EXHIBIT 10.59
FORM OF PROMISSORY NOTE
THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS 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 (the "Issuer")
U.S.$15,000,000.00 Note at 10% Interest (calculated and compounded
semi-annually)
Maturity Date: [NTD: insert date which is five years after First Closing], or
earlier as determined herein
FOR VALUE RECEIVED, the Issuer, a Delaware limited partnership, hereby
acknowledges itself indebted and promises to pay to MOTIENT SERVICES INC., or
its permitted assigns (the "Noteholder"), the principal amount of FIFTEEN
MILLION UNITED STATES DOLLARS (U.S.$15,000,000.00), 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, 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 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the payment of the principal of or interest on this Note is rescinded or must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
Note shall be reinstated at such time as though such payment had been due but
not made at such time.
This Note is the "MSI Note" 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 Note and constitute an integral part hereof.
THIS 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 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 Note, the following capitalized terms shall have the
meanings set out below:
(a) "Business Day" means any day on which banks are open for business in the
place where this Note is scheduled for payment;
(b) "Canadian License Co." means Mobile Satellite Ventures (Canada) Inc.
(c) "Canadian Licenses" means the licenses issued by Industry Canada to TMI and
which were transferred to Canadian License Co. pursuant to the TMI Asset
Sale Agreements (as defined in the Investment Agreement);
(d) "Convertible Notes" means the Convertible Notes (as defined in the
Investment Agreement) of even date herewith made by Issuer in the initial
aggregate principal amount of U.S.$55 million, 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 Noteholder;
(e) "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 is 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 has agreed
(contingently or otherwise) to purchase or otherwise acquire, or in respect
of which the Issuer and its subsidiaries has otherwise assured a creditor
or other Person against loss;
(f) "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;
(g) "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 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 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.$1,000,000.00 ("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 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 Note or 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) in the Investment Agreement or
any other Ancillary Agreement (as defined in the Investment
Agreement) to which the Issuer 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.
(h) "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);
(i) "Investment Agreement" means the Amended and Restated Investment Agreement
dated October **, 2001 among Mobile Satellite Ventures LLC (the predecessor
to the Issuer), Motient Corporation, Motient Services Inc., TMI, and
various 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 Noteholder;
(j) "Issue Date" means [NTD: insert date of the First Closing];
(k) "Issuer" means Mobile Satellite Ventures LP;
(l) "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 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 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;
(m) "Maturity Date" means the earliest of the following dates:
(i) [NTD: insert date which is five years after First Closing];
(ii) the date, if any, on which the Noteholder declares this Note due
and payable pursuant to Section 11 below; and
(iii) the Second Closing Date (as defined in the Investment Agreement);
(n) "Newco LP Agreement" means the Limited Partnership Agreement of Mobile
Satellite Ventures LP, dated as of the date hereof, between 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 Noteholder;
(o) "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;
(p) "Note" means this note;
(q) "Person" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability
company, or other legal entity or organization;
(r) "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 and other than
Permitted Transfers (as defined below);
(ii) the issuance of Debt (other than Permitted Debt (as defined in
the TMI Note)), 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, (B) as a result of the conversion of the
Convertible Notes (as defined in the Investment Agreement) or (C)
where the proceeds of such issuance consist of consideration
other than cash;
(s) "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;
(t) "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.
(u) "TMI" means TMI Communications and Company Limited Partnership; and
(v) "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 except to the extent that the same has been approved
in writing by the Noteholder;
2. This Note is a direct and unsecured senior obligation of the Issuer. The
Issuer agrees that this 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 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 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 Note.
The failure to make a payment on account of principal of, or interest on,
this 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 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
amounts owing under this Note will cease to bear interest on the date on
which all such amounts are fully repaid, unless payment of principal or
interest is improperly withheld or refused by the Issuer.
4. The principal of this 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 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 Note, including without limitation payments under
Section 8, Section 9 or Section 10, shall be applied, firstly, on account
of accrued interest, and secondly, on account of principal.
7. Unless previously redeemed or purchased by the Issuer, this Note will
mature at its principal amount then outstanding on the Maturity Date.
8. The Issuer may at any time or times prepay this Note, in whole or in part,
together with interest accrued to the date of such prepayment, without
premium or penalty, upon providing the Noteholder with two Business Days
prior written notice.
9. This Note shall become due and payable upon the Second Closing Date (as
defined in the Investment Agreement), and shall be paid out of the Investor
Purchase Price (as defined in the Investment Agreement) in priority to any
other payment except for the TMI Note; provided that there shall not then
be an Event of Default under the Convertible Notes pursuant to which the
holders thereof have declared the Convertible Notes due and payable.
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 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 Note, on the one hand, and (i) the principal amount outstanding under
the MSI Note plus (ii) the 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), 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 an Event of Default (a) 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 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 Note shall immediately become due and
payable; (a) 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 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.
12. 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 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 Note, in the enforcement of this Note, and expressly agrees that
this 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.
14. 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, without the prior consent of the Noteholder, 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"):
(a) 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;
(b) 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;
(c) 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;
(d) 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);
(e) sales, transfers or other dispositions of contract rights under subscriber
equipment leases pursuant to any bona fide financing of such leases
permitted under Section 2 of the TMI Note;
(f) non-exclusive licenses of technology and other intangible assets, excluding
spectrum licenses;
(g) sales of mobile earth terminals and related equipment, and other inventory;
(h) 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;
(i) 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
(j) 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 (h), (i) and (j) 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.
15. This 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
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 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. Except with the prior written consent of the Noteholder, this Note may not
be assigned by the Issuer. Except with the prior written consent of the
Issuer, this Note may not be assigned by the Noteholder to any person or
entity other than an Affiliate of the Noteholder. This 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.
17. Issuer, by execution of this Note, and Noteholder, by acceptance of this
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 Note, or which in any way relates, directly or indirectly, to the
obligations of Issuer to Noteholder under this 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.