capital stock or other securities received by or distributed to Holder with respect to the Shares as a result of any stock dividend stock split. including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares. 2. upon the terms and conditions set forth in the Plan and this Agreement. that any and all cash dividends paid on such Shares and any and all shares of Common Stock. The purchase price of the Shares shall be as set forth in the Grant Notice. the Company shall.5 Rights as Stockholder. 2. deem necessary or advisable. recapitalization. provided.

alienation. as applicable. upon execution of this Agreement.3Unreleased Shares. The Repurchase Option shall lapse and terminate one hundred fifty (150) days after .1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Holder.1. from time to time. contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer. until such Unreleased Shares are released from the Company's Repurchase Option. or such other person designated by the Administrator. and shall. deliver and deposit with the Secretary of the Company. 4.2 Release of Shares from Repurchase Restriction. Holder hereby authorizes and directs the Secretary of the Company. The Unreleased Shares and stock assignment shall be held by the Secretary of the Company. Upon delivery of such notice and the payment of the Aggregate Repurchase Price. 3. if any. shall be liable for the debts. pursuant to the Joint Escrow Instructions of the Company and Holder attached as Exhibit E to the Grant Notice. such dividends or other distributions shall also be subject to the restrictions set forth in this Agreement and held in escrow pending release of the Unreleased Shares with respect to which such dividends or other distributions were paid from the Company's Repurchase Option. until the Company exercises its Repurchase Option as provided in Section 3. and any attempted disposition thereof shall be null and void and of no effect.1 and any dividends or other distributions thereon. at the Company's option. garnishment or any other legal or equitable proceedings (including bankruptcy). If any dividends or other distributions are paid on the Unreleased Shares held by the escrow agent pursuant to this Section 4. the escrow agent shall deliver to Holder the certificate or certificates representing such Shares in the escrow agent's possession belonging to Holder in accordance with the terms of the Joint Escrow Instructions attached as Exhibit E to the Grant Notice." 3. or such other person designated by the Administrator. any share certificates representing the . 3. as his or her attorney. Any of the Shares released from the Company's Repurchase Option shall thereupon be released from the restrictions on transfer under Section 3. provided. ARTICLE IV ESCROW OF SHARES 4. however. any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4. together with the stock assignment duly endorsed in blank.1. by delivery to Holder or Holder's executor with such notice of a check in the amount of the Repurchase Price times the number of Shares to be repurchased (the "Aggregate Repurchase Price").1 and the Joint Escrow Instructions. In the event the Company repurchases any Shares under this Section 3. or such other person designated by the Administrator.4 Restrictions on Transfer. or any other person designated by the Administrator as escrow agent. Upon release of the Unreleased Shares.4. To insure the availability for delivery of Holder's Unreleased Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 3. the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto.in."Repurchase Price"). levy. anticipation.3 Unreleased Shares. have not yet been released from the Company's Repurchase Option are referred to herein as "Unreleased Shares. any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4. then such entry will reflect that the Shares are subject to the restrictions of this Agreement. such Unreleased Shares. attachment.1 below) and shall be exercisable. to transfer the Unreleased Shares as to which the Repurchase Option has been exercised from Holder to the Company. encumbrance. The Shares shall be released from the Company's Repurchase Option as indicated in Exhibit B to the Grant Notice.2 Transfer of Repurchased Shares. and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. attached to the Grant Notice as Exhibit D to the Grant Notice. and the escrow agent shall be discharged of all further obligations hereunder. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. no Unreleased Shares or any dividends or other distributions thereon or any interest or right therein or part thereof. In the event any of the Shares are released from the Company's Repurchase Option.2Holder has a Termination of Employment. . that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.1. Holder hereby appoints the Secretary of the Company. The Repurchase Option shall be exercisable by the Company by written notice to Holder or Holder's executor (with a copy to the escrow agent appointed pursuant to Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Company.1 Escrow of Shares. Any of the Shares which. or until such time as this Agreement no longer is in effect. repurchased by the Company pursuant to the Repurchase Option pursuant to Section 3. pledge.fact to assign and transfer unto the Company. If the Shares are held in book entry form. Unless otherwise permitted by the Administrator pursuant to the Plan. in escrow. Termination of Directorship or Termination of Consultancy.

In its absolute discretion. determination or interpretation made in good faith with respect to the Plan.2 Taxes. . and shall be appropriately adjusted for any stock dividends. A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder. 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. in order to ensure compliance with the . amend or revoke any such rules. the Shares and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b.4. this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. 5. stock split. to any and all shares of capital stock or other securities which may be issued in respect of. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration.1 Adjustment for Stock Split. Holder understands that Holder will recognize ordinary income for federal income tax purposes under Section 83 of the Code. consistent with any adjustment under Section 10. or similar change in the capital structure of the Company. recapitalizations and the like occurring after the date hereof. In this context. or in substitution of the Shares.3 No Liability for Actions in Connection with Escrow. interpretation and application of the Plan as are consistent therewith and to interpret. the Administrator shall make appropriate and equitable adjustments in the Unreleased Shares subject to the Repurchase Option and the number of Shares. HOLDER ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b). shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment. 5. ARTICLE V OTHER PROVISIONS 5. combinations. No member of the Administrator shall be personally liable for any action.4 Administration. A form of election under Section 83(b) of the Code is attached to the Grant Notice as Exhibit F.1. the Plan.3 of the Plan. reverse stock split. local and foreign tax consequences of this investment and the transactions contemplated by the Grant Notice and this Agreement. state. EVEN IF HOLDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HOLDER'S BEHALF 5. "restriction" includes the right of the Company to repurchase the Shares pursuant to its Repurchase Option set forth in Section 3. Holder understands that Holder may elect to be taxed for federal income tax purposes at the time the Shares are purchased rather than as and when the Repurchase Option lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the date of purchase. Notwithstanding any other provision of the Plan or this Agreement. In the event of any stock dividend. To the extent permitted by applicable law. in exchange for.4Holder (and not the Company) shall be responsible for Holder's own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. recapitalization. Holder has reviewed with Holder's own tax advisors the federal. Holder understands that . 5. this Agreement or the Shares. if Holder is subject to Section 16 of the Exchange Act.5(b) Holder agrees that. The provisions of this Agreement shall apply.3 of the Exchange Act) that are requirements for the application of such exemptive rule. or its designee. reverse splits. reclassification. the Company and all other interested persons. Holder is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.Transfer Orders.5 Restrictive Legends and Stop. (a) Any share certificate(s) evidencing the Shares issued hereunder shall be endorsed with the following legend and any other legend required by any applicable federal and state securities laws: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER. to the full extent set forth herein with respect to the Shares. combination. The Company. splits.3 Limitations Applicable to Section 16 Persons.

executors. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. to discharge Holder at any time for any reason . 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. and this Agreement shall inure to the benefit of the successors and assigns of the Company. administrators.6 Notices. To the extent permitted by applicable law. and state securities laws and regulations. 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. and the Shares are to be issued. 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. By a notice given pursuant to this Section 5. This Agreement shall be administered.10 Amendments.6whatsoever.9 Conformity to Securities Laws. Notwithstanding anything herein to the contrary.11 No Employment Rights. (b) and (c) below.7 Titles. however. Time.12 Successors and Assigns. 2008. either party may hereafter designate a different address for notices to be given to that party. signed by Holder and by a duly authorized representative of the Company. rules and regulations. it may make appropriate notations to the same effect in its own records. 1. provided.restrictions referred to herein. If Holder is an Employee.Based Vesting. (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. 3 and 4 below. . This Agreement may not be modified. 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. Subject to any accelerated vesting pursuant to paragraphs 2. the other provisions shall nevertheless remain effective and shall remain enforceable. and that.6. then a certain percentage of the Unreleased Shares shall be released in accordance with the provisions of paragraphs (a). successors and assigns. 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. with or without cause. Severability. 5. Performance. Director or Consultant on such date. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable. 2. 5. 5. 5. amended or terminated except by an instrument in writing.7EXHIBIT B TO RESTRICTED STOCK AWARD GRANT NOTICE VESTING PROVISIONS Capitalized terms used in this Exhibit B and not defined below shall have the meanings given them in the Agreement to which this Exhibit B is attached. only in such a manner as to conform to such laws. 5. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws. if the Company transfers its own securities. except to the extent expressly provided otherwise in a written agreement between the Company and Holder. The Company may assign any of its rights under this Agreement to single or multiple assignees. this Agreement shall be binding upon Holder and his or her heirs. Subject to the restrictions on transfer herein set forth. the Plan shall be administered. 5. that no Unreleased Shares shall be released pursuant to paragraphs (a). If the Company's EBITDA (as defined below) and the Company's Net Adds (as defined below) both equal or exceed the respective Achievement Threshold amounts for 2005 as set forth in paragraph (a) below and/or both equal or exceed the respective Achievement Threshold amounts for 2006 as set forth in paragraph (b) below and/or both equal or exceed the respective Achievement Threshold amounts for 2007 as set forth in paragraph (c) below. which are expressly reserved. the Unreleased Shares shall be released from the Company's Repurchase Option in their entirety on December 31. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof. . if the Holder is an Employee. the Company may issue appropriate "stop transfer" instructions to its transfer agent. rules and regulations.Based Accelerated Vesting. (b) or (c) below if either the Company's EBITDA or Net Adds do not at least equal the Achievement Threshold amount for the applicable year.8 Governing Law. 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. if any.

Threshold [***] 10% -----12.1. by the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). *** Certain information on this page has been omitted and filed separately with the Commission.1EBITDA (in thousands) Target [***] Maximum [***] 12.5% ----22. Confidential treatment has been requested with respect to the omitted portions. then a number of the Unreleased Shares shall be released from the Company's Repurchase Option on the applicable Performance Vesting Effective Date equal to the number obtained by multiplying the percentage determined in accordance with the following table.5% 30% The percentage of Unreleased Shares which shall be released from the Company's Repurchase Option if performance is between the Achievement Threshold amount and the Achievement Target amount.5% 22. .5% 15% 20% 22. or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. (b) Fiscal Year 2006.5% 15% ----20% 22. 2005 PERFORMANCE. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for Fiscal Year 2007 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below). If the Company's EBITDA (as defined below) and Net Adds (as defined below) for Fiscal Year 2006 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below). then a number of the Unreleased Shares shall be released from the Company's Repurchase Option on the applicable Performance Vesting Effective Date equal to the number obtained by multiplying the percentage determined in accordance with the following table.5% 30% 2006 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] The percentage of Unreleased Shares which shall be released from the Company's Repurchase Option if performance is between the Achievement Threshold amount and the Achievement Target amount. . Confindential treatment has been requested with respect to the omitted portions. or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for the Fiscal Year 2005 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below).2(c) Fiscal Year 2007.1.BASED VESTING SCHEDULE Threshold [***] 10% 2005 Net Adds Target [***] 12.5% 15% 2006 Net Adds Target Maximum [***] [***] 12.(a) Fiscal Year 2005.5% Maximum [***] 15% 2005 Threshold [***] *** Certain information on this page has been omitted and filed separately with the Commission. by the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). then a number of the Unreleased Shares shall be released from the Company's Repurchase Option on the applicable Performance Vesting .

For purposes of this Exhibit B. (iv) non. (f) Adjustments for Future Changes in the Company's Business. 2006 or 2007. If the Company commences operations in any new markets. For purposes of this Exhibit B. (iii) depreciation and amortization expense. Unreleased Shares shall only be released from the Company's Repurchase Option pursuant to this paragraph 2 if Holder is an Employee.5% 15% ----20% 22. (vi) net non. . For purposes of this Exhibit B. the Administrator shall.5% 15% 2007 Net Adds Target Maximum [***] [***] 12. as applicable. (v) charges and expenses related to stock based compensation awards. (i) Definition of Performance Vesting Effective Date. or ceases to operate in any existing market.cash items increasing such consolidated net income or loss for such period. Threshold [***] 10% -----12. (b) and (c) to reflect the Company's changed scope of operations. If the Company adopts a pre. For purposes of this Exhibit B. in its discretion. as applicable. the term "EBITDA" for a Fiscal Year means the Company's consolidated net income or loss for such period before extraordinary items and before the cumulative effect of any change in accounting principles plus (a) the following to the extent deducted in calculating such consolidated net income or loss: (i) consolidated interest expense. Except as otherwise provided in subparagraph 2(j). the term "FISCAL YEAR" means the Company's fiscal year ending December 31. Cricket Communications Inc.nine (39) markets.cash reorganization expenses and charges.recurring expenses reducing such consolidated net income or loss which do not represent a cash item in such period or any future period (including losses attributable to the sale of assets other than in the ordinary course of business) and minus (b) the following to the extent included in calculating such consolidated net *** Certain information on this page has been omitted and filed separately with the Commission. the date of the public announcement by the Company of EBITDA or Net Adds. (h) Definition of Fiscal Year. Confidential treatment has been requested with respect to the omitted portions. (vii) non. (d) Definition of EBITDA. equitably adjust the Net Adds Achievement Levels set forth in paragraphs (a). (b) and (c) are designed to be measured against the Company's performance in its existing thirty. with respect to any Fiscal Year. (g) Release of Shares Cumulative.. (b) and (c) shall be cumulative. the Administrator shall. the term "PERFORMANCE VESTING EFFECTIVE DATE" means.3income or loss: (i) income tax credits for such period. The release of Unreleased Shares from the Company's Repurchase Option under paragraphs (a).5% 30% 2007 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] The percentage of Unreleased Shares which shall be released from the Company's Repurchase Option if performance is between the Achievement Threshold amount and the Achievement Target amount. (e) Definition of Net Adds. The EBITDA Achievement Levels and Net Adds Achievement Levels set forth in paragraphs (a). "end of period customers" on the last day of such Fiscal Year less "end of period customers" on the last day of the preceding Fiscal Year. the administrative agent identified therein and others posted to IntraLinks on December 23. Director or Consultant of the Company or any of its Subsidiaries on the applicable Performance Vesting Effective Date. 2004 and (viii) other non.1. (ii) all gains arising in relation to the sale of assets other than in the ordinary course of business and (iii) all non. or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. . by the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). (ii) all income tax expense deducted in arriving at such consolidated net income or loss.5% -----22.cash impairment of assets (tangible and intangible) and related noncash charges. equitably adjust the EBITDA Achievement Levels and/or the Net Adds Achievement Levels to reflect the Company's changed scope of operations.Effective Date equal to the number obtained by multiplying the percentage determined in accordance with the following table.cash dividends or other distributions made with respect to qualified preferred stock as contemplated by the Credit Agreement negotiated among the Company. Continued Service Condition. in its discretion.paid card based service offering. the term "NET ADDS" means. with respect to the release from the Company's Repurchase Option of Unreleased Shares to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005. for the relevant Fiscal Year.

In the event of a Change in Control during 2006. 2005. In the event of Holder's Termination of Employment by reason of discharge by the Company other . Director or Consultant immediately prior to such Change in Control. immediately prior to the date of the occurrence of such Change in Control). (a) Change in Control prior to January 1. 2006. (j) Minimum Vesting for Fiscal Year 2006. Director or Consultant on the second anniversary of the date of the occurrence of such Change in Control. (c) Change in Control on or after January 1. In the event of a Change in Control on or after January 1.4Company's Repurchase Option under this paragraph 2 on or after the date of occurrence of a Change in Control. the remaining Unreleased Shares shall be released from the Company's Repurchase Option on the last day of the one year period. then eighty. 2006. then the minimum number of Unreleased Shares that shall be released from the Company's Repurchase Option under this subparagraph 2 on the Performance Vesting Effective Date for Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal Year 2006) shall be twenty percent (20%) of the total number of shares of Restricted Stock subject to the Award (as shown in the Grant Notice). Change in Control Accelerated Vesting. In the event of a Change in Control.5than for Cause. then (i) if the Change in Control occurs prior to January 1.but in no event shall the Company make such public announcement later than the date on which the Company files its Form 10. . (d) Termination of Employment in the Event of a Change in Control. 2006. if the Holder is an Employee. agrees to provide. and does provide. then fifty percent (50%) of the Unreleased Shares shall be released from the Company's Repurchase Option. (i) if the Holder. 4. then seventy. or (ii) such remaining Unreleased Shares shall otherwise be released from the Company's Repurchase Option on December 31. 2006. and (ii) if Holder is an Employee. twenty.five percent (75%) of the Unreleased Shares shall be released from the Company's Repurchase Option. (k) Termination of Performance. and (iii) if the Holder is an Employee.Based Vesting. (i) if Holder is an Employee. 2006. then the remaining Unreleased Shares shall be released from the Company's Repurchase Option. 2008. or both) for up to five (5) days a month for up to a one (1) year period for a fee of $1. Director or Consultant immediately prior to such Change in Control. 2006.five percent (25%) of the Unreleased Shares shall be released form the Company's Repurchase Option and (ii) if the Change in Control occurs on or after January 1. Director or Consultant immediately prior to such Change in Control. no Unreleased Shares shall be released from the . then any remaining Unreleased Shares shall be released from the Company's Repurchase Option. if later. in each case. In the event of a Change in Control prior to January 1. Director or Consultant on December 31. during the period commencing ninety (90) days prior to such Change in Control and ending twelve (12) months after such Change in Control. or by reason of resignation by Holder for Good Reason (as defined below). the remaining Unreleased Shares shall be released from the Company's Repurchase Option. then any then remaining Unreleased Shares shall be released from the Company's Repurchase Option. 3. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. and shall be arranged so as to reasonably accommodate Holder's vacation or other personal affairs. on the date of Holder's Termination of Employment (or. Director or Consultant on the first anniversary of the date of occurrence of such change in Control. (b) Change in Control during 2006. 2007. or by reason of resignation by the Holder for Good Reason after February 28. upon written request of the Company and reasonable advance notice. consulting services to the Company (or to the Parent at the direction of the Company. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. Accelerated Vesting in the Event of Termination of Employment. and (ii) if Holder is an Employee.500 per day. then an additional fifty percent (50%) of the Unreleased Shares shall be released from the Company's Repurchase Option. Notwithstanding the foregoing provisions of this paragraph 2. The Company and the Holder shall mutually use their best efforts to schedule the date or dates on which the Holder will provide the requested consulting services so as not to prevent the Holder from being gainfully employed by a subsequent employer. if Holder is an Employee. (a) Accelerated Vesting in the Event of Termination of Employment by the Company Other than for Cause or by Holder for Good Reason After February 28.five percent (85%) of the Unreleased Shares shall be released from the Company's Repurchase Option and (ii) if the Holder is an Employee. if Holder has a Termination of Employment by reason of discharge by the Company other than for Cause (as defined below). 2007. (i) if Holder is an Employee.K for the relevant Fiscal Year. Notwithstanding the other provisions of this paragraph 2 (other than subparagraph 2(k)).

12. so we can interpolate an EBITDA. Inc.based payout schedule by finding the halfway point at each defined level of Net Adds.2005 Net Adds: [***] *** Certain information on this page has been omitted and field separately with the Confindential treatment has been requested with respect to the omitted portions.5% -----12. Confidentiality. Example 1: .5% 15% -----20% 22. In no event will more than 100% of the Unreleased Shares be released from the Company's Repurchase Option pursuant to the provisions of this Exhibit B.5%)+12. Limit on Release of Shares.Payout = 16. (c) Condition to Release of Shares. PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12.6ATTACHMENT B.5% . For purposes of this Exhibit B. 2005. but performance in EBITDA falls somewhere in.1 METHODOLOGY FOR LINEAR INTERPOLATION 2005 Net Adds Threshold Target [***] [***] 10% 12.. the actual payout should be halfway between the scheduled payouts of 12. Starting with either measure will yield the same result. Thus the interpolated. 5. as amended from time to time (the "EMPLOYMENT AGREEMENT").between the schedule. the EBITDA.5% 30% 2005 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] The EBITDA amounts in the following examples are shown in thousands.2005 Net Adds: [***] PROBLEM: The net adds performance falls exactly on a specified payout range.2005 EBITDA: [***] .(b) Definitions of Cause and Good Reason. 6. EBITDA. the Company and Cricket Communications. the EBITDA. SOLUTION: Start with the net adds payout column and use straight.based payout . At [***] net adds.based payout would be halfway between 10% and 12.5% Maximum [***] 15% -----22.9 of the Employment Agreement and the Holder's non.based payout would be halfway between 15% and 22. At [***] net adds.line interpolation to determine the final payout.5% for threshold EBITDA performance and 20% for target EBITDA performance. Thus the payout is (1/2)*(20%.25% Example 2: . At [***] net adds. SOLUTION: Use straight line interpolation for both measures. Holder agrees to keep the EBITDA and Net Adds achievement levels set forth in this Exhibit B confidential and not to disclose such thresholds to any third party without the prior written consent of the Company. the terms "CAUSE" and "GOOD REASON" shall have the meanings given to such terms in that certain Amended and Restated Executive Employment Agreement dated as of January 10.5% and 20%.revocation of such General Release during the time period for such revocation set forth therein. PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]).5% and 20%. the EBITDA. The release of Unreleased Shares from the Company's Repurchase Option pursuant to this paragraph 4 shall be conditioned on the Holder's delivery to the Company of an executed General Release in accordance with Section 5.based payout would be halfway between 12. .2005 EBITDA: [***] . . Since EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]).7PROBLEM: Neither the net adds performance nor the EBITDA performance fall exactly on a specified payout.5%. by and between Holder.5%.

Dated: [_______________]. Thus the payout is (1/3)*(18.1EXHIBIT E .25% (midpoint of 10% and 12. First we determine where [***] lies in the range of [***] to [***].75% (midpoint of 15% and 22. INC.75%.[***] = [***]).in.fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of Leap Wireless International. and the undersigned dated [___________].5%) 2005 EBITDA Actual [***] (midpoint of [***] and [***]) To determine the actual payout given this range. we interpolate a payout at [***] net adds based on the scheduled payouts at [***] and [***].Payout = 17.5% and 20%) Maximum [***] 18. Confidential treatment has been requested with respect to the omitted portions. Hutcheson." as set forth in the Restricted Stock Award Agreement.75%. ____ Stewart D. spouse of Stewart D. standing in its name of the books of said corporation represented by Certificate No. without requiring additional signatures on the part of Holder. hereby sells. Inc. [_______] shares of the Common Stock of LEAP WIRELESS INTERNATIONAL.25% and 18.08% *** Certain information on this page has been omitted and filed separately with the Commission.1EXHIBIT D TO RESTRICTED STOCK AWARD GRANT NOTICE STOCK ASSIGNMENT FOR VALUE RECEIVED.5%) Target [***] 16.25%)+16. 2005 Signature of Spouse . set forth in the Agreement.. the undersigned. The purpose of this assignment is to enable the Company to exercise its "Repurchase Option. [________________________].25% (midpoint of 12. Dated: _______________.25% . The length of the range is [***] [***] = [***] net adds. Stewart D. Hutcheson INSTRUCTIONS: Please do not fill in the blanks other than the signature line. 2005..16. assigns and transfers unto LEAP WIRELESS INTERNATIONAL. INC. .schedule looks like this: 2005 Net Adds Threshold [***] 11. Hutcheson. have read and approve the foregoing Agreement. This Stock Assignment may be used only in accordance with the Restricted Stock Award Agreement between LEAP WIRELESS INTERNATIONAL. So the actual performance of [***] net adds falls 1/3 of the way between [***] net adds (target) and [***] net adds (maximum). [____] herewith and do hereby irrevocably constitute and appoint [____________________] to transfer the said stock on the books of the within named corporation with full power of substitution in the premises. a Delaware corporation. Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement. This means the actual payout must fall 1/3 of the way between 16. a Delaware corporation. [***] is [***] above the range minimum ([***] . . In consideration of issuing to my spouse the shares of the common stock of Leap Wireless International.8EXHIBIT C TO RESTRICTED STOCK AWARD GRANT NOTICE CONSENT OF SPOUSE I. I hereby appoint my spouse as my attorney. INC.

1 of the Agreement. Subject to the provisions of this paragraph and the Agreement. excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders. 8. you are directed (a) to date the stock assignments necessary for the repurchase and transfer in question. Within one hundred twenty (120) days after any voluntary or involuntary termination of Holder's services to the Company for any or no reason. or other property belonging to Holder. annulled. . You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation. you are hereby authorized and directed to hold in escrow the documents delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement ("AGREEMENT") between the Company and the undersigned (the "Escrow"). including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to. you will deliver to Holder a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not repurchased pursuant to the Repurchase Option set forth in Section 3.in. or notice of transfer of. notwithstanding any such order. 10307 Pacific Center Court San Diego. 6. 2005 Secretary Leap Wireless International. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. You shall not be liable in any respect on account of the identity. you shall not be liable to any of the parties hereto or to any other person. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney. you shall deliver all of the same to the Holder and shall be discharged of all further obligations hereunder.14. vacated or found to have been entered without jurisdiction. If at the time of termination of this escrow you should have in your possession any documents. in accordance with the following instructions: 1. judgments or decrees of any court. authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. the securities. including the stock certificate and the Assignment in Blank. Holder does hereby irrevocably constitute and appoint you as Holder's attorney. 9. California 92121 Ladies and Gentlemen: As escrow agent (the "ESCROW AGENT") for both Leap Wireless International. and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. but no more than once per calendar month. set aside. judgment or decree being subsequently reversed. and (c) to deliver the same. judgment or decree. Holder shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. 2. modified. unless the Company's Repurchase Option has been exercised.fact for Holder while acting in good faith. to the Company or its assignee. firm or corporation by reason of such compliance. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "COMPANY") exercises the Company's Repurchase Option as defined in the Agreement). amended. Upon written request of Holder. modified or revoked only by a writing signed by all of the parties hereto. Your duties hereunder may be altered. As of the date of closing of the repurchase indicated in such notice. the purchase price and the time for a closing hereunder at the principal office of the Company. 5. The Holder and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice..fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated. . 7. Inc. 3. you will deliver to Holder a certificate or certificates representing so many shares of stock as are not then subject to the Repurchase Option.TO RESTRICTED STOCK AWARD GRANT NOTICE JOINT ESCROW INSTRUCTIONS ________________. and the undersigned recipient of stock of the Company (the "HOLDER"). together with the certificate evidencing the shares of stock to be repurchased and transferred. (b) to fill in the number of shares being repurchased and transferred. the Company shall give to the Holder and you a written notice specifying the number of shares of stock to be purchased. Inc. a Delaware corporation (the "COMPANY").in. In case you obey or comply with any such order. securities.

the Company shall appoint a successor Escrow Agent.10. By a notice given pursuant to this Section 15. and their respective successors and permitted assigns.212. federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you. you do not become a party to the Agreement. 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 obtained by the United States Postal Service.3IN WITNESS WHEREOF. shall. 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. . 18. and construed and enforced in accordance with. 13. INC. 17. 15. 16. LEAP WIRELESS INTERNATIONAL. which is required to be given to Holder. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto. 14. be given to Holder's designated beneficiary. (Signature Page Follows) . Hutcheson Address _____________________________ ESCROW AGENT: By: _________________________ Robert Irving. In the event of any such termination. . You shall not be liable for the expiration of any rights under any applicable state. without regard to conflicts of law thereof. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. if any by written notice under this Section 15. the laws of the State of Delaware. the necessary parties hereto shall join in furnishing such instruments. if the Holder is then deceased. any party may hereafter designate a different address for notices to be given to that party. Leap Wireless International. and may pay such counsel reasonable compensation therefor. Secretary. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder. This instrument shall be binding upon and inure to the benefit of the parties hereto. Very truly yours. and any notice to be given to the Holder or you shall be addressed to the address given beneath Holder's and your signatures on the signature page to this Agreement. you become a party hereto only for the purpose of said Joint Escrow Instructions. These Joint Escrow Instructions shall be governed by. may rely upon the advice of such counsel. California 92121 HOLDER: Stewart D. Inc. 11. but you shall be under no duty whatsoever to institute or defend any such proceedings. Any notice. By signing these Joint Escrow Instructions. the parties have executed these Joint Escrow Instructions as of the date first written above. The Company will reimburse you for any reasonable attorneys' fees with respect thereto. decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected. By:_________________________________ Name: Title: Address: 10307 Pacific Center Court San Diego. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder. you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order.

par value $0. of Leap Wireless International. par value $0. Please consult your personal tax advisor for the address of the office of the Internal Revenue Service to which you should mail your election form. The name.0001. 2. to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer's receipt of shares (the "Shares") of Common Stock. the election is irrevocable. stamped envelope so that the Internal Revenue Service may return a date. PLEASE CONSULT WITH YOUR PERSONAL TAX ADVISOR AS TO WHETHER AN ELECTION OF THIS NATURE WILL BE IN YOUR BEST INTERESTS IN LIGHT OF YOUR PERSONAL TAX SITUATION.addressed. address and taxpayer identification number of the Taxpayer's spouse are (complete if applicable): ________________________ ________________________ ________________________ SSN: Description of the property with respect to which the election is being made: __________________(_____) shares of Common Stock. The executed original of the Section 83(b) election must be filed with the Internal Revenue Service not later than 30 days after the date the shares were transferred to you. 1. Send the cover letter with the originally executed Section 83(b) election form and one (1) copy via certified mail. as amended. for its records and one (1) copy must be attached to your federal income tax return for the applicable calendar year. Inc. should sign Section 83(b) election form as well).0001 per share. address and taxpayer identification number of the undersigned taxpayer are: Stewart D. The steps outlined below should be followed to ensure the election is mailed and filed correctly and in a timely manner. transferred to you. as amended. . (Your spouse. Complete Section 83(b) election form (attached as Attachment 1) and make four (4) copies of the signed election form. The post office will provide you with a white certified receipt that includes a dated postmark. Prepare the cover letter to the Internal Revenue Service (sample letter attached as Attachment 2).. of Leap Wireless International.Address: 10307 Pacific Center Court San Diego. 5.stamped at the post office.stamped copy to you. pursuant to Section 83(b) of the Internal Revenue Code of 1986. your postmarked receipt is your proof of having timely filed the Section 83(b) election if you do not receive confirmation from the Internal Revenue Service. California 92121 . PLEASE NOTE: There is no remedy for failure to file on time. Retain the Internal Revenue Service file stamped copy (when returned) for your records. We suggest that you have the package date. PLEASE NOTE: If you make the Section 83(b) election. a Delaware corporation (the "Company"). ALSO. with respect to the shares of common stock.1ATTACHMENT 1 TO EXHIBIT F ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B) The undersigned taxpayer hereby elects. 3. return receipt requested to the Internal Revenue Service at the address of the Internal Revenue Service where you file your personal tax returns. of the Company.0001 per share. 4. One (1) copy must be sent to Leap Wireless International.4EXHIBIT F TO RESTRICTED STOCK AWARD GRANT NOTICE FORM OF 83(B) ELECTION AND INSTRUCTIONS These instructions are provided to assist you if you choose to make an election under Section 83(b) of the Internal Revenue Code. if any. 1. 2. Inc. Enclose a self. Inc. Hutcheson ____________________________ ____________________________ SSN: The name. However. . par value $0.

Please acknowledge receipt of the enclosed materials by stamping the enclosed copy of the Election and returning it to me in the self. Unless otherwise defined herein. RESTRICTED STOCK AND DEFERRED STOCK UNIT PLAN STOCK OPTION GRANT NOTICE AND NON. 6. The date on which the property was transferred was _________. 200_ VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Internal Revenue Service [Address where taxpayer files returns] Re: Election under Section 83(b) of the Internal Revenue Code of 1986 Taxpayer:_________________________________________________________________ Taxpayer's Social Security Number:________________________________________ Taxpayer's Spouse:________________________________________________________ Taxpayer's Spouse's Social Security Number:_______________________________ Ladies and Gentlemen: Enclosed please find an original and one copy of an Election under Section 83(b) of the Internal Revenue Code of 1986.1ATTACHMENT A-5 LEAP WIRELESS INTERNATIONAL. Stewart D. Inc. directorship or consultancy with the Company. 4.2ATTACHMENT 2 TO EXHIBIT F SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE __________________.3(a)) of the Shares was $___________ per Share. The amount paid by the taxpayer for Shares was $0. an option to purchase the number of shares of the Company's Common Stock set forth below (the "OPTION"). as amended. The fair market value at the time of transfer (determined without regard to any lapse restrictions. A copy of this statement has been furnished to the Company.3.1Dated: _____________. 5. The taxable year to which this election relates is calendar year 200_. Dated: ______________. hereby grants to the holder listed below ("HOLDER"). . Nature of restrictions to which the property is subject: The Shares are subject to repurchase at their original purchase price if unvested as of the date of termination of employment.QUALIFIED STOCK OPTION AGREEMENT Leap Wireless International. Inc. pursuant to its 2004 Stock Option.Qualified Stock Option Agreement attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT") and the Plan. 200_. 2004 STOCK OPTION. as defined in Treasury Regulation Section 1. 200_. INC. 7. the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement. Spouse's Signature ________________________ Signature(s) Notarized by: . Restricted Stock and Deferred Stock Unit Plan (the "PLAN"). being made by the taxpayer referenced above. Hutcheson Enclosures cc: Leap Wireless International. This Option is subject to all of the terms and conditions as set forth herein and in the Non. 200_. Taxpayer Signature ________________________ The undersigned spouse of Taxpayer joins in this election.0001 per share. .addressed stamped envelope provided herewith. .83. each of which are incorporated herein by reference. Very truly yours. (Complete if applicable). (the "COMPANY").

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. 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.Qualified Stock Option and shall not be an incentive stock option within the meaning of Section 422 of the Code. (the "COMPANY") has granted to Holder an option under the Company's 2004 Stock Option. the Stock Option Agreement and the Plan. 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. LEAP WIRELESS INTERNATIONAL. the Stock Option Agreement and this Grant Notice.HOLDER: Stewart D. 2005 EXERCISE PRICE PER SHARE: $___________ per share TOTAL NUMBER OF SHARES SUBJECT TO THE OPTION: [______] EXPIRATION DATE: TYPE OF OPTION: __________________. The Option shall be a Non. effective as of the Grant Date set forth in the Grant Notice (the "GRANT DATE"). Hutcheson GRANT DATE: _________________. 1. By his or her signature and the Company's signature below. conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan or the Option. The purchase price of the shares of Common Stock subject to the Option shall be as set forth in the Grant Notice. Restricted Stock and Deferred Stock Unit Plan (the "PLAN") to purchase the number of shares of Common Stock indicated in the Grant Notice. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference. without commission or other charge. HOLDER: By:__________________________________ By:____________________________________ Print Name:__________________________ Print Name: Stewart D.QUALIFIED STOCK OPTION AGREEMENT Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this Non.2 Incorporation of Terms of Plan. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.Qualified Stock Option Agreement (this "AGREEMENT") is attached. ARTICLE III . 2. Leap Wireless International. INC.2 Purchase Price. VESTING SCHEDULE: The shares of Common Stock subject to the Option (rounded down to the next whole number of shares) shall vest and become exercisable on the dates and in the percentages indicated in Exhibit B to this Grant Notice. 2015 This Option is a Non-Qualified Stock Option and is not an incentive stock option within the meaning of Section 422 of the Code. ARTICLE II GRANT OF OPTION 2. Hutcheson Title:_______________________________ Title:_________________________________ Address: 10307 Pacific Center Court Address:_______________________________ San Diego. Holder agrees to be bound by the terms and conditions of the Plan. Holder hereby agrees to accept as binding. Holder has reviewed the Stock Option Agreement.1 Grant of Option. upon the terms and conditions set forth in the Plan and this Agreement.1 Defined Terms. ARTICLE I GENERAL 1. Inc. California 92121 _______________________________ EXHIBIT A TO STOCK OPTION GRANT NOTICE NON.

Termination of Directorship or Termination of Consultancy.3: (a) An Exercise Notice in writing signed by Holder or any other person then entitled to exercise the Option or portion thereof. After the death of Holder.3. prior to the time when the Option becomes unexercisable under Section 3.1 Person Eligible to Exercise. (a) Subject to Sections 3. ninety (90) days following the date such shares become exercisable). or any exercisable portion thereof. and (b) Subject to Section 6.2(c). (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.3 Manner of Exercise. except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Holder. 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. during the lifetime of Holder. or (ii) The expiration of ninety (90) days following the date of Holder's Termination of Employment.2(b) and 5.8. if then wholly exercisable. 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. such notice complying with all applicable rules established by the Administrator. through the delivery of shares of Common Stock which have been owned by Holder for at least six (6) months. 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). any exercisable portion of the Option may. as . (b) No portion of the Option which has not become vested and exercisable at Termination of Employment. unless such termination occurs by reason of Holder's death or Disability (as defined below) or the Holder's termination by the Company for Cause (as defined in Exhibit B hereto). The Option.2 Partial Exercise. or (ii) With the consent of the Administrator. Termination of Directorship or Termination of Consultancy. shall thereafter become vested and exercisable. with respect to any shares of Common Stock that become exercisable pursuant to subparagraph 2(k) or subparagraph 4(a) of Exhibit B hereto. 3. only Holder may exercise the Option or any portion thereof.3.3. such payment may be made. The installments provided for in the vesting schedule set forth in Exhibit B to the Grant Notice are cumulative. Any exercisable portion of the Option or the entire Option. ARTICLE IV EXERCISE OF OPTION 4.1applicable. 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.24. by reason of Holder's death or Disability. 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. stating that the Option or portion thereof is thereby exercised. 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. Termination of Directorship or Termination of Consultancy.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. 4. (b) For purposes of this Agreement. or (iv) The date of Termination of Employment. if later.1 Commencement of Exercisability. as applicable. as applicable (or.3 and 5.2 Duration of Exercisability.3 Expiration of Option. Termination of Directorship or Termination of Consultancy for Cause (as defined in Exhibit B hereto). or (iii) The expiration of one (1) year following the date of Holder's Termination of Employment. in whole or in part. Except as provided in Sections 5. 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 . "Disability" means permanent and total disability within the meaning of Section 22(e)(3) of the Code.PERIOD OF EXERCISABILITY 3. 3. .

4 of the Plan. 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. and (d) The receipt by the Company of full payment for such shares. 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 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. 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. 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. that payment of such proceeds is made to the Company upon settlement of such sale. damage. subject to Section 10.transfer orders covering such shares. 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. in its absolute discretion. Holder of the Option shall not be. signed by Holder or the other person then entitled to exercise such Option or portion thereof. 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. 4. Without limiting the generality of the foregoing. (ii) and (iii). deem necessary or advisable. or (iii) To the extent permitted under applicable laws. including payment of any applicable withholding tax.4 Conditions to Issuance of Stock Certificates. in such form as is prescribed by the Administrator.3(b). and (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall. which the Administrator shall. 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. or any portion thereof. appropriate proof of the right of such person or persons to exercise the Option. not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act. determine to be necessary or advisable. in its absolute discretion. nor have any of the rights or privileges of. and such registration is then effective in respect of such shares. 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. .5 Rights as Stockholder.4ARTICLE V OTHER PROVISIONS . including payment of any applicable withholding tax. 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 (c) A bona fide written representation and agreement.4 of the Plan.portion thereof. 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.3(b). The written representation and agreement referred to in the first sentence of this subsection (c) shall. in its absolute discretion. provided. and (e) The receipt by the Company of full payment for such shares.1 by any person or persons other than Holder.3and may issue stop. subject to Section 10. 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. The shares of Common Stock deliverable upon the exercise of the Option. 4. any combination of the consideration provided in the foregoing paragraphs (i). Such shares shall be fully paid and nonassessable. The Administrator may. 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. . or (iv) With the consent of the Administrator. 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. stating that the shares of Common Stock are being acquired for Holder's own account. and (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4. however. may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company.

5.7 Governing Law.2 Option Not Transferable. the Company and all other interested persons. Severability.1 by written notice under this Section 5. assigned or transferred in any manner other than by will or the laws of descent and distribution or. during the lifetime of Holder.5 Notices. any exercisable portion of the Option may. 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. (b) Holder agrees that. . either party may hereafter designate a different address for notices to be given to that party. it may make appropriate notations to the same effect in its own records.6 Titles. be given to the person entitled to exercise his or her Option pursuant to Section 4. 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. this Agreement or the Option. subject to the terms and conditions set forth in Section 10.2(b). interpretation and application of the Plan as are consistent therewith and to interpret. After the death of Holder. prior to the time when the Option becomes unexercisable under Section 3. amend or revoke any such rules. pursuant to a DRO. in order to ensure compliance with the restrictions referred to herein. (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. (c) Unless transferred to a Permitted Transferee in accordance with Section 5. only Holder may exercise the Option or any portion thereof unless it has been disposed of pursuant to a DRO. the Option may be transferred to one or more Permitted Transferees. (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. This Agreement shall be administered.1 Administration. (b) Notwithstanding any other provision in this Agreement. if the Company transfers its own securities. 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. if any.3. the Company may issue appropriate "stop transfer" instructions to its transfer .Transfer Orders. if Holder is then deceased. unless and until the shares underlying the Option have been issued. levy. 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.1 of the Plan. Any notice which is required to be given to Holder shall.5. attachment. the other provisions shall nevertheless remain effective and shall remain enforceable. 5.4 Shares to Be Reserved. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable. No member of the Administrator shall be personally liable for any action. pledge. and that. By a notice given pursuant to this Section 5. 5.5. 5. the Option may not be sold.2(b). 5.3 Restrictive Legends and Stop. (a) Subject to Section 5. assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment. subject to the consent of the Administrator. with the consent of the Administrator and to the extent the Option is not intended to qualify as an Incentive Stock Option. 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. 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. In its absolute discretion. interpreted and enforced under the laws of the State of Delaware without regard to conflicts of laws thereof. and any attempted disposition thereof shall be null and void and of no effect. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration. encumbrance. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. contracts or engagements of Holder or his or her successors in interest or shall be subject to disposition by transfer. and all restrictions applicable to such shares have lapsed. except to the extent that such disposition is permitted by the preceding sentence. determination or interpretation made in good faith with respect to the Plan. alienation. Neither the Option nor any interest or right therein shall be liable for the debts. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Holder. 5. 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. anticipation. pledged. garnishment or any other legal or equitable proceedings (including bankruptcy).5agent.

9 Amendments. with or without cause.BASED VESTING SCHEDULE 2005 Net Adds Target Maximum [***] [***] 12. the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws. amended or terminated except by an instrument in writing. If the Company's EBITDA (as defined below) and the Company's Net Adds (as defined below) both equal or exceed the respective Achievement Threshold amounts for 2005 as set forth in paragraph (a) below and/or both equal or exceed the Achievement Threshold amounts for 2006 as set forth in paragraph (b) below and/or both equal or exceed the Achievement Threshold amounts for 2007 as set forth in paragraph (c) below. If Holder is an Employee. if Holder is an Employee. To the extent permitted by applicable law. 1.11 Successors and Assigns. Confidential treatment has been requested with respect to the omitted portions. then the Option shall vest and become exercisable as to that number of shares of Common Stock equal to the number obtained by multiplying the percentage determined in accordance with the following table. (b) and (c) below. executors. if either the Company's EBITDA or Net Adds do not at least equal the Achievement Threshold amount for the applicable year.5% 15% 2005 Threshold [***] Threshold [***] 10% *** Certain information on this page has been omitted and filed separately with the Commission. and state securities laws and regulations.10 No Employment Rights. .Based Vesting. Subject to any accelerated vesting and exercisability pursuant to paragraphs 2. rules and regulations. Subject to the restrictions on transfer herein set forth. Performance. Notwithstanding anything herein to the contrary. and the Option is granted and may be exercised. and this Agreement shall inure to the benefit of the successors and assigns of the Company. 5. by the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice). then a certain percentage of the number of shares of Common Stock subject to the Option shall vest and become exercisable in accordance with the provisions of paragraphs (a). this Agreement shall be binding upon Holder and his or her heirs. that no shares subject to the Option shall vest and become exercisable pursuant to paragraphs (a).7EXHIBIT 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. 5.5. The Company may assign any of its rights under this Agreement to single or multiple assignees. successors and assigns. however. only in such a manner as to conform to such laws. administrators. signed by Holder or such other person as may be permitted to exercise the Option pursuant to Section 4. the shares of Common Stock subject to the Option shall vest and become exercisable in their entirety on December 31. 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. the Plan shall be administered. except to the extent expressly provided otherwise in a written agreement between the Company and Holder. If the Company's EBITDA (as defined below) and Net Adds (as defined below) for Fiscal Year 2005 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below). rules and regulations. Director or Consultant on that date. 3 and 4 below. to discharge Holder at any time for any reason whatsoever.65. . . Time. (b) or (c) below. (a) Fiscal Year 2005. 2.1 and by a duly authorized representative of the Company. 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. This Agreement may not be modified.8 Conformity to Securities Laws. which are expressly reserved. 2008.Based Accelerated Vesting. 2005 PERFORMANCE. provided.

If the Company's EBITDA and Net Adds for Fiscal Year 2006 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth below). by the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice).5% 15% ---20% 22. by the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice). .5% 30% 2006 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] The percentage for determining the number of shares of Common Stock that shall vest and become exercisable if performance is between the Achievement Threshold amount and the Achievement Target amount or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B.5% 15% ---20% 22.1.2below).. 2007 Net Adds Target Maximum [***] [***] 12.5% ---22.1. (b) Fiscal Year 2006.5% ---22. then the Option shall vest and become exercisable as to that number of shares of Common Stock equal to the number obtained by multiplying the percentage determined in accordance with the following table. (c) Fiscal Year 2007. then the Option shall vest and become exercisable as to that number of shares of Common Stock equal to the number obtained by multiplying the percentage determined in accordance with the following table. Confidential treatment has been requested with respect to the omitted portions.1EBITDA (in thousands) Target [***] Maximum [***] 12.5% 30% The percentage for determining the number of shares of Common Stock that shall vest and become exercisable if performance is between the Achievement Threshold amount and the Achievement Target amount or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. If the Company's EBITDA and Net Adds for Fiscal Year 2007 equal or exceed the EBITDA and Net Adds Achievement Thresholds (as set forth *** Certain information on this page has been omitted and filed separately with the Commission.5% 15% 2006 Net Adds Target Maximum [***] [***] 12.5% 22.5% 15% 20% 22.5% 30% 2007 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] Threshold [***] 10% ---12. Threshold [***] 10% ---12.5% 15% .

for the relevant Fiscal Year. the Option shall not vest and become exercisable as to any additional shares of Common Stock pursuant to performance.recurring expenses reducing such consolidated net income or loss which do not represent a cash item in such period or any future period (including losses attributable to the sale of assets other than in the ordinary course of business) and minus (b) the following to the extent included in calculating such consolidated net income or loss: (i) income tax credits for such period. with respect to any Fiscal Year. For purposes of this Exhibit B. For purposes of this Exhibit B. For purposes of this Exhibit B.cash items increasing such consolidated net income or loss for such period. (d) Definition of EBITDA. 2005. or ceases to operate in any existing market.cash impairment of assets (tangible and intangible) and related noncash charges. (iv) non. the term "FISCAL YEAR" means the Company's fiscal year ending December 31. but in no event shall the Company make such public announcement later than the date on which the Company files its Form 10.1. Continued Service Condition. If the Company adopts a pre. (ii) all gains arising in relation to the sale of assets other than in the ordinary course of business and (iii) all non. (vi) net non. (i) Definition of Fiscal Year. 2(b) and 2(c) shall be cumulative.cash reorganization expenses and charges. equitably adjust the Net Adds Achievement Levels set forth in paragraphs (a). . 2004 and (viii) other non. (j) Termination of Performance. For purposes of this Exhibit B. as applicable. Notwithstanding the foregoing provisions of this paragraph 2. with respect to vesting and exercisability to occur upon the attainment of EBITDA and Net Adds Achievement Levels for 2005. Director or Consultant of the Company or any of its Subsidiaries on the applicable Performance Vesting Effective Date. the Administrator shall. (vii) non. Cricket Communications Inc. Notwithstanding the other provisions of this paragraph 2 (other than subparagraph 2(j)). Change in Control Accelerated Vesting. the Option shall vest and become exercisable as to shares of Common Stock pursuant to this paragraph 2 if Holder is an Employee. Confidential treatment has been requested with respect to the omitted portions.based accelerated vesting and exercisability under this paragraph 2 on or after the date of the occurrence of a Change in Control.43. (g) Accelerated Vesting Cumulative. in its discretion.paid card based service offering. (f) Adjustments for Future Changes in the Company's Business. if Holder is an Employee. The vesting and exercisability of the Option as to shares of Common Stock under paragraphs 2(a). If the Company commences operations in any new markets. the term "EBITDA" for a Fiscal Year means the Company's consolidated net income or loss for such period before extraordinary items and before the cumulative effect of any change in accounting principles plus (a) the following to the extent deducted in calculating such consolidated net income or loss: (i) consolidated interest expense. the administrative agent identified therein and others posted to IntraLinks on December 23. (ii) all income tax expense deducted in arriving at such consolidated net income or loss. *** Certain information on this page has been omitted and filed separately with the Commission. the date of the public announcement by the Company of EBITDA or Net Adds. (k) Minimum Vesting For Fiscal Year 2006.3(e) Definition of Net Adds. (h) Definition of Performance Vesting Effective Date.nine (39) markets. Except as otherwise provided in subparagraph 2(k). the term "NET ADDS" means. the Administrator shall.K for the relevant Fiscal Year. .cash dividends or other distributions made with respect to qualified preferred stock as contemplated by the Credit Agreement negotiated among the Company.The percentage for determining the number of shares of Common Stock that shall vest and become exercisable if performance is between the Achievement Threshold amount and the Achievement Target amount or between the Achievement Target amount and the Achievement Maximum amount shall be determined by linear interpolation between the applicable Achievement amounts for each measure in accordance with the method described in Attachment B. equitably adjust the EBITDA Achievement Levels and/or the Net Adds Achievement Levels to reflect the Company's changed scope of operations. in its discretion.Based Vesting. 2006 or 2007.. as applicable. The EBITDA Achievement Levels and Net Adds Achievement Levels set forth in paragraphs (a). . the term "PERFORMANCE VESTING EFFECTIVE DATE" means. the Company's "end of period customers" on the last day of such Fiscal Year less "end of period customers" on the last day of the preceding Fiscal Year. (b) and (c) to reflect the Company's changed scope of operations. (v) charges and expenses related to stock based compensation awards. then the minimum additional number of shares of Common Stock that shall vest and become exercisable under this paragraph 2 on the Performance Vesting Effective Date for Fiscal Year 2006 (with respect to EBITDA and Net Adds performance for Fiscal Year 2006) shall equal twenty percent (20%) of the total number of shares of Common Stock subject to the Option (as set forth in the Grant Notice). Director or Consultant on December 31. (b) and (c) are designed to be measured against the Company's performance in its existing thirty. (iii) depreciation and amortization expense.

twenty. In the event of a Change in Control. the remaining unvested shares of Common Stock subject to the Option shall vest and become exercisable on the last day of the one (1) year period. (b) Definitions of Cause and Good Reason. the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to fifty percent (50%) of the number of then unvested shares of Common Stock subject to the Option and (ii) if Holder is an Employee. The accelerated vesting and exercisability of shares of Common Stock subject to the Option pursuant to this paragraph 4 shall be conditioned on the Holder's delivery to the Company of an executed General Release in accordance with Section 5. (d) Termination of Employment in the Event of a Change in Control. 2006. (i) if the Holder.500 per day. then (i) if the Change in Control occurs prior to January 1. For purposes of this Exhibit B. during the period commencing ninety (90) days prior to such Change in Control and ending twelve (12) months after such Change in Control. (i) if Holder is an Employee. or by reason of resignation by Holder for Good Reason (as defined below). agrees to provide. upon written request of the Company and reasonable advance notice. and (iii) if Holder is an Employee. 2006. Director or Consultant immediately prior to such Change in Control. 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. Director or Consultant immediately prior to such Change in Control. 2007. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control. if Holder is an Employee.five percent (85%) of the number of then unvested shares of Common Stock subject to the Option. the Option shall then vest and become exercisable as to the remaining unvested shares of Common Stock subject to the Option. the Company and Cricket Communications. . 2006.9 of the Employment Agreement and the Holder's non. 2008. Inc. if later. Director or Consultant immediately prior to such Change in Control. In the event of Holder's Termination of Employment (without regard to any consulting services provided pursuant to this paragraph (a)) by reason of discharge by the Company other than for Cause. the Option shall then vest and become exercisable as to any then remaining unvested shares of Common Stock subject to the Option. or (ii) such remaining unvested shares of Common Stock subject to the Option shall otherwise vest and become exercisable on December 31. 2006. if the Holder has a Termination of Employment by reason of discharge by the Company other than for Cause (as defined below). (c) Change in Control on or after January 1.5(a) Termination of Employment by the Company Other than for Cause or by Holder for Good Reason After February 28. 2007. the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to eighty. Director or Consultant on the first anniversary of the date of the occurrence of such Change in Control.five percent (25)% of the number of then unvested shares of Common Stock subject to the Option shall vest and become exercisable and (ii) if the change in Control occurs on or after January 1. and (ii) if Holder is an Employee. The Company and the Holder shall mutually use their best efforts to schedule the date or dates on which the Holder will provide the requested consulting services so as not to prevent the Holder from being gainfully employed by a subsequent employer. immediately prior to the date of the occurrence of such Change in Control). Accelerated Vesting in the Event of Termination of Employment. 2006. (i) if Holder is an Employee. as amended from time to time (the "EMPLOYMENT AGREEMENT"). In the event of a Change in Control during 2006. 2005. the Option shall then vest and become exercisable as to the remaining unvested shares of Common Stock subject to the Option. or both) for up to five (5) days a month for up to a one (1) year period for a fee of $1. or by reason of resignation by the Holder for Good Reason after February 28. (b) Change in Control during 2006.revocation of such General Release during the time period for such . the Option shall then vest and become exercisable as to a number of shares of Common Stock equal to seventy. (c) Condition to Accelerated Vesting and Exercisability.. the Option shall then vest and become exercisable as to an additional number of shares of Common Stock equal to fifty percent (50%) of the number of then unvested shares of Common Stock subject to the Option.five percent (75%) of the number of then unvested shares of Common Stock subject to the Option. In the event of a Change in Control on or after January 1. 4. consulting services to the Company (or to the Parent at the direction of the Company. by and among Holder. In the event of a Change in Control prior to January 1. and shall be arranged so as to reasonably accommodate Holder's vacation or other personal affairs. and (ii) if Holder is an Employee. 2006. and does provide.(a) Change in Control prior to January 1. Director or Consultant on the second anniversary of the date of the occurrence of such Change in Control. the terms "CAUSE" and "GOOD REASON" shall have the meanings given to such terms in that certain Amended and Restated Executive Employment Agreement dated as of January 10.

6ATTACHMENT B.5% Maximum [***] 15% ---22. At [***] net adds.5%.25% Example 2: . Limit on Vesting. Holder agrees to keep the EBITDA and Net Adds achievement levels set forth in this Exhibit B confidential and not to disclose such thresholds to any third party without the prior written consent of the Company. the actual payout should be halfway between the scheduled payouts of 12.5% 30% 2005 EBITDA (in thousands) Threshold [***] --------Target [***] Maximum [***] The EBITDA amounts in the following examples are shown in thousands.line interpolation to determine the final payout.5%) Target [***] 16. 5.5% . At [***] net adds. Since EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]). Thus the payout is (1/2)*(20%. but performance in EBITDA falls somewhere in. Confidentiality. PAYOUT CALCULATION: Net additions of [***] dictate a payout of 12. At [***] net adds.Payout = 16. *** Certain information on this page has been omitted and filed separately with the Commission.2005 Net Adds: [***] PROBLEM: The net adds performance falls exactly on a specified payout range. so we can interpolate an EBITDA. Confidential treatment has been requested with respect to the omitted portions.based payout would be halfway between 12. SOLUTION: Start with the net adds payout column and use straight.based payout would be halfway between 10% and 12.5% ---12.based payout schedule by finding the halfway point at each defined level of Net Adds.5% and 20%.1 METHODOLOGY FOR LINEAR INTERPOLATION 2005 Net Adds Threshold Target [***] [***] 10% 12.5% for threshold EBITDA performance and 20% for target EBITDA performance.5%) 2005 EBITDA Actual [***] (midpoint of [***] and [***]) . -7- SOLUTION: Use straight line interpolation for both measures. PAYOUT CALCULATION: EBITDA performance ([***]) is halfway between THRESHOLD and TARGET performance ([***] and [***]). Example 1: .based payout schedule looks like this: 2005 Net Adds Threshold [***] 11.25% (midpoint of 10%and 12. . Thus the interpolated. the EBITDA.2005 EBITDA: [***] .based payout would be halfway between 15% and 22. 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.revocation set forth therein.between the schedule. EBITDA.2005 Net Adds: [***] PROBLEM: Neither the net adds performance nor the EBITDA performance fall exactly on a specified payout.12.2005 EBITDA: [***] .75% (midpoint of 15% and 22.5% and 20%) Maximum [***] 18.25% (midpoint of 12.5%.5% 15% ---20% 22. Starting with either measure will yield the same result. the EBITDA.5%)+12.5% and 20%. the EBITDA. 6.

except as provided in Section 10.75%. (the "COMPANY") under and pursuant to the Leap Wireless International.25% . we interpolate a payout at [***] net adds based on the scheduled payouts at [***] and [***]. The Plan and Option Agreement are incorporated herein by reference. the Plan and the Option Agreement constitute the entire 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.Payout = 17. . Confidential treatment has been requested with respect to the omitted portions. 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: ___________________________ . 200__ Stock Option.3 of the Plan. SUBMITTED BY HOLDER: By:_________________________________ By:_________________________________ Print Name:_________________________ Print Name: _________________________ Title:______________________________ Address:_____________________________ .25%)+16. Thus the payout is (1/3)*(18. 4. This means the actual payout must fall 1/3 of the way between 16. Entire Agreement. This Exercise Notice. Tax Consultation.To determine the actual payout given this range. Rights as Stockholder. 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.16. Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.25% and 18.08% *** Certain information on this page has been omitted and filed separately with the Commission.2- . no right to vote or receive dividends or any' other rights as a stockholder shall exist with respect to Shares subject to the Option. Restricted Stock and Deferred Stock Unit Plan (the "Plan") and the Stock Option Grant Notice and Non. Holder understands that there are tax consequences to Holder as a result of Holder's purchase or disposition of the Shares. . 2.75%. The length of the range is [***] [***] = [***] net adds. 2005. Representations of Holder. as well as any applicable withholding tax) TYPE OF OPTION: The Option is a Non.Qualified Stock Option Agreement dated . Inc. Holder agrees to abide by and be bound by their terms and conditions. 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). INC. read and understood the Plan and the Option Agreement. 3. 2005 _____________________________________ $____________ $____________ _____________________________________ $______________ (Representing the full Exercise Price for the Shares. . 1. Holder acknowledges that Holder has received. Inc. the undersigned ("HOLDER") hereby elects to exercise Holder's option to purchase shares of the Common Stock (the "SHARES") of Leap Wireless International.8EXHIBIT C TO STOCK OPTION GRANT NOTICE FORM OF EXERCISE NOTICE Effective as of today.[***] = [***]). 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. notwithstanding the exercise of the Option. [***] is [***] above the range minimum ([***] .1ACCEPTED BY: LEAP WIRELESS INTERNATIONAL.Qualified Stock Option and is not an incentive stock option within the meaning of Section 422 of the Code. First we determine where [***] lies in the range of [***] to [***]. (the "OPTION AGREEMENT"). So the actual performance of [***] net adds falls 1/3 of the way between [***] net adds (target) and [***] net adds (maximum).

EXHIBIT B GENERAL RELEASE

1. GENERAL RELEASE OF CLAIMS. In consideration of the benefits under Paragraph 5 of the Amended and Restated Executive Employment Agreement (as amended from time to time, the "Agreement"), dated as of January 10, 2005, by and among Cricket Communications, Inc. ("the "Company"), Leap Wireless International, Inc. (the "Parent"), and Stewart D. Hutcheson ("EXECUTIVE"), EXECUTIVE does hereby for himself or herself and his or her spouse, beneficiaries, heirs, successors and assigns, release, acquit and forever discharge the Company, the Parent, their subsidiaries, and their respective stockholders, officers, directors, any of the directors' affiliated entities, 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, known or unknown, which EXECUTIVE 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, EXECUTIVE's employment with the Company, or the termination thereof, any claims under Title VII of the Civil Rights Act of 1964, as amended, the Federal Age Discrimination and Employment Act, the Equal Pay Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Civil Rights Act of 1866, 1871 and 1991, the California Fair Employment and Housing Act, the California Occupational Safety and Health Act, claims for unpaid wages and failure to pay wages under the California Labor Code (collectively, "Claims"). This General Release shall not, however, constitute a waiver of any of EXECUTIVE's rights under the Agreement or under any outstanding stock option granted to EXECUTIVE, or under the terms of any employee benefit plan of the Companies in which EXECUTIVE is a participant after this General Release becomes effective and remains unrevoked for eight days. 2. RELEASE OF UNKNOWN CLAIMS. IN ADDITION, EXECUTIVE 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 HIS 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. EXECUTIVE AGREES AND EXPRESSLY ACKNOWLEDGES THAT THIS GENERAL RELEASE INCLUDES A WAIVER AND RELEASE OF ALL CLAIMS WHICH EXECUTIVE 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 ALL CLAIMS INCLUDING BUT NOT LIMITED TO THE ADEA CLAIMS UNDER THIS GENERAL RELEASE: - 11) That the Agreement and this General Release are written in a manner calculated to be understood by EXECUTIVE. 2) 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 EXECUTIVE signs this General Release. 3) The Agreement provides for consideration in addition to anything of value to which EXECUTIVE is already entitled. 4) EXECUTIVE is advised to consult an attorney before signing this General Release. 5) EXECUTIVE is afforded twenty- one (21) days (or, in the event that the termination of EXECUTIVE's employment is in connection with an exit incentive or other employment termination program, forty- five (45) days) after EXECUTIVE is provided with this General Release to decide whether or not to sign this General Release. If EXECUTIVE executes this General Release prior to the expiration of such period, EXECUTIVE does so voluntarily and after having had the opportunity to consult with an attorney. 6) In the event that the termination of EXECUTIVE's employment is in connection with an exit incentive or other employment termination program, EXECUTIVE 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.

7) EXECUTIVE 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 EXECUTIVE will not receive the benefits described in Section 5.3 of the Agreement. 8) If EXECUTIVE wishes to revoke the General Release, EXECUTIVE shall deliver written notice stating his intent to revoke this General Release to the Company's General Counsel on or before the seventh (7th) day after the date hereof. 4. NO ASSIGNMENT OF CLAIMS. EXECUTIVE represents and warrants to the Releasees that there has been no assignment or other transfer of any interest in any Claim which EXECUTIVE may have against the Releasees, or any of them, and EXECUTIVE 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. - 25. NO SUITS OR ACTIONS. EXECUTIVE 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. 6. NO ADMISSION. EXECUTIVE 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. EXECUTIVE Date: _______________________ Stewart D. Hutcheson - 3-

EXHIBIT 10.15 [CRICKET COMMUNICATIONS, INC. LETTERHEAD] January 31, 2005 Albin F. Moschner 660 Northcroft Court Lake Forest, IL 60045 Dear Albin: We are pleased to offer you the position of Executive Vice President and Chief Marketing Officer, reporting to Doug Hutcheson, Chief Executive Officer & President. The terms of the offer are as follows: 1. A starting bi- weekly salary of $11,923.08; if annualized, $310,000. 2. Eligibility to participate in our Bonus Plan. You will have an opportunity to earn a target bonus up to 65% of your base compensation. The bonus payout will be based on company and individual performance. 3. A competitive comprehensive benefits package for you and your eligible dependents. Attached you will find a detailed copy of our benefits package for your information. 4. We will facilitate your relocation from Lake Forest, IL to San Diego, CA. A copy of our relocation package/program is enclosed for your review. The company will provide you with temporary living (housing) for one year from your date of employment. During this one year period, you will also be eligible for two trips per month to your primary residence. The company will reimburse the cost of a rental automobile for one year from the date of your employment or we will pay the reasonable and customary cost to ship your personal vehicle from Lake Forest, Ill to San Diego, A. 5. You will be eligible to participate in the company's long term incentive plan. Subject to and effective upon your acceptance of employment with the Company, the Board of Directors of Leap Wireless International, Inc. has granted you an award for 20,000 shares of restricted common stock and an option to purchase 127,660 shares of common stock at an exercised price of $26.55 per share or, if higher, the closing price of Leap's common stock on the date preceding the date of the option grant becomes effective. The specifics of these awards will be provided to you in the form of restricted stock/stock option agreements. Al Moschner January 31, 2005

Page Two In connection with your employment by the Company, you will be required to take and pass a drug and alcohol test, the results of a background investigation must be acceptable to the Company, and you will be required to sign the Company's Invention Disclosure, Confidentiality & Proprietary Rights Agreement. The Leap Human Resources department will initiate the background investigation. Included with this letter is a clinic passport that contains the name, address, and telephone number of the medical center that you will go to in order to complete your drug and alcohol test specimen collection. Please take this passport with you when you go for your test. You must appear at Labcorp PSC, 71 N Waukegan Road, Suite 800, Lake Bluff, IL 60044, (847) 735- 0026, (please call first before going) for your drug and alcohol test promptly after your receipt of this offer letter. Please be sure to have a photo ID with you when you check in for the screening. Please return a signed copy of this offer letter along with the attached Terms of Employment and Invention Disclosure, Confidentiality & Proprietary Rights Agreement. Please note that this offer is valid for five days from the date of this letter. If you have any questions, please do not hesitate to call me at (858) 882 - 6015. Congratulations and welcome! Sincerely, /s/ Leonard C. Stephens Leonard C. Stephens Sr Vice President, Human Resources I accept the offer of employment made to me by Cricket Communications, Inc. and agree to the terms set forth above. Offer accepted: Albin F. Moschner /s/ Albin F. Moschner Printed Name Signature

EXHIBIT 10.16.1 EMERGENCE BONUS AGREEMENT This Emergence Bonus Agreement, effective as of February 17, 2005, is entered into between Glenn Umetsu ("Executive") and Cricket Communications, Inc. ("Cricket). Recitals

A. On April 13, 2003, Cricket, Leap Wireless International, Inc. ("Leap"), and substantially all of their respective subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. B. Cricket, Leap and their respective debtor subsidiaries emerged from bankruptcy on August 16, 2004 when the Amended and Restated Joint Plan of Reorganization of Leap, Cricket and other debtors party thereto became effective. C. Executive served as an executive officer of Leap and Cricket for all or substantially all of the time that these two corporations were in bankruptcy. D. To help assure its continued operations and the retention of its employees during its financial restructuring, Cricket instituted various retention and bonus compensation programs in 2003 and 2004, including a program referred to as the Key Employee Retention Program ("KERP") which provided employees who were selected to participate in the program with bonus payments in October 2004 and February 2005. No executive officer of Leap or Cricket participated in the KERP. E. In recognition of the services that Executive rendered to Leap and Cricket, including the services that Executive rendered to Leap and Cricket during the pendency of these corporations' bankruptcies, the Compensation Committee of the Board of Directors of Leap authorized the payment of a cash emergence bonus to Executive. For good and valuable consideration, the receipt of which is hereby acknowledged, Cricket has agreed to pay to Executive the portion of such bonus that remains to be paid as set forth below. Agreement 1. Cricket shall pay Executive a bonus in an amount equal to $125,000 on (or promptly after) the earliest to occur of the following events: (a) September 30, 2005, provided Executive is still employed by Cricket on such date; (b) the date on which Executive ceases to be employed by Cricket, unless such cessation of employment occurs as a result of a termination for Cause.

As used in this agreement, the terms "Cause" shall have the meaning ascribed to such term in the standard form of Stock Option Grant Notice and Non- Qualified Stock Option Agreement filed as Exhibit 10.2 to Leap's Current Report on From 8- K, filed with the Securities and Exchange Commission on January 5, 2005. IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above. EXECUTIVE CRICKET COMMUNICATIONS, INC. By: Name: S.D. Hutcheson Title: President, CFO
EXHIBIT 10.16.2 EMERGENCE BONUS AGREEMENT This Emergence Bonus Agreement, effective as of February 17, 2005, is entered into between David Davis ("Executive") and Cricket Communications, Inc. ("Cricket). Recitals

A. On April 13, 2003, Cricket, Leap Wireless International, Inc. ("Leap"), and substantially all of their respective subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. B. Cricket, Leap and their respective debtor subsidiaries emerged from bankruptcy on August 16, 2004 when the Amended and Restated Joint Plan of Reorganization of Leap, Cricket and other debtors party thereto became effective. C. Executive served as an executive officer of Leap and Cricket for all or substantially all of the time that these two corporations were in bankruptcy. D. To help assure its continued operations and the retention of its employees during its financial restructuring, Cricket instituted various retention and bonus compensation programs in 2003 and 2004, including a program referred to as the Key Employee Retention Program ("KERP") which provided employees who were selected to participate in the program with bonus payments in October 2004 and February 2005. No executive officer of Leap or Cricket participated in the KERP. E. In recognition of the services that Executive rendered to Leap and Cricket, including the services that Executive rendered to Leap and Cricket during the pendency of these corporations' bankruptcies, the Compensation Committee of the Board of Directors of Leap authorized the payment of a cash emergence bonus to Executive. For good and valuable consideration, the receipt of which is hereby acknowledged, Cricket has agreed to pay to Executive the portion of such bonus that remains to be paid as set forth below. Agreement 1. Cricket shall pay Executive a bonus in an amount equal to $87,500 on (or promptly after) the earliest to occur of the following events: (a) September 30, 2005, provided Executive is still employed by Cricket on such date; (b) the date on which Executive ceases to be employed by Cricket, unless such cessation of employment occurs as a result of a termination for Cause. As used in this agreement, the terms "Cause" shall have the meaning ascribed to such term in the standard form of Stock Option Grant Notice and Non- Qualified Stock Option Agreement filed as Exhibit 10.2 to Leap's Current Report on From 8- K, filed with the Securities and Exchange Commission on January 5, 2005. IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above. EXECUTIVE CRICKET COMMUNICATIONS, INC. By: Name: S.D. Hutcheson Title: President, CFO EXHIBIT 10.16.3

EMERGENCE BONUS AGREEMENT This Emergence Bonus Agreement, effective as of February 17, 2005, is entered into between Leonard C. Stephens ("Executive") and Cricket Communications, Inc. ("Cricket). Recitals A. On April 13, 2003, Cricket, Leap Wireless International, Inc. ("Leap"), and substantially all of their respective subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. B. Cricket, Leap and their respective debtor subsidiaries emerged from bankruptcy on August 16, 2004 when the Amended and Restated Joint Plan of Reorganization of Leap, Cricket and other debtors party thereto became effective. C. Executive served as an executive officer of Leap and Cricket for all or substantially all of the time that these two corporations were in bankruptcy. D. To help assure its continued operations and the retention of its employees during its financial restructuring, Cricket instituted various retention and bonus compensation programs in 2003 and 2004, including a program referred to as the Key Employee Retention Program ("KERP") which provided employees who were selected to participate in the program with bonus payments in October 2004 and February 2005. No executive officer of Leap or Cricket participated in the KERP. E. In recognition of the services that Executive rendered to Leap and Cricket, including the services that Executive rendered to Leap and Cricket during the pendency of these corporations' bankruptcies, the Compensation Committee of the Board of Directors of Leap authorized the payment of a cash emergence bonus to Executive. For good and valuable consideration, the receipt of which is hereby acknowledged, Cricket has agreed to pay to Executive the portion of such bonus that remains to be paid as set forth below. Agreement 1. Cricket shall pay Executive a bonus in an amount equal to $87,500 on (or promptly after) the earliest to occur of the following events: (a) September 30, 2005, provided Executive is still employed by Cricket on such date; (b) the date on which Executive ceases to be employed by Cricket, unless such cessation of employment occurs as a result of a termination for Cause. As used in this agreement, the terms "Cause" shall have the meaning ascribed to such term in the standard form of Stock Option Grant Notice and Non- Qualified Stock Option Agreement filed as Exhibit 10.2 to Leap's Current Report on From 8- K, filed with the Securities and Exchange Commission on January 5, 2005. IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above. EXECUTIVE CRICKET COMMUNICATIONS, INC. By: Name: S.D. Hutcheson Title: President, CFO EXHIBIT 10.16.4 EMERGENCE BONUS AGREEMENT This Emergence Bonus Agreement, effective as of February 17, 2005, is entered into between Robert J. Irving, Jr. ("Executive") and Cricket Communications, Inc. ("Cricket). Recitals A. On April 13, 2003, Cricket, Leap Wireless International, Inc. ("Leap"), and substantially all of their respective subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. B. Cricket, Leap and their respective debtor subsidiaries emerged from bankruptcy on August 16, 2004 when the Amended and Restated Joint Plan of Reorganization of Leap, Cricket and other debtors party thereto became effective. C. Executive served as an executive officer of Leap and Cricket for all or substantially all of the time that these two corporations were in bankruptcy. D. To help assure its continued operations and the retention of its employees during its financial restructuring, Cricket instituted various retention and bonus compensation programs in 2003 and 2004, including a program referred to as the Key Employee Retention Program ("KERP") which provided employees who were selected to participate in the program

with bonus payments in October 2004 and February 2005. No executive officer of Leap or Cricket participated in the KERP. E. In recognition of the services that Executive rendered to Leap and Cricket, including the services that Executive rendered to Leap and Cricket during the pendency of these corporations' bankruptcies, the Compensation Committee of the Board of Directors of Leap authorized the payment of a cash emergence bonus to Executive. For good and valuable consideration, the receipt of which is hereby acknowledged, Cricket has agreed to pay to Executive the portion of such bonus that remains to be paid as set forth below. Agreement 1. Cricket shall pay Executive a bonus in an amount equal to $87,500 on (or promptly after) the earliest to occur of the following events: (a) September 30, 2005, provided Executive is still employed by Cricket on such date; (b) the date on which Executive ceases to be employed by Cricket, unless such cessation of employment occurs as a result of a termination for Cause. As used in this agreement, the terms "Cause" shall have the meaning ascribed to such term in the standard form of Stock Option Grant Notice and Non- Qualified Stock Option Agreement filed as Exhibit 10.2 to Leap's Current Report on From 8- K, filed with the Securities and Exchange Commission on January 5, 2005. IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above. EXECUTIVE CRICKET COMMUNICATIONS, INC. By: Name: S.D. Hutcheson Title: President, CFO
. . . Exhibit 21.1

Subsidiaries

Backwire.com, Inc. Chasetel Licensee Corp. Cricket Communications, Inc. (dba Cricket Wireless, Inc. in Pennsylvania) (dba Cricket Wireless, Inc. in Florida) Telephone Entertainment Network, Inc. Cricket Holdings Dayton, Inc. Cricket Licensee (Albany), Inc. Cricket Licensee (Columbus), Inc. Cricket Licensee (Denver) Inc. Cricket Licensee (Lakeland) Inc. Cricket Licensee (Macon), Inc. Cricket Licensee (North Carolina) Inc. Cricket Licensee (Pittsburgh) Inc. Cricket Licensee (Reauction), Inc. Cricket Licensee I, Inc. Cricket Licensee II, Inc. Cricket Licensee III, Inc. Cricket Licensee IV, Inc. Cricket Licensee V, Inc. Cricket Licensee VI, Inc. Cricket Licensee VII, Inc. Cricket Licensee VIII, Inc. Cricket Licensee IX, Inc. Cricket Licensee X, Inc. Cricket Licensee XII, Inc.

Delaware Delaware Delaware

Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware

Cricket Licensee XIII, Inc. Cricket Licensee XIV, Inc. Cricket Licensee XV, Inc. Cricket Licensee XVI, Inc. Cricket Licensee XVII, Inc. Cricket Licensee XVIII, Inc. Cricket Licensee XIX, Inc. Cricket Licensee XX, Inc. Chasetel Real Estate Holding Company, Inc. Cricket Alabama Property Company Cricket Arizona Property Company Cricket Arkansas Property Company Cricket California Property Company Cricket Colorado Property Company Cricket Florida Property Company Cricket Georgia Property Company Cricket Idaho Property Company Cricket Illinois Property Company Cricket Indiana Property Company Cricket Kansas Property Company Cricket Kentucky Property Company Cricket Michigan Property Company Cricket Minnesota Property Company Cricket Mississippi Property Company Cricket Nebraska Property Company Cricket Nevada Property Company Cricket New Mexico Property Company Cricket New York Property Company Cricket North Carolina Property Company Cricket Ohio Property Company Cricket Oklahoma Property Company Cricket Oregon Property Company Cricket Pennsylvania Property Company Cricket Texas Property Company Cricket Utah Property Company Cricket Washington Property Company Cricket Wisconsin Property Company Leap Wireless Mexico S.A. de C.V. Leap PCS Mexico, Inc. MCG PCS Licensee Corporation, Inc. Orrengrove Investments Limited

Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Tennessee Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Mexico California Delaware Cyprus

Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES- OXLEY ACT OF 2002

I, S. Douglas Hutcheson, certify that: 1. I have reviewed this annual report on Form 10- K of Leap Wireless International, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d- 15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,

to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record. and b) any fraud. this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made. the financial statements. to ensure that material information relating to the registrant. whether or not material. process. I have reviewed this annual report on Form 10.K of Leap Wireless International. and other financial information included in this report. or caused such disclosure controls and procedures to be designed under our supervision. b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures. b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures. fairly present in all material respects the financial condition. the periods presented in this report. 3.OXLEY ACT OF 2002 I. Douglas Hutcheson Chief Executive Officer and President Exhibit 31. and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected. . that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.15(e) and 15d. is made known to us by others within those entities. and for. the registrant's internal control over financial reporting. process. summarize and report financial information. particularly during the period in which this report is being prepared. as of the end of the period covered by this report based on such evaluation. and b) any fraud. Date: May 16. or is reasonably likely to materially affect. to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record.15(e)) for the registrant and have: a) designed such disclosure controls and procedures. 4. or is reasonably likely to materially affect. that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a. 2. and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected.is made known to us by others within those entities. 2005 By: /s/ S. including its consolidated subsidiaries. the registrant's internal control over financial reporting. results of operations and cash flows of the registrant as of. and 5. Inc.. and 5. certify that: 1. based on our most recent evaluation of internal control over financial reporting. based on our most recent evaluation of internal control over financial reporting. DOUGLAS HUTCHESON S. Dean M. as of the end of the period covered by this report based on such evaluation. not misleading with respect to the period covered by this report. Based on my knowledge. whether or not material.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES. The registrant's other certifying officer and I have disclosed. in light of the circumstances under which such statements were made. Based on my knowledge. summarize and report financial information. The registrant's other certifying officer and I have disclosed. particularly during the period in which this report is being prepared. Luvisa.

LUVISA Dean M.C. 2004 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d). . DOUGLAS HUTCHESON S. that: (i) the accompanying Annual Report on Form 10.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER Pursuant to 18 U. Dated: May 16. as amended. Section 1350. and (ii) the information contained in the Report fairly presents. of the Securities Exchange Act of 1934. in all material respects.K of the Company for the year ended December 31. the undersigned officer of Leap Wireless International. to such officer's knowledge. Dated: May 16. as created by Section 906 of the Sarbanes-Oxley Act of 2002. Inc. Inc. Inc.C. Inc. Luvisa Acting Chief Financial Officer and Treasurer A signed original of this written statement required by Section 906 has been provided to Leap Wireless International. the financial condition and results of operations of the Company. of the Securities Exchange Act of 1934. Inc. and (ii) the information contained in the Report fairly presents. in all material respects. 2005 /s/ S. LUVISA Dean M. (the "Company") hereby certifies. Exhibit 32. Section 1350. as applicable. 2005 /s/ DEAN M. the financial condition and results of operations of the Company. and will be retained by Leap Wireless International. (the "Company") hereby certifies. to such officer's knowledge. and will be retained by Leap Wireless International. that: (i) the accompanying Annual Report on Form 10. as amended. 2005 By: /s/ DEAN M. and furnished to the Securities and Exchange Commission or its staff upon request. Luvisa Acting Chief Financial Officer and Treasurer Exhibit 32. 2004 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d).Date: May 16. as applicable. and furnished to the Securities and Exchange Commission or its staff upon request.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Pursuant to 18 U. Douglas Hutcheson Chief Executive Officer and President A signed original of this written statement required by Section 906 has been provided to Leap Wireless International.S.S. Inc. as created by Section 906 of the Sarbanes-Oxley Act of 2002. the undersigned officer of Leap Wireless International.K of the Company for the year ended December 31.

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