<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998
REGISTRATION NO. 333-56385
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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IRIDIUM WORLD COMMUNICATIONS LTD.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
BERMUDA 4812 52-2025291
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
CLARENDON HOUSE, 2 CHURCH STREET, HAMILTON HM 11, BERMUDA
(441) 295-5950
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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IRIDIUM LLC
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4800 52-1984342
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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F. THOMAS TUTTLE, ESQ.
IRIDIUM WORLD COMMUNICATIONS LTD., 1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
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with copies to:
DENNIS C. SULLIVAN, ESQ.
SULLIVAN & CROMWELL
1701 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 956-7500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 15, 1998
[IRIDIUM WORLD COMMUNICATIONS LTD. LOGO]
300,000 WARRANTS TO PURCHASE
1,560,000 SHARES OF CLASS A COMMON STOCK
IRIDIUM WORLD COMMUNICATIONS LTD.
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This Prospectus relates to (i) the resale by the holders thereof of 300,000
warrants (the "Warrants") of Iridium World Communications Ltd. ("IWCL") and (ii)
the issuance of 1,560,000 shares of IWCL Class A Common Stock, $.01 par value
(the "Class A Common Stock"), that may be acquired upon the exercise of the
Warrants (the "Warrant Shares" and, together with the Warrants, the
"Securities"). Each Warrant currently entitles the holder thereof to purchase,
on or after July 16, 1998, 5.2 Warrant Shares at an exercise price of $20.90 per
share, subject to adjustment in certain circumstances. The Warrants will, unless
exercised, automatically expire on July 15, 2005. See "Description of Warrants."
The Class A Common Stock is listed on the Nasdaq National Market (the "NNM")
under the symbol "IRIDF." On July 13, 1998, the closing price of the Class A
Common Stock on the NNM was $58 5/16 per share.
The Warrants are part of the 300,000 units (the "Units") that were
originally sold on July 16, 1997, by IWCL, Iridium LLC ("Iridium") and Iridium
Capital Corporation ("Capital") to the initial purchasers thereof. Each Unit
consisted of $1,000 principal amount of 13% Senior Notes due 2005, Series A (the
"Series A Notes") of Iridium and Capital and one Warrant. On September 8, 1997,
the Units were split into Warrants and Series A Notes and the Warrants and
Series A Notes have traded separately since that date.
The Securities may be offered and sold from time to time by the holders
named herein or by their transferees, pledgees, donees or their successors
(collectively, the "Selling Holders") pursuant to this Prospectus. The
Securities may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Plan of
Distribution" and "Selling Holders." If required, the names of any such agents
or underwriters involved in the sale of the Securities and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in an accompanying supplement to this Prospectus (the
"Prospectus Supplement"). The Selling Holders will receive all the net proceeds
from any sale of the Securities and will pay all underwriting discounts, selling
commissions and related fees, if any, applicable to such sale. Iridium is
responsible for payment of all other expenses incident to the registration of
the Warrants and the Warrant Shares pursuant hereto, or otherwise incident to
the performance of or compliance with the Warrant Agreement (as defined below).
See "Governance of IWCL and Relationship with Iridium -- Management Services
Agreement." The Selling Holders and any broker-dealers, agents or underwriters
that participate in the distribution of the Securities may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commission received by them and any profit on the
resale of Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution."
The Warrants have not been registered for sale under the securities laws of
any state or jurisdiction as of the date of this Prospectus. Brokers or dealers
effecting transactions in the Warrants should confirm the registration thereof
under the securities laws of the state in which such transactions occur, or the
existence of any exemption from registration.
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN WARRANTS AND CLASS A
COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998
<PAGE> 3
AVAILABLE INFORMATION
IWCL and Iridium are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by IWCL and Iridium can be inspected and
copied at public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New
York, New York 10048; and Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission's Washington, D.C. office at prescribed
rates. The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding IWCL
and Iridium. The Class A Common Stock is quoted on the NNM, and copies of the
reports, proxy statements and other information filed by IWCL with the
Commission may also be inspected at the offices of Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006.
IWCL and Iridium have filed with the Commission a Registration Statement on
Form S-3 (together with all exhibits and amendments, the "Registration
Statement") under the Securities Act, with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which are omitted as permitted by the rules and regulations of the
Commission. For further information with respect to IWCL, Iridium and the
securities offered hereby, reference is made to the Registration Statement,
including the exhibits and schedules. The Registration Statement may be
inspected, without charge, at the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549, and also at the regional offices of the
Commission listed above. Copies of such material may also be obtained from the
Commission upon the payment of prescribed rates.
Statements contained in the Prospectus as to any contracts, agreements or
other documents filed as an exhibit to the Registration Statement are not
necessarily complete, and in each instance reference is hereby made to the copy
of such contract, agreement or other document filed as an exhibit to the
Registration Statement for a full statement of the provisions thereof, and each
such statement in the Prospectus is qualified in all respects by such reference.
INCORPORATION BY REFERENCE
The following documents have been filed by IWCL or Iridium with the
Commission pursuant to the Exchange Act and are hereby incorporated by reference
into this Prospectus:
(a) The Annual Report on Form 10-K of IWCL, Iridium, and certain of
Iridium's direct and indirect subsidiaries for the year ended December 31,
1997 (the "Form 10-K");
(b) The Quarterly Report on Form 10-Q of IWCL, Iridium and certain of
Iridium's direct and indirect subsidiaries for the quarter ended March 31,
1998;
(c) IWCL's Proxy Statement relating to the 1998 Annual Meeting of
Stockholders; and
(d) The description of IWCL's Class A Common Stock contained in IWCL's
Registration Statement on Form 8-A filed under the Exchange Act and any
amendments or reports filed for the purpose of updating such description.
All documents filed by IWCL or Iridium pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Warrants and the Class A Common Stock offered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing such documents (provided, however,
that the information referred to in Item 402(a)(8) of Regulation S-K of the
Commission shall not be deemed specifically incorporated by reference herein).
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
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document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement as modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
IWCL and Iridium will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any person, a copy of any and all of the information
that has been incorporated by reference in this Prospectus (other than exhibits
and schedules thereto, unless such exhibits or schedules are specifically
incorporated by reference into the information that this Prospectus
incorporates). Written or oral requests for copies of these documents should be
directed to Iridium World Communications Ltd., 1575 Eye Street, N.W.,
Washington, D.C. 20005, Attention: F. Thomas Tuttle, Assistant Secretary
(Telephone (202) 408-3800).
FORWARD-LOOKING STATEMENTS
Iridium is a development stage company with no operating history, and IWCL
has no business other than business related to its interests in Iridium.
Accordingly, many statements in this Prospectus or incorporated by reference
herein are forward-looking. Examples of such forward-looking statements include,
but are not limited to, the statements concerning Iridium's operations,
prospects, markets, technical capabilities, funding needs, financing sources,
pricing, launch schedule, commercial operations schedule, estimates of the size
of addressable markets for mobile satellite services, estimates of customer
counts, the last year in which Iridium will have negative cash flow and a net
increase in year-end borrowings, and future regulatory approvals, as well as
information concerning expected characteristics of competing systems and
expected actions of third parties, including but not limited to, systems
contractors, equipment suppliers, gateways operators, service providers and
roaming partners. These forward-looking statements are based on a number of
assumptions and are inherently predictive and speculative. One or more of the
assumptions underlying such forward-looking statements is likely to be
incorrect. Therefore, actual results may be materially different from those
expressed or implied by such statements.
Factors which may cause IWCL's or Iridium's results to differ materially
from those expressed or implied by such forward-looking statements include, but
are not limited to, (i) Iridium's absence of current revenues, highly leveraged
capital structure and significant additional funding needs, (ii) delays and cost
overruns related to the construction and deployment of the Iridium
communications system (the "Iridium System"), (iii) technological risks related
to the development and implementation of the various components of the Iridium
System, (iv) customer acceptance of Iridium World Services, (v) satellite
launch, operation and maintenance risks, (vi) risks associated with the need to
obtain operating licenses in the numerous countries where Iridium assumes it
will provide its services, (vii) competition from satellite and terrestrial
communications services and (viii) Iridium's dependence on Motorola and other
members of Iridium for the construction and operation of the Iridium System and
the distribution and marketing of Iridium World Services. These factors, and
other factors that may materially affect Iridium's operations, are described in
greater detail in the Securities and Exchange Commission filings of IWCL and
Iridium. See "Risk Factors" and the risk factors set forth in Exhibit 99 to the
Form 10-K under "Certain Factors Which May Affect Forward-Looking Statements."
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements and the notes thereto incorporated by
reference in this Prospectus. Unless otherwise specified or the context
otherwise requires, references in this Prospectus to "dollars" and "$" are to
United States dollars.
IWCL AND IRIDIUM
Iridium is developing and commercializing a global mobile wireless
communications system that will enable subscribers to send and receive telephone
calls virtually anywhere in the world -- all with one phone, one phone number
and one customer bill. The Iridium communications system (the "Iridium System")
will combine the convenience of a terrestrial wireless system with the global
reach of Iridium's satellite system. The Iridium System encompasses four
components: the "space segment," which will include the low earth orbit
satellite constellation and the related control facilities; the ground stations
or "gateways," which will link the satellites to terrestrial communications
systems; the Iridium subscriber equipment, which will provide mobile access to
the satellite system and terrestrial wireless systems; and the terrestrial
wireless interprotocol roaming infrastructure, which will facilitate roaming
among the Iridium satellite system and multiple terrestrial wireless systems
that use different wireless protocols. Iridium expects to commence operations in
September 1998. The satellite constellation was designed, assembled and
delivered in orbit by Motorola, Inc. ("Motorola"), a leading international
provider of wireless communications systems, phones and pagers, semiconductors
and other electronic equipment. Motorola also is the principal investor in
Iridium. Other strategic investors include leading wireless communications
service providers from around the world, as well as experienced satellite
manufacturers and experienced launch providers.
IWCL, a Bermuda company, was organized to act as a member of Iridium and to
have no other business. See "Governance of IWCL and Relationship with Iridium."
THE OFFERING
Issuer..................... IWCL acts as the publicly-held member of Iridium,
and IWCL's only assets are its Class 1 Membership
Interests and its rights to acquire Class 1
Membership Interests. IWCL was registered as a
Bermuda company on December 12, 1996 and has its
principal offices at Clarendon House, 2 Church
Street, Hamilton HM11, Bermuda and its telephone
number is (441) 295-5950.
Securities Subject
to the Offering.......... 300,000 Warrants and up to 1,560,000 shares of
Class A Common Stock issuable upon exercise of the
Warrants.
Total Number of Warrants... 300,000 Warrants, which when exercised would
entitle the holders thereof to acquire an aggregate
of up to 1,560,000 Warrant Shares. See "Description
of Warrants."
Warrant Expiration Date.... July 15, 2005.
Exercise................... Each Warrant entitles the holder thereof to
purchase 5.2 shares of Class A Common Stock at an
exercise price of $20.90 per share. The number of
shares of Class A Common Stock for which, and the
price per share at which, a Warrant is exercisable
are subject to adjustment upon the occurrence of
certain events as provided in the Warrant
Agreement. The Warrants will be exercisable on or
after July 16, 1998. See "Description of Warrants."
Listing of Class A
Common Stock............. The Class A Common Stock currently trades on the
NNM under the symbol "IRIDF".
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LLC Interest Warrants...... IWCL paid the net proceeds it received from the
sale of the Warrants to Iridium to purchase a
corresponding number of warrants to purchase Class
1 Membership Interests from Iridium (the "LLC
Interest Warrants") having the same tenor and terms
as the Warrants. The LLC Interest Warrants entitle
IWCL to purchase, in the aggregate, a number of
Class 1 Membership Interests equal to the aggregate
number of Warrant Shares issuable in respect of the
Warrants. The LLC Interest Warrants provide that
upon the exercise of any Warrant and the payment of
the exercise price therefor to IWCL, IWCL will
purchase from Iridium, and Iridium will sell to
IWCL, a number of Class 1 Membership Interests
equal to the number of Warrant Shares issuable upon
such exercise for a purchase price equal to the
exercise price of such Warrant, subject to
adjustment in certain circumstances. See
"Description of Warrants -- General."
Registration Rights........ IWCL is required under the Warrant Agreement to use
its reasonable efforts to cause the Registration
Statement of which this Prospectus forms a part to
remain effective until (i) as to the Warrants, the
earliest of (x) such time as all the Warrants have
been sold thereunder, (y) two years after its
effective date and (z) such time as the Warrants
can be sold by non-affiliates of IWCL without
restriction under the Securities Act, and (ii) as
to the Warrant Shares, the earlier of (a) such time
as all Warrants have been exercised and (b) July
15, 2005. IWCL's registration rights obligations
are subject to certain conditions, including IWCL's
right to suspend the availability of the
Registration Statement for two 45 consecutive-day
periods in any 365-day period. See "Description of
Warrants -- Registration Rights."
Use of Proceeds............ Neither IWCL nor Iridium will receive any proceeds
from the sale of the Securities by the Selling
Holders. All proceeds will be received by the
Selling Holders. Upon exercise of any Warrant, IWCL
will receive $20.90 for each Warrant Share issued.
Pursuant to the terms of the Share Issuance
Agreement, IWCL will apply all of such exercise
price to the exercise of a corresponding number of
LLC Interest Warrants. Accordingly, Iridium will
indirectly receive all net cash paid in respect of
the exercise of Warrants.
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RISK FACTORS
Investors should consider the following risk factors and the risk factors
set forth in Exhibit 99 to the Form 10-K under "Certain Factors which May Affect
Forward-Looking Statements" which report is incorporated herein by reference, in
addition to the other information contained in this Prospectus, in evaluating
whether to purchase the Securities.
DIVIDEND POLICY
IWCL's sole asset is its Class 1 Membership Interests and IWCL has no
independent means of generating revenues. IWCL has never declared or paid any
dividends on its Class A Common Stock or non-voting Class B Common Stock, par
value $.01 per share ("Class B Common Stock") and Iridium has never made
distributions on its Class 1 Membership Interests. Iridium has no current source
of revenue and does not expect significant revenues until sometime after the
commencement of commercial operations, currently scheduled for September 23,
1998. IWCL and Iridium do not anticipate paying any dividends or distributions
until Iridium has demonstrated a positive operating cash flow for a significant
period of time. In addition, debt covenants applicable to subsidiaries of
Iridium impose significant restrictions on the ability of such subsidiaries to
make cash distributions to Iridium (and therefore effectively restrict the
ability of Iridium to make cash distributions). Such covenants or similar
covenants relating to replacement or other indebtedness are likely to be in
effect long after the achievement of positive operating cash flow.
Iridium is treated as a partnership for United States federal income tax
purposes. IWCL is responsible for paying the United States federal income tax on
its distributive share of the income of Iridium that is effectively connected
with the conduct of a trade or business in the United States. IWCL will have no
source of funds to pay United States federal income taxes other than
distributions from Iridium. The Iridium LLC Agreement (as defined below)
requires Iridium's Board of Directors (the "Iridium Board"), to the extent of
legally available funds, to declare and pay distributions sufficient to assure
that each non-U.S. Class 1 Member receives an amount at least equal to the
amount of such member's U.S. federal, state and local income tax liability
resulting from allocations of Iridium's income to such Member. Iridium Operating
LLC, a wholly-owned subsidiary of Iridium, also has agreed under the Management
Services Agreement (as defined below) to advance funds to IWCL, under certain
conditions, to enable IWCL to pay any income tax liability that cannot be
satisfied by distributions to IWCL on the Class 1 Membership Interests. If for
any reason Iridium were unable to comply with these undertakings, IWCL would be
unable to make required tax payments to the United States which would have a
material adverse effect on IWCL.
SHARES ELIGIBLE FOR FUTURE SALE
IWCL has authorized 50,000,000 shares of Class A Common Stock. Assuming the
exercise of all Warrants, the pro forma number of shares of Class A Common Stock
of IWCL outstanding at June 30, 1998 would have been 13,633,344 shares. IWCL has
agreed in the Interest Exchange Agreement (as defined below) that it will
exchange shares of Class A Common Stock for Class 1 Membership Interests at the
rate of one share of Class A Common Stock for each Class 1 Membership Interest
and to register with the Securities and Exchange Commission those shares for
sale. Pursuant to the Interest Exchange Agreement, the holders of Class 1
Membership Interests may not exchange such Interests for shares of Class A
Common Stock prior to 90 days after the first fiscal quarter in which Iridium
achieves positive earnings before interest, taxes, depreciation and
amortization. No exchanges shall take place unless approved by Iridium, pursuant
to the authorization of Directors representing at least 66 2/3% of the Iridium
Board. See "Governance of IWCL and Relationship with Iridium -- Exchange Rights
of Iridium Members." Based upon the number of Class 1 Membership Interests
outstanding as of June 30, 1998, 141,313,149 shares of Class A Common Stock
would be issuable upon such exchange. Including all Class 1 Membership Interests
which will be issuable in the future based upon warrants, options and
convertible securities outstanding on June 30, 1998 and other outstanding
commitments to members of Iridium (excluding the Reserve Capital Call and
warrants issuable to Motorola in respect of additional indebtedness not yet
incurred), an aggregate of 178,394,747 shares of Class A Common Stock would be
issuable upon such exchange. See "-- Dilution Risk."
In addition, IWCL has authorized 2,500,000 shares of Class B Common Stock
for issuance, and has issued 20,625 shares of Class B Common Stock, in the
Global Ownership Program (as defined below). These
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shares of Class B Common Stock will be exchangeable for Class A Common Stock on
a share for share basis after the satisfaction of certain conditions, but in no
event earlier than one year after issuance of, and full payment for, the
relevant shares of Class B Common Stock. Following such exchanges, and if
registered for resale with the Commission, the Class A Common Stock issuable on
exchange will be freely transferable if held by persons who are not affiliates.
Issuances of substantial amounts of Class A Common Stock, or the expectation of
such issuances, could adversely affect the market price of the Class A Common
Stock.
DILUTION RISK
Upon the purchase by IWCL of Class 1 Membership Interests with the proceeds
from the exercise of the Warrants, IWCL will not experience a substantial
dilution in pro forma net tangible book value per Class 1 Membership Interest.
However, IWCL will experience dilution in the future as a result of the purchase
and sale of Class 1 Membership Interests at prices below the price paid by IWCL
for its Class 1 Membership Interests. At June 30, 1998 there were outstanding
warrants to purchase 4,997,281 Class 1 Membership Interests at $.00013 per Class
1 Membership Interest issued in connection with the issuance and sale of
Iridium's 14 1/2% Senior Subordinated Notes due 2006; 42,853 Series A Class 2
Interests that convert into 793,209 Class 1 Membership Interests without any
additional cash investment; and a currently exercisable warrant to purchase up
to the number of Series M Convertible Class 2 Interests that would be
convertible into 2.5% of the number of outstanding Class 1 Membership Interests
on the date of exercise, calculated on a fully diluted basis, at the equivalent
of $13.33 per underlying Class 1 Membership Interest. In addition to the
warrants described above, under the guarantee arrangements with Motorola,
Iridium has a continuing obligation to issue warrants to Motorola for so long as
Motorola has guaranteed borrowings of Iridium or any of its subsidiaries under
certain credit facilities. Motorola earned, for its guarantee of Iridium's
obligations under the Guaranteed Bank Facility (as defined), 7,741,346 Class 1
Membership Interests through May 13, 1998. Additionally, the Second Amended and
Restated Agreement Regarding Guarantee, dated May 11, 1998, provides that, when
the Guaranteed Bank Facility and Motorola's guarantee thereunder have been
permanently reduced to $275 million or less, Iridium has the option to
compensate Motorola for such guarantee by continuing to pay warrant compensation
at the existing rate or paying (i) interest on the guaranteed amount at a rate
based on the difference between the interest rate on the Guaranteed Bank
Facility and the interest rate on the Series A Notes and the 14% Series B Notes
of Iridium Operating LLC plus (ii) substantially reduced warrant compensation
based on the number of warrants issued in connection with the offering of the
Series A Notes (the "High Yield Equivalent Compensation"). The maximum number of
warrants Motorola may earn as High Yield Equivalent Compensation until June 30,
1999 (maturity of the Guaranteed Bank Facility) is 75,820 Class 1 Membership
Interests. Motorola also would be entitled to receive warrants to purchase up to
3,750,000 additional Class 1 Membership Interests at a price of $.00013 per
Class 1 Membership Interest in connection with the possible $350 million
increase in the Guaranteed Bank Facility. The Class 1 Membership Interests
acquired upon exercise of any such warrants issued on or prior to the commercial
activation date must be held for five years from the date of issuance of such
Interests. Up to 18,206,550 Class 1 Membership Interests may be issued to
existing investors in Iridium at a purchase price of $13.33 per Class 1
Membership Interest pursuant to the Reserve Capital Call (as defined below). The
Iridium Board has also authorized the issuance of warrants to purchase up to
9,165,000 Class 1 Membership Interests at a purchase price of $.00013 per Class
1 Membership Interest to gateway owners and to Motorola based on satisfaction of
certain performance criteria relating to the construction and implementation of
gateways and gateway services.
There will be no immediate dilution to the purchasers of Class A Common
Stock with respect to the Warrant Shares. However, pursuant to the Interest
Exchange Agreement, IWCL has agreed to exchange shares of Class A Common Stock
for Class 1 Membership Interests at an exchange rate of one share of Class A
Common Stock for each Class 1 Membership Interest (subject to anti-dilution
adjustments) commencing 90 days after Iridium has achieved one full quarter of
positive earnings before interest, taxes, depreciation and amortization. No
exchange shall take place unless approved by Iridium pursuant to authorization
of Directors representing at least 66 2/3% of the Iridium Board. Also, IWCL has
authorized the issuance of up to 2,500,000 shares of Class B Common Stock in the
Global Ownership Program. These shares of Class B Common Stock will be
convertible into Class A Common Stock on a share for share basis. In
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addition, IWCL has agreed that in the future it will issue additional shares of
Class A Common Stock at the direction of Iridium and invest the net proceeds
thereof in exchange for one Class 1 Membership Interest for each share of Class
A Common Stock so issued (subject to anti-dilution adjustments).
The anti-dilution provisions of the Warrants do not provide for adjustment
in respect of issuances of Iridium Class 1 Membership Interests. See
"Description of Warrants -- Adjustments."
VOLATILITY
The market price of the Class A Common Stock has been volatile and the
price of the Warrants may also be volatile. In particular, the trading prices
for the common stock of many development stage technology companies like IWCL
and Iridium have experienced extreme price and volume fluctuations, which have
at times been unrelated to operating performance. Factors such as announcements
of fluctuations in Iridium's or its competitors' operating results and market
conditions for growth stocks or technology stocks in general could have a
significant effect on the future price of the Class A Common Stock or the
Warrants. In particular, the price of the Warrants or the Class A Common Stock
could be subject to significant fluctuations in response to variations in
Iridium's prospects and operating results which could be affected by delays in
the design, construction, deployment, customer acceptance and commercial
operation of the Iridium System, delays in obtaining service providers or
regulatory approvals in particular countries, satellite anomalies, general
conditions in the telecommunications industry, regulation, international events,
changes in interest rates and other factors. Such factors may have an adverse
effect on the price of the Warrants or the trading price Class A Common Stock
from time to time.
ABSENCE OF A PUBLIC MARKET FOR THE WARRANTS
There is no public market for the Warrants and IWCL does not intend to
apply for listing of the Warrants on any national securities exchange or for
quotation of the Warrants through the NNM. No assurance can be given as to the
liquidity of the trading market for the Warrants or that an active public market
for the Warrants will develop. If an active public market does not develop, the
market price and liquidity of the Warrants may be adversely affected.
EXPIRATION OF WARRANTS
The Warrants will not become exercisable until July 16, 1998 and will
expire on July 15, 2005. A Warrantholder who fails to exercise his Warrants
prior to expiration will lose all rights to acquire Class A Common Stock. Prior
to the exercise of the Warrants, the Warrantholders will not have any of the
rights of the holders of Class A Common Stock.
In the event a bankruptcy or reorganization proceeding is commenced by or
against IWCL, a bankruptcy court may hold that unexercised Warrants are
executory contracts which may not, even if sufficient funds are available, be
entitled to receive any consideration or may receive an amount less than they
would be entitled to have received if they had been exercised prior to the
commencement of any such bankruptcy or reorganization proceeding.
RISKS ASSOCIATED WITH INCORPORATION UNDER BERMUDA LAW
IWCL is incorporated under the Companies Act 1981 of Bermuda, as amended
from time to time (the "Bermuda Act"). As a result, the rights of holders of
Class A Common Stock will be governed by Bermuda law and IWCL's Memorandum of
Association and Bye-Laws. The rights of shareholders under Bermuda law may
differ from the rights of shareholders of companies incorporated in other
jurisdictions. IWCL has been advised by its Bermuda counsel, Conyers, Dill &
Pearman, that uncertainty exists as to whether courts in Bermuda will enforce
judgments obtained in other jurisdictions (including the United States) against
IWCL or officers or directors of IWCL under the securities laws of those
jurisdictions or entertain actions in Bermuda against IWCL or its officers or
directors under the securities laws of other jurisdictions. There is no treaty
in effect between the United States and Bermuda providing for such enforcement,
and there are grounds upon which Bermuda courts may not enforce judgments of
United States courts. Certain remedies available under the United States federal
securities laws would not be allowed in Bermuda courts as contrary to that
jurisdiction's public policy.
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RISK OF LOSS OF MANAGEMENT RIGHTS UPON CHANGE IN CONTROL
Under the Iridium LLC Agreement, IWCL has certain special rights including
the right to designate two members of the Iridium Board, one of whom will act as
a Vice Chairman of Iridium, and the right to approve certain significant
transactions involving Iridium. See "Governance of IWCL and Relationship with
Iridium -- Participation in the Governance of Iridium." Iridium will have the
right to terminate these special rights following an IWCL change in control,
which includes circumstances in which an entity other than Iridium becomes the
beneficial owner of more than 30% of IWCL's outstanding common stock or in which
there is a change in a majority of the members of IWCL's Board of Directors (the
"IWCL Board") over a two year period that was not approved by a vote of 66 2/3%
of the members of IWCL Board then still in office who were directors at the
beginning of the two year period or whose election or nomination for election
was previously so approved. As a result of these provisions, as well as the
risks described below under "-- Risks Related to the Investment Company Act of
1940," holders of Class A Common Stock may effectively be precluded from
replacing a majority of the IWCL Board, which initially consisted of directors
selected by Iridium.
RISKS RELATED TO THE INVESTMENT COMPANY ACT OF 1940
Substantially all of the assets of IWCL consist of Class 1 Membership
Interests in Iridium. Under the United States Investment Company Act of 1940
(the "1940 Act"), IWCL could be deemed to be an "investment company" if the
Class 1 Membership Interests constitute "investment securities," as defined in
the 1940 Act. If IWCL were required to be registered as an investment company
under the 1940 Act, there would be a substantial risk that IWCL would be in
violation of the 1940 Act because non-United States companies cannot so register
without applying for and receiving an order from the Commission permitting such
registration. Reincorporation under the laws of a state in the United States
would impose substantial tax expense on IWCL. IWCL believes that it is not
required to register as an investment company under the 1940 Act. This decision
is based upon IWCL's belief that the Class 1 Membership Interests it holds are
not "securities" for purposes of the 1940 Act. This belief is based upon IWCL's
role in the affairs of Iridium. There is a risk that a court could reach a
contrary conclusion. This risk would be substantially increased if there were an
IWCL change in control that resulted in IWCL losing its special management
rights. See "Governance of IWCL and Relationship with Iridium."
RISKS RELATED TO PASSIVE FOREIGN INVESTMENT COMPANY RULES
Under the passive foreign investment company ("PFIC") rules, a foreign
corporation will generally be a PFIC in any taxable year of the foreign
corporation in which either at least 75 percent of its gross income is "passive
income" or at least 50 percent of its assets are "passive assets." The following
discussion assumes that IWCL should, under current law, be treated for these
purposes as owning its share of Iridium's gross assets and as earning directly
its share of Iridium gross income; IWCL would be a PFIC if it were not permitted
to be treated in this manner. The determination of whether the shares of Class A
Common Stock constitute shares of a PFIC must be made annually based upon the
composition of the income and assets of IWCL, Iridium and any corporation in
which IWCL or Iridium holds a 25-percent-or-more interest. IWCL does not
currently believe that its Class A Common Stock constitutes shares of a PFIC;
however, there can be no assurance that the shares of Class A Common Stock will
not be considered shares of a PFIC for any taxable year. Furthermore, if IWCL
were determined to be a PFIC in 1998, IWCL would be considered a PFIC for 1997
as well.
Generally, if a share of Class A Common Stock were treated as stock of a
PFIC for any taxable year during which a U.S. Holder held such share, the entire
gain recognized by such U.S. Holder on a sale or other disposition of the share
would be allocated ratably over the U.S. Holder's holding period for the share.
The amounts allocated to the taxable year of the sale or other disposition and
to any year before IWCL became a PFIC would be taxed as ordinary income. The
amount allocated to each other taxable year would be subject to tax at the
highest applicable ordinary income rate in effect for such taxable year, and an
interest charge would be imposed on the amount allocated to such taxable year.
All such tax and interest would be included in the U.S. Holder's U.S. federal
income tax liability for the taxable year in which the sale or other disposition
took
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place. Further, any distribution in respect of shares of Class A Common Stock in
excess of 125 percent of the average of the annual distributions on shares of
Class A Common Stock received by the U.S. Holder during the preceding three
years or the U.S. Holder's holding period, whichever is shorter, would be
subject to taxation as described above. A U.S. Holder could avoid these
consequences by electing to include on a current basis its share of IWCL's
ordinary earnings and net capital gain for each taxable year, or by electing to
mark to market its Class A Common Stock at the end of each taxable year. See
"Tax Considerations."
USE OF PROCEEDS
There will be no proceeds to IWCL or Iridium from the sale of the Warrants
or Warrant Shares by the Selling Holders. Upon the exercise of the Warrants,
IWCL will receive $20.90 for each Warrant Share issued. If all 1,560,000 Warrant
Shares are issued, IWCL would receive aggregate gross proceeds of approximately
$32,604,000. IWCL is required to use all proceeds received from each exercise of
Warrants to purchase from Iridium a number of Class 1 Membership Interests equal
to the number of Warrant Shares issued upon such exercise for a purchase price
equal to the exercise price of such Warrants. Iridium will use the proceeds from
such sales of Class 1 Membership Interests to IWCL for general corporate
purposes. However, there can be no assurance that IWCL or Iridium will receive
any proceeds from the exercise of the Warrants, as there can be no assurance
that any such Warrants will be exercised by the holders thereof.
RECENT DEVELOPMENTS
Iridium is developing and commercializing a global mobile wireless
communications system that will enable subscribers to send and receive telephone
calls virtually anywhere in the world -- all with one phone, one phone number
and one customer bill. The Iridium System will combine the convenience of a
terrestrial wireless system with the global reach of Iridium's satellite system.
The Iridium System encompasses four components: the "space segment," which will
include the low earth orbit satellite constellation and the related control
facilities; the ground stations or "gateways," which will link the satellites to
terrestrial communications systems; the Iridium subscriber equipment, which will
provide mobile access to the satellite system and terrestrial wireless systems;
and the terrestrial wireless interprotocol roaming infrastructure, which will
facilitate roaming among the Iridium satellite system and multiple terrestrial
wireless systems that use different wireless protocols. Iridium expects to
commence commercial operations in September 1998. The satellite constellation
was designed, assembled and delivered in orbit by Motorola, a leading
international provider of wireless communications systems, phones and pagers,
semiconductors and other electronic equipment. Motorola also is the principal
investor in Iridium. Other strategic investors include leading wireless
communications service providers from around the world, as well as experienced
satellite manufacturers and experienced launch providers.
PROGRESS TO DATE
Iridium, Motorola and the various gateway owners have made substantial
progress in the development and implementation of the Iridium System and related
activities and expect to commence commercial service on schedule in September
1998. As of May 17, 1998, Motorola had launched 72 Iridium satellites, 67 of
which are operational. The deployment of the Iridium satellite constellation is
now complete. Motorola has contracted with launch service providers to perform
maintenance launches, which are scheduled to begin in July 1998 and which will
increase the number of operational spare satellites.
Installation of the final satellite software is scheduled to be completed
prior to the September 23, 1998 commercial activation date. However, delays in
the development of this software have resulted in a shortened schedule for
subscriber trials in advance of commercial service. The delay in the
availability of the final constellation software has also impacted testing by
Motorola and Kyocera of the handsets, which could result in delays of handset
deliveries, particularly by Kyocera. Iridium believes that Motorola handsets
will be available in sufficient quantities to support the initial demand
following commercial activation, with Kyocera handsets available later in 1998.
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Motorola has completed construction of the terrestrial facilities necessary
to command the in-space movements of the Iridium System's satellites, including
the Satellite and Network Operations Center and the associated tracking,
telemetry and command facilities. Iridium expects to provide virtually global
service initially through up to 12 gateways and 15 business offices. The
construction of the 12 gateway facilities is complete and the telecommunications
equipment has been installed at 11 locations. Equipment for the final gateway in
China has been shipped and the installation of equipment has begun. Gateway
ground station and business office testing continues on the satellites, network,
telephony, paging and billing systems. Operations trials for voice services have
been completed successfully in 10 gateway territories. Business systems hardware
and software has been installed in 14 of the 15 business offices and nine
business offices have completed software acceptance testing.
Iridium has commenced the initial phase of the alpha trials, which focus on
business scenarios, including subscriber provisioning, SIM card validation and
call detail record processing. Constellation-based "network" alpha trials are
scheduled to begin on August 1, 1998. Beta tests, with subscriber participation,
are scheduled to commence in mid-September, and Iridium expects such tests to
continue through the commencement of commercial service.
Iridium has made significant progress to date in securing the worldwide
regulatory approvals necessary to build and operate the Iridium System. The
space segment of the Iridium System has been licensed by the United States, and
Iridium believes that international coordination has been completed successfully
between the Iridium System and all existing or planned systems that have been
identified through the coordination process. No other action is required from
any other country to license the space segment. With respect to gateways, eight
licenses and four experimental licenses to build and operate gateways have been
received. With respect to the subscriber units, each country in which Iridium
intends to operate must authorize use of Iridium subscriber equipment, including
allocation of subscriber link frequencies. The FCC licensed the operation of
Iridium handsets in the United States and, as of July 9, 1998, all or a
substantial portion of the authorizations necessary to operate the Iridium
System had been granted for an additional 88 markets. Iridium's gateway owners
are dedicating substantial effort to obtaining licensing for Iridium services in
the countries in their service territories with particular focus on obtaining
licenses by the commencement of commercial operations in those countries which
are expected to account for most of the demand for and usage of Iridium
services.
Iridium also has made significant progress in securing service providers
and roaming partners. As of June 30, 1998, Iridium or its gateway operators had
entered into over 200 service provider agreements and roaming agreements, which
collectively cover markets that form a significant portion of Iridium's business
plan.
GOVERNANCE OF IWCL AND RELATIONSHIP WITH IRIDIUM
The power and authority to conduct and manage the business of IWCL is
vested in the IWCL Board. The IWCL Board is comprised of seven members, a
majority of whom also are executive officers of Iridium or one of Iridium's
other members. At least two members of the IWCL Board will at all times be
persons not currently employed by or affiliated with Iridium or Motorola or any
other member of Iridium owning more than five percent of the outstanding Class 1
Membership Interests (the "Independent Company Directors").
PARTICIPATION IN THE GOVERNANCE OF IRIDIUM
Iridium is governed by the Iridium Board. The members of Iridium may manage
Iridium only through their election of Directors, and have no authority, in
their capacity as members, to act on behalf of Iridium. IWCL has waived the
limitation on liability provided by the Delaware Limited Liability Company Act.
The other members of Iridium have not waived this limitation and do not have
liability with respect to the debts or obligations of Iridium in excess of their
investment in their interests in Iridium. Notwithstanding IWCL's unlimited
liability with respect to Iridium, the holders of Class A Common Stock will not
have liability under Bermuda law with respect to their shares of Class A Common
Stock other than the possible loss in the value
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of those shares. See "Description of Iridium LLC Limited Liability Company
Agreement -- Limitations on Liability."
IWCL was formed to act as a special-purpose member of Iridium. The Iridium
LLC Agreement provides that IWCL will have certain special membership rights
during the period (the "IWCL Special Rights Period") commencing on the first
date that IWCL's Class 1 Membership Interests represent five percent or more of
the total outstanding Class 1 Membership Interests (which occurred upon the
consummation of IWCL's initial public offering in June 1997) and ending on the
date and delivery by Iridium of notice of the termination of IWCL's special
rights following (i) the sale or other disposition by IWCL of Class 1 Membership
Interests, if, as a result of such sale or other disposition, IWCL's Class 1
Membership Interests represent less than five percent of the total outstanding
Class 1 Membership Interests or (ii) following the occurrence of an IWCL Change
in Control. "IWCL Change of Control" means an event or series of events not
approved either by members of Iridium owning a majority of the Class 1
Membership Interests or by a majority of the Iridium Board, at a time when IWCL
owns Class 1 Membership Interests representing less than 50% of the outstanding
Class 1 Membership Interests, as a result of which (a) any "person" or "group"
(as such terms are defined in Section 12(d) and 14(d) of the Securities Exchange
Act of 1934 (the "Exchange Act")) other than Iridium becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 30% of IWCL's outstanding common stock (or equivalent
securities), (b) IWCL consolidates with or merges into another corporation or
conveys, transfers or leases all or substantially all of its assets to any
person, or any corporation consolidates with or merges into IWCL, in either
event pursuant to a transaction in which IWCL's outstanding common stock is
changed into or exchanged for cash, securities or other property, other than any
transaction (i) between IWCL and either Iridium, an affiliate of Iridium or a
wholly-owned subsidiary of Iridium, or (ii) after which the shareholders who
beneficially owned IWCL's common stock immediately before such transaction
beneficially own at least 50% of the outstanding voting stock of the surviving
entity and no person beneficially owns more than 30% of the outstanding voting
stock of the surviving entity, or (c) during any period of two consecutive
years, individuals who at the beginning of such period constituted the IWCL
Board (together with any new directors whose election by the IWCL Board or whose
nomination for election was approved by a vote of 66 2/3% of the members of the
IWCL Board then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the IWCL Board then
in office.
During the IWCL Special Rights Period (i) IWCL shall be entitled to
designate two Independent Company Directors as Directors of Iridium, (ii) one
Director of Iridium designated by IWCL shall be elected Vice Chairman of the
Iridium Board and (iii) one Director of Iridium designated by IWCL shall be a
member of each committee of the Iridium Board. Pursuant to the Iridium LLC
Agreement, IWCL will not be entitled to appoint more than two Directors to the
Iridium Board even if its ownership interests increases and it would otherwise
have been entitled to additional appointment rights. In addition to any other
voting rights which IWCL may have under the Iridium LLC Agreement, under the
Delaware Limited Liability Company Act or otherwise, during the IWCL Special
Rights Period, Iridium may not take any of the following actions, or permit any
of the following actions or events to occur, without the consent of one of the
Directors of Iridium designated by IWCL (the "IWCL Special Rights Consent"): (i)
make any material amendments or modifications to the Iridium LLC Agreement; (ii)
approve any business plan of Iridium that would result in any material change in
the purpose of Iridium as set forth in the Iridium LLC Agreement or otherwise
change Iridium's business so that it varies materially from the business purpose
contemplated by the Iridium LLC Agreement; (iii) acquire, other than in the
ordinary course of business Iridium, (a) a controlling interest or a majority of
the voting stock or equity of, any corporation or other entity that would be a
Significant Subsidiary (as such term is defined in the rules under the
Securities Act of 1933) or (b) any other assets if the aggregate fair market
value thereof is greater than $50 million; (iv) sell, lease (as lessor),
exchange or otherwise dispose of all or substantially all of the assets of
Iridium (other than to a person controlled by Iridium); (v) cause the
dissolution and/or liquidation of Iridium; or (vi) take certain bankruptcy or
insolvency related action with respect to Iridium.
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EXCHANGE RIGHTS OF IRIDIUM MEMBERS
Pursuant to an Interest Exchange Agreement (the "Interest Exchange
Agreement"), IWCL has agreed that after the Exchange Date (as defined below) and
subject to the restrictions on transfer in the Iridium LLC Agreement it will
permit holders of Class 1 Membership Interests of Iridium to exchange those
interests for shares of Class A Common Stock at a ratio of one share of Class A
Common Stock for each Class 1 Membership Interest (subject to anti-dilution
adjustments). See "Description of Iridium LLC Limited Liability Company
Agreement -- Issuance of Additional Interests; Restrictions on Transfer; Rights
of First Refusal" for a description of certain restrictions on transfer of the
Class 1 Membership Interests contained in the LLC Agreement. If a holder of
Class 1 Membership Interests (a "Class 1 Holder") desires to effect an exchange
of all or a portion of its Class 1 Membership Interests it must provide written
notice to IWCL and Iridium. No exchange shall take place unless approved by
Iridium, pursuant to authorization of Directors representing at least 66 2/3% of
the Iridium Board. The "Exchange Date" is the 90th day following the first
fiscal quarter in which Iridium has achieved positive earnings before interest,
taxes, depreciation and amortization. In order to exercise its rights under the
Interest Exchange Agreement, a holder of Class 1 Membership Interests and its
affiliates must be in full compliance with the Iridium LLC Agreement and any
Gateway Authorization Agreement to which it is a party. Iridium and IWCL have
the right to defer exchanges under the Interest Exchange Agreement if doing so
is in the best interests of Iridium or IWCL in light of possible or pending
financing transactions.
Under the Interest Exchange Agreement, IWCL has agreed that at any time
after the Exchange Date, IWCL will, at the request of Class 1 Holders and
holders of Class A Common Stock acquired under the Interest Exchange Agreement,
representing not less than 2% of the Fully Diluted Class A Shares (as defined
below), file with the Commission a registration statement and use its reasonable
best efforts to have that registration statement remain effective for a period
of up to six months, permitting such holders to sell shares of Class A Common
Stock in the manner specified by those holders. IWCL has certain rights to defer
the filing of a registration statement or to cause holders to stop distributing
securities under an effective registration statement. Registering holders are
required to pay their pro rata portion of the costs of registration. "Fully
Diluted Class A Shares" means all shares of Class A Common Stock actually
outstanding and the aggregate number of shares of Class A Common Stock issuable
under the Interest Exchange Agreement in exchange for Class 1 Interests at the
then applicable exchange rate, whether or not the Class 1 Membership Interests
are then exchangeable. At the request of Iridium, acting pursuant to
authorization of Directors representing at least 66 2/3% of the Iridium Board,
IWCL will take all reasonable steps to register pursuant to these provisions any
other shares of Class A Common Stock acquired under the Interest Exchange
Agreement specified by Iridium.
SHARE ISSUANCE AGREEMENT
IWCL and Iridium have entered into a Share Issuance Agreement governing
offerings of securities by IWCL. The Share Issuance Agreement provides that all
net proceeds from the sale of securities by IWCL will be invested by IWCL in
membership interests in Iridium. IWCL will not issue any securities except
pursuant to the Share Issuance Agreement (or pursuant to warrants issued in
accordance therewith), the Interest Exchange Agreement and the Global Ownership
Program described below. IWCL has agreed that if requested by Iridium it will
use its best efforts to sell securities of IWCL in compliance with all
applicable laws and will cease to do so, if requested by Iridium.
If IWCL sells Class A Common Stock pursuant to the Share Issuance
Agreement, Iridium will issue to IWCL, in exchange for the net proceeds of such
offering, one Class 1 Membership Interest for each share of Class A Common Stock
sold by IWCL (subject to anti-dilution adjustments). If Iridium directs IWCL to
issue securities other than Class A Common Stock, Iridium will issue to IWCL
interests in or securities of Iridium, in exchange for the net proceeds of such
offering, which replicate as nearly as possible the economic attributes of the
securities sold by IWCL.
Iridium has agreed to pay all expenses incurred by IWCL in connection with
any issuance of securities under the Share Issuance Agreement and to indemnify
IWCL and its officers, directors and employees against
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certain losses, claims, damages or liabilities. See "-- Management Services
Agreement." IWCL also has agreed to issue Class A Common Stock pursuant to the
Share Issuance Agreement in connection with Iridium's option plan for its
executive officers and managers (the "Iridium Option Plan). Iridium will issue
to IWCL one Class 1 Membership Interest for each share of Class A Common Stock
issued by IWCL in connection with the Iridium Option Plan (subject to
anti-dilution adjustments).
GLOBAL OWNERSHIP PROGRAM
IWCL and Iridium have commenced a Global Ownership Program (the "Global
Ownership Program") which is designed to offer an equity investment opportunity
in IWCL to certain governmental telecommunication administrations and related
entities (the "Telecom Administrations") as part of a comprehensive program to
enhance market access, improve the competitive standing of the Iridium System
and achieve appropriate regulatory approvals. Under the Global Ownership
Program, IWCL will sell shares of its Class B Common Stock to Telecom
Administrations designated from time to time by Iridium. IWCL has authorized the
issuance of up to 2,500,000 shares of Class B Common Stock under the Global
Ownership Program. As of June 30, 1998, 20,625 shares of Class B Common Stock
are outstanding. The Class B Common Stock is sold to Telecom Administrations at
a price per share equal to $13.33. At the time of issuance, the purchasers in
the Global Ownership Program will only be required to pay an amount equal to the
par value per share of the Class B Common Stock -- $.01 per share. The balance
of the purchase price will be payable through the withholding of dividends, if
any, which would otherwise be payable on the shares of Class B Common Stock. A
purchaser will have the right but not the obligation to pay the purchase price
in cash at any time, except as otherwise required under Bermuda law (e.g., on
winding up). The Class B Common Stock will be nontransferable until the later of
(i) the date that is one year after the date on which the full purchase price of
the shares has been paid (through withheld dividends or otherwise), and (ii) the
date on which certain specified regulatory approvals have been obtained to the
satisfaction of Iridium. The Class B Common Stock is also subject to
restrictions on transfer under applicable securities laws and the purchasers
will agree not to transfer the Class B Common Stock to a U.S. Person (as
defined). IWCL will have the right to repurchase the Class B Common Stock from
any holder at a price equal to the portion of the purchase price paid through
the date of repurchase, if the specified regulatory approvals applicable to that
holder have not been obtained by a specified date. IWCL and the holder have the
right to cause the Class B Common Stock to be exchanged for Class A Common Stock
at any time after the Transferability Date. The initial exchange rate will be
one share of Class A Common Stock for each share of Class B Common Stock
exchanged and such rate is subject to anti-dilution adjustments. At the time of
issuance of any shares of Class B Common Stock, IWCL will acquire from Iridium
Class 1 Membership Interests at a rate of one Class 1 Membership Interest for
each share of Class B Common Stock issued (subject to anti-dilution
adjustments). The purchase price for the Class 1 Membership Interests will be
identical to the proceeds to IWCL from the issuance of the Class B Common Stock,
with all but a nominal amount deferred and paid through an offset against
distributions that would otherwise be payable on the Class 1 Membership
Interests acquired. The Iridium LLC Agreement provides that if any portion of
the purchase price for an interest in Iridium is payable after the issuance of
the interest, the Iridium Board may restrict the rights otherwise incident to
the holding of such interest. IWCL may require Iridium to repurchase Class 1
Membership Interests in an amount corresponding to any Class B Common Stock
repurchased by IWCL. Iridium has agreed to pay or reimburse IWCL for the payment
of all expenses incurred by IWCL in connection with the Global Ownership Program
and to indemnify IWCL and its officers, directors and employees against certain
losses, claims, damages or liabilities.
MANAGEMENT SERVICES AGREEMENT
Iridium and IWCL have entered into a Management Services Agreement, which
was amended and restated in December 1997 in connection with an asset drop-down
transaction (the "Asset Drop-Down Transaction") in which Iridium transferred
substantially all of its assets and liabilities to its wholly-owned subsidiary,
Iridium Operating LLC ("Operating"). The amendment, among things, added
Operating as a party. Pursuant to the Management Services Agreement, Iridium has
agreed to supervise and manage the day-to-day operations of IWCL and IWCL has
agreed to allow Iridium to do so. Iridium will implement or cause to be
implemented all policy decisions relating to the operations of IWCL approved by
the IWCL Board
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and to conduct or cause to be conducted the ordinary and usual business and
affairs of IWCL. The IWCL Board has the right to give Iridium written
instructions, not inconsistent with the terms of the Management Services
Agreement, with respect to matters arising under the agreement and Iridium is
required to follow such instructions. Among other things, Iridium will be
responsible for administering the following functions of IWCL: treasury,
accounting, legal, tax, insurance, licenses and permits, investor relations,
public relations and securities law compliance and stock listing compliance.
Iridium has no authority under the Management Services Agreement to give any
notice or to approve any matter under the Iridium LLC Agreement on behalf of
IWCL, including, but not limited to IWCL's Special Rights Consent. Iridium also
will advance funds to IWCL, under certain conditions, to enable IWCL to pay any
income tax liability that cannot be satisfied by distributions to IWCL on its
Class 1 Membership Interests. Iridium will receive no fees or expense
reimbursement from IWCL for its services under the Management Services
Agreement. The Management Services Agreement is terminable as to the duties of
Iridium to IWCL only with the consent of both Iridium and IWCL, except that
Iridium has the right to terminate the agreement after the occurrence of an IWCL
Change of Control.
Pursuant to the Management Services Agreement, Iridium also has agreed to
supervise and manage the day-to-day operations of Operating and Operating has
agreed to allow Iridium to do so. Iridium will implement or cause to be
implemented all policy decisions relating to the operations of Operating
approved by the Operating Board of Directors (the "Operating Board"), and
Iridium will conduct or cause to be conducted the ordinary and usual business
and affairs of Operating. The Operating Board has the right to give Iridium
written instructions, not inconsistent with the terms of the Management Services
Agreement, with respect to matters arising under the Agreement and Iridium is
required to follow such instructions. Pursuant to the Limited Liability Company
Agreement of Operating (the "Operating LLC Agreement"), the officers and
directors of Operating are identical in all respects to the officers and
directors of Iridium. Pursuant to the Management Services Agreement, all actions
taken by an officer of Iridium with respect to the business of Operating are
deemed to be actions of an officer of Operating. Pursuant to the Management
Services Agreement, among other things, Iridium will be responsible for
administering the following functions of Operating: contract administration,
treasury, accounting, legal, tax, insurance, licenses and permits, investor
relations, public relations and securities law compliance and stock listing
compliance. Iridium has no authority under the Management Services Agreement to
take action on any matter reserved for action by Operating alone under the
Operating LLC Agreement.
Pursuant to the Management Services Agreement, Operating will provide
sufficient funds to Iridium to enable Iridium to manage the business and
operations of Operating and IWCL, including payment of Iridium's obligations to
its employees, consultants and directors, and payments for Iridium's office
space and equipment, sales, general operating and administrative expenses,
insurance and its obligations under certain contracts transferred to Operating
by Iridium in connection with the Asset Drop-Down Transaction, subject to the
limitation that Operating will not be obligated to reimburse Iridium for the
physical construction, operation, maintenance or insurance of any satellite
system other than the satellite system to be delivered under the Space System
Contract and any other satellite system to be owned by Operating. In addition,
Operating will reimburse Iridium for payment obligations under the Share
Issuance Agreement, the Global Ownership Program and the Interest Exchange
Agreement. Any funds received by Iridium in respect of a Reserve Capital Call
shall be treated as a capital contribution from Iridium to Operating. See
"Description of Iridium Limited Liability Company Agreement." The Management
Services Agreement is terminable as to the duties of Iridium to Operating only
with the consent of both Iridium and Operating.
DESCRIPTION OF IRIDIUM LIMITED LIABILITY COMPANY AGREEMENT
The following is a summary of certain provisions of the Limited Liability
Company Agreement of Iridium, dated as of July 29, 1996, as amended (the
"Iridium LLC Agreement"). This summary does not purport to be a complete
description of the Iridium LLC Agreement, and is qualified in its entirety by
reference to the Iridium LLC Agreement which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part and is available
upon request to Iridium at 1575 Eye Street N.W., Washington, D.C. 20005,
Attention: Secretary.
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ESTABLISHMENT; PURPOSE
Iridium was formed as a limited liability company pursuant to the
provisions of the Delaware Limited Liability Company Act (the "Delaware Act") on
July 16, 1996. Iridium, Inc., a Delaware corporation and the predecessor of
Iridium, was formed on June 14, 1991. On July 29, 1996, Iridium, Inc. was merged
with and into Iridium, with Iridium as the surviving entity. Iridium's purpose
is to acquire, own and manage the Iridium System, which it does through its
wholly-owned subsidiary, Iridium Operating LLC to acquire, own and manage any
successor or replacement system, to manage access to any use of such systems
(including use by Members, gateways, service providers and others) and to engage
in activities necessary, appropriate or incidental to the foregoing.
THE IRIDIUM BOARD; COMMITTEE STRUCTURE AND MANAGEMENT
Iridium is governed by the Iridium Board. The Members may manage Iridium
only through their designated directors and have no authority, in their capacity
as members, to act on behalf of Iridium. The day-to-day activities of Iridium
are managed by its officers, subject to the supervision of the Iridium Board.
The officers are nominated and elected by the Iridium Board. The Iridium LLC
Agreement requires that the Chairman of the Iridium Board be a director and that
the Vice Chairman and Chief Executive Officer be a director.
Each Member, other than IWCL, is entitled to appoint one director to the
Iridium Board for each 5,250,000 Class 1 Membership Interests owned. Class 1
Members, other than IWCL, may aggregate their Class 1 Membership Interests and
appoint one director for each 5,250,000 Class 1 Membership Interests owned in
the aggregate.
The Iridium Board may act through one or more committees established by the
Iridium LLC Agreement or by resolution, with each committee having the powers of
the Iridium Board to the extent provided in the Iridium LLC Agreement or the
relevant resolution. The Iridium LLC Agreement establishes the following four
committees, which are the only existing committees of the Iridium Board:
Banking and Financing Committee. This committee is authorized generally to
supervise matters relating to the financing of Iridium. The committee must
consist of not fewer than eight directors.
Related Party Contract Committee. This committee consists of all directors
of Iridium not designated by Motorola, Lockheed Martin Corporation and Raytheon
Company, which are the contracting and principal subcontracting Members,
respectively, under the three principal contracts for the development and
operation of the technical components of the Iridium System. The committee has
the authority to review, monitor and enforce Iridium's rights with respect to
such contracts. Directors appointed by Lockheed Martin and Raytheon will be
appointed to the committee when they cease to be subcontractors under the
contracts. Directors appointed by Motorola will be appointed to the committee
when Motorola ceases to be a party to the contracts.
Compensation Committee. This committee must consist of not fewer than
three directors, appointed by the Iridium Board, who are not officers or
employees of Iridium. The committee has the authority to review, and provide
recommendations relating to the compensation and benefits of managerial
employees and has authority to administer the Iridium Option Plan (unless the
Iridium Board appoints a substitute committee).
Audit Committee. This committee is required to review, and make
recommendations regarding, Iridium's internal accounting and financial controls,
including the preparation of financial statements and the engagement of
independent public accountants. The committee must consist of two or more
directors, appointed by the Iridium Board, who are not officers or employees of
Iridium. See "-- Classes of Membership Interests -- Series B and Series C Class
2 Interests" for certain special rights with respect to the Iridium Board and
its committees that have been granted to Motorola in connection with its
guarantee of the borrowings under the Guaranteed Bank Facility.
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SPECIAL RIGHTS OF IWCL IN THE GOVERNANCE OF IRIDIUM
The Iridium LLC Agreement provides that IWCL will have certain special
membership rights during the Special Rights Period (as defined). See "Governance
of IWCL and Relationship with Iridium." During the IWCL Special Rights Period
(i) IWCL shall be entitled to designate two Independent Company Directors as
directors of Iridium, (ii) one director of Iridium designated by IWCL shall be
elected Vice Chairman of the Iridium Board and (iii) one director of Iridium
designated by IWCL shall be a member of each committee of the Iridium Board.
Pursuant to the Iridium LLC Agreement, IWCL will not be entitled to appoint more
than two directors to the Iridium Board even if its ownership interest increases
and it would otherwise have been entitled to additional appointment rights. In
addition to any other voting rights which IWCL may have under the Iridium LLC
Agreement, under the Delaware Act or otherwise, during the IWCL Special Rights
Period, Iridium may not take any of the following actions, or permit any of the
following actions or events to occur, without the consent of one of the
directors of Iridium designated by IWCL: (i) make any material amendments or
modifications to the Iridium LLC Agreement; (ii) approve any business plan of
Iridium that would result in any material change in the purpose of Iridium as
set forth in the Iridium LLC Agreement or otherwise change Iridium's business so
that it varies materially from the business purpose contemplated by the Iridium
LLC Agreement; (iii) acquire, other than in the ordinary course of business of
Iridium, (a) a controlling interest or a majority of the voting stock or equity
of, any corporation or other entity that would be a Significant Subsidiary (as
such term is defined in the rules under the Securities Act) or (b) any other
assets if the aggregate fair market value thereof is greater than $50 million;
(iv) sell, lease (as lessor), exchange or otherwise dispose of all or
substantially all of the assets of Iridium (other than to a person controlled by
Iridium); (v) cause the dissolution and/or liquidation of Iridium; or (vi) take
certain bankruptcy or insolvency related actions with respect to Iridium.
CLASSES OF MEMBERSHIP INTERESTS
The Members' interests in Iridium are divided into two classes: "Class 1
Membership Interests" which represent the common equity of Iridium and "Class 2
Interests" which represent the preferred equity of Iridium. The Iridium LLC
Agreement authorizes Iridium to issue 225,000,000 Class 1 Membership Interests,
50,000 Series M Class 2 Interests and 300,000 additional Class 2 Interests. At
June 30, 1998 there were 141,313,149 Class 1 Membership Interests issued and
outstanding. There are three Series of Class 2 Interests outstanding.
Class 1 Membership Interests. Subject to the rights of holders of any
Series of Class 2 Interests, all voting rights of the Members are vested in the
Class 1 Membership Interests.
Series A Class 2 Interests. The Series A Class 2 Interests are convertible
preferred interests that are entitled to dividends at a rate of 14 1/2% per
annum from the Original Issue Date to, but not including, the relevant Series A
Redemption Date. The dividends on the Series A Class 2 Interests are payable,
either in kind or in cash, at the option of Iridium, through February 28, 2001.
Commencing March 1, 2001, dividends on the Series A Class 2 Interests are
payable only in cash. Dividends on the Series A Class 2 Interests accrue whether
or not they have been declared and whether or not there are profits or other
funds of Iridium legally available for the payment of such dividends. No
dividend may be declared and paid on the Class 1 Membership Interests unless all
accrued dividends on the Series A Class 2 Interests have been paid in full. The
Series A Class 2 Interests are convertible to Class 1 Membership Interests at
any time, at the option of the holder, at the Series A Conversion Price then in
effect. The Series A Conversion Price is adjusted from time to time to reflect,
among other things, distributions or reclassification of the Class 1 Membership
Interests. At June 30, 1998, each Series A Class 2 Interest was convertible into
18.51 Class 1 Membership Interests. The Series A Class 2 Interests are
redeemable, at the option of Iridium, at any time after March 1, 2001 at
redemption prices that adjust downward each March 1 for four years at a
proportionate rate from 107.5% of the Series A Liquidation Preference ($1,000
plus accrued and unpaid dividends) on March 1, 2001 to 100% of the Series A
Liquidation Preference on March 1, 2005. After March 1, 2005 the Series A Class
2 Interests are redeemable at 100% of the Series A Liquidation Preference. At
June 30, 1998 there were 42,853 Series A Class 2 Interests outstanding.
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Series B and Series C Class 2 Interests. In connection with Motorola's
guarantee of a certain credit facility available to Operating (the "Guaranteed
Bank Facility"), Iridium issued to Motorola one Series B Class 2 Interest and 75
Series C Class 2 Interests. These are the only issued and outstanding Series B
and Series C Class 2 Interests. The Series B Class 2 Interests and Series C
Class 2 Interests do not pay any dividends. The Series B Class 2 Interest
entitles Motorola to one seat on the Iridium Board in addition to Directors it
may otherwise appoint as the owner of Class 1 Membership Interests and Series M
Class 2 Interests. The Series C Class 2 Interests entitle Motorola to appoint a
majority of the Board of Directors (and of all committees other than the Related
Party Contract Committee) in the event of certain events of default relating to
the Guaranteed Bank Facility. The Series B and Series C Class 2 Interests are
redeemable by Iridium at $.01 per Interest upon the later of (i) the termination
or expiration of the Guarantee Agreement of Motorola and (ii) the reimbursement
of any payments made by Motorola pursuant to the Guarantee Agreement.
Series M Class 2 Interests. Motorola owns a warrant (the "Series M
Warrant") to purchase Series M Class 2 Interests in an amount that would be
convertible into 2.5% of the outstanding Class 1 Membership Interests at the
time of exercise of the Series M Warrant, calculated on a fully diluted basis,
at a price of $1,000 per Series M Class 2 Interest, subject to anti-dilution
adjustments. No Series M Class 2 Interests are currently outstanding. Dividends
on each Series M Class 2 Interest will accrue at the rate of 8.00% per annum of
the sum of the Liquidation Value thereof plus all accumulated and unpaid
dividends thereon, from and including the date of issuance of such Interest to
and including the date on which the Liquidation Value of such Interests is paid
or the date on which such Interest is converted into Class 1 Membership
Interests. Dividends accrue whether or not they have been declared and whether
or not there are profits or other funds of Iridium legally available for the
payment of dividends. Additionally, when dividends are declared or paid on the
Class 1 Membership Interests, the holders of Series M Class 2 Interests will be
entitled to participate in such dividends ratably. The Series M Class 2
Interests are convertible into Class 1 Membership Interests at any time at the
option of the holder. The number of Class 1 Membership Interests into which the
Series M Class 2 Interests are convertible is computed by multiplying the number
of Series M Class 2 Interests to be converted by $1,000 and dividing the result
by the Series M Conversion Price then in effect. The initial Series M Conversion
Price is $13.33, but is subject to anti-dilution adjustments from time to time,
and at the current Series M Conversion Price each Series M Class 2 Interest
would be convertible into 75 Class 1 Membership Interests. Upon the occurrence
of an Event of Noncompliance, defined as a failure by Iridium to pay when due
the full amount of dividends due to holders of Series M Class 2 Interests or the
occurrence of certain enumerated acts by Iridium related to bankruptcy or
insolvency, the holders can demand the immediate redemption of all interests at
Liquidation Value plus accumulated and unpaid interest and the number of seats
on the Iridium Board will be increased by one at the request of the holders of a
majority of the Series M Class 2 Interests then outstanding and the holders of
Series M Class 2 Interests will be entitled to elect an individual to fill such
newly created Director position. There are no Series M Class 2 Interests issued
or outstanding.
MERGER
The Iridium LLC Agreement provides that Iridium may merge or consolidate
with one or more limited liability companies, corporations, or similar entities
provided that the transaction is approved by the Iridium Board and Class 1
Members holding not less than 66 2/3% of the outstanding Class 1 Membership
Interests. In the event of a merger, Members who hold Interests and do not vote
in favor of, or consent in writing to, the merger are entitled to appraisal
rights subject to certain exceptions.
DIVIDEND AND LIQUIDATION RIGHTS
Class 1 Members are entitled to receive dividends, as and when declared by
the Iridium Board, in its discretion. Class 2 Members are entitled to receive
dividends, if any, in accordance with the terms of the relevant Series of Class
2 Interests, as and when declared by the Iridium Board. The Class 2 Interests
rank senior to the Class 1 Membership Interests as to dividends and
distributions upon the liquidation, dissolution and winding-up of Iridium.
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The Iridium LLC Agreement requires the Iridium Board, to the extent of
legally available funds, to declare and pay a pro rata dividend in an amount
which, when added to any prior dividends paid with respect to the profits of the
same year, is sufficient to assure that each non-U.S. Class 1 Member receives an
amount at least equal to the amount of such Member's U.S. federal, state and
local income tax liability resulting from allocations of Iridium's income to
such Member.
ISSUANCE OF ADDITIONAL INTERESTS; RESTRICTIONS ON TRANSFER; RIGHTS OF FIRST
REFUSAL
With the consent of Class 1 Members holding a majority of the Class 1
Membership Interests, the Iridium Board may, at any time, cause Iridium to admit
additional Members upon conditions determined by the Iridium Board. Subject to
certain exceptions, if Iridium authorizes the issuance or sale of any Class 1
Membership Interests, Iridium must first offer to sell to each Class 1 Member a
portion of such Class 1 Membership Interests that would prevent any dilution in
such Class 1 Member's holdings of Class 1 Membership Interests, provided that
upon exercise of such purchase rights, the number of Class 1 Membership
Interests of any holder of Class 1 Membership Interests may not exceed 45% of
the Class 1 Membership Interests deemed outstanding on such date.
The Iridium LLC Agreement contains significant restrictions on the ability
of a Member to transfer any Class 1 Membership Interests or Class 2 Interests in
Iridium. Prior to making any transfer of Class 1 Membership Interests or Class 2
Interests in Iridium (other than certain transfers to affiliates), the person
seeking to make such transfer must notify Iridium and all holders of Class 1 and
Class 2 Interests of the terms and conditions of the proposed transfer. In order
for the proposed transfer to be permitted, a number of conditions must be
satisfied, including but not limited to the conditions that (i) a majority of
the Iridium Board approve the transfer and (ii) the transfer not result in any
person (other then IWCL) beneficially owning, or having the right to
beneficially own, more than 45% of the outstanding Class 1 Membership Interests.
In addition, Iridium may elect to purchase all (but not less than all) of the
Class 1 and Class 2 Interests to be transferred upon the terms and conditions of
the proposed transfer and, if Iridium elects not to make such purchase, any of
the holders of Class 1 and Class 2 Interests may purchase all (but not less than
all) of the Class 1 and Class 2 Interests to be transferred on a pro rata basis.
The Iridium LLC Agreement provides that as long as Motorola is the
principal supplier to Iridium and/ or Motorola or one of its subsidiaries is the
holder for the benefit of Iridium of any FCC license to construct, operate or
launch the Iridium System, Motorola will not transfer (other than certain exempt
transfers) any of its Class 1 Membership Interests issued in respect of common
stock of Iridium, Inc. purchased under a 1993 stock purchase agreement. This
restriction does not apply to any Class 1 Membership Interests purchased
pursuant to the Reserve Capital Call. In addition, in the event that Motorola no
longer is the principal supplier to Iridium and neither Motorola nor one of its
subsidiaries is the holder for the benefit of Iridium of any FCC license to
construct, operate or launch the Iridium System, and Motorola desires to
transfer any Class 1 Membership Interests prior to July 19, 2003, Motorola is
required to offer all other holders of Class 1 Membership Interests the
opportunity to participate ratably in such sale at the same price and on the
same terms as Motorola.
CAPITAL CONTRIBUTIONS; RESERVE CAPITAL CALL
Contributions to the capital of Iridium, with respect to each Member who
purchases an Interest, are made in an amount equal to the net purchase price to
Iridium for such Interest (such amount being such Member's capital contribution
to Iridium). The Iridium LLC Agreement requires that the Class 1 Members cause
their Class 1 Membership Interests in the aggregate to be entitled to at least
21% of each item of the capital, income, gain, loss, deduction or credit
distributions of Iridium at all times. Members generally are not required to
make additional capital contributions to Iridium other than in connection with
the Reserve Capital Call.
Seventeen Members of Iridium have made varying Reserve Capital Call
commitments to purchase an aggregate of 18,206,550 additional Class 1 Membership
Interests at a purchase price of $13.33 per Class 1 Membership Interest, upon a
date thirty days after the date of the receipt of a funding notice from the
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treasurer of Iridium (the "Reserve Capital Call"). Subject to restrictions
imposed pursuant to a December 1997 secured bank facility (the "Secured Bank
Facility"), the treasurer of Iridium is required to provide such a notice on the
date on which the treasurer has first determined that Iridium will not have
available to it sufficient funds to meet its contractual obligations and other
funding requirements on the forty-fifth day thereafter absent exercise of the
Reserve Capital Call. The Iridium LLC Agreement provides Iridium with several
non-exclusive remedies in the event a Member fails to pay any of the amounts
required by a Reserve Capital Call, including redeeming the defaulting Member's
Class 1 Membership Interests for an amount equal to $13.33 per Class 1
Membership Interest. Pursuant to the Secured Bank Facility, Iridium pledged its
rights with respect to the Reserve Capital Call and will be restricted from
exercising the Reserve Capital Call.
LIMITATIONS ON LIABILITY
In accordance with the Delaware Act, Members are generally not liable for
the debts, obligations or liabilities of Iridium. Pursuant to the Iridium LLC
Agreement, and in accordance with the Delaware Act, IWCL has waived the
limitation on liability contained in the Delaware Act, provided that IWCL has no
liability to any person, including Iridium, for any debt, obligation or
liability of Iridium until all of the assets and capital of Iridium have first
been exhausted in satisfaction thereof. No Member or director has any liability
for any debts, obligations or liabilities, whether arising in contract, tort or
otherwise, of any other Member or director.
Members, directors and officers of Iridium have only the duties set forth
in the Iridium LLC Agreement. The Iridium LLC Agreement provides that the duties
and obligations owed to Iridium and to the Members by the directors and officers
of Iridium, and any duties and obligations that may be owed by any Member or by
any affiliates of any Member, are the same as the respective duties and
obligations owed to a corporation organized under the Delaware General
Corporation Law by its directors and officers and any such duties that may be
owed to a corporation by any similarly situated stockholder or affiliate
thereof, respectively. The Iridium LLC Agreement also provides that, to the
fullest extent permitted by the Delaware General Corporation Law, a director
shall not be liable to Iridium or the Members for monetary damages for a breach
of fiduciary duty as a director. Such limitation does not, however, limit
liability of directors (i) for any breach of the director's duty of loyalty to
Iridium, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for acts relating to
certain unlawful dividend payments or stock redemptions or repurchases and (iv)
for any transaction from which the director derived an improper personal
benefit.
The Iridium LLC Agreement provides that Iridium will indemnify the
directors, officers and other persons serving in similar capacities at the
request of Iridium for another entity against all expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with any action, suit, or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of Iridium) by reason of the fact that such person was
serving in such capacity, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of Iridium, and, with respect to any criminal action or proceedings,
had no reasonable cause to believe such person's conduct was unlawful. The
Iridium LLC Agreement further provides that Iridium will indemnify the
directors, officers and other persons serving in similar capacities at the
request of Iridium for another entity against expenses (including attorney's
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit by or in the right of Iridium by
reason of the fact that such person was serving in such capacity, provided that
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of Iridium, and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to Iridium unless
awarded pursuant to a court order.
ALLOCATIONS OF PROFITS AND LOSSES; TAX MATTERS PARTNER
The profits and losses of Iridium generally are, subject to certain tax
considerations, the Delaware Act and the rights of the Class 2 Members, to be
allocated entirely to the Class 1 Members pro rata in proportion
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to their percentage of ownership of all outstanding Class 1 Membership
Interests. The Iridium LLC Agreement provides:
Profits. Items of income and gain shall be allocated (i) first to the
Class 2 Members in amounts that match the distributions made to such Members in
accordance with the terms of the Class 2 Interest and (ii) second to the Class 1
Members pro rata in proportion to their percentage of ownership of all Class 1
Membership Interests.
Losses. All items of loss, deduction, expense or credit shall be allocated
to the Class 1 Members pro rata in proportion to their percentage ownership of
all Class 1 Membership Interests.
Motorola is the Tax Matters Partner of Iridium. The Tax Matters Partner
acts as the liaison between Iridium and the Members, on the one hand, and the
United States Internal Revenue Service, on the other, in connection with all
administrative and judicial proceedings involving tax controversies regarding
Iridium.
AMENDMENTS TO THE IRIDIUM LLC AGREEMENT; MEETINGS
The Iridium LLC Agreement may not be changed or amended, nor may the
observance of any provision of the Iridium LLC Agreement be waived, without the
consent of Class 1 Members holding not less than 66 2/3% of the outstanding
Class 1 Membership Interests. This general approval requirement for amendments
to the Iridium LLC Agreement is subject to certain exceptions including, among
others:
Iridium Board. The provision of the Iridium LLC Agreement granting to the
Members the right to elect members of the Iridium Board may not be amended
without the consent of Class 1 Members holding not less than 95% of the
outstanding Class 1 Membership Interests.
Related Party Contract Committee. The provisions of the Iridium LLC
Agreement relating to the Related Party Contract Committee (which reviews and
monitors the principal contracts between Iridium and certain of its Members) may
not be amended without the consent of (i) 66 2/3% of the directors serving on
the Related Party Contracts Committee and (ii) 66 2/3% of the non-interested
Members.
Capital Contributions. Certain provisions of the Iridium LLC Agreement
relating to the circumstances in which a Reserve Capital Call is automatically
triggered may only be amended by the affirmative vote of not less than 85% of
the entire Iridium Board, and other provisions of the Iridium LLC Agreement
covering Members' capital contributions may be amended only with the consent of
Iridium and each Member whose rights and obligations thereunder are directly
affected by such amendment.
Appraisal Rights. The provisions relating to the Member's appraisal rights
may not be amended without the unanimous consent of the Members.
An annual meeting for the Class 1 Members shall be held each year within
120 days after the close of the immediately preceding fiscal year of Iridium. At
such annual meeting each Member shall provide notice to Iridium and the other
Members of the names of any director or directors such Member is entitled to
appoint. Special meetings of Members may be called for any purpose stated in the
notice of such special meeting at any time by the Iridium Board, the chairman of
the Board of Directors, the vice chairman and chief executive officer, the
president or the holders of not less than a majority of the Class 1 Membership
Interests outstanding. Notice of any meeting shall be given to all Members
entitled to vote at such meeting and to each director not less than 10 nor more
than 60 days prior to the date of such meeting. The holders of a majority of the
Class 1 and Class 2 Interests entitled to vote on a particular item of business,
present in person or by proxy, shall constitute a quorum for purposes of the
transaction of such item of business. Each Member entitled to vote at a meeting
of Members or to express consent or dissent to any action in writing without a
meeting may authorize any person to act for it in such matters by proxy.
Unless otherwise provided by law, any action to be taken by the Members may
be taken without a meeting, without prior notice and without a vote, if consents
in writing, setting forth the action so taken, shall be signed by the Members
having not less than the minimum Interests that would be necessary to authorize
or take such action at a meeting at which all Members entitled to vote thereon
were present and voted and are delivered to Iridium.
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GATEWAY RIGHTS AND SPECTRUM ACCESS OBLIGATIONS
The exclusive right to own and operate the various gateway service
territories is assigned to Members pursuant to the Iridium LLC Agreement. As a
condition of the exclusive right to operate in their assigned territories
(including the exclusive right to act as, or select, the service provider for
such territory), each Member that has been assigned a service territory has
agreed (i) to use its best efforts to obtain the necessary authorizations to
provide gateway services in each of the jurisdictions included in its service
territory (the "Gateway Authorizations") and to construct and operate such
gateway on a timely basis consistent with the terms of such Member's Gateway
Authorization Agreement, (ii) to require any service provider within its service
territory to use its best efforts to obtain the necessary authorizations to act
as a service provider and (iii) use its best efforts to cause the relevant
authorities in their respective territories to ratify and adopt the spectrum
allocation and service definitions for low earth orbit systems adopted by the
World Administrative Radio Conference. The gateway and service provider rights
of Class 1 Members may be terminated without compensation if such a member fails
to (i) comply with its obligations regarding Gateway construction and spectrum
allocation or (ii) obtain the necessary Gateway Authorizations within the time
periods set forth in the Iridium LLC Agreement. In the event that such rights
are terminated in the member's principal country of operation as a result of the
Member's failure to obtain the relevant Gateway Authorizations, and the Member
used its best efforts to obtain the Gateway Authorizations, such member is
entitled to compensation for the loss of the gateway service territory on the
terms specified in the Iridium LLC Agreement.
DISSOLUTION; WINDING-UP
The Iridium LLC Agreement provides that Iridium shall be dissolved and its
affairs wound-up upon: (i) the adoption of a resolution by not less than 66 2/3%
of the entire Iridium Board that Iridium be dissolved and the approval of such
resolution by the affirmative vote of Class 1 Members holding not less than
66 2/3% of the Class 1 Membership Interests present at a meeting duly called for
such purpose; (ii) the death, retirement, resignation, bankruptcy or similar
occurrence which terminates the continued membership of any Member unless the
remaining Members exercise their right under the Iridium LLC Agreement to
continue the business of Iridium (such right to be exercised by the affirmative
consent of both (a) a majority of the Iridium Board and (b) a "majority in
interest" (as defined in IRS Revenue Procedure 94-46) of the remaining Members);
and (iii) December 31, 2095, subject to amendment by an affirmative vote of
Class 1 Members holding not less than 66 2/3% of the Class 1 Membership
Interests.
19
<PAGE> 24
SELLING HOLDERS
The Warrants were originally issued and sold by Iridium, as part of the
Units, in July 1997 to Chase Securities, Inc. and Merrill Lynch & Co. (the
"Initial Purchasers") in a private placement, and were resold by the Initial
Purchasers in transactions exempt from the registration requirements of the
Securities Act in the United States to qualified institutional buyers (as
defined in Rule 144A under the Securities Act) and outside the United States to
non-U.S. persons in offshore transactions in reliance on Regulation S under the
Securities Act. The Selling Holders may from time to time offer and sell the
Securities set forth below pursuant to this Prospectus.
The following table sets forth as of July 10, 1998, the respective number
of Warrants beneficially owned by each Selling Holder and the number of Warrant
Shares issuable upon the conversion of such Selling Holder's Warrants. The term
"Selling Holders" includes the holders listed below and the beneficial owners of
the Securities and their transferees, pledgees, donees or other successors.
Except as set forth below, other than as a result of the ownership of the
Securities, none of the Selling Holders has, or within the past three years has
had, any position, office or material relationship with IWCL or any of its
predecessors or affiliates. The table has been prepared based upon information
furnished to IWCL by or on behalf of the Selling Holders.
<TABLE>
<CAPTION>
SECURITIES OWNED PRIOR
TO THE OFFERING
-------------------------------
SELLING HOLDERS WARRANTS CLASS A COMMON STOCK
--------------- -------- --------------------
<S> <C> <C>
Chase Securities Inc. .................................. 28,383 147,691(1)
Continental Casualty Company............................ 19,000 98,800
High Yield Portfolio.................................... 17,150 89,180
United High Income Fund, Inc. .......................... 6,500 33,800
ING Barings (US) Capital Corp. ......................... 5,000 26,000
Northstar High Total Return Fund........................ 4,475 23,270
The Income Fund of America, Inc. ....................... 4,000 20,800
Putnam High Yield Managed Trust......................... 3,250 16,900
LB Series Fund, Inc., High Yield Portfolio.............. 3,000 15,600
United High Income Fund II, Inc. ....................... 3,000 15,600
Lutheran Brotherhood High Yield Fund.................... 2,000 10,400
MAS High Yield Portfolio................................ 1,920 9,984
National Financial Services Corp. ...................... 1,565 8,138
American Variable Asset Allocation Fund................. 1,500 7,800
FC CBO LTD.............................................. 1,500 7,800
ML CBO IV (Cayman) Ltd. ................................ 1,500 7,800
PamCo Cayman Ltd. ...................................... 1,500 7,800
Trustees of the University of Pennsylvania.............. 1,110 5,772
Dreyfus High Yield Securities........................... 1,000 5,200
Fortis Series Fund, Inc. -- Diversified Income Series... 1,000 5,200
Ranger Asset Management LP.............................. 1,000 5,200
McCann, Anthony D. and McCann, Mary C. JT/WROS.......... 950 4,940
Morgan Stanley High Yield Portfolio..................... 840 4,368
Caywood Capital Fund L.P. .............................. 700 3,640
Morgan Stanley Institutional Fund High Yield
Portfolio............................................. 605 3,146
Enterprise High Yield Bond Fund......................... 550 2,860
Northstar Balance Sheet Opportunities Fund.............. 500 2,600
Putnam High Yield Fixed Income Fund, LLC................ 500 2,600
TMK/United Funds, Inc. -- High Income Portfolio......... 500 2,600
Enterprise Accumulation Trust High Yield................ 450 2,340
Hamill, Robert B. ...................................... 400 3,080(2)
Horizon Strategic Income................................ 350 1,820
Forethought Life Insurance Company...................... 320 1,664
</TABLE>
20
<PAGE> 25
<TABLE>
<CAPTION>
SECURITIES OWNED PRIOR
TO THE OFFERING
-------------------------------
SELLING HOLDERS WARRANTS CLASS A COMMON STOCK
--------------- -------- --------------------
<S> <C> <C>
CentralSecured Investments, N.V. ....................... 310 1,612
Martindale, Wight Jr. .................................. 260 1,352
American Variable Bond Fund............................. 250 1,300
Anchor Pathway Fund Asset Allocation Series............. 250 1,300
Columbia/HCA............................................ 250 1,300
DeMoss Foundation....................................... 250 1,300
SunTrust Bank, South Florida, N.A., Trustee............. 250 1,300
Manufacturer's Life High Yield.......................... 240 1,248
Golden Rule Insurance High Yield........................ 200 1,040
SICAV U.S. High Yield Bond Fund......................... 185 962
IL Annuity & Insurance.................................. 150 780
William M. Keck Jr. Foundation.......................... 150 780
Chase Manhattan Private Bank (Switzerland).............. 117 608
MAS Multi-Asset Class Portfolio......................... 70 364
Calka, Joanna E. ....................................... 50 260
Panama, Solynieve....................................... 50 260
Wilson, John Mark....................................... 50 260
Northstar High Total Return II Fund..................... 25 130
Hess, Wendy E. and Hess, David A. JTWROS................ 20 104
Grambor, Diane M. ...................................... 10 52
Henley, Paul and Kimberley.............................. 10 52
</TABLE>
-------------------------
(1) Chase Securities Inc. ("CSI") is an affiliate of The Chase
Manhattan Bank, which is the Administrative Agent and a lender under
certain guaranteed bank financing of Iridium and the Administrative
Agent and a lender under certain secured bank financing of Iridium.
CSI has acted as Global Financial Advisor and a Global Arranger of
such guaranteed bank financing and secured bank financing.
(2) Includes 1,000 shares of Class A Common Stock beneficially owned
by such holder, which are not being offered hereby.
The information concerning the Selling Holders may change from time to
time. If required, such changes will be set forth in supplements to the
Prospectus. The per share conversion price and, therefore, the number of shares
of Class A Common Stock issuable upon conversion of the Warrants, are subject to
adjustment under certain circumstances. Accordingly, the number of shares of
Class A Common Stock issuable upon conversion of Warrants may increase or
decrease. Because the Selling Holders may offer all or some portion of the
Securities pursuant to this Prospectus, and because there are currently no
agreements, arrangements or understandings with respect to the sale of
Securities, no estimate can be given as to the amount of Securities that will be
held by the Selling Holders upon termination of this offering.
PLAN OF DISTRIBUTION
The Warrants offered hereby may be sold from time to time to purchasers
directly by the Selling Holders. Alternatively, the Selling Holders may from
time to time offer the Warrants to or through underwriters, broker-dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of
Warrants, for whom they may act as agent. The Selling Holders and any
underwriters, broker-dealers or agents that participate in the distribution of
the Warrants may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of Warrants by them and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker-dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
21
<PAGE> 26
The Warrants offered hereby may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the Selling Holders or by agreement between the
Selling Holders and underwriters and dealers who may receive fees or commissions
in connection therewith. The sale of the Warrants may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the Warrants may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii)
in transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing of options. At the time a particular offering
of Warrants is made, a Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount and type of Warrants being offered and
the terms of the offering, including the name or names of any underwriters,
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
The outstanding Class A Common Stock is listed on the NNM, and IWCL has
applied for listing the Warrant Shares on the NNM. IWCL does not intend to apply
for listing of the Warrants on any securities exchange or authorization for
quotation of the Warrants on any quotation system. There is no assurance as to
the development or liquidity of any trading market that may develop for the
Warrants.
To comply with the securities laws of certain jurisdictions, if applicable,
the Warrants will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Warrants may not be offered or sold (unless they have been registered or
qualified for sale) in such jurisdictions or an exemption from registration or
qualification is available and is complied with.
Pursuant to the Warrant Agreement, all expenses of the registration of the
Securities will be paid by IWCL, including, without limitation, Commission
filing fees; provided, however, that the Selling Holders will pay all
underwriting discounts, selling commissions and related fees, if any. Holders of
Securities and IWCL have agreed to indemnify each other against certain
liabilities, including certain liabilities arising under the Securities Act.
The Warrant Shares offered hereby are offered upon exercise of the
Warrants. The offering of the Warrant Shares will terminate upon the earlier of
(i) such time as all the Warrants have been exercised and (ii) July 15, 2005.
DESCRIPTION OF WARRANTS
The Warrants were issued pursuant to a warrant agreement (the "Warrant
Agreement") between IWCL and State Street Bank and Trust Company, as Warrant
Agent (the "Warrant Agent"). The following is a summary of certain provisions of
the Warrant Agreement. This summary does not purport to be a complete
description of the Warrant Agreement, and is qualified in its entirety by
reference to the Warrant Agreement which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available upon
request to Iridium at 1575 Eye Street, N.W., Washington, D.C. 20005, Attention:
Secretary.
GENERAL
Each Warrant, when exercised, will entitle the holder thereof to receive
5.2 fully paid and non-assessable shares of Class A Common Stock of IWCL (the
"Warrant Shares") at an exercise price of $20.90 per share (the "Exercise
Price"). In the aggregate, the Warrants entitle the holders thereof to purchase
1,560,000 shares of Class A Common Stock, representing, on a fully-diluted
basis, an aggregate indirect beneficial ownership of approximately of
Iridium, as of June 30, 1998. The Exercise Price and the number of shares of
Class A Common Stock issuable upon exercise of a Warrant are both subject to
adjustment in certain circumstances described below.
The LLC Interest Warrants provide that upon the exercise of any Warrant,
IWCL will purchase from Iridium, and Iridium will sell to IWCL, a number of
Class 1 Membership Interests equal to the number of shares of Class A Common
Stock issuable upon such exercise for a purchase price equal to the exercise
price of such Warrant.
22
<PAGE> 27
The Warrants may be exercised at any time after July 16, 1998; provided,
however, that holders of Warrants will be able to exercise their Warrants only
if this Registration Statement is effective or the exercise of the Warrants is
exempt from the registration requirements of the Securities Act, and the
Warrants and the Warrant Shares are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such holders reside. Unless earlier exercised, the
Warrants will expire on July 15, 2005 (the "Expiration Date"). IWCL will give
notice of expiration not less than 90 nor more than 120 days prior to the
Expiration Date to the registered holders of the then outstanding Warrants. If
IWCL fails to give such notice, the Warrants will nevertheless expire and become
void on the Expiration Date.
Pursuant to the terms of the Share Issuance Agreement, IWCL purchased from
Iridium, and Iridium sold to IWCL, a corresponding number of LLC Interest
Warrants of the same tenor and terms as the Warrants, entitling IWCL to
purchase, in the aggregate, a number of Class 1 Membership Interests equal to
the aggregate number of Warrant Shares issuable in respect of the Warrants,
subject to anti-dilution adjustments. Pursuant to the terms of the Share
Issuance Agreement and the LLC Interest Warrants, upon the due and valid
exercise of any Warrant and the issuance of Warrant Shares in respect thereof,
IWCL will purchase from Iridium, and Iridium will issue and sell to IWCL, a
number of Class 1 Membership Interests equal to the aggregate number of Warrant
Shares issuable in respect of the Warrants, subject to anti-dilution
adjustments.
The Warrants may be exercised by surrendering to the Warrant Agent the
certificates evidencing such Warrants with the accompanying form of election to
purchase, properly completed and executed, together with payment of the Exercise
Price. Payment of the Exercise Price may be made in the form of cash or a
certified or official bank check payable to the order of the IWCL or by wire
transfer of funds to an account designated by IWCL. Upon surrender of the
Warrant certificate and payment of the Exercise Price, IWCL will cause The Bank
of New York, as Transfer Agent of the Class A Common Stock, or any successor
thereto, to countersign and deliver, to or upon the written order of such
holder, certificates representing the number of whole Warrant Shares or other
securities or property to which such holder is entitled under the Warrants and
Warrant Agreement, including, without limitation, any cash payable to adjust for
fractional interests in Warrant Shares issuable upon such exercise. If at the
time prior to the Expiration Date less than all of the Warrants evidenced by a
Warrant certificate are surrendered for exercise, a new Warrant certificate will
be issued for the remaining number of Warrants.
No fractional Warrant shares will be issued upon exercise of any Warrants.
If any fraction of a Warrant Share would, except for the foregoing provision, be
issuable upon the exercise of any Warrants (or specified portion thereof), IWCL
will pay an amount in cash equal to the current market price per Warrant Share,
as determined on the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction, computed to the nearest whole cent.
The Warrants initially were issued as fully registered securities in global
form. No service charge will be made for registration of transfer or exchange
upon surrender of any Warrant certificate at the office of the Warrant Agent
maintained for that purpose. IWCL may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration or transfer or exchange of Warrant certificates.
In the event a bankruptcy or reorganization proceeding is commenced by or
against IWCL, a bankruptcy court may hold that unexercised Warrants are
executory contracts which may not, even if sufficient funds are available, be
entitled to receive any consideration or may receive an amount less than they
would be entitled to have received if they had been exercised prior to the
commencement of any such bankruptcy or reorganization proceeding.
The holders of the Warrants have no right to vote on matters submitted to
the stockholders of IWCL, and have no right to receive cash dividends. The
holders of the Warrants have no preemptive rights and are not entitled to share
in the assets of IWCL in the event of the liquidation, dissolution or winding up
of IWCL's affairs.
23
<PAGE> 28
ADJUSTMENTS
The number of Warrant Shares that may be purchased upon the exercise of
each Warrant and the Exercise Price are both subject to adjustment in certain
events including: (i) the payment by IWCL of dividends (or other distributions)
on Class A Common Stock of IWCL payable in shares of such Class A Common Stock
or other shares of IWCL's capital stock, (ii) subdivisions, combinations and
certain reclassifications of Class A Common Stock, (iii) the issuance to all
holders of Class A Common Stock of rights, options or warrants entitling them to
subscribe for shares of Class A Common Stock, or of securities convertible into
or exchangeable for shares of Class A Common Stock, for a consideration per
share which is less than the current market price per share (as defined in the
Warrant Agreement) of the Class A Common Stock, and (iv) the dividend or
distribution to holders of the class A Common Stock of any of IWCL's assets,
debt securities or any rights or warrants to purchase securities (excluding
those rights and warrants referred to in clause (iii) above and excluding cash
dividends or cash distributions paid out of consolidated current or retained
earnings or earned surplus). In addition, the Exercise Price may be reduced in
the event of purchase of shares of the Class A Common Stock pursuant to a tender
or exchange offer made by IWCL or any subsidiary thereof at a price greater than
the current market price of the Class A Common Stock on the business day
immediately preceding the commencement of the tender or exchange offer.
Notwithstanding the foregoing, no such adjustment will be made, directly or
indirectly, as a direct or indirect result of the issuance, acceleration or
exercise of the warrants to compensate Motorola for issuance or modification of
its guarantee and conditional guarantees of certain obligations of Iridium or
Operating, or the issuance or other distribution of membership interests or
other capital stock by Iridium. In addition, certain events described above are
subject to certain exceptions described in the Warrant Agreement, including,
without limitation, certain bona fide public offerings and private placements
and certain issuances of Class A Common Stock pursuant to employee stock
incentive plans.
No adjustment in the Exercise Price or the number of Warrant Shares
issuable upon exercise of Warrants will be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Exercise
Price or the number of Warrant Shares issuable upon exercise of Warrants;
provided, however, that any adjustment which is not made will be carried forward
and taken into account in any subsequent adjustment.
In the case of certain reclassifications, redesignations, reorganizations
or changes in the number of outstanding shares of Class A Common Stock or
consolidations or mergers of IWCL or the sale of all or substantially all of the
assets of IWCL, each Warrant shall thereafter be exercisable for the right to
receive the kind and amount of shares of stock or other securities or property
to which such holder would have been entitled as a result of such consolidation,
merger or sale had the Warrants been exercised immediately prior thereto.
However, if (i) IWCL consolidates, merges or sells all or substantially all of
its assets to another person and, in connection therewith, the consideration
payable to the holder of Class A Common Stock in exchange for their shares is
payable solely in cash or (ii) there is a dissolution, liquidation or winding-up
of IWCL, then the holders of the Warrants will be entitled to receive, upon
surrender of their Warrant certificates, distributions on an equal basis with
the holders of IWCL Class A Common Stock or other securities issuable upon
exercise of the Warrants, as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price. Upon receipt of such payment, if
any, the Warrants will expire and the rights of holders thereof will cease. In
the case of any such consolidation, merger or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or winding up
of IWCL, IWCL must deposit promptly with the Warrant Agent the funds, if any,
required to pay the holders of the Warrants. After such funds and the
surrendered Warrant certificate are received, the Warrant Agent is required to
deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such persons as it may be directed in writing by the holders surrendering such
Warrants.
In the event of a taxable distribution to holders of Class A Common Stock
of IWCL which results in an adjustment to the number of shares of Class A Common
Stock or other consideration for which a Warrant
24
<PAGE> 29
may be exercised, the holders of the Warrants may, in certain circumstances, be
deemed to have received a distribution subject to United States Federal income
tax as a dividend. See "Tax Considerations."
RESERVATION OF SHARES
IWCL has authorized and reserved for issuance such number of shares of
Class A Common Stock as shall be issuable upon the exercise of all outstanding
Warrants. Such shares of Class A Common Stock, when paid for and issued, will be
duly and validly issued, fully paid and non-assessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof.
AMENDMENT
From time to time, IWCL and the Warrant Agent, without the consent of the
holders of the Warrants, may amend or supplement the Warrant Agreement for
certain purposes, including, without limitation, curing defects or
inconsistencies or making any change that does not adversely affect the rights
of any holder. Any amendment or supplement to the Warrant Agreement that has an
adverse effect on the interests of the holders of the Warrants will require the
written consent of the holders of a majority of the then outstanding Warrants
issued in the Offerings taken as a single class (excluding any Warrants held by
IWCL or any of its Affiliates). The consent of each holder of the Warrants
affected will be required for any amendment pursuant to which the Exercise Price
would be increased or the number of Warrant Shares purchasable upon exercise of
Warrants would be decreased (other than pursuant to adjustments provided in the
Warrant Agreement) or the exercise period with respect to the Warrants would be
shortened.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any of the Warrants remain outstanding, but only to the extent it is
required to send such documents to the holders of IWCL's outstanding Class A
Common Stock, IWCL will cause copies of the reports and other documents to be
filed with the Warrant Agent and mailed to the holders of the Warrants at their
addresses appearing in the register of Warrants maintained by the Warrant Agent.
REGISTRATION RIGHTS
Registration of Warrants
Under the Warrant Agreement, IWCL is obligated to use its reasonable
efforts to keep the Registration Statement of which this Prospectus is a part
effective until (i) as to the Warrants, the earliest of (x) such time as all the
Warrants have been sold thereunder, (y) two years after its effective date and
(z) such time as the Warrants can be sold by non-affiliates of IWCL without
restriction under the Securities Act, and (ii) as to the Warrant Shares, the
earlier of (a) such time as all Warrants have been exercised and (b) the
Expiration Date.
Each holder of Warrants that sells such Warrants pursuant to the
Registration Statement of which this Prospectus is a part generally will be
required to be named as a selling securityholder in the related prospectus and
to deliver a prospectus to the purchaser, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by certain provisions of the Warrant Agreement which are
applicable to such holder (including certain indemnification obligations).
During any consecutive 365-day period, IWCL shall be entitled to suspend
the availability of the Registration Statement of which this Prospectus is a
part for up to two 45 consecutive-day periods (except for the 45 consecutive-day
period immediately prior to the Expiration Date) if the IWCL Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
holders of the Warrants; provided, however, that in no event shall IWCL be
required to disclose the business purpose for such suspension if IWCL determines
in good faith that such business purpose must remain confidential. There can be
no assurance that IWCL will be able to keep the Registration Statement of which
this Prospectus is a part continuously effective until all of the Warrants have
been exercised or have expired.
25
<PAGE> 30
TAX CONSIDERATIONS
TAXATION OF THE ISSUER
Iridium is intended to be treated as a partnership for United States
federal income tax purposes. As a Class 1 Member of Iridium, IWCL will be
subject to United States federal income tax on its distributive share of the
income of Iridium that is effectively connected with the conduct of a trade or
business in the United States, without regard to whether any distribution has
been received from Iridium. IWCL's share of Iridium's effectively connected
income may also under certain circumstances be subject to "branch profits tax"
at a 30% rate. IWCL's ability to use net operating losses may be limited under
Section 382 of the Code as a result of subsequent issuances of IWCL stock.
UNITED STATES FEDERAL INCOME TAXATION
The following is a summary of certain United States federal income tax
consequences of the ownership of Warrants and Class A Common Stock by an
investor that holds the Warrants and Class A Common Stock as capital assets.
This summary does not purport to address all material tax consequences of the
ownership of Warrants and Class A Common Stock, and does not take into account
the specific circumstances of any particular investors (such as tax-exempt
entities, certain insurance companies, broker-dealers, regulated investment
companies, traders in securities that elect to mark to market, investors liable
for alternative minimum tax, investors that actually or constructively own 10%
or more of the voting stock of IWCL, investors that hold Warrants and Class A
Common Stock as part of a straddle or a hedging or conversion transaction or
investors whose functional currency is not the U.S. dollar), some of which may
be subject to special rules. This summary is based on the tax laws of the United
States (including the Internal Revenue Code of 1986, as amended, its legislative
history, existing and proposed regulations thereunder, published rulings and
court decisions) as in effect on the date hereof, all of which are subject to
change (or changes in interpretation), possibly with retroactive effect. This
summary does not address state or local taxes. Each holder should consult its
own tax advisor as to the United States federal, state and local tax
consequences of the ownership and disposition of Warrants and Class A Common
Stock.
For purposes of this discussion, a "U.S. Holder" is any beneficial owner of
Warrants and Class A Common Stock that is (i) a citizen or resident of the
United States, (ii) a corporation organized under the laws of the United States
or any State, (iii) an estate the income of which is subject to United States
federal income tax without regard to its source or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. A "Non-U.S. Holder"
is any beneficial owner of Warrants and Class A Common Stock that is not a
United States person for United States federal income tax purposes.
U.S. HOLDERS
OWNERSHIP AND DISPOSITION OF WARRANTS
Sale of a Warrant. Generally, a U.S. Holder of a Warrant will recognize
gain or loss upon the sale of a Warrant in an amount equal to the difference
between the amount realized on the sale and the U.S. Holder's adjusted tax basis
for the Warrant. A U.S. Holder's adjusted tax basis in a Warrant will generally
equal its cost, increased by the amount of any constructive distributions to the
U.S. Holder in respect of the Warrants as a result of an adjustment to the
conversion ratio. See "-- Adjustments Under the Warrants," below. Gain or loss
attributable to the sale of an option to buy or sell property is considered gain
from the sale of the property that has the same character as the property to
which the option relates. Because the Warrants relate to stock, gains or losses
attributable to the sale of the Warrants will generally constitute capital gains
and losses if the stock would be a capital asset in the hands of the Warrant
holder and will be long term if the Warrants have been held for more than one
year.
Exercise of a Warrant, Disposition of Common Shares, and Dividends. In
general, no gain or loss will be recognized by a U.S. Holder upon the exercise
of a Warrant (except with respect to cash, if any, paid in
26
<PAGE> 31
lieu of the issuance of fractional shares of Class A Common Stock). Upon
exercise of a Warrant with cash, the holder's tax basis in the shares so
acquired will be the sum of (a) the holders' adjusted tax basis in the Warrant
and (b) the cash paid upon exercise of the Warrant. If any cash is received in
lieu of fractional shares of Class A Common Stock, the holder will recognize
gain or loss, and the character and amount of gain or loss will be determined as
if the holder had received such fractional shares and then immediately sold them
for cash.
Expiration of the Warrants. Upon the expiration of an unexercised Warrant,
the holder will recognize a loss equal to the adjusted tax basis of the Warrant
in the hands of the holder. The character of the loss realized upon the failure
to exercise an option is determined based on the character of the property to
which the option relates. Since the Warrants relate to stock, a loss realized
upon expiration of the Warrant will generally be a capital loss if the stock
would have been a capital asset in the hands of the Warrantholder and will be
long term if the Warrant was held for more than one year.
Adjustments Under the Warrants. Pursuant to the terms of the Warrants, the
number of shares of Class A Common Stock that may be purchased upon exercise of
the Warrants is subject to adjustment from time to time upon the occurrence of
certain events. In certain circumstances, a change in conversion ratio or any
transaction having a similar effect on the interest of a Warrant holder may be
treated as a distribution with respect to any Warrant holder whose proportionate
interest in the earnings and profits of the issuer is increased by such change
or transaction. Thus, under certain circumstances which may or may not occur,
such an adjustment pursuant to the terms of the Warrants may be treated as a
taxable distribution to the Warrant holders to the extent of the IWCL's current
or accumulated earnings and profits (as determined for United States federal
income tax purposes), without regard to whether the Warrant holders receive any
cash or other property. If the Warrant holders receive such a taxable
distribution, their tax bases in the Warrants will be increased by an amount
equal to the taxable distribution.
OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A COMMON STOCK
Taxation of Dividends and Stock Distributions
Under the United States federal income tax laws, and subject to the passive
foreign investment company ("PFIC") rules discussed below, distributions by IWCL
with respect to its Class A Common Stock will be includible in the gross income
of a U.S. Holder as ordinary dividend income to the extent paid out of current
or accumulated earnings and profits of IWCL, as determined for United States
federal income tax purposes. Dividends will not be eligible for the dividends
received deduction generally allowed to U.S. Holders that are corporations.
Any dividends paid in foreign currency will be includible in the income of
a U.S. Holder in a U.S. dollar amount calculated by reference to the prevailing
market exchange rate in effect on the date the dividends become includible in
the U.S. Holder's income. Generally, any gain or loss resulting from currency
exchange fluctuations during the period from the date that the dividend becomes
includible in the U.S. Holder's income to the date that the foreign currency is
converted into U.S. dollars will be treated as ordinary income or loss.
If less than 25% of IWCL's gross income for the three years preceding the
year in which a dividend is declared (or for the portion of the three-year
period during which IWCL has been in existence, if shorter) was effectively
connected with the conduct of a U.S. trade or business, the dividend generally
will constitute foreign source "passive income" (or in the case of certain
holders, "financial services income") for U.S. foreign tax credit purposes. If
25% or more of IWCL's gross income for such period was "effectively connected"
income, the dividend will be United States source in the same proportion that
IWCL's "effectively connected" income for such period bears to IWCL's total
gross income for the period, and the remainder will constitute foreign source
"passive income" (or in the case of certain holders, "financial services
income") for U.S. foreign tax credit purposes.
Distributions of additional shares of Class A Common Stock to U.S. Holders
with respect to shares of Class A Common Stock that are part of a pro rata
distribution to all shareholders of IWCL generally will not be subject to U.S.
federal income tax.
27
<PAGE> 32
Taxation of Capital Gains
Subject to the PFIC rules discussed below, upon a sale or other disposition
of Class A Common Stock, a U.S. Holder will recognize gain or loss for United
States federal income tax purposes in an amount equal to the difference between
the U.S. dollar value of the amount realized and the U.S. Holder's tax basis
(determined in U.S. dollars) in such Class A Common Stock. Generally, such gain
or loss will be capital gain or loss, will be long-term capital gain or loss if
the U.S. Holder's holding period for such Class A Common Stock exceeds one year
and any such gain will be income from sources within the United States for
foreign tax credit limitation purposes.
Passive Foreign Investment Company Rules
Under the passive foreign investment company ("PFIC") rules, a foreign
corporation will generally be a PFIC in any taxable year of the foreign
corporation in which either at least 75 percent of its gross income is "passive
income" or at least 50 percent of its assets are "passive assets." For purposes
of the PFIC tests, passive income generally includes interest, dividends, rents
and royalties (other than rents and royalties derived in the active conduct of a
trade or business and not derived from a related person), annuities and gains
from the sale or disposition of assets that produce passive income, and passive
assets generally include assets producing or held for the production of such
income. The following discussion assumes that IWCL should, under current law, be
treated for the purposes of the PFIC tests as owning its share of Iridium's
gross assets and as earning directly its share of Iridium gross income. IWCL
would be a PFIC if it were not permitted to treat itself as owning its share of
Iridium's assets and earning directly its share of Iridium's gross income for
the purposes of the PFIC tests.
Because Iridium had substantial temporary investments in securities, more
than 75 percent of IWCL's gross income for 1997 was passive income for purposes
of the PFIC income test. Under the PFIC rules, however, a foreign corporation
will not be considered a PFIC in the first year in which it has gross income
(the start-up year) if (i) no predecessor of such corporation was a PFIC, (ii)
it is established to the satisfaction of the Internal Revenue Service that such
corporation will not be a PFIC for either of the first two taxable years
following the start-up year and (iii) such corporation is not in fact a PFIC for
either of the first two taxable years following the start-up year. Under this
exception to PFIC classification, IWCL does not expect that it will have been a
PFIC for 1997.
Moreover, based on the manner in which Iridium currently intends to operate
its business in future years, IWCL does not expect to be a PFIC for any future
year. However, since the determination of whether the shares of Class A Common
Stock constitute shares of a PFIC must be made annually based upon the
composition of the income and assets of IWCL, Iridium and any corporation in
which IWCL or Iridium holds a 25-percent-or-more interest, there can be no
assurance that the shares of Class A Common Stock will not be considered shares
of a PFIC for any taxable year. Furthermore, if IWCL were determined to be a
PFIC in 1998, the start-up exception outlined in the previous paragraph would be
inapplicable and IWCL would be considered a PFIC for 1997 as well.
Generally, if a share of Class A Common Stock were treated as stock of a
PFIC for any taxable year during which a U.S. Holder held such share, the entire
gain recognized by such U.S. Holder on a sale or other disposition of the share
would be allocated ratably over the U.S. Holder's holding period for the share.
The amounts allocated to the taxable year of the sale or other disposition and
to any year before IWCL became a PFIC would be taxed as ordinary income. The
amount allocated to each other taxable year would be subject to tax at the
highest applicable ordinary income rate in effect for such taxable year, and an
interest charge would be imposed on the amount allocated to such taxable year.
All such tax and interest would be included in the U.S. Holder's U.S. federal
income tax liability for the taxable year in which the sale or other disposition
took place. Further, any distribution in respect of shares of Class A Common
Stock in excess of 125 percent of the average of the annual distributions on
shares of Class A Common Stock received by the U.S. Holder during the preceding
three years or the U.S. Holder's holding period, whichever is shorter, would be
subject to taxation as described above.
28
<PAGE> 33
The special PFIC tax rules described above will not apply to a U.S. Holder
if (i) the U.S. Holder elects to have IWCL treated as a "qualified electing
fund" (a "QEF election") for each taxable year during the U.S. Holder's holding
period in which IWCL is a PFIC and (ii) IWCL provides certain information
necessary to enable the U.S. Holder to make a QEF election. IWCL currently
intends to provide upon the request of any U.S. Holder the information necessary
to make a QEF election.
A U.S. Holder that makes a QEF election generally will be currently taxable
on its pro rata share of IWCL's ordinary earnings and net capital gain (at
ordinary and capital gain rates, respectively) for each taxable year of IWCL,
regardless of whether or not distributions were received. However, a U.S. Holder
that makes a QEF election covering each taxable year of IWCL during the U.S.
Holder's holding period in which IWCL is a PFIC will not be currently taxable on
its pro rata share of IWCL's undistributed ordinary earnings and net capital
gain in any year in which IWCL is not a PFIC.
If a U.S. Holder is taxed on its pro rata share of IWCL's ordinary earnings
and net capital gain, the U.S. Holder's basis in shares of Class A Common Stock
will be increased to reflect taxed but undistributed income. Distributions that
have been taxed previously will result in a corresponding reduction of basis in
shares of Class A Common Stock and will not be taxed again as a distribution to
the U.S. Holder.
For taxable years beginning after 1997, a U.S. Holder of shares of stock in
a PFIC that are treated as "marketable stock" may also make a mark-to-market
election. An electing shareholder will not be subject to the PFIC rules
described above. Instead, in general, an electing shareholder will include in
each year as ordinary income the excess, if any, of the fair market value of the
Class A Common Stock at the end of the taxable year over its adjusted basis and
will be permitted an ordinary loss in respect of the excess, if any, of the
adjusted basis of the Class A Common Stock over its fair market value at the end
of the taxable year (but only to the extent of the net amount of previously
included income as a result of the mark-to-market election). The basis in the
Class A Common Stock of a U.S. Holder making the mark-to-market election will be
adjusted to reflect any such income or loss amounts.
A U.S. Holder who owns shares of Class A Common Stock during any year in
which IWCL is a PFIC must file Internal Revenue Service Form 8621.
NON-U.S. HOLDERS
A Non-U.S. Holder of Warrants or shares of Class A Common Stock will not be
subject to U.S. federal income tax on dividends paid with respect to, or gains
realized on the sale or other disposition of, Warrants or shares of Class A
Common Stock, unless (i) such dividend or gain is effectively connected with the
conduct by the holder of a trade or business in the United States (and is
attributable to a permanent establishment maintained in the United States by
such Non-U.S. Holder, if an applicable income tax treaty so requires as a
condition for such Non-U.S. Holder to be subject to U.S. taxation on a net
income basis in respect of income from or gain from the sale of Warrants or
shares of Class A Common Stock), in which case the Non-U.S. Holder generally
will be subject to tax in respect of such income or gains in the same manner as
a U.S. Holder, or (ii) in the case of gain realized by an individual holder, the
holder is present in the United States for 183 days or more during the taxable
year of the sale and certain other conditions are met. Effectively connected
income realized by a corporate Non-U.S. Holder may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty. If
dividends paid with respect to shares of Class A Common Stock are not subject to
U.S. federal income tax as described above, that portion of the dividends
received by a Non-U.S. Holder that is attributable to the conduct by Iridium of
a trade or business within the United States will be subject to a 30%
withholding tax if, for the three-year period ending with the close of IWCL's
taxable year preceding the declaration of such dividends, or for such part of
that period as IWCL was in existence, 25% or more of IWCL's gross income was
effectively connected with the conduct of a trade or business within the United
States, although IWCL believes that this 25% test will not be met and,
accordingly, that dividends paid to Non-U.S. Holders will not be subject to the
withholding tax described above.
29
<PAGE> 34
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to dividend
payments (or other taxable distributions) in respect of shares of Class A Common
Stock made within the United States to a non-corporate United States person, and
"backup withholding" at the rate of 31% will apply to such payments if the
holder or beneficial owner fails to provide an accurate taxpayer identification
number in the manner required by United States law and applicable regulations,
if there has been notification from the Internal Revenue Service of a failure by
the holder or beneficial owner to report all interest or dividends required to
be shown on its federal income tax returns or, in certain circumstances, if the
holder or beneficial owner fails to comply with applicable certification
requirements. Certain corporations and persons that are not United States
persons may be required to establish their exemption from information reporting
and backup withholding by certifying their status on Internal Revenue Service
Forms W-8 or W-9.
In general, payment of the proceeds from the sale of Warrants or shares of
Class A Common Stock to or through a United States office of a broker is subject
to both United States backup withholding and information reporting unless the
holder or beneficial owner certifies its non-United States status under
penalties of perjury or otherwise establishes an exemption. United States
information reporting and backup withholding generally will not apply to a
payment made outside the United States of the proceeds of a sale of Warrants or
shares of Class A Common Stock through an office outside the United States of a
non-United States broker. However, United States information reporting
requirements (but not backup withholding) will apply to a payment made outside
the United States of the proceeds of a sale of Warrants or shares of Class A
Common Stock through an office outside the United States of a broker (i) that is
a United States person, (ii) that derives 50% or more of its gross income for a
specified three-year period from the conduct of a trade or business in the
United States, (iii) that is a "controlled foreign corporation" as to the United
States, or (iv) with respect to payments made after December 31, 1999, that is a
foreign partnership, if at any time during its tax year, one or more of its
partners are U.S. persons (as defined in U.S. Treasury regulations) who in the
aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, such foreign partnership is
engaged in a United States trade or business, unless the broker has documentary
evidence in its files that the holder or beneficial owner is a non-United States
person or the holder or beneficial owner otherwise establishes an exemption.
Amounts withheld under the backup withholding rules may be credited against
a holder's tax liability, and a holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the United States Internal Revenue Service.
VALIDITY OF THE WARRANTS AND WARRANT SHARES
The validity of the Warrant Shares offered hereby will be passed upon for
IWCL by Conyers, Dill & Pearman, Hamilton, Bermuda. The validity of the Warrants
offered hereby will be passed upon for IWCL by Sullivan & Cromwell, Washington,
D.C.
EXPERTS
The financial statements of IWCL as of December 31, 1997 and 1996, and for
the year ended December 31, 1997 and for the period December 12, 1996
(Inception) through December 31, 1996, and the consolidated financial statements
of Iridium as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997, and for the period June 14, 1991
(Inception) through December 31, 1997 have been incorporated by reference herein
and in the Registration Statement in reliance upon the reports of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
30
<PAGE> 35
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY IWCL, THE
SELLING HOLDERS OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF IWCL OR
IRIDIUM SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. i
Incorporation By Reference............ i
Forward-Looking Statements............ ii
Prospectus Summary.................... 1
Risk Factors.......................... 3
Use of Proceeds....................... 7
Recent Developments................... 7
Governance of IWCL and Relationship
with Iridium........................ 8
Description of Iridium Limited
Liability Company Agreement......... 12
Selling Holders....................... 20
Plan of Distribution.................. 21
Description of Warrants............... 22
Tax Considerations.................... 26
Validity of the Warrants and
Warrant Shares...................... 30
Experts............................... 30
</TABLE>
===============================================================================
===============================================================================
[IRIDIUM LOGO]
IRIDIUM WORLD
COMMUNICATIONS LTD.
------------------------
300,000 WARRANTS
TO PURCHASE
1,560,000 SHARES OF
CLASS A COMMON STOCK
, 1998
===============================================================================
<PAGE> 36
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 25,024
Nasdaq National Market listing fee.......................... 17,500
Printing fees............................................... 25,000
Legal fees and expenses..................................... 50,000
Blue Sky fees and expenses (including legal fees)........... 12,000
Accounting fees and expenses................................ 20,000
Miscellaneous fees and expenses............................. 10,476
--------
Total....................................................... $160,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law permits a company to indemnify its directors and officers,
except for any act of willful negligence, willful default, fraud or dishonesty.
The Registrant has provided in its Bye-Laws that its directors and officers will
be indemnified and held harmless against any expenses, judgments, fines,
settlements and other amounts incurred by reason of any act or omission in the
discharge of their duty, other than in the case of fraud or dishonesty.
Bermuda law and the Bye-Laws of the Registrant also permit the Registrant
to purchase insurance for the benefit of its directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence, default, breach of duty or breach of
trust.
The Registrant has entered into indemnification agreements with its
officers and directors. To the extent permitted by law, the indemnification
agreements may require the Registrant, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceedings against them as to which they could be
indemnified.
The Registrant maintains a directors' and officers' liability insurance
policy.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
3.1 Limited Liability Company Agreement of Iridium LLC, dated as
of July 29, 1996, as amended: Incorporated by reference to
Exhibit 10.1 to the Registration Statement on Form S-1 of
Iridium World Communications Ltd. and Iridium LLC
(Registration Nos. 333-23419 and 333-23419-01) (the "Form
S-1").
3.2 Memorandum of Association of Iridium World Communications
Ltd.: Incorporated by reference to Exhibit 3.1 to the Form
S-1.
3.3 Bye-Laws of Iridium World Communications Ltd.: Incorporated
by reference to Exhibit 3.2 to the Form S-1.
4.1.1 Warrant Agreement dated July 16, 1997.**
</TABLE>
II-1
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
4.1.2 Form of Class A Common Stock Certificate: Incorporated by
reference to Exhibit 4.1 of the Form S-1.
5.1 Opinion of Conyers Dill & Pearman.**
5.2 Opinion of Sullivan & Cromwell.**
10.1 Form of Interest Exchange Agreement between IWCL and Iridium
LLC: Incorporated by reference to Exhibit 10.2 to the Form
S-1.
10.2 Form of amended and restated Management Services Agreement
between IWCL, Iridium LLC and Iridium Operating LLC:
Incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form S-4 of Iridium Operating LLC,
Iridium Capital Corporation, Iridium Roaming LLC and Iridium
IP LLC (Registration No. 333-44349, - 01, -02, -03 and -04)
(the "1998 Form S-4").
10.3 Space System Contract between Iridium LLC and Motorola, Inc.
effective July 29, 1993, as amended and conformed on January
14, 1997: Incorporated by reference to Exhibit 10.6 to the
Form S-1.+
10.4 Communications System Operations & Maintenance Contract
between Iridium LLC and Motorola, Inc. effective July 29,
1993, as amended and conformed on January 14, 1997:
Incorporated by reference to Exhibit 10.7 to the Form S-1.+
10.5 Terrestrial Network Development Contract between Iridium LLC
and Motorola, Inc. effective January 1, 1993, as amended and
conformed on January 14, 1997: Incorporated by reference to
Exhibit 10.8 to the Form S-1.+
10.6 Amendment No. 3 to the Terrestrial Network Development
Contract between Iridium LLC and Motorola, Inc. effective
June 20, 1997: Incorporated by reference to Exhibit 10.7 to
the Registration Statement on Form S-4 of Iridium LLC,
Iridium Capital Corporation, Iridium Roaming LLC and Iridium
IP LLC (Registration Nos. 333-31741, -01, -02 and -03) (the
"1997 Form S-4").+
10.7 Amendment No. 4 to the Terrestrial Network Development
Contract between Iridium LLC and Motorola, Inc., effective
May 8, 1998.** ++
10.8 Support Agreement between Iridium LLC and Motorola, Inc.:
Incorporated by reference to Exhibit 10.9 to the Form S-1.
10.9 Agreement, executed as of December 16, 1996, between
Andersen Consulting LLC and Iridium LLC relating to the
development of business support systems: Incorporated by
reference to Exhibit 10.10 to the Form S-1.+
10.10 14 1/2% Senior Subordinated Discount Notes Due 2006 of
Iridium: Incorporated by reference to Exhibit 10.11 to the
Form S-1.
10.11 Form of Warrant issued in respect of 14 1/2% Senior
Subordinated Discount Notes: Incorporated by reference to
Exhibit 10.13 to the Form S-1.
10.12 Warrant to purchase Series M Class 2 Interests dated July
29, 1993, as amended: Incorporated by reference to Exhibit
10.13 to the Form S-1.
10.13 Form of Gateway Authorization Agreement: Incorporated by
reference to Exhibit 10.14 to the Form S-1.
10.14 Guaranteed Bank Facility: Incorporated by reference to
Exhibit 10.15 to the Form S-1.
10.15 Amendment dated December 19, 1997 to Guaranteed Bank
Facility: Incorporated by reference to Exhibit 10.15 of the
Report for the fiscal year ended December 31, 1997 on Form
10-K of IWCL, Iridium, and its subsidiaries (the "1997 Form
10-K").
10.16 Motorola Agreement regarding Guarantee: Incorporated by
reference to Exhibit 10.16 to the Form S-1.
10.17 Amended and Restated Agreement regarding Guarantee:
Incorporated by reference to Exhibit 10.17 to the 1997 Form
S-4.
10.18 Second Amended and Restated Agreement regarding Guarantee.**
10.19 Memorandum of Understanding with Motorola, Inc: Incorporated
by reference to Exhibit 10.18 to the 1997 Form S-4.
</TABLE>
II-2
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
10.20 Form of Share Issuance Agreement between IWCL and Iridium
LLC: Incorporated by reference to Exhibit 10.17 to the Form
S-1.
10.21 Iridium LLC Option Plan: Incorporated by reference to
Exhibit 10.5 to the Form S-1.
10.22 Iridium LLC Selected Senior Officers' Supplementary
Retirement Plan: Incorporated by reference to Exhibit 10.27
to the 1997 Form S-4.
10.23 Agreement between Dr. Staiano and Iridium LLC: Incorporated
by reference to Exhibit 10.28 to the 1997 Form S-4.
10.24 Asset Transfer Agreement: Incorporated by reference to
Exhibit 10.25 to the 1998 Form S-4.
10.25 Consent of Arthur Andersen LLP to Contract Assignment:
Incorporated by reference to Exhibit 10.26 to the 1998 Form
S-4.
10.26 Consent of Motorola Inc. to Contract Assignment:
Incorporated by reference to Exhibit 10.27 to the 1998 Form
S-4.
10.27 Form of Credit Agreement among Iridium Operating LLC, Chase
Securities Inc., Barclays Capital, The Chase Manhattan Bank
and Barclays Bank PLC: Incorporated by reference to Exhibit
10.28 of the 1997 Form 10-K.
10.28 Conditions Precedent to the Disbursement of the Term Loans
under Section 2.01(a) of the Credit Agreement: Incorporated
by reference to Exhibit 10.29 of the 1997 Form 10-K.
10.29 Regulatory and Technical Conditions Precedent to
availability of funding under the Credit Agreement:
Incorporated by reference to Exhibit 10.30 of the 1997 Form
10-K.
10.30 Form of Assignment and Acceptance under the Credit
Agreement: Incorporated by reference to Exhibit 10.31 of the
1997 Form 10-K.
10.31 Form of Pledge and Security Agreement among Iridium
Operating LLC, each of the Subsidiaries and The Chase
Manhattan Bank: Incorporated by reference to Exhibit 10.32
of the 1997 Form 10-K.
10.32 Form of Parent Security Agreement between Iridium Operating
LLC and The Chase Manhattan Bank: Incorporated by reference
to Exhibit 10.33 of the 1997 Form 10-K.
10.33 Form of Subsidiary Guarantee Agreement between each of the
Subsidiary Guarantors and The Chase Manhattan Bank:
Incorporated by reference to Exhibit 10.34 of the 1997 Form
10-K.
10.34 Form of Subsidiary Guarantee Assumption Agreement:
Incorporated by reference to Exhibit 10.35 of the 1997 Form
10-K.
10.35 Form of Depositary Agreement between Iridium Operating LLC
and The Chase Manhattan Bank: Incorporated by reference to
Exhibit 10.36 of the 1997 Form 10-K.
10.36 Form of Motorola Consent under the Credit Agreement among
Motorola, Iridium Operating LLC and The Chase Manhattan
Bank: Incorporated by reference to Exhibit 10.37 of the 1997
Form 10-K.
10.37 Form of Motorola Pledge Agreement between Motorola, Inc. and
The Chase Manhattan Bank: Incorporated by reference to
Exhibit 10.38 of the 1997 Form 10-K.
10.38 Form of Progress Certificate (Pre-Commercial Activation)
under the Credit Agreement: Incorporated by reference to
Exhibit 10.39 of the 1997 Form 10-K.
10.39 Form of Verification of Independent Technical Advisor under
the Credit Agreement: Incorporated by reference to Exhibit
10.40 of the 1997 Form 10-K.
10.40 Form of Progress Certificate (Post-Commercial Activation)
under the Credit Agreement: Incorporated by reference to
Exhibit 10.41 of the 1997 Form 10-K.
10.41 Form of Borrowing Request under the Credit Agreement:
Incorporated by reference to Exhibit 10.42 of the 1997 Form
10-K.
23.1 Consent of KPMG Peat Marwick LLP.**
23.2 Consent of Conyers, Dill & Pearman (contained in Exhibit
5.1).
23.3 Consent of Sullivan & Cromwell (contained in Exhibit 5.2).
</TABLE>
II-3
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
99 Certain Factors Which May Affect Forward Looking Statements:
Incorporated by reference to Exhibit 99 of the 1997 Form
10-K.
</TABLE>
- ---------------
* Filed previously.
** Filed herewith.
+ Confidential treatment previously granted.
++ Confidential treatment requested.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange
II-4
<PAGE> 40
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding), is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-5
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrants
certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this Registration
Statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Washington, District of Columbia on July 10, 1998.
IRIDIUM WORLD COMMUNICATIONS LTD.
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
Chairman and Chief Executive Officer
Date: July 10, 1998
IRIDIUM LLC
By: /s/ ROBERT W. KINZIE
------------------------------------
Robert W. Kinzie
Chairman
Date: July 10, 1998
II-6
<PAGE> 42
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Director of Iridium World July 10, 1998
- ------------------------------------------------ Communications Ltd. and Chairman of
Robert W. Kinzie Iridium LLC
* Chairman and Chief Executive Officer July 10, 1998
- ------------------------------------------------ of Iridium World Communications Ltd.
Edward F. Staiano and Vice Chairman and Chief Executive
Officer of Iridium LLC
* Chief Financial Officer of Iridium July 10, 1998
- ------------------------------------------------ World Communications Ltd. and Vice
Roy Grant President-Chief Financial Officer of
Iridium LLC
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Aburizal Bakrie
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Hasan M. Binladin
Director of Iridium LLC July 1998
- ------------------------------------------------
Gordon J. Comerford
Director of Iridium LLC July 1998
- ------------------------------------------------
Atilano de Oms Sobrinho
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Robert A. Ferchat
Deputy Chairman and Director of July 1998
- ------------------------------------------------ Iridium World Communications Ltd. and
Alberto Finol Director of Iridium LLC
Director of Iridium LLC July 1998
- ------------------------------------------------
Edward Gams
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Durrell Hillis
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Kazuo Inamori
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
S. H. Khan
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Anatoly I. Kiselev
* Director of Iridium World July 10, 1998
- ------------------------------------------------ Communications Ltd. and Iridium LLC
Richard L. Lesher
Director of Iridium LLC July 1998
- ------------------------------------------------
John F. Mitchell
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Jung L. Mok
</TABLE>
II-7
<PAGE> 43
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Giuseppe Morganti
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
J. Michael Norris
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Yusai Okuyama
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
John A. Richardson
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Theodore H. Schell
* Director of Iridium World July 10, 1998
- ------------------------------------------------ Communications Ltd. and Iridium LLC
William A. Schreyer
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Sribhumi Sukhanetr
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Tao-Tsun Sun
* Director of Iridium World July 10, 1998
- ------------------------------------------------ Communications Ltd. and Iridium LLC
Yoshiharu Yasuda
Director of Iridium LLC July 1998
- ------------------------------------------------
Wang Mei Yue
* Director of Iridium LLC July 10, 1998
- ------------------------------------------------
Peter Zaboji
*By: /s/ F. THOMAS TUTTLE
------------------------------------------
F. Thomas Tuttle
Attorney-In-Fact
</TABLE>
II-8
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
3.1 Limited Liability Company Agreement of Iridium LLC, dated as
of July 29, 1996, as amended: Incorporated by reference to
Exhibit 10.1 to the Registration Statement on Form S-1 of
Iridium World Communications Ltd. and Iridium LLC
(Registration Nos. 333-23419 and 333-23419-01) (the "Form
S-1").
3.2 Memorandum of Association of Iridium World Communications
Ltd.: Incorporated by reference to Exhibit 3.1 to the Form
S-1.
3.3 Bye-Laws of Iridium World Communications Ltd.: Incorporated
by reference to Exhibit 3.2 to the Form S-1.
4.1.1 Warrant Agreement dated July 16, 1997.**
4.1.2 Form of Class A Common Stock Certificate: Incorporated by
reference to Exhibit 4.1 of the Form S-1.
5.1 Opinion of Conyers Dill & Pearman.**
5.2 Opinion of Sullivan & Cromwell.**
10.1 Form of Interest Exchange Agreement between IWCL and Iridium
LLC: Incorporated by reference to Exhibit 10.2 to the Form
S-1.
10.2 Form of amended and restated Management Services Agreement
between IWCL, Iridium LLC and Iridium Operating LLC:
Incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form S-4 of Iridium Operating LLC,
Iridium Capital Corporation, Iridium Roaming LLC and Iridium
IP LLC (Registration No. 333-44349, - 01, -02, -03 and -04)
(the "1998 Form S-4").
10.3 Space System Contract between Iridium LLC and Motorola, Inc.
effective July 29, 1993, as amended and conformed on January
14, 1997: Incorporated by reference to Exhibit 10.6 to the
Form S-1.+
10.4 Communications System Operations & Maintenance Contract
between Iridium LLC and Motorola, Inc. effective July 29,
1993, as amended and conformed on January 14, 1997:
Incorporated by reference to Exhibit 10.7 to the Form S-1.+
10.5 Terrestrial Network Development Contract between Iridium LLC
and Motorola, Inc. effective January 1, 1993, as amended and
conformed on January 14, 1997: Incorporated by reference to
Exhibit 10.8 to the Form S-1.+
10.6 Amendment No. 3 to the Terrestrial Network Development
Contract between Iridium LLC and Motorola, Inc. effective
June 20, 1997: Incorporated by reference to Exhibit 10.7 to
the Registration Statement on Form S-4 of Iridium LLC,
Iridium Capital Corporation, Iridium Roaming LLC and Iridium
IP LLC (Registration Nos. 333-31741, -01, -02 and -03) (the
"1997 Form S-4").+
10.7 Amendment No. 4 to the Terrestrial Network Development
Contract between Iridium LLC and Motorola, Inc., effective
May 8, 1998.** ++
10.8 Support Agreement between Iridium LLC and Motorola, Inc.:
Incorporated by reference to Exhibit 10.9 to the Form S-1.
10.9 Agreement, executed as of December 16, 1996, between
Andersen Consulting LLC and Iridium LLC relating to the
development of business support systems: Incorporated by
reference to Exhibit 10.10 to the Form S-1.+
10.10 14 1/2% Senior Subordinated Discount Notes Due 2006 of
Iridium: Incorporated by reference to Exhibit 10.11 to the
Form S-1.
10.11 Form of Warrant issued in respect of 14 1/2% Senior
Subordinated Discount Notes: Incorporated by reference to
Exhibit 10.13 to the Form S-1.
10.12 Warrant to purchase Series M Class 2 Interests dated July
29, 1993, as amended: Incorporated by reference to Exhibit
10.13 to the Form S-1.
10.13 Form of Gateway Authorization Agreement: Incorporated by
reference to Exhibit 10.14 to the Form S-1.
10.14 Guaranteed Bank Facility: Incorporated by reference to
Exhibit 10.15 to the Form S-1.
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
10.15 Amendment dated December 19, 1997 to Guaranteed Bank
Facility: Incorporated by reference to Exhibit 10.15 of the
Report for the fiscal year ended December 31, 1997 on Form
10-K of IWCL, Iridium, and its subsidiaries (the "1997 Form
10-K").
10.16 Motorola Agreement regarding Guarantee: Incorporated by
reference to Exhibit 10.16 to the Form S-1.
10.17 Amended and Restated Agreement regarding Guarantee:
Incorporated by reference to Exhibit 10.17 to the 1997 Form
S-4.
10.18 Second Amended and Restated Agreement regarding Guarantee.**
10.19 Memorandum of Understanding with Motorola, Inc: Incorporated
by reference to Exhibit 10.18 to the 1997 Form S-4.
10.20 Form of Share Issuance Agreement between IWCL and Iridium
LLC: Incorporated by reference to Exhibit 10.17 to the Form
S-1.
10.21 Iridium LLC Option Plan: Incorporated by reference to
Exhibit 10.5 to the Form S-1.
10.22 Iridium LLC Selected Senior Officers' Supplementary
Retirement Plan: Incorporated by reference to Exhibit 10.27
to the 1997 Form S-4.
10.23 Agreement between Dr. Staiano and Iridium LLC: Incorporated
by reference to Exhibit 10.28 to the 1997 Form S-4.
10.24 Asset Transfer Agreement: Incorporated by reference to
Exhibit 10.25 to the 1998 Form S-4.
10.25 Consent of Arthur Andersen LLP to Contract Assignment:
Incorporated by reference to Exhibit 10.26 to the 1998 Form
S-4.
10.26 Consent of Motorola Inc. to Contract Assignment:
Incorporated by reference to Exhibit 10.27 to the 1998 Form
S-4.
10.27 Form of Credit Agreement among Iridium Operating LLC, Chase
Securities Inc., Barclays Capital, The Chase Manhattan Bank
and Barclays Bank PLC: Incorporated by reference to Exhibit
10.28 of the 1997 Form 10-K.
10.28 Conditions Precedent to the Disbursement of the Term Loans
under Section 2.01(a) of the Credit Agreement: Incorporated
by reference to Exhibit 10.29 of the 1997 Form 10-K.
10.29 Regulatory and Technical Conditions Precedent to
availability of funding under the Credit Agreement:
Incorporated by reference to Exhibit 10.30 of the 1997 Form
10-K.
10.30 Form of Assignment and Acceptance under the Credit
Agreement: Incorporated by reference to Exhibit 10.31 of the
1997 Form 10-K.
10.31 Form of Pledge and Security Agreement among Iridium
Operating LLC, each of the Subsidiaries and The Chase
Manhattan Bank: Incorporated by reference to Exhibit 10.32
of the 1997 Form 10-K.
10.32 Form of Parent Security Agreement between Iridium Operating
LLC and The Chase Manhattan Bank: Incorporated by reference
to Exhibit 10.33 of the 1997 Form 10-K.
10.33 Form of Subsidiary Guarantee Agreement between each of the
Subsidiary Guarantors and The Chase Manhattan Bank:
Incorporated by reference to Exhibit 10.34 of the 1997 Form
10-K.
10.34 Form of Subsidiary Guarantee Assumption Agreement:
Incorporated by reference to Exhibit 10.35 of the 1997 Form
10-K.
10.35 Form of Depositary Agreement between Iridium Operating LLC
and The Chase Manhattan Bank: Incorporated by reference to
Exhibit 10.36 of the 1997 Form 10-K.
10.36 Form of Motorola Consent under the Credit Agreement among
Motorola, Iridium Operating LLC and The Chase Manhattan
Bank: Incorporated by reference to Exhibit 10.37 of the 1997
Form 10-K.
10.37 Form of Motorola Pledge Agreement between Motorola, Inc. and
The Chase Manhattan Bank: Incorporated by reference to
Exhibit 10.38 of the 1997 Form 10-K.
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
10.38 Form of Progress Certificate (Pre-Commercial Activation)
under the Credit Agreement: Incorporated by reference to
Exhibit 10.39 of the 1997 Form 10-K.
10.39 Form of Verification of Independent Technical Advisor under
the Credit Agreement: Incorporated by reference to Exhibit
10.40 of the 1997 Form 10-K.
10.40 Form of Progress Certificate (Post-Commercial Activation)
under the Credit Agreement: Incorporated by reference to
Exhibit 10.41 of the 1997 Form 10-K.
10.41 Form of Borrowing Request under the Credit Agreement:
Incorporated by reference to Exhibit 10.42 of the 1997 Form
10-K.
23.1 Consent of KPMG Peat Marwick LLP.**
23.2 Consent of Conyers, Dill & Pearman (contained in Exhibit
5.1).
23.3 Consent of Sullivan & Cromwell (contained in Exhibit 5.2).
99 Certain Factors Which May Affect Forward Looking Statements:
Incorporated by reference to Exhibit 99 of the 1997 Form
10-K.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
+ Confidential treatment previously granted.
++ Confidential treatment requested.
<PAGE> 1
EXHIBIT 4.1.1
WARRANT AGREEMENT
Dated as of
July 16, 1997
between
IRIDIUM WORLD COMMUNICATIONS LTD.
and
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
------------------
Warrants for
Class A Common Stock of
Iridium World Communications Ltd.
------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
SECTION 1.03. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------------
ARTICLE 2 Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
SECTION 2.02. Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------
SECTION 2.03. Execution and Countersignature. . . . . . . . . . . . . . . . . . . . . . 9
------------------------------
SECTION 2.04. Certificate Register. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
SECTION 2.05. Separation of Warrants and Notes. . . . . . . . . . . . . . . . . . . . . 9
--------------------------------
SECTION 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------
SECTION 2.07. Replacement Certificates. . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------
SECTION 2.08. Temporary Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------
SECTION 2.09. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------
SECTION 2.10. Book-Entry Provisions for Global Securities. . . . . . . . . . . . . . . 11
-------------------------------------------
SECTION 2.11. Special Transfer Provisions. . . . . . . . . . . . . . . . . . . . . . . 13
---------------------------
ARTICLE 3 Exercise Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.01. Exercise Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------
SECTION 3.02. Exercise Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------
SECTION 3.03. Expiration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------
SECTION 3.04. Manner of Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------
SECTION 3.05. Issuance of Warrant Shares. . . . . . . . . . . . . . . . . . . . . . . 16
--------------------------
SECTION 3.06. Fractional Warrant Shares. . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------
SECTION 3.07. Reservation of Warrant Shares. . . . . . . . . . . . . . . . . . . . . . 17
-----------------------------
SECTION 3.08. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------
ARTICLE 4 Antidilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.01. Changes in Class A Common Stock. . . . . . . . . . . . . . . . . . . . . 18
-------------------------------
SECTION 4.02. Adjustments for Change in Capital Stock. . . . . . . . . . . . . . . . . 18
---------------------------------------
SECTION 4.03. Adjustments for Rights Issue. . . . . . . . . . . . . . . . . . . . . . 19
----------------------------
SECTION 4.04. Adjustment for Other Distributions. . . . . . . . . . . . . . . . . . . 21
----------------------------------
SECTION 4.05. Adjustment for Common Stock Issue. . . . . . . . . . . . . . . . . . . . 22
---------------------------------
SECTION 4.06. Adjustment for Convertible Securities Issue. . . . . . . . . . . . . . . 23
-------------------------------------------
SECTION 4.07. Consideration Received. . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------
SECTION 4.08. When No Adjustments Required. . . . . . . . . . . . . . . . . . . . . . 25
----------------------------
SECTION 4.09. Notice of Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
SECTION 4.10. Voluntary Increase or Reduction. . . . . . . . . . . . . . . . . . . . . 25
-------------------------------
SECTION 4.11. Notice of Certain Transactions. . . . . . . . . . . . . . . . . . . . . 25
------------------------------
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.12. Self-Tenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------
SECTION 4.13. Warrant Agent's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . 26
--------------------------
SECTION 4.14. When Issuance or Payment May Be Deferred. . . . . . . . . . . . . . . . 26
----------------------------------------
SECTION 4.15. Adjustment in Exercise Rate. . . . . . . . . . . . . . . . . . . . . . . 26
---------------------------
SECTION 4.16. Form of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------
SECTION 4.17. Limitation on Adjustments. . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------------
SECTION 4.18. No Dilution or Impairment. . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------------
SECTION 4.19. Notices to Warrant Holders; Rights of Warrant Holders. . . . . . . . . . 27
-----------------------------------------------------
SECTION 4.20. Combination; Liquidation. . . . . . . . . . . . . . . . . . . . . . . . 29
------------------------
SECTION 4.21. Minimum Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------------
SECTION 4.22. Motorola Guarantee Warrants; Iridium Capital Stock. . . . . . . . . . . 30
--------------------------------------------------
ARTICLE 5 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.01. Effectiveness of Registration Statement. . . . . . . . . . . . . . . . . 30
---------------------------------------
SECTION 5.02. Suspension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------
SECTION 5.03. Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------
SECTION 5.04. Accuracy of Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------
SECTION 5.05. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---------------
SECTION 5.06. Additional Acts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------
SECTION 5.07. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------
ARTICLE 6 Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.01. Appointment of Warrant Agent. . . . . . . . . . . . . . . . . . . . . . 36
----------------------------
SECTION 6.02. Rights and Duties of Warrant Agent. . . . . . . . . . . . . . . . . . . 36
----------------------------------
SECTION 6.03. Individual Rights of Warrant Agent. . . . . . . . . . . . . . . . . . . 37
----------------------------------
SECTION 6.04. Warrant Agent's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . 37
--------------------------
SECTION 6.05. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . 37
--------------------------
SECTION 6.06. Successor Warrant Agent. . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------------
ARTICLE 7 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.01. SEC Reports and Other Information. . . . . . . . . . . . . . . . . . . . 39
---------------------------------
SECTION 7.02. Persons Benefitting. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------------------
SECTION 7.03. Rights of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-----------------
SECTION 7.04. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
---------
SECTION 7.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------
SECTION 7.06. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------
SECTION 7.07. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------
SECTION 7.08. Multiple Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------------
SECTION 7.09. Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-----------------
SECTION 7.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------
SECTION 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
---------------
</TABLE>
EXHIBIT A - Form of Warrant Certificate
ii
<PAGE> 4
EXHIBIT B - Form of Certificate to be Delivered Upon Termination
of the Regulation S Restricted Period
EXHIBIT C - Form of Certificate to be Delivered in Connection
with Transfers to Non-QIB Institutional Accredited
Investors
EXHIBIT D - Form of Certificate for Transfer to Rule 144A Global
Security Bearing a Securities Act Legend
EXHIBIT E - Form of Certificate to be Delivered in Connection
with Transfers Pursuant to Regulation S
iii
<PAGE> 5
WARRANT AGREEMENT dated as of July 16, 1997 (this
"Agreement"), between IRIDIUM WORLD COMMUNICATIONS LTD., a Bermuda company
("IWCL"), and STATE STREET BANK AND TRUST COMPANY, as warrant agent (the
"Warrant Agent").
IWCL desires to issue the warrants described herein and to
purchase with the proceeds therefrom LLC Warrants (as defined herein) of
Iridium LLC, a Delaware limited liability company ("Iridium") pursuant to the
Share Issuance Agreement, dated June 9, 1997, between IWCL and Iridium. The
Warrants will initially entitle the holders thereof (the "Holders") to purchase
in the aggregate 1,560,000 shares of Class A Common Stock, par value $0.01 per
share, of IWCL (the "Class A Common Stock") in connection with an offering (as
described below, the "Units Offering") by IWCL, Iridium and Iridium Capital
Corporation, a Delaware corporation ("Iridium Capital"), of (i) 300,000 units
(the "Units"), each consisting of $1,000 principal amount of 13% Senior Notes
due 2005, Series A (the "Notes") and a warrant to purchase 5.2 shares of Class
A Common Stock (the "Warrants"), and (ii) $500,000,000 aggregate principal
amount of 14% Senior Notes due 2005, Series B. In connection with the sale of
the Units, an aggregate of 300,000 Warrants will be issued to the purchasers of
the Units.
The Warrants will not trade separately from the Notes until
the earlier of (i) the commencement of an Exchange Offer (as defined herein) or
the effectiveness of a shelf registration statement for the Notes and (ii) such
date after January 15, 1998 as Chase Securities Inc. may, in its discretion,
deem appropriate (the "Separation Date").
IWCL further desires the Warrant Agent to act on behalf of
IWCL in connection with the issuance of the Warrants as provided herein and the
Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of Warrants:
ARTICLE 1
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means any other Person, directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specific Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; provided,
however, that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control. The terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Board" means the Board of Directors of IWCL or any committee
thereof duly authorized to act on behalf of such Board of Directors.
<PAGE> 6
"Business Day" means each day that is not a Saturday, a Sunday
or a day on which banking institutions are not required to be open in
Massachusetts or New York.
"Combination" means an event in which IWCL consolidates with,
merges with or into, or sells all or substantially all of its assets to another
Person.
"Current Market Value" per share of Class A Common Stock or
any other security at any date means, on any date of determination, (1) the
average of the daily closing sale prices for each of the 20 Business Days
immediately preceding such date (or such shorter number of days during which
such security has been listed), if the security has been listed on the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market or
other national securities exchange for at least 10 Business Days prior to such
date, (2) if such security is not so listed, the average daily closing bid
prices for each of the 15 Business Days immediately preceding such date (or
such shorter number of days during which such security has been quoted), if the
security has been quoted on a national over-the-counter market for at least 10
Business Days prior to such date, (3) if the security is not so listed and not
so quoted, the value of the security determined in good faith by the Board and
certified in a board resolution, based on the most recently completed
arm's-length transaction between IWCL and a Person other than an Affiliate of
IWCL, the closing of which occurred on such date or within six months preceding
such date, and (4) if the Board fails to make such a determination the value of
the security determined by a nationally recognized investment banking firm or
appraisal firm which is not an Affiliate of IWCL ("Independent Financial
Expert").
"Definitive Security" means certificated Warrants physically
delivered, including Warrant Certificates delivered to Institutional Accredited
Investors.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means an offer by Iridium and Iridium Capital
to holders of the Notes to issue and deliver to such holders, in exchange for
the Notes, a like aggregate principal amount of debt securities of Iridium and
Iridium Capital pursuant to the Exchange and Registration Rights Agreement,
dated as of July 16, 1997.
"Exercise Date" means, for a given Warrant, the day on which
such Warrant is exercised pursuant to Section 3.04.
"Guarantee Agreement" means the guarantee agreement between
Motorola and The Chase Manhattan Bank, as Administrative Agent, and the other
lenders party thereto, dated as of August 21, 1996, as amended or supplemented
from time to time with respect to the Notes.
"Guaranteed Bank Facility" means Iridium's $750 million
unsecured borrowing facility with a syndicate of banks, as amended from time to
time.
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<PAGE> 7
"Indenture" means the Indenture dated as of July 16, 1997,
among Iridium, Iridium Capital, Iridium Roaming LLC and Iridium IP LLC, and the
Trustee, as amended or supplemented from time to time with respect to the
Notes.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
"Issue Date" means the date on which Warrants are initially
issued.
"LLC Warrants" means the warrants, each of which represents
the right to purchase Class 1 Membership Interests in Iridium having the same
terms and tenor as the Warrants issued hereby.
"MOU" means the Memorandum of Understanding dated as of July
11, 1997 between Motorola and Iridium, as amended or supplemented from time to
time.
"Motorola" means Motorola, Inc., a Delaware corporation, or
any successor Person to Motorola.
"Motorola Additional Guarantee" means the commitment by
Motorola pursuant to the MOU to guarantee up to $350 million (inclusive of
principal and interest) in borrowings under the Guaranteed Bank Facility
(inclusive of principal and interest) in excess of the Motorola Guarantee, and
any guarantee issued by Motorola pursuant thereto.
"Motorola Guarantee" means the guarantee by Motorola of
Iridium's borrowings under the Guaranteed Bank Facility up to an aggregate
amount of $750 million (inclusive of interest).
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Rule 902 of the Securities Act.
"Offering Memorandum" means the Offering Memorandum, dated
July 11, 1997, relating to the offer and sale of the Units.
"Officer" means the Chairman of the Board and Chief Executive
Officer, the Deputy Chairman, the Chief Financial Officer, the Secretary or the
Assistant Secretary of IWCL.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Regulation S" means Regulation S under the Securities Act or
any successor provision thereto.
"SEC" means the Securities and Exchange Commission, or any
successor agency or body performing substantially similar functions.
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<PAGE> 8
"Securities Act" means the Securities Act of 1933, as amended.
"Share Issuance Agreement" means the Share Issuance Agreement
between Iridium and IWCL, dated as of June 9, 1997, as amended or supplemented
from time to time.
"Time of Determination" means the time and date of the earlier
of (i) the determination of stockholders entitled to receive rights, warrants,
or options or a distribution, in each case, to which Section 4.03 or 4.04
applies and (ii) the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such rights, warrants or distribution
on such national or regional exchange or market on which the Class A Common
Stock is then listed or quoted.
"Trustee" means State Street Bank and Trust Company, or any
successor trustee under the Indenture.
"Warrant Certificates" mean the registered certificates
(including without limitation, the Global Securities) issued by IWCL under this
Agreement representing the Warrants.
"Warrant Shares" mean the shares of Class A Common Stock (and
any other securities) for which the Warrants are exercisable.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ---------
<S> <C>
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Certificate Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Common Shelf Registration Statement" . . . . . . . . . . . . . . . . . . . . 5.01
"Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01
"Class A Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Delivering Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
"Exercise Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
"Exercise Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01
"Expiration Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.02(b)
"Expiration Time" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
"Extraordinary Cash Dividend" . . . . . . . . . . . . . . . . . . . . . . . . 4.04
"Global Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Holders" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Indemnified Parties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
"Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Private Placement Legend" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(c)
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
"Purchased Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
"QIBs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.07
"Regulation S Global Security" . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Regulation S Permanent Global Security" . . . . . . . . . . . . . . . . . . . 2.01
"Regulation S Restricted Period" . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Regulation S Securities Exchange Date" . . . . . . . . . . . . . . . . . . . 2.01
"Regulation S Temporary Global Security" . . . . . . . . . . . . . . . . . . . 2.01
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Rule 144A Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Separability Legend" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
"Separation Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.20(a)
"Transfer Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.05
"Transfer Restricted Security" . . . . . . . . . . . . . . . . . . . . . . . . 2.06
"Units" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Units Offering" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Warrant Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Warrants" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
"Warrant Shelf Registration Statement" . . . . . . . . . . . . . . . . . . . . 5.01
</TABLE>
SECTION 1.03. Rules of Construction. Unless the text
otherwise requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as
in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular unless the context otherwise requires.
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating. Warrants initially offered
and sold to "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) ("QIBs") in accordance with Rule 144A under the Securities Act
(such Rule, or any successor provision thereto, "Rule 144A") shall be issued on
the Issue Date initially in the form of one or more
5
<PAGE> 10
permanent global Warrant Certificates in registered form, substantially in the
form set forth in Exhibit A hereto (each, a "Rule 144A Global Security"),
deposited with the Warrant Agent, as custodian for the Depositary, duly
executed by IWCL and countersigned by the Warrant Agent as hereinafter
provided. Warrants initially offered and sold in offshore transactions in
reliance on Regulation S shall be issued on the Issue Date initially in the
form of one or more temporary global Warrant Certificates in registered form,
substantially in the form of Exhibit A hereto (each, a "Regulation S Temporary
Global Security"). The Regulation S Temporary Global Securities will be
registered in the name of, and held by, a temporary certificate holder
designated by Chase Securities Inc. until the 40th day after the later of the
commencement of the distribution of the respective initial Warrants and the
Issue Date (each, a "Regulation S Restricted Period") with respect to the offer
and sale of the respective initial Warrants (the "Regulation S Securities
Exchange Date"). IWCL shall promptly notify the Warrant Agent in writing of
the occurrence of the Regulation S Securities Exchange Date and, within a
reasonable period after the Regulation S Securities Exchange Date, upon receipt
by the Warrant Agent and IWCL of one or more certificates substantially in the
form set forth in Exhibit B hereto from one or more Holders of interests in the
applicable Regulation S Temporary Global Security, IWCL shall execute, if not
already executed, and the Warrant Agent shall countersign and deliver, if not
already countersigned and delivered, one or more permanent global Warrant
Certificates in registered form, substantially in the form set forth in Exhibit
A hereto (each, a "Regulation S Permanent Global Security" and, together with
the related Regulation S Temporary Global Security, a "Regulation S Global
Security") or increase the beneficial ownership interest therein if already
executed, countersigned and delivered, in exchange for the related Regulation S
Temporary Global Securities of like tenor and amount. The Rule 144A Global
Securities and Regulation S Global Security are referred to herein as the
"Global Securities". Each Warrant Certificate may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which IWCL is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to IWCL) and shall bear the legends
required by Section 2.02. Each Warrant Certificate shall be dated the date of
its countersignature. The terms of the Warrant Certificate set forth in
Exhibit A are part of the terms of this Agreement. Notwithstanding the
foregoing, the IWCL may execute, and the Warrant Agent may countersign and
deliver Regulation S Permanent Global Securities in a $0 amount at the time of
issuance of the Regulation S Temporary Global Security.
SECTION 2.02. Legends. (a) Each Warrant Certificate shall
bear the following legend:
THE CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF IRIDIUM WORLD
COMMUNICATIONS LTD. ("IWCL") FOR WHICH THIS WARRANT IS EXERCISABLE MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ANY
APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, NO HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE
TIME OF EXERCISE, A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
RELATING TO THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT HAS BEEN FILED WITH, AND
6
<PAGE> 11
DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH
REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC.
(b) Each Warrant Certificate issued prior to the Separation
Date shall bear the following legend (the "Separability Legend"):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS
PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF SENIOR NOTES
DUE 2005, SERIES A OF IRIDIUM LLC AND IRIDIUM CAPITAL CORPORATION (IN
EITHER SUCH CASE, THE "NOTES") AND WARRANTS. THE WARRANTS AND THE
NOTES WILL NOT TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE
COMMENCEMENT OF AN EXCHANGE OFFER OR THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT FOR SUCH NOTES AND (II) SUCH DATE AFTER JANUARY
15, 1998 AS CHASE SECURITIES INC. MAY DETERMINE.
(c) Unless otherwise provided in Section 2.06 each Warrant
Certificate shall bear the following legend (the "Private Placement Legend"):
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
IWCL OR ANY AFFILIATE OF IWCL WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), EXCEPT (A) TO IWCL, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFSHORE TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904
UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
7
<PAGE> 12
THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES (IF AVAILABLE) OR
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE (A) THROUGH (F),
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS AND SUBJECT TO THE ISSUERS' AND
THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSES
(A) THROUGH (F), A CERTIFICATE OF TRANSFER IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO IWCL AND THE WARRANT AGENT. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT IT IS NOT AN
AFFILIATE OF IWCL OR ACTING ON BEHALF OF IWCL AND (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT)
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S.
(d) Each Warrant Certificate issued in global form and
deposited with DTC shall bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
IWCL OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT REFERRED TO HEREIN.
8
<PAGE> 13
SECTION 2.03. Execution and Countersignature. Two Officers
shall sign the Warrant Certificates for IWCL by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no longer holds that
office at the time the Warrant Agent countersigns the Warrant Certificate, the
Warrant Certificate shall nevertheless be valid. A Warrant Certificate shall
not be valid until an authorized signatory of the Warrant Agent manually
countersigns the Warrant Certificate. Such authorized signature shall be
conclusive evidence that the Warrant Certificate has been countersigned under
this Agreement.
The Warrant Agent shall initially countersign and deliver
Warrant Certificates which are Units entitling the Holders thereof to purchase
in the aggregate not more than 1,560,000 Warrant Shares upon a written order of
IWCL signed by two Officers.
The Warrant Agent may appoint an agent reasonably acceptable
to IWCL to countersign the Warrant Certificates. Unless limited by the terms
of such appointment, such agent may countersign Warrant Certificates whenever
the Warrant Agent may do so. Each reference in this Agreement to
countersignature by the Warrant Agent includes countersignature by such agent.
Such agent will have the same rights as the Warrant Agent for service of
notices and demands.
SECTION 2.04. Certificate Register. The Warrant Agent shall
keep a register ("Certificate Register") of the Warrant Certificates and of
their transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
represented on the face of each Warrant Certificate. IWCL and the Warrant
Agent may deem and treat the Person in whose name a Warrant Certificate is
registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither IWCL nor the Warrant Agent shall be affected by notice
to the contrary.
SECTION 2.05. Separation of Warrants and Notes. (a) Prior to
the Separation Date, no Warrant may be sold, assigned or otherwise transferred
to any Person unless, simultaneously with such transfer, the Warrant Agent
receives confirmation from the Trustee for the Notes that the Holder thereof
has requested a transfer of such Notes to the same transferee.
(b) On or after the Separation Date, the holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
SECTION 2.06. Transfer and Exchange. The Warrant
Certificates shall be issued in registered form only and shall be transferable
only upon the surrender of such Warrant Certificate for registration of
transfer. When a Warrant Certificate is presented to the Warrant Agent with a
request to register a transfer, the Warrant Agent shall register the transfer
as requested if the reasonable requirements of the Warrant Agent and of Section
8-401(1) of the Uniform Commercial Code as in effect in the State of New York
are met, as stated to the Warrant Agent in an opinion of counsel if requested
by the Registrar; provided, however, that prior to the Separation Date the
Warrant Agent shall not register a transfer of a Warrant
9
<PAGE> 14
Certificate and such transfer will be void and of no effect unless the Notes
that are a part of the same Unit as the Warrants represented by such Warrant
Certificate to be transferred are simultaneously transferred to the same
transferee. To permit the registration of transfers and exchanges, IWCL shall
execute and the Warrant Agent shall countersign Warrant Certificates at the
Warrant Agent's request. All Warrant Certificates issued upon any registration
of transfer or exchange of Warrant Certificates shall be valid obligations of
IWCL, entitled to the same benefits under this Agreement as the Warrant
Certificates surrendered upon such registration of transfer or exchange. No
service charge will be made to a Holder for any registration of transfer or
exchange upon surrender of any Warrant Certificate at the office of the Warrant
Agent maintained for that purpose. However, IWCL may require payment of a sum
sufficient to cover any tax, assessment or other governmental charge that may
be imposed in connection with any registration of transfer or exchange of
Warrant Certificates but not for any exchange or original issuance (not
involving a transfer) pursuant to Section 2.08, 3.04 or 3.05.
During the period beginning on the later of the Issue Date and
the last date on which IWCL or any Affiliate of IWCL was the owner of an
initial Warrant (or any predecessor Warrant) and ending on the date two years
(or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder) from any such date, any
initial Warrant issued or owned during the period set forth above, as the case
may be, and any Warrant issued upon registration of transfer of, or in exchange
for, or in lieu of, such initial Warrant shall be deemed a "Transfer Restricted
Security" and shall be subject to the restrictions on transfer provided in the
legend set forth in Section 2.02(c); provided, however, that the term "Transfer
Restricted Security" shall not include (a) any initial Warrant which is issued
upon transfer of, or in exchange for, any Warrant which is not a Transfer
Restricted Security or (b) any initial Warrant as to which such restrictions on
transfer have been terminated in accordance with this Section 2.06.
Every Transfer Restricted Security shall be subject to the
restrictions on transfer set forth in Section 2.01 and Section 2.11 and shall
bear the Private Placement Legend and the Holder of each Transfer Restricted
Security, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer.
The restrictions imposed by Section 2.01 and Section 2.11 upon
the transferability of any particular Transfer Restricted Security shall cease
and terminate and the Private Placement Legend shall no longer be necessary (a)
in the case of a Regulation S Global Security, on the Regulation S Securities
Exchange Date with respect to the Warrants or (b) in the case of a Rule 144A
Global Security or Definitive Security, on (x) the later of two years (or such
shorter period of time as permitted by Rule 144(k) under the Securities Act or
any successor provision thereunder) after the later of the Issue Date or the
last date on which IWCL or any Affiliate of IWCL was the owner of the
applicable Transfer Restricted Security (or any predecessor of such Transfer
Restricted Security) or (y) (if earlier) if and when such Transfer Restricted
Security has been sold pursuant to an effective registration statement under
the Securities Act or, unless the Holder thereof is an Affiliate of IWCL,
transferred pursuant to Rule 144 or Rule 904 under the Securities Act (or any
successor provision). IWCL shall inform the Warrant Agent in writing of the
effective date of any registration statement registering any Transfer
Restricted Securities under the Securities Act.
10
<PAGE> 15
Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Holder of such Global Security (or its agent), and that ownership of a
beneficial interest in the Global Security shall be required tn be reflected in
a book-entry.
SECTION 2.07. Replacement Certificates. If a mutilated
Warrant Certificate is surrendered to the Warrant Agent or if the Holder of a
Warrant Certificate claims that the Warrant Certificate has been lost,
destroyed or wrongfully taken, IWCL shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate of the same tenor and amount if
the reasonable requirements of the Warrant Agent and of Section 8-405 of the
Uniform Commercial Code as in effect in the State of New York are met. Such
Holder shall furnish an indemnity bond sufficient in the judgment of IWCL and
the Warrant Agent to protect IWCL and the Warrant Agent from any loss which
either of them may suffer if a Warrant Certificate is replaced. IWCL and the
Warrant Agent may charge the Holder for their expenses in replacing a Warrant
Certificate. Every replacement Warrant Certificate is an additional obligation
of IWCL.
SECTION 2.08. Temporary Certificates. Until definitive
Warrant Certificates are ready for delivery, IWCL may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that IWCL considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, IWCL shall prepare
and the Warrant Agent shall countersign definitive Warrant Certificates and
deliver them in exchange for temporary Warrant Certificates.
SECTION 2.09. Cancellation. (a) In the event IWCL shall
purchase or otherwise acquire Warrant Certificates, the same shall thereupon be
delivered to the Warrant Agent for cancellation.
(b) The Warrant Agent and no one else shall cancel and may,
but shall not be required to, destroy all Warrant Certificates surrendered for
transfer, exchange, replacement, exercise or cancellation unless IWCL directs
the Warrant Agent to deliver cancelled Warrant Certificates to IWCL. IWCL may
not issue new Warrant Certificates to replace Warrant Certificates to the
extent they represent Warrants which have been exercised or Warrants which IWCL
has purchased or otherwise acquired.
SECTION 2.10. Book-Entry Provisions for Global Securities.
(a) Each Global Security shall (i) be registered in the name of the Depositary
for such Global Security or the nominee of such Depositary, (ii) be delivered
to the Warrant Agent as custodian for such Depositary and (iii) bear the Global
Securities legend as set forth in Section 2.02(d).
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Warrant Agreement with respect to any
Global Security held on their behalf by the Depositary, or the Warrant Agent as
its custodian, or under such Global Security, and the Depositary may be treated
by IWCL, the Warrant Agent and any agent of IWCL or the Warrant
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<PAGE> 16
Agent as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent IWCL,
the Warrant Agent or any agent of IWCL or the Warrant Agent, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or shall impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights of a
holder of any Warrant Certificate.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in
a Global Security may be transferred in accordance with the rules and
procedures of the Depositary and the provisions of Section 2.11. Except as
otherwise provided in Section 2.11, beneficial owners of interests in a Global
Security may obtain Definitive Securities in exchange for their beneficial
interests in such Global Security only if (i) IWCL notifies the Warrant Agent
in writing that the Depositary is no longer willing or able to continue as
Depositary for such Global Security or the Depositary ceases to be a "clearing
agency" registered under the Exchange Act and, in each case, a successor
depository is not appointed by IWCL within 90 days of such notice or such
cessation, as the case may be, (ii) an Event of Default (as defined in the
Indenture has occurred and is continuing under the Indenture and the Warrant
Agent has received a request from the Depositary to effect such exchange or
(iii) IWCL, at its option, notifies the Warrant Agent that it elects to cause
the issuance of the Warrants in definitive form.
(c) Any beneficial interest in one of the Global Securities
that is transferred to a person who takes delivery in the form of an interest
in the other Global Security will, upon transfer, cease to be an interest in
such Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Security for as long as it remains such an interest.
(d) In connection with any transfer of a portion of the
beneficial interest in a Global Security to beneficial owners pursuant to
Section 2.10(b) or Section 2.11, the Warrant Agent shall reflect on its books
and records the date and a decrease in the aggregate number of Warrants in such
Global Security in an amount equal to the aggregate number of Warrants in the
beneficial interest in such Global Security to be transferred, and IWCL shall
execute, and the Warrant Agent shall countersign and deliver, one or more
Definitive Securities of like tenor and amount.
(e) In connection with the transfer of an entire Global
Security to beneficial owners thereof pursuant to subsection (b) of this
Section, such Global Security shall be deemed to be surrendered to the Warrant
Agent for cancellation, and IWCL shall execute, and the Warrant Agent shall
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in such Global Security, an equal
aggregate number of Warrants represented by Definitive Securities of authorized
denominations.
(f) Any Definitive Security delivered in exchange for an
interest in a Rule 144A Global Security pursuant to Section 2.10(b) or Section
2.10(d) shall, unless the circumstances
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<PAGE> 17
provided in Section 2.11(a)(i)(x) exist or except as otherwise provided in
Section 2.11(e), bear the Private Placement Legend.
(g) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Warrant Agreement or the Warrants.
SECTION 2.11. Special Transfer Provisions. (a) Transfers to
Non-QIB Institutional Accredited Investors. The following provisions shall
apply with respect to the registration of any proposed transfer of a Transfer
Restricted Security to any Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons):
(i) The Warrant Agent shall register the transfer of any
Warrant Certificate, whether or not such Warrant Certificate bears the
Private Placement Legend, if (x) the requested transfer is subsequent
to a date which is two years after the later of the Issue Date and the
last date on which IWCL or any of its Affiliates was the owner of such
Warrant or (y) the proposed transferee has delivered to the Warrant
Agent a certificate substantially in the form set forth in Exhibit C
hereto.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Rule 144A Global Security seeking to transfer
a Definitive Security to another person, upon receipt by the Warrant
Agent of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the Warrant
Agent's procedures therefor, the Warrant Agent shall reflect on its
books and records the date and a decrease in the number of Warrants
represented by Rule 144A Global Security in an amount equal to the
number of Warrants represented by such Rule 144A Global Security to be
transferred, and IWCL shall execute, and the Warrant Agent shall
authenticate and deliver, one or more Definitive Certificates of like
tenor and amount.
(iii) An Institutional Accredited Investor which is not a QIB
and not a Non-U.S. Person shall only hold Definitive Securities.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Transfer
Restricted Security to a QIB (other than a Non-U.S. person);
(i) If the Warrant to be transferred consists of (x)
Definitive Securities, the Security Registrar shall register the
transfer if such transfer is being made by a proposed transferor who
has delivered to the Warrant Agent a certificate substantially in the
form set forth in Exhibit D hereto to the Warrant Agent or (y) an
interest in a Rule 144A Global Security, the transfer of such interest
may be effected only through the book-entry system maintained by the
Depositary.
(ii) If the Warrant to be transferred consists of Definitive
Securities, upon receipt by the Warrant Agent of instructions given in
accordance with the Depositary's and the
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<PAGE> 18
Warrant Agent's procedures therefor, the Warrant Agent shall reflect
on its books and records the date and an increase in the number of
Warrants represented by the Rule 144A Global Security in an amount
equal to the number of Warrants represented by the Definitive
Securities to be transferred, and the Warrant Agent shall cancel the
Definitive Securities so transferred.
(c) Transfers of Interests in a Regulation S Global Security
to U.S. Persons. The following provisions shall apply with respect to any
transfer of interests in a Regulation S Global Security to U.S. Persons:
(i) If the beneficial interest to be transferred is in a
Regulation S Temporary Global Security, transfers by an owner of a
beneficial interest in such Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A
Global Security will be made only upon receipt by the Warrant Agent
from the transferor of a certificate substantially in the form set
forth in Exhibit D hereto to the effect that such transfer is being
made to a person who the transferor reasonably believes is a QIB
within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A; and
(ii) If the beneficial interest to be transferred is in a
Regulation S Permanent Global Security, the Warrant Agent shall
register the transfer of any such Warrant Certificate without
requiring any additional certification.
(d) Transfers to Non-U.S. Person at Any Time. The following
provisions shall apply with respect to any transfer of a Warrant Certificate to
a Non-U.S. Person:
(i) The Warrant Agent shall register any proposed transfer to
any Non-U.S. Person if the Warrant Certificate to be transferred is a
Definitive Security or an interest in a Rule 144A Global Security only
upon receipt of a certificate substantially in the form set forth in
Exhibit E hereto from the proposed transferor. Prior to the
termination of the Regulation S Restricted Period, any Non-U.S. Person
shall be delivered a beneficial interest in the Regulation S Temporary
Global Security.
(ii) (x) If the proposed transferor is an Agent Member
holding a beneficial interest in a Rule 144A Global Security, upon
receipt by the Warrant Agent of (1) the documents required by
paragraph (i) of this paragraph (d) and (2) instructions in accordance
with the Depositary's and the Warrant Agent's procedures, the Warrant
Agent shall reflect on its books and records the date and a decrease
in the number of Warrants represented by such Rule 144A Global
Security in an amount equal to the number of Warrants represented by
the beneficial interest in such Rule 144A Global Security to be
transferred, and (y) upon receipt by the Warrant Agent of instructions
given in accordance with the Depositary's and the Warrant Agent's
procedures, the Warrant Agent shall reflect on its books and records
the date and an increase in the number of Warrants represented by the
Regulation S Global Security in an amount equal to the number of
Warrants represented by the Definitive Securities or such Rule 144A
Global Security, as the case may be, to be transferred, and the
Warrant Agent shall cancel
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<PAGE> 19
the Definitive Security so transferred or decrease the number of
Warrants represented by such Rule 144A Global Security, as the case
may be.
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates not bearing the Private Placement Legend,
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of
Warrant Certificates bearing the Private Placement Legend, the Warrant Agent
shall deliver only Warrant Certificates that bear the Private Placement Legend
unless either (i) the Private Placement Legend is no longer required pursuant
to Section 2.01 and Section 2.06, or (ii) there is delivered to the Warrant
Agent an opinion of counsel reasonably satisfactory to IWCL and the Warrant
Agent to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) General. By its acceptance of any Warrant Certificate,
or any beneficial interest in any Global Security, bearing the Private
Placement Legend, each Holder of such Warrant Certificate or beneficial
interest acknowledges the restrictions on transfer of such Warrant Certificate
set forth in this Warrant Agreement and in the Private Placement Legend and
agrees that it will transfer such Warrant Certificate only as provided in this
Warrant Agreement. The Warrant Agent shall not register a transfer of any
Warrant Certificate unless such transfer complies with the restrictions on
transfer of such Warrant Certificate set forth in this Warrant Agreement. In
connection with any transfer of Warrant Certificates to an Institutional
Accredited Investor, each such Holder or beneficial owner agrees by its
acceptance of the Warrant Certificates to furnish the Warrant Agent or IWCL
such certifications, legal opinions or other information as such Person may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Warrant Agent shall not be required to
determine (but may rely on a determination made by IWCL with respect to) the
sufficiency of any such certifications, legal opinions or other information.
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price. Each Warrant shall initially
entitle the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase 5.2 shares of Class A Common Stock for a per share
exercise price (the "Exercise Price") of $20.90.
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<PAGE> 20
SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time or
from time to time after July 16, 1998; provided, however, that holders of
Warrants will be able to exercise their Warrants only if the Common Shelf
Registration Statement relating to the Warrant Shares is effective and the
Warrant Shares are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
holders reside.
(b) No Warrant shall be exercisable after July 15, 2005, at
which time the Warrants shall automatically expire (the "Expiration Date").
SECTION 3.03. Expiration. Each Warrant shall terminate and
become void as of the earlier of (i) the close of business on the Expiration
Date or (ii) the date such Warrant is exercised. IWCL shall give notice not
less than 90 and not more than 120 days prior to the Expiration Date to the
Holders of all then outstanding Warrants to the effect that the Warrants will
terminate and become void as of the close of business on the Expiration Date;
provided, however, that if IWCL fails to give notice as provided in this
Section 3.03, the Warrants will nevertheless expire and become void on the
Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised
upon (i) surrender to the Warrant Agent at the principal corporate trust office
of the Warrant Agent, together with the form of election to purchase Class A
Common Stock on the reverse thereof duly filled in and signed by the Holder
thereof, and (ii) payment to the Warrant Agent, for the account of IWCL, of the
Exercise Price for each Warrant Share issuable upon the exercise of such
Warrants then exercised. Such payment shall be made in cash or by certified or
official bank check payable to the order of IWCL or by wire transfer of funds
to an account designated by IWCL for such purpose. Subject to Section 3.02,
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or in part from time to time, and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new
Warrant Certificates, and IWCL, at the Warrant Agent's request, shall supply
the Warrant Agent with Warrant Certificates duly signed on behalf of IWCL for
such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section
2.07, upon the surrender of Warrant Certificates and payment of the per share
Exercise Price, as set forth in Section 3.04, IWCL shall issue and cause The
Bank of New York, as transfer agent for the Class A Common Stock or any
successor thereto ("Transfer Agent") to countersign and deliver to or upon the
written order of the Holder and in such name or names as the Holder may
designate a certificate or certificates for the number of whole Warrant Shares
so purchased upon the exercise of such Warrants or other securities or property
to which it is entitled, registered or otherwise, to the Person or Persons
entitled to receive the same, together with cash as provided in Section 3.06 in
respect of any fractional Warrant Shares otherwise issuable upon such exercise.
Such certificate or certificates shall be deemed to have been issued and any
Person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of such
Warrant Certificates and payment of the per share Exercise
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<PAGE> 21
Price, as aforesaid; provided, however, that if, at such date, the transfer
books for the Warrant Shares shall be closed, the certificates for the Warrant
Shares in respect of which such Warrants are then exercised shall be issuable
as of the date on which such books shall next be opened and until such date
IWCL shall be under no duty to deliver any certificates for such Warrant
Shares; provided further, however, that such transfer books, unless otherwise
required by law, shall not be closed at any one time for a period longer than
20 calendar days.
SECTION 3.06. Fractional Warrant Shares. IWCL shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of whole Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable on the exercise of
any Warrant (or specified portion thereof), IWCL shall pay at the time of
exercise an amount in cash equal to the Current Market Value per Warrant Share,
as determined on the Business Day immediately preceding the date the Warrant is
exercised, multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. IWCL shall at
all times keep reserved out of its authorized shares of Class A Common Stock a
number of shares of Class A Common Stock sufficient to provide for the exercise
of all outstanding Warrants. The Bank of New York, as U.S. Registrar, and
Codan Services Limited, as Bermuda Registrar, for the Class A Common Stock or
any successor thereto (in each case, the "Registrar"), shall at all times until
the Expiration Date reserve such number of authorized shares as shall be
required for such purpose. IWCL will keep a copy of this Agreement on file
with the Transfer Agent. All Warrant Shares which may be issued upon exercise
of Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof. IWCL will supply such Transfer Agent with duly
executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
3.06. IWCL will furnish to such Transfer Agent a copy of all notices of
adjustments (and certificates related thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment
pursuant to Article 4 to reduce the Exercise Price below the then par value
($0.01 per share) of the Class A Common Stock, IWCL shall take any and all
corporate action which may, in the opinion of its counsel, be necessary in
order that IWCL may validly and legally issue fully paid and nonassessable
shares of Class A Common Stock at the Exercise Price as so adjusted.
IWCL covenants that all shares of Class A Common Stock which
may be issued upon exercise of Warrants will, upon issue, be duly and validly
issued, fully paid, nonassessable, free of preemptive rights, free from all
taxes and free from all liens, charges and security interests, created by or
through IWCL, with respect to the issue thereof.
SECTION 3.08. Compliance with Law. Notwithstanding anything
in this Agreement to the contrary, in no event shall a Holder be entitled to
exercise a Warrant unless (i)
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<PAGE> 22
a registration statement filed under the Securities Act in respect of the
issuance of the Warrant Shares is then effective or (ii) in the opinion of
counsel to IWCL addressed to the Warrant Agent the exercise of such Warrants is
exempt from the registration requirements of the Securities Act and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the States or other jurisdictions in which such
holders reside.
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Class A Common Stock. The number of
Warrant Shares that may be purchased upon the exercise of each Warrant (the
"Exercise Rate") and the related Exercise Price will both be subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Article 4. For purposes of this Article 4, "Common Stock" means the Class
A Common Stock and any other stock of IWCL for which the Warrants may be
exercised and where, as a result of this definition, the term refers to more
than one class of securities, the adjustment provisions of this Article 4 shall
be equitably adjusted to achieve as nearly as practicable the intended result
as evidenced by the text of such adjustment provisions.
SECTION 4.02. Adjustments for Change in Capital Stock. If at
any time after the date of this Agreement, IWCL:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(3) combines its outstanding shares of Common Stock into
a smaller number of shares;
(4) pays a dividend or makes a distribution on its Common
Stock in shares of its capital stock other than
Common Stock; or
(5) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Exercise Price and the Exercise Rate in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of IWCL which such holder would have owned immediately following
such action if such Warrant had been exercised immediately prior to such
action.
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<PAGE> 23
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment and upon exercise of a Warrant the
holder may receive shares of two or more classes or series of capital stock of
IWCL, IWCL shall determine the allocation of the adjusted Exercise Price
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Article 4.
Such adjustment shall be made successively whenever any event
listed above occurs.
SECTION 4.03. Adjustments for Rights Issue. If IWCL
distributes any rights, options or warrants to all holders of its Common Stock
entitling them for a period expiring within 60 days after the record date
mentioned below to purchase shares of Common Stock or securities convertible
into, or exchangeable or exercisable for, Common Stock at a price per share
less than the Current Market Value per share as of the Time of Determination,
the Exercise Price shall be adjusted in accordance with the formula:
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<PAGE> 24
O + N x P
-----
E' = E x M
----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on
the record date.
N = the number of additional shares of Common Stock that
may be acquired in connection with such distribution.
P = the price per share to acquire such additional shares
of Common Stock.
M = the Current Market Value per share, minus, in case
(i) any other distribution has occurred to which
Section 4.02(4) applies or (ii) any other
distribution which has occurred to which Section 4.04
applies, and with respect to which, in either case,
(x) the record date shall occur on or before the
record date for the distribution to which this
Section 4.02 applies or (y) the Ex-Dividend Time (as
defined in the definition of Time of Determination)
shall occur on or after the date of the Time of
Determination for the distribution to which this
Section 4.03 applies, the fair market value (on the
record date for the distribution to which this
Section 4.03 applies) of (1) the capital stock of
IWCL distributed in respect of each share of Common
Stock in such Section 4.02(4) distribution and (2)
the assets of IWCL or debt securities or any rights,
warrants or options to purchase securities of IWCL
distributed in respect of each share of Common Stock
in such Section 4.04 distribution.
The Board shall determine fair market values in good faith for
the purpose of this Section 4.03.
The adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, warrants or options to which this Section 4.03 applies. To the extent
that shares of Common Stock are not delivered after the expiration of such
rights or warrants, the Exercise Price shall be readjusted to the Exercise
Price which would otherwise be in effect had the adjustment made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that
such rights or warrants are not so issued, the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect if such date
fixed for determination of stockholders entitled to receive such rights or
warrants had not been so fixed.
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<PAGE> 25
No adjustment shall be made under this Section 4.03 if the
application of the formula stated above in this Section 4.03 would result in a
value of E' that is higher than the value of E.
SECTION 4.04. Adjustment for Other Distributions. If IWCL
distributes to all holders of its Common Stock any of its assets, debt
securities or any rights, options or warrants to purchase debt securities,
assets or other securities of IWCL, the Exercise Price shall be adjusted in
accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Current Market Value (including securities or
cash, but excluding (1) distributions of capital
stock referred to in Section 4.02 and distributions
of rights, warrants or options referred to in Section
4.03 and (2) cash dividends or other distributions
that are paid out of consolidated current net
earnings retained in the business as shown on the
books of IWCL unless such cash dividends or other
cash distributions are Extraordinary Cash Dividends
(as hereinafter defined)) per share of Common Stock
on the record date for the determination of
stockholders entitled to receive the distribution.
F = the fair market value (as determined in good faith by
the Board) of the assets, securities, rights or
warrants applicable to one share of Common Stock as
of the Time of Determination for the determination of
stockholders entitled to receive the distribution.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the
distribution.
This Section 4.04 shall not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings or earned
surplus as shown on the books of IWCL prepared in accordance with generally
accepted accounting principles other than any Extraordinary Cash Dividend.
Also, this subsection shall not apply to rights, options or warrants referred
to in Section 4.03. An "Extraordinary Cash Dividend" shall be any cash
dividend other than a dividend that, when added to all other cash dividends
paid in the twelve month period prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price under this Section 4.04), does not exceed 10% of the Current
Market Value per share of Common Stock on such declaration date. In all cases,
IWCL
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<PAGE> 26
shall give the Warrant holders at least 10 days notice of a record date for any
dividend payment on the Common Stock.
SECTION 4.05. Adjustment for Common Stock Issue. If IWCL
issues shares of Common Stock for a consideration per share less than the
Current Market Value per share on the date IWCL fixes the offering price of
such additional shares, the Exercise Price shall be adjusted in accordance with
the formula:
O + P
E' = E x M --
-----
O + N
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such additional shares.
N = the number of additional shares issued.
P = the aggregate consideration received for the issuance
of such additional shares.
M = the Current Market Value per share on the date of
issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This Section 4.05 does not apply to:
(1) any of the transactions described in Sections 4.02,
4.03 and 4.04;
(2) the exercise of Warrants or other warrants
outstanding on the date of this Agreement, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock;
(3) Common Stock issued to IWCL's or Iridium's employees
under bona fide employee benefit plans adopted by the Board and approved by the
holders of Common Stock when required by law, and Common Stock issued to the
non-employee directors of IWCL or Iridium upon the exercise of options granted
to such persons, if such Common Stock would otherwise be covered by this
Section 4.05 (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date of this Agreement shall not exceed 4%
(in
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<PAGE> 27
equivalent value) of the Class 1 Membership Interests in Iridium outstanding at
the time of the adoption of each such plan, exclusive of antidilution
adjustments thereunder);
(4) Common Stock issuable upon the exercise of rights or
warrants issued to the holders of Common Stock;
(5) Common Stock issued to stockholders of any person
which is merged with IWCL or any subsidiary of IWCL or Iridium in proportion to
their stock holdings of such person immediately prior to such merger, upon such
merger;
(6) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting;
(7) Common Stock issued in a bona fide offering under
Rule 144A or Regulation S or a bona fide private placement, in each case to
multiple purchasers; or
(8) Common Stock issued in exchange for Class 1
Membership Interests of Iridium LLC pursuant to the Interest Exchange
Agreement, dated as of June 9, 1997 between IWCL and Iridium.
SECTION 4.06. Adjustment for Convertible Securities Issue.
If IWCL issues any securities convertible into or exchangeable for Common Stock
(other than securities issued in transactions described in Sections 4.02, 4.03
and 4.04) for a consideration per share of Common Stock initially deliverable
upon conversion or exchange of such securities less than the Current Market
Value per share of the Common Stock on the date of issuance of such convertible
or exchangeable securities, the Exercise Price shall be adjusted in accordance
with the formula:
O + P
---
E' = E x M
---
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such additional shares.
D = the maximum number of shares deliverable upon
conversion of or in exchange for such securities at
the initial conversion or exchange rate.
P = the aggregate consideration received for the issuance
of such securities.
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<PAGE> 28
M = the Current Market Value per share on the date of
issuance of such securities.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all the Common Stock deliverable upon conversion or
exchange of such securities has not been issued when such securities are no
longer convertible, exchangeable or outstanding, then the Exercise Price shall
promptly be readjusted to the Exercise Price which would then be in effect had
the adjustment upon the issuance of such securities been made on the basis of
the actual number of shares of Common Stock issued upon conversion or exchange
of such securities.
This Section 4.06 does not apply to:
(1) convertible or exchangeable securities issued to
stockholders of any person which is merged with IWCL or any subsidiary of IWCL,
in proportion to their stock holdings of such person immediately prior to such
merger, upon such merger;
(2) convertible or exchangeable securities issued in a
bona fide public offering pursuant to a firm commitment underwriting; or
(3) convertible or exchangeable securities issued in a
bona fide offering under Rule 144A or Regulation S or a bona fide private
placement, in each case to multiple purchasers.
SECTION 4.07. Consideration Received. For purposes of any
computation respecting consideration received pursuant to Sections 4.05 and
4.06, the following shall apply:
(1) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by IWCL for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board (irrespective of the accounting treatment
thereof) and described in a Board resolution which shall be filed with the
Warrant Agent; and
(3) in the case of the issuance of securities convertible
into or exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by IWCL for the issuance of
such securities plus the additional minimum consideration, if any, to be
received by IWCL upon the conversion or exchange thereof (the consideration in
each case to be determined in the same manner as provided in paragraphs (1) and
(2) of this Section 4.07); provided that if consideration in addition to such
additional minimum consideration is received by IWCL then the Exercise Price
shall be promptly readjusted to the
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Exercise Price which would then be in effect had such additional consideration
been included in the calculation of the Exercise Price.
SECTION 4.08. When No Adjustments Required. To the extent
the Warrants become convertible into cash pursuant to Section 4.20, no
adjustment shall be made thereafter. Interest will not accrue on the cash.
SECTION 4.09. Notice of Adjustments. Whenever the Exercise
Rate or Exercise Price is adjusted, IWCL shall provide the written notices
required by Section 4.19.
SECTION 4.10. Voluntary Increase or Reduction. IWCL from
time to time may increase the Exercise Rate or decrease the Exercise Price, as
the case may be, by any amount for any period of time if the period is at least
20 days and if the increase or decrease, as the case may be, is irrevocable
during the period.
Whenever the Exercise Rate is increased or the Exercise Price
is decreased, as the case may be, IWCL shall mail to registered Warrant holders
and the Warrant Agent a notice of the increase or decrease, as the case may be.
IWCL shall mail the notice at least 15 days before the date the increased
Exercise Rate or decreased Exercise Rate or decreased Exercise Price, as the
case may be, and the period it will be in effect.
An increase in the Exercise Rate or decrease in the Exercise
Price, as the case may be, does not change or adjust the Exercise Rate or
Exercise Price, as the case may be, otherwise in effect, or as used for
calculations, for purposes of Sections 4.02, 4.03, 4.04, 4.05 and 4.06.
SECTION 4.11. Notice of Certain Transactions. If: (1) IWCL
takes any action that would require an adjustment in the Exercise Rate pursuant
to Section 4.02, 4.03 or 4.04 or (2) IWCL takes any action that would require a
supplemental Warrant Agreement pursuant to Section 4.20, IWCL shall mail to
registered Warrant holders and the Warrant Agent a notice stating the proposed
record date for a dividend or distribution or the expected effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. IWCL shall mail the notice at least 20 days
before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
SECTION 4.12. Self-Tenders. In case of the consummation of a
tender or exchange offer (other than an odd-lot tender offer) made by IWCL or
any subsidiary of IWCL to all or substantially all of IWCL's stockholders for
all or any portion of the Common Stock where the cash and value of any other
consideration included in such payment per share of Common Stock exceeds the
Current Market Value of the common Stock on the business day immediately
preceding the commencement of the self-tender or exchange offer, the Exercise
Price shall be reduced on the 5th Business Day following the Expiration Time
(as defined) so that it shall equal the price determined by multiplying the
Exercise Price in effect immediately prior to the last time tenders or
exchanges may be made pursuant to such tender or exchange offer (the
"Expiration Time") by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding (without giving effect to any reduction in
respect of any tendered of
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exchanged shares) on the Expiration Time multiplied by the Current Market Value
of the Common Stock on the business day immediately preceding the commencement
of the self-tender or exchange offer, and the denominator of which shall be the
sum of (A) the fair market value (determined by the Board in good faith) of the
aggregate consideration payable to stockholders based on the actual acceptances
(up to any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares") and (B) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration Time and
the Current Market Value of the Common Stock on the business day immediately
preceding the commencement of the self-tender or exchange offer, such reduction
to become effective immediately prior to the opening of business on the day
following the Expiration Time.
SECTION 4.13. Warrant Agent's Disclaimer. The Warrant Agent
has no duty to determine when an adjustment under this Article 4 should be
made, how such adjustment should be made or what such adjustment should be.
The Warrant Agent has no duty to determine whether any provisions of a
supplemental Warrant Agreement under Section 4.20 are correct. The Warrant
Agent makes no representation or warranty as to the validity or value of any
securities or assets issued upon exercise of Warrants or pursuant to any
adjustment. The Warrant Agent shall not be responsible for IWCL's failure to
comply with Article 4.
SECTION 4.14. When Issuance or Payment May Be Deferred. In
any case in which this Article 4 shall require that an adjustments in the
Exercise Rate be made effective as of a record date for a specified event, IWCL
may elect to defer until the occurrence of such event (i) issuing to the holder
of any Warrant exercised after such record date the Warrant Shares and other
capital stock of IWCL, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of IWCL, if any, issuable upon such
exercise on the basis of the Exercise Rate and (ii) paying to such holder any
amount in cash in lieu of a fractional share pursuant to Section 3.06;
provided, however, that IWCL shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence of
the event requiring such adjustment.
SECTION 4.15. Adjustment in Exercise Rate. Upon each
adjustment of the Exercise Price pursuant to this Article 4 with respect to the
Warrants, each such Warrant outstanding prior to the making of the adjustment
in Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth) obtained from the following formula:
N' = N x E
--
E'
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where:
N' = the adjusted Exercise Rate of the Warrants.
N = the Exercise Rate of the Warrants, prior to
adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
SECTION 4.16. Form of Warrants. Irrespective of any
adjustments in the Exercise Price or the Exercise Rate or kind of shares or
other assets purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares or other assets as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 4.17. Limitation on Adjustments. IWCL shall take no
action which reduces the Exercise Price below the then par value of the Warrant
Shares.
SECTION 4.18. No Dilution or Impairment. If any event shall
occur as to which the provisions of Article 4 are not strictly applicable but
the failure to make any adjustment would adversely affect the purchase rights
represented by the Warrants in a way that is contrary to the manifest and
essential intent and principles of Article 4, then, in each such case, IWCL
shall appoint an investment banking firm of recognized national standing, or
any other financial expert that does not (or whose directors, officers,
employees, affiliates or stockholders do not) have a direct or material
indirect financial interest in IWCL, who has not been, and, at the time it is
called upon to give independent financial advice to IWCL, is not (and none of
its directors, officers, employees, affiliates or stockholders are) a promoter,
director or officer of IWCL, which shall give their opinion upon the
adjustment, if any, on a basis consistent with the manifest and essential
intent and principles established in Article 4, necessary to preserve, without
dilution, the purchase rights, represented by the Warrants. Upon receipt of
such opinion, IWCL will promptly mail a copy thereof to the Warrant Agent and
the Warrant holders and shall make the adjustments described therein.
SECTION 4.19. Notices to Warrant Holders; Rights of Warrant
Holders. Upon any adjustment of the Exercise Rate pursuant to Article 4, IWCL
shall as soon as practicable (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of recognized standing
selected by the Board (who may be the regular auditors of IWCL) setting forth
the Exercise Rate and Exercise Price for each of the Warrants after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting forth the number
of Warrant Shares (or portion thereof) issuable after such adjustment of the
Exercise Rate, upon exercise of a Warrant, and the Exercise Price in effect
after such adjustment and (ii) cause to be given to each of the registered
holders of the Warrant certificates at his or her address appearing on the
Warrant register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be
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given in advance and included as a part of the notice required to be mailed
under the other provisions of this Section 4.19.
In case:
(a) IWCL shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants and other than issuances in exchange for equivalent
consideration; or
(b) IWCL shall authorize the distribution to all holders
of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in Section 4.02 each and
other than distributions in exchange for equivalent consideration, but
including Extraordinary Cash Dividends); or
(c) of any consolidation or merger to which IWCL is a
party and for which approval of any shareholders of IWCL is required,
or of the conveyance or transfer of the properties and assets of IWCL
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (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),
or a tender offer or exchange offer by IWCL for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of IWCL; or
(e) IWCL proposes to take any action (other than actions
of the character described in Section 4.02) which would require an
adjustment of the Exercise Price pursuant to Article 4;
then IWCL shall cause to be filed with the Warrant Agent and shall cause to be
given to each of the registered holders of the Warrant certificates at the
address appearing on the Warrant register, at least 10 days (or 5 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to
be determined, or (ii) the initial or record expiration date set forth in any
tender offer or exchange offer for shares of Common Stock, or (iii) the date on
which any such consolidation, merger, conveyance, transfer, reclassification,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
share of Common Stock shall be entitle to exchange such shares for securities
or other property, if any, deliverable upon such consolidation, merger,
conveyance, transfer, reclassification, dissolution, liquidation or winding up.
The failure to give the notice required by the Section 4.19 or any defect
therein shall not affect the legality of
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validity of any issuance, right, option, warrant, distribution, tender offer,
exchange offer, consolidation, merger, conveyance, transfer, reclassification,
dissolution, liquidation or winding up, or the vote upon any action.
SECTION 4.20. Combination; Liquidation. (a) Except as
provided in Section 4.20(b), in the event of a Combination, each Holder shall
have the right to receive upon exercise of the Warrants the kind and amount of
shares of capital stock or other securities or property which such Holder would
have been entitled to receive upon or as a result of such Combination had such
Warrant been exercised immediately prior to such event. Unless paragraph (b)
is applicable to a Combination, IWCL shall provide that the surviving or
acquiring Person (the "Successor Company") in such Combination will enter into
a supplemental agreement with the Warrant Agent confirming the Holders' rights
pursuant to this Section 4.20(a) and providing for adjustments, which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article 4. The provisions of this Section 4.20(a) shall similarly apply
to successive Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of IWCL, the holders of
the Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, distributions on an equal basis with the holders of Common Stock
or other securities issuable upon exercise of the Warrants, as if the Warrants
had been exercised immediately prior to such event, less the Exercise Price.
In case of any Combination described in this Section 4.20(b),
the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of IWCL, IWCL, shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay to the holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
is required to deliver a check in such amount as is appropriate (or, in the
case of consideration other than cash, such other consideration as is
appropriate) to such Person or Persons as it may be directed in writing by the
Holders surrendering such Warrants. Upon receipt of such payment, if any, the
Warrants will expire and the rights of the Holders thereof shall cease.
If this Section 4.20 applies, Sections 4.02, 4.03, 4.04, 4.05,
4.06 and 4.12 shall not apply.
SECTION 4.21. Minimum Adjustment. The adjustments required
by the preceding Sections of this Article 4 shall be made whenever and as often
as any specified event requiring an adjustment shall occur, except that no
adjustment of the Exercise Price or the number of shares of Common Stock
issuable upon exercise of Warrants that would otherwise be required shall be
made unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% the
Exercise Price or the number of shares of Common Stock issuable upon exercise
of Warrants immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required
by this Article 4 and not previously made, would result in a minimum
adjustment. For any adjustment, any specified event shall be deemed to have
occurred at the close of business on
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the date of its occurrence. In computing adjustments under this Article 4,
fractional interests in Common Stock shall be taken into account to the nearest
one-hundredth of a share.
SECTION 4.22. Motorola Guarantee Warrants; Iridium Capital
Stock. Notwithstanding anything to the contrary contained in this Article 4,
no adjustment will be made, directly or indirectly, as a direct or indirect
result of the issuance, acceleration or exercise of the warrants to compensate
Motorola for issuance or modification of the Guarantee Agreement or any
guarantee provided pursuant to the Motorola Additional Guarantee, in each case
as required by the MOU, or the issuance or other distribution of membership
interests or other capital stock by Iridium.
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration Statement.
Subject to Section 5.02, IWCL shall cause to be filed pursuant to Rule 415 (or
any successor provision) of the Securities Act not later than the first date on
which IWCL is eligible to file a registration statement on Form S-3, a shelf
registration statement relating to the offer and sale of the Warrants by the
Holders from time to time in accordance with the methods of distribution
elected by such Holders and set forth in such registration statement (the
"Warrant Shelf Registration Statement"), and shall use its reasonable efforts
to cause the Warrant Shelf Registration Statement to be declared effective on
or before 365 days after the Issue Date. Subject to Section 5.02, IWCL shall
cause to be filed pursuant to Rule 415 (or any successor provision) of the
Securities Act not later than the first date on which IWCL is eligible to file
a registration statement on Form S-3, a shelf registration statement covering
the issuance of Warrant Shares to the Holders upon exercise of the Warrants by
the Holders thereof (the "Common Shelf Registration Statement", and together
with the Warrant Shelf Registration Statement, the "Registration Statements")
and shall use its reasonable efforts to cause the Common Shelf Registration
Statement to be declared effective on or before 365 days after the Issue Date.
Subject to Section 5.02, IWCL shall cause each of the Registration Statements
to remain effective until (A) in the case of the Common Shelf Registration
Statement, the earlier of (i) such time as all Warrants have been exercised and
(ii) the Expiration Date and (B) in the case of the Warrant Shelf Registration
Statement, the earliest of (i) such time as all the Warrants have been sold
thereunder, (ii) two years after its effective date and (iii) such time as the
Warrants can be sold by Persons who are not Affiliates of IWCL without
restriction under the Securities Act. In connection with any Registration
Statement, (i) IWCL shall furnish to the Warrant Agent, prior to the filing
with the SEC, a copy of any Registration Statement, and each amendment thereof
and each amendment or supplement, if any, to the prospectus included therein
and shall use its reasonable best efforts to reflect in each such document,
when filed with the SEC, such comments as the Warrant Agent may reasonably
propose, (ii) IWCL shall furnish to each Holder, without charge, at least one
copy of any Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those incorporated by reference),
(iii) IWCL shall, for
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<PAGE> 35
so long as any Registration Statement is effective, deliver to each Holder,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request, and IWCL consents to
the proper use of the most recent prospectus included therein and the most
recent amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Warrants or the Warrant Shares, as
the case may be, covered by such prospectus and any amendment or supplement
thereto, (iv) IWCL may require each Holder of Warrants to be sold pursuant to
the Warrant Shelf Registration Statement or to be exercised in connection with
the Common Shelf Registration Statement to furnish to IWCL such information
regarding the Holder and the distribution of such Warrants or Warrant Shares as
IWCL may from time to time reasonably request for inclusion in such
Registration Statement, (v) IWCL shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to such Registration
Statement such information as a majority of the Holders of all then outstanding
Warrants issued in the Units Offerings taken as a single class reasonably agree
should be included therein and shall make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified in writing of the matters to be incorporated in such prospectus
supplement or post-effective amendment, (vi) IWCL shall enter into such
agreements (including underwriting agreements) as are appropriate, customary
and reasonably necessary in connection with any such Registration Statement and
(vii) IWCL shall (A) make available all material customary for reasonable due
diligence examinations in connection with such Registration Statements, (B)
make such representations and warranties to the Holders of Warrants as are
customary and reasonable in connection with such Registration Statements, (C)
obtain such opinions of counsel to IWCL addressed to and reasonably
satisfactory to the Holders of Warrants as are customary and reasonable in
connection with such Registration Statements and (D) obtain such "comfort"
letters and updates thereof from the independent certified public accountants
of IWCL addressed to the Holders of Warrants as are customary and reasonable in
connection with such Registration Statements. IWCL will furnish the Warrant
Agent with current prospectuses meeting the requirements of the Securities Act
in sufficient quantity to permit the Warrant Agent to deliver, at IWCL's
expense, a prospectus to each holder of a Warrant upon the exercise thereof.
IWCL shall promptly inform the Warrant Agent in writing of any change in the
status of the effectiveness or availability of any Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day
period, IWCL shall be entitled to suspend the availability of each of the
Warrant Shelf Registration Statement and the Common Shelf Registration
Statement for up to two 45 consecutive-day periods (except during the 45
consecutive-day period immediately prior to the Expiration Date) if the Board
determines in the exercise of its reasonable judgement that there is a valid
business purpose for such suspension and provides notice that such
determination was made by the Board to the holders of the Warrants; provided,
however, that in no event shall IWCL be required to disclose the business
purpose for such suspension if IWCL determines in good faith that such business
purpose must remain confidential.
SECTION 5.03. Blue Sky. IWCL shall use its reasonable
efforts to register or qualify the Warrants and the Warrant Shares under all
applicable securities laws, blue sky laws or similar laws of all jurisdictions
in the United States and Canada in which any Holder of
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<PAGE> 36
Warrants may or may be deemed to purchase Warrants or Warrant Shares upon the
exercise of Warrants and shall use its reasonable efforts to maintain such
registration or qualification (A) in the case of the Common Shelf Registration
Statement, until the earlier of (i) such time as all Warrants have been
exercised and (ii) the Expiration Date, and (B) in the case of the Warrant
Shelf Registration Statement, until the earliest of (i) such time as all the
Warrants have been sold thereunder, (ii) such time as the Warrants can be sold
by Persons who are not Affiliates of IWCL without restriction under the
Securities Act and (iii) two years after its effective date; provided, however,
that IWCL shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 5.03 or to take any action which would subject it to general service of
process or to taxation or any other governmental fees or charges in any such
jurisdiction where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. IWCL represents and
warrants to each Holder and agrees for the benefit of each Holder that (i) each
of the Warrant Shelf Registration Statement and the Common Shelf Registration
Statement and any amendment thereto, each as of its effective date, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading; and (ii) each of the prospectus furnished to
such Holder for delivery in connection with the sale of Warrants and the
prospectus delivered to such Holder upon the exercise of Warrants and the
documents incorporated by reference therein as of its date will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that IWCL shall have no liability under clauses (i) or (ii)
of this Section 5.04 with respect to any such untrue statement or omission.
SECTION 5.05. Indemnification. (a) In connection with any
Registration Statement, IWCL agrees to indemnify and hold harmless each Holder
of the Warrants and each person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons being referred to collectively as the "Indemnified
Parties") from and against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including but not limited to any
losses, claims, damages, liabilities or actions relating to purchases and sales
of the Warrants or the Warrant Shares) to which each Indemnified Party may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or prospectus or in any amendment or
supplement thereto, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) IWCL shall
not be liable in any such case to the extent that such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement
or any preliminary or final prospectus or in any amendment or supplement
thereto in
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reliance upon and in conformity with written information pertaining to such
Holder and furnished to IWCL by or on behalf of such Holder specifically for
inclusion therein, (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any prospectus relating to such
Registration Statement, the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any person as to which there is a
prospectus delivery requirement (a "Delivering Seller") that sold the Warrants
or Warrant Shares, as the case may be, to the person asserting any such losses,
claims, damages or liabilities to the extent that any such loss, claim, damage
or liability of such Delivering Seller results from the fact that there was not
sent or given to such person, on or prior to the written confirmation of such
sale, a copy of the relevant prospectus, as amended and supplemented, provided
that (i) IWCL shall have previously furnished copies thereof to such Delivering
Seller in accordance with this Agreement and (ii) such furnished prospectus, as
amended and supplemented, would have corrected any such untrue statement or
omission or alleged untrue statement or omission.
(b) In connection with any Registration Statement, each Holder
of the Warrants or Warrant Shares, as the case may be, severally and not
jointly, will indemnify and hold harmless IWCL and each person, if any, who
controls IWCL within the meaning of the Securities Act or the Exchange Act and
the directors, officers, agents and employees of such controlling persons from
and against any losses, claims, damages or liabilities or any actions in
respect thereof to which IWCL or any such controlling person or director,
officer, agent or employee of such controlling person may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or preliminary or final prospectus or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to IWCL by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, IWCL for any legal or
other expenses reasonably incurred by IWCL or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof. This indemnity agreement will be in addition to
any liability which such Holder may otherwise have to IWCL or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 5.05 of notice of any claim or the commencement of any action or
proceeding (including a governmental investigation), such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to subsection (a) or (b), notify the indemnifying party in
writing of the claim or the commencement of the action or proceeding; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 5.05 except to the
extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 5.05. If any such claim, action or proceeding shall be
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brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
claim, action or proceeding, the indemnifying party shall not be liable to the
indemnified party under this Section 5.05 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
an indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of independent counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of independent counsel to the
indemnified party) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available
to the indemnifying party, (3) a conflict or potential conflict exists (based
upon advice of independent counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action or proceeding within a reasonable time after receiving notice of
the commencement of the action or proceeding, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in subsections 5.05(a) and 5.05(b), shall use
all reasonable efforts to cooperate with the indemnifying party in the defense
of any such action or claim. No indemnifying party shall be liable for any
settlement of any action effected without its written consent. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this section is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above for any reason other than as provided in
subsection (c) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or
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<PAGE> 39
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by IWCL on the one hand
or such Holder or such other indemnified person, as the case may be, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5.05(d), the Holders shall not be required to
contribute any amount in excess of the amount by which the net proceeds
received by such Holders from the sale of the Warrants pursuant to the Warrant
Shelf Registration Statement or the Warrant Shares pursuant to the Common Shelf
Registration Statement exceeds the amount of damages which such Holders would
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each
officer, director, employee, representative and agent of an indemnified party
and each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party, and each officer, director, employee,
representative and agent of IWCL and each person, if any, who controls IWCL
within the meaning of the Securities Act or the Exchange Act shall have the
same rights to contribution as IWCL.
(e) The agreements contained in this section shall survive the
sale of the Warrants pursuant to the Warrant Shelf Registration Statement and
the sale of the Warrant Shares pursuant to the Common Shelf Registration
Rtatement, as the case may be, and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or
the issuance or sale of any Class A Common Stock or other securities issuable
upon the exercise of the Warrants requires registration or approval of any
governmental authority (other than the registration requirements under the
Securities Act), or the taking of any other action under the laws of the United
States of America or any political subdivision thereof or Bermuda before such
securities may be validly offered or sold in compliance with such laws, then
IWCL covenants that it will, in good faith and as expeditiously as reasonably
possible, use all reasonable efforts to secure and maintain such registration
or approval or to take such other action, as the case may be.
SECTION 5.07. Expenses. All expenses incident to IWCL's
performance of or compliance with its obligations under this Article 5 will be
borne by IWCL, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all reasonable fees and expenses incurred in connection with compliance
with state securities or blue sky laws, (iii) all reasonable expenses of any
Persons incurred by or on behalf of and at the direction of IWCL in preparing
or assisting in preparing,
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printing and distributing the Warrant Shelf Registration Statement, the Common
Shelf Registration Statement or any other registration statement, prospectus,
any amendments or supplements thereto and other documents relating to the
performance of and compliance with this Article 5, (iv) the fees and
disbursements of the Warrant Agent, (v) the fees and disbursements of counsel
for IWCL and the Warrant Agent and (vi) the fees and disbursements of the
independent public accountants of IWCL, including the expenses of any special
audits or comfort letters required by or incident to such performance and
compliance.
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. IWCL hereby
appoints the Warrant Agent to act as agent for IWCL in accordance with the
express provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent
for IWCL. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of IWCL and
does not assume any obligation or relationship or agency or trust for or with
any of the holders of Warrant Certificates or beneficial owners of Warrants.
(b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel to IWCL), and the advice of such counsel
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by
it in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement, opinion or other paper or document
reasonably believed by it to be genuine and to have been presented or signed by
the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are specifically set forth herein and
in the Warrant Certificates, and no implied duties or obligations of the
Warrant Agent shall be read into this Agreement or the Warrant Certificates.
The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability for which it
does not receive indemnity if such indemnity is reasonably requested. The
Warrant Agent shall not be accountable or under any duty or responsibility for
the use by IWCL of any of the Warrant Certificates countersigned by the Warrant
Agent and delivered by it to the Holders or on behalf of the Holders pursuant
to this Agreement or for the application by IWCL of the proceeds of the
Warrants. The Warrant Agent shall have no duty or responsibility in case of
any default by
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<PAGE> 41
IWCL in the performance of its covenants or agreements contained herein or in
the Warrant Certificates or in the case of the receipt of any written demand
from a Holder with respect to such default, including any duty or
responsibility to initiate or attempt to initiate any proceedings at law or
otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Class A Common Stock issuable upon exercise of each
Warrant or the Exercise Price, or with respect to the nature or extent of any
adjustment when made or with respect to the method employed or provided to be
employed herein or in any supplemental agreement in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value of
any shares of Class A Common Stock or of any securities or property which may
at any time be issued or delivered upon the exercise of any Warrant or upon any
adjustment pursuant to Article 4, and it makes no representation with respect
thereto. The Warrant Agent shall not be responsible for any failure of IWCL to
make any cash payment or to issue, transfer or deliver any shares of Class A
Common Stock or stock certificates upon the surrender of any Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to
Article 4, or to comply with any of the covenants of IWCL contained in Article
4.
SECTION 6.03. Individual Rights of Warrant Agent. The
Warrant Agent and any stockholder, director, officer or employee of the Warrant
Agent may buy, sell or deal in any of the Warrants, Warrant Shares or other
securities of IWCL or its affiliates or become pecuniarily interested in
transactions in which IWCL or its affiliates may be interested, or contract
with or lend money to IWCL or its affiliates or otherwise act as fully and
freely as though it were not the Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
IWCL or for any other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. IWCL agrees to pay
the Warrant Agent from time to time compensation for its services and to
reimburse the Warrant Agent upon request for all reasonable out-of-pocket
expenses incurred by it, including the reasonable compensation and expenses of
the Warrant Agent's agents and counsel. IWCL shall indemnify the Warrant Agent
against any and all loss, liability, damage, claim or expense (including
agents' and attorneys' fees and expenses) incurred by it without negligence or
bad faith on its part arising out of or in connection with the acceptance or
performance of its duties under this Agreement. The Warrant Agent shall notify
IWCL promptly of any claim for which it may seek indemnity. IWCL need not
reimburse any expense or indemnify against any loss or liability incurred by
the Warrant Agent through wilful misconduct, negligence or bad faith. IWCL's
payment obligations pursuant to this Section 6.05 shall survive the termination
of this Agreement.
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SECTION 6.06. Successor Warrant Agent. (a) IWCL to Provide
Warrant Agent. IWCL agrees for the benefit of the Holders that there shall at
all times be a Warrant Agent hereunder until all the Warrants have been
exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any
time resign by giving written notice to IWCL of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless IWCL otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an instrument in
writing signed by or on behalf of IWCL and specifying such removal and the date
when it shall become effective, which date shall not be less than 60 days after
such notice is given unless the Warrant Agent otherwise agrees. Any removal
under this Section 6.06 shall take effect upon the appointment by IWCL as
hereinafter provided of a successor Warrant Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such appointment by
such successor Warrant Agent. If a successor Warrant Agent does not take
office within 60 days after the retiring Warrant Agent resigns or is removed,
the retiring Warrant Agent or the Holders of 10% of all then outstanding
Warrants issued in the Units Offerings taken as a single class may petition, at
the expense of IWCL, any court of competent jurisdiction for the appointment of
a successor.
(c) IWCL to Appoint Successor. In the event that at any time
the Warrant Agent shall resign, or shall be removed, or shall become incapable
of acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under Federal bankruptcy laws, as now or hereafter constituted,
or under any other applicable Federal or state bankruptcy, insolvency or
similar law, or shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Warrant Agent or its property or affairs, or shall
make an assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered
in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law, or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant
Agent or of its property or affairs for the purpose of rehabilitation,
conservation, winding up or liquidation, a successor Warrant Agent, qualified
as aforesaid, shall be appointed by IWCL by an instrument in writing filed with
the successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such
appointment, the Warrant Agent shall cease to be the Warrant Agent hereunder;
provided, however, that in the event of the resignation of the Warrant Agent
hereunder, such resignation shall be effective on the earlier of (i) the date
specified in the Warrant Agent's notice of resignation and (ii) the appointment
and acceptance of a successor Warrant Agent hereunder.
(d) Successor To Expressly Assume Duties. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to IWCL an instrument accepting such appointment hereunder, and
thereupon such successor Warrant Agent,
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without any further act, deed or conveyance, shall become vested with all the
rights and obligations of such predecessor with like effect as if originally
named as Warrant Agent hereunder, and such predecessor, upon payment of its
charges and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on deposit with
or held by such predecessor, as Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the
Warrant Agent hereunder may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be
a party, or any corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all the corporate trust or stock transfer assets
and business of the Warrant Agent, provided that it shall be qualified as
aforesaid, shall be the successor Warrant Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information.
Notwithstanding that IWCL may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, IWCL shall file with the SEC and
thereupon provide the Warrant Agent and Holders with such annual reports and
such information, documents and other reports as are specified in Sections 13
and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such sections. Delivery of such reports, information and
documents to the Warrant Agent is for informational purposes only and the
Warrant Agent's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including IWCL's compliance with any of its covenants hereunder.
SECTION 7.02. Persons Benefitting. Nothing in this Agreement
is intended or shall be construed to confer upon any Person other than IWCL,
the Warrant Agent and the Holders any right, remedy or claim under or by reason
of this agreement or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised
Warrants are not entitled to (i) receive dividends or other distributions, (ii)
receive notice of or vote at any meeting of the stockholders, (iii) consent to
any action of the stockholders, (iv) receive notice as stockholders of any
other proceedings of IWCL, (v) exercise any preemptive rights, (vi) share in
the assets of IWCL in the event of the liquidation, dissolution or winding up
of IWCL's affairs other than as provided in Section 4.20 or (vii) exercise any
other rights whatsoever as stockholders of IWCL.
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SECTION 7.04. Amendment. This Agreement may be amended by
the parties hereto without the consent of any Holder for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective
provision contained herein or adding or changing any other provisions with
respect to matters or questions arising under this Agreement as IWCL and the
Warrant Agent may deem necessary or desirable (including without limitation any
addition or modification to provide for compliance with the transfer
restrictions set forth herein); provided, however, that such action shall not
adversely affect the rights of any of the Holders. Any amendment or supplement
to this Agreement that has an adverse effect on the interests of the Holders
shall require the written consent of a majority of the Holders of all then
outstanding Warrants issued in the Units Offerings taken as a single class.
The consent of each Holder affected shall be required for any amendment
pursuant to which the Exercise Price would be increased or the number of
Warrant Shares issuable upon exercise of Warrants would be decreased (other
than pursuant to adjustments provided herein) or the exercise period with
respect to the Warrants would be shortened. In determining whether the Holders
of the required number of Warrants have concurred in any direction, waiver or
consent under this Agreement, Warrants owned by IWCL or by any Affiliate of
IWCL shall be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Warrant Agent shall be protected in
relying on any such direction, waiver or consent, only Warrants which the
Warrant Agent actually knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be
in writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to IWCL:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Attention: Secretary
with a copy to:
Iridium LLC
1575 Eye Street, N.W.
Washington, D.C. 20005
Attention: General Counsel
if to the Warrant Agent:
State Street Bank and Trust Company
4th Floor
2 International Place
Boston, MA 02110
Attention: Corporate Trust Department
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Facsimile: (617) 664-5371
IWCL or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.06. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
SECTION 7.07. Successors. All agreements of IWCL in this
Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Agreement.
SECTION 7.09. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
SECTION 7.11. Use of Proceeds. IWCL agrees, for the benefit
of the Holders of the Warrants from time to time and of the Class A Common
Stock or any other capital stock of IWCL underlying such Warrants upon exercise
thereof, to use the proceeds from the issuance and sale of the Warrants (net of
any expenses of the offering of the Units allocable to IWCL) to purchase LLC
Warrants from Iridium in accordance with the Share Issuance Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
IRIDIUM WORLD COMMUNICATIONS LTD.
By: /s/ ROY GRANT
-------------------------------------
Name: Roy Grant
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By: /s/ E. J. DONAGHEY
------------------------------------
Name: Eric J. Donaghey
Title: Assistant Vice President
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EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF SENIOR NOTES
DUE 2005, SERIES A OF IRIDIUM, LLC AND IRIDIUM CAPITAL CORPORATION (THE
"NOTES") AND ONE WARRANT TO PURCHASE 5.2 SHARES OF CLASS A COMMON STOCK, PAR
VALUE $0.01 PER SHARE OF IRIDIUM WORLD COMMUNICATIONS LTD. ("IWCL"). THE
WARRANTS AND THE NOTES WILL NOT TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE
COMMENCEMENT OF AN EXCHANGE OFFER OR THE EFFECTIVENESS OF A SHELF REGISTRATION
STATEMENT FOR SUCH NOTES AND (II) SUCH DATE AFTER JANUARY 15, 1998 AS CHASE
SECURITIES INC. MAY DETERMINE.
THE CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF IWCL
FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, NO
HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS,
AT THE TIME OF EXERCISE, A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
RELATING TO THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS
OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO IWCL OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.
<PAGE> 48
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH IWCL OR ANY AFFILIATE OF
IWCL WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
EXCEPT (A) TO IWCL, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (E)
TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES (IF
AVAILABLE) OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE (A) THROUGH (F), IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS AND SUBJECT TO AND THE WARRANT AGENT'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CLAUSES (A) THROUGH (F), A CERTIFICATE OF TRANSFER IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO IWCL AND THE WARRANT AGENT. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT) OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S.
2
<PAGE> 49
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE WARRANT AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THE WARRANT AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
3
<PAGE> 50
No. [ ] Certificate for ________ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
IRIDIUM WORLD COMMUNICATIONS LTD.
THIS CERTIFIES THAT ______________, or its registered assigns,
is the registered holder of the number of Warrants set forth above
(the"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at
its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from Iridium World Communications
Ltd., a Bermuda corporation ("IWCL"), 5.2 shares of Class A Common Stock, par
value of $0.01 per share, of IWCL (the "Common Stock") at the per share
exercise price of $20.90 (the "Exercise Price"). This Warrant Certificate
shall terminate and become void as of the close of business on July 15, 2005
(the "Expiration Date") or upon the exercise hereof as to all the shares of
Class A Common Stock subject hereto. The number of shares issuable upon
exercise of the Warrants and the Exercise Price per share shall be subject to
adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of July 16, 1997 (the "Warrant Agreement"),
between IWCL and State Street Bank and Trust Company, as warrant agent (the
"Warrant Agent", which term includes any successor Warrant Agent under the
Warrant Agreement), and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of IWCL, the Warrant
Agent and the Holders of the Warrants. Capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Warrant Agreement. A
copy of the Warrant Agreement may be obtained for inspection by the Holder
hereof upon written request to the Warrant Agent at 2 International Place,
Boston, MA 02110, attention of the Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and
with the simultaneous payment of the Exercise Price in cash (subject to
adjustment) to the Warrant Agent for the account of IWCL at the office of the
Warrant Agent.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
on or after July 16, 1998; provided, however, that Holders of Warrants will be
able to exercise their Warrants only if a shelf registration statement relating
to the Class A Common Stock underlying the Warrants is effective, and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside; provided further, however, that no Warrant shall be exercisable
after July 15, 2005.
4
<PAGE> 51
In the event IWCL enters into a Combination, the Holder hereof
will be entitled to receive upon exercise of the Warrants the kind and amount
of shares of capital stock or other securities or other property of such
surviving entity as the Holder would have been entitled to receive upon or as a
result of the Combination had the Holder exercised its Warrants immediately
prior to such Combination; provided, however, that in the event that, in
connection with such Combination, consideration to holders of Class A Common
Stock in exchange for their shares is payable solely in cash or in the event of
the dissolution, liquidation or winding-up of IWCL, the Holder hereof will be
entitled to receive such cash distributions as the Holder would have received
had the Holder exercised its Warrants immediately prior to such event, less the
Exercise Price.
As provided in the Warrant Agreement, the number of shares of
Class A Common Stock issuable upon the exercise of the Warrants and the
Exercise Price are subject to adjustment upon the happening of certain events.
IWCL may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.06 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the issuance of the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but IWCL shall pay an amount in cash equal to the Current Market
Value per Warrant Share on the day immediately preceding the date the Warrant
is exercised, multiplied by the fraction of a Warrant Share that would be
issuable on the exercise of any Warrant.
All shares of Class A Common Stock issuable by IWCL upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and non-assessable. The holder in whose name the Warrant
Certificate is registered may be deemed and treated by IWCL and the Warrant
Agent as the absolute owner of the Warrant Certificate for all purposes
whatsoever and neither IWCL nor the Warrant Agent shall be affected by notice
to the contrary.
The Warrants do not entitle any holder hereof to any of the
rights of a shareholder of IWCL.
5
<PAGE> 52
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
<TABLE>
<S> <C>
IRIDIUM WORLD COMMUNICATIONS LTD.
By:
---------------------------------------------------------
By:
---------------------------------------------------------
DATED:
Countersigned:
STATE STREET BANK AND
TRUST COMPANY, as
Warrant Agent
By:
----------------------------------------
Authorized Signatory
</TABLE>
6
<PAGE> 53
FORM OF ELECTION TO PURCHASE WARRANT SHARES (to be
executed only upon exercise of Warrants)
IRIDIUM WORLD COMMUNICATIONS LTD.
[Note: No exercise of Warrants may be made prior to a shelf
registration statement relating to the Class A Common Stock underlying the
Warrants being declared effective.]
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per share (subject to adjustment) of $20.90 to
acquire [ ] shares of Class A Common Stock, par value $0.01 per share, of
Iridium World Communications Ltd. on the terms and conditions specified within
the Warrant Certificate and the Warrant Agreement therein referred to,
surrenders this Warrant Certificate and all right, title and interest therein
to Iridium World Communications Ltd. and directs that the shares of Class A
Common Stock deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered thereto.
<TABLE>
<S> <C>
Date:
----------------------
(Signature of Owner)
----------------------
(Street Address)
----------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
</TABLE>
[Signature must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved guarantee
medallion program pursuant to
Securities and Exchange Commission Rule
17Ad-5]
- -------
1. The signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, and must be
guaranteed.
7
<PAGE> 54
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
------------------------------
Street Address:
-----------------------
City, State and Zip Code:
--------------------
Any unexercised Warrants represented by the Warrant Certificate to be issued
to:
Please insert social security or identifying number:
Name:
------------------------------
Street Address:
-----------------------
City, State and Zip Code:
--------------------
8
<PAGE> 55
EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD
[_________________], 1997
Iridium World Communications Ltd.
State Street Bank and Trust Company
Corporate Trust Department
4th Floor
2 International Plaza
Boston, MA 02110
Re: Iridium World Communications Ltd. Warrants (the "Warrants")
to Purchase Class A Common Stock
Ladies and Gentlemen:
This letter relates to Warrants represented by a temporary
global warrant certificate (the "Temporary Certificate"). Pursuant to Section
2.01 of the Warrant Agreement dated as of July 16, 1997 relating to the
Warrants (the "Warrant Agreement"), the undersigned hereby certifies that (1)
the undersigned is the beneficial owner of [_____] Warrants represented by the
Temporary Certificate and (2) the undersigned is a Non-U.S. Person (as defined
in the Warrant Agreement) outside the United States to whom the initial
warrants could be transferred in accordance with Rule 904 of Regulation S
promulgated under the Securities Act of 1933, as amended. Accordingly, you are
hereby requested to transfer the initial Warrants represented by the Temporary
Certificate into a permanent global certificate, all in the manner provided by
the Warrant Agreement.
<PAGE> 56
2
You and the IWCL are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[NAME OF HOLDER]
By:
-------------------------
Name:
Title:
<PAGE> 57
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
IRIDIUM WORLD COMMUNICATIONS LTD.
STATE STREET BANK AND TRUST COMPANY
Corporate Trust Department
4th Floor
2 International Place
Boston, MA 02110
Re: Iridium World Communication Ltd. ("IWCL") Warrants
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement, dated as of
July 16, 1997 (the "Warrant Agreement") between IWCL and State Street Bank
Trust Company, as Warrant Agent. Capitalized terms used but not defined herein
will have the meaning given to them in the Warrant Agreement.
This certificate is delivered to request a transfer of
warrants (the "Warrants") to purchase Class A Common Stock, par value $0.01 per
share of IWCL.
Upon transfer, the Warrants would be registered in the name of
the new beneficial owner as follows:
Name:
-------------------------------
Address:
----------------------------
Taxpayer ID Number:
-----------------
The undersigned represents and warrants to Iridium World
Communications Ltd., Iridium LLC, Iridium Capital Corporation and each
subsidiary of Iridium which has guaranteed its 13% Senior Notes due 2005,
Series A or its 14% Senior Notes due 2005, Series B (together the "Iridium
Parties") that (terms used herein that are defined in Rule 144A ("Rule 144A"),
Regulation D ("Regulation D") or Regulation S ("Regulation S") under the
Securities Act are used herein as defined therein):
1. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended, (the "Securities Act")) and have purchased the Warrants in a
transaction exempt from the registration requirements of the
<PAGE> 58
2
Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risk of our
investment in the Warrants and invest in or purchase securities similar to the
Warrants in the normal cause of our business. We and any accounts for which we
are acting are each able to bear the economic risk of our or its investment.
2. We understand that the Warrants have not been
registered under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on our own behalf and
on behalf of any investor account for which we are purchasing Warrants to
offer, sell or otherwise transfer such Warrants prior to the date which is two
years after the later of the date of original issue and the last date on which
any Iridium Party or any affiliate of any Iridium Party was the owner of such
Warrants (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) an Iridium Party, (b) pursuant to a registration statement
which has been declared effective under the Securities Act, (c) in a
transaction complying with the requirements of Rule 144A under the Securities
Act, to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offshore transactions meeting the requirements of
Rule 903 or Rule 904 under the Securities Act, (e) to an institutional
"accredited investor" within the meaning Rule 501(a)(1), (2), (3) or (7) under
the Securities Act in a transaction exempt from the registration requirements
of the Securities Act (if available), (f) pursuant to any other available
exemption from the registration requirements of the Securities Act, and, in
each case (a) through (f), in accordance with all applicable securities laws of
the states of the United States and other jurisdictions. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Warrants is proposed
to be made pursuant to the clause (e) above prior to the Resale Restrictions
Termination Date, we shall deliver a letter from the transferee substantially
in the form of this letter to the Iridium Parties and the Warrant Agent, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 5.01(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Warrants for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that each Iridium Party and the Warrant Agent reserve
the right prior to any offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Warrants pursuant to clauses (d), (e) or
(f) above to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Iridium Parties and the Warrant
Agent.
TRANSFEREE:
--------------------
BY:
----------------------------
date:
<PAGE> 59
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR
TRANSFER TO RULE 144A GLOBAL SECURITY
BEARING A SECURITIES ACT LEGEND
IRIDIUM WORLD COMMUNICATIONS LTD.
STATE STREET BANK AND TRUST COMPANY
Corporate Trust Department
4th Floor
2 International Place
Boston, MA 02110
Re: Iridium World Communication Ltd. ("IWCL") Warrants
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement, dated as of
July 16, 1997 (the "Warrant Agreement") between IWCL and State Street Bank
Trust Company, as Warrant Agent. Capitalized terms used but not defined herein
will have the meaning given to them in the Warrant Agreement.
This letter relates to [______] Warrants which are held in
[the form of a beneficial interest in the Regulation S Temporary Global
Security (CINS No. __________) with the Depositary in the name of the
undersigned] [definitive form].
The undersigned has requested transfer of such Warrants to a
Person who will take delivery thereof in the form of a beneficial interest in
the Rule 144A Global Security (CUSIP No. ___________). In connection with such
transfer, the undersigned does hereby confirm that such transfer has been
effected in accordance with the transfer restrictions set forth in the Warrant
Agreement and the Warrant Certificates and pursuant to and in accordance with
Rule 144A under the U.S. Securities Act of 1933, as amended, and accordingly,
the undersigned represents that:
1. the Warrants are being transferred to a transferee
that the undersigned reasonably believes is purchasing the Warrants
for its own account or one or more accounts with respect to which the
transferee exercises sole investment discretion; and
2. the undersigned reasonably believes that transferee
and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in a transaction meeting the requirements of
Rule 144A and in accordance with any applicable securities laws of any
state of the United States or any other jurisdiction.
[NAME OF TRANSFEROR]
<PAGE> 60
2
<TABLE>
<S> <C>
By:
---------------------------
Name:
Title:
Dated:
-----------------------
</TABLE>
<PAGE> 61
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
IRIDIUM WORLD COMMUNICATIONS LTD.
STATE STREET BANK AND TRUST COMPANY
Corporate Trust Department
4th Floor
2 International Place
Boston, MA 02110
Re: Iridium World Communications Ltd. ("IWCL") Warrants
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement, dated as of
July 16, 1997 (the "Warrant Agreement") between IWCL and State Street Bank and
Trust Company, as Warrant Agent.
In connection with our proposed sale of warrants (the
"Warrants") to purchase Class A Common Stock, par value $0.01 per share of
IWCL, the undersigned confirms that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, the undersigned represents that:
(1) the offer of the Warrants was not made to a U.S.
Person;
(2) either (a) at the time of the buy order was
originated, the transferee was outside the United States or the
undersigned and any person acting on our behalf reasonably believed
that the transferee was outside in the United States or (b) the
transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither the undersigned nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the U.S. Securities Act of
1933, as amended.
In addition, if the sale is made during the restricted period applicable to the
Warrants and the provisions of Rule 903(c)(2) or Rule 904(c)(1) of Regulation S
are applicable thereto, the
<PAGE> 62
2
undersigned confirms that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
[NAME OF TRANSFEROR]
By:
----------------------------
Name:
Title:
Address:
Date:
--------------------------
Upon transfer, the Warrants should be registered in the name of the new
beneficial owner as follows:
Name:
--------------------------------------------------
Address:
-----------------------------------------------
Taxpayer ID Number:
------------------------------------
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF CONYERS DILL & PEARMAN]
10 July, 1998
Iridium World Communications Ltd.
Clarendon House
Church Street
Hamilton HM11
Bermuda
Dear Sirs
Iridium World Communications Ltd.
- ---------------------------------
We have acted as special Bermuda legal counsel to Iridium World Communications
Ltd. (the "Company") in connection with the registration of 300,000 warrants of
the Company (the "Warrants") and the issuance of 1,560,000 shares of Class A
Common Stock in the Company (the "Common Stock") which may be acquired upon the
exercise of the Warrants in connection with the Company's registration
statement on Form S-3 filed with the U.S. Securities and Exchange Commission
(the "Commission") on 9th June, 1998, which is hereinafter defined as the "Form
S-3 Registration Statement", which term does not include any exhibits,
documents or schedules incorporated by reference therein (the "Registration
Statement", which term does not include any exhibits incorporated by reference
into the Registration Statement).
For the purposes of giving this opinion, we have examined and relied upon a copy
of the Form S-3 Registration Statement being filed by the Company under the
Securities Act of 1933, as amended (the "Securities Act"), with the Commission
on 9th June, 1998.
<PAGE> 2
Iridium World Communications Ltd.
Page 2
We have also reviewed and have relied upon originals, or copies certified or
otherwise identified to our satisfaction, of the Memorandum of Association and
Bye-laws of the Company as well as Board minutes and resolutions and Members
minutes and resolutions of the Company. We have also reviewed originals, or
copies certified to our satisfaction, of such corporate records of the Company
and other instruments, certificates of appropriate public officials and
certificates of officers and representatives of the Company and such other
documents and have made such enquiries as to questions of Bermuda law as we have
deemed necessary in order to render the opinions set forth below.
We have assumed:
(i) the genuineness and authenticity of all signatures and the conformity to
the originals of all copies (whether or not certified) of all documents
examined by us and the authenticity and completeness of the originals
from which such copies were taken;
(ii) the correctness, accuracy and completeness of all factual
representations made in the Form S-3 Registration Statement and in the
other documents which we have reviewed; and
(iii) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions
expressed herein.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. Subject as mentioned
below, this opinion is issued solely for your benefit and for the benefit of
Sullivan & Cromwell, your United States counsel, with respect to the matters
referred to herein and is not to be relied upon by any other person, firm or
entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that:
<PAGE> 3
Iridium World Communications Ltd.
Page 3
1. The Company has been duly incorporated and is validly
existing as an exempted company under the laws of
Bermuda and is in good standing (meaning that it has
not failed to make any required filing with any Bermuda
governmental authority or to pay any Bermuda government
fee or tax the failure of which might make it liable to
be struck off the Register of Companies and thereby
cease to exist under the laws of Bermuda) under the
laws of Bermuda.
2. The Warrant Agreement dated July 16 1997 between the
Company and State Street Bank and Trust Company as
warrant agent has been duly authorized, executed and
delivered by the Company (the "Warrant Agreement").
3. The 1,560,000 shares of Common Stock covered by the
Form S-3 Registration Statement have been duly
authorised for issuance and sale and upon sale and
delivery by the Company upon exercise of the Warrants
as contemplated by the Warrant Agreement will be duly
and validly issued, fully paid and non-assessable
(which term when used herein shall mean no further sums
are required to be paid by the holders thereof in
connection with the issue of such shares).
We consent to the filing of this opinion with the Commission as an exhibit to
the Form S-3 Registration Statement.
Yours faithfully,
CONYERS DILL & PEARMAN
<PAGE> 1
Exhibit 5.2
[Letterhead of Sullivan & Cromwell]
July 14, 1998
Iridium World Communications Ltd.,
Clarendon House,
Church Street,
Hamilton HM 11,
Bermuda.
Dear Sirs:
In connection with the registration under the Securities Act
of 1933 (the "Act") of 300,000 Warrants (the "Warrants") of Iridium World
Communications Ltd., a Bermuda company (the "Company"), and the 1,560,000
shares of Class A Common Stock, par value $.01 per share, of the Company
initially issuable upon exercise of the Warrants (the "Shares") we, as your
United States counsel, have examined such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such
examination, we advise you that, in our
<PAGE> 2
Iridium World Communications Ltd. -2-
opinion, the Warrants constitute valid and legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the
United States and of the State of New York, and we are expressing no opinion as
to the effect of the laws of any other jurisdiction. With respect to all
matters of Bermuda
<PAGE> 3
Iridium World Communications Ltd. -3-
law, we have relied upon the opinion, dated 10 July, 1998 of Conyers Dill &
Pearman, and our opinion is subject to the same assumptions and limitations
with respect to such matters as are contained in such opinion of Conyers Dill
& Pearman.
Also, we have relied as to certain matters on information
obtained from public officials, officers of the Company and other sources
believed by us to be responsible, and we have assumed that the Warrant
Agreement has been duly authorized, executed and delivered by the Warrant Agent
thereunder, an assumption which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"Validity of the Warrants and Warrant Shares" in the Prospectus. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
/S/SULLIVAN & CROMWELL
<PAGE> 1
EXHIBIT 10.7
AMENDMENT NO. 4
TO THE
IRIDIUM(R) TERRESTRIAL NETWORK DEVELOPMENT CONTRACT
WHEREAS, Iridium Operating LLC (hereinafter called "Iridium") and
Motorola, Inc. (hereinafter called "Motorola") have previously entered into
that certain IRIDIUM Terrestrial Network Development Contract (hereinafter
called the "TNDC") effective January 1, 1993, including Amendments Nos. 1, 2
and 3 thereto, respectively dated November 2, 1995, August 20, 1996, and June
20, 1997; and
WHEREAS, Iridium and Motorola desire to further amend the terms and
conditions of the TNDC in order to accommodate changes to the scope of work to
be performed thereunder.
NOW, THEREFORE, in consideration of the foregoing and pursuant to
ARTICLE 8, CHANGES of the TNDC, Iridium and Motorola agree to the following
changes to the TNDC.
1. Amend Article 2, DESCRIPTION OF WORK, by adding the following new
paragraphs:
"M. Motorola shall provide the Message Origination Controller
(MOC) Language Prompts as set forth in Section 15.0 of Exhibit
A hereto.
N. Motorola shall provide Messaging Features as set forth in
Section 16.0 of Exhibit A hereto.
O. Motorola shall provide the GBS Browser as set forth in Section
17.0 of Exhibit A hereto.
P. Motorola shall provide the Inter-Gateway Transit of Fax and
Data Calls * as set forth in Section 18.0 of Exhibit A hereto.
Q. Motorola shall provide * Regional Service as set forth in
Section 19.0 of Exhibit A hereto.
R. Motorola shall provide Aeronautical Services Support as set
forth in Section 20.0 of Exhibit A hereto.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933.
<PAGE> 2
S. Motorola shall provide the IRIDIUM(R) Cellular Roaming Service
* as set forth in Section 21.0 of Exhibit A hereto.
T. Motorola shall provide the * Encryption as set forth in
Section 22.0 of Exhibit A hereto."
2. Amend Article 4, DELIVERY SCHEDULE, by adding the following new
paragraph:
"D. Motorola shall perform work required under Paragraphs M
through T of ARTICLE 2, DESCRIPTION OF WORK, in accordance
with the Milestones in Sections 15.0, 16.0, 17.0, 18.0, 19.0,
20.0, 21.0 and 22.0 of Exhibit A hereto."
3. Amend Article 5, PRICE, to provide pricing for the additional work set
forth in Paragraphs M and N of Article 2, DESCRIPTION OF WORK by
adding the following new paragraphs:
"I. Paragraph M - *
J. Paragraph N - *
K. Paragraph O - *
L. Paragraph P - *
M. Paragraph Q - *
N. Paragraph R - *
O. Paragraph S - *, which amount includes * for the initial term
of the IIU Extended Maintenance as provided in Article 10 of
this Contract, and which corresponds to Section 21.0 of
Exhibit A hereto.
P. Paragraph T - *"
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 2
<PAGE> 3
4. Amend Article 6, PAYMENT, by adding the following new paragraphs:
"I. The amounts to be paid under Paragraphs I, J, L, M, N, O and P
of ARTICLE 5, PRICE, shall be paid by Iridium to Motorola as
follows:
1. Upon Motorola's completion of any of the milestones
corresponding to Paragraphs I, J, L, M, N, O or P,
Motorola shall provide notice to Iridium of such
completion.
2. Upon such notification, Iridium shall have twelve
(12) months from such milestone completion date to
pay Motorola the full amount corresponding to such
milestones plus interest on such amount at a rate of
* per annum beginning on the corresponding milestone
completion date.
3. *
5. Amend Article 10, WARRANTY, by deleting in its entirety the first
sentence of Paragraph B.2 which reads:
"b. Motorola also warrants that the Software licensed to Iridium
pursuant to this Contract will be free from Service Affecting
or Performance Affecting Software Defects during the one (1)
year period immediately following Conditional Acceptance
thereof as defined in Section 11.3 of Exhibit A hereto."
and replacing it with:
"b. Motorola also warrants that the Software licensed to Iridium
pursuant to this Contract will be free from Service Affecting
or Performance Affecting Software Defects during the one (1)
year period immediately following Conditional Acceptance
thereof as defined in Sections 11.3 and 21.3.5 of Exhibit A
hereto."
6. Amend Article 10, WARRANTY, by deleting in its entirety the first
sentence of Paragraph C.1 which reads:
"I. Motorola shall provide IIU Extended Maintenance (IIU-EM to
Iridium beginning at Conditional Acceptance of the IIU as
defined in Section 11.3 of Exhibit A hereto and ending on *."
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 3
<PAGE> 4
and replacing it with:
"I. Motorola shall provide IIU Extended Maintenance (IIU-EM to
Iridium beginning at Conditional Acceptance of the IIU as
defined in Sections 11.3 and 21.3.5 of Exhibit A hereto and
ending on *."
7. Amend Article 10, WARRANTY, by deleting in its entirety the last
sentence of Paragraph C.2 which reads:
"Within thirty (30) days following commencement of the
extended term, and receipt of Motorola's invoice, Iridium
shall pay Motorola * for the IIU-EM."
and replacing it with
"Within thirty (30) days following commencement of the
extended term, and receipt of Motorola's invoice, Iridium
shall pay Motorola * for the IIU-EM."
8. Amend Article 24, AUTHORIZED REPRESENTATIVES, by adding the names
"Rickie D. Currens" and "Richard Henderson" to the listing of representatives
for Motorola, and "Robert Call" to the listing of representatives for Iridium.
9. Delete Exhibit A, including Appendices A, B, and C thereto, in its
entirety and substitute the attached new Exhibit A.
10. The TNDC, as amended by Amendments Nos. 1, 2 and 3, and this Amendment
No. 4, constitutes the entire agreement between the parties, and except as
specifically amended by the Amendments, all provisions of the TNDC remain in
full force and effect.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this
Amendment No. 4 to the TNDC effective this 8th day of May, 1998.
<TABLE>
<CAPTION>
IRIDIUM OPERATING LLC MOTOROLA, INC.
<S> <C>
/s/ E. F. STAIANO /s/ RICKIE D. CURRENS
- -------------------------- -----------------------------
Typed Typed
- -------------------------- ----------------------------
- -------------------------- -----------------------------
</TABLE>
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 5
<PAGE> 6
THE IRIDIUM(R)
TERRESTRIAL NETWORK DEVELOPMENT CONTRACT
EXHIBIT A
STATEMENT OF WORK
FOREWORD
This document contains the scope of work to be performed by the Satellite
Communications Division (SATCOM) of Motorola, Inc. (Motorola) located in
Chandler, Arizona under the Terrestrial Network Development Contract with
Iridium LLC located in Washington, D.C. The work in this document includes the
non-recurring engineering design, development and test efforts associated with
the IRIDIUM Gateway Equipment which will be sold by Motorola under separate
contracts with Gateway Operators.
- ---------------
IRIDIUM is a registered trademark and service mark of Iridium LLC
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 5
<PAGE> 7
15.0 MESSAGE ORIGINATION CONTROLLER (MOC) LANGUAGE PROMPTS
15.1 OVERVIEW
The design of the Message Origination Controller (MOC) has the
capability of supporting message prompts in a total of * languages per
each Gateway. * standard message prompt languages * shall be provided
with the MOC as part of the standard MOC feature set. The MOC shall
also support up to * additional message prompt languages as options
per each Gateway. These * additional message prompt languages for
each Gateway site can be chosen from the list of * languages that are
identified below.
15.2 IMPLEMENTATION
Motorola shall translate, record and edit the individual words and
phrases for the MOC prompts in the * non-standard languages identified
below. The MOC will concatenate these words and phrases to form the
actual MOC prompts in the languages selected for each Gateway.
15.3 NON-STANDARD LANGUAGE LIST
The non-standard languages available for the * additional message
prompt languages for each Gateway site shall include:
*
15.4 MILESTONES
The work under this Section 15.0 shall be performed, and Iridium shall
pay for such work, in accordance with the following Milestone:
<TABLE>
<CAPTION>
SCHEDULED
MS NO. MILESTONE DESCRIPTION COMPLETION DATE PRICE
<S> <C> <C> <C>
15-1 Completion of the MOC Language * *
Prompts (Previously Q-1)
</TABLE>
This milestone shall be deemed completed upon the issuance by Motorola
to Iridium of a certification that (a) MOC Language Prompts are
complete and
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 6
<PAGE> 8
accurate in the * standard languages and the * non-standard languages;
and (b) the MOC Language Prompts are in a format suitable for
installation in the Gateways.
15.5 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the MOC Language
Prompts features and conditions precedent to the availability and
operation of the MOC Language Prompts features and the work to be
performed by Motorola under this Section 15.0:
1. The MOC Language Prompts will be installed into each Gateway
MOC as part of Release * installation as part of the Gateway
Equipment Purchase Agreements (GEPAs) for each Gateway.
15.6 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance under
this Section 15.0, or are not included as a feature or functionality
of the MOC Language Prompts, or are limitations to the MOC Language
Prompts:
1. The scope of work to be performed under this Section excludes
any effort to implement the translation, recording or
installation of the MOC Language Prompts by the Gateway
operators/owners. The scope of work under this Section also
excludes any effort to translate, record and install any
additional MOC Language Prompts not identified in Section
15.3.
16.0 MESSAGING FEATURES
16.1 OVERVIEW
The Messaging Features for the System provide improved quality,
marketability and performance of the IRIDIUM System Messaging
Services. These specific enhancements consist of: improved (uniform)
call treatments and increased number of Message Delivery Areas (MDAs)
supported. These features shall consist of new Call Termination
Treatments and *, as described in this Subsection 16.1.
16.1.1 CALL TERMINATION TREATMENT
The following are general characteristics of the desired
functionality.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 7
<PAGE> 9
The default telephony behavior for the forwarding conditions, ISU Not
Reachable, ISU Busy, and ISU No Answer, is to forward the call to the
telephony subscriber's messaging service at the telephone subscriber's
home gateway. Subscriber redirection of a forwarding condition
supersedes the default behavior for that condition until the
redirection is canceled. The messaging subscriber shall be
responsible for selecting the receiving device (ISU or MTD or both).
Only numeric messages and notifications are subject to this delivery
option. Alphanumeric messages can only be delivered to the MTD. The
receiving device is set at provisioning, and can be modified by the
Service Provider via a provisioning interface, or during a Subscriber
Service Session.
16.1.1.1 ENHANCED CALL COMPLETION (ECC)
The telephony subscriber's messaging service provides an ECC feature
with the following characteristics:
1) personal greeting recorded by the subscriber, or a standard
greeting
2) collect a numeric message of up to 20 digits
3) message delivery to the subscriber's ISU
4) selection of a GW language at Provisioning for use by the
messaging service when prompting callers
5) *
6) when the forwarded call is answered by messaging services, the
caller hears a personal or standard greeting and is then
prompted to enter a numeric message *.
16.1.1.2 VOICE MESSAGING (VM) AND ECC
The telephony subscriber may combine a voice message capability with
ECC. Characteristics of the combined service are as follows:
1) all capabilities identified in the current baseline for a
telephony voice messaging subscriber
2) all those capabilities identified herein for ECC except as
modified herein
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 8
<PAGE> 10
a) when the forwarded call is answered by messaging
service, the caller is prompted to enter a numeric
message * or to record a voice message
b) messages delivered to the subscriber's ISU include
the numeric message entered by a caller or a
notification message indicating a voice message has
been deposited.
16.1.1.3 * AND ECC
The telephony subscriber may upgrade the ECC capability *.
Characteristics of the upgraded service are as follows:
1) all capabilities identified in the current baseline for a
Directed Messaging Service (DMS) numeric or alphanumeric
messaging service
2) all those identified herein for ECC
3) *
16.1.1.4 VM AND *
The telephony subscriber may combine a voice message capability with
*. Characteristics of the combined service are as follows:
1) all capabilities identified in the current baseline for a DMS
voice messaging subscriber
2) all capabilities identified herein for the telephony
subscriber * except as modified here
a) *
b) *
16.1.2 MDA INCREASE
Increase the maximum number of possible MDAs from *. This will
facilitate Iridium in refining MDA definition and utilizing coding
schemes for user friendliness.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 9
<PAGE> 11
16.2 DESIGN AND DEVELOPMENT OF MESSAGING FEATURES
Motorola shall modify the design and development of the hardware and
software for the Message Origination Controller (MOC), Notification
Center (NC) and the Message Termination Controller (MTC) Equipment
which will provide these Messaging Features. Motorola shall also
re-design the functional interfaces and protocols which must be
implemented in the System in order to provide the Messaging Features
functionality.
16.2.1 DOCUMENTATION MODIFICATION
Motorola shall modify the MOC, NC and MTC Equipment, including
Motorola internal specifications, interface control documents (ICDs)
and the Gateway product description, as is reasonably necessary to
document the software changes developed under this Section 16.0.
16.2.2 UPDATED MOC TECHNICAL SPECIFICATION DOCUMENT
Motorola shall modify the MOC Technical Specification Document to
incorporate the features for new call treatments and additional MDAs.
16.3 UPDATED MOC TECHNICAL SPECIFICATION DOCUMENT- MILESTONE 16-1
(PREVIOUSLY ME-1)
Motorola shall modify the MOC Technical Specification Document to
incorporate the Messaging Features described herein. A copy of the
updated MOC Technical Specification Document shall be made available
to Iridium. This Milestone shall be deemed completed when Motorola
has submitted the updated MOC Technical Specification Document to
Iridium.
16.4 LAB DEMONSTRATION - MILESTONE 16-2 (PREVIOUSLY ME-2)
Motorola shall develop test cases for the Messaging Features
identified herein as part of the Product and/or Integration Release *
Acceptance Test Plans. Motorola shall then perform the testing of the
Messaging Features in accordance with these plans. This testing will
address the features identified herein at the Messaging Infrastructure
and may be accomplished by testing, simulation, analysis, or a
combination thereof, in accordance with these plans. This testing
will be conducted in the Motorola test laboratory at Chandler, Arizona
or at such other laboratory as may be specified by Motorola. Iridium
representatives shall be offered the opportunity to witness all
testing activities. Motorola shall prepare and
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 10
<PAGE> 12
release internally at Motorola the Product and/or Integration
Acceptance Test Reports which cover the Messaging Features described
herein. A copy of these reports shall be made available to Iridium.
This Milestone, ME-2, shall be deemed completed when Motorola has
completed the testing for the Messaging Features and upon the
documenting of non-compliant items, if any, to the test plans in the
subsequent test reports. This testing shall be held in accordance
with the applicable test plans to the satisfaction of Motorola based
upon commercially reasonable standards. The testing required by this
milestone may be conducted as a part of the Messaging Infrastructure
Integration & Test activities.
16.5 MILESTONES
The work under this Section 16.0 shall be performed, and Iridium shall
pay for such work, in accordance with the following Milestones:
<TABLE>
<CAPTION>
SCHEDULED
MS COMPLETION
NO. MILESTONE DESCRIPTION DATE PRICE
<S> <C> <C> <C>
16-1 Updated MOC Technical Specification Doc. * *
(Previously ME-1)
16-2 Lab Demonstration (Previously ME-2) * *
------------
TOTAL: *
</TABLE>
16.6 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the Messaging Features
and conditions precedent to the availability and operation of the
Messaging Features and the work to be performed by Motorola under this
Section 16.0:
16.6.1 SCHEDULE ASSUMPTIONS
The Messaging Features will be implemented as part of Release * within
the IRIDIUM program.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 11
<PAGE> 13
16.6.2 TECHNICAL ASSUMPTIONS
The additional message delivery traffic is based on the following
assumptions:
*
16.6.3 GATEWAY IMPLEMENTATION AND GPAP ASSUMPTIONS
The Messaging Features described herein require mandatory changes be
implemented in ALL Gateways to satisfy the projected * baseline
traffic loads per the traffic model referenced below. Per Iridium
direction, initial installation of currently planned GWs will not
receive these required modifications. The resulting effect is that
the installed systems satisfy the projected traffic load for
approximately the first *. Any changes to the installed systems will
be handled via GW expansion options.
In addition to the implementation costs referenced above, Motorola
also anticipates increasing the annual payments required for each
Gateway owner under the existing GPAP. Iridium shall also communicate
to the Gateway customers that they may incur an increase in annual
GPAP cost.
16.7 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance under
this Section 16.0, or are not included as a feature or functionality
of the Messaging Features, or are limitations to the Messaging
Features:
1) This Section assumes the traffic levels associated with MOC
and NC remain unchanged from the "*" traffic model, which is
documented in Motorola SATCOM document MDL-G0001.SYS, TRAFFIC
MODEL INPUTS AND METHODOLOGIES, Rev. C, 22 March 1995.
2) The features and requirements of this Section eliminate from
the baseline design the caller's receipt of a system
announcement prior to being forwarded to the MOC for message
input processing.
17.0 GBS BROWSER
17.1 OVERVIEW
Motorola will provide the capability to browse the IRIDIUM System
Practices (ISP) which are stored on the * server within the Gateway
Business System (GBS).
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 12
<PAGE> 14
17.2 SELECTION AND IMPLEMENTATION OF THE GBS BROWSER
Motorola shall install the * on the eight OMC-G workstations in the
Gateway Equipment delivered to the * Gateway Equipment purchasers to
provide intranet access from the OMC-G to the * Server in the GBS. If
Gateway Equipment has been delivered to a purchaser before the
completion of the design and development of the GBS browser under this
Section 17.0, Motorola shall, without additional cost to the Gateway
Equipment purchasers, install and test the OMC-G browser on such
Gateway Equipment, provided that the Gateway Equipment owner consents
to such action by Motorola.
*
17.3 BROWSER CONFIGURATION
Motorola shall configure the OMC-G browser with a bookmark pointing to
the GBS * server. The browser will be configured so that the OMC-G
users will have no read and no write access to the OMC-G file system.
17.4 OMC-G CONFIGURATION
Motorola shall configure the OMC-G with a new user group. This user
group will be different from all other OMC-G user groups. A separate
login will be required to access the ISP from an OMC-G workstation.
17.5 GIE CONFIGURATION
Motorola shall configure the Gateway Infrastructure Equipment (GIE) to
prevent Gateway Technical Office (GTO) access with the browser from
other Gateway sites.
17.6 DOCUMENT MODIFICATION
Motorola shall update the documentation of the OMC-G to reflect the
addition of this capability, as is reasonable necessary to document
the software changes defined in Section 17.2.
Motorola will update the Gateway BO requirements, the OMC-G B0/B1
requirements, and the Gateway/GBS SFS and ICD to reflect this feature.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 13
<PAGE> 15
17.7 TEST PLAN MODIFICATION
Motorola shall update the OMC-G, the Gateway and the System I&T test
plan to reflect this feature.
17.8 GBS BROWSER TESTING
Motorola shall test this feature as part of the Gateway/GBS Test Plan.
17.9 GBS BROWSER DEMONSTRATION - MILESTONE 17-1 (PREVIOUSLY Q-1)
Motorola and Iridium shall jointly develop a GBS Browser demonstration
plan. Motorola shall perform a demonstration of the GBS Browser
features set forth in this Section 17.0. This demonstration may be
accomplished by testing, simulation, analysis, or a combination
thereof, in accordance with the demonstration plan. The demonstration
will be conducted in the Motorola test laboratory in Chandler,
Arizona, or at such other laboratory as may be specified by Motorola
not later than fifteen (15) days prior to the commencement of the
demonstration. Iridium representatives shall be offered the
opportunity to witness all demonstration activities and will be
notified no less than seven (7) calendar days prior to said
demonstration.
Motorola shall prepare and release internally at Motorola a report
(the "GBS Browser Demonstration Report") that details the results of
the demonstration. A copy of the GBS Browser Demonstration Report
shall be made available to Iridium. This Milestone Q-1 shall be
deemed completed upon: 1) Iridium's receipt of Motorola's
certification that the GBS Browser features in this Milestone Q-1 have
been demonstrated in accordance with the jointly developed
demonstration plan to the satisfaction of Motorola based upon
commercially reasonable standards; and 2) a jointly developed
corrective action plan has been prepared for those items found to be
non-compliant with the demonstration plan. The corrective action plan
shall be prepared within fifteen (15) business days of completion of
the demonstration.
17.10 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the GBS browser
features and conditions precedent to the availability and operation of
the GBS browser features and the work to be performed by Motorola
under this Section 17.0:
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 14
<PAGE> 16
17.11 MILESTONE
The work under this Section 17.0 shall be performed, *, in accordance
with the following Milestone:
<TABLE>
<CAPTION>
SCHEDULED
MS NO. MILESTONE DESCRIPTION COMPLETION DATE PRICE
<S> <C> <C> <C>
17-1 GBS Browser demo (Previously * *
Q-1)
</TABLE>
18.0 INTER-GATEWAY TRANSIT OF FAX AND DATA CALLS *
18.1 OVERVIEW
Motorola will design and develop hardware and software changes to the
Gateway Equipment, to the equipment in the Master Control Facility
(MCF) and to the Backup Control Facility (BCF) to support
inter-Gateway transit of FAX and data calls. The hardware and
software changes will allow certain FAX and data calls to be routed
between Gateways *. Motorola will deliver, install and verify
operation of the necessary hardware and software in the MCF and BCF.
18.2 DESIGN AND DEVELOPMENT OF INTER-GATEWAY TRANSIT OF FAX AND
DATA CALLS
Motorola shall design and develop the hardware and software for the
Gateway Equipment which will provide the inter-Gateway transit of FAX
and data calls feature. Motorola shall also design the functional
interfaces and protocols which must be implemented in the System in
order to provide the inter-Gateway transit of FAX and data calls
functionality.
18.2.1 ESTABLISHMENT OF LABORATORY TEST BED
Motorola will obtain and install in the Gateway test laboratory * and
associated interface and mounting hardware and software for use in the
development and testing of the inter-Gateway transit of FAX and data
call feature. All such equipment and software at the Gateway test
laboratory shall belong to Motorola, and Iridium shall obtain no
ownership interests in such equipment.
18.3 DOCUMENTATION MODIFICATION
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 15
<PAGE> 17
Motorola shall modify the documentation of the Switching SubSystem
(SSS), Gateway Infrastructure Equipment (GIE) *, including Motorola
internal specifications, interface control documents (ICDs) and the
Gateway Product and Description Specifications (Motorola document
number *), as is reasonably necessary to document the hardware and
software changes developed under this Section 18.0
18.4 INTER-GATEWAY TRANSIT OF FAX AND DATA CALLS PRELIMINARY DESIGN
REVIEW (PDR)-MILESTONE 18-1 (PREVIOUSLY F-1)
Motorola shall conduct a PDR of the inter-Gateway transit of FAX and
data calls design at Motorola's SATCOM facility in Chandler, Arizona.
Iridium representatives shall be given reasonable advanced notice to
attend this PDR. At the PDR, Motorola shall review the status of the
design of the inter-Gateway transit of FAX and data calls feature, and
shall establish specific action items as a result of the review. This
milestone F-1 shall be deemed completed when Motorola has held the PDR
and established a list of specific action items resulting from the
review. A copy of the action items will be made available to Iridium.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 16
<PAGE> 18
18.5 INTER-GATEWAY TRANSIT OF FAX AND DATA CALLS CRITICAL DESIGN
REVIEW (CDR)-MILESTONE 18-2 (PREVIOUSLY F-2)
Motorola shall conduct a CDR of the inter-Gateway transit of FAX and
data calls design at Motorola's SATCOM facility in Chandler, Arizona.
Iridium representatives shall be given reasonable advanced notice to
attend this CDR. At the CDR, Motorola shall review the status of the
design of the inter-Gateway transit of FAX and data calls feature, and
shall establish specific action items as a result of the review. This
milestone F-2 shall be deemed completed when Motorola has held the CDR
and established a list of specific action items resulting from the
review. A copy of the action items will be made available to Iridium
at no additional cost.
18.6 TRAINING AND DOCUMENTATION MODIFICATION
Motorola shall develop training and Gateway owner documentation
modifications to support operations and maintenance of * and its
associated connections within the Gateway. The costs of training *.
18.7 QUALITY OF SERVICE AND CAPACITY ANALYSIS
Motorola shall analyze the quality of service and capacity impacts, if
any, on the Gateway, *, MCF and BCF equipment expected from the
implementation of the inter-Gateway transit of FAX and data calls
feature. Motorola shall release a report (the "Inter-Gateway Transit
of FAX and Data Calls Quality of Service and Capacity Report")
internally at Motorola which details the results of the analysis. A
copy of the Inter-Gateway Transit of FAX and Data Calls Quality of
Service and Capacity Reports shall be made available to Iridium.
18.8 OMC-G MANAGEMENT CHANGES
Motorola shall design and implement changes to the Operations and
Maintenance Center - Gateway (OMC-G) software to enable centralized
monitoring of the Gateway local * status and operational data by the
OMC-G.
18.9 FEATURE DEMONSTRATION - 18.3 (PREVIOUSLY F-3)
Motorola and Iridium shall jointly develop an Inter-Gateway Transit of
FAX and Data demonstration plan. Motorola shall perform a
demonstration of inter-Gateway transit of FAX and data at Motorola's
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 17
<PAGE> 19
SATCOM facility in Chandler, Arizona. This demonstration will address
multi-Gateway FAX and data calls and OMC-G management. This
demonstration may be accomplished by testing, simulation, analysis, or
such combination thereof, as determined by Motorola. Iridium
representatives shall be offered the opportunity to witness all
demonstration activities and will be notified no less than seven (7)
days prior to said demonstration.
Motorola shall prepare and release internally at Motorola a report
that details the results of the demonstration provided for in the
preceding paragraph. A copy of this report shall be made available to
Iridium. This Milestone F-3 shall be deemed completed upon: (1)
Iridium's receipt of Motorola's certification that the inter-Gateway
transit of FAX and data calls * feature in this Milestone F-3 has been
demonstrated in accordance with the jointly developed demonstration
plan to the satisfaction of Motorola based on commercially reasonable
standards; and (2) a jointly developed corrective action plan has been
established for those items found to be non-compliant with the
demonstration plan. The corrective action plan shall be completed
within fifteen (15) business days of completion of the demonstration.
18.10 DELIVERY OF EQUIPMENT - MILESTONE 18-4 (PREVIOUSLY F-4)
Motorola shall procure, assemble, stage and deliver to Iridium the
necessary hardware and software to implement the inter-Gateway transit
of FAX and data calls feature at the MCF and BCF.
18.11 INSTALLATION
Motorola shall install the necessary hardware and software to
implement the inter-Gateway transit of FAX and data calls feature at
the MCF and BCF, including assembling and installing equipment
cabinets, installing the Hardware in such cabinets, installing the
Software (if not already installed) and performing wiring to the * and
SSS equipment as necessary.
18.12 TEST PLAN
Motorola and Iridium shall jointly develop an inter-Gateway transit of
FAX and data call feature Acceptance Test Plan which will be performed
the MCF and BCF.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 18
<PAGE> 20
18.12.1 FINAL ACCEPTANCE TESTING - MILESTONE 18-5 (PREVIOUSLY F-5)
Motorola shall perform the tests in the Acceptance Test Plan at the
MCF and the BCF. This Milestone F-5 shall be deemed completed and
Final Acceptance achieved upon: (1) Iridium's receipt of Motorola's
certification that the equipment has been tested in accordance with
the jointly developed test plan and that the test results are
satisfactory to Motorola based upon commercially reasonable standards,
or, if a test is not passed, the failure was caused by a Level 3 or
Level 4 Failure; and (2) a jointly developed corrective action plan
has been established for those items found to be non-compliant with
the acceptance test criteria. Motorola and Iridium shall establish
the corrective action plan within 15 business days of the completion
of the testing. Iridium representatives shall be offered the
opportunity to witness the Acceptance Testing and will be notified at
least 7 calendar days prior to the start of the Acceptance Testing.
18.13 MILESTONES
The work under this Section 18.0 shall be performed and Iridium shall
pay for such work, in accordance with the following Milestones:
<TABLE>
<CAPTION>
SCHEDULED
MS NO. MILESTONE DESCRIPTION COMPLETION DATE PRICE
<S> <C> <C> <C> <C>
18-1 Preliminary Design Review * $*
(Previously F-1)
18-2 Critical Design Review * *
(Previously F-2)
18-3 Feature Demonstration * *
(Previously F-3)
18-4 Delivery of Equipment * *
(Previously F-4)
18-5 Final Acceptance * *
(Previously F-5)
TOTAL: *
</TABLE>
Notwithstanding any other provisions of this Contract, the foregoing
prices are contingent on Iridium being responsible for all import
duties and all applicable sales, use, excise, property, value added,
withholding and other taxes or governmental assessments of any kind
(collectively, the "Duties
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 19
<PAGE> 21
and Taxes") imposed on the goods and services purchased hereunder or
otherwise imposed in connection with the transactions contemplated
hereby, excluding, however, any United States federal or state taxes
measured by Motorola's net income. In the event Motorola is required
by applicable law to pay any Duties and Taxes for which Iridium is
responsible under the preceding sentence, Iridium shall indemnify
Motorola by paying to Motorola on demand an amount sufficient to hold
Motorola harmless from the payment by Motorola of such Duties and
Taxes.
18.14 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the inter-Gateway
transit of FAX and data calls feature and conditions precedent to the
availability and operation of the inter-Gateway transit of FAX and
data calls feature and the work performed by Motorola under this
Section 18.0:
(1) The inter-Gateway transit of Fax and data calls feature will
be implemented and tested in the MCF and BCF by *.
(2) Iridium will be responsible for any cost impacts resulting
from Iridium-directed changes in *, configurations, or
guaranteed level of service due to the addition of FAX and
data calls *.
(3) Work is to be performed at the MCF and BCF.
(4) Iridium will provide all reasonable support requested by
Motorola.
(5) * shall have procured and have installed SR6 *.
(6) Motorola will only be responsible to install * in Gateway
sites for which a Gateway owner has entered into an amendment
to the GEPA contract for such * equipment. Installation will
be in accordance with the GEPA contract between Motorola and
such Gateway operator.
(7) Iridium shall provide a site at both the MCF and BCF with 24
hour per day access, which is sufficient to permit the
installation and testing of *.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 20
<PAGE> 22
(8) Iridium shall inform the Gateway owners of the need to enter
into all appropriate amendments with Motorola in order to
enable *, and for appropriate GPAP/GTAC coverage of *.
18.15 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance under
this Section 18.0, or are not included as a feature or functionality
of the inter-Gateway transit of FAX and data calls feature, or are
limitations to the inter-Gateway transit of FAX and data call feature:
*
19.0 * DOMESTIC SERVICE
19.1 OVERVIEW
The * Domestic Service feature provides the capability for gateway
service providers to offer specially priced services to subscribers
requiring IRIDIUM network access only from within a specified gateway
region. *, the subscriber would have operational access to the
IRIDIUM services subscribed to, while using their unit within the
region subscribed to. This service includes global long distance
calls originated or terminated by the subscriber while within the
specified gateway region.
19.2 DESIGN AND DEVELOPMENT
Motorola shall modify the design and development of the SSS (D900) and
other Gateway subsystems as required to provide the * Domestic
Service.
19.2.1 DOCUMENTATION MODIFICATION
Motorola shall modify the appropriate documentation of the required
Gateway Subsystems, including but not limited to Motorola internal
specifications, Network Management Methods & Procedures, Gateway
training, and the Gateway Product Description, as is reasonably
necessary to document the changes developed under this Section 19.0.
19.2.2 UPDATED SERVICES DESCRIPTION DOCUMENT
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 21
<PAGE> 23
Motorola shall modify the Services Description Document to incorporate
the new feature described in paragraph 19.1.
19.3 MILESTONE
The work under this Section 19.0 shall be performed and Iridium shall
pay for such work, in accordance with the following Milestone:
<TABLE>
<CAPTION>
SCHEDULED
MS NO. MILESTONE DESCRIPTION COMPLETION DATE PRICE
<S> <C> <C> <C>
19-1 Contract Start * $*
</TABLE>
19.4 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying * Domestic Service and
conditions precedent to the availability and operation of * Domestic
Service and the work to be performed by Motorola under this Section
19:
(1) *
(2) * Iridium will provide reasonable support requested by
Motorola.
(3) SR6 must be installed in *.
19.5 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance under
this Section 19.0, or are not included in the development, or are
limitations to the * Domestic Service:
1) This Section 19.0 includes DEVELOPMENT ONLY for the * Domestic
Service. It does NOT include the following,
*:
- Deployment activities of any kind for this service.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 22
<PAGE> 24
- Associated software *, such as, line trunk groups or
hardware which may be required depending on the
configuration of the IBSS.
- Global Customer Care specific development (including
testing and office data).
- Global Assistance specific development (including
testing and office data).
- Any GBS additions, changes, or extensions.
2) Existing documentation and training materials will only be
updated to include the * Domestic Service.
3) Type approval and homologation activities are not included in
this Section 19.0. Any applicable type approval or
homologation of the * Domestic Service will have to be
obtained by the Gateway owner.
20.0 AERONAUTICAL SERVICES SUPPORT
20.1 OVERVIEW
Motorola shall implement the system modifications addressed in this
Section 20.0 with the deliverables listed in time to support
Aeronautical Services ("Aero") commercial activation as described in
this Section 20.0. Motorola is responsible for the definition,
design, implementation and demonstration of Aero changes to the
Iridium Communications System ("ICS") to the extent provided in this
Section 20.0. Motorola shall ensure that the Aeronautical Gateway
System ("AGS") equipment interface control document ("ICD"), when
approved by Motorola, properly provides for connection of the AGS to
Gateways.
20.2 SYSTEMS ENGINEERING PHASE AND AERO SERVICES - MILESTONE 20-1
Motorola shall provide systems engineering services to define and
implement changes for Aero to the ICS that shall allow the Gateways
and the Space Vehicles to service multiple co-located Aeronautical
Subscriber Unit devices [called Radio Channel Units (RCUs)], housed in
Aeronautical Satellite Terminal Units (STUs), onboard aircraft.
Motorola shall study the RF interference between these systems in
order to accurately describe the
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 23
<PAGE> 25
effects on each system and propose revolution for all inter-system RF
interference issues. (This is generally referred to as
"coexistence"). ICS changes to support coexistence between the ICS
avionics and other avionics on board an aircraft are out of the scope
of this activity.
Motorola and Iridium recognize that the originally proposed (reference
Motorola Letter T970252 dated Nov. 18, 1997) Preliminary Design Review
(PDR) has been overcome by events. Rather than conduct a PDR, the
parties have agreed that Motorola will demonstrate completion of
Milestone 20-1 by submitting a letter to Iridium outlining and
referencing the meetings and documents which comprise the presentation
of these Systems Engineering Phase efforts to Iridium. Iridium's
receipt of this letter will constitute completion of this Milestone
20-1.
20.3 DESIGN AND DEVELOPMENT OF THE AERONAUTICAL SERVICES
Motorola shall design and develop modifications to the Gateways, SCS
and the Space Vehicles to implement Aero features, as follows:
*
4) The designs for the SSS, OMC-G and associated Gateway
equipment and documentation will support connectivity and
accounting, fault and security management for an AGS at each
Gateway to ensure that the AGS is operational and to collect
Call Detail Records.
5) SCS modifications to provide telemetry of the * system
performance and to monitor AGS status.
20.3.1 DOCUMENTATION MODIFICATION
Motorola shall modify the documentation of the Gateways and Space
Vehicles, including Motorola internal specifications, interface
control documents (ICDs), training materials, and the Gateway product
description, as necessary to document the changes developed under this
Section 20.0.
Motorola shall modify the MU Air Interface Specification
(SPC-E0011.SYS) as appropriate, to define the changes necessary to the
ICS for Aero.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 24
<PAGE> 26
Motorola shall develop ICDs that shall define the interface between
the AGS and the Gateways.
Motorola shall develop an Integration and Test Plan (ITP) that shall
define the work to be performed to test the changes being made to the
Gateways, SCS and SVs for Aero.
Motorola shall develop detailed instructions for the installation of
Aero related Gateway subsystem modifications prior to implementation
of Aero.
20.4 AERO SERVICES CRITICAL DESIGN REVIEW (CDR) - MILESTONE
20-2
Motorola shall conduct an Aero Critical Design Review (CDR) at
Motorola's SATCOM facility in Chandler, Arizona. The CDR required by
this Milestone 20-2 may be conducted in conjunction with the Radio
Channel Unit (RCU) Development Effort CDR. At the CDR, Motorola shall
review the status of the Aero design versus the design requirements,
and, following the CDR, shall document specific action items resulting
from the review. A copy of the specific action items shall be
provided to Iridium. Iridium shall have 10 business days to provide
comments and requested changes to the specific action items. Within
10 business days of receipt from Iridium, Motorola shall 1) address
Iridium's comments and requested changes to the satisfaction of
Motorola based upon commercially reasonable standards, 2) make any
necessary modifications to the specific action items, and 3) issue a
final report on the CDR. This Milestone 20-2 shall be deemed complete
when Motorola has issued the final CDR report. The agenda and
contents of the CDR shall be as in Section 20.11.2 herein.
20.5 * STUDY
To confirm its preliminary investigation, and with the intent of
accepting * as a design goal, Motorola shall analyze the aircraft *
limitations of the current ICS and issue a report to Iridium that
details the results of the study. The study shall identify
recommended system enhancements, if any, for aircraft *.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 25
<PAGE> 27
20.6 INTEGRATION AND TEST READINESS REVIEW (ITRR) - MILESTONE 20-3
The ITRR shall be organized and run by Motorola at their SATCOM
facility in Chandler, Arizona. The currently identified Aero Service
Provider, *, and its subsystems to be tested at Motorola will be
included subject to their availability. Iridium, Aero Service
Provider, and their representatives will be requested to attend and
participate in the ITRR. At the ITRR, Motorola shall review the plan
and preparation for the conduct of Integration and Test of Aero
Services' features, and shall establish specific action items as a
result of the review. A copy of the specific action items shall be
provided to Iridium. Iridium shall have 10 business days to provide
comments and requested changes to the specific action items. Within
10 business days of receipt from Iridium, Motorola shall 1) address
Iridium's comments and requested changes to the satisfaction of
Motorola based upon commercially reasonable standards, 2) make any
necessary modifications to the specific action items, and 3) issue a
final report on the ITRR. This Milestone 20-3 shall be deemed
complete when Motorola has issued the final ITRR report.
20.7 SYSTEMS INTEGRATION AND TEST, AND DEMONSTRATION - MILESTONE
20-4
Motorola shall perform Systems Integration and Test to assure that the
changes and enhancements to the ICS meet the Aero requirements defined
at CDR, amended as mutually agreed between Iridium and Motorola during
the period between CDR and ITRR. Motorola shall perform a
demonstration to verify Motorola's Aeronautical Services Gateway and
SV features in accordance with the jointly developed demonstration
plan of the Aeronautical Services functionality at the Motorola test
laboratory in Chandler, or at such other laboratory as may be
specified by Motorola. Testing, simulation, analysis, or a
combination thereof may be used to accomplish the demonstration, over
time, in accordance with the demonstration plan. Iridium, Aero
Service Provider, and their representatives shall be notified at least
7 calendar days prior to the start of system level demonstration
activities. Should the Aero Service Provider not be ready to
participate, Iridium shall attempt to provide Motorola with an
engineering model of the Aero Service Provider's equipment (AGS) for
purposes of the 4th Quarter 1998 testing. Motorola shall prepare and
release to Iridium a report (the "Aero Services Validation Report")
which details the results of the demonstration. This Milestone 20-4
shall be deemed completed upon: 1) Iridium's receipt of Motorola's
certification
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 26
<PAGE> 28
that Motorola has demonstrated the Aero functionality in accordance
with the jointly developed demonstration plan to the satisfaction of
Motorola based upon commercially reasonable standards, and 2) a
jointly developed corrective action plan having been established for
those items, if any, found to be non-compliant with the demonstration
plan's acceptance criteria. Motorola and Iridium shall establish the
corrective action plan within 15 business days of the completion of
the demonstration.
20.8 SYSTEMS TEST, AERO SERVICE PROVIDER'S EQUIPMENT - MILESTONE
20-5
Motorola shall provide the use of their ICS test assets for up to
eighty hours to integrate aeronautical subsystems and to support Aero
system level (aviation infrastructure to cockpit and cabin
end-systems) testing. It is intended that the eighty hours shall be
allocated over a four-week period during *; provided, however, that if
other tasks have Motorola's test assets fully consumed, or if the Aero
Service Provider is not ready to participate, the testing period for
the Aero Service Provider's equipment shall be rescheduled to occur as
soon as practicable during *. Iridium and the Aero Service Provider
shall request a start date for testing, and Motorola will schedule
testing to begin on that date or as soon as practicable thereafter.
Iridium, the Aero Service Provider and their representatives shall be
notified at least 7 calendar days prior to the start of four week test
period. Motorola shall provide both ICS test assets and staff to
operate this equipment. Motorola shall prepare and release to Iridium
a report (the Aero Service Providers Equipment Testing Report) which
details the results of the testing. A copy of the test results shall
be provided to Iridium. Iridium shall have 10 business days to
provide comments. Within 10 business days of receipt from Iridium,
Motorola shall 1) address Iridium's comments to the satisfaction of
Motorola based upon commercially reasonable standards and, 2) issue a
final report on Aero Service Providers equipment testing. This
Milestone 20-5 shall be deemed complete when the Systems Integration
and Test utilization of system test assets has been completed to
Iridium's satisfaction or the eighty hours utilization of system test
assets allocated over a four week period has been expended, whichever
occurs first, and Motorola has issued the final test report.
20.9 MILESTONES
The work under this Section 20.0 shall be performed, and Iridium shall
pay for such work, in accordance with the following Milestones:
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 27
<PAGE> 29
<TABLE>
<CAPTION>
Scheduled
MS# Milestone Description Completion Date Amount Due
<S> <C> <C> <C>
20-1 Systems Engineering Phase of Aero * $*
20-2 Critical Design Review * $ *
20-3 Integration and Test Readiness * $ *
Review
20-4 Integration and Test, and * $*
Demonstration
20-5 Systems Test, Aero Svc. Provider's
Equip. * $ *
</TABLE>
* An invoice may be submitted upon completion but not earlier than *.
20.10 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the Aero features and
conditions precedent to the availability and operation of Aero
features and the work to be performed by Motorola under this Section
20.0:
1) The Aeronautical Service Provider will provision the STU
equipment and aircraft for the testing and assume the overall
responsibility for integration, test and FAA qualification of
the ICS Aero, including the installation of equipment on
aircraft, and qualification/certification of such equipment
for air worthiness.
2) Aero Services will be implemented as part of Gateway release
*.
3) *
4) Iridium shall ensure that Gateway operators install ECS, ETS
and OMC-G revisions for Aero, in accordance with instructions
to be provided by Motorola, prior to implementation, or
operational/subscriber trials, if any, of Aero.
*
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 28
<PAGE> 30
20.11 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance under
this Section 20.0, or are not included as a feature or functionality
of the Aero Services, or are limitations to the Aero Services:
1) *
2) No changes to the system to support coexistence between the
ICS and other satellite communications systems are included.
3) No changes are included for improvement of current
Registration and Hand-off processing.
4) Power Control - Motorola shall study the power control
algorithm and the associated Link Margin in the L-Band
Subscriber Link in support of voice and data communications
for Aero. Based on the study, Motorola shall, if practical,
recommend changes to the RCU to better support the power
control algorithm. Implementation of any such RCU changes is
outside the scope of this proposal.
5) Motorola shall conduct a systems engineering study to analyze
* capability of the ICS. *, or whatever capability is
confirmed by the study, shall be adopted as the system design
goal. No testing of the ICS's * capability is included.
Motorola may recommend optimization or enhancements to the ICS
to improve * performance as added scope, or more likely, as
changes to subscriber equipment.
6) The AGS interface to the SSS should not change the SSS;
however, it may require the purchase of supplemental trunk
interface cards on both the ground and airside of the SSS. *
will provide this information to Iridium and *. Installation
details and procedures, and procurement of the interface
equipment (such as trunk interface cards), if required, are
outside the scope of this activity.
7) Motorola Integration and Test support for test of the Aero
Service Provider's equipment (e.g.: STU and/or AGS) and for
operational or subscriber trials, if any, is not included.
Aero system level test plans and procedures (to be used during
the 80 hours of testing) must be provided by Iridium and the
Aero Service Providers. If the STU and/or AGS is not
available to support Motorola System Integration and Test at
the required
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 29
<PAGE> 31
time, or if for other reasons Iridium determines that
additional testing is required, such testing will be the
subject of future negotiations.
8) There are no modifications necessary to the baseline ICS
store-and-forward fax service to support the Aero service.
There is nothing in the ICS store-and-forward fax service
which limits an Aero Service Provider from developing a
capability in the avionics systems to provide automatic
retrieval of fax images from the fax mailbox and presentation
of these images to "Group 3" fax machines located on board
aircraft.
20.12 PDR AND CDR DELIVERABLES
20.12.1 PDR DELIVERABLES
The PDR shall be a formal technical review of the design
requirements and the basic design approach for each element of
the ICS. These elements are the SVs, the AGS interface, the
OMC-G and the satellite control segment. The PDR should
evaluate the progress, technical adequacy, and risk resolution
(on a technical cost, and schedule basis) of the selected
design approach.
Topics to be addressed at the PDR include:
1) Aero ICS system level description including the
chosen system architecture.
2) *
3) All information should show traceability back to the
IASR.
Each subsystem should address:
1) How the design accommodates the required services.
2) How the design accommodates the required products.
3) The impact to the ICS for both Aero and non-Aero
usage.
20.12.2 CDR DELIVERABLES
The CDR shall be a formal technical review of the detail design of the
Aero ICS implementation to ensure it satisfies the design and
performance requirements
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 30
<PAGE> 32
established at the PDR. The CDR shall evaluate the progress,
technical adequacy, and risk resolution (on a technical, cost, and
schedule basis) of the detail design.
The CDR shall address:
1) Product producibility.
2) Review ICS subsystem specifications.
3) Review preparation for product development and support.
The CDR confirms that:
1) Issues for the ICS and its functional areas are resolved.
2) The design is balanced across cost, schedule, performance, and
risk.
3) An audit trail exists to the PDR with all changes
substantiated.
21.0 IRIDIUM CELLULAR ROAMING SERVICE (ICRS) *
21.1 OVERVIEW
Motorola will provide the following Software feature additions and
Hardware additions to the IRIDIUM Interoperability Unit (IIU).
21.1.1 IRIDIUM Interoperability Unit (IIU) software additions for the
support of IS-41 homed subscribers, *.
21.1.2 Enhanced IS-41 interface to *.
21.1.3. Enhanced subscriber/Authentication Cener (AC)
provisioning capability.
21.1.4 Enhanced bulk subscriber modification procedure.
21.1.5 Procurement and installation of a Tellabs Digital
Cross-Connect System (DACS) to increase flexibility of the IIU
signaling interconnect and necessary cabinets, patch panels,
and wiring to house and interconnect the DACS with the IIU at
the Site (referred to as the "Hardware Additions") and
procurement of one set of manufacturer recommended spares
(referred to as the "DACS Spares").
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 31
<PAGE> 33
The four software features described in 21.1.1 through 21.1.4 above
are referred to as the "Software Features." The following sections
describe the work to be performed for each of these features.
21.2 PRODUCTION OF SOFTWARE FEATURES AND HARDWARE ADDITIONS
Motorola will provide the Software Features described above. This
includes the labor and materials required to design, develop,
document, test, integrate and deploy the Software Features into the
IIU at the test bed platform referred to in Section 11.2.1 of this
Statement of Work and into the IIU at the Site. The Hardware Addition
will consist of procurement, installation design, and installation of
the Hardware Additions at the Site. This consists of labor and
material to install and update installation and configuration
documents as required.
21.2.1 SUPPORT OF IS-41 HOMED SUBSCRIBERS, *
Software Feature 21.1.1 will expand IIU functions to enable IS-41
homed subscribers the ability to roam *.
21.2.2 INTERFACE ENHANCEMENTS
Software Feature 21.1.2 will provide IIU adaptations necessary to
support IS-41 roaming capabilities in accordance with the unique
architectural and functional constraints of various * environments.
This includes network to network characteristics for *.
21.2.3 SUBSCRIBER/AUTHENTICATION CENTER PROVISIONING CAPABILITY
Software Feature 21.1.3 will provide IIU provisioning capabilities to
support more robust end to end subscriber and Authentication Center
(AC) provisioning processes.
21.2.4 BULK SUBSCRIBER MODIFICATION PROCEDURE
Software Feature 21.1.4 will provide IIU bulk provisioning
capabilities, allowing batch modification of subscriber profile data
fields.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 32
<PAGE> 34
21.2.5 DACS HARDWARE ADDITION
Hardware Addition 21.1.5 will provide a flexible and robust solution
for link routing, monitoring and troubleshooting.
21.3 DELIVERY, INSTALLATION, INTEGRATION, TESTING AND CONDITIONAL
ACCEPTANCE
Motorola will perform the tasks in the following subsections.
21.3.1 INSTALLATION/INTEGRATION OF SOFTWARE FEATURES
Motorola will install, integrate and test the Software features on the
IIU at the test bed platform referred to in Section 11.2.1 of this
Statement of Work and on the IIU at the Site. Software Features will
be delivered in phases as determined by Motorola.
21.3.2 DELIVERY; INVENTORY-DACS HARDWARE ADDITION
Motorola will deliver the Hardware Additions and the DACS Spares to
the Site. Within a reasonable time after the arrival of the Hardware
Additions and the DACS Spares at the Site, Motorola will unpack,
inspect and inventory the Hardware Additions and the DACS Spares.
Motorola will promptly repair or replace any missing or damaged
Hardware Additions and DACS Spares.
21.3.3 INSTALLATION OF DACS AND ASSOCIATED HARDWARE -MILESTONE 21-4
(PREVIOUSLY I-4)
Motorola will install the DACS at the Site, including assembling and
installing three(3) cabinets, installing a patch panel, installing the
interconnecting cabling of the DACS up to the patch panel, and
configuring the DACS. Installation of the DACS will coincide with the
installation of the IIU at the Site. Iridium representatives will be
offered the opportunity to witness the installation and will be
notified at least 7 calendar days prior to the start of the
installation. Milestone I-4 will be deemed complete, and delivery of
the Hardware Additions to Iridium will be concluded after successful
completion of Tellabs field installation acceptance test procedure.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 33
<PAGE> 35
21.3.4. SYSTEM FUNCTIONAL SPECIFICATION (SFS) REVIEW - MILESTONE 21-5
(PREVIOUSLY I-5)
Motorola will conduct a System Functional Specification of the
Software Features at Motorola's SATCOM facility. Iridium
representatives shall be offered the opportunity to attend this
review. AT the review, Motorola will review the status of the SFS and
establish specific action items as a result of the review. This
Milestone I-5 shall be deemed complete when Motorola has held the SFS
review and established a list of specific action items resulting from
the review.
21.3.5 TESTING
21.3.5.1 INTEGRATED TEST PLAN
Motorola and Iridium will jointly develop an IIU Conditional
Acceptance Test Plan - Enhancements #1 ("ICATP E-1") that
describes the testing to be conducted by Motorola to achieve
conditional acceptance of the Software Features at the Site.
The ICATP E-1 will be released and controlled under Motorola's
Configuration Management (CM).
21.3.5.2 ACCEPTANCE TESTING; SOFTWARE FEATURES
CONDITIONAL ACCEPTANCE
Motorola will perform the tests in the ICATP E-1 on the IIU at
the Site. The Software Features will be deemed to have
achieved conditional acceptance when all of the tests in the
ICATP E-1 for the Software Additions have been passed or, if a
test is not passed the failure was caused by a Level 3 or
Level 4 Failure.
21.3.5.2.1 MILESTONES 21-6 AND 21-7 (PREVIOUSLY I-6, I-7)
Milestones 21-6 and 21-7 will be deemed completed upon: 1)
Iridium's receipt of Motorola's certification that the
Software Features 21.1.3 and 21.1.4 have been tested in
accordance with the ICATP E-1 to the satisfaction of Motorola
based upon commercially reasonable standards; and 2) a jointly
developed corrective action plan has been established for
those items found to be non-compliant with ICATP E-1
acceptance criteria. The corrective action plan will be
established within 15 business days of the completion of the
testing. Iridium representatives will be offered the
opportunity to witness the conditional acceptance testing and
will be notified at least 7 calendar days prior to the start
of the conditional acceptance testing.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 34
<PAGE> 36
21.3.5.2.2 MILESTONE 21-9 (PREVIOUSLY I-9)
Milestone 21-9 will be deemed completed upon: 1) Iridium's
receipt of Motorola's certification that the Software Feature
21.1.1 and 21.1.2 has been tested in accordance with the ICATP
E-1 to the satisfaction of Motorola based upon commercially
reasonable standards; and 2) a jointly developed corrective
action plan has been established for those items found to be
non-compliant with ICATP E-1 acceptance criteria. The
corrective action plan will be established within 15 business
days of the completion of the testing. Iridium
representatives will be offered the opportunity to witness the
conditional acceptance testing and will be notified at least 7
calendar days prior to the start of the conditional acceptance
testing.
21.6 IS-41 TO * SYSTEM DESIGN AND TEST REVIEW - MILESTONE 21-8
(PREVIOUSLY I-8)
Motorola will conduct an IS-41 to * System Design and Test review of
the Software Features 21.1.1 and 21.1.2 at Motorola's SATCOM facility.
Iridium representatives shall be offered the opportunity to attend
this review. At the review, Motorola will review the status of the
IS-41 to * features and establish specific action items as a result of
the review. This Milestone 21-8 shall be deemed complete when
Motorola has held the System Design and Test review and established a
list of specific action items resulting from the review.
21.7 ACCEPTANCE TESTING: SOFTWARE FEATURES FINAL ACCEPTANCE -
MILESTONE 21-10 (PREVIOUSLY 1-10)
21.7.1 SUPPORT OF IRIDIUM'S INITIAL ICRS FIELD TRIALS (MOBILITY
APPLICATION PART [MAP] LAYER)
Motorola will provide commercially reasonable support to Iridium, to
assist Iridium in its * of the Software Features with both an IS-41
and GSM terrestrial cellular networks. Motorola's support under this
Section will consist of providing: Motorola staff at the Site;
Motorola Staff at * sites * and one GSM site; support of Iridium's
test plan development, and support for Iridium's test report analysis
for the Software Features. Motorola will also promptly correct any
defect or malfunction in the delivered Software Features that prevent
successful testing of the IIU with IS-41 and GSM terrestrial cellular
networks. Successful testing means that the item tested passed the
test in compliance with standard GSM and IS-41 test procedures as
jointly approved by Iridium and Motorola or, if it failed the test, it
failed by virtue of a Level 3 or Level 4 Failure.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 35
<PAGE> 37
21.7.2 TEST CASES
Motorola and Iridium will jointly agree upon a IIU Final Acceptance
Test Plan * ("IFATP E-1") that Iridium develops. The
IFATP E-1 will describe the testing to be conducted by Iridium and
supported by Motorola as part of the field trials to achieve final
acceptance of the Software Features at the Site. The IFAPT E-1 will
be conducted with a single GSM carrier and a single IS-41 carrier *.
These tests will be completed in accordance with the IFAPT E-1. The
IFAPT E-1 will be comprised of the following test cases:
*
21.7.3 MOTOROLA'S SUPPORT
For Section 21.7.1 Support of Iridium's Initial ICRS Field Trials
(Mobility Application Part (MAP) layer above, Motorola's support for
final acceptance will end after the provision of 8 man months of labor
or the Commercial Activation Date, whichever comes first. The number
of Motorola personnel supporting this effort as well as the effort
under Section 11 of this Statement of Work, will not exceed five (5)
persons at any given time during the support period. Motorola will
provide one (1) person at the Site during the tests to be conducted in
Section 21.7.1 Support of Iridium's Initial ICRS Field Trials
(Mobility Application Part (MAP) layer above. Iridium may request
from Motorola a status of the man month expenditures. Motorola will
provide this status within (5) business days of such request.
21.7.4 FINAL ACCEPTANCE
The Software Features will be deemed to have achieved final acceptance
upon the successful completion of the IFAPT E-1, or upon the
completion of Motorola's support as specified in Section 21.7.3
Motorola's Support, whichever occurs first acceptance testing and will
be notified at least 7 calendar days prior to the start of the
conditional acceptance testing.
21.8 OPERATION, ADMINISTRATION AND MAINTENANCE (O, A & M) -
ADDENDUM
21.8.1 SOFTWARE FEATURES - DOCUMENTATION
Motorola will provide to Iridium on or before the Commercial
Activation Date two copies of vendor supplied OA&M documentation that
cover the Software
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 36
<PAGE> 38
Features. This documentation will cover basic operation,
administration and maintenance of the Software Features.
21.8.2 DACS EQUIPMENT - DOCUMENTATION
Motorola will provide to Iridium on or before the Commercial
Activation Date two copies of vendor supplied OA&M documentation for
the DACS. This documentation will cover basic operation,
administration and maintenance of the DACS.
21.9 TRAINING PLAN - ADDENDUM
21.9.1 SOFTWARE FEATURES - TRAINING
Motorola will develop and provide to Iridium by the Commercial
Activation Date, a recommended training plan addendum for training
Iridium personnel to properly operate, administer and maintain the
Software Features. This training is only an extension to the training
put forth in Section 11.7 of this Statement of Work. The cost of
training, such as tuition, travel and living expenses, are not
included as a part of the work to be performed by Motorola under this
Section.
21.10 DACS SPARES AND MAINTENANCE PLAN
DACS Spares inventory control, and operation, administration and
maintenance of the DACS is the sole responsibility of Iridium. The
DACS comes with a two (2) year (from the date of Motorola's purchase)
warranty covering the hardware from the manufacturer, Tellabs
Operations, Inc. Motorola makes no warranty with respect to the
Hardware Additions or the DACS Spares, all of which are sold by
Motorola to Iridium AS-IS. Iridium agrees to look solely to the
manufacturer of the Hardware Additions and the DACS Spares in the
event of any defect in the material or workmanship in connection
therewith. MOTOROLA MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE HARDWARE ADDITIONS AND THE DACS SPARES. ALL SUCH
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF THE MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE ARE SPECIFICALLY EXCLUDED.
Tellabs also may provide to Iridium an Extended Support Service
Agreement that provides an unlimited number of telephone support
incidences on a 7 X 24 basis. Included with the Extended Support
Service Agreement with the DACS manufacturer may be support for free
software maintenance releases as well as point releases of the DACS
application software. All maintenance plans and support services will
be the responsibility of Iridium. Motorola shall have no obligation
to repair, replace or maintain the
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 37
<PAGE> 39
Hardware Additions or the DACS Spares. In addition, Motorola does not
warrant that the sparing levels provided will be sufficient to
maintain the DACS at the service level needed by Iridium. Tellabs may
provide Iridium with counter-to-counter and overnight
repair/replacement services at an additional cost.
21.12 PAYMENT MILESTONES
The work in this proposed Statement of Work will be performed, and
Iridium will pay for such work, in accordance with the following
Milestone Schedule:
<TABLE>
<CAPTION>
SCHEDULED
MS MILESTONE DESCRIPTION COMPLETION PRICE
NO. DATE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
21-4 Hardware (DACS) Addition Acceptance (Previously * $*
I-4)
21-5 System Functional Specification (SFS)Review * $*
(Previously I-5)
21-6 Software Features 21.1.3 Conditional Acceptance * $*
(Enhanced Subscriber Provisioning)(Previously I-6)
21-7 Software Feature 21.1.4 Conditional Acceptance * $*
(Enhanced Bulk Provisioning) (Previously I-7)
21-8 IS-41 to * System Design and Test Review * $*
(Previously I-8)
21-9 Software Features 21.1.1 and 21.1.2 Conditional * $*
Acceptance (IS-41 * Roaming) (Previously I-9)
21-10 Software Features Final Acceptance by Iridium * $*
(Previously I-10)
$*
</TABLE>
21.13 SERVICE REQUIREMENT, ASSUMPTIONS AND CONDITIONS PRECEDENT
In addition to the previously agreed requirement, assumptions and
conditions in Section 11.11 of this Statement of Work, the following
items are requirements,
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 38
<PAGE> 40
limitations, assumptions and conditions precedent to the availability
and operation of Software Features and the work to be performed by
Motorola:
1) Support of IS-41 homed Subscribers, *:
- Processing of Authorization Period expiry is
handled by visited networks.
- In order to optionally support MTLI, IS-41
homed subscribers must be provisioned with an
IRIDIUM network MSISDN.
- As with existing * location information can
only be provided if the * and registered in
the IIU.
- All ICRS Subscribers will have an IMSI.
2) IS-41 Interface Enhancements
- *
3) Enhanced Subscriber/Authentication Center Provisioning
capability
- Errors logged during provisioning are not
processed any further by the IIU. This log
will be available to Iridium's provisioning
system for verification and error correction.
- Iridium's provisioning system will
pre-provision the AC with ESN/A-key
information prior to subscriber provisioning
using such ESNs.
4) Enhanced Bulk Subscriber Modification procedure
- As a result of any modifications to a
subscriber's profile, there will be no
signaling over the network. When attempting
to modify a parameter that would affect the
service provided to a subscriber who is
actively roaming in a visited network the
modification operation will fail and be
logged as accordingly.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 39
<PAGE> 41
- Errors logged during provisioning are not
processed any further by the IIU. This log
will be available to Iridium's provisioning
system for verification and error correction.
- ESN additions require that the ESN/A-key
associations be pre-provisioned in the AC for
the automatic provisioning of the MIN to an
ESN/A-key pair.
5) Iridium will be required to allow Motorola access to the IIU
at the Site to complete integration and test, and conditional
acceptance testing of the Software Features.
21.14 LIMITATIONS, RESTRICTIONS AND PERFORMANCE EXCLUSIONS
In addition to the previously agreed items as detailed in
Section 11.12 of this Statement of Work, the following items
are not included in Motorola's performance under this Section,
or are not included as a feature or functionality of the
Software Features or the Hardware Additions provided
hereunder, or are limitations to the Software Features and
Hardware Additions:
1) Addition of DACS
- Motorola has established an IIU lab unit at
Motorola's test laboratory in Chandler,
Arizona. This IIU test bed platform and
associated system and application software
was established for use in the development of
the IIU features. The work in Section 21.0
does not include adding a DACS to any test
lab. Testing which requires verification of
the DACS system must be performed at the
Site. Complete access to equipment must be
provided by Iridium.
22.0 * FRAME RELAY ENCRYPTION
22.1 MANAGEMENT SUMMARY
Iridium desires to install network encryption devices to protect the
confidentiality and integrity of data transmitted over the * between
the Control Facilities, Iridium Data Center, Gateways (GW), Gateway
Business Systems (GBS) and other locations around the world. The
encryption products will work on data
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 40
<PAGE> 42
transmitted over the network and will encrypt all data. Iridium has
selected * as the vendor for the encryption equipment.
22.1.1 MOTOROLA WILL BE RESPONSIBLE FOR THE FOLLOWING:
1) Engineering and modifications required of the Gateway
Infrastructure Equipment (GIE) racks to install encryption
devices in the GIE rack.
2) Supply updated documentation showing modifications required to
support the addition of the encryption equipment into the GIE
at each Gateway.
3) Procure Network Encryption Software and a Work Station at the
MCF and BCF.
4) Modify the GIE as necessary, and install encryption equipment
at the Gateways. Master Control Facility (MCF), Backup
Control Facility (BCF), and Gateway Technical Assistance
Center (GTAC).
5) Install a Workstation and configure the Workstation at the MCF
and BCF.
6) Support the start up of encryption equipment from the MCF at
all locations including Iridium Data Center, Remote GBS,
Cellular Clearing House and Customer Care Center after
notification from Iridium that the equipment is available and
a LAN connection is available to communicate with the
encryption equipment.
7) Provide Key Management and Maintenance for the encrypted *
Network.
8) Provide Operations and Procedures for the management of the
encryption.
22.1.2 MOTOROLA WILL NOT BE RESPONSIBLE FOR THE FOLLOWING:
1) Procurement and delivery of the * encryption equipment to any
location.
2) Detailed operator training.
3) Installation of encryption equipment at any GBS location,
Iridium Data Center, Customer Care Center or Cellular Clearing
House.
4) Maintenance and Operation of the * encryption equipment at all
locations will be the responsibility of Iridium.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 41
<PAGE> 43
5) The encryption equipment will not be integrated with the
Integrated Network Management (INM).
6) Motorola will not provide management of the encryption above
and beyond what is provided by the * software.
22.2 SPECIAL TERMS AND CONDITIONS
For Motorola to support any schedules provided in this Section 22.0,
Iridium must notify Motorola by March 23, 1998 that Iridium accepts
the terms of this Section 22.0.
The work specified by this proposal for the installation and
configuration of the encryption devices is anticipated to start * and
be completed by *. This section 22.0 will only cover the installation
of equipment at the MCF, BCF, GTAC and the Iridium Gateways.
Installation at any other locations not covered by the above will be
the responsibility of Iridium or its partners.
*
22.3 ENCRYPTION EQUIPMENT PROCUREMENT AND DELIVERY
Iridium will procure, ship and clear for export all data encryption
equipment to each location requiring encryption. Iridium will send to
Motorola at the MCF the Equipment Manufacturing Certificate for each
encryption device so that encryption keys can be maintained at the MCF
for the * encryption service.
Motorola will procure the * software for * from * and a Work Station
to run the software for network key management control for the
encryption devices at the MCF and a back up system at the BCF.
Motorola will procure maintenance contracts for the * software
annually from * and assure that the latest version available is in
operation.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 42
<PAGE> 44
22.4 DESIGN AND DEVELOPMENT FOR * ENCRYPTION
22.4.1 DESIGN AND DEVELOPMENT
Motorola will design the Gateway Equipment hardware required to add
frame relay encryption services to the *. Motorola will modify the
current GIE configuration to allow for the installation of one * data
encryption unit and up to two additional serial encryption devices for
GBS locations not connected to the *. Motorola shall design and
develop the mechanical hardware to support this installation in the
GIE. Provision will be made for LAN connections for access to and
control of the encryption devices. The effort under this Section 22.0
shall include the design and development of connectivity architecture
and interface requirements.
22.4.2 DOCUMENTATION MODIFICATION
Motorola will modify the Gateway Design Package delivered to Iridium
pursuant to Subsection 4.3.B - Milestone 10 of the TNDC to include the
Encryption Hardware changes designed and developed under this Section
22.0.
22.4.3 TASK DESCRIPTION
Motorola will provide mounting brackets for one * encryption unit and
up to two additional serial encryption devices for the existing GIE
racks at each Gateway. Encryption devices will be procured by
Iridium. The mounting will be consistent with the existing GIE
devices and therefore consistent with survival of * testing. The GIE
has successfully passed *. Strict application of the Bellcore test
procedures would require that a fully populated GIE, including
encryption equipment (or at least a GIE rack with installed encryption
equipment and dummy loads for the other equipment) be tested for
seismic survival. Motorola is well capable of conducting this test.
To reduce costs, however, the parties agree to the compliance plan
described in the following subsection.
22.4.4 * PROOF OF PERFORMANCE
*
Motorola mechanical engineers will select the mounting position of the
encryption units and design the mounting devices. These parts will be
added to the structural model and analysis will predict whether *. No
additional testing of the full rack will be performed.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 43
<PAGE> 45
* test will be estimated using the model, the known location of the
encryption units in the rack, and the accelerometer tests from the
previous testing. Actual encryption units, one of each type, will be
tested, using these calculated loads as the test waveform input. The
test approach is to assemble test equipment with an actual encryption
unit, test to make sure encryption is functional, apply the *. In the
event the encryption equipment does not pass the test, Motorola will
recommend a course of action to Iridium, but any such action will be
at additional expense to Iridium.
If the analysis shows the GIE would fail testing, the encryption
equipment will be mounted in a separate rack. This rack, with the
encryption units installed, will be tested to the *. The cost of this
rack will be the responsibility of Iridium.
22.5 ENCRYPTION EQUIPMENT INSTALLATION
22.5.1 PHYSICAL AND LOGICAL LOCATION
*. Required installation hardware and instructions for installation
will be designed by Motorola and made available to each Gateway
location prior to installation.
Physical installation of the encryption equipment into the GIE rack
shall be coordinated and supported by Iridium at each location.
22.5.2 ENCRYPTION EQUIPMENT INSTALLATION LOCATIONS
Motorola will perform any reconfiguration of the GIE rack as required,
install the encryption equipment at each location and perform the
initial set up of the encryption device. *
Locations within the continental US where Motorola will perform such
work are the MCF in Virginia, and the Gateway and GTAC in Arizona.
22.6 INSTALLATION SCHEDULE
Motorola will begin installation at each location, as specified in
Section 22.5, and in accordance with Section 22.2, which shall be
accomplished at the time of * installation at the corresponding
location. Iridium will notify Motorola in writing when the encryption
equipment is available at each location and ready for installation and
configuration.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 44
<PAGE> 46
22.7 PROBLEM RESOLUTION DURING INSTALLATION
Motorola will use commercially reasonable efforts to resolve all
problems found during the installation at each location that Motorola
installs and ensure the integrity of that * encrypted circuit. *
22.8 NETWORK TESTING FOLLOWING INSTALLATION
Motorola will test the circuit end to end at locations installed by
Motorola by sending and receiving representative data files at both
ends of the circuit to assure connectivity and proper operation of the
encrypted circuit.
This testing may occur during the performance of other activities at
the Gateways, so this testing will have to be coordinated on a
non-interrupting basis with these other activities.
22.9 KEY MANAGEMENT AND OPERATION
Key Management shall be provided by Motorola at the MCF with back up
at the BCF. Motorola will use commercially reasonable efforts to
maintain the encryption keys for all locations connected to the
network and change the keys per the scheduled interval. Motorola
shall not be liable for any damages, costs or losses relating to key
management and operation.
Motorola will provide an engineer at the MCF for maintenance and
support of the encrypted * Network. Iridium will bear the costs
needed to support this engineer.
22.10 MAINTENANCE
Maintenance of the encryption equipment after installation, other than
Network Key Management, will be the responsibility of Iridium.
Motorola will provide reasonable assistance to Iridium from the MCF in
identifying when an encryption device is defective at a location.
Iridium may work with the equipment supplier for repair and/or
replacement of defective equipment.
Iridium is responsible for all export licenses associated with moving
* encryption equipment to and from foreign locations for repair.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 45
<PAGE> 47
22.11 MILESTONES
The work under this Section 22.0 shall be performed, and Iridium shall
pay for such work, in accordance with the following Milestone:
<TABLE>
<CAPTION>
Milestone Schedule Total
Number Milestone Description Completion Date Amount
------ --------------------- --------------- ------
<S> <C> <C> <C>
22-1 Modified Gateway Design * *
(Previously M-1)
22-2 Completed * Encrypted Network of * *
Motorola Installed Equipment
(Previously M-2)
22-3 Annual Service Fee * *
(Previously M-3)
22-4 Annual Service Fee * *
(Previously M-4)
22-5 Annual Service Fee * *
(Previously M-5)
22-6 Annual Service Fee * *
(Previously M-6)
22-7 Annual Service Fee * *
(Previously M-7)
22-8 Optional Extension of Service Fee * *
(Previously M-8)
</TABLE>
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 46
<PAGE> 48
<TABLE>
<S> <C> <C> <C>
22-9 Optional Extension of Service Fee * *
(Previously M-9)
</TABLE>
22.12 SERVICE REQUIREMENTS, ASSUMPTIONS AND CONDITIONS PRECEDENT
The following items are assumptions underlying the *
Encryption features and conditions precedent to the
availability and operation of such features and Motorola's
performance under this Section 22.0
1) It is the responsibility of the GW and GBS Operators
to develop their own methods and operational
procedures according to their needs and capabilities.
2) Iridium will make provisions for Motorola to have
electronic access to all encryption equipment at the
MCF for Encryption Key Management.
3) Iridium will provision the installation of encryption
equipment that Iridium installs so that a LAN
connection is provided to the encryption equipment.
4) Iridium will provide access for Motorola personnel to
all Gateways for installations of the * encryption
equipment.
22.13 LIMITATIONS AND PERFORMANCE EXCLUSIONS
The following items are not included in Motorola's performance
under this Section 22.0.
1) Installation of encryption equipment at any GBS
location.
2) Installation of encryption devices at any Customer
Care Center, Cellular Clearing House, or the Iridium
Data Center.
3) Any overhead cost caused by adding encryption that
causes a reduction in circuit capacity to the * is
the responsibility of Iridium to recover.
- --------------------------------------------------------------------------------
* Information has been omitted and filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933. 47
<PAGE> 1
EXHIBIT 10.18
EXECUTION COPY
SECOND AMENDED AND RESTATED
AGREEMENT REGARDING GUARANTEE
This Second Amended and Restated Agreement Regarding Guarantee
(this "Agreement") is made by and among Motorola, Inc., a Delaware corporation
("Motorola"), Iridium LLC, a Delaware limited liability company ("Iridium"),
and Iridium Operating LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Iridium ("Operating"), is dated as of May 11, 1998,
and amends and restates the Amended and Restated Agreement Regarding Guarantee,
dated as of July 11, 1997 (the "First Amended Agreement Regarding Guarantee"),
which amended and restated the Agreement Regarding guarantee originally dated
as of August 21, 1996 (the "Original Agreement Regarding Guarantee") between
Motorola and Iridium. Reference is made to that certain Amended and Restated
Memorandum of Understanding (the "MOU"), dated May 11, 1998, between Motorola,
Iridium and Operating.
Motorola has entered into a Guarantee Agreement, dated as of
August 21, 1996, as amended (the "Bridge Guarantee Agreement"), pursuant to
which Motorola has guaranteed the payment of up to $450,000,000 of the
obligations of Iridium under that certain Credit Agreement, dated as of August
21, 1996, as amended, between Iridium and the Lenders named therein (the
"Bridge Agreement"). The First Amended Agreement Regarding Guarantee and the
Original Agreement Regarding Guarantee defined certain rights and obligations
of the parties relating to such guarantee and possible additional guarantees by
Motorola. Capitalized terms used and not otherwise defined herein shall have
the meanings defined in the Bridge Agreement.
On December 18, 1997, following the date of the First Amended
Agreement Regarding Guarantee, Iridium entered into an asset drop-down
transaction (the "Asset Drop-Down Transaction") with Operating, pursuant to
which substantially all of the assets and liabilities of Iridium were
transferred to Operating.
Operating and Motorola intend to entered into that certain
Standby Purchase Agreement (the "Handset Purchase Agreement") pursuant to which
Operating may become obligated to purchase hand-held phones or belt-worn pagers
(collectively, "Subscriber Equipment") from Motorola to use with the Iridium
communications system (the "IRIDIUM System"). In order to fund such purchases
of Subscriber Equipment from Motorola, Operating may be required to borrow
funds from one or more lenders pursuant to a Credit Agreement. Motorola desires
to assist Operating in obtaining such a Credit Agreement by agreeing to provide
a guarantee of Operating's obligations relating to such Credit Agreement,
subject to certain conditions.
The purpose of this Agreement is to set forth certain binding
agreements among Motorola, Iridium and Operating that are intended to (i)
incorporate the remaining pertinent terms of the First Amended Agreement
Regarding Guarantee, as modified in
<PAGE> 2
connection with the Asset Drop-Down Transaction and (ii) reflect the agreements
of the parties in respect of the Handset Guarantee (as defined).
The parties agree as follows:
1. Handset Guarantee
(a) Motorola Agreement to Provide Handset Guarantee. If
at any time and from time to time Operating becomes obligated to purchase
Subscriber Equipment pursuant to the Handset Purchase Agreement, Motorola
hereby agrees, upon the written request of Operating, to provide a Guarantee
relating to an aggregate of up to $175 million (the "Handset Guarantee") under
the Bridge Agreement or under a separate Credit Agreement having the same terms
as the then current Bridge Agreement provided, however, that Motorola shall not
be required to provide the Handset Guarantee unless the Commitments (and
corresponding borrowings) under the Bridge Agreement have been permanently
reduced to $275 million or less (not including the Commitment Increase or the
Handset Increase (each as defined in the MOU)).
(b) Operating Agreements with Respect to Handset
Guarantee. Operating hereby agrees that any funds borrowed that are subject to
the Handset Guarantee ("Handset Borrowings") will be used exclusively for (i)
payments to Motorola under the Handset Purchase Agreement, (ii) payments of
overdue amounts owed by Operating to Motorola under other agreements (the
amounts under clauses (i) and (ii) being "Overdue Amounts") and (iii) payments
of interest (including interest on interest), fees and expenses payable to the
Lenders and agents in respect of borrowings to fund the payments described
clauses (i) and (ii). Operating hereby agrees that, if Motorola provides the
Handset Guarantee, to the extent of available funds that are subject to the
Handset Guarantee, Operating shall borrow available funds under the Handset
Guarantee and pay all Overdue Amounts.
2. Reimbursement Obligation.
(a) Operating Default. Other than as set forth under
Section 2(b) below, if and to the extent that any Lenders demand that Motorola
pay, and Motorola does pay, any Guaranteed Amount pursuant to any Guarantee,
Operating shall, promptly upon receipt from Motorola of a written demand for
reimbursement, reimburse Motorola for such Guarantee Payment, plus interest
accruing at a rate equal to that which would be in effect under the Credit
Agreement relating to such Guaranteed Amount, without duplication.
(b) Motorola Default. If a Guarantee Payment is made in
respect of a Guaranteed Amount that has been accelerated or otherwise become
due as a result of a
-2-
<PAGE> 3
Motorola-Based Default, then (i) Motorola shall assume and become subject to
the obligations of the Lenders under the applicable Credit Agreement vis-a-vis
Operating (including, without limitation, the obligation to make loans in the
aggregate principal amount of such Lenders' commitments under such Credit
Agreement), (ii) Motorola shall assume and become entitled to the benefits of
the rights of the Lenders under such Credit Agreement vis-a-vis Operating
(including, without limitation, the right to receive payments in respect of
loans made under such Credit Agreement, upon acceleration or otherwise), but
not including any provisions relating to a Guarantee or any right or remedy
arising as a result of the occurrence of a Motorola-Based Default, (iii)
Operating shall become obligated to reimburse Motorola for such Guarantee
Payment and to repay any additional amounts for which Operating may become
indebted to Motorola pursuant to clause (ii) above on the terms and conditions
contained in such Credit Agreement as such Credit Agreement is modified by
clause (ii) above, and (iv) Operating shall continue to be subject to the terms
and conditions of such Credit Agreement (including, without limitation, the
covenants contained therein), as such Credit Agreement is modified by clause
(ii) above, it being expressly understood that Motorola shall in such
circumstances have the right to accelerate payments under and otherwise
exercise its rights under any such Credit Agreement to the extent set forth
therein as if it were a lender thereunder to the extent that such right to
accelerate or other rights arise from some event or circumstance other than a
Motorola-Based Default or a Guarantee.
(c) Costs and Expenses. Operating further agrees to
reimburse Motorola for all reasonable out-of-pocket costs and expenses
(including, without limitation, the fees and expenses of legal counsel) in
connection with any enforcement of Operating's obligations under Section 2(a)
(including, without limitation, any fees and expenses incurred in connection
with any bankruptcy proceedings).
(d) Subordination. The rights of Motorola under this
Section 2 shall be subject to the terms and conditions of any applicable
subordination agreements then in effect executed by Motorola for the benefit of
creditors of Operating.
3. Compensation to Motorola.
(a) Warrant Compensation. Except as described in Section
3(e), Iridium shall compensate Motorola for incurring the Motorola Exposure by
issuing warrants (the "Warrants") to purchase Class 1 Interests in Iridium
("Shares") to Motorola. The Warrants shall (i) be in substantially the form of
the warrants issued pursuant to the Original Agreement Regarding Guarantee,
(ii) provide for a ten year term and an exercise price of $0.00013 per Class 1
Interest; (iii) become exercisable on March 1, 2001 and (iv) provide for
issuance of Shares that (A) with respect to Shares issued for warrants received
on or prior to the Commercial Activation Date, may be sold without transfer
restrictions (other than transfer restrictions imposed by the LLC Agreement,
the Interest Exchange
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<PAGE> 4
Agreement and applicable securities law) at any time after the fifth
anniversary of the exercise of the Warrants and (B) with respect to Shares
issued for warrants received after the Commercial Activation Date, may be sold
without transfer restrictions (other than transfer restrictions imposed by the
LLC Agreement, the Interest Exchange Agreement and applicable law) at any time
after the exercise of the Warrants. In addition, in the event that Motorola
earns Warrants with respect to periods beginning after March 1, 2001, Iridium
shall compensate Motorola with Shares issued directly to Motorola in the
amounts described below in lieu of Warrants. On the 45th day following the end
of each calendar quarter during which any Motorola Exposure was outstanding at
any time, Iridium shall issue a certificate to Motorola evidencing the Warrants
or Shares earned by Motorola in respect of the total of such Motorola Exposure
outstanding in such quarter.
(b) Calculation of Warrant Compensation. Motorola shall
earn Warrants or Shares based on the amount and duration of Motorola Exposure.
The number of Warrants or Shares shall be earned according to the following
table, pro rated both (A) for the actual dollar amount of Motorola Exposure
outstanding during each relevant period and (B) for the number of days such
Motorola Exposure was outstanding during such period. The following table
indicates the maximum amount of Warrants or Shares issuable for each full $100
million of Motorola Exposure, assuming such Motorola Exposure was outstanding
during the entire relevant period.
<TABLE>
<CAPTION>
MOTOROLA EXPOSURE NUMBER OF WARRANTS PER $100 MILLION
OF MOTOROLA EXPOSURE PER YEAR
(Prior to the Commercial Activation Date)
<S> <C> <C>
$ 0 -- $ 275,000,000 0/412,500(1)
275,000,001 -- 499,999,000 412,500
500,000,000 -- 749,999,999 637,500
750,000,000 -- (or more) 825,000
</TABLE>
<TABLE>
<CAPTION>
(AFTER THE COMMERCIAL ACTIVATION DATE)
<S> <C> <C>
$ 0 -- $275,000,000 0/412,500(1)
275,000,001 -- 499,999,999 412,500
500,000,000 -- 749,999,999 637,500
750,000,000 -- 849,999,999 825,000
850,000,000 -- 949,999,999 847,500
950,000,000 -- 1,049,999,999 877,500
1,050,000,000 -- (or more) 900,000
</TABLE>
----------
(1) See Section 3(e) below
For example, (A) if there is $750,000,000 of Motorola Exposure outstanding for
a period of one year, which year is prior to the Commercial Activation Date,
Motorola will have earned Warrants relating to 6,187,500 Shares ($750,000,000 /
100,000,000 = 7.5; 7.5* 825,000 = 6,187,500), and (B) if there is $850,000,000
of Motorola Exposure outstanding for a period of two years, one of which years
is prior to the Commercial Activation Date and one of which is after the
Commercial Activation Date, Motorola will
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<PAGE> 5
have earned Warrants relating to 14,216,250 Shares ($850,000,000 / 100,000,000
= 8.5; 8.5 * 825,000 = 7,012,500; 8.5 * 847,500 = 7,203,750;
7,012,500+7,203,750 = 14,216,250).
(c) Limitations on Warrant Compensation. Prior to the
Commercial Activation Date, Motorola shall not be eligible to earn Warrants
relating to more than (i)11,250,000 Shares with respect to the first
$749,999,999 in Motorola Exposure and (ii) 3,750,000 Shares with respect to the
additional amounts between and including $750,000,000 and $1,100,000,000 in
Motorola Exposure, in each case subject to antidilution adjustments in
accordance with the terms of the Warrants. Motorola shall earn Warrants on the
entire Motorola Exposure from and after the Commercial Activation Date.
(d) Warrants Issued to Date. The parties acknowledge that
Warrants for 7,527,730 Shares have been earned by Motorola as of March 31, 1998
with respect to outstanding Motorola Exposure and such Warrants apply toward
the limitations set forth in Section 3(c)(i) of this Agreement.
(e) High Yield Equivalent Compensation. During any period
in which each of the following conditions (the "High Yield Equivalent
Conditions") exists: (i) the Motorola Exposure outstanding shall be $275,000,00
or less; (ii) no other person or party providing guarantees for the support of
Iridium's indebtedness for borrowed money is receiving equity compensation from
Iridium or IWCL in respect of such guarantees (other than Kyocera Corporation
in connection with its Guarantee of Operating's borrowings to fund the purchase
of Subscriber Equipment from Kyocera); (iii) Kyocera is receiving equity
compensation, if any, at no greater rate (in relation to amount of Guarantee)
than Motorola, (iv) no mandatory prepayment or redemption or acceleration of
any Senior Notes (as defined in the MOU) has occurred (except as a result of
Motorola's disposition of Class 1 Interests causing a "change in control" (as
defined in the Offering Memorandum) to occur under the Senior Notes); and (v)
Iridium has complied with the terms of this Agreement and the MOU, then at
Iridium's option, in lieu of issuing Warrants pursuant to Section 3(a) above:
(1) Operating shall pay Motorola cash
compensation for the Motorola Exposure, in an amount equal to (x) the
average daily Motorola Exposure during any period for which the
Motorola Exposure is greater than zero multiplied by the excess, if
any, of (A) the weighted average daily interest rate applicable to the
Series A Notes and Series B Senior Notes over (B) the weighted average
daily interest rate actually charged by the Lenders under the Credit
Agreements related to the Motorola Exposure for such period.
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<PAGE> 6
(2) Iridium shall issue to Motorola Warrants to
purchase Shares in an amount equal to the average daily principal
amount of Motorola Exposure during such period multiplied by the daily
equivalent of the warrant compensation payable to the initial holders
of the units comprised of warrants to purchase IWCL common stock and
Series A Notes with respect to such amount (calculated on a pro rata
daily basis from the date of the issuance of such Series A Notes to
the stated maturity thereof).
(3) In each case (1) and (2) multiplied by the
number of days the Motorola Exposure is outstanding.
(4) High Yield Equivalent Compensation shall be
paid semi-annually in arrears within 45 days after the end of each
semi-annual period.
(f) Guarantee Reduction. In connection with any permanent
reduction of the Commitments under the Bridge Agreement, as amended, or any
separate Credit Agreement Iridium will use its reasonable efforts to cause the
Lenders thereunder to amend the Bridge Agreement Guarantee or other Guarantee
to provide for a similar reduction in Motorola's maximum liability thereunder.
(g) Additional Member and Interests. Iridium shall
provide Motorola with the additional Banking and Finance Committee member and
the Series B, Class 2 interests as described in Section 7 of the MOU.
4. Representations and Warranties of Iridium and
Operating. Each of Iridium and Operating represents and warrants that:
(a) the representations and warranties of Iridium and
Operating set forth in Section 7 of the Bridge
Agreement were true and correct as of the date given
under the Bridge Agreement and the representations
and warranties given under any subsequent Credit
Agreement will be true and correct on the date given;
(b) the Certificates of Designation relating to Iridium's
Series B Class 2 interests and Series C Class 2
Interests have been duly adopted by Iridium's Banking
and Financing Committee in the form attached as Annex
J to the Original Agreement Regarding Guarantee and
all other necessary corporate actions have been taken
to duly authorize the issuance to Motorola of the
Series B Class 2 Interests and Series C Class 2
Interests; and
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<PAGE> 7
(c) the execution, delivery and performance of this
Agreement, the Warrants, the amendments and the other
agreements and instruments contemplated hereby to
which Iridium or Operating is a party, have been duly
authorized by Iridium or Operating (as the case may
be); this Agreement, the Warrants, such amendments,
such waiver letter and the Certificates of
Designation relating to Iridium's Series B Class 2
Interests and Series C Class 2 Interests and all
other agreements contemplated hereby to which Iridium
or Operating is a party each constitutes a valid and
binding obligation of Iridium or Operating (as the
case may be), enforceable in accordance with its
terms; the execution and delivery by Iridium and
Operating of this Agreement, the Warrants, such
amendments, such other agreements and instruments
contemplated hereby to which Iridium or Operating is
a party, the offering, sale and issuance of Iridium's
Series B Class 2 Interests and the Warrants
hereunder, the issuance of Iridium's Class 1
interests upon exercise of Warrants and the
fulfillment of and compliance with the respective
terms hereof and thereof by Iridium and Operating, do
not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii), except as
provided in the Security Agreement, result in the
creation of any lien, security interest, charge or
encumbrance upon Iridium's or Operating's or any
Subsidiary's equity capital or assets pursuant to,
(iv) give any third party the right to modify,
terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing
with, any court or administrative or governmental
body or agency by, or in respect of, Iridium,
Operating, any Subsidiary, IWCL or any of their
respective directors or shareholders pursuant to, the
charter, limited liability company agreement or
bylaws of Iridium, Operating, any Subsidiary or IWCL
(as the case may be), or any law, statute, rule or
regulation to which Iridium, Operating, any
Subsidiary or IWCL is subject, or any agreement,
instrument, order, judgment or decree to which
Iridium, Operating, any Subsidiary or IWCL is
subject.
5. Motorola Protection Rights. Either Operating or
Iridium (as the case may be) will provide Motorola with written notice at least
five full business days (and no more than ten business days) prior to giving
notice to the banks under any Credit Agreement or any proposed borrowing which
is covered by a Guarantee. In addition, for so long as any Guarantees remain
outstanding (unless the High Yield Equivalent Conditions exist), without the
prior written approval of Motorola (which may be withheld
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<PAGE> 8
in the absolute discretion of Motorola), Iridium shall not (in the case of (a),
(b), (e), (f) and (g) below) and Operating shall not (in the case of (c), (d),
(e), (g) and (h) below):
(a) sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of,
more than 5% of the consolidated assets of Iridium
and its Subsidiaries (computed on the basis of book
value, determined in accordance with generally
accepted accounting principles consistently applied,
or fair market value, determined by Iridium's board
of directors in its reasonable good faith judgment)
in any transaction or series of related transactions
or sell or permanently dispose of any of its or any
Subsidiary's Intellectual Property Rights (other than
commercially available software designed for
operation on a personal computer or network of
personal computers);
(b) merger or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person
(other than a Wholly-Owned Subsidiary);
(c) liquidate, dissolve or effect a recapitalization or
reorganization of its capital structure in any form
of transaction;
(d) effect a change in its equity capitalization that
requires the approval of the holders of Shares;
(e) directly or indirectly declare or pay any dividends
or make any distributions upon any of its equity
capital other than distributions of Iridium to
members made pursuant to Section 3.07(a) of the LLC
Agreement with respect to certain members' U.S. tax
liabilities;
(f) directly or indirectly redeem (other than a
redemption of the Series B or C Class 2 Interests of
Iridium pursuant to the LLC Agreement), purchase or
otherwise acquire, or permit any Subsidiary to
redeem, purchase or otherwise acquire, any of
Iridium's or any Subsidiary's capital stock or other
equity securities (including, without limitation,
warrants, options and other rights to acquire such
capital stock or other equity securities) other than
pursuant to the exercise of Iridium's remedies
against any holder of Shares pursuant to the terms of
the LLC Agreement or the 1993 Stock Purchase
Agreement (as defined in the LLC Agreement);
-8-
<PAGE> 9
(g) incur any indebtedness for borrowed money other than
indebtedness the amount, terms and conditions
(including without limitations, the subordination
provisions) or which have been approved in advance by
the lenders to the extent required under any Credit
Agreement; or
(h) take any action or permit any circumstances to exist
which is prohibited under the terms of any Credit
Agreement or fail to take any action required to be
taken by it under the terms of any Credit Agreement,
in each case subject to the grace period applicable
to any default created by such action or circumstance
pursuant to such Credit Agreement; provided, however,
that this clause (h) shall not apply to any action or
circumstance that would constitute a Motorola Default
(as defined in the Bridge Agreement).
6. Amendments and Modifications to Credit Agreements.
Operating shall not enter into any amendment, waiver, supplement or
modification of any Credit Agreement (other than as contemplated by this
Agreement or the MOU) without the prior written consent of Motorola, which
consent may be granted or withheld by Motorola in its sole discretion, but
acting in good faith.
7. Use of Proceeds. Operating will use the proceeds of
the loans made under any Credit Agreement solely (i) to make payments to
Motorola at the times and in the amounts required pursuant to the SSC, the TNDC
or the O&M Contract, (ii) to pay fees and expenses payable to the Lenders and
agents in connection with such Credit Agreement, (iii) to pay for Subscriber
Equipment and (iv) for general corporate purposes so long as the amount subject
to this clause (iv) does not exceed the amounts budgeted for such purposes in
the budget plans approved by Iridium's board of directors from time to time.
8. Copies of Information and Notices. Any and all
material information, notices and correspondence provided by or on behalf of
Operating to any Lender (whether or not required under the applicable Credit
Agreement) shall be provided at the same time to Motorola.
9. Referral of Matters to Related Party Contracts
Committee. Each of Iridium and Operating acknowledges and agrees that the
Contract Committee (as defined in the LLC Agreement) of Iridium's board of
directors has a limited scope of authority with respect to the relationship
between Motorola on the one hand and Iridium and Operating on the other, and
that only those matters specifically required by the LLC Agreement and matters
related to the Amended Guarantee Agreement, other contracts between Motorola
and Iridium and actions or claims by Iridium or Operating against
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<PAGE> 10
Motorola and other Affiliate Transactions (as defined in the Offering
Memorandum) will be taken to the Contract Committee for approval.
10. Access. Operating shall permit Motorola to have
access to relevant meetings, documents or other materials, other than Internal
Meetings, Documents and Materials (as defined below), directly relating to the
Guarantees or any Credit Agreement. "Internal Meetings, Documents and
Materials" means meetings between or among executives or employees of IWCL,
Operating or Iridium or between or among Iridium, Operating or IWCL and their
consultants, advisors and/or counsel; documents or other materials which are
prepared in connection with such meetings; and documents or other materials
which are circulated solely between or among executives or employees of
Iridium, Operating or IWCL or between or among Iridium, Operating or IWCL and
their consultants, advisors and/or counsel.
11. Notices under this Agreement. All notices, requests,
demands, claims, and other communications hereunder will be in writing. Any
notice, request, demand, claim or other communication hereunder shall be deemed
duly given (i) when delivered, if personally delivered, (ii) when receipt is
electronically confirmed, if faxed (with hard copy to follow via first class
mail, postage prepaid) or (iii) one day after deposit with a reputable
overnight courier, in each case addressed to the intended recipient as set
forth below:
If to Iridium:
Iridium LLC
1575 Eye Street, NW
Washington, D.C. 20005
Attention: Vice President and Chief Financial Officer and
Vice President - General Counsel
Telecopy #: (202) 842-0006
If to Operating:
Iridium Operating LLC
1575 Eye Street, NW
Washington, D.C. 20005
Attention: Vice President and Chief Financial Officer and
Vice President - General Counsel
Telecopy #: (202) 842-0006
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<PAGE> 11
If to Motorola:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Attention: Treasurer
Telecopy #: (847) 576-4768
with a copy (which shall not constitute notice) to:
Motorola, Inc.
425 North Martingale Road
Schaumburg, Illinois 60173
Attention: Vice President - Law Department, Iridium Matters
Telecopy #: (847) 435-3328
12. Definitions. The following terms when used in this
Agreement have the following meanings:
"Commercial Activation Date" means the date of the first
"Revenue Producing Communication Message" as defined in the SSC
(excluding subscriber trials).
"Credit Agreement" means any agreement pursuant to which
Iridium incurs indebtedness for borrowed money which is Guaranteed by
Motorola, including without limitation, the Bridge Agreement, as
amended.
"Guarantee" means any guarantee by Motorola of any obligations
of Iridium under any Credit Agreement or any note, agreement or other
instrument executed in connection therewith, including without
limitation, the guarantee set forth in the Amended Guarantee Agreement
with respect to the Bridge Agreement.
"Guarantee Agreement" means any agreement which evidences any
Guarantee, including without limitation the Bridge Guarantee
Agreement.
"Guarantee Payment" means any payment which is demanded of
Motorola by a Lender pursuant to any Guarantee which is actually paid
by Motorola, to the extent so paid.
"Guaranteed Amount," with respect to any period, means the
maximum amount of Iridium's obligations for which Motorola has
provided a Guarantee
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<PAGE> 12
during such period (regardless of the actual amount of Iridium's
obligations outstanding to any Lender during such period) together,
without duplication, with any Guarantee Payments which have been made
by Motorola but not repaid by Iridium.
"Lender" means any lender under any Credit Agreement, or any
agent or other authorized representative of any lender, including
without limitation the Global Arrangers (as defined in the Bridge
Agreement, as amended).
"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks,
service marks, trade dress, trade names, logos and corporate names and
registrations and applications for registration thereof together with
all of the goodwill associated therewith, (iii) copyrights (registered
or unregistered) and copyrightable works and registrations and
applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer
software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without
limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and
information), (vii) other intellectual property rights and (viii)
copies and tangible embodiments thereof (in whatever form or medium).
"Interest Exchange Agreement" means the Interest Exchange
Agreement, dated as of June 9, 1997, by and between IWCL and Iridium.
"IWCL" means Iridium World Communications Ltd.
"LLC Agreement" means the limited liability company Agreement
of Iridium LLC dated as of July 19, 1996 as amended.
"Motorola-Based Default" means a default under the Bridge
Agreement or any other Credit Agreement which is caused solely and
directly by actions taken by Motorola other than a default occurring
as the result of the ownership percentage of Motorola and its
affiliates falling below the thresholds set forth in the Bridge
Agreement (as amended by the amendment described in Section 1(c))
unless it falls below such thresholds as the result of Motorola or an
affiliate disposing of Iridium's voting securities.
-12-
<PAGE> 13
Also, a Motorola-Based Default means a default under the
Bridge Agreement or any other Credit Agreement which is caused solely
and directly by actions taken by Motorola as a result of a demand for
payment under a Guarantee which has arisen as a result of a material
default by Motorola under (1) the SSC, the TNDC or the O&M Contract,
so long as Iridium has fully complied in all material respects with
its obligations under the SSC, the TNDC and the O&M Contract and
Motorola's default is the primary cause for the default under the
applicable Credit Agreement which has caused such demand for payment,
or (2) under any gateway purchase agreement between Motorola and a
gateway purchaser, so long as the default by Motorola thereunder was
not excused or caused by any default on the part of the purchaser
thereunder.
"Motorola Exposure" means the Commitments (including
Commitments under the Bridge Agreement or a separate Credit Agreement
having the same terms as the Bridge Agreement), the Guarantee Payments
(to the extent not repaid by Iridium) and the Vendor Financing
Amount.
"Offering Memorandum" means the Offering Memorandum dated
October 9, 1997 related to the issuance and sale by Iridium of its
11.25% Senior Notes due 2005, Series C.
"O&M Contract" means the Operations and Maintenance Contract
effective July 29, 1993 between Iridium and Motorola, as amended from
time to time.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"Senior Notes" has the meaning set forth in the MOU.
"SSC" means the Space System Contract effective July 29, 1993
between Iridium and Motorola, as amended from time to time.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
limited liability company, partnership,
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<PAGE> 14
association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership,
association or other business entity if such Person or Persons shall
be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or
control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"TNDC" means the Terrestrial Network Development Contract
effective January 1, 1993 between Iridium and Motorola, as amended
from time to time.
"Vendor Financing Amount" means the total amount (including
interest and expenses) of any vendor financing, including without
limitation, vendor financing contemplated by an amendment to the TNDC
or any other payment deferrals or payments made to, or for the benefit
of, Iridium, provided to Iridium or third parties by Motorola but not
including (i) any vendor financing or payment deferrals under the TNDC
(including Amendment No. 3) in effect on July 11, 1997, so long as
payments are made under the TNDC when owed or (ii) any amounts which
would not be deemed to be part of this "Vendor Financing Amount"
pursuant to Amendment No. 4 to the TNDC (Article 6.I.3).
13. Complete Agreement. This Agreement and the other
agreements and instruments referred to herein embody the complete agreement and
understanding among the parties with respect to the matters addressed herein
and supersede and preempt the Original Agreement Regarding Guarantee and any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
14. Miscellaneous. This Agreement (a) is made under and
shall be governed by the laws of the State of New York without regard to
principles of conflict of laws, (b) is intended for the benefit of the parties
hereto and is not intended to benefit any other person and no person other than
the parties hereto may rely upon the provisions hereof, (c) may be executed in
counterparts, each of which taken together shall constitute one and the same
instrument, and (d) may be amended or waived only if such amendment or waiver
is in writing and signed by the party against whom it is sought to be enforced.
15. No Third Party Beneficiaries; Limited Rights Against
Motorola. The parties hereto agree that Iridium shall have no rights (apart
from those set forth in this Agreement, the MOU or any other written agreements
between such parties) against
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<PAGE> 15
Motorola as a result of Iridium's inability to meet drawing or other conditions
under the Bridge Agreement.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties have entered into this
Amended and Restated Agreement Regarding Guarantee in each case as of the date
first above written.
IRIDIUM LLC
By:
----------------------------
Name:
Title:
IRIDIUM OPERATING LLC
By:
----------------------------
Name:
Title:
MOTOROLA, INC.
By:
----------------------------
Name:
Title:
<PAGE> 1
Exhibit 23.1
Accountants' Consent
The Boards of Directors
Iridium World Communications Ltd. and Iridium LLC:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
McLean, Virginia
July 13, 1998
