NEITHER THIS WARRANT NOR ANY OF
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT
COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY
THE PROVISIONS OF, THE ACT, THE RULES AND REGULATIONS THEREUNDER
AND THIS WARRANT.
Warrant No. 3
WARRANT
TO PURCHASE 15,937,500 SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
SKYTERRA COMMUNICATIONS, INC.
THIS IS TO CERTIFY THAT Harbinger
Capital Partners Master Fund I, Ltd., or its registered assigns, is
entitled, at any time prior to the Expiration Date (such term, and
certain other capitalized terms used herein being hereinafter
defined), to purchase from SKYTERRA COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), 15,937,500 shares of the
Common Stock of the Company, (subject to adjustment as provided
herein), at a purchase price of $.01 per share (the initial
"Exercise Price", subject to adjustment as provided
herein).
As used in this Warrant, the
following terms have the respective meanings set forth
below:
"Affiliate" of any Person means any
other Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with such Person. The term "control" (including the terms
"controlled by" and "under common control with") as used with
respect to any Person means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Appraised Value" per share of
Common Stock as of a date specified herein shall mean the value of
such a share as of such date as determined by an investment bank of
nationally recognized standing selected by the Majority Warrant
Holders and reasonably acceptable to the Company. If the investment
bank selected by the Majority Warrant Holders is not reasonably
acceptable to the Company, and the Company and the Majority Warrant
Holders cannot agree on a mutually acceptable investment bank, then
the Company and the Majority Warrant Holders
shall each choose one such
investment bank and the respective chosen firms shall jointly
select a third investment bank, which shall make the determination.
The Company shall pay the costs and fees of each such investment
bank (including any such investment bank selected by the Majority
Warrant Holders), and the decision of the investment bank making
such determination of Appraised Value shall be final and binding on
the Company and all affected holders of Warrants or Warrant Stock.
Such Appraised Value shall be determined as a pro rata portion of
the value of the Company taken as a whole, based on the higher of
(A) the value derived from a hypothetical sale of the entire
Company as a going concern by a willing seller to a willing buyer
(neither acting under any compulsion) and (B) the liquidation value
of the entire Company. No discount shall be applied on account of
(i) any Warrants or Warrant Stock representing a minority interest,
(ii) any lack of liquidity of the Common Stock or the Warrants,
(iii) the fact that the Warrants or Warrant Stock may constitute
"restricted securities" for securities law purposes, (iv) the
existence of any call option or (v) any other grounds.
"Business Day" shall mean any day
that is not a Saturday or Sunday or a day on which banks are
required or permitted to be closed in the State of New
York.
"Commission" shall mean the
Securities and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities
laws.
"Common Stock" shall mean the Voting
Common Stock or the Non-Voting Common Stock, as constituted on the
Original Issue Date, and any capital stock into which such Common
Stock may thereafter be changed, and shall also include (i) capital
stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of any Common Stock
upon any reclassification thereof which is also not preferred as to
dividends or liquidation over any other class of stock of the
Company and which is not subject to redemption, and (ii) shares of
common stock of any successor or acquiring corporation received by
or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.3 hereof.
"Company" means SkyTerra
Communications, Inc., a Delaware corporation, and any successor
corporation.
"Current Market Price" shall mean as
of any specified date the average of the daily market price of one
share of the Common Stock for the shorter of (x) the twenty (20)
consecutive Business Days immediately preceding such date or (y)
the period commencing on the Business Day next following the first
public announcement by the Company of any event giving rise to an
adjustment of the Exercise Price pursuant to Section 5 below and
ending on the date of such event. The "daily market price" of one
share of Common Stock for each such Business Day shall be: (i) if
the Common Stock is then listed on a national securities exchange,
the last sale price of one share of Common Stock, regular way, on
such day on the principal stock exchange or market system on which
such Common Stock is then listed or admitted to trading, or, if no
such sale takes place on such day, the average of the closing bid
and asked prices for one share of Common Stock on such day as
reported on such stock exchange or market system or (ii) if the
Common Stock is not then listed or admitted to trading on any
national securities exchange but is traded over-the-counter, the
average of the closing bid and asked prices for one share
of
Common Stock as reported on the
Electronic Bulletin Board or in the National Daily Quotation
Sheets, as applicable.
"Designated Office" shall have the
meaning set forth in Section 10 hereof.
"Encumbrance" means any mortgage,
pledge, hypothecation, claim, charge, security interest,
encumbrance, option, lien, put or call right, right of first offer
or refusal, proxy, voting right or other restrictions or
limitations of any nature whatsoever in respect of any 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
asset, or materially impair the operations of SkyTerra LP or the
Company or materially interfere with the use of such property or
asset.
"Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
"Exercise Date" shall have the
meaning set forth in Section 2.1 hereof.
"Exercise Notice" shall have the
meaning set forth in Section 2.1 hereof.
"Exercise Price" shall mean $0.01
per share of Common Stock, subject to adjustment as provided
herein.
"Expiration Date" shall mean January
7, 2014.
"Fair Value" per share of Common
Stock as of any specified date shall mean (A) if the Common Stock
is publicly traded on such date, the Current Market Price per
share, or (B) if the Common Stock is not publicly traded on such
date, (1) the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company
and set forth in a written notice to each Holder or (2) if the
Majority Warrant Holders object in writing to such price as
determined by the Board of Directors within thirty (30) days after
receiving notice of same, the Appraised Value per share as of such
date. For the avoidance of doubt and notwithstanding the foregoing,
the Fair Value per share of Voting Common Stock and Non-Voting
Common Stock shall, at all times, be deemed to be the same. Fair
Value with respect to property, services or other consideration
shall be calculated in a similar manner.
"FCC" shall mean the Federal
Communications Commission.
"Harbinger" shall mean Harbinger
Capital Partners Master Fund I, Ltd. or Harbinger Capital Partners
Special Situations Fund, L.P. or any of their respective
Affiliates.
"Holder" shall mean (a) with respect
to this Warrant, the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for
such purpose and (b) with respect to any other Warrant or shares of
Warrant Stock, the Person in whose name such Warrant or Warrant
Stock is registered on the books of the Company maintained for such
purpose.
"HSR Act" means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"January 2009 Warrants" shall mean
warrants issued by the Company to Harbinger on January 7, 2009 to
purchase an aggregate of 7,500,000 shares of Common Stock, and all
warrants issued upon transfer, division, or combination of, or in
substitution of such warrants.
"January 2010 Warrants" shall mean
warrants to be issued by the Company to Harbinger on January 4,
2010 (or such other time that the Company and Harbinger may agree)
to purchase an aggregate of 3,750,000 shares of Common Stock, and
all warrants issued upon transfer, division or combination of such
warrants.
"Majority Warrant Holders", with
respect to a given determination, shall mean the Holders of
Warrants, January 2009 Warrants and January 2010 Warrants (to the
extent issued) representing more than fifty percent (50%) of all
Common Stock issuable upon exercise of all outstanding Warrants,
January 2009 Warrants and January 2010 Warrants (taken
together).
“Master Contribution
Agreement” shall mean the Master Contribution and Support
Agreement dated July 24, 2008, among Harbinger Capital Partners
Master Fund I, Ltd., Harbinger Capital Partners Special Situations
Fund, L.P., Harbinger Co-Investment Fund, L.P., the Company,
SkyTerra LP and SkyTerra Subsidiary LLC (formerly named Mobile
Satellite Ventures Subsidiary LLC), as amended to date.
"SkyTerra LP" shall mean SkyTerra
LP, a Delaware limited partnership formerly named Mobile Satellite
Ventures LP.
"Finance Co." shall mean SkyTerra
Finance Co., a Delaware corporation formerly named MSV Finance
Co.
"Non-Voting Common Stock" shall mean
the non-voting common stock, par value $0.01 per share, of the
Company.
"Notes" shall mean the 18.0% Senior
Notes due 2013 of SkyTerra LP and Finance Co.
"Opinion of Counsel" means a written
opinion of outside counsel experienced in Securities Act matters
chosen by the Holder of this Warrant or Warrant Stock issued upon
the exercise hereof and reasonably acceptable to the
Company.
"Original Issue Date" shall mean
April 1, 2009.
"Outstanding" shall mean, when used
with reference to Common Stock, at any date as of which the number
of shares thereof is to be determined, all issued shares of Common
Stock, whether Voting Common Stock or Non-Voting Common Stock, as
the case may be, except shares then owned or held by or for the
account of the Company or any Subsidiary, and shall include all
shares issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common
Stock.
"Person" shall mean any individual,
sole proprietorship, partnership, limited liability company, joint
venture, trust, incorporated organization, association,
corporation, institution,
public benefit corporation, entity
or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Restricted Common Stock" shall mean
shares of Common Stock which are, or which upon their issuance on
the exercise of this Warrant would be, evidenced by a certificate
bearing the restrictive legend set forth in Section 8.2(a)
hereof.
"Securities Act" shall mean the
Securities Act of 1933, as amended, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at
the time.
"Share Withholding Option" has the
meaning set forth in Section 2.1 hereof.
"Subsidiary" shall mean any
corporation, association or other business entity (i) at least 50%
of the outstanding voting securities of which are at the time owned
or controlled directly or indirectly by the Company; or (ii) with
respect to which the Company possesses, directly or indirectly, the
power to direct or cause the direction of the affairs or management
of such person.
"Tax" or "Taxes" means any and all
taxes, charges, fees, levies, imposts, duties or other assessments
of any kind whatsoever, imposed by or payable to any federal,
state, provincial, local, or foreign tax authority, including any
gross income, net income, alternative or add on minimum, franchise,
profits or excess profits, gross receipts, estimated, capital,
goods, services, documentary, use, transfer, ad valorem, business
rates, value added, sales, customs, real or personal property,
capital stock, license, payroll, withholding or back up
withholding, employment, social security, workers’
compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits,
occupancy, transfer, gains taxes, together with any interest,
penalties, additions to tax or additional amounts imposed with
respect thereto.
"Transfer" shall mean any
disposition of any Warrant or Warrant Stock or of any interest
therein, which would constitute a "sale" thereof or a transfer of a
beneficial interest therein within the meaning of the Securities
Act.
"Voting Common Stock" shall mean the
voting common stock, par value $0.01 per share, of the
Company.
"Warrant Price" shall mean an amount
equal to (i) the number of shares of Common Stock being purchased
upon exercise of this Warrant pursuant to Section 2.1 hereof,
multiplied by (ii) the Exercise Price as of the date of such
exercise.
"Warrants" shall mean all of the
warrants issued by the Company to Harbinger on April 1, 2009 to
purchase an aggregate of 21,250,000 shares of Common Stock, and all
warrants issued upon transfer, division or combination of, or in
substitution for, such warrants. All Warrants shall at all times be
identical as to terms and conditions, except as to the number of
shares of Common Stock for which they may be exercised and their
date of issuance.
"Warrant Stock" generally shall mean
the shares of Common Stock issued, issuable or both (as the context
may require) upon the exercise of Warrants.
(a) From
and after the Original Issue Date and until 5:00 P.M., New York
time, on the Expiration Date, the Holder of this Warrant may, from
time to time, exercise this Warrant, on any Business Day, for up to
15,937,500 shares of Common Stock. In order to exercise this
Warrant, in whole or in part, the Holder shall (i) deliver to the
Company at its Designated Office a written notice of the Holder's
election to exercise this Warrant (an "Exercise Notice"), which
Exercise Notice shall be irrevocable and specify the number of
shares of Non-Voting Common Stock and/or Voting Common Stock to be
purchased, together with this Warrant and (ii) pay to the Company
the Warrant Price (the date on which both such delivery and payment
shall have first taken place being hereinafter sometimes referred
to as the "Exercise Date"). Such Exercise Notice shall be in the
form of the subscription form appearing at the end of this Warrant
as Annex A, duly executed by the Holder or its duly authorized
agent or attorney. For the avoidance of doubt, subject to the other
conditions set forth in Sections 2.1(b), 2.1(c) or elsewhere
herein, the Holder may, at its sole discretion, exercise the
Warrant for shares of Voting Common Stock, shares of Non-Voting
Common Stock or any combination thereof.
(b) Upon
receipt by the Company of such Exercise Notice, Warrant and
payment, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute (or cause
to be executed) and deliver (or cause to be delivered) to the
Holder a certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise,
together with cash in lieu of any fraction of a share, as hereafter
provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations
as the exercising Holder shall reasonably request in the Exercise
Notice and shall be registered in the name of the Holder or,
subject to Section 8 below, such other name as shall be designated
in the Exercise Notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to
have been issued, and the Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the Exercise Date.
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 Warrant Stock
(or the conversion of Non-Voting Common Stock into Voting Common
Stock), the Company shall issue on the Exercise Date the maximum
number of shares of Warrant Stock that can be issued without
shareholder approval, without regard to any shares of Warrant Stock
otherwise required to be issued in excess of such maximum number of
shares of Warrant Stock, and shall promptly after receipt of such
shareholder approval issue the balance of the number of shares of
Warrant Stock for which this Warrant has been exercised. The
Company shall use its reasonable best efforts to obtain such
shareholder approval as soon as reasonably possible, including,
without limitation, filing all proxy statements or information
statements, necessary or convenient to obtain such
consent.
(c) Notwithstanding
anything to the contrary contained herein, prior to the issuance of
the Warrant Stock or, in the event that the Warrant Stock is
Non-Voting Common Stock, the Voting Common Stock issuable upon
exchange of such Warrant Stock, the Holder or
its permitted assigns on the one
hand, and the Company on the other hand, shall have satisfied any
and all applicable legal or regulatory requirements for conversion,
including compliance with the HSR Act and FCC requirements. 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. The Company shall pay all
necessary filing fees and reasonable out-of-pocket expenses to
obtain such legal or regulatory approvals.
(d) Payment
of the Warrant Price shall be made at the option of the Holder by
one or more of the following methods: (i) by delivery of a
certified or official bank check in the amount of such Warrant
Price payable to the order of the Company, (ii) by instructing the
Company to withhold a number of shares of Warrant Stock then
issuable upon exercise of this Warrant with an aggregate Fair Value
equal to such Warrant Price (the "Share Withholding Option"), (iii)
by surrendering to the Company, Notes previously acquired by the
Holder with an aggregate fair market value equal to such Warrant
Price; it being understood that the fair market value of the Note
shall be its principal amount plus any accrued interest to that
day, or (iv) by surrendering to the Company shares of Common Stock
previously acquired by the Holder with an aggregate Fair Value
equal to such Warrant Price. In the event of any withholding of
Warrant Stock or surrender of Notes or Common Stock pursuant to
clause (ii), (iii) or (iv) above where the number of shares whose
Fair Value (as measured on the Exercise Date) is equal to the
Warrant Price is not a whole number, the number of shares withheld
by or surrendered to the Company shall be rounded up to the nearest
whole share and the Company shall make a cash payment to the Holder
based on the incremental fraction of a share being so withheld by
or surrendered to the Company in an amount determined in accordance
with Section 2.3 hereof. Notwithstanding any provision herein to
the contrary, the Company shall not be required to register shares
of Common Stock in the name of any Person who acquired this Warrant
(or part hereof) or any shares of Warrant Stock otherwise than in
accordance with this Warrant.
(e) If
this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the ce
