UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF               
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended September 30, 2015
or
o
 
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 0-32421
NII HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
91-1671412
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
 
 
1875 Explorer Street, Suite 800
Reston, Virginia
 (Address of principal executive offices)
 
20190
 (Zip Code)
(703) 390-5100
(Registrant's telephone number, including area code)

Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 12 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 þ     No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o

 
Accelerated filer þ


 
Non-accelerated filer o
 
Smaller reporting company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

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 þ     No o
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
Number of Shares Outstanding
Title of Class
on October 30, 2015
Common Stock, $0.001 par value per share
100,773,099


                                    

NII HOLDINGS, INC. AND SUBSIDIARES
INDEX
 
 
Page
 
 
 
 
 
 
 
 

2

                                    

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
Unaudited
 
Successor Company
 
 
Predecessor Company
 
September 30,
2015
 
 
December 31, 2014
 
 
 
 
 
ASSETS
Current assets
 

 
 
 

Cash and cash equivalents
$
393,496

 
 
$
334,194

Short-term investments
54,584

 
 
110,064

Accounts receivable, net of allowance for doubtful accounts of $28,734 — Successor Company and
   $30,749 — Predecessor Company
179,316

 
 
256,133

Handset and accessory inventory
33,274

 
 
65,885

Deferred income taxes, net
38,629

 
 
39,146

Prepaid expenses and other
118,398

 
 
198,466

Assets related to discontinued operations
—

 
 
709,524

Total current assets
817,697

 
 
1,713,412

Property, plant and equipment, net
563,595

 
 
1,352,705

Intangible assets, net
889,826

 
 
688,153

Other assets
571,672

 
 
373,053

Assets related to discontinued operations
—

 
 
1,303,268

Total assets
$
2,842,790

 
 
$
5,430,591

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Liabilities not subject to compromise
 
 
 
 
Current liabilities
 

 
 
 

Accounts payable
$
64,755

 
 
$
132,642

Accrued expenses and other
236,739

 
 
337,651

Deferred revenues
12,272

 
 
28,843

Current portion of long-term debt
582,766

 
 
717,427

Liabilities related to discontinued operations
—

 
 
492,818

Total current liabilities
896,532

 
 
1,709,381

Long-term debt
87,510

 
 
207,844

Deferred income tax liabilities
41,479

 
 
40,921

Other long-term liabilities
198,685

 
 
207,506

Liabilities related to discontinued operations
—

 
 
636,210

Total liabilities not subject to compromise
1,224,206

 
 
2,801,862

Liabilities subject to compromise (Note 2)
—

 
 
4,593,493

Commitments and contingencies (Note 8)


 
 


Stockholders’ equity (deficit)
 

 
 
 

Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding — Successor Company
—

 
 
—

Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding — Predecessor Company
—

 
 
—

Common stock, par value $0.001, 140,000 shares authorized, 100,000 shares issued and outstanding — Successor Company
100

 
 
—

Common stock, par value $0.001, 600,000 shares authorized, 172,363 shares issued and outstanding — Predecessor Company
—

 
 
172

Paid-in capital — Successor Company
2,069,775

 
 
—

Paid-in capital — Predecessor Company
—

 
 
1,517,081

Accumulated deficit
(189,421
)
 
 
(2,150,664
)
Accumulated other comprehensive loss
(261,870
)
 
 
(1,331,353
)
Total stockholders’ equity (deficit)
1,618,584

 
 
(1,964,764
)
Total liabilities and stockholders’ equity (deficit)
$
2,842,790

 
 
$
5,430,591

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

                                    

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share amounts)
Unaudited
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended
 
 
Six Months Ended
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
 
June 30,
2015
 
September 30, 2014
 
September 30, 2014
Operating revenues
 

 
 
 
 
 
 
 
Service and other revenues
$
266,487

 
 
$
643,904

 
$
435,695

 
$
1,288,133

Handset and accessory revenues
18,165

 
 
39,807

 
40,569

 
128,816

 
284,652

 
 
683,711

 
476,264

 
1,416,949

Operating expenses
 

 
 
 

 
 

 
 

Cost of service (exclusive of depreciation and amortization included below)
112,179

 
 
256,085

 
172,124

 
532,479

Cost of handsets and accessories
28,307

 
 
121,143

 
87,494

 
311,767

Selling, general and administrative
168,804

 
 
419,699

 
246,927

 
767,208

Impairment and restructuring charges
4,715

 
 
36,792

 
81,586

 
99,021

Depreciation
36,353

 
 
126,789

 
83,579

 
264,962

Amortization
11,946

 
 
27,089

 
17,150

 
38,394

 
362,304

 
 
987,597

 
688,860

 
2,013,831

Operating loss
(77,652
)
 
 
(303,886
)
 
(212,596
)
 
(596,882
)
Other (expense) income
 

 
 
 

 
 

 
 

Interest expense, net
(28,878
)
 
 
(82,820
)
 
(107,926
)
 
(338,405
)
Interest income
8,597

 
 
15,327

 
7,176

 
22,535

Foreign currency transaction losses, net
(106,617
)
 
 
(63,948
)
 
(44,994
)
 
(16,934
)
Other income (expense), net
927

 
 
(137
)
 
1,686

 
(969
)
 
(125,971
)
 
 
(131,578
)
 
(144,058
)
 
(333,773
)
Loss from continuing operations before reorganization items and income tax provision
(203,623
)
 
 
(435,464
)
 
(356,654
)
 
(930,655
)
Reorganization items (Note 2)
2,144

 
 
1,956,874

 
(58,579
)
 
(58,579
)
Income tax provision
(470
)
 
 
(2,009
)
 
(956
)
 
(3,546
)
Net (loss) income from continuing operations
(201,949
)
 
 
1,519,401

 
(416,189
)
 
(992,780
)
Income (loss) from discontinued operations, net of income taxes
12,528

 
 
221,114

 
(27,258
)
 
(450,057
)
Net (loss) income
$
(189,421
)
 
 
$
1,740,515

 
$
(443,447
)
 
$
(1,442,837
)
 
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations per common share, basic
$
(2.02
)
 
 
$
8.73

 
$
(2.41
)
 
$
(5.77
)
Net income (loss) from discontinued operations per common share, basic
0.12

 
 
1.27

 
(0.16
)
 
(2.61
)
Net (loss) income per common share, basic
$
(1.89
)
 
 
$
10.00

 
$
(2.57
)
 
$
(8.38
)
 
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations per common share, diluted
$
(2.02
)
 
 
$
8.71

 
$
(2.41
)
 
$
(5.77
)
Net income (loss) from discontinued operations per common share, diluted
0.12

 
 
1.27

 
(0.16
)
 
(2.61
)
Net (loss) income per common share, diluted
$
(1.89
)
 
 
$
9.98

 
$
(2.57
)
 
$
(8.38
)
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding, basic
100,000

 
 
172,363

 
172,363

 
172,256

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding,
  diluted
100,000

 
 
172,691

 
172,363

 
172,256

 
 
 
 
 
 
 
 
 
Comprehensive (loss) income, net of income taxes
 
 
 
 
 
 
 
 
  Foreign currency translation adjustment
$
(264,932
)
 
 
$
(205,899
)
 
$
(216,109
)
 
$
(163,106
)
  Reclassification adjustment for sale of Nextel Argentina, Nextel Mexico and Nextel Chile (Note 4)
(1,672
)
 
 
421,953

 
(33,885
)
 
(33,885
)
  Other
4,734

 
 
2,956

 
430

 
296

  Other comprehensive (loss) income
(261,870
)
 
 
219,010

 
(249,564
)
 
(196,695
)
  Net (loss) income
(189,421
)
 
 
1,740,515

 
(443,447
)
 
(1,442,837
)
    Total comprehensive (loss) income
$
(451,291
)
 
 
$
1,959,525

 
$
(693,011
)
 
$
(1,639,532
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

                                    

NII HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Three Months Ended September 30, 2015 (Successor Company) and
For the Six Months Ended June 30, 2015 (Predecessor Company)
(in thousands)
Unaudited

 
Common Stock
 
Paid-in Capital
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total Stockholders’
Equity (Deficit)
 
Shares
 
Amount
 
 
 
 
Balance, January 1, 2015 — Predecessor Company
172,363

 
$
172

 
$
1,517,081

 
$
(2,150,664
)
 
$
(1,331,353
)
 
$
(1,964,764
)
Net income
—

 
—

 
—

 
1,740,515

 
—

 
1,740,515

Other comprehensive income
—

 
—

 
—

 
—

 
219,010

 
219,010

Share-based compensation activity
—

 
—

 
5,239

 
—

 
—

 
5,239

Balance, June 30, 2015 — Predecessor Company
172,363

 
172

 
1,522,320

 
(410,149
)
 
(1,112,343
)
 
—

Elimination of Predecessor Company's equity
(172,363
)
 
(172
)
 
(1,522,320
)
 
410,149

 
1,112,343

 
—

Issuance of Successor Company's common stock
100,000

 
100

 
2,067,565

 
—

 
—

 
2,067,665

Balance, July 1, 2015 — Successor Company
100,000

 
100

 
2,067,565

 
—

 
—

 
2,067,665

Net loss
—

 
—

 
—

 
(189,421
)
 
—

 
(189,421
)
Other comprehensive loss
—

 
—

 
—

 
—

 
(261,870
)
 
(261,870
)
Share-based compensation activity
—

 
—

 
2,210

 
—

 
—

 
2,210

Balance, September 30, 2015 — Successor Company
100,000

 
$
100

 
$
2,069,775

 
$
(189,421
)
 
$
(261,870
)
 
$
1,618,584

































The accompanying notes are an integral part of these condensed consolidated financial statements.

5

                                    

NII HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2015 (Successor Company),
For the Six Months Ended June 30, 2015 (Predecessor Company)
and For the Nine Months Ended September 30, 2014 (Predecessor Company)
(in thousands)
Unaudited
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended September 30, 2015
 
 
Six Months Ended June 30, 2015
 
Nine Months Ended September 30, 2014
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 

 
 

Net (loss) income
$
(189,421
)
 
 
$
1,740,515

 
$
(1,442,837
)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
 
 
 
 

 
 

(Income) loss from discontinued operations
(12,528
)
 
 
(221,114
)
 
450,057

Amortization of debt (premiums) discounts and financing costs
(337
)
 
 
18,753

 
70,437

Depreciation and amortization
48,299

 
 
153,878

 
303,356

Provision for losses on accounts receivable
15,383

 
 
65,396

 
46,334

Foreign currency transaction losses, net
106,617

 
 
63,948

 
16,934

Impairment charges, restructuring charges and losses on disposals of fixed assets
4,162

 
 
31,471

 
61,355

Share-based payment expense
2,210

 
 
5,239

 
8,062

Reorganization gain in connection with emergence from Chapter 11
—

 
 
(1,775,787
)
 
—

Fresh start adjustments, net
—

 
 
(248,709
)
 
—

Other, net
(7,459
)
 
 
(10,178
)
 
20,270

Change in assets and liabilities:
 
 
 
 

 
 

Accounts receivable
(30,652
)
 
 
(35,013
)
 
(68,115
)
Prepaid value-added taxes
643

 
 
50,564

 
(18,853
)
Handset and accessory inventory
6,463

 
 
7,513

 
(37,067
)
Prepaid expenses and other
(8,855
)
 
 
(26,688
)
 
(76,317
)
Other long-term assets
9,836

 
 
47,253

 
(81,064
)
Accrued value-added taxes
(565
)
 
 
(7,941
)
 
18,799

Accounts payable, accrued expenses, deferred revenues and other
(31,675
)
 
 
(14,254
)
 
51,279

Total operating cash used in continuing operations
(87,879
)
 
 
(155,154
)
 
(677,370
)
Total operating cash provided by (used in) discontinued operations
22,988

 
 
(99,603
)
 
(118,803
)
Net cash used in operating activities
(64,891
)
 
 
(254,757
)
 
(796,173
)
Cash flows from investing activities:
 
 
 
 

 
 

Capital expenditures
(60,062
)
 
 
(88,485
)
 
(271,223
)
Purchases of investments
(256,467
)
 
 
(757,714
)
 
(1,331,015
)
Proceeds from sales of investments
306,014

 
 
756,546

 
1,848,594

Change in restricted cash, escrow accounts and other deposits
(49,329
)
 
 
(57,074
)
 
(153,032
)
Other, net
699

 
 
(1,890
)
 
21,014

Total investing cash (used in) provided by continuing operations
(59,145
)
 
 
(148,617
)
 
114,338

Total investing cash provided by (used in) discontinued operations
96,377

 
 
1,176,438

 
(285,024
)
Net cash provided by (used in) investing activities
37,232

 
 
1,027,821

 
(170,686
)
Cash flows from financing activities:
 
 
 
 

 
 

Claims paid to senior noteholders
—

 
 
(745,221
)
 
—

Net proceeds from debtor-in-possession loan
—

 
 
340,375

 
—

Repayment of debtor-in-possession loan
—

 
 
(340,375
)
 
—

Borrowings under equipment financing facilities and other
—

 
 
—

 
14,590

Repayments under capital leases, equipment financing and other
(25,202
)
 
 
(2,008
)
 
(89,107
)
Other, net
—

 
 
(4,291
)
 
(396
)
Total financing cash used in continuing operations
(25,202
)
 
 
(751,520
)
 
(74,913
)
Total financing cash used in discontinued operations
—

 
 
(26,711
)
 
(9,586
)
Net cash used in financing activities
(25,202
)
 
 
(778,231
)
 
(84,499
)
Effect of exchange rate changes on cash and cash equivalents
560

 
 
(9,152
)
 
(40,923
)
Change in cash and cash equivalents related to discontinued operations
22,662

 
 
103,260

 
306,292

Net (decrease) increase in cash and cash equivalents
(29,639
)
 
 
88,941

 
(785,989
)
Cash and cash equivalents, beginning of period
423,135

 
 
334,194

 
1,147,682

Cash and cash equivalents, end of period
$
393,496

 
 
$
423,135

 
$
361,693


The accompanying notes are an integral part of these condensed consolidated financial statements.

6



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1.
Basis of Presentation
Unless the context requires otherwise, "NII Holdings, Inc.," "NII Holdings," "we," "our," "us" and "the Company" refer to the combined businesses of NII Holdings, Inc. and its consolidated subsidiaries. Our unaudited condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission, or the SEC. While these financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, they reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for interim periods. In addition, the year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. We refer to our operating companies by the countries in which they operate, such as Nextel Brazil and Nextel Argentina.
You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2014 and the condensed consolidated financial statements contained in our quarterly reports on Form 10-Q for the three months ended March 31, 2015 and for the three months ended June 30, 2015. You should not expect results of operations for interim periods to be an indication of the results for a full year. Our consolidated results from continuing operations in this quarterly report on Form 10-Q include the results of operations of Nextel Brazil and our corporate headquarters.
Sale of Nextel Argentina. On September 11, 2015, NII Mercosur Telecom, S.L.U. and NII Mercosur Moviles, S.L.U., both of which are indirect subsidiaries of NII Holdings, entered into a binding agreement with Grupo Clarin S.A., or Grupo Clarin, relating to the sale of all of the outstanding equity interests of Nextel Communications Argentina, S.R.L., or Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0 million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allows Grupo Clarin or any of its affiliates to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatory authorities in Argentina. We received the remaining cash consideration in October 2015. Under the agreement, Grupo Clarin assumes the risk associated with the regulatory approvals relating to the transfer of the 49% equity interest in Nextel Argentina and the exercise of the option for the remaining 51% equity interest, including any impairment or loss of licenses. If Grupo Clarin does not obtain regulatory approval within a specified timeframe, it may request an extension, assign its purchase right to another party or require us to liquidate Nextel Argentina and provide the proceeds to Grupo Clarin.
Pending receipt of the regulatory approvals, we issued a promissory note in the amount of $85.0 million and pledged the remaining 51% of the equity interests in Nextel Argentina to Grupo Clarin. The promissory note was pledged by Grupo Clarin pursuant to a note pledge agreement, does not require the payment of periodic interest and will be assigned to us upon delivery of the remaining 51% of the equity interests in Nextel Argentina. The promissory note only provides for payment to Grupo Clarin if Nextel Argentina makes unauthorized distributions, if the required approvals from the regulatory authorities in Argentina are received and we fail to deliver the remaining 51% of the equity interests, or if the regulatory approvals are not received within three years (four years if Grupo Clarin exercises an extension) and we fail to dispose of our assets in Argentina upon Grupo Clarin's request in accordance with the call option. NII Holdings guaranteed the obligations under the promissory note and the binding agreement in accordance with their respective terms. See Note 7 for more information.
Pending consummation of the transfer of the remaining 51% of the equity interests, we have agreed to cause Nextel Argentina to (i) conduct its business in the ordinary course and (ii) maintain and preserve certain business relationships. The binding agreement provides that $6.0 million of the purchase price will be held in escrow for one year for indemnification of representations, warranties and covenants. Grupo Clarin agreed to purchase Nextel Argentina on an as is, where is basis, subject to the terms and conditions of the binding agreement, including customary representations and warranties. Net proceeds from the sale of the equity interest are freely disposable, and although the transfer of the remaining 51% equity interests is subject to regulatory approval, the transfer is not conditioned on the absence of a material adverse change in the business of Nextel Argentina.
Subsequent to the closing of this transaction with Grupo Clarin, we no longer maintain a controlling financial interest in Nextel Argentina, and therefore we deconsolidated Nextel Argentina's results from our consolidated results of operations. In addition, in connection with this transaction, we have presented Nextel Argentina's results for all periods as discontinued operations in this quarterly report on Form 10-Q.
Sale of Nextel Mexico. On April 30, 2015, we, together with our wholly-owned subsidiary NIU Holdings LLC, completed the sale of our Mexican operations to New Cingular Wireless, Inc., an indirect subsidiary of AT&T, Inc. The transaction was structured as a sale of all the outstanding stock of the parent company of Comunicaciones Nextel de México, S.A. de C.V., or

7



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Nextel Mexico, for a purchase price of $1.875 billion, including $187.5 million deposited in escrow for a period of two years to satisfy potential indemnification claims. The net proceeds of the sale were $1.448 billion, after deducting Nextel Mexico's outstanding indebtedness net of cash and applying other specified purchase price adjustments. In connection with this sale, we have presented Nextel Mexico's results for all periods as discontinued operations in this quarterly report on Form 10-Q.
Reorganization Accounting. In accordance with the requirements of reorganization accounting, NII Holdings adopted the provisions of fresh start accounting as of June 30, 2015 and became a new entity for financial reporting purposes. References to the "Successor Company" relate to NII Holdings on or subsequent to June 30, 2015. References to the "Predecessor Company" relate to NII Holdings prior to June 30, 2015. See Note 2 for more information regarding the implementation of fresh start accounting.

Going Concern. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do not include any adjustments that might result from the occurrence of the uncertainties described below. In connection with the preparation of our consolidated financial statements for the year ended December 31, 2014, we concluded that the circumstances existing at the time raised substantial doubt about our ability to continue as a going concern.

As discussed in more detail in Note 2, in connection with our emergence from Chapter 11, we restructured $4.35 billion of senior notes by distributing cash and issuing shares of new common stock, resolving the insolvency issues associated with those obligations. In addition, we made a number of changes within our senior management team and modified our business plan to reflect our available cash resources and the impact of the current and expected economic conditions in Brazil on both our subscriber growth and revenues, and to align our costs with this revised outlook.
We have an obligation to meet a net debt financial covenant in Nextel Brazil's local bank loans that will apply semiannually beginning on June 30, 2016. Based on our current business plan, we believe that it is unlikely that we will satisfy the applicable financial covenant included in both of Nextel Brazil's local bank loan agreements at the June 30, 2016 measurement date. If we are unable to develop or implement changes to our business that allow us to meet this covenant, we will need to refinance or negotiate amendments to these financing arrangements or secure waivers from the lenders in order to avoid a potential default under the loan agreements. If a default occurs, the lenders could require us to repay the amounts outstanding under these arrangements, and if they were to do so, the lender of Nextel Brazil's equipment financing facility could accelerate the amount outstanding under that obligation as well. As of September 30, 2015, we had $230.0 million principal amount outstanding under Nextel Brazil's local bank loans and $342.5 million principal amount outstanding under Nextel Brazil’s equipment financing facility. See Note 6 for more information.
In light of the risk of a potential default under Nextel Brazil's local bank loans and equipment financing facility described above, we are not currently able to conclude that the circumstances that previously led us to determine that there is substantial doubt about our ability to continue as a going concern no longer exist.
Reclassifications. We have reclassified some prior period amounts in our condensed consolidated financial statements to conform to our current year presentation.
New Accounting Pronouncements.   There were no new accounting standards issued during the three months ended September 30, 2015 that materially impacted our condensed consolidated financial statements or could materially impact our financial statements or related disclosures in a future period.

8



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 2.
Emergence from Chapter 11 Proceedings and Fresh Start Accounting

On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and NII International Telecom, S.C.A., or NIIT, filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. In addition, subsequent to September 15, 2014, five additional subsidiaries of NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. We refer to the companies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Our operating subsidiaries in Brazil, Mexico and Argentina were not debtors in these Chapter 11 cases.

On June 19, 2015, the Bankruptcy Court entered an order approving and confirming the First Amended Joint Plan of Reorganization Proposed by the Plan Debtors and the Official Committee of Unsecured Creditors, dated April 20, 2015. We refer to this plan, as amended, as the Plan of Reorganization. On June 26, 2015, the conditions of the Bankruptcy Court's order and the Plan of Reorganization were satisfied, the Plan of Reorganization became effective, and we and the other Debtors emerged from the Chapter 11 proceedings. We refer to June 26, 2015 as the Emergence Date.

The significant transactions that occurred on the Emergence Date in connection with the effectiveness of our Plan of Reorganization included the following:

•
NII Holdings canceled all shares of its common stock, preferred stock and other equity interests that existed prior to June 26, 2015;

•
NII Holdings amended and restated its Bylaws and filed an Amended and Restated Certificate of Incorporation authorizing the Company to issue up to 140,000,000 shares of common stock, par value $0.001 per share, and up to 10,000,000 shares of undesignated preferred stock, par value $0.001 per share;

•
NII Holdings issued 99,999,992 shares of new common stock, with a per share value of $20.68, and distributed cash of $776.3 million to the holders of claims and service providers in comprehensive settlement of numerous integrated claims and disputes approved by the Bankruptcy Court in connection with the confirmation of the Plan of Reorganization;

•
In accordance with the Plan of Reorganization, all of the obligations of the Debtors with respect to the following indebtedness were canceled:

•
$700.0 million aggregate principal amount of 7.875% senior notes due 2019 issued by NIIT pursuant to an indenture, dated as of May 23, 2013, among NIIT (as issuer), the Company (as guarantor), and Wilmington Trust National Association (as trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•
$900.0 million aggregate principal amount of 11.375% senior notes due 2019 issued by NIIT pursuant to an indenture, dated as of February 19, 2013, among NIIT (as issuer), the Company (as guarantor), and Wilmington Trust National Association (as trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•
$1.45 billion aggregate principal amount of 7.625% senior notes due 2021 issued by NII Capital Corp. pursuant to an indenture, dated as of March 29, 2011, among NII Capital Corp. (as issuer), each of the guarantors party thereto and Wilmington Savings Fund Society, FSB (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof;

•
$500.0 million aggregate principal amount of 8.875% senior notes due 2019 issued by NII Capital Corp. pursuant to an indenture, dated as of December 15, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto and U.S. Bank National Association (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof; and

•
$800.0 million aggregate principal amount of 10.0% senior notes due 2016 issued by NII Capital Corp. pursuant to an indenture, dated as of August 18, 2009, among NII Capital Corp. (as issuer), each of the guarantors party thereto

9



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

and Wilmington Savings Fund Society, FSB (as successor trustee) and all amendments, supplements or modifications thereto and extensions thereof.

Pursuant to our Plan of Reorganization, we entered into a registration rights agreement to provide registration rights to parties that, together with their affiliates, received upon emergence 10% or more of the issued and outstanding common stock of NII Holdings in connection with the Plan of Reorganization. In satisfaction of this registration rights agreement, on July 14, 2015, we filed a Registration Statement on Form S-1 under the Securities Act of 1933 to register our common stock that may be offered for sale from time to time by certain selling stockholders. On July 21, 2015, this Form S-1 was declared effective. We are not selling any common stock under the related prospectus and will not receive any proceeds from the sale of common stock by the selling stockholders.

In connection with our emergence from Chapter 11, we were required to apply the provisions of fresh start accounting to our financial statements because: (i) the holders of existing voting shares of NII Holdings prior to its emergence from the Chapter 11 proceedings received less than 50% of the voting shares of NII Holdings outstanding following its emergence from the Chapter 11 proceedings; and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims. Because our results of operations during the period from June 26, 2015 to June 30, 2015 were not material, we applied fresh start accounting to our consolidated financial statements as of the close of business on June 30, 2015. Under the principles of fresh start accounting, a new reporting entity is considered to be created, and as a result, we allocated the reorganization value of NII Holdings as of June 30, 2015 to our individual assets based on their estimated fair values at the date we applied fresh start accounting.

The total value of the cash and shares of common stock distributed under the Plan of Reorganization was $2.813 billion. We refer to this value as the Plan Distributable Value. The Plan Distributable Value was comprised of $745.2 million of cash paid to the holders of our NIIT and NII Capital Corp. senior notes and $2,067.7 million of new common stock. We also distributed an additional $2.8 million to other creditors. We determined the equity value of the Successor Company to be approximately $2,067.7 million, which represents the $2.813 billion Plan Distributable Value less $745.2 million in cash distributions. 

The following condensed consolidated balance sheet reconciles the balance sheet of the Predecessor Company immediately prior to our emergence from Chapter 11 to the balance sheet of the Successor Company immediately subsequent to our emergence from Chapter 11. The adjustments set forth in the condensed consolidated balance sheet presented below reflect the consummation of the Plan of Reorganization, which are reflected in the "Reorganization Adjustments" column, and the fair value adjustments required by the implementation of fresh start accounting, which are reflected in the "Fresh Start Adjustments" column. The information presented below reflects changes in the estimated fair values of certain assets and liabilities that occurred in the third quarter of 2015 as we continue to finalize the information required for fresh start accounting. This condensed consolidated balance sheet should be read in conjunction with the explanatory notes following the table.

The following is a reconciliation of the Successor Company's equity value to its reorganization value as of June 30, 2015 (in thousands):
Fair value of Successor Company's common stock
$
2,067,665

Fair value of debt
789,046

Fair value of other liabilities
702,897

Reorganization value of Successor Company's assets
$
3,559,608



10



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Predecessor Company
 
Reorganization Adjustments
 
Fresh Start Adjustments
 
Successor Company
 
June 30, 2015
 
 
 
July 1, 2015
 
(in thousands)
ASSETS
Current assets
 

 
 
 
 
 
 
Cash and cash equivalents
$
1,199,441

 
$
(776,306
)
(a)
$
—

 
$
423,135

Short-term investments
97,395

 
—

 
—

 
97,395

Accounts receivable, net
187,732

 
—

 
—

 
187,732

Handset and accessory inventory
49,835

 
—

 
—

 
49,835

Deferred income taxes, net
685

 
—

 
39,995

(d)
40,680

Prepaid expenses and other
160,384

 
—

 
(19,494
)
(e)
140,890

Assets related to discontinued operations
242,487

 
—

 
—

(n)
242,487

Total current assets
1,937,959

 
(776,306
)
 
20,501

 
1,182,154

Property, plant and equipment, net
1,083,001

 
—

 
(373,516
)
(f)
709,485

Intangible assets, net
571,076

 
—

 
568,676

(g)
1,139,752

Other assets
511,154

 
—

 
(2,079
)
(h)
509,075

Assets related to discontinued operations
32,246

 
—

 
(13,104
)
(n)
19,142

Total assets
$
4,135,436

 
$
(776,306
)
 
$
200,478

 
$
3,559,608

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Liabilities not subject to compromise
 
 
 
 
 
 
 
  Current liabilities
 

 
 
 
 
 
 
    Accounts payable
$
101,757

 
$
—

 
$
—

 
$
101,757

    Accrued expenses and other
322,931

 
—

 
(2,677
)
(i)
320,254

    Deferred revenues
17,908

 
—

 
(1,805
)
(j)
16,103

    Current portion of long-term debt
667,617

 
—

 
6,997

(k)
674,614

    Liabilities related to discontinued operations
96,161

 
—

 
(1,727
)
(n)
94,434

  Total current liabilities
1,206,374

 
—

 
788

 
1,207,162

Long-term debt
176,738

 
—

 
(62,306
)
(k)
114,432

Deferred income tax liabilities
2,692

 
—

 
40,837

(d)
43,529

Other long-term liabilities
147,765

 
—

 
(33,113
)
(l)
114,652

Liabilities related to discontinued operations
5,763

 
—

 
6,405

(n)
12,168

Total liabilities not subject to compromise
1,539,332

 
—

 
(47,389
)
 
1,491,943

Liabilities subject to compromise
4,591,452

 
(4,591,452
)
(b)
—

 
—

Stockholders’ (deficit) equity
 

 
 

 
 

 


Undesignated preferred stock - Successor Company
—

 
—

 
—

 
—

Undesignated preferred stock - Predecessor Company
—

 
—

 
—

 
—

Common stock - Successor Company
—

 
100

(b)
—

 
100

Common stock - Predecessor Company
172

 
(172
)
(c)
—

 
—

Paid-in capital - Successor Company
—

 
2,067,565

(b)
—

 
2,067,565

Paid-in capital - Predecessor Company
1,522,320

 
(1,522,320
)
(c)
—

 
—

Accumulated deficit
(2,405,497
)
 
3,269,973

(c)
(864,476
)
(m)
—

Accumulated other comprehensive loss
(1,112,343
)
 
—

 
1,112,343

(m)
—

Total stockholders’ (deficit) equity
(1,995,348
)
 
3,815,146

 
247,867

 
2,067,665

Total liabilities and stockholders’ (deficit) equity
$
4,135,436

 
$
(776,306
)
 
$
200,478

 
$
3,559,608





11



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Our unaudited condensed consolidated balance sheet as of June 30, 2015 presented above reflects the effect of the following adjustments:

(a)
Reflects cash payments made in connection with the implementation of the Plan of Reorganization (in thousands):
Claims paid to senior noteholders
$
745,221

Payments to other creditors
2,779

Total claims paid
748,000

Reorganization-related professional fees
28,306

Total cash payments
$
776,306


(b)
Represents the cancellation of debt and related transactions in connection with the implementation of the Plan of Reorganization on the Emergence Date. In accordance with the Plan of Reorganization, we distributed cash and shares of new common stock to holders of claims. The following table reflects the calculation of the total gain on the settlement of our liabilities subject to compromise (in thousands):
Total Predecessor Company liabilities subject to compromise
$
4,591,452

Less: Common stock, Successor (at par)
(100
)
            Additional paid-in-capital, Successor
(2,067,565
)
            Total claims paid
(748,000
)
Gain on settlement of liabilities subject to compromise
$
1,775,787


(c)
Reflects the cumulative impact of the reorganization adjustments discussed above. Additionally, these adjustments reflect the cancellation of the Predecessor Company's common stock and additional paid-in capital to accumulated deficit (in thousands):

Gain on settlement of liabilities subject to compromise
$
1,775,787

Reorganization-related professional fees
(28,306
)
Net gain on reorganization adjustments
1,747,481

Cancellation of Predecessor Company equity
1,522,492

Net impact to accumulated deficit
$
3,269,973


(d)
Represents the net increase in deferred tax assets and liabilities associated with adjustments for fresh start accounting. The change in the components of deferred tax assets and liabilities resulted in a change to the proportionate allocation of the valuation allowance between current deferred tax assets and non-current deferred tax liabilities.

(e)
Represents the write-off of unamortized debt issuance costs primarily related to Nextel Brazil's equipment financing facility and local bank loans.

(f)
Reflects the impact of fresh start adjustments on property, plant and equipment in Nextel Brazil and our corporate segment. We measured the fair value of property, plant and equipment using the cost approach as the primary method. The cost approach is based on the premise that a prudent investor would pay no more for an asset than its replacement or reproduction cost. The cost to replace the asset would include the cost of constructing a similar asset of equivalent utility at prices applicable at the time of the valuation analysis. The replacement or reproduction cost estimates were adjusted by losses in value attributable to obsolescence. The following reflects the impact of fresh start adjustments (in thousands):

12



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Consolidated
 
Predecessor Company
 
Fresh Start Adjustments
 
Successor Company
Land
$
3,341

 
$
—

 
$
3,341

Leasehold improvements
39,607

 
(20,646
)
 
18,961

Network equipment, communication towers and network software
1,818,721

 
(1,294,665
)
 
524,056

Software, office equipment, furniture and fixtures and other
342,210

 
(256,815
)
 
85,395

Less: Accumulated depreciation and amortization
(1,207,834
)
 
1,207,834

 
—

 
996,045

 
(364,292
)
 
631,753

Construction in progress
86,956

 
(9,224
)
 
77,732

 
$
1,083,001

 
$
(373,516
)
 
$
709,485


(g)
Reflects the impact of fresh start adjustments on our intangible assets (in thousands):
 
Nextel Brazil
 
Predecessor Company
 
Fresh Start Adjustments
 
Successor Company
Licenses
$
553,076

 
$
515,776

 
$
1,068,852

Customer relationships
—

 
32,200

 
32,200


In Brazil, our spectrum holdings include 20 megahertz, or MHz, of 1.9 gigahertz, or GHz,/2.1 GHz spectrum and 20 MHz of 1.8 GHz spectrum that support our wideband code division multiple access, or WCDMA, network and, in Rio de Janeiro, our long-term evolution, or LTE, network. We valued Nextel Brazil's spectrum licenses using the Greenfield method, a form of the income approach, by estimating the discounted future cash flows of a hypothetical start-up business, based on certain assumptions, including: (i) forecasted revenues and profit margins attributable to the spectrum for the period from July 1, 2015 to June 1, 2041, which represents the end of the current term of our spectrum licenses, including renewals solely at our option; and (ii) a discount rate of 16.6%, which is based on an after-tax weighted average cost of capital. We also have spectrum holdings in the 800 MHz specialized mobile radio, or SMR, spectrum band that currently support our integrated digital enhanced network, or iDEN network, but may be used for other purposes in the future.

We valued our intangible assets related to customer relationships, all of which relate to Brazil, using the excess earnings method, a form of the income approach, by estimating the discounted future cash flows attributable to existing subscribers, based on certain assumptions, including: (i) forecasted revenues and profit margins attributable to the current subscriber base beginning on July 1, 2015; (ii) a churn rate of 2.1%; and (iii) a discount rate of 16.6%, based on an after-tax weighted average cost of capital.
 
Corporate
 
Predecessor Company
 
Fresh Start Adjustments
 
Successor Company
Trade name
18,000

 
20,700

 
38,700


Our trade name represents the right to use the Nextel name exclusively in our markets. We valued our trade name using the relief from royalty method, a form of the income approach that estimates the amount a market participant would pay to utilize that trade name, based on certain assumptions, including (i) forecasted revenues attributable to the trade name from July 1, 2015 to June 1, 2041; (ii) a royalty rate of 0.25% of expected revenues determined with regard to comparable market transactions and profitability analysis; and (iii) a discount rate of 16.6%, which was based on an after-tax weighted average cost of capital.

(h)
Represents a $13.5 million decrease in non-income based tax assets to reduce their values to their estimated fair values based on discounted cash flows to reflect the timing of their anticipated realization, partially offset by the recognition of an $11.4 million asset related to the fair value of lease contracts whose terms were favorable relative to available market terms.

13



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


(i)
Represents the write-off of unamortized deferred gains related to the 2013 tower transactions.

(j)
Represents the revaluation of deferred revenues to the fair value of related future performance obligations.

(k)
Adjustments to Nextel Brazil's debt balances related to the remeasurement of its equipment financing facility, local bank loans, tower financings and capital lease obligations to their fair values were as follows (in thousands):    
 
Nextel Brazil
 
Predecessor Company
 
Fresh Start Adjustments
 
Successor Company
Brazil equipment financing
$
366,937

 
$
(2,989
)
 
$
363,948

Brazil bank loans
294,322

 
9,987

 
304,309

Brazil capital lease and tower financing obligations
182,108

 
(62,307
)
 
119,801

Other
988

 
—

 
988

Total debt
844,355

 
(55,309
)
 
789,046

Less: current portion
(667,617
)
 
(6,997
)
 
(674,614
)
 
$
176,738

 
$
(62,306
)
 
$
114,432


(l)
Primarily represents the $61.3 million write-off of unamortized deferred gains related to the 2013 tower transactions, partially offset by a $24.3 million increase related to the recognition of unfavorable lease contracts relative to available market terms and a $5.3 million increase related to the remeasurement of asset retirement obligations to their fair values.

(m)
Reflects the cumulative impact of all fresh start adjustments and the elimination of the Predecessor Company’s accumulated other comprehensive loss as follows (in thousands):
Intangible asset fair value adjustment
$
568,676

Property, plant and equipment fair value adjustment
(373,516
)
Debt fair value adjustment
55,309

Write-off of unamortized deferred gains on 2013 tower transactions
63,940

Other
(65,700
)
Net gain on fresh start fair value adjustments
248,709

Tax impact of fresh start adjustments
(842
)
Elimination of Predecessor Company's accumulated other comprehensive loss
(1,112,343
)
Net impact on accumulated deficit
$
(864,476
)

(n)
Represents the net change in assets and liabilities related to Nextel Argentina as a result of remeasurement to their respective fair values.


14



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Reorganization Items.

The components of our reorganization items for the three months ended September 30, 2015, the six months ended June 30, 2015 and the three and nine months ended September 30, 2014 are as follows (in thousands):
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended
 
 
Six Months Ended
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
 
June 30, 2015
 
September 30, 2014
 
September 30, 2014
Gain on settlement of liabilities subject to compromise
$
—

 
 
$
1,775,787

 
$
—

 
$
—

Net gain on fresh start fair value adjustments
—

 
 
248,709

 
—

 
—

Reorganization-related professional fees and other costs
2,144

 
 
(67,622
)
 
(58,579
)
 
(58,579
)
Total reorganization items
$
2,144

 
 
$
1,956,874

 
$
(58,579
)
 
$
(58,579
)



Note 3.
Supplemental Financial Statement Information

Prepaid Expenses and Other.

The components of our prepaid expenses and other current assets are as follows:
 
Successor Company
 
 
Predecessor Company
 
September 30,
2015
 
 
December 31,
2014
 
(in thousands)
Value-added taxes
$
37,838

 
 
$
101,283

Other current assets
62,064

 
 
44,860

Other prepaid assets
18,496

 
 
52,323

 
$
118,398

 
 
$
198,466




15



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Property, Plant and Equipment, Net.
The components of our property, plant and equipment, net are as follows:
 
Successor Company
 
 
Predecessor Company
 
September 30,
2015
 
 
December 31,
2014
 
(in thousands)
Land
$
2,609

 
 
$
3,903

Leasehold improvements
14,642

 
 
50,174

Network equipment, communication towers and network software
469,647

 
 
2,170,033

Software, office equipment, furniture and fixtures and other
59,204

 
 
378,256

Less: Accumulated depreciation and amortization
(32,410
)
 
 
(1,392,528
)
 
513,692

 
 
1,209,838

Construction in progress
49,903

 
 
142,867

 
$
563,595

 
 
$
1,352,705


During the three months ended September 30, 2015 and 2014, we capitalized $2.0 million and $2.9 million of interest, respectively. For the six months ended June 30, 2015, we capitalized $2.6 million of interest, and for the nine months ended September 30, 2014, we capitalized $25.8 million of interest. See Note 2 for more information regarding the valuation of our property, plant and equipment in connection with the implementation of fresh start accounting.

Intangible Assets, Net.
Our intangible assets include the following:
 
 
 
Successor Company
 
 
Predecessor Company
 
 
 
September 30, 2015
 
 
December 31, 2014
 
Average Useful Life (Years)
 
Gross Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
 
 
Gross Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
 
 
 
(in thousands) 
Amortizable intangible assets:
 
 
 

 
 

 
 

 
 
 

 
 

 
 

Licenses
26
 
$
836,647

 
$
(8,708
)
 
$
827,939

 
 
$
783,783

 
$
(113,630
)
 
$
670,153

Tradename
26
 
38,700

 
(387
)
 
38,313

 
 
—

 
—

 
—

Customer relationships
4
 
25,146

 
(1,572
)
 
23,574

 
 
—

 
—

 
—

 
 
 
$
900,493

 
$
(10,667
)
 
$
889,826

 
 
$
783,783

 
$
(113,630
)
 
$
670,153

As of December 31, 2014, the balance of our indefinite lived intangible assets was $18.0 million. See Note 2 for more information regarding the valuation of our intangible assets in connection with the implementation of fresh start accounting.

16



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Restricted Cash.  
The components of our restricted cash, almost all of which were classified as other assets in our condensed consolidated balance sheet as of September 30, 2015 and our consolidated balance sheet as of December 31, 2014, are as follows:

 
Successor Company
 
 
Predecessor Company
 
September 30,
2015
 
 
December 31,
2014
 
(in thousands)
Cash in escrow — Nextel Mexico sale
$
186,570

 
 
$
—

Brazil judicial deposits
56,452

 
 
46,215

Cash in escrow — Nextel Peru sale
34,350

 
 
41,782

Other
—

 
 
407

 
$
277,372

 
 
$
88,404

Accrued Expenses and Other.
The components of our accrued expenses and other are as follows:
 
Successor Company
 
 
Predecessor Company
 
September 30,
2015
 
 
December 31,
2014
 
(in thousands)
Payroll related items and commissions
$
33,999

 
 
$
38,829

Non-income based taxes
30,776

 
 
42,054

Network system and information technology
27,014

 
 
43,535

Capital expenditures
16,570

 
 
64,459

Other
128,380

 
 
148,774

 
$
236,739

 
 
$
337,651

Accumulated Other Comprehensive Loss. As of September 30, 2015 and December 31, 2014, the tax impact on our accumulated other comprehensive loss was not material. The components of our accumulated other comprehensive loss, net of taxes, are as follows:
 
 
Successor Company
 
 
Predecessor Company
 
September 30, 2015
 
 
December 31, 2014
 
(in thousands)
Cumulative foreign currency translation adjustment
$
(261,870
)
 
 
$
(1,326,003
)
Other
—

 
 
(5,350
)
 
$
(261,870
)
 
 
$
(1,331,353
)


17



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Supplemental Cash Flow Information.
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended September 30,
 
 
Six Months Ended June 30,
 
Nine Months Ended September 30,
 
2015
 
 
2015
 
2014
 
 
 
 
(in thousands)
Capital expenditures
 
 
 
 

 
 

Cash paid for capital expenditures, including capitalized interest on property, plant and equipment
$
60,062

 
 
$
88,485

 
$
271,223

Change in capital expenditures accrued and unpaid or financed, including interest capitalized
(11,672
)
 
 
(19,282
)
 
(120,770
)
 
$
48,390

 
 
$
69,203

 
$
150,453

For the three months ended September 30, 2015, we had $19.0 million in non-cash investing and financing activities, the majority of which related to U.S. treasury bills that we received in connection with the sale of Nextel Argentina. For the six months ended June 30, 2015, we had the following non-cash investing and financing activities:
•
$2,067.7 million in Successor Company common stock that we issued in partial satisfaction of certain claims that were settled in connection with our emergence from Chapter 11 (see Note 2 for more information); and
•
$187.5 million increase in restricted cash, which represents cash placed in escrow to secure our indemnification obligations in connection with the sale of Nextel Mexico.
We did not have any non-cash investing and financing activities during the nine months ended September 30, 2014.
Revenue-Based Taxes.  We record revenue-based taxes and other excise taxes on a gross basis as a component of both service and other revenues and selling, general and administrative expenses in our condensed consolidated financial statements. For the three months ended September 30, 2015 and the six months ended June 30, 2015, we recognized $9.3 million and $39.0 million in revenue-based taxes and other excise taxes, respectively. For the three and nine months ended September 30, 2014, we recognized $25.9 million and $77.1 million in revenue-based taxes and other excise taxes, respectively.
Diluted Net (Loss) Income Per Common Share.  As presented for the six months ended June 30, 2015, our calculation of diluted net income from continuing operations per common share includes 0.3 million restricted common shares, but does not include any other potential common shares, including shares issuable upon the potential exercise of stock options issued under our stock-based employee compensation plans since their effect would have been antidilutive. As presented for the three months ended September 30, 2015 and for the three and nine months ended September 30, 2014, our calculation of diluted net loss from continuing operations per common share is based on the weighted average number of common shares outstanding during those periods and does not include other potential common shares, including shares issuable upon the potential exercise of stock options under our stock-based employee compensation plans or restricted common shares issued under those plans since their effect would have been antidilutive.
For the three months ended September 30, 2015, we did not include 1.6 million stock options and 0.6 million restricted common shares in our calculation of diluted net income from continuing operations per common share because their effect would have been antidilutive. In addition, for the six months ended June 30, 2015, we did not include 4.8 million stock options in our calculation of diluted net income from continuing operations per common share because their effect would have been antidilutive. For the three and nine months ended September 30, 2014, we did not include 9.4 million stock options and 8.8 million stock options, respectively, and 1.2 million restricted common shares for both periods, in our calculation of diluted net loss from continuing operations per common share because their effect would have been antidilutive.



18



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 4.
Discontinued Operations

Sale of Nextel Argentina. On September 11, 2015, two of our indirect subsidiaries entered into a binding agreement with Grupo Clarin relating to the sale of all of the outstanding equity interests of Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0 million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allows Grupo Clarin or any of its affiliates to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatory authorities in Argentina. The remaining cash consideration was received in October 2015. See Note 1 for more information on the sale of Nextel Argentina.

Sale of Nextel Mexico. On April 30, 2015, we completed the sale of Nextel Mexico to New Cingular Wireless, an indirect subsidiary of AT&T, for net proceeds of $1.448 billion, including $187.5 million deposited in escrow to satisfy potential indemnification claims that may arise. This amount held in escrow is available for the indemnification of defined claims through April 2017. In October 2015, we received notification of certain tax-related claims for $9.1 million, and we intend to vigorously contest these claims. See Note 1 for more information on the sale of Nextel Mexico.
 
Sale of Nextel Chile. In August 2014, our wholly-owned subsidiaries NII Mercosur Telecom, S.L., NII Mercosur Moviles, S.L. and NII International Telecom S.C.A. completed the sale of all of the outstanding equity interests of our wholly-owned subsidiary, Nextel Chile S.A., or Nextel Chile, to Fucata, S.A., a venture comprised of Grupo Veintitres and Optimum Advisors, for a de minimus amount.

Sale of Nextel Peru. In August 2013, our wholly-owned subsidiaries NII Mercosur Telecom, S.L. and NII Mercosur Moviles, S.L., completed the sale of all of the outstanding equity interests of our wholly-owned subsidiary, Nextel del Peru, S.A., or Nextel Peru, to Empresa Nacional de Telecomunicaciones S.A. and one of its subsidiaries, Entel Inversiones, S.A., which we refer to collectively as Entel. Entel has provided notice of potential claims for amounts greater than the $34.4 million that remained in escrow as of September 30, 2015 to satisfy these claims. We believe that the requirements for payment of certain indemnification claims have not been met at this time, and we intend to vigorously contest these claims. As of September 30, 2015, we accrued an immaterial amount related to the potential settlement of these claims. The time period for additional claims against the amount held in escrow lapsed in February 2015.

In connection with the transactions discussed above, we have presented the results of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru as discontinued operations in this quarterly report on Form 10-Q. Accordingly, we reclassified Nextel Argentina's, Nextel Mexico's, Nextel Peru's and Nextel Chile's results of operations for all periods presented to reflect these entities as discontinued operations. Unless otherwise noted, amounts included in these notes to our condensed consolidated financial statements exclude amounts attributable to discontinued operations. The major components of income (loss) from discontinued operations related to Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru were as follows (in thousands):

 
Successor Company
 
 
Predecessor Company
 
Three Months Ended September 30,
 
 
Six Months Ended June 30,
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
 
2015
 
2014
 
2014
Operating revenues
$
75,450

 
 
$
599,038

 
$
457,853

 
$
1,456,135

Operating expenses
(60,863
)
 
 
(675,245
)
 
(467,522
)
 
(1,824,978
)
Other income (expense), net
1,159

 
 
(49,974
)
 
(43,316
)
 
(81,773
)
Income (loss) before income tax provision
15,746

 
 
(126,181
)
 
(52,985
)
 
(450,616
)
Income tax provision
(4,770
)
 
 
(8,065
)
 
(5,461
)
 
(36,582
)
 
10,976

 
 
(134,246
)
 
(58,446
)
 
(487,198
)
Gain on sales of Nextel Argentina, Nextel Mexico, Nextel Chile and Nextel Peru
1,552

 
 
355,360

 
31,188

 
37,141

Income (loss) from discontinued operations, net of income taxes
$
12,528

 
 
$
221,114

 
$
(27,258
)
 
$
(450,057
)

19



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The components of assets and liabilities related to discontinued operations as of December 31, 2014, all of which related to Nextel Argentina and Nextel Mexico, consisted of the following (in thousands):

ASSETS
Current assets
 
Cash and cash equivalents
$
239,407

Short-term investments
43,548

Accounts receivable, less allowance for doubtful accounts of $24,266
142,545

Handset and accessory inventory
141,748

Deferred incomes taxes, prepaid expenses and other, net
142,276

Total current assets
709,524

Property, plant and equipment, net
1,080,228

Intangible assets, net
133,971

Deferred incomes taxes and other assets, net
89,069

Total assets
$
2,012,792

LIABILITIES
Accounts payable
$
147,162

Accrued expenses and other
225,337

Deferred revenues
60,176

Current portion of long-term debt
60,143

Long-term debt
526,980

Deferred income tax and other long-term liabilities
109,230

Total liabilities
$
1,129,028


Note 5.
Impairment and Restructuring Charges
Asset Impairments.

During the three months ended September 30, 2015 and the six months ended June 30, 2015, Nextel Brazil recognized $4.0 million and $27.8 million in non-cash asset impairment charges, the majority of which related to the shutdown or abandonment of certain transmitter and receiver sites that are no longer required in its business and retail store closures related to the realignment of distribution channels. Nextel Brazil also recognized $10.0 million and $11.2 million in asset impairment charges during the three and nine months ended September 30, 2014, the majority of which related to the shutdown of transmitter and receiver sites and retail store closures.
    
In September 2014, we evaluated strategic options for the next generation of our push-to-talk services and determined that, for one of these options, further development was no longer probable. As a result, we recognized a $42.8 million asset impairment charge at the corporate level.
In June 2014, we recognized a $6.4 million asset impairment charge at the corporate level related to the sale of our corporate aircraft.
Restructuring Charges.

During the six months ended June 30, 2015, we recognized $5.4 million in severance and other related costs at the corporate level as a result of the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses. We also recognized $6.4 million and $19.5 million in severance and other related costs at the corporate level and in Brazil during the three and nine months ended September 30, 2014 related to similar streamlining and cost reduction efforts.


20



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In September 2014, Nextel Brazil recognized $17.6 million of charges related to the cessation of utilization of certain network services.

Total impairment and restructuring charges for the three months ended September 30, 2015 and 2014, for the six months ended June 30, 2015 and for the nine months ended September 30, 2014 were as follows (in thousands):
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended September 30,
 
 
Six Months Ended
June 30,
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
 
2015
 
2014
 
2014
Brazil
4,845

 
 
28,072

 
$
38,194

 
$
38,194

Corporate
(130
)
 
 
8,720

 
43,392

 
60,827

  Total impairment and restructuring charges
$
4,715

 
 
$
36,792

 
$
81,586

 
$
99,021

As of September 30, 2015, total accrued restructuring charges were as follows (in thousands):
Balance, January 1, 2015 — Predecessor Company
$
7,572

  Restructuring charges
5,719

  Cash payments
(8,457
)
Balance, June 30, 2015 — Predecessor Company
$
4,834

  Restructuring charges
809

  Cash payments
(1,095
)
Balance, September 30, 2015 — Successor Company
$
4,548


Note 6.
Debt

As a result of the implementation of fresh start accounting in connection with our emergence from Chapter 11, we remeasured the components of our debt to their fair values as of June 30, 2015. See Note 2 for more information. The components of our debt are as follows:
 
Successor Company
 
 
Predecessor Company
 
September 30, 2015
 
 
December 31, 2014
 
(in thousands)
Brazil equipment financing
$
339,672

 
 
$
366,937

Brazil bank loans
236,968

 
 
343,915

Brazil capital lease and tower financing obligations
93,060

 
 
213,163

Other
576

 
 
1,256

Total debt
670,276

 
 
925,271

Less: current portion
(582,766
)
 
 
(717,427
)
 
$
87,510

 
 
$
207,844


Cancellation of Senior Notes. In connection with the confirmation of our Plan of Reorganization and our emergence from Chapter 11, the $1,600.0 million in aggregate principal amount outstanding under each of NIIT's 7.875% senior notes due 2019 and its 11.375% senior notes due 2019 and the $2,750.0 million in aggregate principal amount outstanding under each of NII Capital Corp.'s 7.625% senior notes due 2021, its 8.875% senior notes due 2019 and its 10.0% senior notes due 2016 were canceled.

21



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Throughout the Chapter 11 proceedings, the entire $4,350.0 million in NIIT and NII Capital Corp. senior notes was classified as liabilities subject to compromise. See Note 2 for more information.

Brazil Bank Loans. As of the December 31, 2014 measurement date, we were not in compliance with the net debt financial covenant included in each of Nextel Brazil's outstanding local bank loans. As a result, we classified these bank loans as current liabilities in our consolidated balance sheet as of December 31, 2014. In February 2015, Nextel Brazil and the lenders providing the local bank loans entered into standstill agreements under which the lenders agreed that they would not seek remedies under the provisions of the agreements related to Nextel Brazil's failure to satisfy the financial covenants in the loan agreements in the period before September 15, 2015 and that further principal repayment obligations due between the signing date and September 15, 2015 would be suspended. In addition, the standstill agreements formally committed the lenders to sign further amendments to the terms of the local bank loans. Among other things, the amendments revised the financial covenants and principal repayment schedule for the loans, granted the lenders a security interest over amounts held in certain collection accounts maintained with each lender and increased the interest margin on the loans from approximately 115% of the local Brazilian borrowing rate to approximately 140% of this local rate. Certain of these amendments were implemented in connection with the standstill agreements and the remainder became effective in connection with our emergence from Chapter 11 proceedings.

The amendments provide for a "covenant holiday" through December 31, 2015, during which time we are not required to comply with the financial covenants outlined in Nextel Brazil's local bank loan agreements. Thereafter, Nextel Brazil must maintain a net debt to earnings before interest, taxes, depreciation and amortization, or EBITDA, ratio over the trailing 12 months of no greater than 4.0 as of June 30, 2016, 3.5 as of December 31, 2016 and 2.5 as of June 30, 2017 and on each six-month anniversary thereafter.

In connection with our emergence from Chapter 11, we made a number of changes within our senior management team and modified our business plan to reflect our available cash resources and the impact of the current and expected economic conditions in Brazil on both our subscriber growth and revenues, and to align our costs with this revised outlook. Based on our current business plan, we believe that it is unlikely that we will satisfy the applicable financial covenant included in both of Nextel Brazil's local bank loan agreements at the June 30, 2016 measurement date.

If we are unable to develop or implement changes to our business that allow us to meet this covenant, we will need to refinance or negotiate amendments to these financing arrangements or secure waivers from the lenders in order to avoid a potential default under the loan agreements. If a default occurs, the lenders could require us to repay the amounts outstanding under these arrangements. As a result of this uncertainty, we have continued to classify the amounts outstanding under Nextel Brazil's local bank loans as current liabilities in our condensed consolidated balance sheet as of September 30, 2015. As of September 30, 2015, we had $230.0 million principal amount outstanding under Nextel Brazil's local bank loans.
Brazil Equipment Financing Facility. In December 2014, Nextel Brazil and the lender under the equipment financing facility agreed to amend this facility to remove all financial covenants beginning with the December 31, 2014 measurement date through the June 30, 2017 measurement date so that the first measurement date under the amended facility will be December 31, 2017. In exchange for that covenant relief, Nextel Brazil granted the lender preferential rights to the amounts held in certain bank accounts. Because of the uncertainty regarding our ability to meet the financial covenant contained in Nextel Brazil's local bank loans discussed above and certain cross-default provisions that are included in the loan agreement under Nextel Brazil's equipment financing facility, we have continued to classify the amount outstanding under this facility as a current liability in our condensed consolidated balance sheet as of September 30, 2015. As of September 30, 2015, we had $342.5 million in principal amount outstanding under Nextel Brazil's equipment financing facility. We do not have the ability to borrow additional amounts under this equipment financing facility.

Note 7.
Fair Value Measurements
Nextel Argentina.
As discussed further in Note 1, on September 11, 2015, two of our indirect subsidiaries entered into a binding agreement with Grupo Clarin relating to the sale of all of the outstanding equity interests of Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0 million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allows Grupo Clarin or any of its affiliates to acquire

22



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatory authorities in Argentina. Pending receipt of the necessary regulatory approvals in Argentina, we issued a non-recourse promissory note in the amount of $85.0 million and pledged the remaining 51% of the equity interests in Nextel Argentina to Grupo Clarin. We recorded our retained 51% interest in Nextel Argentina as an equity method investment under the fair value option, which is included as a component of other assets in our condensed consolidated balance sheet, and, accordingly, we will record this investment at its market value at each reporting date. As of September 30, 2015, we estimated the fair value of this investment to be $96.8 million. In addition, as of September 30, 2015, we recorded the non-recourse promissory note as a component of other long-term liabilities in our condensed consolidated balance sheet at its estimated fair value of $96.8 million. This fair value estimate was based on the $178.0 million purchase price paid by Grupo Clarin, as adjusted for changes in excess cash from September 11, 2015 through September 30, 2015. We included the respective changes in the fair value of the equity method investment and the promissory note as a component of other income (expense), net for the three months ended September 30, 2015. These changes in fair value were not material.
Financial Instruments.
Available-for-Sale Securities.
As of September 30, 2015 and December 31, 2014, available-for-sale securities included $36.5 million and $110.1 million, respectively, in short-term investments made by Nextel Brazil in investment funds and certificates of deposit. These funds invest primarily in Brazilian government bonds, long-term, low-risk bank certificates of deposit and Brazilian corporate debentures. The gross unrecognized holding gains and losses as of September 30, 2015 were not material.
We account for our available-for-sale securities at fair value. The fair value of the Brazilian securities is based on the net asset value of the funds. In our judgment, these types of securities trade with sufficient daily observable market activity to support a Level 1 classification within the fair value hierarchy.
Held-to-Maturity Investments.
We periodically invest some of our cash holdings in certain securities that we intend to hold to maturity. As of September 30, 2015, held-to-maturity investments included $18.1 million in short-term investments at NIIT in U.S. treasury bills. We account for held-to-maturity securities at amortized cost. We determined the fair value of our held-to-maturity investments in U.S. treasury securities based on quoted market prices for the individual instruments. These securities will mature in February 2016. In our judgment, these securities trade with sufficient daily observable market activity to support a Level 1 classification within the fair value hierarchy. As of September 30, 2015, the fair value of our held-to-maturity investments was $18.1 million.
Debt Instruments.
The carrying amounts and estimated fair values of our debt instruments are as follows:
 
Successor Company
 
 
Predecessor Company
 
September 30, 2015
 
 
December 31, 2014
 
Principal Amount Outstanding
 
Carrying
Amount
 
Estimated
Fair Value
 
 
Principal Amount Outstanding
 
Carrying
Amount
 
Estimated
Fair Value
 
(in thousands)
NII Capital Corp. senior notes, net (1)
$
—

 
$
—

 
$
—

 
 
$
2,750,000

 
$
2,750,000

 
$
648,500

NII International Telecom S.C.A. senior
  notes, net (1)
—

 
—

 
—

 
 
1,600,000

 
1,600,000

 
1,166,500

Brazil equipment financing
342,474

 
339,672

 
341,178

 
 
366,937

 
366,937

 
337,295

Brazil bank loans and other
230,557

 
237,544

 
241,560

 
 
345,171

 
345,171

 
275,655

 
$
573,031

 
$
577,216

 
$
582,738

 
 
$
5,062,108

 
$
5,062,108

 
$
2,427,950

_______________________________________
(1) As of December 31, 2014, both our senior notes held by NII Capital Corp. and our senior notes held by NIIT were classified as liabilities subject to compromise in our condensed consolidated balance sheet.
We estimated the fair values of our senior notes using quoted market prices. Because our fair value measurement is based on market prices in an active market, we consider this Level 1 in the fair value hierarchy.
Bank loans and other consists primarily of loans with certain banks in Brazil. We estimated the fair value of these bank loans, as well as the fair value of our equipment financing facility in Brazil, utilizing inputs such as U.S. Treasury security yield curves, prices of comparable bonds, LIBOR, U.S. Treasury bond rates and credit spreads on comparable publicly traded bonds. We consider these measurements to be Level 2 in the fair value hierarchy.
Derivative Instruments.
We occasionally enter into derivative transactions for risk management purposes. We have not and will not enter into any derivative transactions for speculative or profit generating purposes. We record all derivative instruments as either assets or liabilities on our condensed consolidated balance sheet at their fair value. As of September 30, 2015, Nextel Brazil had $4.9 million in derivative instruments that were classified as short-term investments on our condensed consolidated balance sheet, and we consider this measurement to be Level 3 in the fair value hierarchy. Nextel Brazil entered into foreign currency option agreements to manage the foreign currency exposures associated with the forecasted purchase of handsets and other U.S. dollar-denominated payments. We do not apply hedge accounting to these derivative instruments. As a result, we have included all changes in the fair value of these instruments as a component of other income (expense), net in our condensed consolidated statement of comprehensive (loss) income. For the three months ended September 30, 2015 and the six months ended June 30, 2015, Nextel Brazil recognized $3.1 million and $6.3 million in realized gains, respectively, resulting from the changes in the estimated fair value of these derivative instruments. In addition, for the three months ended September 30, 2015 and the six months ended June 30, 2015, Nextel Brazil recorded $3.2 million in unrealized gains and $1.3 million in unrealized losses, respectively, resulting from the changes in the estimated fair value of these derivative instruments.
Other Financial Instruments.
The carrying values of cash and cash equivalents, accounts receivable and accounts payable contained in our condensed consolidated balance sheets approximate their fair values due to the short-term nature of these instruments.



23



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 8.
Commitments and Contingencies

Handset, Equipment and Other Commitments.

We are a party to purchase agreements with various suppliers under which we have committed to purchase handsets, equipment and network services that will be used or sold in the ordinary course of business. As of September 30, 2015, we are committed to purchase $153.9 million under a handset purchase agreement with one of our handset suppliers by the end of 2016. We do not expect that we will purchase all of the committed devices, but we have not recorded a liability for this contract because we do not believe it is probable that we will incur a loss under this handset purchase agreement.
Brazilian Contingencies.
Nextel Brazil has received various assessment notices from state and federal Brazilian authorities asserting deficiencies in payments related primarily to value-added taxes, excise taxes on imported equipment and other non-income based taxes. Nextel Brazil has filed various administrative and legal petitions disputing these assessments. In some cases, Nextel Brazil has received favorable decisions, which are currently being appealed by the respective governmental authority. In other cases, Nextel Brazil's petitions have been denied, and Nextel Brazil is currently appealing those decisions. Nextel Brazil also had contingencies related to certain regulatory, civil and labor-related matters as of September 30, 2015 and December 31, 2014.
As of September 30, 2015 and December 31, 2014, Nextel Brazil had accrued liabilities of $59.0 million and $69.7 million, respectively, related to contingencies, of which $5.3 million and $8.0 million related to unasserted claims, respectively. We currently estimate the reasonably possible losses related to matters for which Nextel Brazil has not accrued liabilities, as they are not deemed probable, to be approximately $285.0 million as of September 30, 2015. We evaluate the likelihood of probable and reasonably possible losses, if any, related to all known contingencies on an ongoing basis. As a result, future increases or decreases to our accrued liabilities may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.
Legal Proceedings.
We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.

Note 9.
Income Taxes

The realization of deferred tax assets is dependent on the generation of future taxable income sufficient to realize our tax loss carryforwards and other tax deductions. Valuation allowances are required to be recognized on deferred tax assets unless it is determined that it is “more-likely-than-not” that the asset will be realized. In 2014, we recorded full valuation allowances on the deferred tax assets of our foreign operating companies, our U.S. parent company and subsidiaries and our foreign holding companies due to substantial negative evidence such as the recent history of cumulative losses and the projected losses for 2015 and subsequent years. We maintained this same valuation allowance position through the first nine months of 2015.

Our emergence from Chapter 11 is not expected to have a significant impact on our net operating loss carryforwards for U.S. Federal and state income tax purposes. However, the utilization of certain of our U.S. net operating loss carryforwards will be limited. The amount of any such limitation cannot be determined until December 31, 2015.


Note 10.
Segment Reporting
We have determined our reportable segments based on our method of internal reporting, which disaggregates our business by geographic location. We evaluate performance of these segments and provide resources to them based on operating income before depreciation, amortization and impairment and restructuring charges, which we refer to as segment earnings. Nextel Brazil is our only reportable operating segment.


24



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Brazil
 
Corporate and Eliminations
 
Consolidated
 
(in thousands)
Three Months Ended September 30, 2015 — Successor Company
 

 
 

 
 

Operating revenues
$
284,606

 
$
46

 
$
284,652

Segment losses
$
(10,808
)
 
$
(13,830
)
 
$
(24,638
)
Less:
 

 
 

 
 

Impairment and restructuring charges
 
 
 
 
(4,715
)
Depreciation and amortization
 

 
 

 
(48,299
)
Foreign currency transaction losses, net
 

 
 

 
(106,617
)
Interest expense and other, net
 

 
 

 
(19,354
)
Loss from continuing operations before reorganization items and income tax
  provision
 

 
 

 
$
(203,623
)
Capital expenditures
$
48,115

 
$
275

 
$
48,390

 
 
 
 
 
 
Three Months Ended September 30, 2014 — Predecessor Company
 

 
 

 
 

Operating revenues
$
476,382

 
$
(118
)
 
$
476,264

Segment earnings (losses)
$
919

 
$
(31,200
)
 
$
(30,281
)
Less:
 

 
 

 
 

Impairment and restructuring charges
 
 
 
 
(81,586
)
Depreciation and amortization
 

 
 

 
(100,729
)
Foreign currency transaction losses, net
 

 
 

 
(44,994
)
Interest expense and other, net
 

 
 

 
(99,064
)
Loss from continuing operations before reorganization items and income tax
  provision
 

 
 

 
$
(356,654
)
Capital expenditures
$
20,673

 
$
3,569

 
$
24,242

 
 
 
 
 
 
Six Months Ended June 30, 2015 — Predecessor Company
 
 
 
 
 
Operating revenues
$
683,611

 
$
100

 
$
683,711

Segment losses
$
(75,234
)
 
$
(37,982
)
 
$
(113,216
)
Less:
 
 
 
 
 

Impairment and restructuring charges
 
 
 
 
(36,792
)
Depreciation and amortization
 
 
 
 
(153,878
)
Foreign currency transaction losses, net
 
 
 
 
(63,948
)
Interest expense and other, net
 
 
 
 
(67,630
)
Loss from continuing operations before reorganization items and income tax
  provision
 
 
 
 
$
(435,464
)
Capital expenditures
$
68,385

 
$
818

 
$
69,203

 
 
 
 
 
 
Nine Months Ended September 30, 2014 — Predecessor Company
 
 
 
 
 
Operating revenues
$
1,416,979

 
$
(30
)
 
$
1,416,949

Segment losses
$
(84,377
)
 
$
(110,128
)
 
$
(194,505
)
Less:
 
 
 
 
 

Impairment and restructuring charges
 
 
 
 
(99,021
)
Depreciation and amortization
 
 
 
 
(303,356
)
Foreign currency transaction losses, net
 
 
 
 
(16,934
)
Interest expense and other, net
 
 
 
 
(316,839
)
Loss from continuing operations before reorganization items and income tax
  provision
 
 
 
 
$
(930,655
)
Capital expenditures
$
138,039

 
$
12,414

 
$
150,453

 
 
 
 
 
 
September 30, 2015 — Successor Company
 

 
 

 
 

Identifiable assets
$
2,040,993

 
$
801,797

 
$
2,842,790

December 31, 2014 — Predecessor Company
 

 
 

 
 

Identifiable assets
$
2,991,959

 
$
2,438,632

(1)
$
5,430,591


(1) As of December 31, 2014, identifiable assets in the "Corporate and Eliminations" column include $2,012.8 million of total assets related to discontinued operations as a result of the sale of Nextel Argentina and Nextel Mexico. See Note 4 for more information.

25



NII HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 11.
Subsequent Event

We are taking steps to further streamline the expenses incurred at our corporate headquarters by shifting costs and associated responsibilities to Nextel Brazil. In connection with this effort, we will implement workforce reductions at our corporate headquarters and expect to incur up to $9.0 million in severance and other related expenses in the fourth quarter of 2015.

Nextel Brazil is also taking actions to reduce costs and align its cost structure and expects to incur approximately $9.0 million in severance and other related expenses in the fourth quarter of 2015 related to these efforts.



26

                                    

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations



27

                                    

Introduction
The following is a discussion and analysis of:
•
our consolidated financial condition as of September 30, 2015 and December 31, 2014 and our consolidated results of operations for the three-month periods ended September 30, 2015 and 2014, for the six-month period ended June 30, 2015 and for the nine-month period ended September 30, 2014; and
•
significant factors which we believe could affect our prospective financial condition and results of operations.
You should read this discussion in conjunction with our 2014 annual report on Form 10-K, including, but not limited to, the discussion regarding our critical accounting policies and estimates, as described below. Historical results may not indicate future performance. See "Forward-Looking and Cautionary Statements," "Item 1A. — Risk Factors" in our 2014 annual report on Form 10-K and "Item 1A. — Risk Factors" in Part II of our quarterly report on Form 10-Q for the three months ended June 30, 2015 for risks and uncertainties that may impact our future performance. We refer to our remaining operating company as Nextel Brazil.

Business Update
Sale of Nextel Mexico. On April 30, 2015, we completed the sale of our operations in Mexico to New Cingular Wireless, an indirect subsidiary of AT&T. The transaction was structured as a sale of all the outstanding stock of Nextel Mexico for a purchase price of approximately $1.875 billion, including $187.5 million deposited in escrow to satisfy potential indemnification claims. The net proceeds of the sale were $1.448 billion, after deducting Nextel Mexico's outstanding indebtedness net of cash and applying other specified purchase price adjustments. We used a portion of the net proceeds to repay all outstanding principal and interest under a debtor-in-possession loan agreement we entered into prior to our emergence from Chapter 11 and to fund distributions to specified creditors pursuant to the Plan of Reorganization. We plan to use the remaining net proceeds from this transaction to support our operations in Brazil. In connection with this sale, we have presented the results of Nextel Mexico for all periods as discontinued operations in this quarterly report on Form 10-Q.
Emergence from Chapter 11 Proceedings. On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, including NII Capital Corp. and NII International Telecom, S.C.A., or NIIT, filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, which we refer to as Chapter 11, in the United States Bankruptcy Court for the Southern District of New York, which we refer to as the Bankruptcy Court. In addition, subsequent to September 15, 2014, five additional subsidiaries of NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court. We refer to the companies that filed voluntary petitions seeking relief under Chapter 11 collectively as the Debtors. Our operating subsidiaries in Brazil, Mexico and Argentina were not debtors in these Chapter 11 cases.

As described in more detail in Note 2 to our condensed consolidated financial statements, on June 19, 2015, the Bankruptcy Court entered an order approving and confirming the Plan of Reorganization. On June 26, 2015, the conditions of the Bankruptcy Court's order and the Plan of Reorganization were satisfied, the Plan of Reorganization became effective, and we and the other Debtors emerged from the Chapter 11 proceedings.
In accordance with the requirements of reorganization accounting, NII Holdings adopted the provisions of fresh start accounting as of June 30, 2015 and became a new entity for financial reporting purposes. References to the "Successor Company" relate to NII Holdings on or subsequent to June 30, 2015. References to the "Predecessor Company" relate to NII Holdings prior to June 30, 2015.
Sale of Nextel Argentina. On September 11, 2015, two of our indirect subsidiaries entered into a binding agreement with Grupo Clarin relating to the sale of all of the outstanding equity interests of Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0 million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allows Grupo Clarin or any of its affiliates to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatory authorities in Argentina. The remaining cash consideration was received in October 2015. We plan to use the net proceeds received from this transaction to provide additional liquidity to support our operations in Brazil. In connection with this transaction, we have presented Nextel Argentina's results for all periods as discontinued operations in this quarterly report on Form 10-Q.
Changes at Corporate Headquarters. Because of the sales of our operations in Argentina, Mexico, Chile and Peru, we now only operate in Brazil. As a result, we are taking steps to further streamline the expenses incurred at our corporate headquarters by shifting costs and associated responsibilities to Nextel Brazil. We will implement workforce reductions at our corporate headquarters in connection with this effort.

28

                                    

Business Overview

We provide wireless communication services under the NextelTM brand in Brazil with our principal operations located in major business centers and related transportation corridors. We provide services in major urban and suburban centers with high population densities where we believe there is a concentration of Brazil’s business users and economic activity. Historically, our services were targeted to meet the needs of business customers and individuals who used our services to meet both professional and personal needs. With the deployment of our wideband code division multiple access, or WCDMA, network in Brazil, our target market also includes consumers. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. In Brazil, we believe our target market is attracted to the services and pricing plans we offer, as well as the quality of and data speeds provided by our WCDMA network. Our WCDMA network in Brazil enables us to offer a wide range of products and services supported by that technology, including data services provided at substantially higher speeds than can be delivered on our integrated digital enhanced, or iDEN network. We are currently offering services supported by our WCDMA network in approximately 260 cities in Brazil, including cities in and around Sao Paulo and Rio de Janeiro. We also offer long-term evolution, or LTE, services in Rio de Janeiro in Brazil and continue to provide services on our iDEN network in Brazil.

The services we currently offer include:
•
mobile telephone voice service;
•
wireless data services, including text messaging services, mobile internet services and email services;
•
push-to-talk services, including Direct Connect®, Prip and International Direct Connect® services, which allow subscribers to talk to each other instantly;
•
other value-added services, including location-based services, which include the use of Global Positioning System, or GPS, technologies; digital media services; and a wide range of applications available via our content management system, as well as the AndroidTM open application market;
•
business solutions, such as security, work force management, logistics support and other applications that help our business subscribers improve their productivity; and
•
voice and data roaming services outside of our coverage areas.
Our goal is to generate higher revenues and increase our subscriber base by providing differentiated wireless communications services that are valued by our existing and potential customers while improving our profitability and cash flow over the long term. Our strategy for achieving this goal is based on several core principles, including:
•
focusing on higher value customer segments in our core markets, such as segments that comprise the small, medium and large business markets, as well as certain consumer market segments that value our differentiated wireless communications services;
•
expanding our service offerings to meet the needs of a broader range of potential customers;
•
offering a superior customer experience; and
•
building on the strength of the unique positioning of the Nextel brand.
The costs of deploying and operating our WCDMA network and LTE upgrade in Brazil, combined with the cost of continuing to operate our iDEN network in Brazil, have negatively impacted our profitability and are expected to continue to have that impact as we expand our subscriber base on our WCDMA network and transition iDEN subscribers to that network in Brazil, but we believe that these costs are necessary to ensure the competitiveness of our service offerings.
We have implemented and will continue to implement changes in our business to better align our organization and costs with our operational and financial results and goals, as well as with the trends in our business. These changes have included changes to our leadership team in Brazil, as well as significant reductions in our headquarters staff through the reorganization of the roles and responsibilities of our headquarters and market teams and headcount reductions at the market level that are designed to reduce costs while maintaining the support necessary to meet our customers' needs.
As a result of the sale of Nextel Argentina in August 2015 and Nextel Mexico in April 2015, both of which followed the sale of Nextel Chile in August 2014 and Nextel Peru in August 2013, we plan to allocate almost all of our financial and other resources to our operations in Brazil going forward.


29

                                    


Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Although we believe that our estimates, assumptions and judgments are reasonable, they are based on presently available information. Due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
As described in more detail in our 2014 annual report on Form 10-K under “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we consider the following accounting policies to be the most important to our financial position and results of operations or policies that require us to exercise significant judgment and/or estimates:
•
revenue recognition;
•
allowance for doubtful accounts;
•
depreciation of property, plant and equipment;
•
amortization of intangible assets;
•
valuation of long-lived assets;
•
asset retirement obligations;
•
foreign currency;
•
loss contingencies; and
•
income taxes.
There have been no material changes to our critical accounting policies and estimates during the three months ended September 30, 2015 compared to those discussed under “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2014 annual report on Form 10-K.

Results of Operations

For purposes of comparison to the nine months ended September 30, 2014, the results of operations for the three months ended September 30, 2015 have been combined with the results of operations for the six months ended June 30, 2015. However, as a result of the application of fresh start accounting and other events related to our reorganization under Chapter 11, the Successor Company's financial results for the three months ended September 30, 2015 are prepared under a new basis of accounting and are not directly comparable to the Predecessor Company's financial results for the six months ended June 30, 2015. For the same reasons, our results of operations for the three- and combined nine-month periods ended September 30, 2015 are not fully comparable to our results of operations for the three and nine months ended September 30, 2014.
In accordance with accounting principles generally accepted in the U.S., we translated Nextel Brazil's results of operations into U.S. dollars using the average foreign currency exchange rates for the applicable period. The following tables present the average foreign currency exchange rates we used to translate Nextel Brazil's results of operations, as well as changes from the average foreign currency exchange rates utilized in prior periods.
 
Successor Company
 
 
Predecessor Company
 
Actual Percent Change From Prior Year
 
Three Months Ended September 30,
 
 
2015
 
 
2014
 
Brazilian real
3.55

 
 
2.28

 
(56
)%

 
Successor Company
 
 
Predecessor Company
 
Combined
 
Predecessor Company
 
Actual Percent Change From Prior Year
 
Three Months Ended September 30,
 
 
Six Months Ended June 30,
 
Nine Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
 
2015
 
2015
 
2014
 
Brazilian real
3.55

 
 
2.97

 
3.16

 
2.29

 
(38
)%

30

                                    


Throughout 2014 and continuing through the first three quarters of 2015, the value of the Brazilian real fluctuated but generally depreciated in value relative to the U.S. dollar. The following table presents the foreign currency exchange rate in effect in Brazil at the end of each of the quarters in 2014, as well as at the end of the first three quarters of 2015. If the value of the Brazilian real continues to depreciate from current levels relative to the U.S. dollar, our future operating results and the values of our assets held in Brazilian reais will continue to be adversely affected.
 
Predecessor Company
 
 
Successor Company
 
2014
 
2015
 
March
 
June
 
September
 
December
 
March
 
June
 
 
September
Brazilian real
2.26

 
2.20

 
2.45

 
2.66

 
3.21

 
3.10

 
 
3.97


To provide better insight into Nextel Brazil's results, as well as our results of operations on a consolidated basis, we present the year-over-year percentage change in each of the line items presented on a constant currency basis in the "Constant Currency Change from Previous Year" columns in the tables below. The comparison of results on a constant currency basis shows the impact of changes in foreign currency exchange rates (i) by adjusting the relevant measures for the three and nine months ended September 30, 2014 to amounts that would have resulted if the average foreign currency exchange rates for the three and nine months ended September 30, 2014 were the same as the average foreign currency exchange rates that were in effect for the three- and combined nine-month periods ended September 30, 2015; and (ii) by comparing the constant currency financial measures for the three and nine months ended September 30, 2014 to the actual financial measures for the three- and combined nine-month periods ended September 30, 2015. The constant currency information reflected in the tables below is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our results of operations.


a.    Consolidated
 
Successor Company
 
 
Predecessor Company
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
Three Months Ended
September 30, 2014
 
Actual Change from
Previous Year
 
Constant Currency Change from Previous Year
 
 
 
 
Dollars
 
Percent
 
Percent
 
(dollars in thousands)
 
 
Brazil segment (losses) earnings
(10,808
)
 
 
919

 
(11,727
)
 
NM

 
(65
)%
Corporate and eliminations segment losses
(13,830
)
 
 
(31,200
)
 
17,370

 
(56
)%
 
(56
)%
Consolidated segment losses
(24,638
)
 
 
(30,281
)
 
5,643

 
(19
)%
 
(20
)%
Impairment and restructuring charges
(4,715
)
 
 
(81,586
)
 
76,871

 
(94
)%
 
(93
)%
Depreciation and amortization
(48,299
)
 
 
(100,729
)
 
52,430

 
(52
)%
 
(26
)%
Operating loss
(77,652
)
 
 
(212,596
)
 
134,944

 
(63
)%
 
(52
)%
Interest expense, net
(28,878
)
 
 
(107,926
)
 
79,048

 
(73
)%
 
(70
)%
Interest income
8,597

 
 
7,176

 
1,421

 
20
 %
 
85
 %
Foreign currency transaction losses, net
(106,617
)
 
 
(44,994
)
 
(61,623
)
 
137
 %
 
269
 %
Other income, net
927

 
 
1,686

 
(759
)
 
(45
)%
 
(30
)%
Loss from continuing operations before reorganization items and income tax provision
(203,623
)
 
 
(356,654
)
 
153,031

 
(43
)%
 
(28
)%
Reorganization items
2,144

 
 
(58,579
)
 
60,723

 
(104
)%
 
(104
)%
Income tax provision
(470
)
 
 
(956
)
 
486

 
(51
)%
 
(50
)%
Net loss from continuing operations
(201,949
)
 
 
(416,189
)
 
214,240

 
(51
)%
 
(41
)%
Income (loss) from discontinued operations, net of income taxes
12,528

 
 
(27,258
)
 
39,786

 
(146
)%
 
(145
)%
Net loss
$
(189,421
)
 
 
$
(443,447
)
 
$
254,026

 
(57
)%
 
(49
)%
_______________________________________
NM — Not Meaningful

31

                                    

 
Successor Company
 
 
Predecessor Company
 
Combined
 
Predecessor Company
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
Six Months Ended June 30, 2015
 
 Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
 
Actual Change from
Previous Year
 
Constant Currency Change from Previous Year
 
 
 
 
 
 
Dollars
 
Percent
 
Percent
 
 
 
 
 
 
(dollars in thousands)
 
 
Brazil segment losses
(10,808
)
 
 
(75,234
)
 
(86,042
)
 
(84,377
)
 
(1,665
)
 
2
 %
 
(41
)%
Corporate and eliminations segment losses
(13,830
)
 
 
(37,982
)
 
(51,812
)
 
(110,128
)
 
58,316

 
(53
)%
 
(53
)%
Consolidated segment losses
(24,638
)
 
 
(113,216
)
 
(137,854
)
 
(194,505
)
 
56,651

 
(29
)%
 
(6
)%
Impairment and restructuring charges
(4,715
)
 
 
(36,792
)
 
(41,507
)
 
(99,021
)
 
57,514

 
(58
)%
 
(53
)%
Depreciation and amortization
(48,299
)
 
 
(153,878
)
 
(202,177
)
 
(303,356
)
 
101,179

 
(33
)%
 
(9
)%
Operating loss
(77,652
)
 
 
(303,886
)
 
(381,538
)
 
(596,882
)
 
215,344

 
(36
)%
 
(20
)%
Interest expense, net
(28,878
)
 
 
(82,820
)
 
(111,698
)
 
(338,405
)
 
226,707

 
(67
)%
 
(65
)%
Interest income
8,597

 
 
15,327

 
23,924

 
22,535

 
1,389

 
6
 %
 
44
 %
Foreign currency transaction losses, net
(106,617
)
 
 
(63,948
)
 
(170,565
)
 
(16,934
)
 
(153,631
)
 
NM

 
NM

Other income (expense), net
927

 
 
(137
)
 
790

 
(969
)
 
1,759

 
(182
)%
 
NM

Loss from continuing operations before reorganization items and income tax provision
(203,623
)
 
 
(435,464
)
 
(639,087
)
 
(930,655
)
 
291,568

 
(31
)%
 
(19
)%
Reorganization items
2,144

 
 
1,956,874

 
1,959,018

 
(58,579
)
 
2,017,597

 
NM

 
NM

Income tax provision
(470
)
 
 
(2,009
)
 
(2,479
)
 
(3,546
)
 
1,067

 
(30
)%
 
(29
)%
Net (loss) income from continuing operations
(201,949
)
 
 
1,519,401

 
1,317,452

 
(992,780
)
 
2,310,232

 
(233
)%
 
(255
)%
Income from discontinued operations, net of income taxes
12,528

 
 
221,114

 
233,642

 
(450,057
)
 
683,699

 
(152
)%
 
(156
)%
Net (loss) income
$
(189,421
)
 
 
$
1,740,515

 
$
1,551,094

 
$
(1,442,837
)
 
$
2,993,931

 
(208
)%
 
(222
)%
_______________________________________
NM — Not Meaningful

We define segment (losses) earnings as operating (loss) income before depreciation, amortization and impairment and restructuring charges. Consolidated segment losses decreased $5.6 million, or 19%, and $56.7 million, or 29%, for the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 and include the results of operations of our Brazil segment and our corporate operations, which are discussed individually below.

1.
Impairment and restructuring charges

Consolidated impairment and restructuring charges recognized in the three- and combined nine-month periods ended September 30, 2015 primarily consisted of non-cash asset impairment charges related to the shutdown or abandonment of transmitter and receiver sites in Brazil and severance costs incurred at the corporate level resulting from the separation of employees in an effort to streamline our organizational structure and reduce general and administrative expenses.

Consolidated impairment and restructuring charges recognized in the three and nine months ended September 30, 2014 included a $42.8 million asset impairment charge related to our decision to cease further development on one of the strategic options for the next generation of our push-to-talk services, a $17.6 million restructuring charge related to the cessation of utilization of certain network services in Brazil, and severance and related costs incurred in Brazil and at the corporate level resulting from the separation of employees in an effort to streamline our organization structure and reduce general and administrative expenses.

2.
Depreciation and amortization

The $52.4 million, or 52%, and $101.2 million, or 33%, decreases in consolidated depreciation and amortization on a reported basis, and the 26% and 9% decreases on a constant currency basis, for the three- and combined nine- month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 were principally the result of a decrease in the value

32

                                    

of Nextel Brazil's property, plant and equipment resulting from the implementation of fresh start accounting. See Note 2 to our condensed consolidated financial statements for more information.

3.
Interest expense, net

Consolidated net interest expense decreased $79.0 million, or 73%, and $226.7 million, or 67%, on a reported basis, and 70% and 65% on a constant currency basis, from the three and nine months ended September 30, 2014 to the three- and combined nine-month periods ended September 30, 2015 primarily as a result of the suspension of interest on all series of our senior notes in connection with our Chapter 11 filing and subsequent cancellation of these notes in connection with our emergence from Chapter 11. See Note 2 to our condensed consolidated financial statements for more information.

4.
Foreign currency transaction losses, net

Foreign currency transaction losses of $106.6 million and $170.6 million during the three- and combined nine-month periods ended September 30, 2015 were the result of the impact of the depreciation in the value of the Brazilian real relative to the U.S. dollar on Nextel Brazil's U.S. dollar-denominated net liabilities.

5.
Reorganization items

Reorganization items include all income, expenses, gains or losses that are incurred or realized as a result of the implementation of the Plan of Reorganization in connection with the Chapter 11 proceedings, including the $1,775.8 million gain we recognized in connection with the settlement of our liabilities subject to compromise upon our emergence from Chapter 11 and a $248.7 million gain as a result of the implementation of fresh start accounting. See Note 2 to our condensed consolidated financial statements for more information.




33

                                    

b.    Nextel Brazil
 
Successor Company
 
 
Predecessor Company
 
 
 
 
 
 
 

Three Months Ended September 30, 2015
 
% of
Nextel Brazil’s
Operating Revenues
 
 
Three Months Ended September 30, 2014
 
% of
Nextel Brazil’s
Operating Revenues
 
Actual Change from
Previous Year
 
Constant Currency Change from Previous Year
 
 
 
 
 
 
Dollars
 
Percent
 
Percent
 
(dollars in thousands)
 
 
Service and other revenues
$
266,441

 
94
 %
 
 
$
435,813

 
91
 %
 
$
(169,372
)
 
(39
)%
 
(5
)%
Handset and accessory revenues
18,165

 
6
 %
 
 
40,569

 
9
 %
 
(22,404
)
 
(55
)%
 
(30
)%
Cost of handsets and accessories
(28,307
)
 
(10
)%
 
 
(87,316
)
 
(19
)%
 
59,009

 
(68
)%
 
(68
)%
Handset and accessory net subsidy
(10,142
)
 
(4
)%
 
 
(46,747
)
 
(10
)%
 
36,605

 
(78
)%
 
(83
)%
Cost of service (exclusive of
  depreciation and amortization)
(112,193
)
 
(39
)%
 
 
(172,345
)
 
(36
)%
 
60,152

 
(35
)%
 
1
 %
Selling and marketing expenses
(44,209
)
 
(16
)%
 
 
(61,427
)
 
(13
)%
 
17,218

 
(28
)%
 
12
 %
General and administrative expenses
(110,705
)
 
(39
)%
 
 
(154,375
)
 
(32
)%
 
43,670

 
(28
)%
 
12
 %
Segment (losses) earnings
$
(10,808
)
 
(4
)%
 
 
$
919

 
—

 
$
(11,727
)
 
NM

 
(65
)%


 
Successor Company
 
 
Predecessor Company
 
Combined
 
Predecessor Company
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 

Six Months Ended June 30, 2015
 
Nine Months Ended September 30, 2015
 
% of
Nextel Brazil’s
Operating Revenues
 

Nine Months Ended September 30, 2014
 
% of
Nextel Brazil’s
Operating Revenues
 
Actual Change from
Previous Year
 
Constant Currency Change from Previous Year
 
 
 
 
 
 
 
 
Dollars
 
Percent
 
Percent
 
 
 
 
 
 
(dollars in thousands)
 
 
Service and other revenues
$
266,441

 
 
$
643,804

 
$
910,245

 
94
 %
 
$
1,290,531

 
91
 %
 
$
(380,286
)
 
(29
)%
 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Handset and accessory
  revenues
18,165

 
 
39,807

 
57,972

 
6
 %
 
126,448

 
9
 %
 
(68,476
)
 
(54
)%
 
(37
)%
Cost of handsets and
  accessories
(28,307
)
 
 
(121,143
)
 
(149,450
)
 
(15
)%
 
(311,398
)
 
(22
)%
 
161,948

 
(52
)%
 
(52
)%
Handset and accessory net subsidy
(10,142
)
 
 
(81,336
)
 
(91,478
)
 
(9
)%
 
(184,950
)
 
(13
)%
 
93,472

 
(51
)%
 
(58
)%
Cost of service (exclusive
  of depreciation and
  amortization)
(112,193
)
 
 
(256,153
)
 
(368,346
)
 
(38
)%
 
(532,852
)
 
(38
)%
 
164,506

 
(31
)%
 
(5
)%
Selling and marketing
  expenses
(44,209
)
 
 
(105,357
)
 
(149,566
)
 
(16
)%
 
(205,210
)
 
(14
)%
 
55,644

 
(27
)%
 
1
 %
General and administrative
  expenses
(110,705
)
 
 
(276,192
)
 
(386,897
)
 
(40
)%
 
(451,896
)
 
(32
)%
 
64,999

 
(14
)%
 
18
 %
Segment losses
$
(10,808
)
 
 
$
(75,234
)
 
$
(86,042
)
 
(9
)%
 
$
(84,377
)
 
(6
)%
 
$
(1,665
)
 
2
 %
 
(41
)%

We use the term "subscriber unit," which we also refer to as a subscriber, to represent an active subscriber identity module, or SIM, card, which is the level at which we track subscribers. The table below provides an overview of Nextel Brazil's subscriber units in commercial service on both its iDEN and WCDMA networks, as well as Nextel Brazil's customer turnover rates for each of the quarters in 2014 and for the first three quarters of 2015. We calculate customer turnover by dividing subscriber deactivations for the period by the average number of subscriber units during that period.

34

                                    

 
Three Months Ended
 
March 31, 2014
 
June 30, 2014
 
September 30, 2014
 
December 31, 2014
 
March 31, 2015
 
June 30, 2015
 
September 30, 2015
 
(subscribers in thousands)
iDEN subscriber units
3,620.3

 
3,455.6

 
3,137.7

 
2,942.5

 
2,669.2

 
2,420.7

 
2,177.4

WCDMA subscriber units
337.9

 
673.8

 
1,050.6

 
1,333.8

 
1,672.3

 
1,971.9

 
2,258.0

Total subscriber units in commercial service — beginning of period
3,958.2

 
4,129.4

 
4,188.3

 
4,276.3

 
4,341.5

 
4,392.6

 
4,435.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
iDEN net subscriber losses
(88.3
)
 
(175.1
)
 
(97.3
)
 
(176.3
)
 
(190.2
)
 
(184.0
)
 
(203.5
)
WCDMA net subscriber additions
259.5

 
234.0

 
185.3

 
241.5

 
241.3

 
226.8

 
230.8

Total net subscriber additions
171.2

 
58.9

 
88.0

 
65.2

 
51.1

 
42.8

 
27.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Migrations from iDEN to WCDMA
76.4

 
142.8

 
97.9

 
97.0

 
58.3

 
59.3

 
116.2 (1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
iDEN subscriber units
3,455.6

 
3,137.7

 
2,942.5

 
2,669.2

 
2,420.7

 
2,177.4

 
1,857.8

WCDMA subscriber units
673.8

 
1,050.6

 
1,333.8

 
1,672.3

 
1,971.9

 
2,258.0

 
2,605.0

Total subscriber units in commercial service — end of period
4,129.4

 
4,188.3

 
4,276.3

 
4,341.5

 
4,392.6

 
4,435.4

 
4,462.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total customer turnover
2.39
%
 
2.81
%
 
2.28
%
 
2.71
%
 
3.10
%
 
3.28
%
 
3.47
%
   iDEN customer turnover
2.53
%
 
3.05
%
 
2.32
%
 
3.00
%
 
3.19
%
 
3.46
%
 
3.83
%
   WCDMA customer turnover
1.44
%
 
1.86
%
 
2.16
%
 
2.21
%
 
2.97
%
 
3.09
%
 
3.16
%
(1) For the three months ended September 30, 2015, migrations from iDEN to WCDMA included approximately 31,000 migrations which were not properly reported in prior quarters. This change in migrations did not impact total subscriber units at the end of any period presented.

The following table represents Nextel Brazil's average monthly revenue per subscriber, or ARPU, for subscribers on both its iDEN and WCDMA networks for each of the quarters in 2014, as well as for the first three quarters of 2015, in both U.S. dollars (US$) and in Brazilian reais (BR). We calculate ARPU by dividing service revenues per period by the weighted average number of subscriber units in commercial service during that period.
 
Three Months Ended (1)
 
March 31, 2014
 
June 30,
2014
 
September 30, 2014
 
December 31, 2014
 
March 31, 2015
 
June 30,
2015
 
September 30, 2015
Total ARPU (US$)
31

 
30

 
30

 
27

 
23

 
20

 
18

  WCDMA ARPU (US$)
20

 
27

 
30

 
29

 
25

 
21

 
19

  iDEN ARPU (US$)
33

 
31

 
30

 
26

 
22

 
19

 
17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total ARPU (BR)
73

 
67

 
69

 
68

 
66

 
62

 
62

  WCDMA ARPU (BR)
47

 
59

 
69

 
74

 
70

 
66

 
66

  iDEN ARPU (BR)
77

 
69

 
69

 
66

 
62

 
58

 
58

(1) The breakout of WCDMA and iDEN ARPU for the periods presented above changed from what we previously reported. Total ARPU amounts did not change from those previously reported.
The average value of the Brazilian real depreciated by 56% and 38% relative to the U.S. dollar during the three- and combined nine-month periods ended September 30, 2015 compared to the average value that prevailed during the three and nine months ended September 30, 2014. As a result, the components of Nextel Brazil's results of operations for the three- and combined nine-month periods ended September 30, 2015, after translation into U.S. dollars, reflect significantly lower revenues and expenses in U.S. dollars than would have occurred if the Brazilian real had not depreciated relative to the U.S. dollar. If the value of the Brazilian real remains at current levels or continues to further depreciate relative to the U.S. dollar, Nextel Brazil's future reported results of operations for 2015 will be adversely affected relative to its reported results of operations for 2014.

35

                                    

The economic environment in Brazil continues to reflect a significant downturn from prior years with low consumer confidence, negative real wage growth, a net loss of jobs and higher unemployment. Consumers in Brazil are also being impacted by rising costs of food and other essentials, with the inflation of food costs significantly exceeding both inflation levels experienced in 2014 and the consumer price index. These conditions and trends have resulted in a decline in the amount of consumer disposable income that is available to purchase telecommunications services and have had an adverse impact on our ability to attract and retain subscribers and on our collection rates. We expect that the current economic and competitive conditions and weak foreign currency exchange rates will continue to have a negative impact on Nextel Brazil's reported results of operations for at least the remainder of 2015.
Nextel Brazil began offering a full range of voice and data services on its WCDMA network in late 2013, and since that time, has experienced substantial subscriber growth on its WCDMA network and a steady increase in its WCDMA ARPU in Brazilian reais through the end of 2014. Nextel Brazil's WCDMA subscriber units increased from 337.9 thousand subscribers as of January 1, 2014 to 2.6 million subscribers as of September 30, 2015. However, Nextel Brazil's WCDMA ARPU in Brazilian reais has decreased over the course of the last three quarters as a result of more intense competition in the wireless market and the economic factors discussed above. In the second and third quarters of 2015, Nextel Brazil implemented several new rate plans and promotions to improve the attractiveness of its service offerings, expand targeted customer segments and provide economic incentives to attract customers. Specifically, in June 2015, Nextel Brazil began offering new simplified rate plans that further encourage subscribers to utilize their existing handsets when purchasing Nextel Brazil's services, which generally result in similar or better ARPUs. In addition, in the third quarter of 2015, Nextel Brazil began offering other less expensive control service plans with lower available voice and data and no handset subsidy, which generally yield lower ARPUs but result in higher profitability. The mix of sales of these new service plans resulted in the stabilization of average ARPU during the third quarter of 2015, as well as shorter economic paybacks and higher overall profitability.
Nextel Brazil continues to offer services on its iDEN network, which does not support data services that are competitive with the higher speed data services offered by its competitors or available on its WCDMA network. As a result, Nextel Brazil has had to offer iDEN service plans with lower average revenues per subscriber to retain and attract high value subscribers on its iDEN network and offer incentives to transition those subscribers to services on its WCDMA network. Despite these efforts, Nextel Brazil has experienced net subscriber losses on, and, until the third quarter of 2015, declines in its average revenue per subscriber on its iDEN network, and we expect that these trends will continue.
During the first nine months of 2015, Nextel Brazil continued to invest in the development of its WCDMA network and in its LTE upgrade in Rio de Janeiro both to meet its regulatory obligations and to improve the capacity of its network. Nextel Brazil's capital expenditures were $116.5 million for the combined nine-month period ended September 30, 2015, which declined 16% from the nine months ended September 30, 2014.
Despite implementing cost reductions in overall operating expenses, Nextel Brazil had a segment loss margin of 9% during the combined nine-month period ended September 30, 2015 compared to a segment loss margin of 6% during the nine months ended September 30, 2014 as the cost reductions did not keep pace with the decline in service and other revenues in those periods. Nextel Brazil recognized segment losses of $10.8 million and $86.0 million during the three- and combined nine-month periods ended September 30, 2015 compared to segment earnings of $0.9 million and segment losses of $84.4 million during the three and nine months ended September 30, 2014, respectively, as a result of the following:

1.
Service and other revenues

The $169.4 million, or 39%, and $380.3 million, or 29%, decreases in service and other revenues on a reported basis during the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 are primarily a result of the impact of weaker foreign currency exchange rates on our reported results. On a constant currency basis, Nextel Brazil's service and other revenues decreased 5% and 3% during the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 primarily due to decreases in average revenues per subscriber.

Nextel Brazil's WCDMA subscriber base grew from 1.3 million subscribers as of September 30, 2014 to 2.6 million subscribers as of September 30, 2015 which led to $32.7 million and $219.2 million increases in Nextel Brazil's WCDMA-based service and other revenues from the three and nine months ended September 30, 2014 to the three- and combined nine-month periods ended September 30, 2015. This growth in Nextel Brazil's WCDMA subscriber base was partially offset by a decrease in its iDEN subscriber base from 2.9 million subscribers as of the end of the third quarter of 2014 to 1.9 million subscribers as of the end of the third quarter of 2015. In addition, Nextel Brazil experienced a decline in its iDEN-based average revenue per subscriber from $30 in the third quarter of 2014 to $17 in the third quarter of 2015. These changes resulted in $202.1 million and $625.7 million decreases in Nextel Brazil's iDEN-based service and other revenues from the three and nine months ended September 30, 2014 to the three- and combined nine-month periods ended September 30, 2015. 

36

                                    

2.
Handset and accessory net subsidy

The $36.6 million, or 78%, and $93.5 million, or 51%, decreases in handset and accessory net subsidy on a reported basis from the three and nine months ended September 30, 2014 to the three- and combined nine-month periods ended September 30, 2015 are largely related to an increased emphasis on new service plans, particularly those under which services are provided to new subscribers using their existing handsets, as well as lower subsidies per handset. For the three months ended September 30, 2015, approximately 80% of Nextel Brazil's gross subscriber additions purchased services using their existing handsets compared to approximately 35% for the three months ended September 30, 2014. The decrease in handset and accessory net subsidy from new service plans for the combined nine-month period ended September 30, 2015 compared to the nine months ended September 30, 2014 was partially offset by a $25.3 million charge for a reserve that Nextel Brazil recognized in the second quarter of 2015 related to certain tax credits generated as a result of handset purchases that we do not believe are probable of being recovered. On a constant currency basis, Nextel Brazil's handset and accessory net subsidy decreased 83% and 58% for the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014.

3.
Cost of service

The $60.2 million, or 35%, and $164.5 million, or 31%, decreases in cost of service on a reported basis for the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 are primarily caused by the impact of weaker foreign currency exchange rates described above. On a constant currency basis, Nextel Brazil's cost of service increased 1% from the third quarter of 2014 to the third quarter in 2015 and decreased 5% from the nine months ended September 30, 2014 to the combined nine-month period ended September 30, 2015 primarily as the result of decreases in interconnect costs related to the changes in the regulated interconnect cost structure described below. These decreases were partially offset by increases in costs related to our nationwide roaming arrangement. In addition, on a constant currency basis, Nextel Brazil recognized significant cost savings in the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 as a result of insourcing certain engineering functions that were previously performed by third party service providers. Also, with the continuing decline in the number of iDEN subscribers in Nextel Brazil's subscriber base, Nextel Brazil's service and repair costs related to its iDEN handset maintenance program continue to decrease.

In 2012, Brazil's telecommunications regulatory agency approved regulations to implement a transition to a cost-based model for determining mobile termination rates. Under the current regulations, the mobile termination rates are being gradually reduced over a transition period ending in 2019, when cost-based rates will take effect. The transition rules also provide for a partial "bill and keep" settlement process that applies to the settlement of mobile termination charges between smaller operators like Nextel Brazil and its larger competitors (who are considered to hold significant market power under the Brazilian regulations), which further reduces mobile termination charges for smaller operators. The lower costs resulting from this partial bill and keep settlement process, which is similar to the settlement process that has historically applied to termination charges relating to our iDEN services, decline as mobile termination rates are reduced during the transition period, with the bill and keep settlement process terminating when cost-based rates are implemented.

4.
Selling and marketing expenses

The $17.2 million, or 28%, and $55.6 million, or 27%, decreases in selling and marketing expenses on a reported basis during the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 are largely due to the impact of weaker foreign currency exchange rates described above. On a constant currency basis, Nextel Brazil's selling and marketing expenses increased 12% and 1% in the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 as a result of more advertising campaigns related to Nextel Brazil's new service plan offerings.

5.
General and administrative expenses

The $43.7 million, or 28%, and $65.0 million, or 14%, decreases in general and administrative expenses on a reported basis for the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 are primarily due to the impact of weaker foreign currency exchange rates as described above. On a constant currency basis, Nextel Brazil's general and administrative expenses increased 12% and 18%, respectively, over the same periods as a result of increases in bad debt expense primarily caused by significant decreases in collections largely due to deteriorating economic conditions in Brazil, as well as higher costs related to civil contingencies initiated by customers. These increases were partially offset by decreases in customer care expenses on a local currency basis resulting from the outsourcing of Nextel Brazil's customer care function and a reduction in the volume of customer care calls received.


37

                                    

c.    Corporate

 
Successor Company
 
 
Predecessor Company
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
Three Months Ended September 30, 2014
 
Change from
Previous Year
 
 
 
 
Dollars
 
Percent
 
(dollars in thousands)
Service and other revenues
$
60

 
 
$
102

 
$
(42
)
 
(41
)%
Selling and marketing expenses
(96
)
 
 
(609
)
 
513

 
(84
)%
General and administrative expenses
(13,794
)
 
 
(32,077
)
 
18,283

 
(57
)%
Segment losses
$
(13,830
)
 
 
$
(32,584
)
 
$
18,754

 
(58
)%

 
Successor Company
 
 
Predecessor Company
 
Combined
 
Predecessor Company
 
 
 
 
 
Three Months Ended September 30, 2015
 
 

Six Months Ended June 30, 2015
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
 
Actual Change from
Previous Year
 
 
 
 
 
 
Dollars
 
Percent
 
 
 
 
 
 
 
Service and other revenues
$
60

 
 
$
168

 
$
228

 
$
253

 
$
(25
)
 
(10
)%
Selling and marketing expenses
(96
)
 
 
(107
)
 
(203
)
 
(5,247
)
 
5,044

 
(96
)%
General and administrative expenses
(13,794
)
 
 
(38,964
)
 
(52,758
)
 
(109,431
)
 
56,673

 
(52
)%
Segment losses
$
(13,830
)
 
 
$
(38,903
)
 
$
(52,733
)
 
$
(114,425
)
 
61,692

 
(54
)%
Segment losses decreased $18.8 million, or 58% and $61.7 million, or 54%, in the three- and combined nine-month periods ended September 30, 2015 compared to the three and nine months ended September 30, 2014 primarily due to reduced payroll costs resulting from fewer general and administrative personnel following a reduction in force that we implemented in 2014, lower consulting expenses, lower information technology costs and $22.6 million in professional fees incurred in the first nine months of 2014 in connection with our preparation for the Chapter 11 filing.

Liquidity and Capital Resources
Our current sources of funding include our cash, cash equivalent and short-term investment balances. As of September 30, 2015, we had a working capital deficit, which is defined as total current assets less total current liabilities, of $78.8 million compared to working capital of $4.0 million as of December 31, 2014. As of September 30, 2015, our working capital included $393.5 million in cash and cash equivalents, of which $1.3 million was held by Nextel Brazil in Brazilian reais. As of September 30, 2015, our working capital also included $54.6 million in short-term investments, the majority of which was held in Brazilian reais. In addition, as of September 30, 2015, we pledged $134.6 million as collateral to secure certain performance bonds relating to our obligations to deploy our WCDMA network in Brazil, of which we recorded $104.1 million as a component of other assets and the remaining $30.5 million of which we recorded as a component of prepaid expenses and other in our condensed consolidated balance sheet. As of September 30, 2015, we also had $220.9 million in cash held in escrow in connection with the sales of Nextel Mexico and Nextel Peru, all of which we recorded as a component of other assets in our condensed consolidated balance sheet.
A substantial portion of our cash and cash equivalents is held in money market funds and bank deposits, and our cash, cash equivalents and short-term investments held in Brazilian reais are typically maintained in a combination of money market funds, highly liquid overnight securities and fixed income investments. The values of our cash, cash equivalents and short-term investments that are held in Brazilian reais will fluctuate in U.S. dollars based on changes in the exchange rate of the Brazilian real relative to the U.S. dollar.

38

                                    

Cash Flows
 
Successor Company
 
 
Predecessor Company
 
Three Months Ended September 30, 2015
 
 
Six Months Ended June 30, 2015
 
Nine Months Ended September 30, 2014
 
 
 
 
 
 
 
Cash and cash equivalents, beginning of period
$
423,135

 
 
$
334,194

 
$
1,147,682

Net cash used in operating activities
(64,891
)
 
 
(254,757
)
 
(796,173
)
Net cash provided by (used in) investing activities
37,232

 
 
1,027,821

 
(170,686
)
Net cash used in financing activities
(25,202
)
 
 
(778,231
)
 
(84,499
)
Effect of exchange rate changes on cash and cash equivalents
560

 
 
(9,152
)
 
(40,923
)
Change in cash and cash equivalents related to discontinued operations
22,662

 
 
103,260

 
306,292

Cash and cash equivalents, end of period
$
393,496

 
 
$
423,135

 
$
361,693

The following is a discussion of the primary sources and uses of cash in our operating, investing and financing activities.

We used $64.9 million and $254.8 million of cash in our operating activities during the three months ended September 30, 2015 and the six months ended June 30, 2015, respectively, primarily to fund operating losses. We used $796.2 million in our operating activities during the nine months ended September 30, 2014, primarily related to operating losses, the prepayment of certain costs associated with our roaming arrangement in Brazil and higher interest expense related to our senior notes that were extinguished in connection with our emergence from Chapter 11.

Our investing activities provided us with $37.2 million of cash during the three months ended September 30, 2015, primarily due to the sale of Nextel Argentina for which we received net cash proceeds of $140.9 million (excluding $18.1 million of U.S. treasury bills received as part of the proceeds), partially offset by $60.1 million of capital expenditures. Our investing activities provided us with $1,027.8 million of cash during the six months ended June 30, 2015, primarily due to the sale of Nextel Mexico for which we received net proceeds of $1.448 billion, including $187.5 million in cash deposited in escrow. The net proceeds from the sale of Nextel Mexico were partially offset by $88.5 million of capital expenditures and $20.0 million in deposits to secure certain performance bonds relating to our obligations to deploy our WCDMA network in Brazil. We used $170.7 million of cash in our investing activities during the nine months ended September 30, 2014, primarily due to $271.2 million in cash capital expenditures and a $131.0 million deposit to secure certain performance bonds relating to our obligations to deploy our WCDMA network in Brazil, partially offset by $517.6 million in net proceeds received from maturities of our short-term investments in Brazil and at the corporate level.

We used $25.2 million of cash in our financing activities during the three months ended September 30, 2015, largely due to a principal repayment under Nextel Brazil's equipment financing facility. We used $778.2 million of cash in our financing activities during the six months ended June 30, 2015, largely due to $745.2 million of cash distributions paid in settlement of certain claims in connection with our emergence from Chapter 11. We used $84.5 million of cash in our financing activities during the first nine months of 2014, largely due to $89.1 million in repayments of capital leases, primarily in connection with the sale of our corporate jet, and other borrowings, partially offset by $14.6 million in borrowings under our equipment financing facilities and other borrowings.

Future Capital Needs and Resources

Over the course of the last several years, our results of operations, including our operating revenues and operating cash flows, have been negatively affected by a number of factors, including competitive pressure across all of our markets, the overall depreciation of the value of local currencies relative to the U.S. dollar, the impact of previous delays in the deployment and launch of services on our WCDMA network and more recently, significant deterioration in economic conditions in Brazil. These and other factors resulted in a reduction in our subscriber growth and revenues at a time when our costs reflected the operation of both of our networks and had a significant negative impact on our results and our ability to grow our revenue base to a level sufficient to reach the scale required to generate positive operating income.
As a result, in 2014, we concluded that we were not able to maintain sufficient liquidity to support our business plan and repay our debts when they come due, including $4.35 billion of senior notes issued by NIIT and NII Capital Corp. On September 15, 2014, we and eight of our U.S. and Luxembourg-domiciled subsidiaries, filed voluntary petitions seeking relief under Chapter

39

                                    

11 in the Bankruptcy Court. Subsequent to September 15, 2014, five additional subsidiaries filed voluntary petitions seeking relief under Chapter 11 in the Bankruptcy Court.
On June 19, 2015, the Bankruptcy Court entered an order approving and confirming the First Amended Joint Plan of Reorganization Proposed by the Plan Debtors and the Official Committee of Unsecured Creditors, dated April 20, 2015. We refer to this plan, as amended, as the Plan of Reorganization. On June 26, 2015, the conditions of the Bankruptcy Court's order and the Plan of Reorganization were satisfied, the Plan of Reorganization became effective, and we and the other Debtors emerged from the Chapter 11 proceedings. Our operating subsidiaries in Brazil, Mexico and Argentina were not debtors in the Chapter 11 cases. See Note 2 to our condensed consolidated financial statements for more information regarding the impact of the implementation of the Plan of Reorganization.
On April 30, 2015, we completed the sale of our operations in Mexico to an indirect subsidiary of AT&T. The transaction was structured as a sale of all the outstanding stock of Nextel Mexico for a purchase price of $1.875 billion, including $187.5 million deposited in escrow to satisfy potential indemnification claims. The net proceeds of the sale were $1.448 billion, after deducting Nextel Mexico's outstanding indebtedness net of cash and applying other specified purchase price adjustments. We also used a portion of the net proceeds from the sale of Nextel Mexico to repay all outstanding principal and interest under a debtor-in-possession loan agreement we entered into during our Chapter 11 proceedings and to fund distributions to specified creditors pursuant to our Plan of Reorganization.
On September 11, 2015, two of our indirect subsidiaries entered into a binding agreement with Grupo Clarin relating to the sale of all of the outstanding equity interests of Nextel Argentina. This agreement provided for aggregate cash consideration of $178.0 million, of which $159.0 million was paid at signing in connection with the transfer of a 49% equity interest in Nextel Argentina and the grant of a call option that allows Grupo Clarin or any of its affiliates to acquire the remaining 51% equity interest in Nextel Argentina upon receipt of required approvals from the regulatory authorities in Argentina. The remaining cash consideration was received in October 2015.
We will use the proceeds received from the sale of Nextel Argentina, as well as the remaining net proceeds from the sale of Nextel Mexico, to fund our operations in Brazil.
Capital Resources.  Our ongoing capital resources depend on a variety of factors, including our existing cash, cash equivalents and investment balances, cash flows generated by our operating activities, cash that we recover from the amounts held in escrow to secure our indemnification obligations in connection with the sales of Nextel Argentina, Nextel Mexico and Nextel Peru, external financial sources, other financing arrangements and the availability of cash proceeds from the sale of assets.
Our ability to generate sufficient net cash from our operating activities in the future is dependent upon, among other things:
•
the amount of revenue we are able to generate and collect from our subscribers, including our ability to increase the size of our subscriber base;
•
the amount of operating expenses required to provide our services;
•
the cost of acquiring and retaining customers, including the subsidies we incur to provide handsets to both our new and existing subscribers; and

•
changes in foreign currency exchange rates.
Due to the impact of our recent and projected results of operations and other factors, we expect our access to the capital markets in the near term may be limited. See "— Future Outlook and Liquidity Plans" for more information.
Capital Needs and Contractual Obligations.  We currently anticipate that our future capital needs will principally consist of funds required for:
•
operating expenses and capital expenditures relating to our existing network and the planned deployment of LTE in other commercial areas in Brazil;
•
payments in connection with spectrum purchases, including ongoing spectrum license fees;
•
debt service requirements;
•
obligations relating to our tower financing arrangements and capital lease obligations;
•
cash taxes; and
•
other general corporate expenditures.

40

                                    

During the three months ended September 30, 2015, there were no material changes to our total contractual obligations as described in our quarterly report on Form 10-Q for the three months ended June 30, 2015.
Capital Expenditures.  Our capital expenditures, including capitalized interest, were $48.4 million for the third quarter of 2015, $69.2 million for the six months ended June 30, 2015 and $150.5 million for the nine months ended September 30, 2014. We have reduced our investments in capital expenditures, including making substantial reductions to our investments in network development and deployment. We expect these efforts to conserve our cash resources to continue, although we anticipate some increase in capital expenditures relating to investments in our network in Brazil over the remainder of the year.
Our capital spending and related expenses are expected to be driven by several factors, including:
•
the amount we spend to enhance our WCDMA network in Brazil and deploy our planned LTE upgrades;
•
the extent to which we expand the coverage of our network in new or existing market areas;
•
the number of additional transmitter and receiver sites we build in order to increase system capacity, maintain system quality and meet our regulatory requirements, as well as the costs associated with the installation of network infrastructure and switching equipment; and
•
the costs we incur in connection with non-network related information technology projects.
Our future capital expenditures may also be affected by future technology improvements, technology choices and our available capital.
Maintenance Covenants Under Financing Agreements. As of the December 31, 2014 measurement date, we were not in compliance with the net debt financial covenant included in each of Nextel Brazil's outstanding local bank loans. As a result, we classified these bank loans as current liabilities in our consolidated balance sheet as of December 31, 2014. As of September 30, 2015, we had $230.0 million principal amount outstanding under Nextel Brazil's local bank loans. As discussed in more detail in Note 1 and Note 6 to our condensed consolidated financial statements, we are required to meet a net debt financial covenant included in the local bank loan agreements that will apply semiannually beginning on June 30, 2016. Based on our current business plan, we believe that it is unlikely that we will satisfy the applicable financial covenant included in both of Nextel Brazil's local bank loan agreements at the June 30, 2016 measurement date. If we are unable to develop or implement changes to our business that allow us to meet this covenant, we will need to refinance or negotiate amendments to these financing arrangements or secure waivers from the lenders in order to avoid a potential default under the loan agreements. If a default occurs, the lenders could require us to repay the amounts outstanding under these arrangements. As a result of this uncertainty, we have continued to classify the amounts outstanding under Nextel Brazil's local bank loans as current liabilities in our condensed consolidated balance sheet as of September 30, 2015.
In December 2014, Nextel Brazil and the lender under the equipment financing facility agreed to amend this facility to remove all financial covenants beginning with the December 31, 2014 measurement date through the June 30, 2017 measurement date so that the first measurement date under the amended facility will be December 31, 2017. In exchange for that covenant relief, Nextel Brazil granted the lender preferential rights to the amounts held in certain bank accounts. As of September 30, 2015, we had $342.5 million in principal amount outstanding under Nextel Brazil's equipment financing facility. Because of the uncertainty regarding our ability to meet the financial covenant contained in Nextel Brazil's local bank loans discussed above and certain cross-default provisions that are included in the loan agreement under Nextel Brazil's equipment financing facility, we have continued to classify the amount outstanding under this facility as a current liability in our condensed consolidated balance sheet as of September 30, 2015.
Future Outlook and Liquidity Plans.  In connection with our emergence from Chapter 11, we made a number of changes within our senior management team and modified our business plan to reflect our available cash resources and the impact of the current and expected economic conditions in Brazil on both our subscriber growth and revenues, and to align our costs with this revised outlook. Our current sources of funding are our cash and investments on hand; the ultimate amount recovered from cash currently held in escrow to secure our indemnification obligations in connection with the sales of Nextel Argentina, Nextel Mexico and Nextel Peru; the return of cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our spectrum in Brazil; and funds generated from our operations. Assuming the availability of these funding sources, and if we are successful in making the necessary changes to our business that are factored into our revised business plan, we expect to have sufficient liquidity to continue to fund our business for the next two years.
If we do not meet the results in our revised business plan, or if anticipated funding sources are not available to us, including the release of cash held in escrow, it is likely that we would need to obtain additional funding in the next twelve to eighteen months. We believe that the uncertainties relating to our business, together with the restrictions in our current financing arrangements and general conditions in the financial and credit markets, may make it challenging for us to obtain additional funding. In addition,

41

                                    

the cost of any additional funding that we may require, if available, could be both significant and higher than the cost of our existing financing arrangements. Our inability to obtain suitable financing if and when it is required for these or other reasons could, among other things, negatively impact our results of operations and liquidity.
In making the assessment of our funding needs and the adequacy of our current sources of funding, we have considered:
•
cash and cash equivalents on hand and short-term investments available to fund our operations;
•
restricted cash currently held in escrow to secure our indemnification obligations in connection with the transactions involving Nextel Argentina, Nextel Mexico and Nextel Peru;
•
the future return of cash pledged as collateral to secure certain performance bonds relating to our obligations to deploy our spectrum in Brazil;
•
cash proceeds from sales of assets, including the potential sale of additional transmitter and receiver sites in Brazil;
•
expected cash flows from our operation in Brazil;
•
the cost of purchasing spectrum, the financing available to fund such purchases, and timing of spectrum payments, including ongoing fees for spectrum use;
•
the anticipated level of capital expenditures required to meet both minimum build-out requirements and our planned deployment of the WCDMA network in Brazil, as well as our planned deployment of LTE in other commercial areas in Brazil;
•
our scheduled debt service obligations;
•
our other contractual obligations; and
•
cash income and other taxes.
In addition to the factors described above, the anticipated cash needs of our business, as well as the conclusions presented herein regarding our liquidity needs, could change significantly:
•
based on the continued development of our business plans and strategy;
•
if we decide to expand into new markets or expand our geographic coverage or network capacity in our existing markets beyond our current plans, as a result of the construction of additional portions of our network or the acquisition of competitors or others;
•
if currency values in Brazil depreciate or appreciate relative to the U.S. dollar in a manner that is more significant than we currently expect and assume as part of our plans;
•
if economic conditions in Brazil do not improve;
•
if competitive practices in the mobile wireless telecommunications industry in Brazil changes materially from those currently prevailing or from those now anticipated; or
•
if other presently unexpected circumstances arise that have a material effect on the cash flow or profitability of our business.

Effect of New Accounting Standards
There were no new accounting standards issued during the three months ended September 30, 2015 that materially impacted our condensed consolidated financial statements or could materially impact our financial statements or related disclosures in a future period.


42

                                    

Forward-Looking and Cautionary Statements

This quarterly report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Statements regarding expectations, including forecasts regarding operating results, performance assumptions and estimates relating to capital requirements, as well as other statements that are not historical facts, are forward-looking statements. These forward-looking statements are generally identified by such words or phrases as “we expect,” “we believe,” “would be,” “will allow,” “expects to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions. These forward-looking statements involve risk and uncertainty, and a variety of facts could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law.

While we provide forward-looking statements to assist in the understanding of our anticipated future financial performance, we caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date that we make them. Forward-looking statements are based on current expectations and assumptions that are subject to significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Except as otherwise required by law, we undertake no obligation to publicly release any updates to forward-looking statements to reflect events after the date of this quarterly report on Form 10-Q, including unforeseen events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our operations and results of our business include, but are not limited to:
•
our ability to attract and retain customers;
•
our ability to satisfy the requirements of our debt obligations;
•
our ability to access sufficient debt or equity capital to meet any future operating and financial needs;
•
our ability to meet established operating goals and generate cash flow;
•
the availability of other funding sources, including the proceeds from the sales of Nextel Mexico and Nextel Peru held in escrow and proceeds derived from other asset sales;
•
general economic conditions in the U.S. or in Latin America, including specifically in Brazil and in the market segments that we are targeting for our services, including the impact of uncertainties in global economic conditions;
•
the political and social conditions in Brazil, including political instability, which may affect Brazil's economy and the regulatory scheme there;
•
the impact of foreign currency exchange rate volatility in the local currency in Brazil when compared to the U.S. dollar and the impact of related currency depreciation in Brazil;
•
our having reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon, including technology deployed in connection with the introduction of digital two-way mobile data or internet connectivity services in our markets;
•
the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our service deployment and marketing plans and customer demand;
•
risks related to the operation and expansion of our WCDMA network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that new services supported by the WCDMA network will not attract enough subscribers to support the related costs of deploying or operating the network;
•
our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth as necessary, increased system usage rates and growth or to successfully deploy new systems that support those functions;
•
future legislation or regulatory actions relating to our services, other wireless communications services or telecommunications generally and the costs and/or potential customer impacts of compliance with regulatory mandates;
•
the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our network business;
•
the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers of cellular services and personal communications services;
•
market acceptance of our new service offerings;

43

                                    

•
our ability to successfully manage and support our legacy iDEN network in Brazil;
•
equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; and
•
other risks and uncertainties described in Part II, Item 1A. "Risk Factors," in this quarterly report on Form 10-Q and, from time to time, in our other reports filed with the SEC.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

During the three months ended September 30, 2015, there were no material changes to our market risk policies or our market risk sensitive instruments and positions as described in our quarterly report on Form 10-Q for the three months ended June 30, 2015.


Item 4.
Controls and Procedures

Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to the Company's management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
As of September 30, 2015, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of our management teams in the United States and in Brazil, including our chief executive officer and chief financial officer. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective due to a material weakness in the Company's internal control over financial reporting in our Brazil segment. The material weakness we identified, which is more fully described in “Item 9A. Controls and Procedures” of our annual report on Form 10-K for the year ended December 31, 2014, relates to an aggregation of control deficiencies in Brazil resulting from Nextel Brazil's failure to establish an effective control environment and monitoring activities, including an organization structure with sufficiently trained resources where supervisory roles, responsibilities and monitoring activities are aligned with our financial reporting objectives. Our remediation efforts related to this material weakness are ongoing, and our current efforts are focused on hiring and developing personnel within Nextel Brazil's accounting department and enhancing monitoring activities.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
The sales of Nextel Mexico and Nextel Argentina were completed on April 30, 2015 and September 11, 2015, respectively. We have evaluated the level of precision at which controls in our remaining segment must operate in order to prevent or detect a material misstatement in light of the decrease in the size of our operations.



44

                                    

PART II - OTHER INFORMATION


Item 1.
Legal Proceedings
We are subject to claims and legal actions that may arise in the ordinary course of business. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.
For information on our various loss contingencies, see Note 8 to our condensed consolidated financial statements above.

Item 1A.
Risk Factors

There have been no material changes in our risk factors from those disclosed in our quarterly report on Form 10-Q for the three months ended June 30, 2015.

Item 2.
Issuer Purchases of Equity Securities

We are authorized to repurchase shares of our common stock to satisfy employee withholding tax obligations related to stock-based compensation. We did not repurchase any shares of our common stock during the three months ended September 30, 2015.






45

                                    

Item 6.     Exhibits
Exhibit Number
 
Exhibit Description
 
Form
 
Exhibit
 
Incorporated by Reference Filing Date
10.1
 
Binding Offer #2015/075/NXT and Call Option delivered by Grupo Clarin S.A. to NII Mercosur Telecom, S.L.U. and NII Mercosur Moviles, S.L.U., including acceptances from NII Mercosur Telecom, S.L.U., NII Mercosur Moviles, S.L.U. and NII Holdings, Inc., dated September 11, 2015.
 
 
 
 
 
 
10.2
 
Promissory Note issued by NII Mercosur Telecom, S.L.U.
 
 
 
 
 
 
10.3
 
Promissory Note issued by NII Mercosur Telecom, S.L.U.
 
 
 
 
 
 
10.4
 
Form of Restricted Stock Award Agreement (Directors).
 
 
 
 
 
 
10.5
 
Separation and Release Agreement between NII Holdings, Inc. and Gokul Hemmady, dated August 20, 2015.
 
 
 
 
 
 
10.6
 
Second Separation and Release Agreement between NII Holdings, Inc. and Gokul Hemmady, dated August 20, 2015.
 
 
 
 
 
 
31.1
 
Statement of Chief Executive Officer Pursuant to Rule 13a-14(a).
 
 
 
 
 
 
31.2
 
Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
 
 
 
 
 
 
32.1
 
Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
32.2
 
Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
101
 
The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit), (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 


46

                                    

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
                        
By:
/s/ TIMOTHY M. MULIERI
 
 
 
 
 
Timothy M. Mulieri
 
 
Vice President, Corporate Controller
 
 
(on behalf of the registrant and as Principal Accounting Officer)
Date: November 5, 2015

47

                                    


EXHIBIT INDEX
Exhibit Number
 
Exhibit Description
 
Form
 
Exhibit
 
Incorporated by Reference Filing Date
10.1
 
Binding Offer #2015/075/NXT and Call Option delivered by Grupo Clarin S.A. to NII Mercosur Telecom, S.L.U. and NII Mercosur Moviles, S.L.U., including acceptances from NII Mercosur Telecom, S.L.U., NII Mercosur Moviles, S.L.U. and NII Holdings, Inc., dated September 11, 2015.
 
 
 
 
 
 
10.2
 
Promissory Note issued by NII Mercosur Telecom, S.L.U.
 
 
 
 
 
 
10.3
 
Promissory Note issued by NII Mercosur Telecom, S.L.U.
 
 
 
 
 
 
10.4
 
Form of Restricted Stock Award Agreement (Directors).
 
 
 
 
 
 
10.5
 
Separation and Release Agreement between NII Holdings, Inc. and Gokul Hemmady, dated August 20, 2015.
 
 
 
 
 
 
10.6
 
Second Separation and Release Agreement between NII Holdings, Inc. and Gokul Hemmady, dated August 20, 2015.
 
 
 
 
 
 
31.1
 
Statement of Chief Executive Officer Pursuant to Rule 13a-14(a).
 
 
 
 
 
 
31.2
 
Statement of Chief Financial Officer Pursuant to Rule 13a-14(a).
 
 
 
 
 
 
32.1
 
Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
32.2
 
Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
101
 
The following materials from the NII Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit), (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 


48






Exhibit 10.1
September 10, 2015
NII Mercosur Telecom, S.L.U.
NII Mercosur Móviles, S.L.U.
NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA

Re.: Binding Offer # 2015/075/NXT
Dear Sirs:
Further to our previous meetings and negotiations we are pleased to submit to NII Mercosur Telecom, S.L.U. and NII Mercosur Móviles, S.L.U., companies (sociedades limitadas unipersonales) organized under the laws of Spain (collectively, the “Sellers” or “you”), this binding offer (this “Binding Offer”) dated as of the date hereof and effective as of the date of your acceptance as set forth in Section 9 below (the “Effective Date”), for the direct or indirect acquisition by the undersigned, Grupo Clarín S.A. (“GC”), or any one or more of its Affiliates currently existing or to be formed for purposes of this transaction (collectively, the “Buyer”), of (i) 49% of the equity interests outstanding as of the Initial Closing Date (as defined below) in Nextel Communications Argentina S.R.L., a wholly-owned subsidiary of the Sellers (the “Target”), free and clear of any and all Liens (as defined in Annex D hereto) (other than those arising under this Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein) (the “49% Equity Interest”) and (ii) an option to acquire the remaining 51% equity interest in the Target free and clear of any and all Liens (other than those arising under this Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein) (the “51% Equity Interest” and, together with the 49% Equity Interest, the “Equity Interest”), in accordance with the terms described below (the “Binding Terms”).
1.
Consideration.
The purchase price for the acquisition of (i) the 49% Equity Interest is US$ 80 million (as further described herein and Annex A-1 hereto) and (ii) the 51% Equity Interest (pursuant to the 51% Call Option (as defined below)) is US$ 85 million (as further described herein and Annex A-1 hereto), which purchase price is subject to adjustment as provided in Section 5 of Annex A-1 (as adjusted, the “Aggregate Purchase Price”).
2.
Payment of Aggregate Purchase Price.
The Aggregate Purchase Price will be paid in freely available United States Dollars by wire transfer to the Sellers’ Accounts (as defined below); provided that the Buyer will pay US$ 18,056,522 of the Aggregate Purchase Price on the Initial Closing Date by transferring to the Sellers’ Accounts the securities specified in Annex E hereto, which securities the Parties agree have a market value on the Initial Closing Date (as defined below) of US$ 18,056,522 (the “Permitted Securities Payment”).
as follows:
a)
Subject to your acceptance of this Binding Offer as provided in Section 9, no later than 4:00 P.M. New York time on Friday, September 11, 2015 (the “Initial Closing Date”), the Buyer (or its permitted assignees) will pay (or cause to be paid) US$ 165,000,000 (minus the Indemnification Escrow Amount (as defined in Annex D hereto) required to be withheld pursuant to Section 1(d)(ii) of Annex A-1) in cash (or in securities, up to the amount described above) by one or more wire transfers of immediately available funds to the Sellers’ Accounts and Sellers shall simultaneously deliver to the Buyer (x) the 49% Equity Interest, in the form of the Initial Equity Units (as defined in Annex A-1 hereto), free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), (y) the promissory note, in substantially the form attached hereto as Annex C (the “Note”) duly executed by the Sellers and NII Holdings, Inc. (“NII”), and (z) the 51% Equity Interest Pledge (as defined herein).
b)
The payment to the Sellers on the Initial Closing Date shall be as provided in Section 1(d)(ii) of Annex A-1 hereto (the “Initial Closing Payment”).
c)
On the Definitive Closing Date (as defined herein), the Sellers shall transfer the 51% Equity Interest, in the form of the Final Equity Units (as defined in Annex A-1 hereto), to the Buyer free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein, including Annex A-1) in exchange for the assignment of the Note free and clear of all Liens to the Sellers (the “51% Transfer Settlement”) (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein, including Annex A-1).
3.
Transaction Steps.
Pursuant to this Binding Offer, if accepted by you in accordance with its terms, we will consummate the following transactions, subject to the terms and conditions hereto:
(a)
By accepting this Binding Offer, the Sellers shall have agreed to perform the obligations set forth herein (including Annex A-1 hereto) (i) in respect of the 49% Equity Interest (the “49% Sale”), and (ii) in respect of the 51% Equity Interest (the “51% Call Option”), which shall be secured by a first ranking pledge on the 51% Equity Interest dated the Effective Date, substantially in the form of Annex A-2 (the “51% Equity Interest Pledge”).
(b)
Upon Sellers’ acceptance of this Binding Offer pursuant to Section 9 hereof, the 49% Sale shall become binding on Sellers and Buyer and payable at 4:00 P.M., New York City time on September 11, 2015 and Sellers shall deliver the 49% Equity Interest, in the form of the Initial Equity Units (as defined in Annex A-1 hereto), and the Note, each free and clear of any and all Liens (other than those arising under this Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein) pursuant to the terms of Annex A-1, subject to the receipt of the Initial Closing Payment.
(c)
Subject to the Buyer certifying to the Sellers that the required prior approval from the Argentine Autoridad Federal de Tecnologías de la Información y las Comunicaciones, as the Governmental Authority under Argentine Law No. 27.078 of Technologies of Information and Communications or any Governmental Authority that may replace it in the future of the change of control of the Target that is triggered by the exercise of the 51% Call Option contemplated in this Binding Offer (the “Regulatory Approval”) has been obtained, the 51% Call Option may be exercised by the Buyer at any time during the 51% Call Option Period (as defined in Annex A-1 hereto) as contemplated in Section 1(c) of Annex A-1 hereto; provided that, unless previously exercised by the Buyer, the 51% Call Option shall be deemed automatically exercised and payable by assignment of the Note as set forth in Annex A-1 on the date that is ten (10) Argentine Business Days immediately following the date on which the Regulatory Approval is obtained (the “Definitive Closing Date”) pursuant to the terms of Annex A-1. In the event that the Regulatory Approval is not timely obtained, the Buyer, in its sole discretion, subject to the terms and conditions set forth herein and in Annex A-1, may require NII Mercosur Telecom S.L.U. to effect the transactions contemplated in Section 2(c) of Annex A-1.
(d)
Following the Definitive Closing Date, the “Nextel” trademark will be licensed or sublicensed to Target for the commercialization of its services as it is currently being used by Target for a period of 90 days after the Definitive Closing Date.
(e)
The filings requiring the Regulatory Approval in respect of the exercise of the 51% Call Option shall be made by the Target at the discretion and in coordination with the Buyer pursuant to Section 2 of Annex A-1, provided that nothing shall prevent the 49% Sale from becoming binding on Sellers and Buyer upon Sellers’ acceptance of this Binding Offer and the Initial Closing Date from occurring upon the payment in full by the Buyer of the Initial Closing Payment on the Initial Closing Date and delivery by the Sellers of the 49% Equity Interest and the Note on the Initial Closing Date, each free and clear of any and all Liens (other than those arising under this Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced herein) pursuant to the terms of Annex A-1. NII and its subsidiaries shall not take any actions that are intended to, or that would reasonably be expected to, frustrate the ability of the Buyer to obtain the Regulatory Approval, and the Sellers shall cause the Target to reasonably cooperate with the Buyer in obtaining the Regulatory Approval.
(f)
Once issued by the Sellers and delivered to the Buyer, the Note shall be pledged in favor of the Sellers as collateral for the 51% Transfer Settlement (the “Note Pledge”). Proceeds received by the Sellers from the issuance of such Note shall be freely disposable by the Sellers. The Note Pledge shall include an appropriate mechanism for the release of the Note from the pledge and its assignment to the Sellers in connection with the 51% Transfer Settlement.
(g)
The parties hereby agree and acknowledge that neither the closing on the Initial Closing Date nor the closing on the Definitive Closing Date will be conditioned on the absence of a Material Adverse Effect (as defined in Annex D hereto).
(h)
Each party hereto will pay when due any Taxes owed by such party pursuant to applicable Law in connection with the transactions contemplated by this Binding Offer. Each party will bear its own attorneys’ and experts’ fees incurred in connection with the transactions contemplated by this Binding Offer.
For purposes of this Binding Offer, “Taxes” means (i) any federal, state or local taxes, charges, fees, imposts, levies or other assessments, including all such taxes based on gross or net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).
4.
Further Documents.
The parties hereto agree to negotiate in good faith in a reasonably and timely fashion to finalize any additional documentation reasonably required to implement and consummate the transactions set forth in this Binding Offer, including, without limitation, an agreement setting forth the necessary procedures to permit the Buyer to exercise the rights set forth in Exhibit A to Annex A-1, and delivering certificates and instruments and consents as may be deemed reasonably necessary or appropriate.
5.
Regulatory Risk; Reporting.
The Buyer assumes the risk associated with the Regulatory Approval relating to the acquisition of the 49% Equity Interest and the 51% Equity Interest, including any impairment or loss of licenses.
The Buyer will indemnify the Sellers and the Sellers Indemnitees (which for the avoidance of doubt excludes the Target) for any out-of-pocket losses (including any fines or penalties) actually incurred or suffered by any of the Sellers or the Sellers Indemnitees (but excluding any losses actually incurred by the Target or arising from a diminution in value of the Target or similar losses and excluding consequential losses) arising from, relating to or in connection with any Legal Proceedings or investigations initiated against any of the Sellers or the Sellers Indemnitees (other than the Target) by any Governmental Authority in respect of the Binding Offer, the Transaction Agreements or any of the transactions contemplated hereby or thereby, including any Legal Proceedings or investigations relating to or arising in connection the Regulatory Approval; provided that (a) the liability of the Buyer in respect of such indemnity shall be limited to the Aggregate Purchase Price and (b) for purposes of any indemnification pursuant to this paragraph, the provisions for resolving claims for indemnification set forth in Article III of Annex D hereto shall apply, mutatis mutandi, except for any of the threshold limitations provided therein.
The Sellers and the Buyer hereby mutually agree to promptly inform one another (and cause Target to inform, as applicable) of any Legal Proceeding in respect of any of the transactions contemplated in this Binding Offer or communication from a Governmental Authority relating to a Legal Proceeding involving the other party as soon as such Legal Proceeding is publicly filed, or communication is received by, the Sellers (or Target) or to the Buyer’s or the Sellers’ (as applicable) knowledge, initiated by any Governmental Authority in connection with the Regulatory Approval or any claim or demand made by any Person upon the Sellers or Target as a result of this Binding Offer.
6.
No Conditions.
The Buyer will purchase the Target on an as is, where is basis subject to the terms and conditions of this Binding Offer, including the representations and warranties included in Annex D.
7.
Buyer.
The words “we,” “us”, “our” and similar shall be deemed to mean Grupo Clarín S.A. and any other Affiliate of Grupo Clarín S.A., and its permitted assignees.
8.
Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8).
If to the Buyer:
Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
E-mail: aleu@grupoclarin.com   
   sbardengo@grupoclarin.com
Attention: Alejandro Urricelqui   
   Sebastían Bardengo

If to the Sellers:
NII Mercosur Telecom, S.L.U. and NII Mercosur Móviles, S.L.U.
c/o NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Facsimile: 1-703-390-5191
E-mail: shana.smith@nii.com
Attention: Shana C. Smith, VP and Deputy General Counsel

9.
Binding Effect.
Subject to the terms of this Binding Offer, this Binding Offer will be deemed irrevocably accepted on the date on which the Sellers provides the Buyer with both (i) reasonably acceptable information regarding the account or accounts to which the Aggregate Purchase Price is to be wired (the “Sellers’ Accounts”) and (ii) when the Guarantor delivers to the Buyer a notice of acceptance. Subject to the terms of this Binding Offer, upon acceptance of the Binding Offer, the obligations of the parties set forth in this Binding Offer (including Schedules and Annexes) are legally binding and enforceable obligations in accordance with their terms, subject only to the conditions set forth herein.
10.
Specific Performance.
Each party hereto acknowledges that the other may be irreparably harmed if such party’s obligations under this Binding Offer are not specifically enforced and that the other party may not have an adequate remedy at law in the event of an actual or threatened violation by such party of its obligations. Therefore, each party hereto agrees that the other shall be entitled to an injunction or any appropriate decree of specific performance for any actual or threatened violations or breaches by such party or their respective affiliates without the necessity of such party showing actual damages or that monetary damages would not afford an adequate remedy.
11.
Expiration.
This Binding Offer will expire automatically and be of no force or effect if the Sellers have not accepted this Binding Offer in accordance with Section 9 within one day after receipt by the Sellers from the Buyer (or its representatives) of this Binding Offer.
12.
Successors and Assignees.
GC shall have the right to assign this Binding Offer and any of its rights and obligations under the Binding Terms to (i) one or more Affiliates of the Buyer on or prior the Initial Closing Date and (ii) any third party at any time following the Initial Closing Date, provided that the obligations of the Buyer under Article III of Annex D hereto shall not be assignable by GC, and GC shall remain liable for any all obligations under Article III of Annex D. The Buyer will give the Sellers notice of any such assignment, which shall become effective without further action by any party upon receipt of such notice.
13.
No Third-Party Beneficiaries.
Except as expressly set forth herein, each of this Binding Offer and the Binding Terms is for the sole benefit of the parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Binding Offer or the Binding Terms, as applicable.
14.
Amendment and Modification; Waiver.
This Binding Offer may only be amended, modified or supplemented by an agreement in writing signed by each party. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Binding Offer, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Binding Offer shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
15.
Applicable Law, Jurisdiction; Disclosure.
This Binding Offer shall be governed by and construed in accordance with the law of the State of New York, without regard to its conflict of laws principles. Any disputes arising out of or in connection with this Binding Offer shall be irrevocably submitted to the exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan or the federal courts of the State of New York sitting in the Borough of Manhattan.
Please be advised that confidentiality is an essential condition of this Binding Offer. This Binding Offer is being delivered on the condition that its contents (including the Aggregate Purchase Price, the form of payment, the structure of the acquisition specified herein and our identity) and its attachments will be treated as strictly privileged and confidential by each of the parties hereto and their respective advisors and will not be disclosed to any person other than the parties hereto and their respective legal and financial advisors on a need to know basis, except that on or after the Effective Date the parties may disclose the transaction contemplated herein to the extent required by applicable Law (as defined in Annex D), including, without limitation, applicable securities laws of the United States or other applicable jurisdiction, subject to granting the non-disclosing party a reasonable opportunity to review and comment and the disclosing party will consider, and address in good faith any comments submitted by the non-disclosing party before such disclosure is made.
We look forward to working with you towards the successful and prompt consummation of this transaction.
Very truly yours,












GRUPO CLARÍN S.A.
By: /s/ Sebastían Bardengo
Name: Sebastían Bardengo
Title: Attorney in Fact




September 11, 2015
GRUPO CLARÍN S.A.
Tacuarí 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Attention:
Alejandro Urricelqui
Sebastían Bardengo
Re.: Binding Offer # 2015/075/NXT
Dear Sirs,
Reference is made to the Binding Offer #2015/075/NXT delivered by Grupo Clarín S.A. (the “Buyer”) to NII Mercosur Telecom, S.L.U., and NII Mercosur Móviles, S.L.U., (the “Sellers” and together with Buyer, sometimes referred to individually as “Party” and collectively as the “Parties”), on September 11, 2015, as well as to its Annexes and Schedules (as hereafter amended, supplemented, modified, restated or replaced from time to time in accordance with its terms, the “Binding Offer”). All capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Binding Offer.
In accordance with Section 9 of the Binding Offer, please find below the corresponding information.
Account Title/Legal name:
Address:
Account Number:
Beneficiary Bank:
ABA Routing#:
Swift Code:
Corporation Contact / Phone/Fax:

Permitted Securities:

Account #
Sincerely,



[Signature page follows]



NII Mercosur Telecom, S.L.U.
 
By: /s/ Shana C. Smith
 
Name: Shana C. Smith
 
Title: Vicepresidenta, Vicesecretario del Consejo de Administración y
Consejera Delegada
 

NII Mercosur Móviles, S.L.U.
By: /s/ Shana C. Smith
Name: Shana C. Smith
Title: Vicepresidenta, Vicesecretario del
Consejo de Administración y
Consejera Delegada




September 11, 2015
GRUPO CLARÍN S.A.
Tacuarí 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Attention:
Alejandro Urricelqui
Sebastían Bardengo
Re.: Binding Offer # 2015/075/NXT
Dear Sirs,
We hereby accept your offer of reference dated September 11, 2015.
Sincerely,

[Signature page follows]

NII Holdings, Inc.
By: /s/ Shana C. Smith
Name: Shana C. Smith
Title: Vice President, Deputy General Counsel
          and Corporate Secretary


ANNEX D

Sellers’ Representations and Warranties & Indemnification

ARTICLE I: REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer as of the dates specified in Article II hereof as follows:
1.1.    Sellers’ Corporate Existence; Authority. Each Seller is a limited liability company duly organized and validly existing under the Laws of Spain and has all requisite corporate power and authority to own, lease and operate its assets and carry on its business as currently conducted. Each Seller has all requisite corporate power and authority to enter into this Binding Offer, the Note, the Indemnification Escrow Agreement (the “Seller Documents”) and the 51% Equity Interest Pledge, and to consummate the transactions contemplated hereby and thereby. Each Seller Document and the 51% Equity Interest Pledge will be, at or prior to the Initial Closing Date, duly authorized, executed and delivered by each Seller and no additional corporate action on the part of either Seller is necessary to authorize the consummation of any Seller Document, the 51% Equity Interest Pledge or the transactions contemplated hereby or thereby. Each Seller Document and the 51% Equity Interest Pledge when so executed and delivered will constitute, a valid and binding agreement of the Sellers, enforceable in accordance with its terms, (i) subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles (collectively, the “General Enforceability Exceptions”) and, (ii) solely with respect to the case of the 51% Equity Interest Pledge, subject to receipt of the Regulatory Approval.
1.2.    Target’s Corporate Existence; Authority.
(a)    The Target is a company duly organized and validly existing under the Laws of Argentina and has all requisite corporate power and authority to own, lease and operate its assets and to carry on its business as now conducted.
(b)    The Target is duly qualified or authorized to do business under the Laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified or authorized would not have a Material Adverse Effect.
1.3.    Conflicts; Consents of Third Parties.
(a)    Except as set forth on Schedule 1.3(a), none of the execution and delivery by either Seller of the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by the Sellers with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws (which by-laws in effect as of the Effective Date are set forth on Schedule 1.3(a)) or comparable organizational documents of the Target, or the Sellers, (ii) any Contract, Telecommunication License, or Permit to which the Target or either Seller is a party or by which any of the properties or assets of the Target or either Seller are bound, (iii) any Order of any Governmental Authority applicable to the Target or either Seller or by which any of the properties or assets of the Target or either Seller are bound, or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or cancellations, that would not have a Material Adverse Effect.
(b)    Except as set forth on Schedule 1.3(b), no consent, waiver, approval, Order, Telecommunication License, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Authority is required on the part of the Target or either Seller in connection with the execution and delivery of the Seller Documents or the compliance by the Sellers with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except for such consents, waivers, approvals, Orders, Telecommunication Licenses, Permits or authorizations the failure of which to obtain would not have a Material Adverse Effect.
1.4.    Capitalization.
(a)    The authorized share capital of the Target consists of 810,236,480 ownership interests (participaciones sociales) (the “Equity Interests”). There are 810,236,480 Equity Interests issued and outstanding. All of the issued and outstanding Equity Interests were duly authorized for issuance and are validly issued, fully paid and non-assessable.
(b)    There is no existing option, warrant, call, right, or Contract of any character to which the Target is a party requiring, and there are no securities of the Target outstanding which upon conversion or exchange would require, the issuance, of any Equity Interests or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests. The Target is not a party to any voting trust or other Contract with respect to the voting, redemption, sale, transfer or other disposition of the Equity Interests. There are no bonds, debentures or other indebtedness of the Target that entitle holders thereof to vote or consent on any matters on which the holders of any Equity Interests may vote.
1.5.    Ownership of Equity Interests. The Sellers are the sole record and beneficial owners of the Equity Interests, free and clear of any and all Liens other than Liens imposed directly or indirectly by the Buyer or pursuant to the terms of this Binding Offer. The Sellers have the power and authority to sell, transfer, assign and deliver the Equity Interests as provided in this Binding Offer, and such delivery will convey to the Buyer ownership of the Equity Interests, free and clear of any and all Liens other than Liens imposed directly or indirectly by the Buyer.
1.6.    Subsidiaries. Except as set forth in Schedule 1.6, the Target does not own any equity interest in any other Person (other than short-term financial investments made in the Ordinary Course of Business consistent with past practices).
1.7.    Financial Statements; Books and Records.
(a)    The Sellers have delivered to the Buyer copies of the audited balance sheets of the Target as at December 31, 2012, December 31, 2013 and December 31, 2014 and the related audited statements of income and of cash flows of the Target for the years then ended, together with the notes thereto (the “Argentine Financial Statements”). Except as set forth in the notes thereto and as disclosed in Schedule 1.7(a), each of the Argentine Financial Statements has been prepared in accordance with Argentine GAAP consistently applied and presents fairly in all material respects the financial position, results of operations and cash flows of the Target as at the dates and for the periods indicated therein. The Argentine Financial Statements were derived from the books and records of the Target.
(b)    Except as set forth on Schedule 1.7(b), the books and records of the Target have been maintained in compliance with applicable Law in all material respects and are complete and accurate in all material respects, and no material meeting has been held or material action taken for which minutes have not been prepared or contained in the Target’s corporate books.
1.8.    No Undisclosed Liabilities. The Target does not have any liabilities of any kind that would have been required to be reflected in, reserved against or otherwise described on the Argentine Financial Statements in accordance with Argentine GAAP, and were not so reflected, reserved against or described, other than (a) liabilities incurred in the Ordinary Course of Business after December 31, 2014 and (b) liabilities incurred by the Target in connection with the transaction contemplated hereby. At the Effective Date, the Target has not assumed any guarantees of any third parties or any obligations of any third parties to give any kind of guarantees, indemnities or securities, except as expressly contemplated by this Binding Offer.
1.9.    Absence of Certain Changes.
(a)    Since December 31, 2014, the Target’s business has been conducted on the Ordinary Course of Business consistent with past practice and in compliance with the Sellers’ representations and warranties and covenants herein, and the Sellers’ will cause the Target to preserve its business organization and customer relationships in the Ordinary Course of Business consistent with past practice.
(b)    Since December 31, 2014 and except (x) in the Ordinary Course of Business consistent with past practice and (y) as set forth on Schedule 1.9(b), the Target has not:
(i)
purchased, agreed to purchase, disposed of or agreed to dispose of, leased or agreed to lease any real estate;
(ii)
purchased or agreed to purchase any capital equipment at purchase prices exceeding in the aggregate $500,000 or disposed of, or agreed to dispose of, any capital equipment at sales prices exceeding in the aggregate $500,000;
(iii)
entered into contractual arrangements not terminable on less than 60 days’ notice without costs or other liability to the Target;
(iv)
entered into any transactions or any other material oral or written agreements, contracts, leases, commitments or understandings, including any relating to capital expenditures, outside the ordinary course of business;
(v)
made any material changes in the policies or practices with respect to selling methods, returns, rebates, discounts, bonuses, credits, terms of payment or other terms of sales or accounting thereof, except for (i) the case of normal occurrences considering the nature of the business and (ii) any changes required by Law; or
(vi)
declared or paid any dividends or distributed any profits or retained earnings.
1.10.    Effect of Transaction. To the Knowledge of the Sellers, no creditor, employee, client, customer or other person having a material business relationship with the Target has changed, or informed either Seller or the Target that such person intends to change, such relationship because of the transactions contemplated by this Binding Offer, except for any such change requested or approved of in writing by the Buyer.
1.11.    Accounts Receivable, Accounts Payable.
(a)    At the Effective Date, except as set forth on Schedule 1.11(a), all accounts receivable of the Target that are reflected on the latest balance sheet in the Argentine Financial Statements represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. To the Knowledge of the Sellers, none of such receivables is subject to any counterclaims or offsets, other than in the Ordinary Course of Business.
(b)    At the Effective Date, and except as set forth on Schedule 1.11(b), all accounts payable of the Target that are reflected on the latest balance sheet in the Argentine Financial Statements represent valid obligations arising from purchases actually made or services actually received in the Ordinary Course of Business. To the Knowledge of the Sellers, none of such payables is subject to any counterclaims or offsets, other than in the Ordinary Course of Business.
1.12.    Inventories. Except as set forth on Schedule 1.12, all inventories that are reflected on the latest balance sheet in the Argentine Financial Statements or acquired by the Target after the date thereof were valued in accordance with Argentine GAAP, were of a type merchantable in the Ordinary Course of Business consistent with past practice and were in good and merchantable condition and fit for their particular purpose.
1.13.    Taxes.
(a)    Except as set forth on Schedule 1.13(a), the Target has timely filed all material Tax Returns required to be filed by it, and all Taxes required to be paid by it have either been paid by it or are reflected in accordance with applicable accounting standards as a reserve for Taxes on the most recent financial statements of such entity, and all such Tax Returns are correct and complete in all material respects, or requests for extensions to file such Tax Returns have been timely filed, granted and have not expired. Except as set forth on Schedule 1.13(a), all material Taxes required to be withheld by the Target have been withheld and have been (or will be) duly and timely paid to the proper Taxing authority. Except as set forth on Schedule 1.13(a), no deficiencies for any Taxes have been proposed, asserted or assessed against the Target that are still pending and no requests for waivers of the time to assess any such Taxes have been made that are still pending. To the Knowledge of the Sellers, except as set forth on Schedule 1.13(a), no income Tax Return of the Target is under current examination by any Taxing authority. Except as set forth on Schedule 1.13(a), all assessments for Taxes due with respect to any concluded litigation have been fully paid or have been adequately reserved on the financial statements of the Target in accordance with applicable accounting standards. There are no Liens for Taxes on any of the assets of any the Target other than Permitted Liens. Notwithstanding anything contained herein, the Target is not making any representation or warranty as to the (i) amount of any net operating losses or other Tax attributes of any of them or (ii) effect of Sections 382, 383 or 384 of the Code (and any comparable or similar provision of applicable Law) on the Buyer’s ability to claim or use net operating loss carryovers or other Tax attributes of the Target.
(b)    For the purposes of the calculation of the amount payable on Capital Gain Tax, if any, the net result of the transaction contemplated hereunder shall be considered, and as a consequence thereof, there shall be no amount to be paid to the Argentine tax authority by Buyer as Capital Gain Tax, since the acquisition cost of the Equity Interests exceeds the Aggregate Purchase Price, , as evidenced in Schedule 1.13(b).
(c)    This Section 1.13 represents the sole and exclusive representations and warranties regarding Taxes.
1.14.    Real Property.
(a)    Schedule 1.14(a) sets forth a complete list of all material real property, and interests in real property in the Owned Property and the Real Property Leases, in each case, together with the street address and current owner for each, and identifies any material reciprocal easement or operating agreements relating thereto.
(b)    To the Knowledge of the Sellers, (i) Schedule 1.14(b)(i) sets forth a list of all Transmitter Sites (excluding construction work and civil infrastructure) and (ii) Schedule 1.14(b)(ii) sets forth a list of all Transmitter Sites with respect to which all material Permits have been obtained.
(c)    The Target has good title to all Owned Property, free and clear of Liens except (i) Liens set forth on Schedule 1.14(c) and (ii) Permitted Liens.
(d)    Except as set forth on Schedule 1.14(d), the Target has quiet enjoyment and peaceful possession of all real property listed on Schedule 1.14(a).
(e)    To the Knowledge of the Sellers, except as set forth on Schedule 1.14(e), the Target has not received any written notice of any material default by the Target under any of the Real Property Leases.
1.15.    Equipment. Except as set forth in Schedule 1.15, the equipment owned or used by the Target which are material for their business are not in need of any further investment outside the Ordinary Course of Business consistent with past practice, and such plant and equipment is in reasonable operating condition and repair, considering ordinary wear and tear. All plant and equipment owned or used by the Target which are material for its business have been maintained in accordance with adequate maintenance plans, with equipment warranty obligations, with all applicable industry standards and with any applicable contractual arrangements.
1.16.    Intellectual Property.
(a)    Schedule 1.16(a) lists the (i) Intellectual Property owned by the Target as of the Effective Date for which a patent, trademark, or copyright registration exists or has been applied for by or on behalf of the Target and, (ii) material licenses or other covenants or rights under Intellectual Property which the Target have been granted from any Person (“Granted Licenses”) or which the Entities have granted to any Person (“Received Licenses” and, together with the Granted Licenses, the “Licenses”).
(b)    Subject to Schedule 1.3(a), the Intellectual Property owned by the Target, together with the right to directly or indirectly use the Intellectual Property licensed to the Target, constitutes all Intellectual Property used in the Ordinary Course of Business as presently conducted. To the Knowledge of Sellers, the Target's conduct of its business as presently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property of any Person.
(c)    Except as set forth on Schedule 1.16(c), to the Knowledge of the Sellers, the Intellectual Property and Licenses identified on Schedule 1.16(a) are not the subject of any challenge received by the Target in writing, and the Target has not received, since January 1, 2014, any written notice of any default or breach under any License.
1.17.    Material Contracts.
(a)    Schedule 1.17(a) sets forth a list of the following Contracts (other than any statements of work, purchase, project, change or similar orders issued pursuant to any such Contracts) to which the Target is a party and under which the Target has any remaining rights or obligations as of the Effective Date (collectively, the “Material Contracts”):
(i)    Contracts for the sale of any assets of the Target other than in the Ordinary Course of Business, for consideration in excess of $500,000;
(ii)    Contracts for the acquisition of any operating business or the equity interests of any other Person;
(iii)    Contracts in respect of Target Debt;
(iv)    Contracts restricting the Target from engaging in any line of business or competing with any Person or in any geographical area;
(v)    any other Contracts which involve the receipt or expenditure of more than $500,000 in the aggregate in any 12-month period, require performance by any party more than one year from the date hereof and are not terminable by the Target without penalty on notice of 180 days’ or less; and
(vi)    any intercompany Contracts or arrangements, including, without limitation, global services agreements or other contractual rights (the “Global Contracts”) that involve the payment or receipt by the Target of more than $500,000 in any 12-month period.
(b)    The Sellers have made available to the Buyer true and correct copies of each of the Material Contracts and all amendments thereto and each of the Material Contracts, as amended, is in full force and effect and is a legal, valid and binding obligation of the Target, enforceable against the Target in accordance with its terms, subject to General Enforceability Exceptions. Except as set forth on Schedule 1.17(b), since December 31, 2014, the Target has not received any written notice of any default or breach by the Target under any Material Contract, except for defaults that would not have a Material Adverse Effect.
1.18.    Employee Matters.
(a)    Schedule 1.18(a) sets forth (i) the name, date of employment by the Target, job title and monthly compensation of the Target’s employees; (ii) any termination clauses in excess of legal minima, pension, retirement, savings, profit sharing, bonus, loans, life insurance, medical benefit plan, entitlement to the Target’s cars, deferred compensations, incentive compensation, stock purchase or stock option or any other collective bargaining agreements employment agreement or any Employee Plans; (iii) every employee who has left the employment of the Target within two years prior to the date hereof, the date of leaving, the job title, and the reason for his or her departure; (iv) every employee of the Target on authorized leave of absence who has a right to return to employment; and (v) any contract with any individual that is not an employee and that provides services on an ongoing basis to the Target or with any temporary employee (i.e., fixed term or seasonal employees) of the Target.
(b)    Except as set forth on Schedule 1.18(b), each of the following is true as of the Effective Date:
(i)    the Target is in compliance in all material respects with all applicable Laws with respect to withholding taxes, social security contributions and employer’s contributions.
(ii)    the Target is in compliance in all material respects with all applicable Laws and collective bargaining agreements respecting employment and employment practices, terms and conditions of employment, wages and hours, termination payments, occupational safety and health;
(iii)    there is no labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of the Sellers, threatened, against the Target;
(iv)    no agreement or Order which is binding on the Target in any material way limits or restricts the Target from relocating or closing any of its operations, or terminating any of its employees’ labor contract, except as provided under Argentine labor Laws, regulations and applicable collective bargaining agreements;
(v)    the Target has not experienced any organized work stoppage;
(vi)    the execution and delivery of the Binding Terms by the Sellers, and the consummation of the transactions contemplated hereby, will not result in, accelerate or increase any obligation or liability (with respect to termination payments, accrued benefits, or otherwise) to any Employee Plans or to any employee or former employee of the Target;
(vii)    except to the extent (if any) to which provisions have been made under Argentine GAAP: (A) no liability has been incurred by the Target for breach of any employment agreement, for compensation for wrongful dismissal or for failure to comply with any Order for the re-engagement of any employee or for any other liability accruing from the termination or variation of any contract of employment in the last two years; (B) no liability has been incurred by the Target for accident or injury to employees; and (C) no Legal Proceeding filed and notified by Administración Federal de Ingresos Públicos is pending or, to the Knowledge of the Sellers, threatened in writing against the Target for any tax contribution and/or withholding of salaries and other remuneration of (1) direct employees pertaining to their direct employment relationships with the Target, (2) individuals that are not employees of the Target who provide services on an ongoing basis to the Target or (3) other individuals as a result of the joint and several liability of the Target with any service provider of services to the Target, in each case, in the last five years;
(viii)    there is no non-statutory collective bargaining, union or other employee association agreement; and
(ix)    there is no employee confidentiality or other agreements protecting proprietary processes, formulae or information to which the Target is a party.
1.19.    Employee Plans. Schedule 1.19 to this Binding Offer sets forth a list of each Employee Plan in effect, and the Sellers have delivered or made available to the Buyer, as applicable with respect to each Employee Plan, true and complete copy of the plan document and any amendments thereto (or in the case of any unwritten Employee Plan, a written summary of the material terms), including any related trust agreement or funding instrument, in each case in effect as of the Effective Date.
(a)    Each Employee Plan has been administered in accordance with its terms and in material compliance with the applicable Law. There are no investigations or audits by any Governmental Authority, termination proceedings or other claims or proceedings against or involving any Employee Plan or asserting any rights to or claims for benefits under any Employee Plan (except routine claims for benefits payable under the Employee Plans as in effect).
(b)    All contributions to, and payments from, any Employee Plan which may have been required in accordance with the terms of such Employee Plan or any related document and under applicable Law have been timely made. No Employee Plan has incurred an “accumulated funding deficiency.”
(c)    No Employee Plans provide benefits, including death or medical benefits, beyond termination of service or retirement other than coverage mandated by applicable Law. The Target has not made a written or, to the Knowledge of the Sellers, oral representation to any current or former employee of the Target promising or guaranteeing any employer paid continuation of medical, dental, life or disability coverage for any period of time beyond retirement or termination of employment, other than with respect to coverage mandated by applicable Law.
(d)    Other than with respect to coverage mandated by applicable Law, no employee of the Target will be entitled to (i) (A) any severance, separation, change of control, termination, bonus or other additional compensation or benefits, or (B) any acceleration of the time of payment or vesting of any compensation or benefits, or the forgiveness of indebtedness owed by such employees, in the case of the foregoing clauses (A) and (B), as a result of any of the transactions contemplated by this Binding Offer (alone or in combination with any other event) or in connection with the termination of such participant’s employment on or after the Initial Closing Date or (ii) any compensation or benefits related to or contingent upon, or the value of which will be calculated on the basis of, any of the transactions contemplated by this Binding Offer (alone or in combination with any other event). The execution and delivery of the Binding Terms, and the consummation of the transactions contemplated hereby (alone or in combination with any other event), and compliance by the Target with the provisions hereof do not and will not require the funding of, or increase the cost of, or give rise to any other obligation under, any Employee Plan or applicable Law and will not result in any breach or violation of, or default under, or limit the Target’s ability to amend, modify or terminate any Employee Plan.
(e)    The Target is not and will not be actually or contingently, now or after the date hereof, liable for any amount due on account of the NII Holdings, Inc. 2015 Compensation Plan or any stock purchase, stock option or other equity-based incentive compensation Employee Plan.
1.20.    Litigation.
(a)    Except as set forth on Schedule 1.20(a), there are no Legal Proceedings pending or, to the Knowledge of the Sellers, threatened against the Target where the claimed amount is in excess of $250,000. As of the date hereof, there are no Legal Proceedings pending or, to the Knowledge of the Sellers, threatened against the Target before any Governmental Authority, which, if adversely determined, would have a Material Adverse Effect.
(b)    Except as set forth on Schedule 1.20(b), the Target is not a party to any Legal Proceedings pending or, to the Knowledge of the Sellers, threatened in writing against the Republic of Argentina.
(c)    There are no Legal Proceedings pending or, to the Knowledge of the Sellers, threatened that reasonably may be expected to result in an Order that would prohibit or restrain the ability of either Seller to enter into the Binding Terms or consummate the transactions contemplated hereby.
1.21.    Compliance with Laws; Permits.
(a)    The Target is in compliance with all Laws of any Governmental Authority applicable to its business or operations, except where the failure to be in compliance would not have a Material Adverse Effect. The Target has not received any written notice of or been charged with the violation of any Laws, except where such violation would not have a Material Adverse Effect.
(b)    Except as expressly provided in Section 1.14(b)(ii),the Target currently has all Permits which are required for the operation of its business as presently conducted, except where the absence of which would not have a Material Adverse Effect. The Target is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Permit to which it is a party, except where such default or violation would not have a Material Adverse Effect.
(c)    Schedule 1.21(c) sets forth a list of all Telecommunication Licenses, including the radio-electric spectrum permits, held by the Target (such Telecommunication Licenses, the “Target Telecommunication Licenses”). The Target Telecommunication Licenses constitute all of the Telecommunication Licenses which are required for the operation of the Target’s business as presently conducted. The Target is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Target Telecommunication License granted to the Target, except where such default or violation would not have a Material Adverse Effect.
(d)    Except as expressly provided in Section 1.14(b)(ii), the Sellers make no representations or warranties in this Binding Offer whatsoever regarding the permitting, licensing, condition or compliance with Law of the Network Assets. The Buyer acknowledges that all Network Assets are being conveyed to the Buyer on a “where is” and, as to condition, “as is” basis.
1.22.    Environmental Matters.
(a)    The operations of the Target are and, since December 31, 2014, have been in compliance in all material respects with all applicable environmental Laws in the respective jurisdictions in which they operate, except where the failure to be in compliance would not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect.
(b)    The Target has obtained and is in compliance with all material permits, licenses and other authorizations required under applicable environmental Laws (“Environmental Permits”) for the continued operations of the business, except where the absence of which would not have a Material Adverse Effect. All Environmental Permits are valid and in good standing, and to the Knowledge of the Sellers, there is no pending or threatened change in the status or terms and conditions of any Environmental Permit, in each case, except where the absence of which would not have a Material Adverse Effect.
(c)    Except as set forth on Schedule 1.22, the Target is not subject to any outstanding material Orders or Legal Proceedings by any Governmental Entity or any person respecting (A) environmental Laws, (B) remedial action or (C) any release or threatened release of, or exposure to, a hazardous substance (“Environmental Claims”) and, to the Knowledge of the Sellers, no such material Environmental Claims are threatened.
(d)    The Target has not received any written communication alleging, with respect to the Target, a material violation of or liability under any environmental Law.
(e)    There has been no release or threatened release of hazardous substances at any location that, as of the Effective Date, (i) requires any material remedial action by the Target pursuant to any environmental Law or (ii) forms the basis of any material Environmental Claim against the Target, except in each case as would not have a Material Adverse Effect.
1.23.    Financial Advisors. Except as set forth on Schedule 1.23, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for the Target or the Sellers in connection with the transactions contemplated by this Binding Offer and no Person is entitled to any fee or commission or like payment from the Buyer in respect thereof.
1.24.    Banks. Schedule 1.24 contains a complete and correct list of the names and locations of all banks in which the Target has accounts or safe deposit boxes and the names of all persons authorized to draw on or that have access to such accounts or safe deposit boxes. Except as set forth on Schedule 1.24, no person holds a power of attorney to act on behalf of the Target.
1.25.    Sellers’ Accounts. The Sellers hereby certify and confirm that payments due by Buyer pursuant to the terms of this Binding Offer shall be made to the Sellers’ Accounts (as defined in Section 2 of this Binding Offer). Any payment made to the Sellers ‘Account by the Buyer shall for all purposes of this Binding Offer be deemed to have been made to the Sellers in the amount and at the time such payment is made to the Sellers’ Accounts.
1.26.    Transactions with Affiliates, Shareholders, Officers, Directors and Others. Except as set forth in Schedule 1.26 or with respect to any amounts to be paid in connection with the representations set forth in Section 1.28, the Target has no liabilities for indebtedness for borrowed money owing to any director, officer, member, shareholder, consultant, or employee of the Target (except for amounts due as normal salaries, wages, benefits or reimbursements of ordinary business expenses or any other amounts payable pursuant to applicable Law), or to the Sellers. No director, officer, member, shareholder, consultant, or employee of the Target now has any liability for any indebtedness for borrowed money owing to the Target except for Ordinary Course of Business expense advances.
1.27.    Insurance. Schedule 1.27 sets forth all insurance policies or programs of self insurance that are owned or held by the Target or its Affiliates on the Effective Date and that cover the Target, its assets, properties or personnel with respect to risks arising in connection with the operation or conduct of the Target’s business (collectively, the “Insurance Policies”). The Insurance Policies provide, in all material respects, adequate insurance coverage for the operation of the Target’s business as currently conducted in accordance with the Target’s past practices.
1.28.    Foreign Exchange. Except as set forth on Schedule 1.28, (i) the Target has complied in all material respects with all applicable Argentine foreign exchange regulations (including the Target’s compliance in all material respects with applicable regulations related to obligations to timely enter and liquidate foreign currency received abroad) and (ii) the Argentine Central Bank did not issue any writing questioning any of the foreign exchange transactions undertaken by the Target, which such questions are currently pending and not yet finally resolved.
1.29.    No Disposition of Assets. Other than in the ordinary course of business, Sellers have not permitted the Target to sell, assign, transfer, convey, lease or otherwise dispose of, or place any encumbrances on, the property, plant or equipment of Target reflected in its audited annual financial statements as of December 31, 2014.
1.30.    Subscribers. As of August 31, 2015, the Target has no less than 1,700,000 Subscribers of which no more than 45% are pre-paid customers. As of August 31, 2015, 77% of the postpaid base had hybrid rate plans adding prepaid capabilities for these customers.
1.31.    Intercompany Debt. The Target has no intercompany payables and loans between the Target, on the one hand, and either Seller and/or their Affiliates, on the other hand.
1.32.    No Other Representations or Warranties; Schedules. Except for the representations and warranties contained in this Article I (as modified by the Sellers Disclosure Schedule), neither the Sellers nor any other Person makes any other representation or warranty with respect to the Target, the Sellers or the transactions contemplated by the Transaction Agreements, and the Sellers disclaim any other representations or warranties, whether made by the Sellers or any of its respective Affiliates, officers, directors, employees, agents or representatives. The disclosure of any matter or item in any Schedule will not be deemed to constitute an acknowledgment that any such matter is required to be disclosed. For the avoidance of doubt, the Sellers will not be deemed to be in breach of any representation, warranty, covenant or agreement set forth in the Transaction Agreements to the extent that the failure of any such representation or warranty to be true and correct or the failure to comply with or perform any such covenant or agreement is due (i) to the failure to obtain any Antitrust Approval or the Regulatory Approval or (ii) any action taken by any Governmental Authority resulting from entering into the publication or announcement of this transaction or any of the transactions contemplated hereby.
ARTICLE II
The Sellers make the representations and warranties set forth in Article I of Annex D as of the dates set forth below.
(i)the representations and warranties provided in Sections 1.1, 1.29, 1.30 and 1.31 are made as of the Effective Date;

(ii)the representations and warranties provided in Sections 1.1 to 1.28 and 1.32 are made as of the Initial Closing Date; and

(iii)the representations and warranties provided in Sections 1.1, 1.2, 1.4(b) (but only with respect to the 51% Equity Interest) and 1.5 (but only with respect to the 51% Equity Interests) are made as of the Definitive Closing Date.



ARTICLE III: INDEMNIFICATION

3.1.    Survival.
(a)    Except as provided in Section 3.1(b), the representations and warranties of the parties hereto contained herein will survive the Initial Closing Date and will remain in full force and effect until 5:00 p.m. local time in New York, New York, on the date that is the 12-month anniversary of the Initial Closing Date as modified by clauses (x) and (y) of this paragraph (the “End Date”), at which time they will terminate, provided that (x) the Sellers Business Fundamental Representations and the representations and warranties contained in Section 1.13 (“Taxes”) will survive the Initial Closing Date and will remain in full force and effect until 5:00 p.m. local time in New York, New York, on the 24-month anniversary of the Initial Closing Date, and (y) Sellers Legal Fundamental Representations will survive for a period of six years from the Initial Closing Date.
(b)    The covenants and agreements contained in the Transaction Agreements that are to be performed in full on or prior to the Initial Closing Date will terminate at the Initial Closing Date. The covenants and agreements that are to be performed in whole or in part after the Initial Closing Date will survive the Initial Closing Date until performed in accordance with their terms. No claim for indemnification pursuant to this Article III may be brought following the applicable End Date. Notwithstanding the foregoing, if on or prior to the applicable End Date, a Third Party Claim Notice or a Direct Claim Notice has been given to an Indemnifying Party, the applicable claim as set forth in such notice will survive such End Date until satisfaction or other full and final resolution thereof and such Third Party Claim Notice or Direct Claim Notice, as applicable, may be amended after such End Date to adjust the amount of Losses based on substantially the same facts and circumstances giving rise to such claim.
3.2.    Indemnification by the Sellers. Subject to this Article III, from and after the Initial Closing Date, the Sellers will indemnify and save and hold harmless the Buyer and its Affiliates (including, after the Initial Closing Date, the Target) and their respective shareholders (or equivalent persons), officers, directors, employees, agents, representatives, successors and assigns (collectively, the “Buyer Indemnitees”) from and against any and all Losses resulting from, arising out of or incurred in connection with: (a) any breach of any representation or warranty made by the Sellers or the Guarantor in the Transaction Agreements as of the date such representation or warranty was made or deemed made pursuant to Article II of this Annex D of the Binding Offer or the Transaction Agreements, and (b) any non-fulfillment, violation or breach of any covenant or agreement made by the Sellers or the Guarantor in the Transaction Agreements.
3.3.    Indemnification by the Buyer. Subject to this Article III, from and after the Initial Closing Date, the Buyer will indemnify and save and hold harmless the Sellers and their Affiliates and their respective shareholders (or equivalent persons), officers, directors, employees, agents, representatives, successors and assigns (collectively, the “Sellers Indemnitees” and, together with the Buyer Indemnitees, the “Indemnified Parties”) from and against any Losses incurred, resulting from or arising out of: (a) any breach of any representation or warranty made by the Buyer in the Transaction Agreements as of the date such representation or warranty was made or on the Initial Closing Date, except in each case for any such representations and warranties that are specifically made as of a particular date, the inaccuracy in or breach of which will be determined with reference to such specific date, and (b) any nonfulfillment, violation or breach of any covenant or agreement made by the Buyer in the Transaction Agreements.
3.4.    Procedures for Claims.
(a)    Subject to Section 3.1, if an Indemnified Party desires to assert any claim for indemnification provided for under this Article III in respect of, arising out of or involving a claim or demand made by any Person (other than a Party or Affiliate thereof) against the Indemnified Party (a “Third Party Claim”), such Indemnified Party will notify the Buyer or the Sellers, as the case may be (the “Indemnifying Party”), in writing of such Third Party Claim, including the amount or the estimated amount of Losses sought thereunder to the extent then ascertainable (which estimate will not be conclusive of the final amount of such Third Party Claim), any relevant time constraints relating thereto and, to the extent practicable, any other material details pertaining thereto (a “Third Party Claim Notice”) promptly after receipt by such Indemnified Party of written notice of the Third Party Claim; provided, however, that the failure to timely give such notice will not reduce the Losses for which the Indemnifying Party is obligated to indemnify the Indemnified Party under this Article III of Annex D except to the extent of any Losses resulting from the Indemnifying Party being prejudiced by such failure. The Indemnified Party will deliver to the Indemnifying Party, promptly after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim; provided, however, that failure to provide any such copies will not affect the indemnification obligations provided hereunder except to the extent of any Losses resulting from the prejudice of any claim or defense available to the Indemnifying Party as a result of such failure.
(b)    If a Third Party Claim is made against an Indemnified Party, the Indemnifying Party will be entitled to participate in the defense thereof and, within 30 days of receiving a Third Party Claim Notice with respect to such Third Party Claim, may assume the defense thereof and select counsel to act in such defense (which counsel will be reasonably satisfactory to the Indemnified Party). Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof, unless, in the reasonable opinion of counsel (including in-house counsel) to the Indemnified Party, counsel for the Indemnifying Party could not adequately represent the interests of the Indemnified Party because the interests of the Indemnifying Party are in conflict with those of the Indemnified Party. If the Indemnifying Party assumes such defense, the Indemnified Party will have the right to participate in the defense thereof and to employ counsel, at its own expense (except as provided in the immediately preceding sentence), separate from the counsel employed by the Indemnifying Party. The Indemnifying Party will be liable for reasonable fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has not assumed the defense thereof and as otherwise contemplated by the two immediately preceding sentences. If the Indemnifying Party chooses to defend any Third Party Claim, the Indemnified Party will cooperate in the defense or prosecution thereof.
(c)    If the Indemnifying Party, within 30 days after written notice of any such Third Party Claim (or sooner if the nature of the Third Party Claim so requires) (i) does not assume control of the defense or (ii) after assuming control of the defense, fails or ceases to diligently defend such Third Party Claim, which failure or cessation is not cured within 15 days after written notice thereof from the Indemnified Party, then the Indemnified Party will have the right to undertake the defense of such Third Party Claim, and (iii) the reasonable and documented fees and expenses of counsel to the Indemnified Party in connection therewith will be considered “Losses” for purposes of this Binding Offer; provided, however, that in no event will the fees and expenses of more than one counsel (in addition to one local counsel in each jurisdiction that is reasonably necessary) for the Indemnified Party with respect to a single Third Party Claim or a series of related Third Party Claims be considered “Losses” for purposes of this Binding Offer.
(d)    The Indemnified Party will not settle, compromise or discharge a Third Party Claim without the Indemnifying Party’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed. The Indemnifying Party may pay, settle or compromise a Third Party Claim without the Indemnified Party’s prior written consent, so long as such payment, settlement or compromise (i) includes an unconditional release of the Indemnified Party from all Liability in respect of such Third Party Claim, (ii) does not subject the Indemnified Party to any injunctive relief or other equitable remedy, (iii) does not include a statement or admission of fault, culpability or failure to act by or on behalf of any Indemnified Party, and (iv) simultaneously with the effectiveness of such settlement, payment or compromise, the Indemnifying Party pays in full any obligation imposed on the Indemnified Party by such settlement, compromise or consent or such obligation is paid in full from the Indemnification Escrow Account.
(e)    The Parties will act in good faith in responding to, defending against, settling or otherwise dealing with any Third Party Claims, and cooperate in any such defense and give each other reasonable access during normal business hours and upon reasonable advance notice to all information relevant thereto. Without limiting the generality of this Section 3.4(e), the Party controlling the defense of any Third Party Claim will deliver, or cause to be delivered, to the other Party copies of all correspondence, pleadings, motions, briefs, appeals or other written statements relating to or submitted in connection with the defense of the Third Party Claim, and timely notices of, and the right to participate in any hearing or other court proceeding, meeting or negotiation relating to the Third Party Claim. Upon request by the Indemnified Party, the Indemnifying Party shall reasonably cooperate to address any demand made by such Indemnified Party in connection with any proceeding initiated by any Governmental Authority with respect to the Regulatory Approval or any claim or demand made by any Person upon consummation of this Binding Offer.
(f)    Subject to Section 3.1, if an Indemnified Party desires to assert any claim for indemnification provided for under this Article III other than a claim in respect of, arising out of or involving a Third Party Claim (a “Direct Claim”), such Indemnified Party will notify the Indemnifying Party in writing of such Direct Claim, including the amount or the estimated amount of Losses sought thereunder to the extent then ascertainable (which estimate will not be conclusive of the final amount of such Direct Claim), and, to the extent practicable, any other material details pertaining thereto (a “Direct Claim Notice”); provided, however, that the failure to timely give such notice will not reduce the Losses for which the Indemnifying Party is obligated to indemnify the Indemnified Party under this Article III of Annex D except to the extent of such Losses resulting from the Indemnifying Party being prejudiced by such failure.
3.5.    Limitations on Indemnification.
(a)    Limitations on the Sellers’ Indemnification of Buyer.
(i)    The Sellers will have no liability for any claim for indemnification pursuant to Section 3.2(a), if the Losses for which it would be responsible for pursuant to such claim and all related claims arising from substantially similar facts or circumstances are less than $150,000 (each such claim a “De Minimis Claim”), subject to an aggregate cap of $1,500,000 for all De Minimis Claims (the “De Minimis Claim Cap”). The limitations set forth in this Section 3.5(a)(i) will not apply to any claim for indemnification in respect of a breach or inaccuracy of the Sellers Business Fundamental Representations and Sellers Legal Fundamental Representations.
(ii)    The maximum aggregate amount of indemnifiable Losses payable by the Sellers in respect of claims pursuant to Section 3.2 (excluding those in connection with Sellers Business Fundamental Representations, Sellers Legal Fundamental Representations and Section 1.8 (Undisclosed Liabilities)) will not exceed the Indemnification Escrow Amount (the “Cap”) it being understood that Losses paid with respect to the representations and warranties contained in Section 1.8 (Undisclosed Liabilities) will reduce the aggregate amount available under the Cap only after US$ 4,000,000 on account of such Losses have been actually paid). The indemnifiable Losses payable by the Sellers in respect of claims pursuant to Section 3.2(a) in connection with (A) Sellers Business Fundamental Representations and Sellers Legal Fundamental Representations will not exceed the Aggregate Purchase Price (as defined in Annex A-1 to the Binding Offer) or (B) the representations and warranties contained in Section 1.8 (Undisclosed Liabilities) will not exceed US$ 10,000,000 less any other indemnifiable Losses paid by the Sellers pursuant to Section 3.2.
(b)    Limitations on Buyer’s Indemnification of the Sellers.
(i)    The Buyer will have no liability for any claim for indemnification pursuant to Section 3.3(a) that is a De Minimis Claim, subject to the De Minimis Claim Cap.
(ii)    The maximum aggregate amount of indemnifiable Losses payable by Buyer in respect of claims pursuant to Section 3.3(a) will not exceed the Cap. The maximum aggregate amount of indemnifiable Losses payable by the Buyer in respect of claims pursuant to Section 3.3(b) will not exceed the Aggregate Purchase Price.
(c)    No Party will be obligated to indemnify any other Person with respect to any Losses with respect to any matter that was included in the calculation of the adjustments reflected in the Aggregate Purchase Price pursuant to Section 5 of Annex A-1 (to the extent so included). Notwithstanding anything to the contrary contained in this Binding Offer, neither the Sellers nor the Buyer shall be liable to any Person under this Binding Offer for any special, consequential, punitive, indirect or exemplary damages (including lost or anticipated revenues or profits relating to the same) arising from any claim relating to this Binding Offer (other than to the extent such damages are paid to a third party), whether such claim is based on warranty, contract, tort (including negligence or strict liability) or otherwise.    
(d)    No Indemnified Party will be entitled to recover from an Indemnifying Party more than once in respect of the same Losses.
(e)    Notwithstanding anything to the contrary in this Binding Offer, the Parties agree and acknowledge that, for any amounts finally determined to be payable by the Sellers in respect of claims pursuant to Section 3.2, such amounts will solely be paid from funds then available in the Indemnification Escrow Account and the Sellers will not be obligated to pay any such amounts remaining unpaid after the funds in the Indemnification Escrow Account have been exhausted.
3.6.    Indemnity Payments.
(a)    In calculating the amount of any Losses, (i) the proceeds actually received by the Indemnified Party or any of its Affiliates under any insurance policy or pursuant to any claim, recovery, settlement or payment by or against any other Person, in each case, net of any actual costs, expenses or premiums incurred in connection with securing or obtaining such proceeds will be deducted, and (ii) any payment made pursuant to this Article III will be treated as an adjustment to the Aggregate Purchase Price for all Tax purposes unless otherwise required by applicable Law. The amount of any Losses incurred in Argentine pesos will be converted into dollars at the Implied Valuation as in effect on the date such Losses are actually incurred.
(b)    If an Indemnified Party recovers an amount from a third party in respect of Losses that is the subject of indemnification hereunder after all or a portion of such Losses has been paid by an Indemnifying Party pursuant to this Article III, the Indemnified Party will promptly remit to the Indemnifying Party the excess (if any) of (i) the amount paid by the Indemnifying Party in respect of such Losses, plus the amount received from the third party in respect thereof, less (ii) the full amount of Losses; provided that if the Indemnified Party is the Buyer and the amount paid by the Indemnifying Party was paid from the Indemnification Escrow Account and the Indemnification Escrow Agreement will not yet have been terminated, the Buyer will promptly remit such recovered amount to the Indemnification Escrow Account instead of the Indemnifying Party.
(c)    Subject to Section 3.5(e), (i) the Indemnifying Party will pay all amounts payable pursuant to this Article III, by wire transfer of immediately available cash funds in dollars, promptly following receipt from an Indemnified Party of a bill for Losses that are the subject of indemnification hereunder, unless the Indemnifying Party in good faith reasonably disputes the Losses, in which event it will promptly notify the Indemnified Party, and (ii) in any event, the Indemnifying Party will pay to the Indemnified Party, by wire transfer in immediately available cash funds in dollars, the amount of any Losses for which it is liable hereunder no later than three Business Days following any determination of such Losses and the Indemnifying Party’s liability therefor. A “determination” will exist when (A) the parties to the dispute have entered into a legally binding agreement with respect to the dispute, (B) a court of competent jurisdiction will have entered a final and non-appealable order or judgment, or (C) an arbitration or like panel will have rendered a final and non-appealable determination with respect to disputes the parties have agreed to submit thereto.
3.7.    Guarantor. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees to the Buyer the full, complete and timely payment and performance, subject to the terms and conditions hereof, by the Sellers of each and every payment and performance obligation of the Sellers in this Article III, without any set off, restriction, condition or deduction for or on account of any counterclaim. If the Sellers default for any reason whatsoever on any of their payment obligation under this Article III or fail to perform such performance obligation when and to the extent that any of the same will become due and payable, then the Guarantor will unconditionally pay or cause to be paid such payment obligation or perform or cause to be performed such performance obligation immediately upon notice from the Buyer specifying the default so that the same benefits will be conferred on the Buyer as would have been received if such payment or performance obligations had been duly performed and satisfied by the Sellers. The Buyer will not be required to demand payment or performance from, or initiate Legal Proceedings against, the Sellers or any other Person prior to or contemporaneously with proceeding against the Guarantor or demand payment therefrom or performance thereby more than once.
3.8.    Exclusivity of Indemnity. Except in the case of intentional fraud committed with the Knowledge of the Sellers or the Knowledge of the Buyer as applicable (as to which none of the limitations set forth in this Article III will apply), from and after the Initial Closing Date, the rights of any Indemnified Party under this Article III will be the sole and exclusive remedy of such Indemnified Party for monetary damages with respect to claims for breach or inaccuracy of any of the representations, or warranties, or breach of any of the covenants and agreements, in each case, that are indemnifiable under this Article III.
3.9.    Indemnification Escrow Agreement. Promptly (but in any event within 15 Business Days of the Initial Closing Date), the Buyer shall deposit the Indemnification Escrow Amount by wire transfer of immediately available funds into the Indemnification Escrow Account to be held and distributed in accordance with the terms of the Indemnification Escrow Agreement.

ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each of the Sellers as follows:
4.1        Corporate Existence; Authority. The Buyer is a sociedad anónima duly organized and validly existing under the Laws of Argentina and has all requisite corporate power and authority to own, lease and operate its assets and carry on its business as currently conducted. The Buyer has all requisite corporate power and authority to enter into this Binding Offer, the Note Pledge and the Indemnification Escrow Agreement (together, the “Buyer Documents”) and the 51% Equity Interest Pledge, and to consummate the transactions contemplated hereby and thereby. This Binding Offer has been, and each other Buyer Document and the 51% Equity Interest Pledge will be, at or prior to the Initial Closing Date, duly authorized, executed and delivered by the Buyer, and no additional corporate action on the part of the Buyer is necessary to authorize the consummation of any Buyer Document or the transactions contemplated hereby or thereby. Each Buyer Document when so executed and delivered will constitute, a valid and binding agreement of the Buyer, enforceable in accordance with its terms, subject to General Enforceability Exceptions.
4.2        Conflicts; Consents of Third Parties.
(a)    None of the execution and delivery by the Buyer of the Buyer Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by the Buyer with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation or by-laws (or comparable organizational documents) of the Buyer, (ii) any Contract, or Permit to which the Buyer is a party or by which any of the properties or assets of the Buyer are bound, (iii) any Order of any Governmental Authority applicable to the Buyer or by which any of the properties or assets of the Buyer are bound, or (iv) any applicable Law.
(b)    No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Authority is required on the part of the Buyer in connection with the execution and delivery of the Buyer Documents or the compliance by the Buyer with any of the provisions hereof or thereof.
4.3        Litigation. There are no Legal Proceedings pending or, to the Knowledge of the Buyer, threatened that reasonably may be expected to result in an Order that would prohibit or restrain the ability of the Buyer to enter into the Binding Terms or consummate the transactions contemplated hereby.
ARTICLE V
The Buyer makes the representations and warranties set forth in Article IV of Annex D as of the Initial Closing Date.

CERTAIN DEFINED TERMS

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
“Contract” means any written contract, indenture, note, bond, lease, commitment or other agreement.
“Employee Plan” means any plan, program, arrangement, agreement or commitment which is an employment or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, stock option, stock purchase, severance pay, life, health, disability or accident insurance plan, or vacation, or other employee benefit plan or commitment that are sponsored or maintained by the Target.
“Escrow Agent” mean Citibank, N.A. or any other escrow agent mutually agreed on by the Buyer and the Sellers.
“Governmental Authority” means any government, governmental agency, department, bureau, authority or instrumentality, or court of competent jurisdiction, of Argentina, in each case whether federal, state or local.
“Guarantor” means NII Holdings, Inc.
“Implied Valuation” means the implicit exchange rate resulting from dividing (i) the last price in Argentine pesos of dollar-denominated Argentine Sovereign Bonds named BONAR 2017 (AA17) quoted at closing of the activities on the calculation date at Bolsa de Comercio de Buenos Aires on its webpage Bolsar https://www.bolsar.com/VistasDL/PaginaIntradiarioEspecies.aspx?Especie=AA17&Vto=4 by (ii) the average between the last bid price and ask price for the same securities quoted in the over-the-counter market in New York City, New York at closing of activities on the same calculation date, as set forth in the Bloomberg screen of JP Morgan Argentina, Corporate, Currency, Government, Preferred, under screenname “JARG”.
“Indemnification Escrow Account” means the deposit account of the Escrow Agent that is governed by the Indemnification Escrow Agreement and into which the Indemnification Escrow Amount is deposited.
“Indemnification Escrow Agreement” means the escrow agreement among the Parties and the Escrow Agent in a form to be agreed upon by the Parties and the Escrow Agent, which shall be substantially in the form set forth in Annex F hereto.
“Indemnification Escrow Amount” means an amount in dollars equal to US$6,000,000.
“Intellectual Property” means all intellectual property, industrial property, and similar proprietary rights worldwide, whether registered or unregistered, including all rights in and to: (i) patents, design patents and utility models, (ii) trademarks, service marks, trade names, service names, logos, Internet domain names, together with the goodwill symbolized by or associated with any of the foregoing (collectively, “Trademarks”), (iii) copyrights and (iv) Software; provided that the foregoing clauses (i) through (iii) shall include any and all registrations or applications for registration for any of the foregoing, and any provisionals, divisionals, continuations, continuations-in-part, renewals, reissuances, re-examinations and extensions of any of the foregoing (as applicable).
“Knowledge of the Buyer” means the actual knowledge of Alejandro Urricelqui and Sebastían Bardengo as of the date hereof.
“Knowledge of the Sellers” means the actual knowledge of the Persons set forth on Schedule 1.1(d) as of the date hereof.
“Law” means any statute, law, code, ordinance, rule, regulation, Order or other requirement or rule of law.
“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Authority or arbitrator (public or private).
“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude or transfer restriction, other than any action taken by a Governmental Authority against the Target, the Sellers or the Guarantor, and other than those arising under the Binding Offer or the transactions and agreements contemplated therein.
“Material Adverse Effect” means any event or condition, which either individually or in the aggregate, results in, or would reasonably be expected to result in (i) a material adverse change in, or a material adverse effect on, the business, financial condition, assets used in the business or results of operations of the Target, (ii) a material adverse effect on the legality, validity or effectiveness of the Target Telecommunication Licenses (including the permits for the use of radio electric spectrum), or (iii) an effect that would prevent, materially delay or materially impair the ability of the Seller to consummate the transactions contemplated by this Binding Offer; provided, however, that for purposes of clause (i) only, any adverse effect will not be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect to the extent resulting from: (a) changes in Argentine GAAP (or official interpretations thereof) or changes in the regulatory accounting requirements applicable to the industry in the which the Target operates; (b) any failure by the Target to meet any estimates of revenues, earnings or other operational or financial measures (including any changes in the Target’s business plan or Applicable Operating Budget) for any period ending on or after the Effective Date and prior to the Definitive Closing Date, whether internal, published or otherwise; provided, that the exception in this clause (b) will not prevent or otherwise affect a determination that any change or occurrence underlying such failure has resulted in, or contributed to, a Material Adverse Effect; (c) changes in the financial (including the cost or availability of debt or equity financing) or securities markets or conditions or economic, regulatory or political conditions, in each case, globally in Argentina or in any other jurisdiction; (d) changes (including changes of applicable Law or official interpretations thereof) or conditions generally affecting the industry or the country or the regions in which the Target operates, including any foreign exchange controls; (e) acts of war, sabotage or terrorism or effects of weather, meteorological events, earthquakes or other natural disasters or acts of God; (f) the public announcement of the transactions contemplated by the Binding Offer; (g) any actions taken by Governmental Authorities as a result of transactions contemplated in this Binding Offer; (h) any action taken (or omitted to be taken) at the written request of the Buyer after the date hereof; (i) any action taken by the Target that is required, contemplated or permitted by the Binding Terms; (j) any default by Argentina of any of its respective debt obligations; or (k) any effect relating to the Chapter 11 Cases; provided, further, that with respect to subsections (a), (c), (d) or (e), such matters will be considered to the extent that they disproportionately affect the Target as compared to similarly situated businesses operating in the telecommunications industry in Argentina.
“Network Assets” means any Transmitter Sites, tower structures, antennas, transmitters, base radios, switches, aggregation points, and other equipment, in each case, owned or leased by the Target and used in connection with its business.
“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Authority or of any court or arbitrator (public or private).
“Ordinary Course of Business” means the ordinary and usual course of business of the Target since January 1, 2014.
“Owned Property” means all real property and interests in real property owned in fee by the Target other than Network Assets.
“Permits” means any approvals, authorizations, consents, licenses, permits or certificates issued by a Governmental Authority, but excluding any Telecommunication Licenses.
“Permitted Liens” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance which have been made available to the Buyer, (ii) statutory liens for any Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business, (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Authority, (v) liens securing debt as disclosed in the Argentine Financial Statements, (vi) title of a lessor under a capital or operating lease, and (vii) such other imperfections in title, charges, easements, restrictions and encumbrances which would not result in a Material Adverse Effect.
“Real Property Lease” means any lease of real property, other than Network Assets, by the Target.
“Sellers Business Fundamental Representations” means the representations and warranties contained in Section 1.19(e) (liability arising from the NII Holdings, Inc. 2015 Incentive Compensation Plan) and Section 1.23 (Financial Advisors).
“Sellers Legal Fundamental Representations” means the representations and warranties contained in Section 1.1 (Sellers’ Corporate Existence and Authority), Section 1.2 (Target’s Corporate Existence and Authority), Section 1.4 (Capitalization), and Section1.5 (Ownership of Equity Interests).
“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) all documentation including user manuals and other training documentation related to any of the foregoing.
“Subscriber” means an active SIM card in commercial use in the Target’s network in Argentina.
“Subsidiary” means, with respect to any Person, any other Person with respect to which such first Person (alone or in combination with any of such first Person’s other Subsidiaries) owns (a) capital stock or other equity interests having the ordinary voting power to elect a majority of the board of directors or other governing body of such Person or (b) if no such governing body exists, a majority of the outstanding voting securities of such Person.
“Tax Return” means all returns, declarations, reports, estimates, claims for refunds, information returns, elections and statements required to be filed with any Governmental Authority in respect of any Taxes, including any amendments thereto and requests for the extension of time in which to file any such return, declaration, report, estimate, information return, election or statement.
“Target Debt” means, without duplication, any and all liabilities of the Target for (i) borrowed money, whether current or funded, secured or unsecured, obligations evidenced by bonds, debentures, notes or similar instruments, including, without limitation, all liabilities in respect of mandatorily redeemable or purchasable capital stock or securities convertible into capital stock; (ii) the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business); (iii) any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, to the extent that such liabilities are required to be classified and accounted for under Argentine GAAP as capital leases; (iv) any letter of credit, banker’s acceptance, surety bonds or similar credit transaction; (v) any transactions accounted for under Argentine GAAP as debt; (vi) any supplier account payables above 90 days past due (other than accounts payable being disputed in good faith); (vii) any unfunded or underfunded Employee Plan obligations (calculated on a projected net benefit obligation basis); (viii) to the extent negative, the net position of the Target under all Contracts to which it is a party documenting derivative and/or hedging transactions; (ix) all accrued interest, fees, premiums, penalties and/or other amounts due in respect of the foregoing; and (x) all guarantees of obligations of any other Person. For the avoidance of doubt, Target Debt will not include intercompany obligations.
“Taxes” means (i) any Argentine or Spanish federal, state or local taxes, charges, fees, imposts, levies or other assessments, including all such taxes based on gross or net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing authority in connection with any item described in clause (i).
“Telecommunication Licenses” means the licenses for the operation or provision of any services of technologies of information and communications granted by the Regulatory Enforcing Authority under Argentine Law No. 27,078 or its predecessors under the applicable telecommunications regulations.
“Transaction Agreements” means the Binding Offer (including Annex A-1), the 49% Equity Pledge, the 51% Equity Pledge and any and all agreements entered pursuant to the Binding Offer.
“Transmitter Sites” means all rooftop, tower or other structures, including related construction work and civil infrastructure, on which the Target has radio transmitters.




ANNEX A-1
Call Option


FURTHER TERMS AND CONDITIONS OF SELLERS’ UNDERTAKING
This undertaking (this “Undertaking”) supplements and forms an integral part of the Binding Terms to which it has been annexed and is referred to therein as the 49% Sale and the 51% Call Option. Unless otherwise defined herein, defined terms shall have the meaning set forth in the Binding Terms (including its other annexes and exhibits).
1.Undertakings.
(a)    Equity Sale and Call Option; Consideration. The Sellers hereby undertake to sell to the Buyer all of the issued and outstanding ownership interests (participaciones sociales) (the “Equity Interests”) in the Target, free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), in two tranches as provided in Sections 1(b) and 1(c) below for an aggregate purchase price of US$ 165,000,000 (as adjusted pursuant to Section 5, the “Aggregate Purchase Price”) to be paid in accordance with the Binding Terms and as further detailed in Section 1(d) below.
(b)    49% Sale. On the Initial Closing Date, the Sellers shall unconditionally and irrevocably sell to the Buyer the 49% Equity Interest, in the form of the Initial Equity Units (as defined below), and the Note (issued by NII Mercosur Telecom, S.L.U.), each free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), in exchange for the payment contemplated in Section 1(d)(i). The Sellers shall sell the 49% Equity Interest to the Buyer as follows:
(i)    Sell to the Buyer the 136,862,160 ownership interests (participaciones sociales) in the Target held by NII Mercosur Móviles, S.L.U. as of the Initial Closing Date (the “Móviles Equity Units”), which, as of the Initial Closing Date, represent all of the Equity Interests held by NII Mercosur Móviles, S.L.U.; and
(ii)    Sell to the Buyer the 260,153,715 ownership interests (participaciones sociales) in the Target held by NII Mercosur Telecom, S.L.U. (the “Initial Telecom Equity Units” and, together with the Móviles Equity Units, the “Initial Equity Units”).
(c)    51% Call Option. Commencing on the date that Regulatory Approval is obtained (the “Regulatory Approval Date”) and continuing until the date that is 10 Business Days immediately following the Regulatory Approval Date (the “Definitive Closing Date” and for the time period beginning on the Regulatory Approval Date and ending on the Definitive Closing Date, the “51% Call Option Period”), the Sellers hereby unconditionally and irrevocably undertake to sell to the Buyer, at Buyer’s option, the 51% Equity Interest, in the form of the 413,220,605 ownership interests (participaciones sociales) in the Target held by NII Mercosur Telecom, S.L.U. (the “Final Equity Units”), free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein) in exchange for the payment or assignment, as applicable, contemplated in Section 1(d)(iii); provided, that, if the Buyer has not exercised the 51% Call Option prior to the Definitive Closing Date, (A) the 51% Call Option shall be deemed automatically exercised and payable in full on the Definitive Closing Date without any further action by the Parties, (B) the Note (if any) will be immediately assigned by the Buyer to the Sellers free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), without the payment of any consideration or amount and (C) the Sellers will transfer the 51% Equity Interest, in the form of the Final Equity Units, free and clear of all Liens to the Buyer. Notwithstanding anything to the contrary herein, the 51% Call Option may only be exercised in accordance with this Section 1(c) once the Buyer has paid to the Seller any Additional Amount (as defined below) due under Section 5(e)(2).
(d)    Procedures; Call Option Purchase Price.
(i)    No later than 4:00 P.M. New York City time on the Initial Closing Date the Sellers (each as specified herein) will (1) deliver to the Buyer the 49% Equity Interest, in the form of the Initial Equity Units (as defined below), and the Note, each free and clear of all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), (2) deliver any and all documents in form and substance satisfactory to the Buyer that are required to be filed with the Argentine Inspección General de Justicia for the registration of the transfer of the 49% Equity Interest to the Buyer and for the registration of the 51% Equity Interest Pledge (including, without limitation, giving all required notices to the Target or its management and providing all required certificados de inhibición or equivalent document of the Sellers), (3) as promptly as practicable, hold a meeting of members or Equity Interest holders of Target to acknowledge, accept and record the 51% Equity Interest Pledge and to provide the Buyer with the governance rights set forth in Exhibit A hereto, and (4) execute and deliver to the Buyer such instruments of conveyance as the Buyer may reasonably request, and the Buyer will pay to the Sellers US$ 165,000,000 (as adjusted pursuant to the terms set forth in Section 5) (as adjusted, the “Purchase Price”) as follows: (A) US$ 80,000,000 in cash paid by wire transfer of immediately available funds available outside of Argentina to the Sellers’ Accounts (the “49% Transfer Payment”), and (B) US$ 85,000,000 in cash paid by wire transfer of immediately available funds available outside of Argentina to the Sellers’ Accounts against issuance by the Sellers and delivery to the Buyer of the Note; provided, however, that if the Indemnification Escrow Account has not been established prior to such date, the Buyer will withhold US$ 6,000,000 and cause such amount to be transferred to the Indemnification Escrow Account promptly after it has been established or in accordance with Section 3.9 of Annex D.
(ii)    If the Buyer elects to exercise the 51% Call Option pursuant to Section 1(c), the Buyer will deliver to the Sellers a written notice (the “Call Exercise Notice”) exercising the 51% Call Option, and the Buyer and the Sellers will consummate the transactions contemplated by the 51% Call Option within three Business Days after the Sellers’ receipt of the Call Exercise Notice; provided, however, that in any event the 51% Call Option shall be automatically exercised, with or without delivery of a Call Exercise Notice, on the Definitive Closing Date.
(iii)    Promptly, and in no event later than three Business Days, after the date that the Buyer exercises the 51% Call Option (including, for the avoidance of doubt, if automatically exercised on the Definitive Closing Date), (A) the Sellers will (1) deliver to the Buyer the 51% Equity Interest, in the form of the Final Equity Units, free and clear of any and all Liens (other than those arising under the Binding Offer or by virtue of the transactions contemplated hereby or the agreements referenced therein), (2) file with the Argentine Inspección General de Justicia all documents required for the registration of the transfer of the 51% Equity Interest to the Buyer, (3) deliver to the Buyer written resignations of all the directors and statutory auditors (síndicos) of the Target appointed by the Sellers, and (4) execute and deliver to the Buyer such instruments of conveyance as the Buyer may reasonably request, and (B) the Buyer will assign the Note to the Sellers, without the payment of any consideration or amount other than delivery of the 51% Equity Interest as contemplated above.
(e)    Cooperation. The Parties will take all actions as may be reasonably necessary to consummate the sales contemplated by this Section 1, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate.
(f)    Assignment of 51% Call Option and Note. During the Regulatory Approval Period (as defined below) and the Additional One Year Period (as defined below), the Buyer may assign the 51% Call Option and/or the Note to any third party.
(g)    Pledges. The Sellers have pledged in favor of the Buyer 51% of the Equity Interests to secure the Sellers’ obligations under the 51% Call Option.
2.    Regulatory Approval.
(a)    Notwithstanding anything to the contrary herein, the Parties acknowledge that the exercise of the 51% Call Option is subject to the receipt of the Regulatory Approval.
(b)    During the period beginning on the Effective Date and ending on March 31, 2019 (the “Regulatory Approval Period”), each of the Parties will (and the Sellers will cause the Target to) use its commercially reasonable efforts to:
(i)    (A) make or cause to be made all filings or applications required of each of them or their respective Affiliates to obtain any necessary Governmental Approvals, including the Regulatory Approval (but excluding the Antitrust Approval), and (B) cooperate with each other in connection with any such filing or applications and in connection with resolving any investigation or other inquiry of any relevant Governmental Authority with respect to any such filing or application; provided that the Sellers shall not make, and shall cause the Target not to make, any filing or application or engage in any communication with any Governmental Authority with respect to the Regulatory Approval without the prior written approval of the Buyer (such approval not to be unreasonably withheld, conditioned or delayed);
(ii)    furnish to each other all information required for any other application or filing to be made pursuant to any applicable Law in connection with the transactions contemplated by this Undertaking; and
(iii)    take such action as may be reasonably required to obtain any necessary Governmental Approvals, including the Regulatory Approval (but excluding the Antitrust Approval), as promptly as possible after the execution of this Undertaking and to avoid the entry of, or to effect the dissolution of, any decree, order, judgment, injunction, temporary restraining order or other order in any suit or proceeding, that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by this Undertaking; provided that the Sellers shall not make, and shall cause the Target not to make, any filing or application without the prior written approval of the Buyer (such approval not to be unreasonably withheld, conditioned or delayed).
(c)    If the Regulatory Approval has not been obtained prior to September 30, 2018, the Buyer may require the Sellers, at the Buyer’s sole discretion, to extend the Regulatory Approval Period until March 31, 2020 (the “Additional One Year Period”), provided that no additional extensions may be required following the Additional One Year Period without the mutual written agreement by the Parties. In the event that either (1) the Regulatory Approval Period has been extended by the Buyer as provided herein and the Regulatory Approval has not been obtained on or prior to the expiration of the Additional One Year Period or (2) the Buyer has not extended the Regulatory Approval Period as provided herein, then the Sellers shall and shall cause the Target, in exchange only for the assignment of the Note to the Sellers and no additional consideration:
(i)    (A) Sell, assign and transfer to the Buyer all of Target’s properties, assets and rights, free and clear of all encumbrances, except for the Target’s Telecommunication Licenses; and (B) execute and deliver to the Buyer such instruments of conveyance as the Buyer may reasonably request;
(ii)    (A) Cancel, terminate or otherwise forfeit all of the Target’s Telecommunication Licenses and any and all rights associated with the Target’s Telecommunication Licenses; and (B) provide reasonably satisfactory evidence to the Buyer of such cancellation, termination or forfeiture; and
(iii)    Only after the actions contemplated in each of clause (i) and (ii) have been fully consummated, liquidate the Target and transfer any and all proceeds to the Buyer.
(d)    The Buyer agrees that the Sellers will have no liability whatsoever to the Buyer as regards the obligation to obtain the Regulatory Approval other than as set forth in the Binding Terms (including this Undertaking), and the Buyer will not, and will cause its Affiliates and representatives not to, make any claim whatsoever, other than for enforcement of the Binding Terms (including this Undertaking and the Note) against the Sellers in connection with the failure to obtain the Regulatory Approval or any action commenced by the Argentine Autoridad Federal de Tecnologías de la Información y las Comunicaciones or CNC or any other Governmental Authority against any of the Buyer, the Sellers, Affiliates of the Sellers or the Target, all of which claims are hereby forever discharged and the Sellers are released of any and all losses in connection therewith.
(e)    The Buyer assumes any and all risk associated with, arising from, relating to or in connection with the Regulatory Approval pursuant to the transactions contemplated in the Binding Terms (including this Undertaking), including Legal Proceedings relating to the process of obtaining or the failure to obtain the Regulatory Approval, or any impairment or loss of licenses.
3.    Antitrust Approval.
(a)    The Buyer and the Sellers will: (i) no later than seven days following the date on which the Buyer determines that a filing is required under the Argentine Antitrust Statutes, make such filings (including filing the Argentine Form F1); (ii) comply with applicable Argentine Antitrust Statutes in relation to the making of any filings in connection with the Antitrust Approval and at the earliest practicable date with any request for additional information from the CNDC or any other competent Governmental Authority pursuant to the Argentine Antitrust Statutes; and (iii) use reasonable best efforts to obtain the Antitrust Approval. Notwithstanding anything to the contrary herein, (i) no Party will be obligated to pay any amounts to any Governmental Authority in connection with the Antitrust Approval other than customary application and filing fees to be paid by the Buyer and (ii) the Buyer shall not under any circumstances be required to, vis-à-vis the Sellers in connection with obtaining the Antitrust Approval, take any measure other than disposing of the Equity Interests for fair market value.
(b)    The Buyer and the Sellers acknowledge and agree that the Buyer will prepare all drafts of any submissions or material communications with the CNDC or any other competent Governmental Authority in connection with the Argentine Antitrust Statutes and provide such drafts in a timely manner to the Sellers, allowing sufficient time to comment, with such comments to be reasonably considered by the Buyer in connection with the preparation of such submissions or material communications. The Sellers shall cause the Target to provide the Buyer with information reasonably requested by the Buyer regarding the Target and the Target’s industry and competitors reasonably required or necessary to obtain the Antitrust Approval.
(c)    The Buyer and the Sellers will each use commercially reasonable efforts to assist and cooperate with one another in good faith in connection with the application for the Antitrust Approval and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by or related to this Undertaking, commenced by the CNDC or any other competent Governmental Authority.
(d)    Notwithstanding anything to the contrary in this Undertaking, the Buyer hereby irrevocably waives any right to rescission of this Undertaking or to recover any or all of the Purchase Price, any right to indemnification against the Sellers or any of its Affiliates or any losses to the Buyer or the Target, in each case, as a result of any failure to obtain the Antitrust Approval after the Closing, except to the extent such failure is the result of the Sellers’ gross negligence or willful misconduct.
(e)    The Buyer assumes any and all risk associated with, arising from, relating to or in connection with the Antitrust Approval pursuant to the transactions contemplated in the Binding Terms (including this Undertaking), including legal proceedings relating to the process of obtaining or the failure to obtain the Antitrust Approval.
4.    Conduct of the Business.

(a)    From the Effective Date until the Definitive Closing Date, except (i) as required by applicable Law, any Governmental Authority or the Telecommunication Licenses (in which case, the Sellers will promptly notify the Buyer of any such condition), (ii) as otherwise expressly provided by the Binding Terms, or (iii) with the prior written consent of the Buyer (which consent will not be unreasonably withheld, delayed or conditioned), the Sellers will and will cause the Target to (A) conduct the business of the Target in the Ordinary Course of Business; (B) terminate any existing Contract with NII Holdings, Inc. and any Affiliate of NII Holdings, Inc. or of the Sellers that is not a Subsidiary of the Target, including, for the avoidance of doubt, any existing Contract with Fundación Nextel para la Acción Comunitaria (other than the Transition Services Agreement) and as the Buyer may otherwise elect); (C) abstain from terminating employees of the Target other than for cause or otherwise as part of the Ordinary Course of Business; (D) use commercially reasonable efforts to give all notices to, and obtain all consents from, all Persons required pursuant to the Contracts set forth in Schedule 1.3(a) of Annex D to the Binding Terms; and (E) take all reasonably necessary actions to promptly provide the Buyer with any information and documents reasonably requested by the Buyer in order to maintain the validity of the 51% Equity Interest Pledge.
(b)    Without limitation to the generality of the foregoing Section 4(a), from the Effective Date until the Definitive Closing Date the Sellers will not, except with the prior written consent of the Buyer, permit the Target to do any of the following:
(i)    declare, set aside, make or pay any dividend or other distribution in respect of the Equity Interests or other ownership interest in the Target or repurchase, redeem or otherwise acquire any outstanding Equity Interests or other securities of, or other ownership interests in the Target;
(ii)    transfer, issue, sell or dispose of, in each case, directly or indirectly, any of the Equity Interests or other participations in or securities of the Target or grant options, warrants, calls or other rights to purchase or otherwise acquire the Equity Interests or other securities of the Target;
(iii)    effect any recapitalization, reclassification or like change in its capitalization;
(iv)    amend its certificate of incorporation or by-laws or other organizational documents;
(v)    enter into or agree to enter into any spin-off, merger or consolidation with any corporation or other entity, file a petition in bankruptcy under any provisions of applicable bankruptcy Law or consent to the filing of any bankruptcy petition against the Target under any applicable bankruptcy Law or acquire the securities of any other Person;
(vi)    create any Subsidiary or make any Investment;
(vii)    except in the Ordinary Course of Business, (A) accelerate, terminate, cancel, renew, amend, grant a waiver under or otherwise modify any Material Contract or (B) enter into any Contract that would constitute a Material Contract if in effect as of the Effective Date;
(viii)    incur, assume or guarantee any indebtedness or liability of any other Person other than in the Ordinary Course of Business;
(ix)    sell, assign, transfer, convey, lease or otherwise dispose of, or place any encumbrances on the property, plant or equipment of the Target reflected in the Target’s audited annual financial statements as of December 31, 2014;
(x)    enter into a new line of business or discontinue any existing line of business;
(xi)    enter into any contract with an Affiliate of NII Holdings, Inc. or of the Sellers that is not a Subsidiary of the Target; or
(xii)    agree in writing to do anything prohibited by this Section 4.
(e)    The Buyer will establish a due diligence committee comprised of four members (the “Members”) to direct and coordinate the Buyer’s due diligence activities. From the Initial Closing Date until the Definitive Closing Date, except as required by applicable Law, the Sellers will and will cause the Target to provide:

(i)    reasonable office space for Members and their consultants, attorneys, accountants and other advisors (the “Advisors”), which office space will be located near the senior management of the Target;
(ii)    each Member and its representatives reasonable access to key personnel of the Target and, if requested by a Member, to the Target’s external Advisors during normal business hours, which access will not affect the operations or management of the Target; and
(iii)    each Member reasonable access to all contracts, books and records and other documents, data and information, including the Target’s systems and databases;
provided that all access and investigation shall be conducted in such a manner as not to unreasonably interfere in any material respects with the conduct of the business of the Target.
(f)    Within 15 days of the Initial Closing Date, the Sellers shall deliver to the Buyer a certificate issued by an internationally recognized certified public accountant, in form reasonably acceptable to the Buyer, certifying the accuracy of the information set forth in Schedule 1.13(b) of Annex D to the Binding Offer.
(g)    Notwithstanding anything to the contrary in this Section 4, the Buyer and the Sellers hereby agree that from time to time after the Final Target Net Cash Balance (as defined below) has been determined in accordance with Section 5 below and for a period not to exceed 10 Business Days, (i) the Target shall be permitted to declare and/or pay Permitted Payments and (ii) the Sellers shall be permitted to exchange Permitted Payments for Dollars or Dollar investments solely for the purpose of effecting a distribution in Dollars to Sellers (each such transaction in clauses (i) and (ii), a “Permitted Transaction”). The Parties hereby agree that the Sellers and the Target shall be permitted to enter into any agreements and/or take any other actions reasonably required to permit the consummation of any Permitted Transactions; provided, however, that, for the avoidance of doubt, Target shall not be permitted to sell any of its assets or incur into any indebtedness to permit the consummation of any Permitted Transactions.
5.    Purchase Price Adjustment.
(a)    [Intentionally Omitted].
(b)    [Intentionally Omitted].
(c)    As promptly as practicable, but in no event later than 15 days after the Initial Closing Date, the Buyer will, in good faith, prepare and deliver to the Sellers a statement (the “Initial Closing Target Net Cash Statement”) setting forth the Buyer’s good faith calculation of the consolidated amount of the Target Net Cash Balance as of the Initial Closing Date (the “Actual Target Net Cash Balance”), along with reasonable supporting detail to evidence the calculation of such amounts. The Initial Closing Target Net Cash Statement shall be prepared in good faith, and shall entirely disregard (i) any and all effects on the assets or liabilities of the Target as a result of any financing or refinancing arrangements entered into at any time by the Buyer or by the Target after the Initial Closing Date or any other transaction entered into by the Buyer or by the Target after the Initial Closing Date in connection with the consummation of the transactions contemplated by this Undertaking and (ii) any of the plans, transactions or changes which the Buyer intends to initiate or make or cause to be initiated or made after the Initial Closing Date with respect to the Target or its business or assets, or any facts or circumstances that are unique or particular to the Buyer or any of its assets or liabilities.
(d)    The Sellers will have five Business Days after receipt of the Initial Closing Target Net Cash Statement to review the Initial Closing Target Net Cash Statement (the “Review Period”). If the Sellers object to any aspect of the Initial Closing Target Net Cash Statement, the Sellers will deliver a written notice of objection (the “Objection Notice”) to the Buyer on or prior to the expiration of the Review Period, setting forth in reasonable detail the basis for any such objection. If the Sellers deliver an Objection Notice to the Buyer prior to the expiration of the Review Period, the Parties will, for a period of five Business Days thereafter (the “Resolution Period”), attempt in good faith to resolve the matters contained therein, and any written resolution signed by each of the Parties as to such matter will be final, binding and conclusive and nonappealable for all purposes hereunder. In the event that the Sellers do not deliver an Objection Notice to the Buyer prior to the expiration of the Review Period, the Sellers will be deemed to have agreed to the Initial Closing Target Net Cash Statement, which Initial Closing Target Net Cash Statement, or undisputed portions thereof in the event the Sellers send an objection notice (as the case may be), will be final, binding, conclusive and nonappealable for all purposes hereunder. If at the conclusion of the Resolution Period, the Sellers and the Buyer have not reached an agreement with respect to all disputed matters contained in the Objection Notice, then within five Business Days thereafter, the Parties will submit for resolution those matters remaining in dispute to the Independent Accounting Firm. The Independent Accounting Firm will act as an arbitrator to resolve (based solely on the written and oral presentations of the Buyer and the Sellers and not by independent review) only those matters submitted to it in accordance with this Section 5(d). The Buyer and the Sellers will direct the Independent Accounting Firm to render a resolution of all such disputed matters as promptly as practicable and, in any event, within 10 Business Days after its engagement or such other period agreed upon in writing by the Buyer and the Sellers. With respect to each disputed matter, the Independent Accounting Firm’s determination, if not in accordance with the position of either the Buyer or the Sellers, will not be in excess of the higher, nor less than the lower, of the amounts set forth by the Buyer in the Initial Closing Target Net Cash Statement or by the Sellers in the Objection Notice, as applicable. The resolution of the Independent Accounting Firm will be set forth in a written statement delivered to each of the Parties and will be final, binding, conclusive and nonappealable for all purposes hereunder. The Actual Target Net Cash Balance, once modified and/or agreed to in accordance with this Section 5(d), will become the “Final Target Net Cash Balance”. The fees, expenses and costs of the Independent Accounting Firm shall be borne in the same proportion as the aggregate amount of the disputed items that are unsuccessfully disputed by each (as determined by the Independent Accounting Firm) bear to the total amount of the disputed items submitted to the Independent Accounting Firm. Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties in connection with resolving any dispute under this Section 5(d) will be borne by the Party incurring such cost or expense.
(e)    Any amounts payable pursuant to the determination of the Final Target Net Cash Balance, will be paid as follows, in each case by wire transfer of immediately available funds available outside of Argentina to an account or accounts designated by the recipient within five Business Days after such determination:
(i)    if the Final Target Net Cash Balance is less than the Minimum Target Net Cash Balance, the Seller will pay the Buyer an amount equal to the amount by which the Minimum Target Net Cash Balance exceeds the Final Target Net Cash Balance (the “Target Net Cash Deficiency Amount”); and
(ii)    if the Final Target Net Cash Balance exceeds the Minimum Target Net Cash Balance (such difference, the “Excess Cash”), (A) the Buyer will pay the Seller an amount equal to the Excess Cash (such amount, the “Additional Amount”), provided that the Additional Amount payable, if any, shall not be greater than US$ 12,877,748 minus the aggregate amount of Permitted Payments received by the Sellers following the date of determination of the Final Target Net Cash Balance and the date of payment pursuant to this Section 5.
(f)    For purposes of all calculations under this Section 5, the exchange rate used for calculating the amount in dollars of any cash held in Argentine pesos will be the Implied Valuation in effect on the Business Day before the Initial Closing Date.
6.    Representations and Warranties.
(a)    Each of the Sellers makes the representations and warranties set forth in Annex D to the Binding Terms as of the dates specified therein.
(b)    The Buyer makes the representations and warranties set forth in Annex D to the Binding Terms as of the dates specified therein.
7.    Definitions. Capitalized terms used herein but not otherwise defined have the meanings set forth below:
(a)    “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
(b)    “Antitrust Approval” means the definitive, final and conclusive written authorization pursuant to the Argentine Antitrust Statutes issued by the Argentine Secretaría de Comercio del Interior, or any Governmental Authority that may replace it in the future, in connection with the transactions contemplated by this Undertaking.
(c)    “Argentine Antitrust Statutes” means the Argentine Antitrust Act (Law 25,156, as amended, modified or supplemented from time to time) and its related decrees, resolutions and statutes.
(d)    “Business Day” means any day of the year that is not (i) a Saturday, (ii) a Sunday or (iii) any other day on which commercial banks are authorized or required by Law to be closed in the City of New York, New York or Buenos Aires, Argentina.
(e)    “Cash” means, as of any date of determination, the unencumbered cash and Cash Equivalents held by the Target on such date minus the sum of (x) the aggregate principal amount of any financial debt of the Target outstanding on such date and (y) all accrued and unpaid interest on such financial debt as of such date.
(f)    “Cash Equivalents” means (i) cash, including Argentine pesos or U.S. Dollars; (ii) investments in money market funds or in short-term deposits in banks maturing in one year or less than one year from the date of deposit, including, but not limited to, investments in bank fixed deposits and other bank instruments; (iii) U.S. treasury bills and securities issued by the government of Argentina; and (iv) investments in any investments listed on Exhibit B, held by the Target as of the Initial Closing Date; provided that, for purposes of any calculation under this Undertaking, (a) any Cash Equivalent other than cash will be valued at the last reported market price on the Business Day prior to such calculation and (b) any Cash Equivalent held or denominated in Argentine pesos (including, for the avoidance of doubt, U.S. Dollar-linked securities) will be converted into U.S. Dollars using the Implied Valuation in effect on the Business Day prior to such calculation.
(g)    “CNC” means the Argentine Comisión Nacional de Comunicaciones.
(h)    “CNDC” means the Argentine Comisión Nacional de Defensa de la Competencia or any Governmental Authority that may replace it in the future.
(i)    “Governmental Approval” means any consent, approval (or deemed approval after the expiry of all appropriate waiting periods), authorization, notice, permission or waiver of a Governmental Authority.
(j)    “Implied Valuation” means the implicit exchange rate resulting from dividing (i) the last price in Argentine pesos of dollar-denominated Argentine Sovereign Bonds named BONAR 2017 (AA17) quoted at closing of the activities on the calculation date at Bolsa de Comercio de Buenos Aires on its webpage Bolsar https://www.bolsar.com/VistasDL/PaginaIntradiarioEspecies.aspx?Especie=AA17&Vto=4 by (ii) the average between the last bid price and ask price for the same securities quoted in the over-the-counter market in New York City, New York at closing of activities on the same calculation date, as set forth in the Bloomberg screen of JP Morgan Argentina, Corporate, Currency, Government, Preferred, under screenname “JARG”.
(k)    “Independent Accounting Firm” shall mean PwC Argentina, Deloitte Argentina, Grant Thornton Argentina or such other internationally recognized certified public accountant satisfactory to the Buyer and the Sellers; provided, that if the Buyer and the Sellers do not appoint an Independent Accounting Firm within ten days after either the Buyer or the Sellers give notice to the other of a request therefor, either of them may request the American Arbitration Association to appoint as the Independent Accounting Firm a partner in the Buenos Aires office of a nationally or internationally recognized independent registered public accounting firm based on its determination that the partner of such firm who shall be responsible for the services to be provided by the Independent Accounting Firm has had no material relationships with the parties or their respective Affiliates within the preceding two years and taking into account such firm’s material relationships during the preceding two years with the parties and their respective Affiliates, and such appointment shall be final, binding and conclusive on the Buyer and the Sellers.
(l)    “Investment” means any capital contribution, advance or other investment, whether in the form of debt or equity, in any Person.
(m)    “Minimum Target Net Cash Balance” means, on the date of determination, US$ 110,000,000 (or its equivalent in Argentine pesos determined by reference to the Implied Valuation).
(n)    “Party” means either the Sellers or the Buyer as the context requires and “Parties” means collectively the Buyer and the Sellers.
(o)    “Permitted Payments” means the dividends (valued at fair market value, if in-kind) paid by the Target to the Sellers or any dividend payments made by the Target to NII Holdings, Inc., Sellers or their Affiliates between the Effective Date and the Initial Closing Date in an aggregate amount not to exceed US$ 12,877,748 (to the extent paid in Argentine pesos, converted using the Implied Valuation on the date of payment).
(p)    “Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity.
(q)    “Target Net Cash Balance” means, as of any date of determination, the unencumbered Cash held by the Target on such date minus the sum of (x) the aggregate principal amount of any financial debt of the Target outstanding on such date and (y) all accrued and unpaid interest on such financial debt as of such date.
(r)    “Transition Services Agreement” means the Transition Services Agreement dated April 30, 2015 by and among Comunicaciones Nextel de Mexico, S.A. de C.V., NII Holdings, Inc., Nextel Argentina S.R.L. and Nextel Telecomunicacoes Ltda.
8.    Other Definitional and Interpretive Matters. The following rules of interpretation will apply:
(a)    When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Undertaking, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a non-Business Day, the period in question will end on the next succeeding Business Day.
(b)    Any reference in this Undertaking to (A) “US$”, “dollars” or “Dollars” will mean U.S. dollars, the legal tender of the United States of America, pursuant to Section 5103 of Title 31 of the United States Code and (B) “Pesos”, “ARS” or “AR$” means Argentine pesos, as the case may be.
(c)    The Schedules and Exhibits to this Undertaking are hereby incorporated and made a part hereof and are an integral part of this Undertaking.
(d)    Any reference in this Undertaking to gender will include all genders, and words imparting the singular number only will include the plural and vice versa.
(e)    The division of this Undertaking into Sections and other subdivisions and the insertion of headings are for convenience of reference only and will not affect or be utilized in construing or interpreting this Undertaking.
(f)    All references in this Undertaking to any “Section” are to the corresponding Section (as the case may be) of this Undertaking unless otherwise specified.
(g)    The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Undertaking as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(h)    The word “including” or any variation thereof means “including, without limitation” and will not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(i)    An item arising with respect to a specific representation or warranty will be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (A) there is a reserve, accrual or other similar item underlying a number that are individualized, expressly or specifically on such balance sheet or financial statements that are related to the subject matter of such representation, (B) such item is specifically set forth on the balance sheet or financial statements or (C) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.
(j)    The Parties have participated jointly in the negotiation and drafting of this Undertaking and, in the event an ambiguity or question of intent or interpretation arises, this Undertaking will be construed as jointly drafted by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Undertaking.
9.    Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated in the Binding Offer (for the Buyer) and the acceptance thereof in the case of the Sellers.
    

EXHIBIT A
Governance Rights

Appointment Rights:

Board of Directors.

The board of the Target shall be comprised of 5 members and 5 alternate members. Three of such members (and their alternates) shall be appointed by the Sellers and 2 of such members (and their alternates) shall be appointed by the Buyer. The President of the Board shall be one of the members appointed by Sellers and the Vice President of the Board shall be appointed by the Buyer.

Decisions at the Board shall be taken by a simple majority of its members present at the relevant meeting, except in respect of matters that qualify as Supermajority Matters (as defined herein) which will require a supermajority of 4 out of 5 directors. Three out of 5 directors shall constitute a quorum at any board meeting.

Executive Committee. The Sellers shall cause the Target to organize an Executive Committee which will be in charge of the day to day management of the Target. The Executive Committee shall be comprised of 3 members, two of them appointed by Sellers and one of them appointed by Buyer. Decisions shall be made by simple majority of votes, except in case of Supermajority Matters which will require unanimity.

Audit Committee. Sellers shall cause the Target to organize an audit committee with the same duties and faculties provided by the rules of the Argentine Comisión Nacional de Valores (the “CNV”). The Audit Committee shall be comprised of 3 members of the Board, two of its members shall be directors appointed by the Sellers (and shall qualify as independent pursuant to the rules of the CNV) and the other member shall be a director appointed by the Buyer. Appointment of independent directors shall be subject to the Buyer’s supervision of independency criteria.

Surveillance Committee (Comisión Fiscalizadora). The Comisión Fiscalizadora shall be comprised of 3 members, two of them (and their alternates) appointed by Sellers and one of them (and its alternate) appointed by Buyer.

Shareholders’ Decisions. All decisions to be taken by shareholders, whether at an ordinary or extraordinary meeting, shall be taken by a simple majority of votes pursuant to applicable law, except in respect of Supermajority Matters which shall require the vote of at least 75% of the votes in the Target.


“Supermajority Matters” means any of the following matters:

(a)Amendment of the By Laws of the Target;

(b)The Target’s engagement in transactions or operations in any line of business other than the core business of the Target;

(c)Authorization of the assumption, incurrence, or amendment of the terms of financial debt that exceeds 5% of the amounts authorized in the annual budget of the Target;

(d)Other in the Ordinary Course of Business, granting of guarantees, liens or encumbrances on the Target’s assets or indemnities with respect to liabilities that exceed 5% of the amounts authorized in the annual budget of the Target;

(e)Other in the Ordinary Course of Business, sale, transfer, lease, or other disposition of assets of the Target with a fair market value in excess of US$1,000,000 (or the equivalent thereof) in the aggregate per calendar year;

(f)Other than in the Ordinary Course of Business, entering into, and material modifications, or early termination of any agreement (i) with strategic clients or providers, or (ii) that would require the payment or collection of amounts, assets or liabilities exceeding US$2,000,000 in the aggregate per calendar year;

(g)Acquisition or investment in, or sale of, equity interests of any person or entity or the entry into or termination of any partnerships or joint ventures, involving payment in excess of US$2,000,000;

(h)Approval or modification of the dividend policy of the Target;

(i)Any decision to submit or withdraw from a securities public offering, listing or registration regime (such as a registered offering of securities or termination of a registration statement);

(j)Issuance or placement of any debt or equity securities, with or without voting rights, in the domestic or international capital markets;

(k)Any capital increase or capital contribution to the Target by any person or entity or the granting of any option to subscribe or to otherwise acquire participations or equity interests in the Target;

(l)Granting of loans to any person or entity except for advances in the ordinary course of business to providers of goods and services to the Target;

(m)Voluntary filing in any insolvency procedure or the initiation of any out-of-court reorganization proceeding (including, without limitation, any acuerdo preventivo extrajudicial) or any kind of debt restructuring;

(n)Spin-off, merger, consolidation, transformation, dissolution or liquidation of the Target or the reorganization or transfer of one or more business units (or fondos de comercio) of the Target;

(o)Capital reductions, amortization, repurchases or reimbursements of equity interests in the Target or any other repayment of capital contributions in the Target or distributions to equity holders; and

(p)Other than in the Ordinary Course of Business, any transactions with related parties.






Exhibit 10.2
September 11, 2015
NII Mercosur Telecom, S.L.U.
NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Re.: Offer PN #2/2015
Dear Sirs,
Reference is made to (i) the Binding Offer # 2015/075/NXT delivered by Grupo Clarín S.A. (“Grupo Clarín”), a company organized and existing under the laws of Argentina, to NII Mercosur Telecom, S.L.U. (“NII Mercosur Telecom”) and NII Mercosur Móviles, S.L.U., companies (sociedades limitadas unipersonales) organized under the laws of Spain, on September 11, 2015, as well as to its Annexes and Schedules (the “Binding Offer”) and (ii) the assignment letter sent by Grupo Clarín to NII Mercosur Telecom on September 11, 2015. Televisión Dirigida S.A. hereby irrevocably submits to NII Mercosur Telecom and NII Holdings, Inc. (“NII Holdings”) an offer for NII Mercosur Telecom to grant a promissory note in favor of Televisión Dirigida S.A., as set forth in Annex I (the “Offer”), which shall be guaranteed by NII Holdings.
This Offer will expire automatically and be of no force or effect if NII Mercosur Telecom and NII Holdings have not accepted this Offer in writing within one day after receipt by NII Mercosur Telecom and NII Holdings of this Offer.
Subject to the terms of this Offer, this Offer will be deemed irrevocably accepted on the date on which NII Mercosur Telecom and NII Holdings deliver to us an acceptance letter, signed by duly authorized officers (together, the “Acceptance Letters”, and the Offer, once accepted, the “Promissory Note”). Subject to the terms of this Offer, upon acceptance of the Offer, the obligations of the parties set forth in this Offer are legally binding and enforceable obligations in accordance with their terms, subject only to the conditions set forth herein.

Televisión Dirigida S.A.

By: /s/ Sebastían Bardengo
 
Name: Sebastían Bardengo
Title: Attorney in Fact
 
Annex I to Offer PN #2/2015

PROMISSORY NOTE

US$ 81,000,000
New York, New York
September 11, 2015


For value received, NII Mercosur Telecom, S.L.U. (“Promisor”) hereby promises to pay to Televisión Dirigida S.A. (“Promisee,” and together with Promisor and the Guarantor (defined below), the “Parties”), on the Maturity Date (as defined in Section I below), the sum of US$ 81,000,000 in lawful money of the United States of America, plus interest thereon on the terms provided for herein, subject to the terms and conditions set forth in this Promissory Note (this “Promissory Note”). The obligations of Promisor hereunder are secured by the 51% Equity Interest Pledge and guaranteed by NII Holding, Inc. (the “Guarantor”) as set forth herein.
The Promisor has agreed to transfer to Promisee part of its 51% Equity Interest (as defined in those certain Binding Terms entered into between the parties on or about September 11, 2015 (the “Binding Terms”). Except as otherwise defined herein, defined terms shall have the meaning set forth in the Binding Terms.

I.    Payment Terms
        
Maturity Date:
 
The unpaid principal amount of this Promissory Note, together with any accrued and unpaid interest and other amounts hereunder, shall only become due and payable upon the occurrence of an Event of Default in accordance with Paragraph II below (the “Maturity Date”).

Interest:
 
Subject to the “Default Interest” provisions set forth below, the outstanding principal amount of this Promissory Note will not accrue interest other than Contingent Interest (as defined below).
Contingent Interest
 
Promptly and no later than 5 Business Days after direct or indirect receipt by any Promisor or its Affiliates of any cash or in kind dividend or any other cash or in kind distribution made after the date hereof (which for the avoidance of doubt shall not apply to any Permitted Payments) in respect of any Equity Interest owned by Promisor (each such amount received, an “Underlying Equity Payment”), Promisor will pay Promisee an amount equal to such Underlying Equity Payment (“Contingent Interest”).
Contingent Interest Payment Date:
 
Contingent Interest shall be paid within five Business Days of receipt of the corresponding Underlying Equity Payment.
Default Interest:
 
If Promisor fails to pay when due any amount payable under this Promissory Note, the unpaid principal amount of this Promissory Note and Contingent Interest accrued thereunder will accrue interest daily at a rate equal to the otherwise applicable interest rate per annum plus 2.00% per annum from the date such payment became due until payment in full. Such default interest shall be due and payable by Promisor to Promisee upon demand of Promisee.
Currency:
 
All payments made under this Promissory Note shall be made in United States dollars (“US$”).
The Promisor’s obligations in respect of any sum payable by Promisor to Promisee under this Promissory Note shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than US$, be discharged only to the extent that on the Business Day following receipt by Promisee of any sum adjudged to be so due in the Judgment Currency, Promisee may in accordance with normal banking procedures purchase US$ with the Judgment Currency; if the amount of US$ so purchased is less than the sum originally due in US$, the Promisor agree, as a separate obligation and notwithstanding any such judgment, to indemnify Promisee against such loss.
Repayment of Promissory Note:
 
Except as provided herein and subject to the section above entitled “Maturity Date,” this Promissory Note will only be repaid (together with any accrued and unpaid Contingent Interest and other amounts payable hereunder) on the Maturity Date.
Any cash payments by Promisor hereunder shall be made in immediately available funds, in US$, by wire transfer to an account of Promisee in New York, New York, as specified in writing by Promisee to Promisor from time to time without presentation or surrender of this Promissory Note, except for full and final payment hereof. If any such amounts shall become due on a day that is not a Business Day, then such amount shall be paid on the next Business Day.
For purposes of this Promissory Note, “Business Day” means any day (other than Saturday or Sunday) on which commercial banks are open for business in New York, New York, United States.
Withholding:
 
All Contingent Interest payments by the Promisor and the Guarantor hereunder shall be made free and clear of, and without deduction or withholding for, or on account of, any and all present or future taxes, levies, assessments, imposts, deductions, charges, fee or withholdings imposed by any jurisdiction from or through which such payments are made, or any political subdivision or taxing authority thereof or therein (all such taxes, levies, assessments, imposts, deductions, charges, fees, withholdings and liabilities being hereinafter referred to as “Taxes”) unless such withholding or deduction is required by law. If any Taxes shall be required by law to be deducted or withheld from or in respect of any Contingent Interest payable hereunder, (i) Promisor shall make such deductions and (ii) Promisor shall pay the full amount deducted to the relevant taxing authority in accordance with applicable law. Within 30 days after the date of any payment of Taxes by Promisor in respect of any payment hereunder, Promisor will furnish to Promisee the original or a certified copy of a receipt evidencing payment thereof.

II.    Events of Default

   Upon the occurrence of one or more of the events set forth below (each, an “Event of Default”), Promisee shall be entitled to accelerate all outstanding amounts due and payable under this Promissory Note (including any accrued and unpaid interest and other amounts payable hereunder) by delivering a written notice to Promisor declaring such acceleration (each, an “Acceleration Notice”) and upon delivery of such Acceleration Notice, all obligations under this Promissory Note shall immediately become due and payable.
Events of Default:
 
(a)    Failure to pay any Contingent Interest under the terms and conditions provided under this Promissory Note.
 
 
(b)    (i) Following receipt of Regulatory Approval, Promisor fails to timely transfer the 51% Equity Interest to Buyer in accordance with the terms and conditions of Section 1(c) of Annex A-1 of the Binding Terms, or (ii) fails to perform when due its obligations in accordance with Section 2(c) of Annex A-1 of the Binding Terms.
III.    Guaranty

Guaranty:
 
For valuable consideration, the Guarantor hereby (a) absolutely and unconditionally guarantees the prompt, complete and full payment on the Maturity Date, of the entire outstanding principal amount of this Promissory Note and any and all accrued but unpaid Contingent Interest thereon and any and all costs, expenses and other amounts owed to Promisee by Promisor with respect to this Promissory Note and (b) waives promptness, diligence, demand of payment, notice of acceptance, notice of intent to demand, notice of intent to accelerate, notice of acceleration, presentment, notice of protest, notice of dishonor, notice of the incurring by Promisor of additional indebtedness, and all other notices and demands with respect to this Promissory Note and the indebtedness evidenced thereby. This constitutes a guaranty of payment and performance and not of collection, and the Guarantor specifically waives any obligation of Promisee to proceed against Promisor on any money or property held by Promisor or by any other person or entity as collateral security, by way of set-off or otherwise. The Guarantor further agrees that this guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment of any of the guaranteed obligations is rescinded or must otherwise be restored or returned by Promisee upon the insolvency, bankruptcy, or reorganization of Promisor or Guarantor, all as though such payment has not been made.
IV.    Miscellaneous

Waiver:
 
Promisor hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever.
Assignments/
Transfers:
 
No Party shall assign or transfer all or any part of its rights or obligations under this Promissory Note to any person without the prior written consent of the other Party. Any purported assignment or transfer in violation of this paragraph shall be deemed null and void ab initio, provided that Buyer shall be entitled to assign its rights hereunder in connection with and to the permitted assignee under any assignment of its rights under the 51% Call Option.
Loss, etc. of Promissory Note:
 
Upon receipt by any Promisor of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Promissory Note and (in case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, or (in case of mutilation) upon surrender or cancellation of this Promissory Note, Promisor will make and deliver in lieu of this Promissory Note a new promissory note of the same unpaid principal amount, dated the date of this Promissory Note.
Costs and Expenses:
 
Each Party shall be responsible for its own costs and out-of-pocket expenses (including any legal fees) incurred by such Party in connection with the preparation, negotiation and documentation of this Promissory Note and any other written agreement between Promisor and Promisee that may be entered into as of the date hereof and the transactions contemplated herein and therein.
Promisor hereby agrees to pay or reimburse from time to time upon request all of Promisee’s reasonable and documented out-of-pocket costs and expenses (including the reasonable fees and expenses of legal counsel) in connection with the enforcement of this Promissory Note and any enforcement or collection proceedings resulting from the occurrence of an Event of Default.
Governing Law:
 
This Promissory Note shall be governed by and construed in accordance with the law of the State of New York, irrespective of any principles of conflicts of law thereof.
Jurisdiction:
 
Each Party hereby irrevocably submits to the exclusive jurisdiction of the State and federal courts of the State of New York, in each case sitting in the Borough of Manhattan, in connection with any dispute arising out of or relating to this Promissory Note.
The Promisor and the Guarantor hereby irrevocably waives any objection it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Promissory Note brought in the courts referred to above, and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
Service of Process
 
The Promisor and the Guarantor have agreed that service of all writs, claims, process and summonses in any related proceeding brought against it in the State of New York may be made upon NII Holdings, Inc., 1875 Explorer Street, Suite 800, Reston, VA 20191, (the “Promisor Service Agent”), and hereby appoints the Promisor Service Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Promisor Service Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. Promptly and no later than 15 Business Days following the Initial Closing Date, Promisor shall appoint and maintain an agent with offices in New York City to act as its process agent. Nothing in this Promissory Note shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.

Notices:
 
All notices, demands, waivers, consents or other communications to be provided pursuant to this Promissory Note shall be in writing, shall be effective upon receipt (if a Business Day, or, if not, on the next succeeding Business Day) and shall be sent by hand, facsimile, air courier or certified or registered mail, return receipt requested, as follows:
(a)    If to Promisor, to:
Ms. Shana C. Smith
c/o: NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Facsimile: 1-703-390-5191
E-mail: shana.smith@nii.com


(b) If to Promisee, to:

Mr. Sebastían Bardengo
Televisión Dirigida S.A.
c/o Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
E-mail: sbardengo@grupoclarin.com
Attention: Sebastían Bardengo

(c) If to the Guarantor, to:

Ms. Shana C. Smith
c/o: NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Facsimile: 1-703-390-5191
E-mail: shana.smith@nii.com

Counterparts:
 
This Promissory Note may be executed in counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same instrument.
Amendments and Waivers:
 
This Promissory Note shall not be modified, amended, waived, or supplemented without the written consent of each of the Parties.
Severability:
 
The illegality or unenforceability in any jurisdiction of any provision hereof or of any document required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Promissory Note or such other document in such jurisdiction or such provision in any other jurisdiction.
Waiver of Jury Trial:
 
PROMISOR AND PROMISEE EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Acceptance Letter
September 11, 2015
Televisión Dirigida S.A.
c/o Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Re.: Offer PN #2/2015
Dear Sirs,
We hereby accept your offer referenced as Offer PN #2/2015 dated September 11, 2015.
Yours faithfully,
NII Mercosur Telecom, S.L.U.
By: /s/ Shana C. Smith     
Name: Shana C. Smith
Title: Vicepresidenta, Vicesecretario del Consejo de Administración y
Consejera Delegada


Acceptance Letter
September 11, 2015
Televisión Dirigida S.A.
c/o Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Re.: Offer PN #2/2015
Dear Sirs,
We hereby accept your offer referenced as Offer PN #2/2015 dated September 11, 2015.
Yours faithfully,
NII Holdings, Inc., as guarantor of Seller’s obligations
By: /s/ Shana C. Smith
Name: Shana C. Smith
Title: Vice President, Deputy General Counsel
and Corporate Secretary
  



 
 
 





Exhibit 10.3
September 11, 2015
NII Mercosur Telecom, S.L.U.
NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Re.: Offer PN #1/2015
Dear Sirs,
Reference is made to (i) the Binding Offer # 2015/075/NXT delivered by Grupo Clarín S.A. (“Grupo Clarín”), a company organized and existing under the laws of Argentina, to NII Mercosur Telecom, S.L.U. (“NII Mercosur Telecom”) and NII Mercosur Móviles, S.L.U., companies (sociedades limitadas unipersonales) organized under the laws of Spain, on September 11, 2015, as well as to its Annexes and Schedules (the “Binding Offer”) and (ii) the assignment letter sent by Grupo Clarín to NII Mercosur Telecom on September 11, 2015. Cablevisión S.A. hereby irrevocably submits to NII Mercosur Telecom and NII Holdings, Inc. (“NII Holdings”) an offer for NII Mercosur Telecom to grant a promissory note in favor of Cablevisión S.A., as set forth in Annex I (the “Offer”), which shall be guaranteed by NII Holdings.
This Offer will expire automatically and be of no force or effect if NII Mercosur Telecom and NII Holdings have not accepted this Offer in writing within one day after receipt by NII Mercosur Telecom and NII Holdings of this Offer.
Subject to the terms of this Offer, this Offer will be deemed irrevocably accepted on the date on which NII Mercosur Telecom and NII Holdings deliver to us an acceptance letter, signed by duly authorized officers (together, the “Acceptance Letters”, and the Offer, once accepted, the “Promissory Note”). Subject to the terms of this Offer, upon acceptance of the Offer, the obligations of the parties set forth in this Offer are legally binding and enforceable obligations in accordance with their terms, subject only to the conditions set forth herein.
Cablevisión S.A.

By: /s/ Sebastían Bardengo
 
Name: Sebastían Bardengo
Title: Attorney in Fact
 


 
 
 



Exhibit 10.3
Annex I to Offer PN #1/2015
PROMISSORY NOTE

US$ 4,000,000
New York, New York
September 11, 2015


For value received, NII Mercosur Telecom, S.L.U. (“Promisor”) hereby promises to pay to Cablevisión S.A. (“Promisee,” and together with Promisor and the Guarantor (defined below), the “Parties”), on the Maturity Date (as defined in Section I below), the sum of US$ 4,000,000 in lawful money of the United States of America, plus interest thereon on the terms provided for herein, subject to the terms and conditions set forth in this Promissory Note (this “Promissory Note”). The obligations of Promisor hereunder are secured by the 51% Equity Interest Pledge and guaranteed by NII Holding, Inc. (the “Guarantor”) as set forth herein.
The Promisor has agreed to transfer to Promisee a portion of its 51% Equity Interest (as defined in those certain Binding Terms entered into between the parties on or about September 11, 2015 (the “Binding Terms”). Except as otherwise defined herein, defined terms shall have the meaning set forth in the Binding Terms.

I.    Payment Terms
        
Maturity Date:
 
The unpaid principal amount of this Promissory Note, together with any accrued and unpaid interest and other amounts hereunder, shall only become due and payable upon the occurrence of an Event of Default in accordance with Paragraph II below (the “Maturity Date”).

Interest:
 
Subject to the “Default Interest” provisions set forth below, the outstanding principal amount of this Promissory Note will not accrue interest other than Contingent Interest (as defined below).
Contingent Interest
 
Promptly and no later than 5 Business Days after direct or indirect receipt by any Promisor or its Affiliates of any cash or in kind dividend or any other cash or in kind distribution made after the date hereof (which for the avoidance of doubt shall not apply to any Permitted Payments) in respect of any Equity Interest owned by Promisor (each such amount received, an “Underlying Equity Payment”), Promisor will pay Promisee an amount equal to such Underlying Equity Payment (“Contingent Interest”).

 
2
 



Contingent Interest Payment Date:
 
Contingent Interest shall be paid within five Business Days of receipt of the corresponding Underlying Equity Payment.
Default Interest:
 
If Promisor fails to pay when due any amount payable under this Promissory Note, the unpaid principal amount of this Promissory Note and Contingent Interest accrued thereunder will accrue interest daily at a rate equal to the otherwise applicable interest rate per annum plus 2.00% per annum from the date such payment became due until payment in full. Such default interest shall be due and payable by Promisor to Promisee upon demand of Promisee.
Currency:
 
All payments made under this Promissory Note shall be made in United States dollars (“US$”).
The Promisor’s obligations in respect of any sum payable by Promisor to Promisee under this Promissory Note shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than US$, be discharged only to the extent that on the Business Day following receipt by Promisee of any sum adjudged to be so due in the Judgment Currency, Promisee may in accordance with normal banking procedures purchase US$ with the Judgment Currency; if the amount of US$ so purchased is less than the sum originally due in US$, the Promisor agree, as a separate obligation and notwithstanding any such judgment, to indemnify Promisee against such loss.
Repayment of Promissory Note:
 
Except as provided herein and subject to the section above entitled “Maturity Date,” this Promissory Note will only be repaid (together with any accrued and unpaid Contingent Interest and other amounts payable hereunder) on the Maturity Date.
Any cash payments by Promisor hereunder shall be made in immediately available funds, in US$, by wire transfer to an account of Promisee in New York, New York, as specified in writing by Promisee to Promisor from time to time without presentation or surrender of this Promissory Note, except for full and final payment hereof. If any such amounts shall become due on a day that is not a Business Day, then such amount shall be paid on the next Business Day.
For purposes of this Promissory Note, “Business Day” means any day (other than Saturday or Sunday) on which commercial banks are open for business in New York, New York, United States.

 
3
 



Withholding:
 
All Contingent Interest payments by the Promisor and the Guarantor hereunder shall be made free and clear of, and without deduction or withholding for, or on account of, any and all present or future taxes, levies, assessments, imposts, deductions, charges, fee or withholdings imposed by any jurisdiction from or through which such payments are made, or any political subdivision or taxing authority thereof or therein (all such taxes, levies, assessments, imposts, deductions, charges, fees, withholdings and liabilities being hereinafter referred to as “Taxes”) unless such withholding or deduction is required by law. If any Taxes shall be required by law to be deducted or withheld from or in respect of any Contingent Interest payable hereunder, (i) Promisor shall make such deductions and (ii) Promisor shall pay the full amount deducted to the relevant taxing authority in accordance with applicable law. Within 30 days after the date of any payment of Taxes by Promisor in respect of any payment hereunder, Promisor will furnish to Promisee the original or a certified copy of a receipt evidencing payment thereof.

II.    Events of Default

   Upon the occurrence of one or more of the events set forth below (each, an “Event of Default”), Promisee shall be entitled to accelerate all outstanding amounts due and payable under this Promissory Note (including any accrued and unpaid interest and other amounts payable hereunder) by delivering a written notice to Promisor declaring such acceleration (each, an “Acceleration Notice”) and upon delivery of such Acceleration Notice, all obligations under this Promissory Note shall immediately become due and payable.
Events of Default:
 
(a)    Failure to pay any Contingent Interest under the terms and conditions provided under this Promissory Note.
 
 
(b)    (i) Following receipt of Regulatory Approval, Promisor fails to timely transfer the 51% Equity Interest to Buyer in accordance with the terms and conditions of Section 1(c) of Annex A-1 of the Binding Terms, or (ii) fails to perform when due its obligations in accordance with Section 2(c) of Annex A-1 of the Binding Terms.

 
4
 



III.    Guaranty

Guaranty:
 
For valuable consideration, the Guarantor hereby (a) absolutely and unconditionally guarantees the prompt, complete and full payment on the Maturity Date, of the entire outstanding principal amount of this Promissory Note and any and all accrued but unpaid Contingent Interest thereon and any and all costs, expenses and other amounts owed to Promisee by Promisor with respect to this Promissory Note and (b) waives promptness, diligence, demand of payment, notice of acceptance, notice of intent to demand, notice of intent to accelerate, notice of acceleration, presentment, notice of protest, notice of dishonor, notice of the incurring by Promisor of additional indebtedness, and all other notices and demands with respect to this Promissory Note and the indebtedness evidenced thereby. This constitutes a guaranty of payment and performance and not of collection, and the Guarantor specifically waives any obligation of Promisee to proceed against Promisor on any money or property held by Promisor or by any other person or entity as collateral security, by way of set-off or otherwise. The Guarantor further agrees that this guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment of any of the guaranteed obligations is rescinded or must otherwise be restored or returned by Promisee upon the insolvency, bankruptcy, or reorganization of Promisor or Guarantor, all as though such payment has not been made.
IV.    Miscellaneous

Waiver:
 
Promisor hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever.
Assignments/
Transfers:
 
No Party shall assign or transfer all or any part of its rights or obligations under this Promissory Note to any person without the prior written consent of the other Party. Any purported assignment or transfer in violation of this paragraph shall be deemed null and void ab initio, provided that Buyer shall be entitled to assign its rights hereunder in connection with and to the permitted assignee under any assignment of its rights under the 51% Call Option.
Loss, etc. of Promissory Note:
 
Upon receipt by any Promisor of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Promissory Note and (in case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, or (in case of mutilation) upon surrender or cancellation of this Promissory Note, Promisor will make and deliver in lieu of this Promissory Note a new promissory note of the same unpaid principal amount, dated the date of this Promissory Note.

 
5
 



Costs and Expenses:
 
Each Party shall be responsible for its own costs and out-of-pocket expenses (including any legal fees) incurred by such Party in connection with the preparation, negotiation and documentation of this Promissory Note and any other written agreement between Promisor and Promisee that may be entered into as of the date hereof and the transactions contemplated herein and therein.
Promisor hereby agrees to pay or reimburse from time to time upon request all of Promisee’s reasonable and documented out-of-pocket costs and expenses (including the reasonable fees and expenses of legal counsel) in connection with the enforcement of this Promissory Note and any enforcement or collection proceedings resulting from the occurrence of an Event of Default.
Governing Law:
 
This Promissory Note shall be governed by and construed in accordance with the law of the State of New York, irrespective of any principles of conflicts of law thereof.
Jurisdiction:
 
Each Party hereby irrevocably submits to the exclusive jurisdiction of the State and federal courts of the State of New York, in each case sitting in the Borough of Manhattan, in connection with any dispute arising out of or relating to this Promissory Note.
The Promisor and the Guarantor hereby irrevocably waives any objection it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Promissory Note brought in the courts referred to above, and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

 
6
 



Service of Process
 
The Promisor and the Guarantor have agreed that service of all writs, claims, process and summonses in any related proceeding brought against it in the State of New York may be made upon NII Holdings, Inc., 1875 Explorer Street, Suite 800, Reston, VA 20191, (the “Promisor Service Agent”), and hereby appoints the Promisor Service Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Promisor Service Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. Promptly and no later than 15 Business Days following the Initial Closing Date, Promisor shall appoint and maintain an agent with offices in New York City to act as its process agent. Nothing in this Promissory Note shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.


 
7
 



Notices:
 
All notices, demands, waivers, consents or other communications to be provided pursuant to this Promissory Note shall be in writing, shall be effective upon receipt (if a Business Day, or, if not, on the next succeeding Business Day) and shall be sent by hand, facsimile, air courier or certified or registered mail, return receipt requested, as follows:
(a)    If to Promisor, to:
Ms. Shana C. Smith
c/o: NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Facsimile: 1-703-390-5191
E-mail: shana.smith@nii.com


(b) If to Promisee, to:

Mr. Sebastían Bardengo
Cablevisión S.A.
c/o Grupo Clarín S.A. 
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
E-mail: sbardengo@grupoclarin.com
Attention: Sebastían Bardengo

(c) If to the Guarantor, to:

Ms. Shana C. Smith
c/o: NII Holdings, Inc.
1875 Explorer Street
Reston, VA 20190
USA
Facsimile: 1-703-390-5191
E-mail: shana.smith@nii.com

Counterparts:
 
This Promissory Note may be executed in counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same instrument.

 
8
 



Amendments and Waivers:
 
This Promissory Note shall not be modified, amended, waived, or supplemented without the written consent of each of the Parties.
Severability:
 
The illegality or unenforceability in any jurisdiction of any provision hereof or of any document required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Promissory Note or such other document in such jurisdiction or such provision in any other jurisdiction.
Waiver of Jury Trial:
 
PROMISOR AND PROMISEE EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.


 
9
 



Acceptance Letter
September 11, 2015
Cablevisión S.A.
c/o Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Re.: Offer PN #1/2015
Dear Sirs,
We hereby accept your offer referenced as Offer PN #1/2015 dated September 11, 2015.
Yours faithfully,
NII Mercosur Telecom, S.L.U.
By: /s/ Shana C. Smith     
Name: Shana C. Smith
Title: Vicepresidenta, Vicesecretario del Consejo de Administración y
Consejera Delegada



Acceptance Letter
September 11, 2015
Cablevisión S.A.
c/o Grupo Clarín S.A.
Tacuari 1846, 4to. Piso
Ciudad de Buenos Aires (1139)
Argentina
Re.: Offer PN #1/2015
Dear Sirs,
We hereby accept your offer referenced as Offer PN #1/2015 dated September 11, 2015.
Yours faithfully,
NII Holdings, Inc., as guarantor of Seller’s obligations
By: /s/ Shana C. Smith     
Name: Shana C. Smith
Title: Vice President, Deputy General Counsel
          and Corporate Secretary



 
 
 





Exhibit 10.4
NII HOLDINGS, INC.

Restricted Stock Award Agreement

(Directors)

THIS AGREEMENT, dated as of the [DAY] day of [MONTH], [YEAR], between NII Holdings, Inc., a Delaware corporation (the “Company”), and [DIRECTOR NAME] (the “Participant”), is made pursuant to and subject to the provisions of the NII Holdings, Inc. 2015 Incentive Compensation Plan and any successor plan (the “Plan”). All terms that are used herein that are defined in the Plan shall have the same meaning given them in the Plan.

1.    Award of Stock. Pursuant to the Plan, the Company, on [MONTH] [DAY], [YEAR] (the “Award Date”), awarded the Participant [___] shares of Common Stock (“Restricted Stock”), subject to the terms and conditions of the Plan and subject further to the terms and conditions set forth herein.

2.    Restrictions. Except as provided in this Agreement, the Restricted Stock is nontransferable and is subject to a substantial risk of forfeiture.

3.    Vesting. Subject to Sections 4, 5 and 6 below, the shares of Restricted Stock shall be transferable and nonforfeitable (“Vested”) one year from the Award Date, so long as the Participant remains in the continuous service of the Company or any Subsidiary.

4.    Death, Disability, Retirement or Termination Without Cause. Section 3 to the contrary notwithstanding, if the Participant dies, becomes permanently and totally disabled within the meaning of Code Section 22(e)(3) (“Disabled”) or retires from service on the Board or on the board of directors of any Affiliate at or after age 65 or at an earlier age with the consent of the Committee, in each case prior to the forfeiture of the shares of Restricted Stock under Section 6, all shares of Restricted Stock that are not then Vested shall become Vested as of the date of the Participant’s death, becoming Disabled or retirement. Additionally, notwithstanding Section 3 to the contrary, the Restricted Stock shall become Vested with respect to a pro rata portion of the shares of Restricted Stock covered hereby if the Participant’s service on the Board or on the board of directors of an Affiliate is terminated by the Company or such Affiliate without Cause and neither the preceding sentence of this Section 4 nor Section 5 applies. Such pro-rata portion shall be equal to the product of (i) the number of shares of Restricted Stock covered hereby that are not Vested as of the date of termination, multiplied by (ii) a fraction, the numerator of which is the number of days that have elapsed from the Award Date and the denominator of which is 365.

5.    Change in Control. Upon a Change in Control, the shares of Restricted Stock that are not then Vested shall become Vested if the shares of Restricted Stock are not assumed, replaced or converted to an equivalent award by the entity that survives or

1



otherwise results from the Change in Control (the “surviving entity”) (or affiliate thereof) for securities tradable on an established securities market. If the shares of Restricted Stock are amended, replaced or converted to an equivalent award by the surviving entity (or an affiliate thereof) for securities tradable on an established securities market (a “Replacement Award”), any such Replacement Award shall be fully Vested in the circumstances described in the first sentence of Section 4 or if, within twelve (12) months after a Change in Control, (a) the Participant’s service on the board of directors of the surviving entity or any affiliate thereof is terminated without Cause and not in the circumstances described in the following sentence, or (b) the Participant voluntarily resigns from service on the board of directors of the surviving entity or any affiliate thereof, for Good Reason. Such Replacement Award shall not become Vested if the Participant’s service on the board of directors of the surviving entity or any affiliate thereof, is terminated within twelve (12) months after a Change in Control for Cause or because of the Participant’s voluntary resignation from service on the board of directors of the surviving entity or any affiliate thereof for any reason other than (a) Good Reason or (b) the circumstances described in the first sentence of Section 4. For purposes of this Agreement, Good Reason shall be defined as a request for the Participant’s resignation from the board of directors of the surviving entity or any affiliate thereof, by a majority of the other members of the board of directors of the surviving entity or any affiliate thereof. For the avoidance of doubt, neither any change in the national securities exchange on which the Common Stock is listed, nor the Common Stock ceasing to be listed on a national securities exchange, shall constitute in and of itself a Change in Control.

6.    Forfeiture. All shares of Restricted Stock that are not then Vested shall be forfeited if the Participant’s service on the Board terminates prior to the date such shares become Vested in accordance with Sections 3, 4 and 5 above or in the event the Administrator makes a final determination that the Participant has breached the provisions of Section 12.

7.    Stockholder Rights and Stock Certificates. The Participant will have the right to receive dividends on and to vote the Restricted Stock. The Restricted Stock may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Company may retain possession of the certificates until the Restricted Stock becomes Vested.

8.    Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof or the Plan may entitle the Participant to a fractional share, such fraction shall be disregarded.

9.    Withholding Taxes. If the Company or a Subsidiary shall be required to withhold any federal, state, local or foreign income, employment or other tax in connection with the Vesting of the Award, the Participant shall pay the tax or make provisions that are satisfactory to the Company for the payment thereof. The Participant may elect to have the Company retain from payment on settlement of the Award the number of shares of

2



Common Stock (based on the closing price of the Company’s Common Stock on the Nasdaq Stock Market on the vesting date) equal to the amount of any required withholding.

10.    No Right to Continued Service. No provision of this Agreement shall confer on the Participant any right to continue service on the Board.

11.    Change in Capital Structure. In accordance with the terms of the Plan, the terms of this Award shall be adjusted as the Committee determines is equitably required in the event (a) the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or (b) there occurs any other event which, in the judgment of the Committee necessitates such action. Any such adjustment shall be made in compliance with Code Section 409A.

12.    Confidentiality. The Participant agrees that, as a condition of receiving the Restricted Stock, the Participant shall not, unless otherwise required by law, discuss or otherwise disclose to any person or entity any information contained in this Award, including but not limited to the fact that the Participant received the Award and the number of shares of Restricted Stock granted herein.

13.    Governing Law, Personal Jurisdiction and Service. This Agreement shall be governed by, and interpreted in accordance with the internal substantive laws of the State of Delaware, without giving effect to the principles of conflicts of law.  Each party hereto irrevocably submits itself to the exclusive personal jurisdiction of the Federal and State courts sitting in the State of Delaware, and hereby waives any claims it may have as to inconvenient forum.  Each party hereto also agrees that service of process may be achieved by any form of mail addressed to the party to be served and requiring a signed receipt, at the address provided in Section 14 of this Agreement or to the address provided to the Company or any Subsidiary.  

14.    Notice. Any notice or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

If to the Company:        NII Holdings, Inc.
1875 Explorer Street, Suite 800
Reston, VA 20190
Attn: Shana C. Smith, Corporate Secretary

If to the Participant:                                
                                            
                                            

Any such notice shall be deemed to have been given (a) on the date of postmark, in the case of notice by mail, or (b) on the date of delivery, if delivered in person.


3



15.    Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date of grant and the provisions of this Agreement, the provisions of the Plan shall govern.

16.    Amendments. Any amendment to the Plan effected after the date hereof shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no such amendment shall adversely affect the right of the Participant with respect to the Restricted Stock without the Participant’s consent.

17.    Participant Bound by Plan. The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

18.    Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company.

19.    Data Privacy Consent. As a condition of the grant of the Restricted Stock, the Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Section 19 by and among, as applicable, the Participant’s employer, the Company and its Subsidiaries and Affiliates, for the exclusive purposes of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that the Company and its Subsidiaries hold certain personal information about him or her, including his or her name, home address and telephone number, date of birth, social security or identity number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Restricted Stock or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in his or her favor, for the purpose of managing and administering the Plan (“Data”). The Participant further understands that the Company and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of his or her participation in the Plan, and that the Company and/or any of its Subsidiaries may each further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. The Participant understands that these recipients may be located in the U.S., South America, or elsewhere. He or she authorizes them to receive, possess, use, retain and transfer, in electronic or other form, for the purposes of implementing, administering and managing his or her participation in the Plan, including any requisite transfer to a broker or other third party with whom he or she may elect to deposit any shares of stock acquired under the Plan, such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on his or her behalf. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting

4



in writing the Company’s Corporate Secretary. The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect his or her ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on its behalf as of the [DAY] day of [MONTH], [YEAR], and the Participant has affixed his signature hereto.

[Signatures are located on the next page.]

5





NII HOLDINGS, INC.

By: ____________________
Name:__________________
Title:___________________



PARTICIPANT

_______________________
[DIRECTOR NAME]

DATED:________________



6





EXECUTION COPY

Exhibit 10.5

SEPARATION AND RELEASE AGREEMENT
10064158.5

This Separation and Release Agreement (“Agreement”) is made by and between NII Holdings, Inc. (“NII”), a Delaware corporation, and Gokul Hemmady (hereinafter “Employee”). NII and Employee are collectively referred to as the “Parties” and individually as a “Party.”

RECITALS:

WHEREAS, NII desires to provide Employee with separation benefits to assist Employee in the transition from employment with NII and its wholly-owned subsidiary, Nextel Telecomunicações Ltda. (“Nextel Brazil”); and

WHEREAS, the parties to this agreement desire to resolve all issues, whether known or unknown, arising out of Employee’s employment and separation from employment in a mutually satisfactory manner, confidentially, and without resort to litigation.

AGREEMENT:

NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties do hereby covenant and agree that on October 1, 2015 (the “Termination Date”):

1.
Termination of Employment; Separation Benefits    

A.Employee will be terminated from employment on the Termination Date. In consideration of Employee’s acceptance of this Agreement:

(a)NII shall pay Employee $666,925, which is the equivalent of 12 months of severance pay. This amount shall be paid to Employee in one lump sum, payable within twenty (20) business days of the Termination Date, subject to the Effective Date, as defined in Section 7 below, having occurred prior to the payment date.

(b)In the event that NII exercises its discretion to make a payment under NII’s 2015 bonus plan for a period prior to and including the employee’s Termination Date, NII shall pay to Employee the unpaid prorated bonus to which Employee would have been entitled based on NII’s actual performance and pursuant to the terms and conditions of NII’s 2015 bonus plan if and when it is paid.

B.In the event that NII triggers a payment pursuant to the Key Employee Incentive Plan (the “KEIP”), as provided for in NII’s bankruptcy proceedings, NII shall pay to Employee his portion of the payments due to him pursuant to the terms and conditions of the KEIP if and when payments are made to other eligible employees or on the Effective Date, if later.


1


C.NII hereby acknowledges and agrees to meet its obligations and/or direct Nextel Brazil to meet its obligations pursuant to the Assignment Letter dated June 27, 2013, including but not limited to providing (a) tax equalization benefits and (b) expenses of up to $5,000 U.S. for tax counseling, in each case, in respect of taxes due by Employee related to calendar years 2014 and 2015; and (c) up to U.S. $35,000 will be paid by Nextel Brazil to the vendor reasonably selected by Employee for the shipment, insurance and taxes due on personal property and household goods moved from Brazil to the U.S. including air shipment for personal effects (such as clothing and linens) and surface or sea shipment for furniture and other household items.

D.The Parties hereby agree that if NII determines that the transition of Employee’s responsibilities is substantially complete prior to the Termination Date, then NII may accelerate the date on which Employee ceases to provide services to NII and Nextel Brazil; provided, however that during the period between such date and the Termination Date, Employee shall continue to receive all salary and benefits in the normal course consistent with past practice.

E.Employee hereby agrees that NII will deduct from the above-described payments all withholding taxes and other payroll deductions that NII is required by law to make from wage payments to employees. Employee hereby agrees that the payments and performances described in this Agreement are all that Employee shall be entitled to receive from NII except for vested qualified retirement benefits, if any, to which Employee may be entitled under NII's ERISA plans, and/or pursuant to the Fundo de Garantia do Tempo e Serviço, also known as FGTS. Employee further acknowledges and agrees that the payment described in Section 1(A) shall be deemed to satisfy NII’s obligations pursuant to NII’s Severance Plan (as amended and restated February 27, 2013) (the “Severance Plan”), that such payment represents the full amount payable to Employee under the terms of the Severance Plan, and that the Severance Plan requires Employee to execute this Agreement as a condition of receiving any such payments.

2.
Consideration
Employee hereby agrees and acknowledges that the benefits set forth in Section 1 of this Agreement are more than Employee would otherwise be entitled to receive under any of NII’s policies and procedures and that they are in addition to anything of value to which Employee already is entitled; and, specifically, that because execution of this Agreement is a condition of receiving any benefits under the Severance Plan, to the extent it would be deemed to apply to Employee’s termination, Employee is not otherwise entitled to any of the benefits set forth in Section 1(A). Employee acknowledges and agrees that the amounts made payable to him under this Agreement and the Second Separation Agreement and General Release between the Parties (the “Second Separation Agreement”) are in complete satisfaction of any and all claims of any kind that he has made or could have in connection with his employment and separation from employment, except as otherwise set forth in Section 3.
    
3.
Complete Release

In exchange for the consideration set forth herein, Employee hereby knowingly and voluntarily releases and forever discharges NII and any related companies, including, without limitation, their affiliates, former and current employees, officers, agents, directors, shareholders, investors, attorneys, successors and assigns or any of them (the “Released Parties”) from all

2


liabilities, claims, demands, rights of action or causes of action Employee had, has or may have against any of the Released Parties, including but not limited to any claims or demands based upon or relating to Employee’s employment with NII or the termination of that employment. This includes but is not limited to a release of any rights or claims Employee may have under Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Age Discrimination in Employment Act of 1967, the (“ADEA”) which prohibits age discrimination in employment; the Americans with Disabilities Act, which prohibits discrimination against otherwise qualified disabled individuals; the Virginia Human Rights Act, which is a state statue prohibiting, among other things, employment discrimination; the Fairfax County Human Rights Ordinance, which is a local ordinance prohibiting, among other things, employment discrimination; or any other federal, state or local laws or regulations prohibiting employment discrimination. This also includes but is not limited to a release by Employee of any claims for wrongful discharge or breach of contract under the Severance Plan, or any other statutory, common law, tort or contract claim that Employee had, has or may have against any of the Released Parties. This release covers both claims that Employee knows about and those that Employee may not know about.

Notwithstanding the foregoing, neither party is releasing any right to enforce this Agreement, and Employee is not releasing: (1) any claims for payments and benefits as set forth in this Agreement or the Second Separation Agreement; (2) any vested qualified retirement benefits under NII’s ERISA plan (although it does include a release of all claims to benefits under the Severance Plan); (3) the right to continuation in NII’s medical plans as provided by COBRA; (4) any claims for unemployment compensation or workers compensation benefits or other rights that may not be released as a matter of law; (5)  any claims solely relating the validity of this general release under the ADEA, as amended; (6) any non-waiveable right to file a charge with the U.S. Equal Employment Opportunity Commission; or (7) any rights to indemnification pursuant to NII’s or any successor company’s Certificate of Incorporation, Delaware General Corporation Law or the Director and Officer Indemnification Agreement between the Parties dated as of June 26, 2015. If a government agency were to pursue any matters that are released herein, Employee agrees that this Agreement will control as the exclusive remedy and full settlement of all such claims by Employee for money damages. Employee hereby acknowledges and agrees that this release is a general release and that by signing this Agreement, he is signing and agreeing to this release.

4.
Non-Release of Future Claims

Employee understands and agrees that he is waiving any and all rights and claims under the ADEA. Employee agrees that his waiver of these ADEA claims is knowing and voluntary, and understands that he is forever releasing any such claims that might have arisen before the date of this Agreement. The parties agree that the decision to terminate Employee’s employment has been made prior to the execution of this agreement.

5.
Encouragement to Consult with Attorney

Employee has had the opportunity to consult with an attorney and has been encouraged to do so prior to executing this Agreement.


3



6.
Period for Review and Consideration of Agreement

This Agreement was first proposed to employee on June 23, 2015 and revised on August 6, 2015. Employee may have, if desired, 45 days from August 6, 2015 within which to consider this Agreement. Employee may execute the Agreement prior to the expiration of the 45 day period. Employee acknowledges that in the event he decides to execute this Agreement in fewer than 45 days, he has done so with the express understanding that he has been given and declined the opportunity to consider this release for a full 45 days. Employee acknowledges that his decision to sign the Agreement in fewer than 45 days was not induced by NII through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the 45 day time period.

7.
Employee's Right to Revoke Agreement

Employee may revoke this Agreement within seven (7) days of Employee's signing it. Revocation can be made by delivering a written notice of revocation to Shana Smith, Vice President, Deputy General Counsel and Secretary, NII Holdings, Inc., 1875 Explorer Street, Suite 800, Reston, VA 20190. For this revocation to be effective, written notice must be received by Ms. Smith no later than the close of business on the seventh day after Employee signs this Agreement. If Employee has not revoked the Agreement, the eighth (8th) day after Employee signs this Agreement shall be the Effective Date for purposes of this Agreement.

8.
No Future Lawsuits

Employee promises never to file a lawsuit asserting any claims that are released in Section 3 of this Agreement. In the event Employee breaches this Section 8, Employee shall pay to NII all of its expenses incurred as a result of such breach, including but not limited to, reasonable attorney’s fees and expenses.

9.
Disclaimer of Liability

This Agreement and the payments and performances hereunder are made solely to assist Employee in making the transition from employment with NII, and are not and shall not be construed to be an admission of liability, an admission of the truth of any fact, or a declaration against interest on the part of NII.

10.
Confidential Information/Return of Property

Employee covenants and agrees that Employee shall not use, divulge, publish or disclose to any person or organization, confidential information obtained by Employee during the course of Employee’s employment or related to Employee’s cessation of employment (“Confidential Information”). The Confidential Information consists of the following: (a) the existence and terms of this Agreement itself; (b) personal, financial, private or sensitive information concerning NII’s executives, employees, customers and suppliers; (c) information concerning NII’s finances, business practices, long-term and strategic plans and similar matters; (d) information concerning NII’s formulas, designs, methods of business, trade secrets, technology, business operations, business records and files; and (e) any other non-public information which, if used, divulged, published or

4


disclosed by Employee, would be reasonably likely to provide a competitive advantage to a competitor or to cause any of NII’s executives or employees embarrassment. Employee further agrees to return immediately to NII all of NII’s property, if any, in Employee’s possession or under Employee’s control upon the Termination Date or such earlier date as Employee’s employment shall cease. Employee agrees that if he intentionally damages any NII property following notification of termination, this agreement becomes null and void. Notwithstanding the restrictions contained in this Section 10, Employee shall be permitted to make necessary disclosures to members of Employee’s immediate family or Employee’s attorneys and advisors concerning the terms of this Agreement, provided they agree to be bound by the terms of this promise of confidentiality, with Employee to be responsible for their compliance. Employee acknowledges that in addition to the promises contained in this Agreement, he remains bound by the Non-Competition and Confidentiality Agreement between the Parties dated as of May 29, 2007.
    
11.
Statements Regarding the Parties
    
The Parties agree not to do or say or write anything, directly or indirectly, that reasonably may be expected to have the effect of criticizing or disparaging the other Party. In addition, the Employee agrees not to do or say or write anything, directly or indirectly, that reasonably may be expected to have the effect of criticizing or disparaging any director of NII; any of NII’s employees, officers or agents; or diminishing or impairing the goodwill and reputation of NII or the products and services it provides. Employee further agrees not to assert that any current or former employee, agent, director or officer of NII has acted improperly or unlawfully with respect to Employee or any other person regarding employment.
        
12.
Cooperation with Litigation

Employee will reasonably cooperate with NII in its defense of any lawsuit filed over matters that occurred during the course of Employee’s employment with NII, and Employee agrees to provide full and accurate information with respect to the same. Notwithstanding the generality of the foregoing, the Parties hereby agree that NII will reimburse Employee for expenses reasonably incurred in connection with such matters and, if the cooperation set forth in this Section 12 results in Employee providing more than 40 hours of time after the Termination Date (the “Cooperation Threshold”), Employee shall be compensated by NII at an hourly rate of $250.00 U.S. per hour for each hour of service provided to NII in excess of the Cooperation Threshold, so long as the provision of such compensation is not in violation of the law of the jurisdiction applicable to the relevant matter for the service being requested.

13.
Litigation Assistance

Employee agrees that, unless compelled by valid subpoena or other court order, and in such case only after providing sufficient notice to NII of such subpoena or court order to allow NII a reasonable opportunity to object to the same, Employee shall not, directly or indirectly, assist any person or entity in connection with any potential or actual litigation against NII or any other of the Released Parties described in Section 3 of this Agreement.

14.
Execution of Documents


5


Each of the parties hereto shall execute any and all further documents and perform any and all further acts reasonably necessary or useful in carrying out the provisions of this Agreement.

15.
Invalid Provisions

The invalidity or unenforceability of any particular provision of this Agreement shall not affect the validity or enforceability of any other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

16.
Acknowledgment

Employee acknowledges that Employee has signed this Agreement freely and voluntarily without duress of any kind. Employee has conferred with an attorney or has knowingly and voluntarily chosen not to confer with an attorney about the Agreement.
 
17.
Entire Agreement

This Agreement and the Second Separation Agreement contains the entire understanding of Employee and NII concerning the subjects it covers and it supersedes all prior understandings and representations, except that Employee acknowledges and confirms the continuing effectiveness of the provisions of any Confidentiality Agreement between Employee and NII. NII has made no promises to Employee other than those set forth herein. This Agreement may not be modified or supplemented except by a subsequent written agreement signed by all parties.

18.
Successorship

It is the intention of the parties that the provisions hereof be binding upon the parties, their employees, affiliates, agents, heirs, successors and assigns forever.

19.
Governing Law

This Agreement shall be governed by the laws of the Commonwealth of Virginia, without regard to its conflict of laws principles.

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
    


THE NEXT PAGE IS THE SIGNATURE PAGE

6


IN WITNESS WHEREOF, the parties have executed this Agreement on the dates stated below.






August 20, 2015_____________            /s/ Gokul Hemmady            
Date                            Gokul Hemmady


NII HOLDINGS, INC.



August 20, 2015______________            By: /s/ Shana Smith            
Date                                Shana Smith
VP, Deputy General Counsel


7



EXECUTION COPY

Exhibit 10.6
SECOND SEPARATION AGREEMENT AND GENERAL RELEASE
10064159.5
This Separation and General Release is made by and between NII Holdings, Inc. (“NII”), a Delaware corporation, and Gokul Hemmady (hereinafter “Employee”). NII and Employee are collectively referred to as the “Parties.”     
RECITALS
WHEREAS, NII provided Employee with a Separation and Release Agreement on June 23, 2015, which set forth the terms of Employee’s severance from NII, and which included a general release of all claims (the “First Agreement”);
WHEREAS, the Parties wish to supplement the terms of the First Agreement;
WHEREAS, the Parties desire to resolve all issues, if any, relating to Employee’s employment with and separation from NII;
NOW THEREFORE, in consideration of the promises and payments contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree in this Second Separation Agreement and General Release (the “Second Agreement”) as follows:    

1.Employee’s Services During Transition Period
Pursuant to the First Agreement, Employee’s employment is to end on October 1, 2015 (the “Termination Date”). Between July 3, 2015 and the Termination Date, Employee agrees that he will work in good faith with NII to ensure a smooth transition of his roles and responsibilities to his successor, similar to the transition program that occurred at Nextel Mexico in July and August of 2014. In addition, Employee agrees to facilitate and assist with the creation and presentation of a detailed recommendation on the iDEN business in Brazil and to make himself available to review the iDEN presentation with the Board of Directors of NII. NII may determine that such transition, including the iDEN presentation, is complete prior to October 1, 2015, at which time Employee’s service will end; provided, however that his salary and benefits will continue in the normal course through October 1, 2015.
2.    Extension of Confidentiality and Non-Compete Provisions
On May 29, 2007, Employee entered into an agreement entitled “NII Holdings, Inc. Non-Competition and Confidentiality Agreement,” a copy of which is attached hereto as Exhibit A (the “Restricted Covenant Agreement”). Employee agrees to extend and abide by the non-compete, non-solicitation and confidentiality covenants set forth in that agreement for a total

1
        
        

period of eighteen (18) months after the Termination Date; provided, however, that notwithstanding anything to the contrary in the Restricted Covenant Agreement, the Parties hereby agree that, for all purposes, the Restricted Covenant Agreement shall be modified such that:
(a)
the “Restricted Area”, as defined in the Restricted Covenant Agreement, shall mean with respect to Employee, “Brazil and Argentina”; and
(a)
“Person,” as defined in the Restricted Covenant Agreement, shall mean the following companies: (a) in Brazil: Claro, Algar Telecom, Oi, Sercomtel, TIM, Vivo, Porto Seguro, Datora Mobile Telecomunicacoes, Terapar Participacoes and Sisteer; and (b) in Argentina: Claro, Movistar, Personal, Tuenti and Nuestro.
3.    Consideration
All provisions of the First Agreement remain in place. In exchange for Employee’s execution of this Second Agreement and his agreement to the terms set forth in Paragraphs 1 and 2, NII will make a payment to Employee in the amount of Three Hundred Thirty Three Thousand, Four Hundred Sixty Three Dollars ($333,463.00), less taxes and applicable deductions (the “Transition Bonus”), which represents six months of Employee’s base salary. The Transition Bonus will be paid within twenty (20) business days of the Termination Date, subject to the Effective Date, as defined in Section 8 below, having occurred prior to such payment.
4.    Release
In exchange for the consideration set forth herein, Employee hereby knowingly and voluntarily releases and forever discharges NII and any related companies, including, without limitation, their affiliates, former and current employees, officers, agents, directors, shareholders, investors, attorneys, successors and assigns or any of them (the “Released Parties”) from all liabilities, claims, demands, rights of action or causes of action Employee had, has or may have against any of the Released Parties, including but not limited to any claims or demands based upon or relating to Employee’s employment with NII or the termination of that employment. This includes but is not limited to a release of any rights or claims Employee may have under Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Age Discrimination in Employment Act of 1967, which prohibits age discrimination in employment; the Americans with Disabilities Act, which prohibits discrimination against otherwise qualified disabled individuals; the Virginia Human Rights Act, which is a state statue prohibiting, among other things, employment discrimination; the Fairfax County Human Rights Ordinance, which is a local ordinance prohibiting, among other things, employment discrimination; or any other federal, state or local laws or regulations prohibiting employment discrimination. This also includes but is not limited to a release by Employee of any claims for wrongful discharge or breach of contract under the Severance Plan or any other statutory, common law, tort or contract claim that Employee had, has or may have against any of

2
        
        

the Released Parties. This release covers both claims that Employee knows about and those that Employee may not know about.
Notwithstanding the foregoing, neither party is releasing any right to enforce the Second Agreement, and Employee is not releasing: (1) any claims for payments and benefits as set forth in the First Agreement or Second Agreement; (2) any vested qualified retirement benefits under NII’s ERISA plan (although it does include a release of all claims to benefits under the NII Severance Plan); (3) the right to continuation in NII’s medical plans as provided by COBRA; (4) any claims for unemployment compensation or workers compensation benefits or other rights that may not be released as a matter of law; (5)  any claims solely relating the validity of this General Release under the ADEA, as amended; (6) any non-waivable right to file a charge with the U.S. Equal Employment Opportunity Commission; or () any rights to indemnification pursuant to NII’s or any successor company’s Certificate of Incorporation, Delaware General Corporation Law or the Director and Officer Indemnification Agreement between NII and Employee dated as of June 26, 2015. If a government agency were to pursue any matters that are released herein, Employee agrees that the Second Agreement will control as the exclusive remedy and full settlement of all such claims by Employee for money damages. Employee hereby acknowledges and agrees that this release is a general release and that by signing the Second Agreement, he is signing and agreeing to this release.
5.    Non-Release of Future Claims
Employee understands and agrees that, as part of the general release in Paragraph 4, he is waiving any and all rights and claims under the Age Discrimination in Employment Act, 29 U.S.C. §§621, et. seq. (“ADEA”). Employee agrees that his waiver of these ADEA claims is knowing and voluntary, and understands that he is forever releasing any such claims that might have arisen before the Effective Date of the Second Agreement. The Parties agree that the decision to terminate Employee’s employment has been made prior to the execution of the Second Agreement.
6.    Encouragement to Consult with Attorney.
Employee has had the opportunity to consult with an attorney and has been encouraged to do so prior to executing the Second Agreement.
7.    Period for Review and Consideration of Agreement.
This Second Agreement was first proposed to employee on July 3, 2015 and revised on August 6, 2015. Employee may have, if desired, 45 days from August 6, 2015 within which to consider this Agreement. Employee may execute the Agreement prior to the expiration of the 45 day period, but may not execute the Agreement prior to the Termination Date. Employee acknowledges that in the event he decides to execute the Second Agreement in fewer than 45 days, he has done so with the express understanding that he has been given and declined the opportunity to consider this release for a full 45 days. Employee acknowledges that his decision to sign the Agreement in fewer than 45 days was not induced by NII through fraud,

3
        
        

misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the 45 day time period.
8.    Employee's Right to Revoke Agreement.
Employee may revoke this Second Agreement within seven (7) days of Employee's signing it. Revocation can be made by delivering a written notice of revocation to Shana Smith, Vice-President, Deputy Counsel and Secretary, NII Holdings, Inc., 1875 Explorer Street, Suite 1000, Reston, VA 20190. For this revocation to be effective, written notice must be received by Ms. Smith no later than the close of business on the seventh day after Employee signs the Second Agreement. If Employee does not revoke the Second Agreement, the eighth (8th) day after Employee signs it shall be the Effective Date of the Second Agreement.
9.    No Future Lawsuits.
Employee promises never to file a lawsuit asserting any claims that are released in Section 4 of the Second Agreement. In the event Employee breaches this Section 9, Employee shall pay to NII all of its expenses incurred as a result of such breach, including but not limited to, reasonable attorney’s fees and expenses.
10.    Disclaimer of Liability.
The Second Agreement and the payments and performances hereunder are not and shall not be construed to be an admission of liability, an admission of the truth of any fact, or a declaration against interest on the part of NII.
11.    Execution of Documents
Each of the Parties hereto shall execute any and all further documents and perform any and all further acts reasonably necessary or useful in carrying out the provisions of the Second Agreement.
12.    Invalid Provisions.
The invalidity or unenforceability of any particular provision of the Second Agreement shall not affect the validity or enforceability of any other provisions hereof, and the Second Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.
13.    Acknowledgment.
Employee acknowledges that Employee has signed the Second Agreement freely and voluntarily without duress of any kind. Employee has conferred with an attorney or has knowingly and voluntarily chosen not to confer with an attorney about the Agreement.
14.    Entire Agreement.

4
        
        

The Second Agreement contains the entire understanding of the Parties concerning the subjects it covers and it supersedes all prior understandings and representations, except as otherwise described in the Second Agreement. The Second Agreement may not be modified or supplemented except by a subsequent written agreement signed by all Parties.
15.    Successorship.
It is the intention of the Parties that the provisions hereof be binding upon the Parties, their employees, affiliates, agents, heirs, successors and assigns forever.

5
        
        

16.    Governing Law.
The Second Agreement shall be governed by the laws of the Commonwealth of Virginia, without regard to its conflict of laws principles.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THE SECOND AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THE SECOND AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.


THE NEXT PAGE IS THE SIGNATURE PAGE

6
        
        

IN WITNESS WHEREOF, the Parties have executed the Second Agreement on the dates stated below.

August 20, 2015_____________            /s/ Gokul Hemmady        
Date                            Gokul Hemmady


NII HOLDINGS, INC.

August 20, 2015_____________            By: /s/ Shana C. Smith    
Date                             Shana C. Smith
Vice-President, Deputy General
Counsel and Secretary


7
        




Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a)
I, Steven M. Shindler, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2015 of NII Holdings, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
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, as of the end of the period covered by this report based on such evaluation; and
(d)
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, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2015
 
/s/ STEVEN M. SHINDLER
 
 
Steven M. Shindler
 
 
Chief Executive Officer 
 






Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a)
I, Daniel E. Freiman, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2015 of NII Holdings, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
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, as of the end of the period covered by this report based on such evaluation; and
(d)
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, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2015
 
/s/ DANIEL E. FREIMAN
 
 
Daniel E. Freiman
 
 
Chief Financial Officer 
 






Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2015 (the “Report”) of NII Holdings, Inc. and subsidiaries (the “Company”), I, Steven M. Shindler, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge and belief:
1.
The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 5, 2015
 
/s/ STEVEN M. SHINDLER
 
 
Steven M. Shindler
 
 
Chief Executive Officer 
 






Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2015 (the “Report”) of NII Holdings, Inc. and subsidiaries (the “Company”), I, Daniel E. Freiman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge and belief:
1.
The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 5, 2015
 
/s/ DANIEL E. FREIMAN
 
 
Daniel E. Freiman
 
 
Chief Financial Officer 
 


NII (NASDAQ:NIHD)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more NII Charts.
NII (NASDAQ:NIHD)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more NII Charts.