Document:

exv10w4

 

EXHIBIT 10.4

SUNRISE ASSISTED LIVING, INC.

2000 STOCK OPTION PLAN

     SUNRISE ASSISTED LIVING, INC., a Delaware corporation (the “Corporation”),
sets forth herein the terms of this 2000 Stock Option Plan (the “Plan”) as
follows:

1. PURPOSE

     The Plan is intended to advance the interests of the Corporation and any
subsidiary thereof within the meaning of Rule 405 of Regulation C under the
Securities Act of 1933, as amended (the “Securities Act”), with the term
“person” as used in such Rule 405 being defined as in Section 2(2) of the
Securities Act (a “Subsidiary”), by providing eligible individuals (as
designated pursuant to SECTION 4 below) with incentives to improve business
results, by providing an opportunity to acquire or increase a proprietary
interest in the Corporation, which thereby will create a stronger incentive to
expend maximum effort for the growth and success of the Corporation and its
Subsidiaries, and will encourage such eligible individuals to continue to serve
the Corporation and its Subsidiaries, whether as an employee, as a director, as
a consultant or advisor or in some other capacity. To this end, the Plan
provides for the grant of stock options, as set out herein.

     This Plan provides for the grant of stock options (each of which is an
“Option”) in accordance with the terms of the Plan. An Option may be an
incentive stock option (an “ISO”) intended to satisfy the applicable
requirements under Section 422 of the Internal Revenue Code of 1986, as amended
from time to time, or the corresponding provision of any subsequently-enacted
tax statute (the “Code”), or a nonqualified stock option (an “NSO”). An Option
is an NSO to the extent that the Option would exceed the limitations set forth
in SECTION 7 below. An Option is also an NSO if either (i) the Option is
specifically designated at the time of grant as an NSO or not being an ISO or
(ii) the Option does not otherwise satisfy the requirements of Code Section 422
at the time of grant. Each Option shall be evidenced by a written agreement
between the Corporation and the recipient individual that sets out the terms
and conditions of the grant as further described in SECTION 8.

2. ADMINISTRATION

	(a)	 	BOARD

     The Plan shall be administered by the Board of Directors of the
Corporation (the “Board”), which shall have the full power and authority to
take all actions and to make all determinations required or provided for under
the Plan or any Option granted or Option Agreement (as defined in SECTION 8
below) entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. The interpretation
and construction by the Board of any

 

 

provision of the Plan or of any Option granted or Option Agreement entered into
hereunder shall be final, binding and conclusive.

	(b)	 	ACTION BY COMMITTEE

     The Board from time to time may appoint a Stock Option Committee
consisting of two or more members of the Board of Directors who, in the sole
discretion of the Board, may be the same Directors who serve on the
Compensation Committee, or may appoint the Compensation Committee to serve as
the Stock Option Committee (the “Committee”). The Board, in its sole
discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made
and actions to be taken by the Board pursuant to or with respect to the Plan,
or the Board may delegate to the Committee such powers and authorities related
to the administration of the Plan, as set forth in SECTION 2(a) above, as the
Board shall determine, consistent with the Restated Certificate of
Incorporation and By-Laws of the Corporation and applicable law. In the event
that the Plan or any Option granted or Option Agreement entered into hereunder
provides for any action to be taken by or determination to be made by the
Board, such action may be taken by or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final and conclusive.

	(c)	 	NO LIABILITY

     No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted or Option Agreement entered into hereunder.

3. STOCK

     The stock that may be issued pursuant to Options under the Plan shall be
shares of common stock, par value $.01 per share, of the Corporation (the
“Stock”), which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Options
under the Plan shall not exceed, in the aggregate, five hundred thousand
(500,000) shares. If any Option expires or terminates, or is terminated or
canceled, for any reason prior to exercise, the shares of Stock that were
subject to the unexercised, forfeited, terminated or canceled portion of such
Option shall be available immediately for future grants of Options under the
Plan.

4. ELIGIBILITY

	(a)	 	DESIGNATED RECIPIENTS

 

 

     Subject to the next sentence, Options may be granted under the Plan to (i)
any director, officer or employee of the Corporation or any Subsidiary as the
Board shall determine and designate from time to time or (ii) any consultant or
advisor providing bona fide services to the Corporation or any Subsidiary
(provided that such services must not be in connection with the offer or sale
of securities in a capital-raising transaction) whose participation in the Plan
is determined by the Board to be in the best interests of the Corporation and
is so designated by the Board. Options granted to a full-time employee of the
Corporation or a “subsidiary corporation” thereof within the meaning of Section
424(f) of the Code shall be either ISOs or NSOs, as determined in the sole
discretion of the Board, and Options granted to any other eligible individual
shall be NSOs.

	(b)	 	SUCCESSIVE GRANTS

     An individual may hold more than one Option, subject to such restrictions
as are provided herein.

5. EFFECTIVE DATE AND TERM OF THE PLAN

	(a)	 	EFFECTIVE DATE

     The Plan shall be effective as of the date of adoption by the Board,
subject to approval of the Plan within one year of such effective date by the
affirmative vote of stockholders who hold more than fifty percent (50%) of the
combined voting power of the outstanding shares of voting stock of the
Corporation present or represented and entitled to vote thereon at a duly
constituted stockholders’ meeting, or by consent as permitted by law. Upon
approval of the Plan by the stockholders of the Corporation as set forth above,
however, all Options granted under the Plan on or after the effective date
shall be fully effective as if the stockholders of the Corporation had approved
the Plan on the Plan’s effective date. If the stockholders fail to approve the
Plan within one year of such effective date, any Options granted hereunder
shall be null and void and of no effect.

	(b)	 	TERM

     The Plan shall have no termination date, but no grant of an ISO may occur
after the date that is ten years after the effective date.

6. GRANT OF OPTIONS

	(a)	 	GENERAL

     Subject to the terms and conditions of the Plan, the Board may, at any
time and from time to time, grant to such eligible individuals as the Board may
determine (each of the whom is an “Optionee”), Options to purchase such number
of shares of Stock on such terms and conditions as the Board may determine,
including any terms or conditions that may be necessary to qualify

 

 

such Options as ISOs under Section 422 of the Code. Such authority specifically
includes the authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify grants to eligible individuals who are
foreign nationals or are individuals who are employed outside the United States
to recognize differences in local law, tax policy or custom.

	(b)	 	LIMITATION ON GRANTS OF OPTIONS

     During any time when the Corporation has a class of equity security
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), the maximum number of shares subject to Options that can
be granted under the Plan to any executive officer of the Company or a
Subsidiary, or to any other person eligible for a grant of an Option under
SECTION 4, is 250,000 shares during the first ten years after the effective
date of the Plan and 100,000 shares per year thereafter (in each case, subject
to adjustment as provided in SECTION 16(a) hereof).

7. LIMITATIONS ON INCENTIVE STOCK OPTIONS

	(a)	 	PRICE AND DOLLAR LIMITATIONS

     An Option that is designated as being one that is intended to qualify as
an ISO shall qualify for treatment as an ISO only to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Stock with respect to which all options that are intended to constitute
“incentive stock options,” within the meaning of Code Section 422, are
exercisable for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee’s employer corporation and its
parent and subsidiary corporations within the meaning of Section 422(d) of the
Code) does not exceed $100,000.

	(b)	 	PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other
agreement, contract or understanding heretofore or hereafter entered into by
the Optionee with the Corporation, except an agreement, contract or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an “Other Agreement”), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Optionee (including groups or classes of
participants or beneficiaries of which the Optionee is a member), whether or
not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the Optionee (a “Benefit Arrangement”), if the Optionee is a
“disqualified individual,” as defined in Section 280G(c) of the Code, any
Option held by that Optionee and any right to receive any payment or other
benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment or benefit, taking into
account all other rights, payments or benefits to or for the Optionee under
this Plan, all Other Agreements and all Benefit Arrangements, would cause any
payment or benefit to the Optionee under this Plan to be considered a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code as
then in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts received by the Optionee
from the Corporation under this Plan, all

 

 

Other Agreements and all Benefit Arrangements would be less than the maximum
after-tax amount that could be received by him without causing any such payment
or benefit to be considered a Parachute Payment. In the event that the receipt
of any such right to exercise, vesting, payment or benefit under this Plan, in
conjunction with all other rights, payments or benefits to or for the Optionee
under any Other Agreement or any Benefit Arrangement would cause the Optionee
to be considered to have received a Parachute Payment under this Plan that
would have the effect of decreasing the after-tax amount received by the
Optionee as described in clause (ii) of the preceding sentence, then the
Optionee shall have the right, in the Optionee’s sole discretion, to designate
those rights, payments or benefits under this Plan, any Other Agreements and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Optionee under this Plan be deemed to be a
Parachute Payment.

8. OPTION AGREEMENTS

     All Options granted pursuant to the Plan shall be evidenced by agreements
(“Option Agreements”), to be executed by the Corporation and by the Optionee,
in such form or forms as the Board shall from time to time determine. Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.

9. OPTION PRICE

     The purchase price of each share of Stock subject to an Option (the
“Option Price”) shall be fixed by the Board and stated in each Option
Agreement. The Option Price shall be not less than the greater of par value or
100 percent of the fair market value of a share of Stock on the date on which
the Option is granted (as determined in good faith by the Board); provided,
however, that in the event the Optionee would otherwise be ineligible to
receive an ISO by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to stock ownership of more than ten percent), the Option
Price of an Option that is intended to be an ISO shall not be less than the
greater of par value or 110 percent of the fair market value of a share of
Stock at the time such Option is granted. In the event that the Stock is listed
on an established national or regional stock exchange or The Nasdaq Stock
Market, is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or is publicly traded in an established
securities market, in determining the fair market value of the Stock, the Board
shall use the closing price of the Stock on such exchange or system or in such
market (the highest such closing price if there is more than one such exchange
or market) on the trading date immediately before the Option is granted (or, if
there is no such closing price, then the Board shall use the mean between the
highest bid and lowest asked prices or between the high and low prices on such
date), or, if no sale of the Stock has been made on such day, on the next
preceding day on which any such sale shall have been made.

10. TERM AND EXERCISE OF OPTIONS

 

 

	(a)	 	TERM

     Upon the expiration of ten years from the date on which an ISO is granted
or on such date prior thereto as may be fixed by the Board and stated in the
Option Agreement relating to such Option, that ISO shall be ineligible for
treatment as an “incentive stock option,” as defined in Section 422 of the
Code, and shall be exercisable only as an NSO. In the event the Optionee
otherwise would be ineligible to receive an “incentive stock option” by reason
of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to
stock ownership of more than 10 percent), such ten year restriction on
exercisability as an ISO shall be read to impose a five year restriction on
such exercisability. If an Optionee shall terminate employment prior to the
ten-year or five-year limitation described in the immediately preceding
sentences, any outstanding ISO shall be ineligible for treatment as an
“incentive stock option,” as defined in Section 422 of the Code, and shall be
exercisable only as an NSO, unless exercised within three months after such
termination or, in the case of termination on account of “permanent and total
disability” (within the meaning of Section 22(e)(3) of the Code), within one
year after such termination.

	(b)	 	OPTION PERIOD AND LIMITATIONS ON EXERCISE

     Each Option granted under the Plan shall be exercisable, in whole or in
part, at any time and from time to time, over a period commencing on or after
the date of grant and, to the extent that the Board determines and sets forth a
termination date for such Option in the Option Agreement (including any
amendment thereto), ending upon the stated expiration or termination date. The
Board in its sole discretion may specify events or circumstances, including the
giving of notice, which will cause an Option to terminate as set forth in the
Option Agreement or in this Plan. No Option granted to a person who is required
to file reports under Section 16(a) of the Exchange Act shall be exercisable
during the first six months after the date of grant. Without limiting the
foregoing but subject to the terms and conditions of the Plan, the Board may in
its sole discretion provide that an Option may not be exercised in whole or in
part for any period or periods of time during which such Option is outstanding
and may condition exercisability (or vesting) of an Option upon the attainment
of performance objectives, upon continued service, upon certain events or
transactions, or a combination of one or more of such factors, or otherwise, as
set forth in the Option Agreement. Subject to the parachute payment
restrictions under SECTION 7(b), however, the Board, in its sole discretion,
may rescind, modify or waive any such limitation or condition on the exercise
of an Option contained in any Option Agreement, so as to accelerate the time at
which the Option may be exercised or extend the period during which the Option
may be exercised. Notwithstanding any other provisions of the Plan, no Option
granted to an Optionee under the Plan shall be exercisable in whole or in part
prior to the date on which the stockholders of the Corporation approve the
Plan, as provided in SECTION 5 above.

	(c)	 	METHOD OF EXERCISE

     An Option that is exercisable hereunder may be exercised by delivery to
the Corporation on any business day, at the Corporation’s principal office,
addressed to the attention of the President, of written notice of exercise,
which notice shall specify the number of shares with respect to which the
Option is being exercised and shall be accompanied by payment in full of the
Option

 

 

Price of the shares for which the Option is being exercised. The minimum number
of shares of Stock with respect to which an Option may be exercised, in whole
or in part, at any time shall be the lesser of (i) 100 shares or such lesser
number set forth in the applicable Option Agreement and (ii) the maximum number
of shares available for purchase under the Option at the time of exercise.
Payment of the Option Price for the shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents; (ii) to
the extent permitted by applicable law and under the terms of the Option
Agreement with respect to such Option, through the tender to the Corporation of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair market
value (determined in accordance with SECTION 9) on the date of exercise; (iii)
to the extent permitted by applicable law and under the terms of the Option
Agreement with respect to such Option, by the delivery of a promissory note of
the person exercising the Option to the Corporation on such terms as shall be
set out in such Option Agreement; (iv) to the extent permitted by applicable
law and under the terms of the Option Agreement with respect to such Option, by
causing the Corporation to withhold shares of Stock otherwise issuable pursuant
to the exercise of an Option equal in value to the Option Price or portion
thereof to be satisfied pursuant to this clause (iv); or (v) by a combination
of the methods described in (i), (ii), (iii) and (iv). An attempt to exercise
any Option granted hereunder other than as set forth above shall be invalid and
of no force and effect. Payment in full of the Option Price need not accompany
the written notice of exercise provided the notice directs that the Stock
certificate or certificates for the shares for which the Option is exercised be
delivered to a licensed broker acceptable to the Corporation as the agent for
the individual exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Corporation cash (or cash
equivalents acceptable to the Corporation) equal to the Option Price. Promptly
after the exercise of an Option and the payment in full of the Option Price of
the shares of Stock covered thereby, the individual exercising the Option shall
be entitled to the issuance of a Stock certificate or Stock certificates
evidencing his ownership of such shares. A separate Stock certificate or
separate Stock certificates shall be issued for any shares purchased pursuant
to the exercise of an Option that is an ISO, which certificate or certificates
shall not include any shares that were purchased pursuant to the exercise of an
Option that is an NSO. Unless otherwise stated in the applicable Option
Agreement, an individual holding or exercising an Option shall have none of the
rights of a stockholder (for example, the right to receive cash or stock
dividend payments attributable to the subject shares or to direct the voting of
the subject shares) until the shares of Stock covered thereby are fully paid
and issued to him. Except as provided in SECTION 16 below, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date of such issuance.

	(d)	 	DATE OF GRANT

     The date of grant of an Option under this Plan shall be the date as of
which the Board approves the grant.

11. TRANSFERABILITY OF OPTIONS

 

 

     During the lifetime of an Optionee, only such Optionee (or, in the event
of legal incapacity or incompetence, the guardian or legal representative of
the Optionee) may exercise the Option, except as otherwise specifically
permitted by this SECTION 11. No Option shall be assignable or transferable
other than by will or in accordance with the laws of descent and distribution;
provided, however, subject to the terms of the applicable Option Agreement, and
to the extent the transfer is in compliance with any applicable restrictions on
transfers, an Optionee may transfer an NSO to a family member of the Optionee
(defined as an individual who is related to the Optionee by blood or adoption)
or to a trust established and maintained for the benefit of the Optionee or a
family member of the Optionee (as determined under applicable state law and the
Code).

12. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP OF OPTIONEE

     In the Board’s sole discretion, the Board may include language in an
Option Agreement providing for the termination of any unexercised Option in
whole or in part upon or at any time after the termination of employment or
other relationship of the Optionee with the Corporation or a Subsidiary
(whether as an employee, a director, a consultant or advisor providing bona
fide services to the Corporation or a Subsidiary, or otherwise). Whether a
leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship of the Optionee with the
Corporation or a Subsidiary for purposes of the Plan shall be determined by the
Board, which determination shall be final and conclusive.

13. USE OF PROCEEDS

     The proceeds received by the Corporation from the sale of Stock pursuant
to the exercise of Options granted under the Plan shall constitute general
funds of the Corporation.

14. REQUIREMENTS OF LAW

     The Corporation shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the Optionee, the individual exercising the Option or the
Corporation of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Corporation shall determine, in its discretion,
that the listing, registration or qualification of any shares subject to the
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory or self-regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance
or purchase of shares, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Corporation, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the Securities Act,
upon the exercise of any Option, unless a registration statement under the
Securities Act is in effect with respect to the shares of Stock covered
thereby, the Corporation shall not be required to sell or

 

 

issue such shares unless the Board has received evidence satisfactory to it
that the holder of such Option may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this
connection by the Board shall be final, binding and conclusive. The Corporation
may, but shall in no event be obligated to, register any securities covered
hereby pursuant to the Securities Act. The Corporation shall not be obligated
to take any affirmative action in order to cause the exercisability or vesting
of an Option or to cause the exercise of an Option or the issuance of shares
pursuant thereto to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement that
an Option shall not be exercisable unless and until the shares of Stock covered
by such Option are registered or are subject to an available exemption from
registration, the exercise of such Option (under circumstances in which the
laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

15. AMENDMENT AND TERMINATION OF THE PLAN

     The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that any amendment by the Board which, if not
approved by the Corporation’s stockholders, would cause the Plan to not comply
with Sections 162(m) or 422 of the Code shall not be effective unless approved
by the affirmative vote of stockholders who hold more than fifty percent (50%)
of the combined voting power of the outstanding shares of voting stock of the
Corporation present or represented and entitled to vote thereon at a duly
constituted stockholders’ meeting, or by consent as permitted by law. The
Corporation, however, may retain the right in an Option Agreement to convert an
ISO into an NSO. The Corporation may also retain the right in an Option
Agreement to cause a forfeiture of the shares of Stock or gain realized by a
holder of an Option (a) if the holder violates any agreement covering
non-competition with the Corporation or any Subsidiary or nondisclosure of
confidential information of the Corporation or any Subsidiary, (b) if the
holder’s employment is terminated for cause or (c) if the Board determines that
the holder committed acts or omissions which would have been the basis for a
termination of holder’s employment for cause had such acts or omissions been
discovered prior to termination of holder’s employment. Furthermore, the
Corporation may, in the Option Agreement, retain the right to annul the grant
of an Option, if the holder of such grant was an employee of the Corporation or
a Subsidiary and the holder’s employment is terminated for cause, as defined in
the applicable Option Agreement. Except as permitted under this SECTION 15 or
SECTION 16 hereof, no amendment, suspension or termination of the Plan shall,
without the consent of the holder of the Option, alter or impair rights or
obligations under any Option theretofore granted under the Plan.

16. EFFECT OF CHANGES IN CAPITALIZATION

	(a)	 	CHANGES IN STOCK

 

 

     If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Corporation on account of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective date of the
Plan, the number and kind of shares for the acquisition of which Options may be
granted under the Plan, and the limitations on the maximum number of shares
subject to Options that can be granted to any individual under the Plan as set
forth in SECTION 6(b) hereof, shall be adjusted proportionately and accordingly
by the Corporation. In addition, the number and kind of shares for which
Options are outstanding shall be adjusted proportionately and accordingly so
that the proportionate interest of the holder of the Option immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options shall
not change the aggregate Option Price payable with respect to shares that are
subject to the unexercised portion of the Option outstanding but shall include
a corresponding proportionate adjustment in the Option Price per share.

	(b)	 	REORGANIZATION IN WHICH THE CORPORATION IS
THE SURVIVING CORPORATION

     Subject to SUBSECTION ((c))(IV) hereof, if the Corporation shall be the
surviving corporation in any reorganization, merger or consolidation of the
Corporation with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.

	(c)	 	DISSOLUTION, LIQUIDATION, SALE OF ASSETS,
REORGANIZATION IN WHICH THE CORPORATION IS NOT THE
SURVIVING CORPORATION, ETC.

     The Plan and all Options outstanding hereunder shall terminate (i) upon
the dissolution or liquidation of the Corporation, (ii) upon a merger,
consolidation or reorganization of the Corporation with one or more other
corporations in which the Corporation is not the surviving corporation, (iii)
upon a sale of substantially all of the assets of the Corporation to another
person or entity or (iv) upon a merger, consolidation or reorganization (or
other transaction if so determined by the Board in its sole discretion) in
which the Corporation is the surviving corporation, that is approved by the
Board and that results in any person or entity (other than persons who are
holders of Stock of the Corporation at the time the Plan is approved by the
stockholders and other than an Affiliate) owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, except to the
extent provision is made in writing in connection with any such transaction
covered by clauses (i) through (iv) for the continuation of the Plan or the
assumption of such Options theretofore granted, or for the substitution for
such Options of new options covering the stock of a successor corporation, or a
parent or subsidiary

 

 

thereof, with appropriate adjustments as to the number and kind of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. In the event of any
such termination of the Plan, each individual holding an Option shall have the
right (subject to the general limitations on exercise set forth in SECTION
10(b) above), during such period occurring before such termination as the Board
in its sole discretion shall determine and designate, and in any event
immediately before the occurrence of such termination, to exercise such Option
in whole or in part, to the extent that such Option was otherwise exercisable
at the time such termination occurs, except that, by inclusion of appropriate
language in an Option Agreement, the Board may provide that the Option may be
exercised before termination without regard to any installment limitation or
other condition on exercise imposed pursuant to SECTION 10(b) above. The
Corporation shall send written notice of a transaction or event that will
result in such a termination to all individuals who hold Options not later than
the time at which the Corporation gives notice thereof to its stockholders.

	(d)	 	ADJUSTMENTS

     Adjustments under this SECTION 16 related to stock or securities of the
Corporation shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share or unit.

	(e)	 	NO LIMITATIONS ON CORPORATION

     The grant of an Option pursuant to the Plan shall not affect or limit in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

17. DISCLAIMER OF RIGHTS

     No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of or to maintain a
relationship with the Corporation or any Subsidiary, or to interfere in any way
with any contractual or other right or authority of the Corporation or any
Subsidiary either to increase or decrease the compensation or other payments to
any individual at any time, or to terminate any employment or other
relationship between any individual and the Corporation or any Subsidiary. The
obligation of the Corporation to pay any benefits pursuant to this Plan shall
be interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Corporation to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any participant or beneficiary under the terms of the
Plan.

 

 

18. NONEXCLUSIVITY OF THE PLAN

     Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.

19. CAPTIONS

     The use of captions in this Plan or any Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Option Agreement.

20. DISQUALIFYING DISPOSITIONS

     If Stock acquired by exercise of an ISO granted under this Plan is
disposed of within two years following the date of grant of the ISO or one year
following the transfer of the subject Stock to the Optionee (a “disqualifying
disposition”), the holder of the Stock shall, immediately prior to such
disqualifying disposition, notify the Corporation in writing of the date and
terms of such disposition and provide such other information regarding the
disposition as the Corporation may reasonably require.

21. WITHHOLDING TAXES

     The Corporation shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon the
exercise of an Option under the Plan or in connection with the purchase of an
Option by the Corporation. At the time of exercise, the Optionee shall pay to
the Corporation any amount that the Corporation may reasonably determine to be
necessary to satisfy such withholding obligation. The Board in its sole
discretion may provide in the Option Agreement that, subject to the prior
approval of the Corporation, which may be withheld by the Corporation in its
sole discretion, the Optionee may elect to satisfy such obligations, in whole
or in part, (i) by causing the Corporation to withhold shares of Stock
otherwise issuable pursuant to the exercise of an Option or (ii) by delivering
to the Corporation shares of Stock already owned by the Optionee. The shares so
delivered or withheld shall have a fair market value equal to such withholding
obligations. The fair market value of the shares used to satisfy such
withholding obligation shall be determined by the Corporation as of the date
that the amount of tax to be withheld is to be determined. An Optionee who has
made an election pursuant to this SECTION 21 may only satisfy his or her
withholding obligation with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

 

22. OTHER PROVISIONS

     Each Option granted under the Plan may be subject to, and the Option
Agreement relating to such Option may contain, such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion. Notwithstanding the foregoing, each ISO granted under the Plan
shall include those terms and conditions that are necessary to qualify the ISO
as an “incentive stock option” within the meaning of Section 422 of the Code or
the regulations thereunder and shall not include any terms or conditions that
are inconsistent therewith.

23. NUMBER AND GENDER

     With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.

24. SEVERABILITY

     If any provision of the Plan or any Option Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

25. GOVERNING LAW

     The validity and construction of this Plan and the instruments evidencing
the Options granted hereunder shall be governed by the laws of the State of
Delaware (excluding its choice of law rules).

*      *      *exv4w3

 

Exhibit 4.3

[FORM OF FIRST SUPPLEMENTAL INDENTURE]

FIRST SUPPLEMENTAL INDENTURE

among

 

NII HOLDINGS (CAYMAN), LTD.,

A COMPANY INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS,

THE GUARANTORS SIGNATORY HERETO

and

WILMINGTON TRUST COMPANY, A DELAWARE CORPORATION,

as TRUSTEE

 

Dated as of

February 18, 2004

 

A SUPPLEMENTAL INDENTURE

REGARDING

13% Senior Secured Discount Notes due 2009

 

 

FIRST SUPPLEMENTAL INDENTURE

     FIRST SUPPLEMENTAL INDENTURE dated as of February 18, 2004, among NII
Holdings (Cayman), Ltd., a company incorporated under the laws of the Cayman
Islands (the “Company”), each of the Guarantors (as defined in the Original
Indenture, as defined herein), and Wilmington Trust Company, a Delaware
corporation, as trustee (the “Trustee”);

     WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture dated as of November 12, 2002 (the “Original Indenture”) to
provide for the issuance of its 13% Senior Secured Discount Notes due 2009 (the
“Notes”) (all terms used herein which are defined in the Original Indenture
shall have the meanings assigned to them in the Original Indenture); and

     WHEREAS, Section 11.02 of the Original Indenture provides, among other
things, that, with the consent of the Holders of not less than a majority in
aggregate Accreted Value of the Notes then outstanding, the Company and the
Trustee may enter into indentures supplemental to the Original Indenture for
the purpose of amending any provision of the Original Indenture or the Notes
(other than as provided in Section 11.02 of the Original Indenture); and

     WHEREAS, the Company desires to amend and delete certain provisions of the
Original Indenture and the Notes; and

     WHEREAS, all action on the part of the Company necessary to authorize its
execution, delivery and performance of the Original Indenture, as further
supplemented by this First Supplemental Indenture, has been duly taken; and

     WHEREAS, the Company has solicited the consent of the Holders of the Notes
to certain amendments to the Indenture (the “Amendments”) pursuant to that
certain Offer to Purchase and Consent Solicitation dated February 4, 2004 (the
“Offer to Purchase”); and

     WHEREAS, the Company has delivered to the Trustee the written consents of
the holders of a majority of Accreted Value of the Notes outstanding, given in
compliance with Section 12.15 of the Original Indenture and received pursuant
to the terms of such tender offer, to the amendments contained herein; and

     WHEREAS, the Company has delivered to the Trustee the written opinion of
Williams Mullen, counsel to the Company, conforming to the requirements
therefor in the Original Indenture, upon which the Trustee is relying pursuant
to Section 11.05 of the Original Indenture, to the effect that the Trustee’s
execution of this First Supplemental Indenture is authorized or permitted by
the Original Indenture and that this First Supplemental Indenture conforms to
the requirements of the Trust Indenture Act of 1939, as amended; and

     WHEREAS, the Company has delivered to the Trustee the Officers’
Certificate and the Opinion of Counsel (in the form of the written opinion of
Williams Mullen, counsel to the Company) required by Section 12.03 of the
Original Indenture, upon which the Trustee is relying pursuant to Section 11.05
of the Original Indenture, each to the effect that, in the opinion of the
person or counsel signing such instrument, all conditions precedent to the
Trustee’s execution of this First Supplemental Indenture have been complied
with; and

     WHEREAS, the Company desires and has requested the Trustee to join in the
execution and delivery of this First Supplemental Indenture for the purpose of
amending the Original Indenture and the Notes; and

     WHEREAS, each of the Guarantors has agreed to enter into this First
Supplemental Indenture to indicate its consent to the amendments and
modifications of the Original Indenture and the Notes made herein and to ratify
and confirm its obligations under the Original Indenture.

     NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, it is mutually covenanted and agreed for the equal and
ratable benefit of all Holders of the Notes as follows, effective upon
execution hereof by the Trustee:

1

 

ARTICLE ONE

DEFINITION

     Section 1.1 Definition. When used herein, “Tender Offer Completion
Event” shall mean such time as each of the following events shall have
occurred: (i) the Company shall have completed a tender offer in accordance
with the terms and conditions set forth in the Offer to Purchase, and (ii) each
holder of the Notes that has tendered its Notes pursuant to the tender offer
shall have received payment for any Notes purchased pursuant to the tender
offer.

ARTICLE TWO

AMENDMENTS TO ORIGINAL INDENTURE AND NOTES

     Section 2.1 Deleted Definitions. Upon the occurrence of the Tender Offer
Completion Event,

	 	(a)	 	Section 1.01 of the Original Indenture shall be amended by
deleting the definition of each term that is used in the Original
Indenture only in the Sections or subsections thereof that are
deleted pursuant to Section 2.2. hereof; and
	 
	 	(b)	 	The definition of any term that is determined by reference to
any section of or definition contained in the Original Indenture
which has been deleted by this First Supplemental Indenture shall
continue to be determined by reference to the provisions of such
Section or definition as it existed immediately prior to the
effective date of this First Supplemental Indenture.

     Section 2.2 Deleted Covenants. Upon the occurrence of the Tender Offer
Completion Event, the text of each of the following Sections or subsections of
the Original Indenture shall be deleted in its entirety and replaced, in each
case, by the words “Intentionally Omitted:”

     Sections 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.12, 4.13, 4.14, 4.15,
4.18, 4.19 and 4.21;

provided, however, that insofar as the provisions of any Section deleted hereby
are referred to for purposes of determining compliance by the Company with the
provisions of any remaining Section or provision of the Original Indenture as
amended and supplemented hereby, such Section shall be deemed to remain as part
of the Original Indenture, as amended and supplemented hereby, solely for such
purposes.

     Section 2.3 Amended Default Provisions. Upon the occurrence of the
Tender Offer Completion Event, Section 6.01 of the Original Indenture shall be
amended by deleting subsections (e), (f), (g), (h), (i), (j) and (k), the
phrase “, or defaults in the observance of any material provision of Section
5.01” in subsection (c), and all references to such deleted subsections in the
Original Indenture.

     Section 2.4 Amendments to Original Indenture. Upon the occurrence of the
Tender Offer Completion Event,

	 	(a)	 	Section 5.01 of the Original Indenture is amended in its
entirety to read as follows:

     Neither the Company nor NII shall consolidate with, merge with or into, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (determined on a consolidated
basis for its Restricted Group Members), in one transaction or a series of
related transactions, to any Person or permit any Person to merge with or into
the Company or NII unless:

	 	(1)	 	the Company or NII shall be the continuing
Person, or the Person (if other than the Company or NII)
formed by such consolidation or into which the Company or NII
is merged or that acquired or leased such property and assets
of the Company or NII shall expressly assume, all of the
obligations of the Company or NII (as the case may be) on all
of the Notes and under this Indenture and the Collateral
Documents;

2

 

	 	(2)	 	immediately after giving effect to such
transaction, no Default or Event of Default shall exist; and
	 
	 	(3)	 	the Company delivers to the Trustee an Officers’
Certificate and an Opinion of Counsel, in each case stating
that such consolidation, merger or transfer and such
supplemental indenture complies with this provision, that all
conditions precedent provided for herein relating to such
transaction have been complied with and, in the event that the
continuing Person is organized under the laws of any
jurisdiction other than the United States of America or any
jurisdiction thereof, that this Indenture, the Notes and each
of the Collateral Documents constitute legal, valid and
binding obligations of the continuing Person, enforceable in
accordance with their terms.

Provided, however, that solely for the purpose of interpreting and
applying clause (f) of the definition of “Asset Sale,” Section 5.01 shall
be deemed to be read as it existed immediately prior to the effective
date of this First Supplemental Indenture.

	 	(b)	 	Section 7.14 of the Original Indenture is amended in its
entirety to read as follows:

If one or more Restricted Group Members incurs any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind (including,
without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof or any option or other agreement
to give any security interest) (“New Liens”) which would have constituted
a “New Lien” under the terms of the Original Indenture as they existed
prior to the amendments thereto caused by the First Supplemental
Indenture, and the Company requests that the Trustee enter into an
amendment to the Intercreditor Agreement to permit such New Liens to be
treated no more favorably than on parity in all respects with (i) in the
case of all or any portion of the New Liens incurred with respect to the
MEFA Collateral, the MEFA Obligations, and (ii) in case of all or any
portion of the New Liens incurred with respect to the EFA Collateral, the
EFA Obligations, the Trustee shall enter into such amendment, and each
Holder of Notes, by its acceptance thereof, consents and agrees to any
such amendment to the Intercreditor Agreement entered into by the
Trustee.

(c)       Section 10.03 shall be amended by (i) replacing the phrase “clauses
(3) and (4) under Section 5.01 and Sections 4.03 through 4.17 and Section
4.19” in two places with the phrase “Sections 4.10, 4.11, 4.16 and 4.17”,
(ii) inserting “and” after the first appearance of the foregoing phrase,
and (iii) deleting the phrase, “and clauses (e) and (f) under Section
6.01”.

     Section 2.5 Amendment of Notes. Upon the occurrence of the Tender Offer
Completion Event, each of the Notes is hereby amended as follows:

	 	(a)	 	Section 11 is deleted in its entirety and the following is
substituted as Section 11:

	 	11.	 	Reports.

          The Indenture imposes certain limitations on the ability of
each of the Restricted Group Members, among other things, to use
the proceeds from Asset Sales or merge, consolidate or transfer
substantially all of its assets. Within 45 days’ after the end of
each of the Company’s first three fiscal quarters of each of its
fiscal years and 90 days after the end of the last fiscal quarter
of each year, the Company must report to the Trustee on compliance
with such limitations.

	 	(b)	 	Subsections (e), (f), (g), (h), (i), (j) and (k) of Section
13, “Defaults and Remedies,” are deleted.

3

 

ARTICLE THREE

MISCELLANEOUS PROVISIONS

     Section 3.1 Execution as Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture.

     Section 3.2 Responsibility for Recitals, etc. The recitals herein shall
be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture.

     Section 3.3 Provisions Binding on Company’s Successors. All of the
covenants, stipulations, promises and agreements made in this First
Supplemental Indenture by the Company shall bind its successors and assigns
whether so expressed or not.

     Section 3.4 Ratification of Indenture and Notes. As supplemented and
amended hereby, the Original Indenture and the Notes are in all respects
ratified and confirmed by the Company and by each of the Guarantors, and the
Original Indenture as so supplemented and amended hereby shall be read, taken
and construed as one and the same instrument.

     Section 3.5 Governing Law. This First Supplemental Indenture shall be
deemed to be a contract made under the laws of the State of New York and, for
all purposes, shall be construed in accordance with the laws of said State.

     Section 3.6 Execution and Counterparts. This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument.

     Section 3.7 Trust Indenture Act to Control. If and to the extent that
any provision of this First Supplemental Indenture limits, qualifies, or
conflicts with another provision included in the Original Indenture or in this
First Supplemental Indenture which is required to be included in or is or is
deemed to be applicable to this First Supplemental Indenture by any of Sections
310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended, such
required or other applicable provision shall control.

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Trustee:	 	WILMINGTON TRUST COMPANY
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Name:

Title:    Authorized Signer
	NII Holdings (Cayman), Ltd.

NII Holdings, Inc.

Nextel International (Services), Ltd.

NII Funding Corp. (formerly Nextel International

    Investment Company)

McCaw International (Brazil), Ltd.

Airfone Holdings, Inc.

Nextel International (Mexico), Ltd.

Nextel International (Uruguay), Inc.

Nextel International (Indonesia) LLC	 	 	 	 	 	 

4

 

	 	 	 	 	 	 	 	 	 
	Nextel International (Peru) LLC	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 	 	

Robert J. Gilker

Vice President	 	 	 	 	 	 
	Nextel del Peru, S.A.

Transnet del Peru S.R.L.

Comunicaciones Nextel de Mexico, S.A. de C.V.

Sistemas de Comunicaciones Troncales, S.A. de C. V.

Prestadora de Servicios de Radiocomunicacion, S.A. de C.V.

Radiophone, S.A. de C.V.

Fonotransportes Nacionales, S.A. de C.V.

Servicios Protel, S.A. de C.V.

Nextel de Mexico, S.A. de C.V.

Teletransportes Integrales, S.A. de C.V.

Servicios de Radiocomunicacion Movil de Mexico, S.A. de C.V.

Multifon, S.A. de C.V.	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 	 	

Robert J. Gilker

Attorney in Fact	 	 	 	 	 	 
	Nextel S.A.

Nextel Telecommunicaçoes, Ltda.

Promobile Telecommunicaçoes, Ltda.

Telemobile Telecommunicaçoes, Ltda.

Master-Tec Telecommunicaçoes Industria e Comercio de Productos

    Electronicos Ltda.

Telecommunicaçoes Brastel S/C Ltda.	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 	 	

Robert J. Gilker

Attorney in Fact	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	 
	 	 	

Mercedes M. Barreras

Attorney in Fact	 	 	 	 	 	 

 

 

 

5

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