NEITHER THIS NOTE NOR THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
CONVEYED WITHOUT SUCH REGISTRATION OR AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED.
MetroPCS, Inc.
6% SUBORDINATED CONVERTIBLE NOTE DUE 2002
$60,000.00 New York, New York
SCN368 July 17, 2000
FOR VALUE RECEIVED, the undersigned, MetroPCS, Inc., a Delaware corporation
(the "Company"), promises to pay to the order of SonomaWest Holdings, Inc. (the
"Holder"), the principal sum of $60,000.00 (SIXTY THOUSAND DOLLARS) on January
17, 2002, together with accrued interest thereon upon maturity as provided
herein.
All payments of interest and all payments on account of the principal of
this Note shall be made in lawful money of the United States of America by wire
transfer of immediately available funds to the account designated in writing by
the Holder to the Company or, to the extent permitted by Section 1 hereof, in
Notes (as defined below). All payments received for application to this Note,
whether designated as principal or interest, shall first be applied to the
payment of accrued interest, and the balance applied in reduction of the
principal amount hereof
This 6% Subordinated Convertible Note due 2002 (individually, the "Note,"
and collectively with any other of the Company's 6% Subordinated Convertible
Notes due 2002, the "Notes") is issued pursuant to the Securities Purchase
Agreement, dated as of July 17, 2000, between the Company and the Purchasers
named therein (the "Securities Purchase Agreement"), and is entitled to all the
benefits of, and subject to all terms and conditions set forth in, the
Securities Purchase Agreement. All terms used in this Note, but not otherwise
defined in this Note, shall have the meaning assigned to them in the Securities
Purchase Agreement. This Note is a general unsecured obligation of the Company.
1. Interest.
The Company promises to pay interest on this Note at the rate of 6% per
annum, upon the conversion, prepayment or maturity of the Notes (each an
"Interest Payment Date"). Interest on this Note shall accrue beginning on the
date hereof and shall cease to accrue on the date that the principal amount
hereof is paid in full or the Note is converted as provided herein. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months. Upon
the occurrence and during the continuance of an Event of Default, in accordance
with Section 5.2 and in addition to the other remedies set forth therein and in
Section 5.3, the Company shall pay interest on this Note at the rate of 10% per
annum.
2. [Reserved]
3. Conversion.
3.1. Conversion Privilege and Conversion Price of the Notes
(a) Subject to and upon compliance with the provisions of this
Section 3, at the option of the Holder, this Note or any portion of
the principal amount hereof which is $100 or an integral multiple of
$100, and any accrued but unpaid interest thereon, may be converted at
the principal amount thereof, or of such portion thereof, into fully
paid and nonassessable shares of Series D Preferred Stock at the
conversion price with respect to this Note (herein called the
"Conversion Price"), determined as hereinafter provided, in effect at
the time of conversion.
In the event that this Note is converted, it shall be converted
into the number of fully paid and non-assessable shares of Series D
Preferred Stock obtained by dividing (i) the unpaid principal balance
of this Note to be converted, together with all accrued and unpaid
interest hereon, each as of the date of conversion, by (ii) the
Conversion Price in effect at the time of conversion. The Conversion
Price initially shall be $100 per each $100 principal amount of Notes,
subject to adjustment as provided herein. In addition, following an
Initial Public Equity Offering, the Holder of this Note may, by
written notice to the Company, demand that the Company repurchase, and
the Company shall so repurchase within 5 Business Days of the date of
such written notice, all or a portion (as so designated by the Holder)
of this Note, at the principal amount so designated plus accrued and
unpaid interest thereon.
(b) If a Subsequent Closing (as defined in the Securities
Purchase Agreement) shall occur, this Note automatically shall be
converted to Series D Preferred Stock simultaneously with, and in
addition to, the purchase of Series D Preferred Stock to occur with
the Subsequent Closing, in accordance with the provisions hereof. If
the FCC Decision Date (as defined in the Securities Purchase
Agreement) shall have occurred but the Subsequent Closing shall not
have occurred, provided no Default or Event of Default has occurred
and is continuing, this Note automatically shall be converted to
Series D Preferred Stock on January 16, 2002 in accordance with the
provisions hereof. If the FCC Decision Date shall not have occurred by
January 17, 2002, then this Note shall mature in accordance with the
terms hereof.
3.2. Exercise of Conversion Privilege
In order to exercise the conversion privilege with respect to this Note,
and subject to Section 3. 1 (b) above, the Holder shall surrender this Note,
duly endorsed or assigned to the Company or in blank. Subject to Section 3. 1(b)
above, the surrendered Note must be accompanied by a written request for
conversion (substantially as set forth in the form of Conversion Notice set
forth as part of Exhibit B) to the Company that the Holder elects to convert
this Note or, if less than the entire principal amount thereof is to be
converted, such lesser amount of this Note.
This Note shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of this Note for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holder as a Holder shall cease, and the Person or Persons entitled to receive
the Series D Preferred Stock issuable upon conversion shall be treated for all
purposes as the record Holder or Holders of such Series D Preferred Stock at
such time. As promptly as practicable on or after the Conversion Date, the
Company shall issue and shall deliver to the Holder a certificate or
certificates for the number of full shares of Series D Preferred Stock issuable
upon conversion, together with payment in lieu of any fraction of a share as
provided in Section 3.3.
If this Note is converted in part only, upon such conversion the Company
shall execute and deliver to the Holder, at the expense of the Company, a new
Note of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of this Note.
3.3. Fractions of Shares
No fractional shares of Series D Preferred Stock shall be issued upon the
conversion of this Note. Instead of any fractional share of Series D Preferred
Stock which would otherwise be issuable upon conversion of this Note (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction.
3.4. Company to Reserve Preferred Stock
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Series D Preferred Stock,
solely for the purpose of effecting the conversion of the Notes, the whole
number of shares of Series D Preferred Stock then issuable upon the conversion
in full of all of the Notes.
3.5. Taxes on Conversions
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Series D Preferred Stock upon conversion of
this Note. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of Series D Preferred Stock in a name other than that of the Holder of
this Note.
3.6. Covenant as to Preferred Stock Upon Conversion
The Company covenants that all shares of Series D Preferred Stock which may
be issued upon conversion of this Note will be duly authorized, validly issued,
fully paid and nonassessable and, except as provided in Section 3.5, the Company
will pay all taxes, liens and charges with respect to the issue thereof.
3.7. Provisions in Case of Reclassification, Consolidation, Merger or Sale
of Assets
In the event that the Company shall be a party to any transaction
(including without limitation any (i) recapitalization or reclassification of
the Series D Preferred Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Series D Preferred Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
Person, or any merger of another Person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Series D Preferred Stock of the Company),
(iii) any sale or transfer of all or substantially all of the assets of the
Company, or (iv) any compulsory share exchange) pursuant to which the Series D
Preferred Stock is converted into the right to receive other securities, cash or
other property, then lawful provision shall be made as part of the terms of such
transaction whereby the Holder of this Note shall have the right thereafter to
convert this Note (subject to funds being legally available for such purpose
under applicable law at the time of such conversion) only into the kind and
amount of securities, cash and other property receivable upon such transaction
by a Holder of the number of shares of Series D Preferred Stock into which this
Note might have been converted immediately prior to such transaction. The
Company or the Person formed by such consolidation or resulting from such merger
or which acquired such assets or which acquired the Company's shares, as the
case may be, shall execute and deliver to the Company written documentation
clearly establishing such rights. Such documentation shall provide for
adjustments which, for events subsequent thereto, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 3. The
above provisions of this Section 3.7 shall similarly apply to successive
transactions of the foregoing type.
4. Antidilution.
If at any time an event occurs which causes an adjustment to the conversion
price of the Series D Preferred Stock in accordance with the Certificate of
Designations applicable to the Series D Preferred Stock (or would cause an
adjustment to the conversion price of the Series D Preferred Stock if any shares
of Series D Preferred Stock were outstanding as of the date of such event), the
Conversion Price of this Note will be adjusted by the same percentage by which
the conversion price of the Series D Preferred Stock is adjusted (or would be
adjusted if any shares of Series D Preferred Stock were outstanding).
5. Events of Default.
5.1. Events of Default Defined
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal on this
Note when the same becomes due and payable, whether at maturity; or
(b) the Company defaults in the payment of any interest on this
Note for more than seven (7) Business Days after the same becomes due
and payable; or
(c) the Company defaults in the performance of 'or compliance
with any term or covenant contained herein or in the Securities
Purchase Agreement which can be cured and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer (as
defined in the Securities Purchase Agreement) obtaining actual
knowledge of such default and (ii) the Company receiving written
notice of such default from the Holder (any such written notice to be
identified as a "notice of default" and to refer specifically to this
paragraph (c) of Section 5. 1); or
(d) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in the
Securities Purchase Agreement or in any writing furnished in
connection with the transactions contemplated thereby proves to have
been false or incorrect on the date as of which made and such breach
can be cured and is not remedied within 30 days of such breach; or
(e) (i) the Company or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
interest on any indebtedness for borrowed money that is outstanding in
an aggregate principal amount of at least $5,000,000 beyond any period
of grace provided with respect thereto, or (ii) the Company or any
Subsidiary is in default in the performance of or compliance with any
term of any evidence of any indebtedness for borrowed money in an
aggregate outstanding principal amount of at least $5,000,000 or of
any mortgage, indenture or other agreement relating thereto or any
other condition exists;
(f) a court or governmental authority of competent jurisdiction
enters an order appointing a custodian, receiver, trustee or other
officer with similar powers with respect to the Company or any of its
subsidiaries or with respect to substantially all of their respective
property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any Subsidiary, or any such petition
shall be filed against the Company or any Subsidiary and such petition
shall not be dismissed within 60 days; or
(g) a final judgment or judgments, excluding any judgments
relating to the Company's confirmed plan of reorganization, for the
payment of money aggregating in excess of $5,000,000 are rendered
against the Company and which judgments are not, within 30 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 30 days after the expiration of such stay;
(h) any attachment or levy of a material portion of the Company's
assets, which attachment or levy is not, within 30 days after entry
thereof, bonded, discharged or stayed pending appeal or is not
discharged with 30 days after the expiration of such stay;
(i) any event has occurred which is likely to result in a
Material Adverse Effect (as defined in the Securities Purchase
Agreement) on the Company;
(j) the loss, or voluntary relinquishing, by the Company of any
FCC license;
(k) the imposition on the Company by any court of law of any
adverse conditions to the effectiveness, validity or use of any FCC
license;
(l) the reinstatement by any court of law, other than in
connection with the Company's confirmed plan of reorganization, of a
cost of the FCC licenses which is substantially similar to the
original bid price paid by the Company as secured debt.
5.2. Remedies on Default; Acceleration
(a) If an Event of Default with respect to the Company described
in paragraph (a) or (b) of Section 5.1 has occurred, the applicable
interest rate shall be increased to 10%.
(b) If an Event of Default with respect to the Company described
in paragraph (f) of Section 5.1 has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(c) If any other Event of Default has occurred and is continuing,
any Holder or Holders of more than 66 2/3% in principal amount of the
Company's 6% Subordinated Convertible Notes due 2002 (of which this
note is one) at the time outstanding may at any time at its or their
option, by notice or notices to the Company (a "Default Notice"),
declare all of such Notes then outstanding to be immediately due and
payable in full within five (5) days of a Default Notice. The Company
immediately shall provide such Default Notice to all holders of Notes.
(d) Upon this Note becoming due and payable under this Section
5.2 whether automatically or by declaration, this Note will forthwith
mature and the entire unpaid principal amount of this Note, plus all
accrued and unpaid interest thereon and shall all be immediately due
and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
5.3. Other Remedies
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether this Note has become or has been declared immediately
due and payable under Section 5.2, the Holder may proceed to protect and enforce
its rights of such Holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in the Securities Purchase Agreement, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
5.4. Rescission
At any time after any Notes have been declared due and payable pursuant to
Section 5.2, the Holders of not less than 66 2/3% in principal amount of the
Notes then outstanding, by written notice to the Company, may rescind and annul
any such declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and (to the extent permitted by applicable
law) on any overdue interest in respect of the Notes, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 9.4 of the Securities Purchase Agreement, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Securities Purchase Agreement. No rescission and annulment under this Section
5.4 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
5.5. Expenses
The Company will pay to the Holder on demand such further amount as shall
be sufficient to cover all costs and expenses of Holder incurred in any
enforcement or collection under this Section 5, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
6. Waiver.
To the extent permitted by law, the Company hereby waives presentment,
protest and demand, notice of protest, demand, dishonor and nonpayment, and
diligence in collection.
7. Collection Costs.
If at any time the indebtedness evidenced by this Note is collected through
legal proceedings or this Note is placed in the hands of attorneys for
collection, the Company agrees to pay all costs and expenses (including all
reasonable attorneys' fees) incurred by the Holder in collecting or attempting
to collect such indebtedness.
8. Successors and Assigns.
This Note shall inure to the benefit of and be binding upon the successors
and permitted assigns of the parties hereto. Subject to applicable securities
laws and Article VIII of the Securities Purchase Agreement, the Holder may
assign the Note. The Company may not assign any of its rights under this Note
except as otherwise provided in the Securities Purchase Agreement. References in
this Note to Shares shall be deemed to refer to any successor equity securities
of any successor to the Company in compliance with the Securities Purchase
Agreement.
9. Amendment and Waiver.
No failure or delay on the part of the Company or the Holder of this Note
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor, shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Holder of this Note at law, in equity or otherwise.
Any amendment, supplement or modification of or to any provision of this
Note shall be effective only if it is made or given in writing and signed by the
Company and the Holder of this Note. Any waiver of any provision of this Note
and any consent to any departure from the terms of any provision of this Note
shall be effective only if executed in writing by the party or parties making
such waiver or consenting to such departure and only in the specific instance
and for the specific purpose for which made or given.
10. Governing Law.
This Note shall be governed by and construed in accordance with the
internal laws of the State of New York applicable to agreements made and to be
performed entirely within such State without regard to the conflicts of law
principles of such State.
IN WITNESS WHEREOF, this Note has been executed and delivered by the
undersigned as of the date first above written.
MetroPCS, Inc.
By: /s/ Roger D. Linquist
-------------------------------------
Name: Roger D. Linquist
Title: President and Chief Executive Officer
<PAGE>
Form of Election to Convert
---------------------------
To MetroPCS, Inc.
The undersigned owner of this Note hereby irrevocably exercises the option
to convert this Note into shares of Series D Preferred Stock of MetroPCS, Inc.
in accordance with the terms of this Note, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned
registered Holder hereof, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Note.
Dated:
Principal Amount of Note: __________________________________
Signature (for conversion only) Signature (for conversion only)
If shares of Series D Preferred Stock are to be issued and registered
otherwise than to the registered Holder named above, please print or
type the name and address, including zip code, and social security or
other taxpayer identification number of the recipient below.
