EXHIBIT 10.58
EXHIBIT E - FORM OF CONVERTIBLE NOTE
THIS NOTE AND THE LIMITED PARTNERSHIP UNITS THAT MAY BE RECEIVED UPON CONVERSION
OF THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE
SECURITIES LAWS (THE "STATE ACTS") AND CANNOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE STATE ACTS AND REGULATIONS PROMULGATED
THEREUNDER.
MOBILE SATELLITE VENTURES LP
No. ___ U.S.$___________
Convertible Note at 10% Interest (calculated and compounded
semi-annually) Maturity Date: [date which is five years after the
First Closing], or earlier as determined herein
FOR VALUE RECEIVED, Mobile Satellite Ventures LP, a Delaware limited partnership
(the "Issuer"), hereby acknowledges itself indebted and promises to pay to
________________, or its permitted assigns (the "Noteholder"), the principal
amount of ______________ UNITED STATES DOLLARS (U.S.$_____________), on the
Maturity Date (as hereinafter defined in Schedule A), at the head office of the
Noteholder or at such other place as directed in writing by the Noteholder. In
addition, the Issuer agrees to pay interest (computed on the basis of a year of
365 or 366 days, as the case may be), in like money on the outstanding principal
amount from the date hereof until the Maturity Date, or until such later date as
all obligations hereunder have been paid in full, or earlier as otherwise
provided herein, at the rate of TEN PERCENT (10%) per annum, calculated and
compounded semi-annually and payable in arrears on the Maturity Date, or earlier
as otherwise provided herein, and should the Issuer at any time make default in
the payment of any principal or interest on this Convertible Note, to pay
interest on the amount in default at the same rate, in like money, all in
accordance with the terms and conditions set out in Schedule A. If at any time,
the payment of the principal of or interest on this Convertible Note is
rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, or reorganization of the Issuer or otherwise, the Issuer's
obligations under this Convertible Note shall be reinstated at such time as
though such payment had been due but not made at such time.
This Convertible Note is one of the "Convertible Notes" as defined in the
Investment Agreement (as defined in Schedule A hereto), and is subject to the
terms and conditions of the Investment Agreement and the Ancillary Agreements
(as defined in the Investment Agreement).
The Terms and Conditions set out on Schedule A attached hereto are hereby
incorporated by reference into this Convertible Note and constitute an integral
part hereof. THIS CONVERTIBLE NOTE IS SUBORDINATED TO OTHER DEBT OF THE ISSUER
AS SET FORTH IN SECTION 2 OF SCHEDULE A.
IN WITNESS WHEREOF, the Issuer has caused this Convertible Note to be executed
on its behalf by the signatures of its officers duly authorized in that regard.
Issued as of _______ __, 2001 MOBILE SATELLITE VENTURES LP
By: Mobile Satellite Ventures GP Inc.,
its general partner
By:________________________________
Name:
Title:
SCHEDULE A
TERMS AND CONDITIONS OF THE NOTE
1. Terms not otherwise defined herein shall have their respective
meanings set forth in the Investment Agreement or, if not defined
therein, in the Newco LP Agreement. In this Convertible Note, the
following capitalized terms shall have the meanings set out below:
(a) "Affiliate" means with respect to a specified Person, any Person
that directly or indirectly controls, is controlled by, or is
under common control with, the specified Person. As used in this
definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise;
(b) "Business Day" means any day on which banks are open for business
in the place where this Convertible Note is scheduled for
payment;
(c) "Canadian Licenses" means the licenses issued by Industry Canada
to TMI and which were transferred to Mobile Satellite Ventures
(Canada) Inc. pursuant to the TMI Asset Sale Agreements (as
defined in the Investment Agreement);
(d) "Capital Lease Obligations" means all monetary obligations of a
Person under any leasing or similar arrangement which, in
accordance with GAAP, is required to be classified as a capital
lease;
(e) "Cash Equivalents" means: (i) securities issued or fully
guaranteed or insured by the United States Government or any
agency thereof and backed by the full faith and credit of the
United States having maturities of not more than twelve months
from the date of acquisition; (ii) certificates of deposit, time
deposits, Eurodollar time deposits, or banker's acceptances
having in each case a tenor of not more than six months, issued
by any U.S. commercial bank having combined capital and surplus
of not less than $500,000,000 whose short term securities are
rated both A-1 or higher by Standard & Poor's Corporation and P-1
or higher by Moody's Investors Services, Inc.; (iii) commercial
paper of an issuer rated either at least A-1 by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. and/or P-1 by
Moody's Investors Service Inc. and in either case having a tenor
of not more than three months; (iv repurchase agreements fully
collateralized by securities issued by U.S. government agencies;
and (v) money market mutual funds invested in the instruments
permitted by clauses (i), (ii), (iii) and (iv) above;
(f) "Class A Preferred Units" shall have the meaning given such term
in the Newco LP Agreement;
(g) "Contingent Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including, without limitation, any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to
advance or provide funds (i) for the payment or discharge of any
such primary obligation, or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, or (c) to
purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of
the ability of the primary obligor to make payment of such
primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect
thereof, or (e) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of any Debt. For
purposes of this definition, the amount of any Contingent
Obligation shall be deemed to be an amount equal to the maximum
reasonably anticipated liability in respect thereof;
(h) "Conversion Amount" means, the portion of the principal amount of
this Convertible Note elected by the Noteholder to be converted,
which amount may be all or any portion of the remaining principal
amount of this Convertible Note;
(i) "Conversion Date" means the date specified in the Notice of
Conversion, or if no date is specified therein, the next Business
Day following the date that the Notice of Conversion is received
by the Issuer (unless a filing under the HSR Act was made in
connection with such conversion, in which case the conversion
shall be deemed effective on the Business Day immediately
following the expiration or termination of the applicable waiting
period under the HSR Act); provided, however, that the Conversion
Date shall be no sooner than one (1) Business Day after the date
of delivery (by facsimile or otherwise) of the Notice of
Conversion and any Notice of Conversion delivered to the Issuer
on a day which is not a Business Day shall be deemed delivered as
of the next following Business Day;
(j) "Conversion Price" means U.S.$6.4465405156, subject to adjustment
in accordance with Section 14;
(k) "Convertible Note" means this Convertible Note and "Convertible
Notes" mean, collectively, this Convertible Note and the other
Convertible Notes of like tenor all issued on the same date
totalling $55,000,000 in original principal amount;
(l) "Debt" means: (i) all indebtedness of the Issuer and its
Subsidiaries for borrowed money, including borrowings of
commodities, bankers' acceptances, letters of credit or letters
of guarantee; (ii) all indebtedness of the Issuer and its
Subsidiaries for the deferred purchase price of property or
services other than for goods and services purchased in the
ordinary course of business and paid for in accordance with
customary practice and not represented by a note, bond, debenture
or other evidence of indebtedness; (iii) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by the Issuer and its
Subsidiaries (even though the rights and remedies of the seller
or lender under such agreement in the event of default are
limited to repossession or sale of such property); (iv) all
current liabilities of the Issuer and its Subsidiaries
represented by a note, bond, debenture or other evidence of
indebtedness; (v) all obligations under leases which have been or
should be, in accordance with U.S. GAAP, recorded as capital
leases in respect of which the Issuer and its Subsidiaries are
liable as lessee; and (vi) all indebtedness of the kinds referred
to in (i) through (v) above which is directly or indirectly
guaranteed by the Issuer and its Subsidiaries or which the Issuer
and its Subsidiaries have agreed (contingently or otherwise) to
purchase or otherwise acquire, or in respect of which the Issuer
and its Subsidiaries have otherwise assured a creditor or other
Person against loss;
(m) "Existing System Equipment Financing" means Debt, up to a maximum
principal amount of U.S.$4,000,000, incurred by the Issuer for
the purpose of enabling the Issuer to acquire hardware or
software, to replace or upgrade hardware and software owned by
the Issuer as at the date of this Note but only to the extent
that the proceeds of such Debt are applied to acquire such
hardware or software;
(n) "Event of Default" means any one or more of the following events:
(i) if the Issuer defaults in payment of the principal of,
and/or interest on, this Convertible Note when the same
becomes due, and continuance of such failure for five (5)
Business Days after the date on which such principal or
interest is due;
(ii) if a decree, judgement or order by a court having
jurisdiction shall have been entered adjudging the Issuer a
bankrupt or insolvent, or approving as properly filed a
petition seeking liquidation or reorganization of the Issuer
under any applicable bankruptcy, reorganization or similar
law, and such decree, judgement or order shall have
continued undismissed, undischarged or unstayed for a period
of 60 calendar days;
(iii)if the Issuer shall institute proceedings to be adjudicated
a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition
or answer or consent seeking reorganization under any
applicable bankruptcy, liquidation or reorganization or
similar law, or shall consent to the filing of any such
petition, or shall consent to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property or of any substantial
part thereof, or shall make an assignment for the benefit of
creditors or a proposal under any applicable bankruptcy or
other law, or shall admit in writing its inability to pay
its debts generally as they become due;
(iv) if there occurs a default in the payment of any principal,
premium, interest or other amount due on (or for) any Debt
(other than this Convertible Note), satellite insurance,
satellite construction costs or in any payment due under any
obligation, guarantee or indemnity of the Issuer in an
aggregate amount in excess of U.S.$1,000,000 ("Obligations")
beyond any period of grace provided with respect thereto, or
if any other default occurs in the performance of any other
term, condition or covenant contained in any such
Obligations or any agreement under which such Obligations
are created, the result of which is to cause any holder(s)
of such Obligations (or a trustee or agent on behalf of such
holder(s)) to accelerate such Obligations, provided that the
resulting default under this Convertible Note shall be
deemed to be cured or waived if such other defaults are
cured or waived;
(v) if the Issuer shall fail to carry out or observe any other
covenant or condition of this Convertible Note or any
covenant contained in the Investment Agreement on its part
to be observed or performed and after notice in writing has
been given to the Issuer by the Noteholder specifying such
default and requiring the Issuer to put an end to the same,
the Issuer shall fail to remedy or cure such default within
a period of 30 calendar days;
(vi) if any representation, warranty, certification or statement
made by the Issuer (or its predecessor) or Parent (as
defined in the Investment Agreement) in the Investment
Agreement or any other Ancillary Agreement (as defined in
the Investment Agreement) to which the Issuer or Parent is a
party or in any certificate, financial statement or other
document delivered pursuant to the Investment Agreement
shall prove to have been incorrect in any material respect
when made (or deemed made); or
(vii)if the Issuer or any Subsidiary of the Issuer or Canadian
License Co. shall have lost ownership of or rights in
respect of the FCC Licenses or the Canadian Licenses, except
for such losses of ownership or rights that would not cause
a Material Adverse Effect on the Issuer and its Subsidiaries
taken as a whole.
(o) "FCC Licenses" means the licenses issued by the Federal
Communications Commission to MSI and which were transferred to
the Issuer or a Subsidiary of the Issuer pursuant to the Amended
and Restated Sub Asset Sale Agreement (as defined in the
Investment Agreement);
(p) "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in
such other statements by such other entity as may be in general
use by significant segments of the U.S. accounting profession,
which are applicable to the circumstances as of the date of
determination;
(q) "General Partner" means the general partner of the Issuer;
(r) "Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing;
(s) "Investment" means any investment in any Person, whether by means
of share purchase, capital contribution, loan, Contingent
Obligation, time deposit or otherwise;
(t) "Investment Agreement" means the Amended and Restated Investment
Agreement dated October 12, 2001 among Mobile Satellite Ventures
LLC (the predecessor to the Issuer), Motient Corporation, TMI,
and the other parties identified therein as "Investors" as in
effect on the Issue Date, and without giving effect to any
amendment, modification, supplement, or restatement thereto or
waiver thereunder except to the extent that the same has been
approved in writing by the Lead Note Investor (as defined in the
Investment Agreement);
(u) "Issuer" means Mobile Satellite Ventures LP;
(v) "Issue Date" means [the date of the First Closing];
(w) "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature
whatsoever (including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital
Lease Obligation, any financing lease having substantially the
same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which
such lien relates as debtor, under the Uniform Commercial Code or
any comparable law) and any contingent or other agreement to
provide any of the foregoing;
(x) "Limited Partner" and "Limited Partners" shall have the meanings
given such term in the Newco LP Agreement;
(y) "Material Adverse Effect" means a material adverse change in, or
a material adverse effect upon, any of (1) the operations,
business, properties, condition (financial or otherwise) of the
Issuer and its Subsidiaries taken as a whole; (2) the ability of
the Issuer or any of its Subsidiaries to perform under this
Convertible Note, the Investment Agreement, or any of the
agreements or instruments executed in connection therewith to
which the Issuer or any of its Subsidiaries is a party; or (3)
the legality, validity, binding effect or enforceability of this
Convertible Note, the Investment Agreement, or any of the
agreements or instruments executed in connection therewith to
which the Issuer or any of its Subsidiaries is a party;
(z) "Maturity Date" means the earliest of the following dates:
(i) [date which is five years after the First Closing]; and
(ii) the date, if any, on which the Noteholder declares this
Convertible Note due and payable pursuant to Section 8
below;
(aa) "MSI" means Motient Services Inc.;
(bb) "MSI Note" means the $15 Million Note of even date herewith made
by the Issuer payable to MSI, as in effect on the Issue Date, and
without giving effect to any amendment, modification, supplement,
or restatement thereto or waiver thereunder except to the extent
that the same has been approved in writing by the Lead Note
Investor (as defined in the Investment Agreement);
(cc) "Newco GP Agreement" means the Stockholders' Agreement of Mobile
Satellite Ventures GP Inc., the general partner of the Issuer,
dated as of the date hereof, among the parties specified therein
as in effect on the Issue Date, and without giving effect to any
amendment, modification, supplement, or restatement thereto or
waiver thereunder except to the extent that the same has been
approved in writing by the Lead Note Investor (as defined in the
Investment Agreement);
(dd) "Newco LP Agreement" means the Limited Partnership Agreement of
the Issuer, dated as of the date hereof, among the parties
specified therein as in effect on the Issue Date, and without
giving effect to any amendment, modification, supplement, or
restatement thereto or waiver thereunder except to the extent
that the same has been approved in writing by the Lead Note
Investor (as defined in the Investment Agreement);
(ee) "Next Generation Financing" means Debt, up to a maximum principal
amount of U.S.$5,000,000, incurred by the Issuer for the purpose
of enabling the Issuer to: (1) acquire hardware or software; or
(2) pay for legal, regulatory or consulting costs directly
related to the development of the Issuer's next-generation mobile
satellite system and its associated terrestrial segment, but only
to the extent that the proceeds of such Debt are applied to
acquire such hardware or software, or to pay for such legal,
regulatory and consulting costs;
(ff) "Notice of Conversion" means the notice of conversion in the form
attached hereto;
(gg) "Person" means any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate,
limited liability company, or other legal entity or organization;
(hh) "Purchase Money Indebtedness" means any Debt incurred or assumed
by the Issuer to finance the cost (including the cost of
construction) of an item of real or personal property (including
the Existing System Equipment Financing and the Next Generation
Financing) or the improvement to such property, the aggregate
principal amount of which Debt does not exceed the sum of (i)
100% of such cost and (ii) reasonable fees and expenses of the
Issuer incurred in connection therewith; provided that such Debt
is incurred or assumed within 90 days of the acquisition of, or
improvement to, such property;
(ii) "Reduction Event" means any one or more of the following:
(i) the sale, disposition, transfer, assignment or lease of any
or all of the assets and/or business of the Issuer other
than Permitted Transfers (as defined in Section 12 below);
(ii)the issuance of Debt (other than Permitted Debt (as defined
in Section 12 below)), where the lesser of:
(A) 50% of the total value of the consideration given to the
Issuer (or to such other party as the Issuer may direct) as
a result of such Debt, after deduction for the direct costs
incurred to consummate such Debt; and
(B) an amount of cash equal to the total principal and
interest on this Note outstanding as at the creation of such
Debt. is paid to the Noteholder in cash pursuant to Section
10 below;
(iii)the issuance of the equity of, or an ownership interest in,
the Issuer, other than issuance of equity (A) at the Second
Closing (as defined in the Investment Agreement) pursuant to
the Investment Agreement, or (B) as a result of the
conversion of the Convertible Notes or (C) where the
proceeds of such issuance consist of consideration other
than cash;
(jj) "Reduction Event Net Proceeds" means, in relation to any
Reduction Event, the total value of the consideration given to
the Issuer (or to such other party as the Issuer may direct) for,
or as a consequence of, such Reduction Event, after deduction of
the direct costs incurred by the Issuer to consummate such
Reduction Event;
(kk) "Required Note Majority" means the holders of a majority of the
aggregate outstanding principal amounts outstanding under all of
the Convertible Notes;
(ll) "Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person;
(mm) "TMI" means TMI Communications and Company, Limited Partnership;
(nn) "TMI Note" means the $11.5 Million Note of even date herewith
made by the Issuer payable to TMI as in effect on the Issue Date,
and without giving effect to any amendment, modification,
supplement, or restatement thereto or waiver thereunder; and
(oo) "Units" shall have the meaning given such term in the Newco LP
Agreement.
2. This Convertible Note is a direct and unsecured senior obligation of the
Issuer. The Noteholder agrees that the Note is subordinated in right of
payment to the prior payment in full of the Issuer's Debt under the TMI
Note. The provisions of this paragraph may not be modified or amended
without the prior consent of TMI for so long as the TMI Note is
outstanding. TMI shall be a third-party beneficiary of the immediately
preceding sentence for so long as the TMI Note is outstanding.
The foregoing provisions of this Section 2 are and are intended solely for
the purpose of defining the relative rights of the Noteholder on the one
hand and the holders of the TMI Note on the other hand. Nothing contained
in this Section 2 or elsewhere in this Convertible Note or in the
Investment Agreement is intended to or shall (a) impair, as among the
Issuer, its creditors other than holders of the TMI Note, and the
Noteholder, the obligation of the Issuer, which is absolute and
unconditional, to pay to the Noteholder the principal of, and interest on
this Convertible Note as and when the same shall become due and payable in
accordance with its terms; or (b) affect the relative rights against the
Issuer of the Noteholder and creditors of the Issuer other than the holders
of the TMI Note; or (c) prevent the Noteholder from exercising all remedies
otherwise permitted by applicable law upon a default or an Event of Default
under this Convertible Note.
The failure to make a payment on account of principal of, or interest on,
this Convertible Note by reason of the first paragraph of this section
shall not be construed as preventing the occurrence of a default or an
Event of Default hereunder.
3. The principal amounts outstanding under this Convertible Note bear interest
(both before and after maturity, default and judgement with interest on
overdue interest at the same rate) from the Issue Date at the rate of ten
percent (10%) per annum, calculated and compounded semi-annually and
payable in arrears on the Maturity Date, or earlier as otherwise provided
herein. The principal amounts owing under this Convertible Note will cease
to bear interest on the date on which all principal owed on this
Convertible Note are fully repaid, unless payment of principal is
improperly withheld or refused by the Issuer. Interest shall not accrue on
accrued but unpaid interest unless and until such accrued but unpaid
interest becomes overdue, in which case such overdue interest shall bear
interest at the rate per annum set forth above commencing on the first day
that such interest becomes overdue until such overdue interest is paid in
full.
4. The principal of this Convertible Note and interest thereon will be payable
in United States Dollars, at the option of the Noteholder: (i) at the head
office of the Noteholder; (ii) at such other place as directed in writing
by the Noteholder; or (iii) by electronic funds transfer to an account
maintained by the Noteholder with a bank in the United States.
5. If the date for payment of any amount of principal or interest in respect
of this Convertible Note is not, at the place of payment, a Business Day,
the Noteholder shall not be entitled to payment of the amount due until the
next following Business Day at the place of payment and shall not be
entitled to any further interest or payment in respect of such delay.
6. Any monies paid on this Convertible Note shall be applied, firstly, on
account of accrued interest, and secondly, on account of principal.
7. Unless previously converted, redeemed or purchased by the Issuer, this
Convertible Note will mature at its principal amount then outstanding on
the Maturity Date.
8. If an Event of Default other than those in (ii) and (iii) of the definition
of Event of Default occurs the Noteholder may, at its option, by notice in
writing to the Issuer, declare this Convertible Note to be due and payable,
and upon such declaration, unless all Events of Default have been cured by
the Issuer prior to receipt by the Issuer of such declaration, all
principal of, and interest on, this Convertible Note shall immediately
become due and payable. In the case of the occurrence of an Event of
Default referred to in clause (ii) or (iii) of the definition of "Event of
Default" the principal amount then outstanding of, and the accrued interest
on any amounts owing under this Convertible Note, and all other amounts
payable by the Issuer hereunder shall become automatically immediately due
and payable without presentment, demand, diligence, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Issuer.
9. The Issuer agrees to pay to Noteholder and reimburse Noteholder for any and
all reasonable costs and expenses, including attorney's fees and court
costs, if any, incurred by the Noteholder in connection with the
enforcement or collection hereof, both before and after the commencement of
any action to enforce or collect this Convertible Note, but whether or not
any such action is commenced by the Noteholder. The Issuer hereby waives
presentment, demand, protest or other notice of any kind, and all defenses
and pleas on the grounds of extension of the time of payments or due dates
of this Convertible Note, in the enforcement of this Convertible Note, and
expressly agrees that this Convertible Note or any payment hereunder may be
extended from time to time without in any way affecting the liability of
the Issuer hereunder. The rights and remedies of the Noteholder hereunder
shall be cumulative and concurrent and may be pursued singularly,
successively or together at the sole discretion of the Noteholder, and may
be exercised as often as occasion therefor shall occur, and the failure to
exercise any such right or remedy shall in no event be construed as a
waiver or release of the same or any other right or remedy.
10. Within five Business Days following the occurrence of a Reduction Event,
the Issuer shall give written notice thereof to the Noteholder, which
notice shall set forth in reasonable detail the terms of the transaction
constituting such Reduction Event. After the TMI Note has been paid in full
and until such time as this Convertible Note has been repaid in full, the
Noteholder may, within 10 days after receipt of the notice of a Reduction
Event referred to above, elect that the Issuer pay to the Noteholder, in
cash, its pro rata portion of 50% of all Reduction Event Net Proceeds
immediately upon receipt by the Issuer of the same. The Noteholder's pro
rata portion shall be determined by reference to the principal amount
outstanding under this Convertible Note, on the one hand, and the (i)
aggregate principal amount outstanding under all of the Convertible Notes
(without regard to whether any other holders of the Convertible Notes have
elected to have the Issuer pay their respective portions of the Reduction
Event Net Proceeds in connection with such Reduction Event) plus (ii) the
principal amount outstanding under the MSI Note, on the other hand. If the
Noteholder exercises such option, the Noteholder may require the Issuer to
direct the person to whom assets or securities are sold in connection with
such Reduction Event to pay such monies owed to the Noteholder pursuant
this Section 10 directly to the Noteholder.
11. If, for any given Reduction Event, the cash payment to the Noteholder
described in Section 10 above does not repay this Convertible Note in full,
the Noteholder will have the option, but not the obligation, to exchange
the remaining portion of this Convertible Note for a pro-rata portion of
the debt or equity instruments, if any, issued by the Issuer as
consideration for such Reduction Event. Upon such exchange, the Noteholder
shall be entitled to receive accrued and unpaid interest on this
Convertible Note through the date of such exchange, which interest shall be
payable by the Issuer in cash on the earlier of the Second Closing Date or
the Maturity Date. 12. Except for any transaction, agreement, undertaking,
activity or other action required in order for the Issuer to perform its
obligations specifically set forth in the Investment Agreement or any
Ancillary Agreement (as defined in the Investment Agreement) or for the
Issuer to exercise any of its rights specifically set forth therein, the
Issuer agrees that, for so long as 25% or more of the original aggregate
principal amount of the Convertible Notes remain outstanding, without the
prior consent of the Required Note Majority:
(a) neither the Issuer nor any Subsidiary of the Issuer shall, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or
with respect to any part of its property or assets, whether now owned or
hereafter acquired, or offer or agree to do so, other than the following
("Permitted Liens"):
(i) any Lien in favor of the Noteholder;
(ii) Liens to secure Purchase Money Indebtedness permitted under
Section 12(g)(i) below, provided that such Liens cover only the
assets acquired with such Purchase Money Indebtedness.
(iii) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty,
unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are
maintained;
(iv) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course
of business which do not secure Debt and are not delinquent or
remain payable without penalty;
(v) Liens (other than any Lien imposed by Employee Retirement Income
Security Act of 1974, as amended) on the property of the Issuer
incurred, or pledges or deposits required, in connection with
workmen's compensation, unemployment insurance and other social
security legislation;
(vi) Liens on the property of the Issuer securing (1) the performance
of bids, trade contracts (other than for borrowed money or other
Debt), leases, statutory obligations, and (2) obligations on
surety and appeal bonds, and (3) other obligations of a like
nature incurred in the ordinary course of business which do not
secure Debt, provided that all such Liens in the aggregate could
not cause a Material Adverse Effect;
(vii) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount, and which do not
in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the
businesses of the Issuer;
(viii) Liens on contract rights under subscriber equipment leases sold,
pledged or otherwise transferred pursuant to any bona fide
financing of such leases; and
(ix) Liens to secure Debt permitted under Section 12(g)(vii); provided
that all such Liens in the aggregate could not cause a Material
Adverse Effect.
(b) neither the Issuer nor any Subsidiary of the Issuer shall, directly or
indirectly, (i) sell, assign, lease, convey, transfer or otherwise dispose
of (whether in one or a series of transactions) any of its assets, business
or property, (including accounts and notes receivable) (with or without
recourse), or enter into equipment sale-leaseback transactions or (ii)
merge or consolidate with any other Person, or enter into any agreement to
do any of the foregoing described in clauses (i) or (ii) except for the
following ("Permitted Transfers"):
(i) sales, transfers, or other dispositions of inventory, or used,
worn-out or surplus property, or property of no further use to
the Issuer, all in the ordinary course of business;
(ii) sales, transfers, or other dispositions of equipment in the
ordinary course of business to the extent that such equipment is
exchanged for credit against the purchase price of similar
replacement equipment or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement
equipment;
(iii) sales, transfers, or other dispositions of communications
services, capacity or equipment pursuant to the customer
contracts providing for the sale of communications services,
capacity or equipment in the ordinary course of business;
(iv) sales, transfers, or other dispositions of assets in the ordinary
course of business having a fair market value not exceeding
$500,000 per item or $1,000,000 in the aggregate in any fiscal
year (excluding sales, transfers and dispositions theretofore
approved in accordance with the terms hereof in such fiscal
year);
(v) sales, transfers or other dispositions of contract rights under
subscriber equipment leases pursuant to any bona fide financing
of such leases permitted under Section 12(g) below;
(vi) non-exclusive licenses of technology and other intangible assets,
excluding spectrum licenses;
(vii) sales of mobile earth terminals and related equipment, and other
inventory;
(viii) sales, transfers, or other dispositions of assets as a result of
the combination and integration of the business of MSI and TMI as
contemplated by the Operations Plan, including without limitation
the sale, transfer or other disposition of: (y) duplicative or
unnecessary assets, or (z) assets in connection with the closing
of facilities and reductions in workforce; provided that such
disposition does not include a disposition of the FCC Licenses or
the Canadian Licenses;
(ix) any wholly-owned Subsidiary of the Issuer may merge, consolidate
or combine with or into, or transfer (for no consideration)
assets to the Issuer; provided that the Issuer shall be the
continuing or surviving corporation; and
(x) any wholly-owned Subsidiary of the Issuer may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise), to another wholly-owned
Subsidiary.
For certainty, "Permitted Transfers" shall not include: (1)
sales, assignments, leases, conveyances, transfers or other
dispositions of the Issuer or any of its Subsidiaries outside of
the ordinary course of business other than as permitted in
paragraphs (viii), (ix) and (x) above; and (2) the sale,
assignment, lease, conveyance, transfer or other disposition
(whether in one or a series of transactions) of all or
substantially all of the assets of any of the Issuer or any of
its Subsidiaries or Canadian License Co.
(c) neither the Issuer nor any Subsidiary of the Issuer shall, directly or
indirectly, make or acquire any Investment in any Person other than the
following:
(i) Investments in Persons which are wholly-owned Subsidiaries of the
Issuer (including Newco Sub (as defined in the Investment
Agreement)) on the date hereof;
(ii) Investments in Mobile Satellite Ventures (Canada) Inc. and Mobile
Satellite Ventures (Canada) Holdings Inc. as required by the
Capacity Lease Agreement, the Rights and Services Agreement or
the Canadian Shareholders Agreement (as such terms are defined in
the Investment Agreement);
(iii) Cash Equivalents; and
(iv) any Investment not otherwise permitted by the foregoing clauses
(i), (ii) and (iii) if, immediately after such Investment is made
or acquired, the aggregate net book value (or aggregate cost
thereof, if greater than book value at the time of determination)
of all Investments permitted by this clause (iii) does not exceed
$2,000,000.
(d) neither the Issuer nor any Subsidiary of the Issuer shall repay any
outstanding Debt to holders of equity securities of the Issuer prior to the
Second Closing (as such term is defined in the Investment Agreement),
except for repayments under the Convertible Notes, repayments under the TMI
Note and repayments under the MSI Note, each in accordance with their
respective terms.
(e) other than Investments permitted by Section 12(c)(ii), neither the Issuer
nor any Subsidiary of the Issuer shall, directly or indirectly, (i) pay any
funds to or for the account of any Affiliate which is not a wholly-owned
Subsidiary of the Issuer, (ii) make any investment in any Affiliate which
is not a wholly-owned Subsidiary of the Issuer (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any
Debt, or otherwise), (iii) lease, sell, transfer or otherwise dispose of
any assets, tangible or intangible, to any Affiliate which is not a
wholly-owned Subsidiary of the Issuer, or (iv) except in the ordinary
course of business consistent with past practice, participate in, or
effect, any other transaction with any Affiliate which is not a
wholly-owned Subsidiary of the Issuer, except in each case on an
arm's-length basis on terms at least as favorable to the Issuer as could
have been obtained from a third party that was not an Affiliate or as
otherwise expressly approved in writing by the Noteholder.
(f) neither the Issuer nor any Subsidiary of the Issuer shall (i) declare or
make any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any Units of any
class of its equity, or (ii) redeem, repurchase or otherwise acquire for
value any Units of its equity or any warrants, rights or options to acquire
such Units, now or hereafter outstanding except, in either case, as
provided in the Convertible Notes or in the Newco LP Agreement.
(g) neither the Issuer nor any Subsidiary of the Issuer shall create, incur,
assume, guaranty, suffer to exist, or otherwise become or remain directly
or indirectly liable with respect to, any Debt, other than the following
(the "Permitted Debt"):
(i) Purchase Money Indebtedness not to exceed U.S.$9,000,000 at any
one time outstanding;
(ii) accounts payable to trade creditors for goods and services and
current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of the Issuer's business,
as the case may be, in accordance with customary terms and paid
within the specified time, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP;
(iii) income taxes payable and deferred taxes;
(iv) accrued expenses and deferred income;
(v) Debt outstanding on the Issue Date that is identified and
quantified on Schedule B hereto;
(vi) Debt incurred to finance in-orbit insurance in an aggregate
amount outstanding at any time not to exceed $5,000,000;
(vii) any other Debt incurred after the date hereof; provided that the
aggregate outstanding principal amount of all such Debt shall not
at any time exceed $2,000,000 outstanding; and
(viii) other Debt that satisfies the following five conditions: (1) such
Debt is subordinated to this Convertible Note pursuant to a
written subordination agreement satisfactory to the Noteholder
which provides that no payment shall be made on or in respect of
such Debt until the Debt evidenced by this Convertible Note is
paid in full in cash, (2) the maturity date of such Debt is a
date subsequent to the first anniversary of the Maturity Date,
(3) such Debt is not mandatorily redeemable pursuant to a sinking
fund or otherwise, and does not have a scheduled principal or
similar payment due, prior to the first anniversary of the
Maturity Date, (4) such Debt is not redeemable at the option of
the holder thereof, in whole or in part, upon the happening of an
event, passage of time, or otherwise, prior to the first
anniversary of the Maturity Date, and (5) such Debt is not
convertible into or exercisable or exchangeable for any equity
securities, warrants, rights or options to acquire equity
securities of the Issuer or any Subsidiary of the Issuer, nor is
such Debt issued with any such warrants, rights or options or any
agreement to issue such warrants, rights or options of the Issuer
or any Subsidiary of the Issuer.
(h) neither the Issuer nor any Subsidiary of the Issuer shall (i) amend, alter,
repeal or otherwise modify, or consent to the amendment, alteration, repeal
or other modification of, the FCC Licenses or (ii) amend, alter, repeal or
otherwise modify, or consent to the amendment, alteration, repeal or other
modification of, any agreements relating to the Canadian Licenses, or waive
any contractual rights thereto; except in each case, amendments,
alterations, repeals, or other modifications or waivers (y) which do not
have Material Adverse Effect on the Issuer, or (z) required by any law,
rule, regulation or order of any Government Authority.
(i) prior to the Second Closing, the Issuer shall not permit the removal of the
General Partner or the appointment of a replacement General Partner.
13. This Convertible Note shall be convertible into Class A Preferred Units of
the Issuer as follows:
(a) Subject to the limitations on conversions contained in this Section 13, the
Noteholder may, at any time and from time to time until the outstanding
principal amount of this Convertible Note is paid in full (and whether or
not an Event of Default exists under this Convertible Note), convert (an
"Optional Conversion") all or a portion of the principal amount of this
Convertible Note (but not, for the avoidance of doubt, any interest,
including without limitation any interest which may have been compounded
pursuant to Section 3 above) into a number of Class A Preferred Units of
the Issuer equal to the number determined by dividing the Conversion Amount
by the Conversion Price in effect on the Conversion Date. To convert this
Convertible Note, the Noteholder must (a) complete and sign a Notice of
Conversion substantially in the form attached hereto, (b) surrender this
Convertible Note to the Issuer, (c) furnish appropriate endorsements or
transfer documents if required by the Issuer, (d) pay any transfer or
similar tax, if required, and (e) execute and deliver documentation
required by the Issuer in order for the Noteholder to join and become bound
by the terms of the Newco LP Agreement. The outstanding principal amount of
this Convertible Note shall be reduced by the portion of the principal
amount converted into Class A Preferred Units. The converted principal
amount of this Convertible Note shall cease to accrue interest. The accrued
but unpaid interest on the converted principal amount of this Convertible
Note shall be due and payable on the earlier of (x) the Maturity Date or
(y) the Second Closing.
(b) Subject to Section 13(g) below, as soon as practicable following the
receipt of the deliveries required by Section 13(a), the Issuer shall issue
and deliver to the Noteholder (x) that number of Class A Preferred Units
issuable upon conversion of the portion of this Convertible Note being
converted in the Optional Conversion and (y) a new Convertible Note in the
form hereof representing the balance of the principal amount hereof not
being converted, if any. Delivery under this Section 13(b) may be made
personally or by reputable overnight courier. The person or persons
entitled to receive Class A Preferred Units issuable upon such conversion
shall be treated for all purposes as the record holder of such Class A
Preferred Units at the close of business on the Conversion Date and such
Class A Preferred Units shall be issued and outstanding as of such date.
(c) Upon the consummation of the Second Closing (as defined in the Investment
Agreement), the entire outstanding principal amount of this Convertible
Note (the "Automatic Conversion Amount") shall automatically convert into a
number of Class A Preferred Units of the Issuer equal to the number
determined by dividing the Automatic Conversion Amount by the Conversion
Price in effect on the Second Closing Date (as defined in the Investment
Agreement). Upon such conversion against issuance and delivery of such
Class A Preferred Units free and clear of any encumbrances (other than
those arising pursuant to applicable federal and state securities laws),
all payment obligations of the Issuer in respect to the outstanding
principal amount of this Convertible Note hereunder shall be deemed
satisfied. Upon such conversion of this Convertible Note, the accrued and
unpaid interest on this Convertible Note shall immediately become due and
payable in cash. Upon receipt of written notice from the Issuer of the
occurrence of the Second Closing, the Noteholder shall (i) surrender this
Convertible Note to the Issuer, (ii) furnish appropriate endorsements or
transfer documents if required by the Issuer, (iii) pay any transfer or
similar tax, if required, and (iv) execute and deliver documentation
required by the Issuer in order for the Noteholder to join and become bound
by the terms of the Newco LP Agreement. Subject to Section 13(g) below, as
promptly as practicable after the receipt of the deliveries required by
this Section 13(c), the Issuer shall issue and deliver to the Noteholder,
that number of Class A Preferred Units issuable upon conversion of this
Convertible Note. From and after the Second Closing, the registered owner
of this Convertible Note shall cease to have any rights under this
Convertible Note except the right to receive payment of the accrued and
unpaid interest on this Convertible Note and those other things to which it
is entitled pursuant to this Section 13(c), the principal amount of this
Convertible Note shall be deemed no longer outstanding and shall be deemed
satisfied in full, and this Convertible Note shall not thereafter be
transferred (except with the consent of the Issuer) on the books of the
Issuer and shall not be deemed outstanding for any purpose whatsoever.
(d) No fractional interest in a Class A Preferred Unit will be issued upon
conversion but a cash adjustment will be made for any fractional interest
(e) The Noteholder shall pay any and all taxes (other than transfer taxes)
which may be imposed with respect to the issuance and delivery of the Class
A Preferred Units upon the conversion of this Convertible Note.
(f) In the case of any dispute with respect to a conversion, the Issuer shall
promptly issue such number of Class A Preferred Units as are not disputed
in accordance with this Section 13. If such dispute only involves the
calculation of the Conversion Price, the Issuer shall submit the disputed
calculations to an independent accounting firm of national standing
(reasonably acceptable to the Noteholder) within five (5) Business Days of
receipt of the Notice of Conversion. The accounting firm shall audit the
calculations and notify the Issuer and the Noteholder of the results no
later than fifteen (15) Business Days from the date it receives the
disputed calculations. The accounting firm's calculation shall be deemed
conclusive. As soon as possible thereafter, the Issuer shall then issue the
appropriate number of Class A Preferred Units in accordance with this
Section 13.
(g) Prior to any conversion, the Noteholder and the Issuer shall cooperate in
good faith (A) to determine if a filing is required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law
(the "HSR Act") in connection with such conversion, and (B) to make the
filing under the HSR Act as promptly as practicable after a determination
is made that such a filing is necessary. The Issuer shall take all actions
reasonably requested by the Noteholder to cause the early termination of
any applicable waiting period under the HSR Act. Notwithstanding anything
in this Convertible Note to the contrary, if a determination is made
pursuant to this Section 13(g) that a filing under the HSR Act is required,
the Issuer shall not be obligated to issue any Class A Preferred Units
pursuant to this Section 13 until the date that is two (2) Business Days
following the expiration or termination of the applicable waiting period
under the HSR Act
14. In order to prevent dilution of the conversion rights granted under Section
13, the Conversion Price shall be subject to adjustment from time to time
pursuant to this Section 14. In the event that any adjustment of the
Conversion Price as required herein results in a fraction of a cent, such
Conversion Price shall be rounded to the nearest .00001. For purposes of
determining the adjusted Conversion Price under this Section 14, the
following provisions shall be applicable:
(a) If the Issuer shall declare or make any distribution of its assets
(including cash) to holders of any Units (except for distributions to pay
taxes in accordance with Section 8.2 of the LP Agreement) as a partial
liquidating dividend, by way of return of capital or otherwise, then, after
the date of record for determining holders of Units entitled to such
distribution, but prior to the date of such distribution, the Noteholder
shall be entitled to receive the amount of such assets which, if this
Convertible Note had been converted into Class A Preferred Units
immediately prior to such time, would have been payable to the holder of
such Class A Preferred Units on the record date for the determination of
partners entitled to such distribution. Notwithstanding anything herein to
the contrary, no adjustment in the Conversion Price shall be made under
this Section 14(a) to the extent the Noteholder participates in such
Noteholder's capacity as a holder of Class A Preferred Units in any such
distribution of assets in accordance with this Section 14(a).
(b) If the Issuer at any time subdivides (by any split, dividend,
recapitalization, reorganization, reclassification or otherwise) the
outstanding Units into a greater number of Units, then, after the date of
record for effecting such subdivision, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced. If
the Issuer at any time combines (by reverse split, recapitalization,
reorganization, reclassification or otherwise) the outstanding Units into a
smaller number of Units, then, after the date of record for effecting such
combination, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(c) If the Issuer shall, at any time or from time to time after the Issue Date,
issue any Units (other than an issuance of Units as a dividend or in a
split of or subdivision in respect of which the adjustment provided for in
Section 14(b) applies), options to purchase or rights to subscribe for
Units, securities by their terms convertible into or exchangeable for
Units, or options to purchase or rights to subscribe for such convertible
or exchangeable securities without consideration or for consideration per
share less than the Conversion Price in effect immediately prior to such
issuance, then such Conversion Price shall forthwith be lowered to a price
equal to the price obtained by multiplying:
(i) the Conversion Price in effect immediately prior to the issuance
of such Units, options, rights or securities by
(ii) a fraction of which (x) the denominator shall be the number of
Units outstanding on a fully-diluted basis immediately after such
issuance and (y) the numerator shall be the sum of (a) the number
of Units outstanding on a fully-diluted basis immediately prior
to such issuance and (b) the number of additional Units which the
aggregate consideration for the number of Units so offered would
purchase at the Conversion Price.
For purposes of this Section 14, "fully diluted basis" shall be determined
in accordance with the treasury stock method of computing fully diluted earnings
per Unit in accordance with GAAP.
(d) If the Issuer shall, at any time or from time to time after the Issue Date,
directly or indirectly, redeem, purchase or otherwise acquire any Units,
options to purchase or rights to subscribe for Units, securities by their
terms convertible into or exchangeable for Units (other than Convertible
Notes which are redeemed according to their terms), or options to purchase
or rights to subscribe for such convertible or exchangeable securities, for
a consideration per share greater than the Conversion Price (plus, in the
case of such options, rights, or securities, the additional consideration
required to be paid to the Issuer upon exercise, conversion or exchange)
immediately prior to such event, then the Conversion Price shall forthwith
be lowered to a price equal to the price obtained by multiplying:
(i) the Conversion Price in effect immediately prior to such event by
(ii) a fraction of which (x) the denominator shall be the Conversion
Price immediately prior to such event and (y) the numerator shall
be the result of dividing:
(1) the product of (A) the number of Units outstanding on a
fully-diluted basis and (B) the Conversion Price, in each case
immediately prior to such event, minus (2) the aggregate
consideration paid by the Issuer in such event (plus, in the case
of such options, rights, or convertible or exchangeable
securities, the aggregate additional consideration to be paid by
the Issuer upon exercise, conversion or exchange), by (2) the
number of Units outstanding on a fully-diluted basis immediately
after such event.
(e) For the purposes of any adjustment of a Conversion Price pursuant to
paragraphs (c) and (d) of this Section 14, the following provisions shall
be applicable:
(i) In the case of the issuance of Units for cash in a public
offering or private placement, the consideration shall be deemed
to be the amount of cash paid therefor before deducting any
customary discounts, commissions or placement fees payable by the
Issuer to any underwriter or placement agent in connection with
the issuance and sale thereof.
(ii) In the case of the issuance of Units for a consideration in whole
or in part other than cash, the consideration other than cash
shall be deemed to be the fair market value thereof as determined
in good faith by the board of directors of the General Partner.
(iii) In the case of the issuance of options to purchase or rights to
subscribe for Units, securities by their terms convertible into
or exchangeable for Units, or options to purchase or rights to
subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of Units deliverable upon
exercise of such options to purchase or rights to subscribe for
Units shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subparagraphs (i) and (ii) above), if any, received by the Issuer
upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights for the Units
covered thereby;
(B) the aggregate maximum number of Units deliverable upon
conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities, options, or rights were issued and for a
consideration equal to the consideration received by the Issuer
for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be
received by the Issuer upon the conversion or exchange of such
securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner
provided in paragraphs (i) and (ii) above);
(C) on any change in the number of Units deliverable upon
exercise of any such options or rights or conversions of or
exchanges for such securities, other than a change resulting from
the anti-dilution provisions thereof, the applicable Conversion
Price shall forthwith be readjusted to such Conversion Price as
would have been obtained had the adjustment made upon the
issuance of such options, rights or securities not converted
prior to such change or options or rights related to such
securities not converted prior to such change been made upon the
basis of such change; and
(D) no further adjustment of the Conversion Price adjusted upon
the issuance of any such options, rights, convertible securities
or exchangeable securities shall be made as a result of the
actual issuance of Units on the exercise of any such rights or
options or any conversion or exchange of any such securities.
(f) If the Issuer has issued or issues any securities on or after the Issue
Date containing provisions protecting the holder or holders thereof against
dilution in any manner more favorable to such holder or holders thereof
than those set forth in this Section 14, such provisions (or any more
favorable portion thereof) shall be deemed to be incorporated herein as if
fully set forth herein and, to the extent inconsistent with any provision
herein, shall be deemed to be substituted therefor.
(g) Notwithstanding anything contained in this Section 14 to the contrary, no
adjustment to the Conversion Price shall be made upon the issuance of any
interests (or securities convertible or exercisable into interests) of the
Issuer issued (i) pursuant to the Investment Agreement or any of the
transactions contemplated thereby, (ii) in connection with the acquisition
of the business of another entity, whether by the purchase of equity
securities, assets or otherwise, (iii) as part of an initial public
offering or other registered underwritten public offering of the Issuer's
securities, (iv) under an employee compensation plan approved by the
General Partner, and (v) upon conversion or exchange of this Convertible
Note in accordance with its terms.
(h) In case of any consolidation of the Issuer with, or merger of the Issuer
with or into, any other entity, or in case of any sale or conveyance of all
or substantially all of the assets of or interests in the Issuer other than
in connection with a plan of complete liquidation of the Issuer, then as a
condition of such consolidation, merger, sale or conveyance, adequate
provision shall be made whereby the Noteholder shall have the right to
acquire and receive upon conversion of this Convertible Note in lieu of or
in addition to (as the case may be) the Class A Preferred Units immediately
theretofore acquirable upon the conversion of this Convertible Note, such
shares of capital stock, securities or assets as may be issued or payable
with respect to or in exchange for the number of Class A Preferred Units
immediately theretofore acquirable and receivable upon conversion of this
Convertible Note.
(i) Within 10 Business Days after the occurrence of any event which requires
any adjustment of the Conversion Price, the Issuer shall give written
notice thereof to the Noteholder. Such notice shall state the Conversion
Price resulting from such adjustment and shall set forth in reasonable
detail the method of calculation and the facts upon which such calculation
is based. Such calculation shall be certified by an appropriate officer of
the general partner of the Issuer.
(j) No adjustment of the Conversion Price shall be made in an amount of less
than 1% of the Conversion Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Conversion Price.
15. This Convertible Note is being executed and delivered in, and shall be
governed by and construed in accordance with the laws of, the State of New
York, without regard to its principles of conflicts of law that would give
effect to the application of the law of another jurisdiction. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to
the non-exclusive jurisdiction of the courts of the State of New York and
of the United States of America, in each case having jurisdiction over the
County of New York, for any litigation arising out of or relating to this
Convertible Note and the transactions contemplated hereby and thereby (and
agrees not to commence any litigation relating thereto except in such
courts unless such courts have declined to exercise jurisdiction), and
further agrees that service of any process, summons, notice or document by
U.S. registered mail to it shall be effective service of process for any
litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying
of venue of any litigation arising out of this Convertible Note or the
transactions contemplated hereby in the courts of the State of New York or
the United States of America, in each case having jurisdiction over the
County of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
litigation brought in any such court has been brought in an inconvenient or
improper forum.
16. This Convertible Note shall inure to the benefit of and be enforceable by
the Noteholder and the Noteholder's successors and permitted assigns, and
shall be binding and enforceable against the Issuer and the Issuer's
successors and assigns. The Noteholder shall not be permitted to transfer
this Convertible Note to any Person except in accordance with the Newo GP
Agreement. Any attempted transfer of this Convertible Note in violation of
the provisions thereof shall be void and of no effect and shall not be
registered on the books of the Issuer. Any permitted transfer of this
Convertible Note in accordance with the Newco GP Agreement shall be subject
to and conditioned upon such permitted transferee having executed and
delivered documentation reasonably required by the Issuer in order for such
permitted assign to join and become bound by the terms of the Newco GP
Agreement.
17. Issuer, by execution of this Convertible Note, and Noteholder, by
acceptance of this Convertible Note, agree that any suit, action, or
proceeding, whether claim or counterclaim, brought or instituted by or
against the Issuer or Noteholder, or any successor or assign of Issuer or
Noteholder, on or with respect to this Convertible Note, or which in any
way relates, directly or indirectly, to the obligations of Issuer to
Noteholder under this Convertible Note, or the dealings of the parties with
respect thereto, shall be tried only by a court and not by a jury. ISSUER
AND NOTEHOLDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
SUCH SUIT, ACTION OR PROCEEDING. Issuer and Noteholder acknowledge and
agree that this provision is a specific and material aspect of the
agreement between the parties and that the Noteholder would not enter into
the transaction contemplated hereby with Issuer if this provision were not
part of their agreement.
18. No provision of this Convertible Note may be amended or otherwise modified
or waived without the prior written consent of the Noteholder.
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert $__________ of the
outstanding principal amount of Convertible Note No. __ (the "Convertible Note")
plus $________ of the accrued and unpaid interest on such principal amount into
Class A Preferred Units of Mobile Satellite Ventures LP (the "Issuer) according
to the conditions of the Convertible Note, as of the date written below.
The undersigned represents and warrants to the Issuer that all offers and sales
by the undersigned of the securities issuable to the undersigned upon conversion
of this Convertible Note shall be made pursuant to registration of the Units
under the Securities Act of 1933, as amended (the "Act"), or pursuant to an
exemption from registration under the Act.
In the event of partial exercise, please reissue an appropriate Convertible Note
for the principal balance which shall not have been converted.
Conversion Date:
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Signature:
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Name:
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Address:
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ACKNOWLEDGED AND AGREED:
MOBILE SATELLITE VENTURES LP
By:
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Name:
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Title:
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Date:
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