On
July 22, 2008, the Board of Directors of the Company approved
the below Change of Control Severance Plan (As Amended and Restated
Effective July 22, 2008) in order to make amendments relating
to compliance with Section 409A of the Internal Revenue Code,
a change in the Company’s employee classification system and
other non-material changes.
CHANGE OF CONTROL SEVERANCE PLAN
(As Amended and Restated Effective July 22, 2008)
1. General
Statement of Purpose. The Board of Directors (the
“Board” ) of NII Holdings, Inc. (the
“Company” ) has considered the effect a change
of control of the Company may have on key management employees of
the Company and its subsidiaries. Given the level of acquisition
and change of control activity in today’s business
environment, the Board recognizes and understands the concerns such
employees have for their careers. The possible occurrence of a
change of control transaction may cause key management employees to
consider major career changes in an effort to assure financial
security for themselves and their families. The Board believes it
is imperative to diminish the inevitable distraction of key
management employees by virtue of the personal uncertainties and
risks created by pending or threatened change of control and to
encourage the full attention and dedication of those employees to
the Company currently and in the event of any threatened or pending
change of control, and to provide the Company’s key
management employees with compensation and benefit arrangements
upon a change of control which ensure that the compensation and
benefit expectations of those employees will be satisfied and which
are competitive with those of comparable companies.
The Board
recognizes that the possibility of a change of control exists and
desires to assure itself of both the present and future continuity
of management, desires to establish certain severance benefits for
certain of its employees applicable in a change of control, and
wishes to ensure that such employees are not practically disabled
from discharging their duties in respect of a proposed or actual
transaction involving a change of control.
2. Effective
and Termination Dates. The Plan was originally effective as of
July 23, 2003. This Amendment and Restatement is effective
July 22, 2008 (the “Effective Date” ). The
Plan will automatically terminate when all benefits payable
hereunder have been paid.
3. Definitions.
Where the following words and phrases appear in the Plan, they
shall have the respective meanings set forth below:
(a)
“Accrued Benefits” means Base Salary, Equity
Compensation and other cash or non-cash benefits earned, vested, or
accrued prior to a Covered Employee’s termination under
Section 4(b), as well as reimbursement for reasonable and
necessary business expenses incurred by a Covered Employee prior to
termination under Section 4(b) and in accordance with the
Company’s applicable expense reimbursement
policies.
(b)
“Base Salary” means, with respect to each
Covered Employee, the annual base salary, exclusive of any bonus,
special pay (including any retention pay) or other benefits he or
she may receive, but without giving effect to any salary reductions
authorized by the Covered Employee under any qualified or
non-qualified deferred compensation plan of an Employer, in effect
(i) on the date immediately preceding the date of the relevant
Change of Control or (ii) on the date of the Covered
Employee’s termination of employment with his or her
Employer, whichever is the highest.
(c)
“Cause” shall mean with respect to any Covered
Employee:
(i) conviction of
a felony involving an intentional act of fraud, embezzlement or
theft in connection with his employment with an
Employer;
(ii) intentional
wrongful damage to property, contractual interests or business
relationships of an Employer; or
(iii) intentional
wrongful disclosure of secret processes or confidential information
of an Employer in violation of any agreement with or policy of the
Employer.
For purposes of
the Plan, no act or failure to act on the part of the Covered
Employee shall be deemed “intentional” if it was
due primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done or omitted to
be done by the Covered Employee not in good faith and without
reasonable belief that his action or omission was in the best
interest of his or her Employer. Nothing herein will limit the
right of the Covered Employee or his beneficiaries to contest the
validity or propriety of any such determination.
(d)
“Change of Control” means the occurrence of any
of the following events:
(i) The Company is
merged or consolidated or reorganized into or with another company
or other legal entity, and as a result of such merger,
consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of such
resulting company or entity immediately after such transaction is
held directly or indirectly in the aggregate by the holders of
voting securities of the Company immediately prior to such
transaction, including voting securities issuable upon the exercise
or conversion of options, warrants or other securities or rights;
or
(ii) The Company
sells or otherwise transfers all or substantially all of its assets
to another company or other legal entity, and as a result of such
sale or other transfer of assets, less than a majority of the
combined voting power of the then outstanding securities of such
company or other entity immediately after such sale or transfer is
held directly or indirectly in the aggregate by the holders of
voting securities of the Company immediately prior to such sale or
transfer, including voting securities issuable upon exercise or
conversion of options, warrants or other securities or rights;
or
(iii) Individuals
who, as of the Effective Date, constitute the Board (the
“Incumbent Board” ) cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least
two thirds of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person or
entity other than the Board; or
(iv) Approval by
the shareholders of the Company of a complete liquidation or
dissolution of the Company; or
(v) An acquisition
by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended ( “Exchange Act” )) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either the then outstanding
shares ( “Outstanding Company Stock” ), or the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
( “Outstanding Company Voting Securities” ),
excluding, however, the following: ( x ) any acquisition
directly from the Company other than the acquisition by virtue of
the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Company,
(y) any acquisition by the Company or any of its subsidiaries,
or (z) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries; or
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(vi) Approval by
the Board of Directors of the Company of a resolution that a Change
of Control has occurred.
(e)
“Code” means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
(f)
“Covered Employee” means any individual to whom
the Plan applies pursuant to Section 4(a) below.
(g)
“Employee Benefits” means benefits provided to
all employees in similarly situated positions to a Covered Employee
under the Company’s pension (qualified and nonqualified),
welfare and fringe benefit plans, programs, policies and
agreements.
(h)
“Employer” means the Company, each of its wholly
owned subsidiaries, and any other subsidiary of the Company to
which the Plan has been extended by the Board (or by the
Compensation Committee of the Board) and which has adopted the Plan
with the consent of the Company.
(i)
“Equity Compensation” means stock options,
restricted stock, performance shares and other equity incentive
awards.
(j)
“Good Reason” means, with respect to any Covered
Employee:
(i) any material
and adverse change in or reduction of the Covered Employee’s
duties, responsibilities and authority, as compared in each case to
the corresponding circumstances in place on the date immediately
preceding the first occurrence of a Change of Control after the
Effective Date (the “Reference Date” );
or
(ii) a relocation
of the principal work location at which the Covered Employee is
based on the Reference Date to a location more than 40 miles away
from such location or a requirement by the Company that the Covered
Employee travel on Company business to a substantially greater
extent than as compared in each case to the corresponding
circumstances prior to the Reference Date which results in a
material adverse change in employment conditions for such Covered
Employee; or
(iii) a material
reduction in Base Salary, Target Bonus or bonus potential not
agreed to by the Covered Employee, or any other significant adverse
financial consequences associated with the Covered Employee’s
employment in comparison to the corresponding circumstances in
place on the Reference Date; or
(iv) a
discontinuance of Employee Benefits following a Change in Control
that, in the aggregate, materially reduces in the aggregate the
actuarial equivalent value of Employee Benefits available to the
Covered Employee prior to the Change in Control; or
(v) a failure by
the Company to comply with any material provisions of this Plan,
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Covered
Employee; or
(vi) a failure by
any successor after a Change of Control has occurred to assume and
agree to perform the obligations under the Plan (unless the
successor has a legal obligation to assume the Plan and perform the
obligations hereunder by operation of law or otherwise).
Any reasonable,
good faith determination by the Covered Employee that
“Good Reason” exists will be presumptively
correct for purposes of this Plan.
(k)
“Plan” means the NII Holdings, Inc. Change of
Control Severance Plan.
(l)
“Severance Compensation” means Severance Pay and
other benefits provided by Sections 5(a) and (b).
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(m)
“Severance Pay” means the amounts payable as set
forth in Sections 5(a) and (b).
(n)
“Severance Period” means the period of time
commencing on the date of the first occurrence of a Change of
Control and continuing until the earlier of (i) eighteen
(18) months after such date or (ii) the Covered
Employee’s death.
(o)
“Target Bonus” means the amount obtained by
multiplying the Covered Employee’s target bonus percentage as
established and in effect for the Covered Employee (i) on the
Reference Date, or (ii) on the date of the Covered
Employee’s termination of employment with his or her
Employer, whichever is the highest, by the Covered Employee’s
Base Salary.
4. Eligibility;
Termination Following a Change of Control.
(a) Subject
to the limitations described below, the Plan applies to all
individuals who are recognized by an Employer as regular full-time
salaried employees in any of the position levels (as determined on
the Effective Date, and adjusting as appropriate for any changes to
the Company’s system of classifying employees by position
level implemented subsequent to such date) or as otherwise
designated in Exhibit A, who are a select group of highly
compensated or management employees and either (i) employed by
an Employer on or after the date that (x) the Company enters
into a definitive agreement providing for a Change of Control,
(y) a third party publicly announces a bona fide intention to
commence a tender offer for outstanding voting securities of the
Company or otherwise to take actions that are reasonably designed
and expected to result in a Change of Control or (z) a Change
of Control otherwise occurs (the date described in the foregoing
clauses (x), (y) or (z) and (ii) below, as
appropriate, the “Trigger Date” ) or
(ii) terminated prior to the date on which a Change of Control
occurs, and if it is reasonably demonstrated by the Covered
Employee that such termination of employment was at the request of
a third party who has taken steps reasonably calculated to effect a
Change of Control or otherwise arose in connection with or
anticipation of a Change of Control, then for purposes of this
Agreement the Trigger Date shall mean the date immediately prior to
the date of such termination of employment.
(b) A
Covered Employee will be entitled to the Severance Compensation
described in Section 5 if (i) the Covered
Employee’s employment is terminated by an Employer during the
Severance Period or prior thereto as provided in
Section 4(a)(ii) and such termination is without Cause and is
not described in Subsection (d) of this Section, or
(ii) the Covered Employee voluntarily terminates his
employment with his Employer during the Severance Period for Good
Reason.
(c) A
termination of employment described in Subsection (b) of this
Section will not affect any rights that the Covered Employee may
have pursuant to any agreement, policy, plan, program or
arrangement of the Company or any other Employer providing Employee
Benefits, which rights shall be governed by the terms thereof. Any
Covered Employee entitled to Severance Compensation pursuant to
this Plan shall not be entitled to cash severance under any other
Company severance plan or program; provided, that, if necessary to
comply with Section 409A of the Code (or any regulations
thereunder), the Severance Compensation of any affected Covered
Employee hereunder shall be paid at the same time and in the same
form as provided under the other severance plan or
program.
(d) Notwithstanding
the preceding provisions of this Section, a Covered Employee will
not be entitled to Severance Compensation if his emp
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