SUBSCRIPTION AGREEMENT
This
SUBSCRIPTION AGREEMENT (this "Agreement")
is
made and entered into as of the 20th day of December, 2007 by and between
SkyTerra Communications, Inc., a Delaware corporation (the "Company"),
and
Inmarsat Global Limited, a company incorporated under the laws of England and
Wales (the "Purchaser").
In
consideration of the mutual agreements, representations, warranties and
covenants herein contained and in contemplation of the Cooperation Agreement
(as
defined below), the parties hereto agree as follows:
1. Definitions;
Certain Rules of Construction.
Any
capitalized term used herein and not defined in this Section
1
or
elsewhere in this Agreement shall have the meaning given such term in the
Cooperation Agreement. As used in this Agreement, the following terms shall
have
the following respective meanings.
"Agreement"
has the
meaning assigned to it in the Preamble.
"Antitrust
Laws"
means
the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the
Federal Trade Commission Act, as amended, and any other United States federal
or
state or foreign statutes, rules, regulations, orders, decrees, administrative
or judicial doctrines or other laws that are designed to prohibit, restrict
or
regulate actions having the purpose or effect of monopolization or restraint
of
trade.
"Authorizations"
has the
meaning assigned to it in Section
3.15(a)
hereof.
"Board"
means
the board of directors of the Company or any duly authorized committee thereof.
"Business
Day"
(whether such term is capitalized or not) means any day except Saturday, Sunday
and any day which shall be a federal legal holiday or a day on which banking
institutions in New York, New York or London are authorized or required by
law
or other governmental action to close.
"Closing"
has the
meaning assigned to it in Section
2.2
hereof.
"Closing
Date"
has the
meaning assigned to it in Section
2.2
hereof.
"Common
Stock"
means
the voting common stock, par value $0.01 per share, of the Company.
"Cooperation
Agreement"
means
the agreement dated as of December ·,
2007 by
and among the Company, MSV, Mobile Satellite Ventures (Canada) Inc. and the
Purchaser.
"Disclosure
Schedules"
has the
meaning assigned to it in Section
3
hereof.
"DOJ"
has the
meaning assigned to it in Section
5
hereof.
"Environmental
Protection Laws"
means
any law, statute or regulation enacted by any jurisdiction in connection with
or
relating to the protection or regulation of the environment, including, without
limitation, those laws, statutes and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing
or
transporting of hazardous or toxic substances, and any orders, decrees or
judgments issued by any court of competent jurisdiction in connection with
any
of the foregoing.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.
"Exchange
Act Reports"
means
the Company's reports filed with the SEC since September 1, 2006, pursuant
to
Section 13 of the Exchange Act.
"Fair
Market Value"
has the
meaning assigned to it in the Cooperation Agreement.
"FCC"
has the
meaning assigned to it in Section
3.15(a)
hereof.
"First
Issue Date"
has the
meaning assigned to it in the Cooperation Agreement.
"FTC"
has the
meaning assigned to it in Section
5
hereof.
"GAAP"
means
U.S. generally accepted accounting principles.
"Governmental
Authority"
means
any nation or government, any state or other political subdivision thereof
and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HSR
Act"
has the
meaning assigned to it in Section
3.7
hereof.
"Indebtedness"
means,
as applied to any Person, all indebtedness for borrowed money, whether current
or funded, or secured or unsecured.
"Intellectual
Property"
has the
meaning assigned to it in Section
3.19(a)
hereof.
"in
writing"
means
any form of written communication or a communication by means of facsimile
transmission, in all events delivered in accordance with Section
8.3.
"Lien"
means,
with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such property or
asset, whether or not filed, recorded or otherwise perfected under applicable
law, other than (a) those resulting from taxes which have not yet become
delinquent or (b) minor liens and encumbrances that do not materially detract
from the value of the property or materially impair the operations of the
Company or materially interfere with the use of such property or
asset.
"Material
Adverse Effect"
means a
material adverse effect on the next generation business, assets, liabilities,
properties, operations or condition (financial or otherwise) of the Company
and
its Subsidiaries taken as a whole, except to the extent that such adverse effect
results from (a) general economic, regulatory or political conditions or changes
therein in the United States or the other countries in which such party
operates; (b) financial or securities market fluctuations or conditions; or
(c)
changes in, or events or conditions affecting, the wireless telecommunications
industry generally.
2
"MSV"
means
Mobile Satellite Ventures, L.P.
"Non-Voting
Common Stock"
means
the non-voting common stock, par value $0.01 per share, of the
Company.
"Permits"
has the
meaning assigned to it in Section
3.16
hereof.
"Permitted
Transfer"
means
any Transfer of Common Stock to any Affiliate of the Purchaser.
"Person"
(whether or not capitalized) means an individual, entity, partnership, limited
liability company, corporation, association, trust, joint venture,
unincorporated organization, and any Governmental Authority.
"PUC"
has the
meaning assigned to it in Section
3.15(a)
hereof.
"Purchaser"
has the
meaning assigned it in the Preamble.
"Registration
Rights Agreement"
means
the agreement dated as of the Closing Date by and among the Company and the
Purchaser, substantially in the form attached hereto as Exhibit
A.
"Registration
Statements"
means
the Company's registration statements filed with the SEC since September 1,
2006, pursuant to the Securities Act.
"Rule
144"
means
Rule 144 promulgated under the Securities Act and any successor or substitute
rule, law or provision.
"SEC"
means
the United States Securities and Exchange Commission.
"SEC
Reports"
means
the Exchange Act Reports and the Registration Statements filed with the SEC
since September 1, 2006.
"Securities
Act"
means
the Securities Act of 1933, as amended, and all of the rules and regulations
promulgated thereunder.
"Shares"
has the
meaning assigned to it in Section
2.1
hereof.
"Significant
Subsidiary"
means
any "significant subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X.
"SkyTerra"
means
SkyTerra Communications, Inc., a Delaware corporation.
"Subsidiary"
means
with respect to any Person at any time, (a) any other Person the accounts of
which would be required by GAAP to be consolidated with those of such first
Person in its consolidated financial statements as of such time, and (b) any
other Person capital securities of which having ordinary voting power to elect
a
majority of the board of directors (or other persons having similar functions),
or other ownership interest of which ordinarily constituting a majority voting
interest, are at such time, directly or indirectly, owned or controlled by
such
first Person and/or one or more of its Subsidiaries. Unless otherwise expressly
provided, all references herein to "Subsidiary" mean a Subsidiary of the
Company.
3
"Transaction
Documents"
means,
collectively, this Agreement, the Cooperation Agreement and the Registration
Rights Agreement, as well as all certificates and exhibits executed or delivered
in connection with such agreements.
"Transfer"
means
and includes any sale, assignment, encumbrance, hypothecation, pledge,
conveyance in trust, gift, or other transfer or disposition of any kind,
including but not limited to transfers to receivers, levying creditors, trustees
or receivers in bankruptcy proceedings or general assignees for the benefit
of
creditors, whether voluntary or by operation of law, directly or
indirectly.
2. Transactions
and Closings.
2.1 Transactions.
Pursuant to Article IV of the Cooperation Agreement and in accordance with
the
terms and conditions thereof, the Company shall issue (i) the Effective Date
Shares on the First Issue Date (and the Effective Date Balance Shares, if
necessary, in accordance with the provisions of the Cooperation Agreement);
(ii)
the Trigger Shares on the Trigger Date (and the Trigger Balance Shares, if
necessary, in accordance with the provisions of the Cooperation Agreement);
and
(iii) the Phase 1 Shares on the Phase 1 Completion Date (and the Phase 1 Balance
Shares, if necessary, in accordance with the provisions of the Cooperation
Agreement) (the Effective Date Shares, the Effective Date Balance Shares, the
Trigger Shares, the Trigger Balance Shares, the Phase 1 Shares and the Phase
1
Balance Shares are collectively referred to herein as the "Shares").
2.2 Closings.
The
closing for the issuance of the Effective Date Shares, Trigger Shares and Phase
1 Shares (and any related Effective Date Balance Shares, Trigger Balance Shares
or Phase 1 Balance Shares, respectively, required to be issued pursuant to
the
terms of the Cooperation Agreement) or any Cash Payment (each, a "Closing")
shall
take place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four
Times Square, New York, New York 10036-6522 on the First Issue Date, the Trigger
Date and the Phase 1 Completion Date, respectively, or at such other time and
place as the Company and the Purchaser may agree (and with respect to the
Effective Date Balance Shares, Trigger Balance Shares and Phase 1 Balance
Shares, on such date as is required pursuant to the terms of the Cooperation
Agreement) (each a "Closing
Date").
At
each Closing (a) the Company shall deliver to the Purchaser an updated
capitalization table in the form of Exhibit
B
with
respect to the ownership of the Company's capital stock at such time and giving
effect to the issuance of the Shares at such Closing and (b) the Company shall
deliver to the Purchaser one or more certificates representing the Shares (in
such denominations as shall be specified in writing by the Purchaser) each
of
which shall be registered in the name of the Purchaser or its
designee.
4
3. Representations
and Warranties of the Company.
Except
as disclosed in the Disclosure Schedules delivered concurrently herewith (the
"Disclosure
Schedules"),
the
Company hereby makes the following representations and warranties:
3.1 Corporate
Status.
Each of
the Company and its Significant Subsidiaries (a) has been duly organized, and
is
validly existing and in good standing under the laws of the jurisdiction of
its
organization and has the requisite corporate or other, as applicable, power
and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (b) has duly qualified to
do
business and is in good standing in each jurisdiction where it is required
to be
so qualified and where the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of
its
Significant Subsidiaries is currently in violation of any of the provisions
of
its Certificate of Incorporation or By-laws (or other applicable charter
documents), each as amended to date.
3.2 Corporate
Power and Authority.
All
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Agreement, the Cooperation Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated herein
and therein have been taken. This Agreement, the Cooperation Agreement and
the
Registration Rights Agreement shall constitute the legal, valid and binding
obligation of the Company, enforceable against the Company, in accordance with
the respective terms of the agreements, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally and by general equitable principles. The Company has all requisite
corporate power and authority to enter into this Agreement, the Cooperation
Agreement and the Registration Rights Agreement and to carry out and perform
their obligations under the terms hereof and thereof.
3.3 No
Violation.
None of
the execution, delivery and performance by the Company of this Agreement, the
Cooperation Agreement and the Registration Rights Agreement, or compliance
with
the terms and provisions hereof and thereof (a) will contravene any applicable
provision of any material law, statute, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority, (b) will conflict
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the
material property or assets of the Company or its Significant Subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust, agreement
or
other material instrument to which the Company or any of its Significant
Subsidiaries is a party or by which it or any of its or their property or assets
are bound or to which it may be subject or result in the acceleration of any
obligation of the Company or (c) will violate any provision of the Certificate
of Incorporation or By-laws (or other applicable charter documents) of the
Company, each as amended to date.
5
3.4 Capitalization.
(a) Section
3.4
of the
Disclosure Schedules discloses the number of authorized, issued and outstanding
shares of capital stock of the Company, and outstanding warrants and options
to
purchase capital stock of the Company as of the date hereof. As of the date
hereof, 1,082,928 shares of Common Stock were reserved for future issuance
pursuant to outstanding options and up to 3,212,893 shares of Common Stock
were
reserved for future issuance pursuant to outstanding warrants issued by the
Company, which excludes 9,144,037 shares of Common Stock to be reserved for
future issuance pursuant to warrants expected to be issued on January 4, 2008.
As of the date hereof, a total of 10,072,722 additional shares of Common Stock
were authorized and reserved for future issuance pursuant to option and other
equity plans adopted or approved by the Company. As of the date hereof, except
as further disclosed in Section
3.4
of the
Disclosure Schedules, there are no other outstanding options, warrants, rights
(including conversion or preemptive rights) or any agreement for the purchase
or
acquisition from the Company of any shares of the Company's capital stock or
voting agreements with respect to equity of the Company. All outstanding shares
of the capital stock of the Company have been duly authorized, validly issued,
fully paid and nonassessable. Except as disclosed in Section
3.4
of the
Disclosure Schedules, there are no obligations, contingent or otherwise, of
the
Company to repurchase, redeem or otherwise acquire any shares of Common Stock
or
other equity securities of the Company. Except as disclosed in Section
3.4
of the
Disclosure Schedules, the issuance of the Shares will not result in SkyTerra
being obligated to issue, sell or purchase, pursuant to any existing
pre-emptive, anti-dilution, redemption or other right of third parties, shares
of Common Stock or other securities to or from any Person (other than the
Purchaser), and will not result in a right of any holder of convertible or
contingent securities issued by Company to adjust the exercise, conversion,
exchange or reset price under such securities, including, in any such case,
pursuant to any "poison pill" or shareholders rights plan. Except as disclosed
in Section
3.4
of the
Disclosure Schedules, there are no anti-dilution or price adjustment provisions
contained in any security issued by Company (or in any agreement providing
rights to security holders). None of the outstanding shares of capital stock
of
Company were issued in violation of the Securities Act or any state securities
laws. There are no voting rights for the Company's Non-Voting Common Stock
that
are created pursuant to the Company's Certificate of Incorporation or Bylaws,
without regard to any contractual or other agreements between Company and any
holder of Non-Voting Common Stock. The only voting rights for the Company's
Non-Voting Common Stock are rights that arise pursuant to the terms of the
corporate laws of Delaware.
(b) Section
3.4
of the
Disclosure Schedules discloses the number of authorized, issued and outstanding
limited partnership units of MSV, and outstanding warrants and options to
purchase limited partnership units of MSV as of the date hereof. As of the
date
hereof, 4,778,250 limited partnership units were reserved for future issuance
pursuant to outstanding options, restricted shares/phantom units, and warrants
issued by MSV. As of the date hereof, 1,721,750 additional limited partnership
units were authorized and reserved for future issuance pursuant to option and
other equity plans adopted or approved by MSV. As of the date hereof, except
as
disclosed in Section
3.4
of the
Disclosure Schedules, there are no other outstanding options, warrants, rights
(including conversion or preemptive rights) or any agreement for the purchase
or
acquisition from MSV or any wholly-owned Subsidiary of any of MSV's limited
partnership units or voting agreements with respect to equity of MSV. All
outstanding limited partnership units of MSV have been duly authorized, validly
issued, fully paid and nonassessable. Except as disclosed in Section
3.4
of the
Disclosure Schedules, there are no anti-dilution or price adjustment provisions
contained in any security issued by MSV (or in any agreement providing rights
to
security holders). None of the outstanding limited partnership units of MSV
were
issued in violation of the Securities Act or any state securities
laws.
6
3.5 Valid
Issuance of the Shares.
The
Shares have been duly authorized and upon issuance pursuant to the terms hereof
(a) will be validly issued, fully paid and nonassessable, (b) will not be
subject to any preemptive rights or any other similar contractual rights of
the
stockholders of the Company or any other Person, and (c) will be delivered
to
the Purchaser, free and clear of any Liens (defined for purposes hereof without
regard to the exceptions set forth in clauses (a) and (b) of the definition
of
Lien) which are imposed by the Company, or arise as a result of the Company's
action or omission, other than those transfer restrictions explicitly set forth
in this Agreement (including, without limitation, Sections
4.4,
and
7.1).
3.6 Litigation.
Except
as disclosed in Section
3.6
of the
Disclosure Schedules, no actions, suits, claims, investigations or proceedings
are pending or, to the Company's knowledge, threatened or reasonably likely
to
be asserted that would reasonably be expected to have, individually or in the
aggregate (a) a Material Adverse Effect or (b) an adverse effect on the rights
or remedies of the Purchaser or on the ability of the Company or its Significant
Subsidiaries to perform their respective obligations under the Transaction
Documents. Except as disclosed in Section
3.6
of the
Disclosure Schedules, neither the Company, nor any of its Significant
Subsidiaries is a party to or named in or subject to any order, writ,
injunction, judgment or decree of any court or Governmental
Authority.
3.7 Approvals.
Assuming the accuracy of the Purchaser's representations and warranties set
forth in Section 4 below, except (a) in connection with or in order to comply
with the applicable provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 0000 (xxx "XXX
Xxx")
and,
if necessary, similar foreign competition or Antitrust Laws, (b) for any
required filings and recordings which have been made and are in full force
and
effect, (c) for the filing of a registration statement with the SEC pursuant
to
the Registration Rights Agreement and (d) for applicable blue sky notice
filings, no order, consent, approval, license, authorization or validation
of,
or filing, recording or registration with, or exemption by, any Person or
Governmental Authority, is required to authorize or is required for or as a
condition to (i) the execution and delivery of this Agreement, the Cooperation
Agreement or the Registration Rights Agreement or the consummation of the
issuance and sale of the Shares contemplated hereby or (ii) the legality,
validity, binding effect or enforceability of this Agreement, the Cooperation
Agreement or the Registration Rights Agreement. The execution and delivery
by
the Company of this Agreement, the Cooperation Agreement and the Registration
Rights Agreement, and the issuance of the Shares, do not require the consent
or
approval of the security holders of the Common Stock or of any other
Person.
3.8 Conformity
to Securities Act and Exchange Act; No Misstatement or Omission.
Each of
the SEC Reports as of the date it was filed with the SEC in the case of the
Exchange Act Reports or declared effective in the case of the Registration
Statements, complied in all material respects with the applicable requirements
of the Securities Act or the Exchange Act (as applicable) and the respective
rules and regulations of the SEC thereunder and did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements therein not misleading. Since September 1, 2006, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act.
7
3.9 Financial
Statements; Indebtedness.
(a) Except
as
disclosed in Section
3.9(a)
of the
Disclosure Schedules, the financial statements and supporting schedules included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2006, and in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007 and in any Registration Statements or other SEC Reports,
in
each case filed with the SEC, present fairly, in all material respects, the
consolidated financial position of the Company and its Significant Subsidiaries
as of the dates specified and the consolidated results of their operations
and
cash flows for the periods specified, in each case, in conformity with GAAP
applied on a consistent basis during the periods involved, except as indicated
therein or in the notes thereto.
(b) Except
for Indebtedness disclosed in Section
3.9(b)
of the
Disclosure Schedules and in the Company's Annual Report on Form 10-K for the
year ended December 31, 2006, and in the Company's Quarterly Report on Form
10-Q
for the quarter ended September 30, 2007, the Company and the Significant
Subsidiaries, taken as a whole, have no Indebtedness outstanding at the date
hereof. Neither the Company nor any Significant Subsidiary are in default with
respect to any outstanding Indebtedness or any instrument relating thereto,
and
no event has occurred, or facts and circumstances exist, which, after passage
of
time, would result in such a default.
3.10 Investment
Company Act.
The
Company is not an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940.
3.11 No
Material Adverse Changes.
Since
September 30, 2007, (a) no event has occurred which has had, or would reasonably
be expected to have, a Material Adverse Effect; (b) except as contemplated
by
this Agreement or as disclosed in Section
3.11(b)
of the
Disclosure Schedules, there has been no transaction entered into by the Company
or any of its Significant Subsidiaries other than transactions in the ordinary
course of business or transactions which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company; (c) there have not been any changes in the Company's authorized capital
or Indebtedness or any increases in the Indebtedness of the Company or its
Significant Subsidiaries taken as a whole, except as disclosed in Section
3.11(c)
of the
Disclosure Schedules; (d) there has been no actual or, to the knowledge of
the
Company, threatened revocation of, or default under, any contract to which
the
Company or any of its Significant Subsidiaries is a party, except as would
not
reasonably be expected to have a Material Adverse Effect; (e) except as
disclosed in Section
3.11(e)
of the
Disclosure Schedules, there have not been any amendments or changes in the
charter documents or by-laws of the Company or the Significant Subsidiaries;
(f)
except as disclosed in Section
3.11(f)
of the
Disclosure Schedules, there has not been any entry into an amendment of,
relinquishment, termination or non-renewal by the Company or the Significant
Subsidiaries of any material contract, license, lease, transaction, commitment
or other right or obligation, other than in the ordinary course of business,
consistent with past practice; and (g) there has not been any transfer or grant
of a right with respect to the Intellectual Property owned or licensed by the
Company or its Significant Subsidiaries, except as among the Company and the
Significant Subsidiaries which would not materially impact the Company's
business plans.
8
3.12 Tax
Returns and Payments.
Except
as would not reasonably be expected to have a Material Adverse Effect, (a)
each
of the Company and its Significant Subsidiaries has filed all U.S. federal
income tax returns and other material domestic and foreign tax returns and
reports required to be filed by it, all such returns and reports are true and
correct to the best of the Company's knowledge, and each of the Company and
its
Significant Subsidiaries has paid all taxes and other assessments shown due
on
such returns and reports; (b) there is no pending or, to the knowledge of the
Company, threatened non-routine examination, investigation, audit, suit, action,
claim or proceeding relating to taxes of the Company or any of its Significant
Subsidiaries; (c) none of the Company or any of its Significant Subsidiaries
have received written notice of a determination by any taxing authority that
any
material tax amounts are owed by the Company or any of its Significant
Subsidiaries, which determination has not been paid, compromised, or otherwise
finally disposed of, and, to the knowledge of the Company, no such determination
is proposed or threatened; and (d) there are no material liens arising from
or
related to taxes on or pending against the Company or any of its Significant
Subsidiaries, or any of their properties, other than statutory liens for taxes
that are not yet due and payable.
3.13 Significant
Subsidiaries.
As of
the respective Closing Date, the Company has no directly or indirectly held
Significant Subsidiary other than those disclosed in Section
3.13
of the
Disclosure Schedules. Each of the Company and its Significant Subsidiaries
has
good title to all of the shares (or other equity interests) it purports to
own
of the stock of each Significant Subsidiary, free and clear in each case of
any
Lien (defined for purposes hereof without regard to the exceptions contained
in
(a) and (b) of the definition of Lien). All such shares have been duly
authorized, validly issued and are fully paid and nonassessable. As of the
Closing Date, the Company is not party to any joint venture or similar
arrangement, except as disclosed in Section
3.13
of the
Disclosure Schedule.
3.14 Properties.
Except
as disclosed in Section
3.14
of the
Disclosure Schedules, the Company and each of its Significant Subsidiaries
owns
its properties and assets, free and clear of all Liens. With respect to leased
property and assets, the Company and its Significant Subsidiaries are in
material compliance with such leases and hold a valid leasehold interest, free
of any Liens, except as would not reasonably be expected to have a Material
Adverse Effect.
3.15 Regulatory
Matters.
(a) Authorizations.
Section
3.15(a)
of the
Disclosure Schedules lists all material Federal Communications Commission
("FCC"),
state
public utility commission ("PUC")
and
foreign regulatory authority permits, licenses, certificates, registrations
and
other similar material authorizations held by the Company and its Significant
Subsidiaries (collectively, the "Authorizations").
Except as disclosed in Section
3.15(a)(ii)
of the
Disclosure Schedules, the Authorizations consist of all such authorizations
necessary or appropriate for the conduct of the business of the Company and
its
Significant Subsidiaries as it is currently being conducted. The Company and
its
Significant Subsidiaries have maintained and kept in force and effect, and
have
applied in a timely manner for renewal of all such Authorizations. Except as
disclosed in Section
3.15(a)(ii)
of the
Disclosure Schedules, the Company and its Significant Subsidiaries are in
compliance with all such Authorizations and any material terms and conditions.
Except as disclosed in Section
3.15(a)(ii)
of the
Disclosure Schedules, each Authorization which is material to the business
of
the Company is valid and in full force and effect, and the Company and its
Significant Subsidiaries have not received notice from the FCC, any PUC, or
any
foreign regulatory authority of its intention to revoke, suspend, condition
or
fail to renew any such Authorization. Except as disclosed in Section
3.15(a)(ii)
of the
Disclosure Schedules, no event has occurred or facts and circumstances exist,
which allows or would reasonably be expected to allow, or which after notice
or
lapse of time would allow or would reasonably be expected to allow, revocation,
suspension, non-renewal or termination or result in any other material
impairment of the Company's or its Significant Subsidiaries' rights under any
of
its Authorizations.
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(b) Compliance
with Laws.
Except
as disclosed in Section
3.15(b)
of the
Disclosure Schedules, the conduct of the Company's business complies with all
applicable U.S., state, local and foreign laws (including, without limitation,
the Communications Act of 1934, as amended, and the Communications Assistance
for Law Enforcement Act), ordinances, rules, regulations, and orders (including,
without limitation, those issued by the FCC, any PUC or any foreign regulatory
authority) (collectively, "Laws"),
except where the failure to so comply would not reasonably be expected to have
a
Material Adverse Effect. The Company is not in violation of any applicable
Environmental Protection Laws and, to its knowledge, no material expenditures
are or will be required in order to comply with any such laws, in each case,
except as would not reasonably be expected to have a Material Adverse
Effect.
3.16 Permits.
The
Company and its Significant Subsidiaries have all franchises, permits, licenses
and any similar authority (the "Permits")
necessary for the conduct of their business as now being conducted by them,
the
lack of which could, individually or in the aggregate, reasonably be expected
to
have a Material Adverse Effect. As of the date hereof, no suspension or
cancellation of any of the Permits is pending or, to the knowledge of the
Company, threatened which could, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect. The Company believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as presently proposed to be conducted. The Company and its Significant
Subsidiaries are not in default under any of such franchises, permits, licenses
or other similar authorities.
3.17 Brokers.
Neither
the Company nor any of its Significant Subsidiaries has any liability to pay
any
fees, commissions or other similar compensation to any broker, finder,
investment banker, financial advisor or other similar Person in connection
with
the transactions contemplated by this Agreement.
3.18 Leases.
Each of
the Company and its Significant Subsidiaries has complied with all material
obligations under all leases for real property to which it is a party as a
lessee. All
leases relating to the leasehold estates of each of the Company and its
Significant Subsidiaries necessary for the conduct of the business of such
Person are, with respect to the Company, valid and enforceable, and, to the
knowledge of the Company, are valid and enforceable with respect to the lessor,
and each of the Company and its Significant Subsidiaries that is the lessee
in
respect thereof currently enjoys peaceful and undisturbed possession of the
premises subject thereto.
10
3.19 Intellectual
Property.
(a) Except
as
disclosed in Part 1 of Section
3.19
of the
Disclosure Schedules, the Company and each of its Significant Subsidiaries
owns,
possesses or has the right to use, exploit and/or practice patents, trade
secrets, trademarks, service marks, trade names, copyrights, franchises and
licenses, and rights with respect thereto (collectively, "Intellectual
Property"),
necessary for the present conduct of its business and as such business is
proposed to be conducted.
(b) Except
as
disclosed in Part 2 of Section
3.19
of the
Disclosure Schedules, there are no outstanding options, licenses, or agreements
of any kind relating to the Company's and/or its Significant Subsidiaries'
Intellectual Property with the exception of agreements for the sale or license
of the Company's products or services in the ordinary course of
business.
(c) Except
as
disclosed in Part 3 of Section
3.19
of the
Disclosure Schedules, neither the Company nor any of its Significant
Subsidiaries is a party to any agreement or license under which the Company
or
any Significant Subsidiary acquires any right, license, title or interest in,
under or to any third party Intellectual Property, other than (i) licenses
that
are available to the public generally for a license fee of less than $10,000
and
that were obtained in the ordinary course of business; and (ii) license or
ownership rights arising from services or development agreements (or the like)
made with third parties in the ordinary course of business.
(d) The
Company has not received any communications alleging that the Company or any
Significant Subsidiary has violated, infringed or misappropriated or, by
conducting its business as presently proposed, would violate, infringe or
misappropriate any of the Intellectual Property of any other
Person.
(e) To
the
knowledge of the Company and its Significant Subsidiaries, no Person is
infringing or misappropriating the Intellectual Property of the Company or
its
Significant Subsidiaries.
(f) Except
as
disclosed in Section
3.19
of the
Disclosure Schedule, neither the Company nor any Significant Subsidiary is
subject or a party to any order, decree, judgment, stipulation or agreement
restricting its ability to conduct the business, including the sale of products
or services, in any geographic area, market or field.
3.20 Securities
Laws.
Assuming the accuracy of the Purchaser's representations and warranties set
forth in Section 4, the offer, sale and issuance of the Shares, as provided
in
this Agreement, is, is intended to be and will, on each Closing Date, be exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) thereof.
3.21 Insurance.
Except
as disclosed in Section
3.21
of the
Disclosure Schedules the Company and the Significant Subsidiaries are insured
by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and sufficient to address risks anticipated
in the businesses in which the Company and the Significant Subsidiaries are
currently engaged. Neither the Company nor any Significant Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain coverage from reputable
insurers as may be necessary to continue its business without a significant
increase in cost.
11
3.22 Internal
Accounting Controls.
The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and
(iv)
the recorded accountability for assets is compared with the existing assets
at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as
defined in Exchange Act Rule 13a-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to
the
Company's management as appropriate to allow timely decisions regarding required
disclosure. The Company has carried out evaluations of the effectiveness of
their disclosure controls and procedures as required by Rule 13a-15 of the
Exchange Act.
3.23 Listing
and Maintenance Requirements.
The
Company's Common Stock is registered pursuant to Section 12 of the Exchange
Act,
and the Company has taken no action designed to, or which, to its knowledge,
is
likely to have the effect of, terminating the registration under the Exchange
Act nor has the Company received any notification that the SEC is contemplating
terminating such registration. The Company has not, in the two (2) years
preceding the date hereof, received notice from any trading market to the effect
that the Company is not in compliance with the listing or maintenance
requirements thereof. The Company is in compliance with the maintenance
requirements for continued quotation of the Common Stock on the OTC Bulletin
Board or, if applicable, the continued listing requirements of the principal
exchange upon which the Company's Common Stock is listed, and is not aware
of
any actions threatened or reasonably likely to be asserted that would challenge
such quotation or, if applicable, listing. The issuance and sale of the Shares
under the Transaction Documents does not contravene the rules and regulations
of
the OTC Bulletin Board or, if applicable, the principal trading market on which
the Common Stock is listed or quoted, and, based solely on the Company's current
capitalization and without regard to any anti-dilution adjustment that may
impact the number Shares to be issued, no approval of the stockholders of the
Company thereunder is required for the Company to issue and deliver to the
Purchaser the maximum number of Shares contemplated by this Agreement (excluding
any additional shares that may be issuable as a result of anti-dilution or
similar adjustments).
4. Representations
and Warranties of the Purchaser.
The
Purchaser hereby makes the following representations and warranties, as of
the
Closing Date:
4.1 Authorization.
All
corporate, partnership or limited liability company action on the part of the
Purchaser necessary for the authorization, execution, delivery and performance
of this Agreement, the Cooperation Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated herein and
therein, has been taken. When executed and delivered by the Purchaser, each
of
this Agreement, the Cooperation Agreement and the Registration Rights Agreement
shall constitute the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. The Purchaser
has all the requisite corporate power and authority to enter into each of this
Agreement, the Cooperation Agreement and the Registration Rights Agreement
and
to carry out and perform its obligations under the terms hereof and thereof.
12
4.2 Purchase
Entirely for Own Account.
The
Purchaser is acquiring the Shares for its own account for investment and not
for
the account of any other person or with a view to any resale, fractionalization,
division, or distribution thereof in a manner that would require registration
thereof or the transactions contemplated hereby under the Securities Act, and
the Purchaser does not presently have any reason to anticipate any change in
his, her or its circumstances or other particular occasion or event which would
cause the Purchaser to sell the Shares. The Purchaser has no contract,
undertaking, agreement, understanding or arrangement with any person to sell,
transfer, or pledge to any person any part or all of the Shares which the
Purchaser is acquiring, or any interest therein, and has no present plans to
enter into the same. The Shares were not offered or sold to the Purchaser by
means of any general solicitation or general advertisement.
4.3 Investor
Status; Etc.
The
Purchaser certifies and represents to the Company that (i) it is an "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
promulgated under the Securities Act and was not organized for the purpose
of
acquiring any of the Shares. The Purchaser has adequate means of providing
for
its current needs and personal contingencies, has no need now, and anticipate
no
need in the foreseeable future, to sell the Shares, and currently has sufficient
net worth and financial liquidity to afford a complete loss of his, her or
its
investment in the Company. The Purchaser has such knowledge and experience
in
financial and business matters so that the Purchaser is capable of evaluating
the merits and risks of an investment in the Company and has made such
evaluation. The Purchaser fully understands that the Shares are speculative
investments which involve a high degree of risk of loss of the Purchaser's
entire investment. No person or entity, other than the Company or its authorized
representatives, have offered the Shares to the Purchaser. The overall
commitment of the Purchaser to investments which are not readily marketable
is
not excessive in view of each of the Purchaser's net worth and financial
circumstances, and any purchase of the Shares will not cause such commitment
to
become excessive. The Purchaser is able to bear the economic risk of an
investment in the Shares.
4.4 Securities
Not Registered.
The
Purchaser understands that the Shares have not been registered under the
Securities Act, by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act, and that the
Shares must continue to be held by the Purchaser unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration. The Purchaser understands that the exemptions from registration
afforded by Rule 144 (the provisions of which are known to it) promulgated
under
the Securities Act depend on the satisfaction of various conditions, and that,
if applicable, Rule 144 may afford the basis for sales only in limited amounts.
The Purchaser has had an opportunity to ask questions of and receive answers
from the management and authorized representatives of the Company, and to review
any other relevant documents and records concerning the business of the Company
and the terms and conditions of this investment, and that any such questions
have been answered to the Company's full satisfaction. The Purchaser understands
that no federal or state agency have passed upon or made any recommendation
or
endorsement of an investment in the Shares.
13
4.5 No
Violation.
Neither
the execution, delivery and performance by the Purchaser of this Agreement
or
the Cooperation Agreement or the Registration Rights Agreement nor compliance
with the terms and provisions hereof and thereof by the Purchaser (a) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or Governmental Authority, except
as would not have a material adverse effect on the Purchaser's ability to
consummate the transactions contemplated hereby or thereby; or (b) will violate
any provision of the organizational documents of the Purchaser, except as would
not have a material adverse effect on the Purchaser's ability to consummate
the
transactions contemplated hereby.
4.6 Brokers.
The
Purchaser has no liability to pay any fees, commissions or other similar
compensation to any broker, finder, investment banker, financial advisor or
other similar Person in connection with the transactions contemplated by this
Agreement.
4.7 Consents.
All
consents, approvals, orders and authorizations required on the part of the
Purchaser in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated herein have
been
obtained and are effective as of the date hereof.
4.8 Reliance.
The
Purchaser is relying solely upon the advice of its own financial, legal and
tax
advisors and their entering into the transactions contemplated by this Agreement
is the result of independent arm's length negotiations between the Purchaser
and
the Company. The Purchaser also acknowledges that the Company is relying on
this
Section
5
and
would not consummate the transactions contemplated by this Agreement in the
absence of this Section
5.
4.9 Material
Non-Public Information.
The
Purchaser hereby acknowledges that it is familiar with its responsibilities
under federal and state securities laws relating to restrictions on trading
in
securities of an issuer while in possession of material, non-public information,
and restrictions on sharing such information with other persons who may engage
in such trading.
5. Governmental
and FCC Approval.
The
parties will promptly execute and file, or join in the execution and filing
of,
any application, notification (including any notification or provision of
information, if any, that may be required under the HSR Act, which the parties
shall file no later than 15 business days after the date hereof) or other
document that may be necessary in order to obtain the authorization, approval
or
consent of any Governmental Authority, which may be reasonably required in
connection with the consummation of the transactions contemplated by this
Agreement. Any fees associated with such notifications or applications shall
be
borne 50% by the Company and 50% by the Purchaser. Each party will use
commercially reasonable efforts to obtain, or assist the other parties in
obtaining, all such authorizations, approvals and consents, including without
limitation using commercially reasonable efforts to supply as promptly as
reasonably practicable any additional information and documentary material
that
may be requested pursuant to the HSR Act and to request the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable. Each party shall, in connection with its obligation to use
commercially reasonable efforts to obtain, or assist the other parties in
obtaining, all such requisite authorizations, approvals or consents, use
commercially reasonable efforts to (i) cooperate in all reasonable respects
with
the other parties in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated
by a
private party, (ii) promptly inform the other parties of any communication
received by such party from, or given by such party to, the United States
Department of Justice (the "DOJ"),
the
United States Federal Trade Commission (the "FTC"),
the
FCC or any other Governmental Authority or quasi-governmental entity and of
any
material communication received or given in connection with any proceeding
by a
private party, in each case regarding any of the transactions contemplated
hereby, (iii) permit the other parties, or the other parties' legal counsel,
to
review any communication given by it to, and consult with the other parties
in
advance of any meeting or conference with, the DOJ, the FTC, the FCC or any
such
other Governmental Authority or quasi-governmental entity or, in connection
with
any proceeding by a private party, with any other person and (iv) to the extent
permitted by the FCC or other Governmental Authority, as appropriate, give
the
other parties the opportunity to attend and participate in such meetings and
conferences.
14
6. Condition
Precedent.
6.1 Condition
to the Obligation of the Purchaser to Consummate Each Closing.
The
obligation of the Purchaser to consummate each Closing is subject to the
satisfaction (or waiver by the Purchaser) of the following conditions
precedent:
(a)
That the
Registration Rights Agreement, in substantially the form attached hereto as
Exhibit
A,
be in
full force and effect and that the Company will not be in breach of any material
term of such agreement.
(b) That
the
Company shall have performed all obligations and conditions herein required
to
be performed or complied with by the Company on or prior to the Closing
Date.
6.2 Conditions
to the Obligation of the Company to Consummate Each Closing.
The
obligation of the Company to consummate each Closing and to issue the Shares
to
the Purchaser at the Closing is subject to the satisfaction (or waiver by the
Company) of the following conditions precedent:
(a) The
Purchaser shall have performed all obligations and conditions herein required
to
be performed or complied with by the Purchaser on or prior to the Closing
Date.
(b) The
Purchaser shall have delivered to the Company a Form W-9 or Form W-8, as
applicable.
15
7. Certain
Covenants and Agreements.
7.1 Legends.
(a) Each
certificate or other document evidencing the Shares shall be endorsed with
the
legend substantially set forth below, and the Purchaser covenants that, except
to the extent such restrictions are waived by the Company, the Purchaser shall
not transfer the shares represented by any such certificate without complying
with the restrictions on transfer described in this Agreement and the legends
endorsed on such certificate:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE SECURITIES ACT OR (II)
THE
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND, IF THE
CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT
HAS BEEN RENDERED BY COUNSEL. THE SHARES ARE SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER CONTAINED IN THAT CERTAIN SUBSCRIPTION AGREEMENT DATED DECEMBER
14,
2007. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF THE
CORPORATION
(b) The
legend set forth in Section
7.1(a)
shall be
removed from the certificates evidencing the Shares, (i) following any sale
of
such Shares pursuant to Rule 144 or any effective registration statement, or
(ii) if such Shares are eligible for sale under Rule 144(k) (and the holder
of
such Shares has submitted a written request for removal of the legend, along
with a legal opinion in compliance with Section
7.1
to the
effect that the holder has complied with the applicable provisions of Rule
144).
Subject to receipt of appropriate certifications and opinions, the Company
shall
cause its transfer agent promptly upon the occurrence of any of the events
in
clauses (i) or (ii) above to effect the removal of the legend on certificates
evidencing the Shares.
7.2 Publicity.
Except
to the extent required by applicable laws, rules, regulations, stock exchange
requirements or other obligations set forth in securities agreements outstanding
as of the date hereof, neither party shall, without the prior written consent
of
the other, make any public announcement or issue any press release with respect
to the transactions and other matters contemplated by this Agreement. The
parties agree that the Company may issue a press release in the form to be
mutually agreed upon by the parties.
7.3 Share
Reservation.
On or
prior to the First Issue Date, the Company shall have duly established a share
reserve with such number of shares of Common Stock sufficient to satisfy the
Effective Date Shares (and the Effective Date Balance Shares, if necessary)
and
the Trigger Date Shares (and the Trigger Balance Shares, if necessary). On
or
prior to the Phase 1 Completion Date, the Company shall have duly established
a
share reserve with such number of shares of Common Stock sufficient to satisfy
the Phase 1 Shares (and the Phase 1 Balance Shares, if necessary). The Shares
shall be issued from such share reserves and, following each issuance of Shares,
for so long as the Purchaser has the right under this Agreement to acquire
any
Shares, the Company shall have authorized and shall maintain sufficient reserves
of shares of Common Stock to satisfy the Shares and all outstanding options,
warrants, rights to subscribe to, or securities or rights convertible into,
any
shares of Common Stock of the Company.
16
7.4 Issuance
of Non-Voting Common Stock. In
the
event that the Purchaser or, upon the occurrence of certain Transfers described
in Section
7.5(b)
below,
any transferee, shall be prohibited from receiving any of the Shares as a result
of its status as a non-U.S. entity, the Company shall issue the maximum number
of shares of Common Stock permissible by law, including the laws of England
and
Wales (the "Maximum
Shares").
The
Company shall simultaneously therewith issue to the Purchaser or the transferee,
as the case may be, such number of shares of Non-Voting Common Stock equal
to
the number of shares of Common Stock issuable in excess of the Maximum Shares.
The Voting Common Stock and the Non-Voting Common Stock shall be the same in
all
respects other than with respect to voting rights.
7.5 Exchange
of Non-Voting Common Stock for Common Stock.
(a) Upon
the
written request of the Purchaser, the Company will, subject to the restrictions
set forth in Section
7.4
hereof,
exchange shares of Non-Voting Common Stock issued pursuant to Section
7.4
hereof
for Common Stock on a one-for-one basis (in each case as appropriately adjusted
for any stock split, combination, reorganization, recapitalization,
reclassification, stock dividend, stock distribution or similar event declared
or effected with respect to the Common Stock after the issuance of such shares
of Non-Voting Common Stock being exchanged, applying the relevant adjustment
methodologies, mutatis mutandis, set out in Section
7.6
below).
Upon surrender of certificates representing the shares of Non-Voting Common
Stock that are being exchanged as part of such transfer, the Company will issue
to the Purchaser certificates representing the appropriate number of shares
of
Common Stock. Notwithstanding the foregoing, in the event that the rules of
any
stock exchange or automatic quotation system on which the Company's Common
Stock
is then listed, traded or quoted requires shareholder approval prior to the
issuance of any or all of the Common Stock, the Company shall not be obligated
to effectuate the exchange of the Non-Voting Common Stock for Common Stock
unless and until such approval has been obtained. The Company shall use its
commercial best efforts to obtain such shareholder approval as soon as
reasonably practicable following receipt of the written request by the
Purchaser. Notwithstanding anything to the contrary contained in this
Section 7.5
or
elsewhere, in the event that any applicable FCC requirements prevent the
Company from issuing any or all of the Common Stock, the Company shall not
be obligated to effectuate the exchange of the Non-Voting Common Stock for
Common Stock unless and until such requirements have been satisfied. The
Company shall use its commercial best efforts to satisfy such requirements
as
soon as reasonably practicable following receipt of the written request by
the
Purchaser.
17
(b) If
the
Purchaser desires to Transfer any shares of Non-Voting Common Stock to any
Person, other than pursuant to a Permitted Transfer, then, at the request of
the
Purchaser, the Company will reasonably promptly exchange such shares of
Non-Voting Common Stock for Company voting Common Stock on a one-for-one basis
(in each case as appropriately adjusted for any stock split, combination,
reorganization, recapitalization, reclassification, stock dividend, stock
distribution or similar event declared or effected with respect to the Common
Stock after the issuance of such shares of Non-Voting Common Stock being
exchanged, applying the relevant adjustment methodologies, mutatis mutandis,
set
out in Section
7.6
below);
provided,
however,
that in
the event that the transferee shall be prohibited from receiving the Common
Stock as set forth in Section
7.4
hereof,
the Purchaser shall Transfer the shares of Non-Voting Common Stock, without
regard to the provisions of the immediately preceding sentence; provided,
further,
such
provisions shall apply to any subsequent Transfers effectuated by such
transferee. Upon surrender of certificates representing the shares of Non-Voting
Common Stock that are being exchanged as part of such transfer, the Company
will
issue to the transferee certificates representing the appropriate number of
shares of Common Stock.
(c) Notwithstanding
anything to the contrary contained in this Section
7.5
above,
prior to the issuance of the Common Stock, the Purchaser shall have satisfied
any and all legal or regulatory requirements for conversion, including
compliance with the HSR Act. The Company shall use its reasonable best efforts
in cooperating with such holder to obtain such legal or regulatory approvals
to
the extent its cooperation is necessary.
(d) In
connection with any exchange of Non-Voting Common Stock for Common Stock
hereunder, the Company shall use its reasonable best efforts to cooperate with
the Purchaser or its transferee, as applicable, so as to enable such exchange
to
be made in accordance with applicable law, rules and regulations and the
requirements of the Company's transfer agent and registrar and to otherwise
facilitate the exchange and issuance of the Common Stock, time being of the
essence.
7.6 The
Fair
Market Value shall be subject to adjustment from time to time prior to the
issuance of the Trigger Shares as follows:
(a) Adjustments
to Fair Market Value Upon Stock Dividends, Subdivisions or
Splits.
If, at
any time after the Effective Date and prior to the last day upon which Trigger
Shares are issued, the number of shares of Common Stock and Non-Voting Common
Stock (taken together "Ordinary
Stock")
outstanding is increased by a stock dividend payable in shares of Ordinary
Stock
or by a subdivision or split-up of shares of Ordinary Stock , then, following
the record date for the determination of holders of Ordinary Stock entitled
to
receive such stock dividend, or to be affected by such subdivision or split-up,
the Fair Market Value applicable to the Trigger Shares shall be decreased by
multiplying the Fair Market Value by a fraction, the numerator of which is
the
number of shares of Ordinary Stock outstanding immediately prior to such
increase and the denominator of which is the number of shares of Ordinary Stock
outstanding immediately after such increase in outstanding shares.
(b) Upon
Combinations or Reverse Stock Splits.
If, at
any time after the Effective Date and prior to the Trigger Date, the number
of
shares of Ordinary Stock outstanding is decreased by a combination or reverse
stock split of the outstanding shares of Ordinary Stock into a smaller number
of
shares of Ordinary Stock, then, following the record date to determine shares
affected by such combination or reverse stock split, the Fair Market Value
applicable to the Trigger Shares shall be increased by multiplying the Fair
Market Value by a fraction, the numerator of which is the number of shares
of
Ordinary Stock outstanding immediately prior to such decrease and the
denominator of which is the number of shares of Ordinary Stock outstanding
immediately after such decrease in outstanding shares.
18
8. Miscellaneous
Provisions.
8.1 Rights
Cumulative.
Each
and all of the various rights, powers and remedies of the parties shall be
considered to be cumulative with and in addition to any other rights, powers
and
remedies which such parties may have at law or in equity in the event of the
breach of any of the terms of this Agreement. The exercise or partial exercise
of any right, power or remedy shall neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available to such
party.
8.2 Pronouns.
All
pronouns or any variation thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person, persons,
entity or entities may require.
8.3 Notices.
(a) Any
notices, reports or other correspondence (hereinafter collectively referred
to
as "correspondence") required or permitted to be given hereunder shall be sent
by postage prepaid first class mail (sent certified or registered), overnight
courier or facsimile transmission, or delivered by hand to the party to whom
such correspondence is required or permitted to be given hereunder. The date
of
giving any notice shall be the date of its actual receipt.
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(b)
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All
correspondence to the Company shall be addressed as
follows:
|
|
SkyTerra
Communications, Inc.
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00000
Xxxxxxxxx Xxxxxxxxx
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Xxxxxx
XX 00000
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|
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Facsimile
No.: 000-000-0000
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|
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Attn:
Chief Financial Officer
|
|
|
with
copies (which shall not constitute notice) to:
|
|
|
SkyTerra
Communications, Inc.
|
|
|
00000
Xxxxxxxxx Xxxxxxxxx
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Xxxxxx
XX 00000
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|
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Facsimile
No.: 000-000-0000
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|
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Attn:
General Counsel
|
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Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
|
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Xxxx
Xxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Facsimile
No.: 000-000-0000
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Attn:
Xxxxxxx Xxxxxxxxx
|
19
|
(c)
|
All
correspondence to the Purchaser shall be addressed as
follows:
|
|
Inmarsat
Global Limited
|
|
|
00
Xxxx Xxxx
|
|
|
Xxxxxx
XX0XXX
|
|
|
Xxxxxx
Xxxxxxx
|
|
|
Facsimile
No.: 44 20 7728 1650
|
|
|
Attn:
General Counsel
|
|
|
with
a copy (which shall not constitute notice) to:
|
|
|
Xxxxxx
& Xxxxxxx LLP
|
|
|
000
Xxxxxxxx Xxxxxx, XX, Xxxxx 0000
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
|
Facsimile
No.: 000-000-0000
|
|
|
Attn:
Xxxx Xxxxx
|
(d) Any
party
may change the address to which correspondence to it is to be addressed by
notification as provided for herein.
8.4 Captions.
The
captions and paragraph headings of this Agreement are solely for the convenience
of reference and shall not affect its interpretation.
8.5 Severability.
Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such
part
or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.
8.6 Governing
Law; Exclusive Jurisdiction and Venue; Waiver of Jury Trial.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT.
8.7 Waiver.
No
waiver of any term, provision or condition of this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or be
construed as, a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.
8.8 Assignment.
The
rights and obligations of any party hereto shall inure to the benefit of and
shall be binding upon the authorized successors and permitted assigns of such
party. This Agreement may be assigned to any party to whom the Cooperation
Agreement will be assigned.
20
8.9 Survival.
The
representations and warranties given by the Company in Sections 3.1, 3.2 (other
than with respect to the Cooperation Agreement), 3.3(c) (other than with respect
to the Cooperation Agreement), 3.5, 3.7 and 3.20 hereto (collectively, the
"Share
Issuance Representations")
are
restated as of each Closing Date with respect to the Shares issued on such
Closing Date and shall survive the particular Closing Date on which such Share
Issuance Representations are given and the consummation of the transactions
contemplated herein and shall expire on the eighteen month anniversary of the
applicable Closing Date. All representations and warranties given by the Company
herein other than the Share Issuance Representations shall survive the date
of
this Agreement and the consummation of the transactions contemplated herein
and
shall expire on the eighteen month anniversary of the date of this Agreement.
Accordingly, no claim relating to any representation or warranty given by the
parties hereto applicable to the Closing Date may be made following such
expiration. If a claim relating to any representation or warranty given by
the
parties hereto is made on or prior to the expiration thereof, then,
notwithstanding anything to the contrary contained in this Section
8.9,
such
representation or warranty shall not so expire, but rather shall remain in
full
force and effect until such time as such claim has been fully and finally
resolved, either by means of a written settlement agreement executed on behalf
of the parties or by means of a final, non-appealable judgment issued by a
court
of competent jurisdiction. The respective covenants and agreements agreed to
by
a party hereto shall survive the date of this Agreement and the consummation
of
the transactions contemplated herein in accordance with their respective terms
and conditions.
8.10 Entire
Agreement.
This
Agreement and the Transaction Documents constitute the entire agreement between
the parties hereto respecting the subject matter hereof and supersede all prior
agreements, negotiations, understandings, representations and statements
respecting the subject matter hereof, whether written or oral, between the
Company and the Purchaser.
8.11 Amendments.
Any
amendment, supplement or modification of or to any provision of this Agreement
and any waiver of any provisions of this Agreement shall be effective only
if
made or given in writing and signed by the Company and the
Purchaser.
8.12 No
Third Party Rights.
This
Agreement is intended solely for the benefit of the parties hereto and their
respective successors and permitted assigns and is not intended to confer any
benefits upon, or create any rights in favor of, any Person (including, without
limitation, any stockholder or debt holder of the Company or MSV) other than
the
parties hereto.
8.13 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
document. The parties hereto confirm that any facsimile copy of another party's
executed counterpart of this Agreement (or its signature page thereof) will
be
deemed to be an executed original thereof.
8.14 Expenses.
Each of
the Company and the Purchaser shall pay its own fees and expenses in connection
with the consummation of the transactions contemplated hereby.
[Signature
pages follow.]
21
Each
of
the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first written above.
|
SKYTERRA
COMMUNICATIONS, INC.
|
|||
|
By:
|
/s/ Xxxxx Xxxxxxx | ||
|
Name:
|
Xxxxx
Xxxxxxx
|
||
|
Title:
|
Executive
Vice President, Chief Financial Officer and Treasurer
|
||
|
INMARSAT
GLOBAL LIMITED
|
|||
|
By:
|
/s/
Xxxxxx Xxxxxx
|
||
|
Name:
|
Xxxxxx
Xxxxxx
|
||
|
Title:
|
Group
General Counsel
|
||
LIST
OF EXHIBITS
|
Exhibit
A:
|
Form
of Registration Rights Agreement
|
|
Exhibit
B:
|
Form
of Capitalization Table
|
Exhibit
A
Form
of
Registration Rights Agreement
See
Exhibit 10.3 to the Current Report on Form 8-K of
SkyTerra Communications, Inc. filed with the
Securities
and Exchange Commission on December 21,
2007
Exhibit
B
Form
of Capitalization Table
| SkyTerra Common Shares (1), (2) |
Current
(12/20/07)
|
Pro
Forma (01/04/08)
|
|||||||||||
|
Shares
|
%
|
Shares
|
%
|
||||||||||
|
Apollo
(3)
|
16,398,129
|
14
|
%
|
16,398,129
|
14
|
%
|
|||||||
|
Management
Options (4)
|
6,517,751
|
6
|
%
|
6,517,751
|
6
|
%
|
|||||||
|
Immarsat
|
-
|
0
|
%
|
-
|
0
|
%
|
|||||||
|
Float
/ Other (5)
|
90,481,948
|
80
|
%
|
90,481,948
|
80
|
%
|
|||||||
|
Total
Fully Diluted Common Shares (6),
(7)
|
113,397,828
|
100
|
%
|
113,397,828
|
100
|
%
|
|||||||
|
Exercise
|
Exercise
|
||||||||||||
|
SkyTerra
Warrants(3),
(8)
|
Shares
|
Price
|
Shares
|
Price
|
|||||||||
|
Series
1A (Select One of Following)
|
|||||||||||||
|
$40.00
or less
|
652,711
|
$
|
20.39
|
652,711
|
$
|
20.39
|
|||||||
|
$50.00
|
592,478
|
$
|
19.20
|
592,478
|
$
|
19.20
|
|||||||
|
$60.00
|
337,043
|
$
|
15.14
|
337,043
|
$
|
15.14
|
|||||||
|
$70.00
or more
|
316,754
|
$
|
0.10
|
316,754
|
$
|
0.10
|
|||||||
|
Series
2A
|
2,560,182
|
$
|
25.85
|
2,560,182
|
$
|
25.85
|
|||||||
|
Harbinger
Warrants (9)
|
-
|
-
|
9,144,037
|
$
|
10.00
|
||||||||
Footnotes:
(1)
Voting
Common: 200,000,000 Authorized Shares; 34,265,663 Outstanding Shares (as
of
December 20, 2007).
(2)
Non-Voting Common: 100,000,000 Authorized Shares; 72,614,414 Outstanding
Shares
(as of December 20, 2007).
(3)
Apollo
has SkyTerra Series 1A and 2A warrants that, although currently out of the
money, could become a dilution factor at a higher SkyTerra trading price.
The
shares of SkyTerra Common Stock underlying the Series 1A and 2A Warrants
are
subject to anti-dilution protection, including upon the exercise of the
Harbinger Warrants.
(4)
Includes
MSV management options exchanging for SkyTerra options and SkyTerra management
options as calculated on a treasury method basis at a current SKYT trading
price
of $5.85. On a non-treasury method basis, there are currently 1,082,928 SkyTerra
options outstanding. On a non-treasury method basis, there are currently
4,778,250 MSV options outstanding (including 50,000 restricted / phantom
units),
which upon exchange to SkyTerra options at a ratio of 2.82, will result in
a
total of 13,474,665 SkyTerra options.
(5)
Other
includes BCE, Inc. and TerreStar Corp.
(6)
Up to
12% of the Company’s outstanding Common Stock will be available for grants
pursuant to the 2006 Equity and Incentive Plan (the “2006 Plan”). On a monthly
basis, that number will be adjusted, provided such adjustment involves increases
of greater than 100,000 shares, to maintain the number of shares outstanding
or
issuable under the 2006 Plan at 12% of the Company’s outstanding Common Stock,
up to a maximum of 15,000,000 shares. As of the date hereof, and prior to
the
Initial Closing, there are 9,193,600 shares available for issuance under
the
2006 Plan. Such number may be increased prior to the Initial Closing to a
maximum of 12,825,609 (12% of total common outstanding prior to the Initial
Closing).
(7)
Pursuant
to the 1998 Long Term Incentive Plan, 879,122 shares of Common Stock were
authorized and reserved for future issuance.
(8)
Common
shares underlying SkyTerra warrants at conversion as of December 20, 2007.
There
are 234,633 Series 1A warrants and 9,810,033 Series 2A warrants outstanding.
The
conversion shares underlying the Series 1A Warrants are calculated on a sliding
scale dependent upon the SkyTerra trading price.
(9)
Harbinger has SkyTerra warrants that, although currently out of the money,
could
become a dilution factor at a higher SkyTerra trading price. The number of
shares issuable upon exercise of the warrants provides Harbinger ownership
of
7.5% of the fully-diluted shares of SkyTerra Common Stock (projected for
January
3, 2008) on a treasury method basis, assuming an agreed-upon SkyTerra share
price of $5.05. The shares of SkyTerra Common Stock underlying the Harbinger
Warrants have certain pre-emptive rights and anti-dilution protection rights,
subject to customary exceptions.
