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Exhibit 10.17
FORM OF
SHARE ISSUANCE AGREEMENT
DATED AS OF MAY [ ], 1997
BY AND BETWEEN
IRIDIUM WORLD COMMUNICATIONS LTD.
AND
IRIDIUM LLC
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SHARE ISSUANCE AGREEMENT
This SHARE ISSUANCE AGREEMENT (this "Agreement") is by and between
Iridium LLC, a limited liability company organized under the laws of the State
of Delaware ("Iridium"), and Iridium World Communications Ltd., a company
organized under the laws of Bermuda (the "Company"), and is made and entered
into as of May __, 1997.
WHEREAS, Iridium is commercializing the IRIDIUM System, a wireless
communications system designed to provide global wireless personal
communications services;
WHEREAS, the Company was formed to act as a special-purpose member of
Iridium and to have no other business; and pursuant to the 1997 Subscription
Agreement between the Company and Iridium, Iridium has agreed to create, issue
and sell, and the Company has agreed to purchase, Class 1 Membership Interests
of Iridium ("Class 1 Interests") at an aggregate purchase price equal to the
proceeds to the Company from the initial public offering (the "IPO") of its
Class A Common Stock, par value $.01 per share (the "Class A Common Stock");
and upon the purchase of such Class 1 Interests with the proceeds from the IPO
the Company will be admitted as a member of Iridium;
WHEREAS, Iridium may desire that the Company authorize, issue, offer
and sell its securities (the "Company Securities") from time to time and invest
the proceeds from such sales of Company Securities in limited liability company
interests of Iridium ("Iridium Interests"); and the Company desires to acquire
from time to time Iridium Interests, including Class 1 Interests, with the
proceeds from any such issuance of Company Securities;
WHEREAS, Iridium has adopted the Iridium LLC Share Option Plan of 1996
(the "1996 Option Plan")and Iridium may desire to adopt other employee benefit
plans from time to time (each such plan, an "Iridium Benefit Plan"); and
Iridium desires to have the ability to (i) issue options to purchase Class A
Common Stock ("Class A Options") from time to time pursuant to the 1996 Option
Plan and (ii) to issue Class A Options and other rights to acquire Class A
Common Stock ("Class A Rights") pursuant to other Iridium Benefit Plans;
WHEREAS, the Company desires to facilitate Iridium's granting of Class
A Options and Class A Rights pursuant to Iridium Benefit Plans, and the Company
desires
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to acquire Class 1 Interests in exchange for shares of Class A Common Stock
issued by the Company in connection with the exercise of such Class A Options
and the exercise or conversion of Class A Rights.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICABILITY
Section 1.01. Definitions. As used in this Agreement, the
following terms have the following respective meanings:
"Agreement" means this Share Issuance Agreement.
"Benefit Plan Schedule" has the meaning assigned thereto in Section 4.02.
"Business Day" means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
"Class A Common Stock" means Class A Common Stock, par value $.01 per
share, of the Company.
"Class A Option" means an option to purchase one or more shares of Class A
Common Stock that is issued pursuant to an Iridium Benefit Plan.
"Class A Right" means a right (other than a Class A Option) to acquire,
either directly or beneficially, one or more shares of Class A Common Stock
that is issued pursuant to an Iridium Benefit Plan.
"Class 1 Interests" means Class 1 Membership Interests of Iridium.
"Closing Price" means, for each Trading Day, the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the Class A Common
Stock is listed or admitted to trading, or, if the Class A Common Stock is not
so listed or admitted to trading on a national securities exchange, on the
Nasdaq
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National Market System or, if the Class A Common Stock is not quoted on the
Nasdaq National Market System, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by Iridium for that purpose or, if the
Class A Common Stock is not traded in the over-the-counter market, the fair
market value per share of the Class A Common Stock as determined by Iridium
Board (whose determination shall be conclusive).
"Commission" means the U.S. Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
"Common Stock" means the Class A Common Stock and any stock of any class of
the Company which has no preference in respect of dividends or amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company and which is not subject to redemption by the
Company. However, shares issuable on exchange of Class 1 Interests pursuant to
Article IV shall include only shares of the class designated as Class A Common
Stock of the Company on the date hereof, or shares of any class or classes
resulting from any reclassification thereof and which have no preferences in
respect of dividends or amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided that, if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable and registerable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassification
bears to the total number of shares of all such classes resulting from all such
reclassification.
"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors, if any.
"Company Board" means the Board of Directors of the Company.
"Company Certificate" has the meaning assigned thereto in Section 3.05.
"Company Securities" means (i) equity securities of the Company, including
Common Stock and any class of preferred stock and (ii) any security issued by
the Company that is
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convertible into, or exchangeable or exercisable for, equity securities of the
Company.
"Directed Offering" has the meaning assigned thereto in Section 2.03.
"Directed Offering Period" means the period commencing on the date Iridium
delivers a Sale Notice to the Company and ending on the 90th day following such
date; provided that the Directed Offering Period may be extended by Iridium, at
its sole discretion, by delivering written notice of such extension to the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, or any successor
thereto, as the same shall be amended from time to time.
"Exchange Notice" has the meaning assigned thereto in Section 4.02.
"Exchange Rate" has the meaning assigned thereto in Section 4.01.
"Holder" has the meaning assigned thereto in Section 4.01.
"indemnified party" has the meaning assigned thereto in Section 6.01.
"Iridium" shall have the meaning set forth in the preamble and shall also
include Iridium's successors.
"Iridium Benefit Plan" means any employee benefit plan of Iridium existing
on the date hereof or hereafter created, each as adopted by the Iridium Board
and as amended from time to time, including the 1996 Option Plan.
"Iridium Board" means the Board of Directors of Iridium.
"Iridium Interests" means any limited liability company interest in
Iridium, including the Class 1 Interests, and any security issued by Iridium
that is convertible into, or exchangeable or exercisable for, limited liability
company interests in Iridium.
"LLC Agreement" means the Limited Liability Company Agreement of Iridium
LLC dated as of July 29, 1996, as amended from time to time.
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"IPO" means the initial underwritten public offering of the Class A Common
Stock as contemplated by the registration statement on Form S-1 under the
Securities Act filed by the Company (file No. 333-23419) on March 14, 1997, as
such registration statement is amended from time to time.
"IPO Date" means the date of the consummation of the IPO.
"managing underwriter or underwriters" means the person or persons selected
by Iridium and the Company in a Directed Offering to manage an underwritten
offering of Company Securities.
"1996 Option Plan" means the Iridium LLC Share Option Plan of 1996, as
amended from time to time.
"Noticed Interests" has the meaning assigned thereto in Section 2.02.
"Offering Documents" has the meaning assigned thereto in Section 3.02.
"person" means a natural person, partnership (whether general or limited),
limited liability company, trust, estate, association, corporation, custodian,
nominee or any other individual or entity in its own or any representative
capacity.
"Process Agent" has the meaning assigned thereto in Section 7.07.
"Sale Notice" has the meaning assigned thereto in Section 2.02.
"Sale Right" has the meaning assigned thereto in Section 2.01.
"Securities Act" means the Securities Act of 1933, or any successor
thereto, as the same shall be amended from time to time.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
exchange or in the applicable market.
"Transfer" has the meaning assigned thereto in Article V.
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"Underlying Shares of Class A Common Stock" has the meaning assigned
thereto in Section 4.01.
"underwriter" means any underwriter of an underwritten offering of Company
Securities pursuant to Article III.
Section 1.02. Interpretation. The following provisions shall govern
the interpretation of this Agreement:
(a) The singular form of any word used herein, including the terms
defined in Section 1.01, includes the plural, and vice versa, unless the
context otherwise requires. The use herein of a pronoun of any gender shall
include correlative words of the other gender.
(b) Unless otherwise expressly indicated, all references herein to
"Articles", "Sections" and other subdivisions hereof are to the corresponding
Articles, Sections or subdivisions of this Agreement; and the words "herein",
"hereof", "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or subdivision hereof.
(c) The headings or titles of the several Articles and Sections
hereof, and any table of contents appended to copies hereof, shall be solely
for convenience of reference and shall not affect the meaning, construction or
effect of this Agreement.
(d) Each reference herein to any agreement, instrument or other
document shall mean such agreement, instrument or document as from time to time
amended, modified or supplemented in accordance with the terms hereof and
thereof. The term "including" shall be construed to mean "including but not
limited to".
ARTICLE II
IRIDIUM'S RIGHT TO REQUIRE
FUTURE PURCHASES OF IRIDIUM INTERESTS
Section 2.01. General Sale Rights of Iridium. Subject to the terms
and conditions set forth herein, at any time and from time to time after the
IPO Date, Iridium shall have the right (the "Sale Right") to create, issue and
sell to the Company, and the Company shall have the obligation to purchase from
Iridium, Iridium Interests.
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Section 2.02. Notice Required for Exercise of Sale Right. In order
to exercise its Sale Right, Iridium shall deliver written notice (a "Sale
Notice") to the Company of (i) its intent to exercise its rights under this
Article II and (ii) the type and number of Iridium Interests intended to be
sold to the Company (the "Noticed Interests"); provided that if Iridium elects
to change the number or type of Noticed Interests during a Directed Offering
Period an additional Sale Notice shall not be required.
Section 2.03. Company's Obligation to Consummate Offering of Company
Securities in Respect of Noticed Interests. The Company hereby agrees that
upon receipt of a Sale Notice the Company shall, within the Directed Offering
Period and in accordance with Article III, use its best reasonable efforts to
consummate an offering of Company Securities (a "Directed Offering"), and apply
the proceeds received by the Company from such Directed Offering to the
purchase of the Noticed Interests, on terms and conditions determined by
Iridium; provided that the Company shall not be required to purchase Noticed
Interest until the date it first receives proceeds from the Directed Offering.
ARTICLE III
PROCEDURES FOR DIRECTED OFFERINGS
Section 3.01. Terms of Directed Offerings; Corporate Action by the
Company. (a) The Company hereby agrees that, subject to applicable law, the
terms of any Directed Offering shall be structured at the direction of Iridium,
including (i) the quantity, class and terms of the Company Securities to be
offered, (ii) whether the Company Securities to be offered will be registered
under the Securities Act or whether such Company Securities will be sold
pursuant to an exemption from such registration, (iii) whether the Directed
Offering will be consummated on a date certain or will be made on a delayed or
continuous basis, (iv) whether the Company Securities will be offered by the
Company or by Iridium or jointly by the Company and Iridium and (v) the terms
under which the proceeds from the sale of the Company Securities will be
applied to the purchase of the Noticed Interests.
(b) The Company hereby agrees, subject to applicable law, to take
all action necessary to consummate any Directed Offering in accordance with the
terms of this Agreement, including (i) authorizing the issuance and sale
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of the Company Securities (and authorizing and reserving for issuance all
Company Securities issuable upon the exercise of the Company Securities to be
issued in the Directed Offering) and (ii) amending or supplementing the
Company's governing documents as required by the terms of the Directed Offering
and seeking shareholder or other approval, if necessary, for such action.
(c) In addition to any other obligation of the Company hereunder, the
Company hereby agrees that at any time and from time to time after the IPO
Date, it will increase its authorized share capital as directed by Iridium,
including authorizing additional shares of Class A Common Stock and creating
and authorizing one or more series of preferred stock, within thirty days of
receipt of written instructions from Iridium to effect such an increase.
Section 3.02. Cooperation in Preparation of Offering Documents.
Iridium and the Company hereby agree to cooperate in the preparation of any
offering documents relating to a Directed Offering (the "Offering Documents"),
including (i) any registration statements or amendments thereto required to be
filed with the Commission pursuant to Section 3.04 in connection with the
registration of Company Securities to be issued in a Directed Offering and (ii)
any disclosure memoranda or amendments thereto to be used in connection with a
Directed Offering of Company Securities exempt from registration under the
Securities Act.
Section 3.03. Customary Agreements. Iridium and the Company hereby
agree to enter into and deliver all customary agreements (including
underwriting or purchase agreements) as are reasonably requested of the Company
or Iridium to expedite or facilitate any Directed Offering.
Section 3.04. Registration Statements. (a) In connection with the
obligations of the Company under Articles II and III in respect of any Directed
Offering of Company Securities registered under the Securities Act the Company
hereby agrees to:
(i) prepare and file with the Commission, a registration statement
with respect to the Company Securities on any form which may be utilized by
the Company and which shall permit the disposition of such Company
Securities in accordance with the terms of the Directed Offering and use
its reasonable best efforts to cause such registration statement to become
effective as directed by Iridium;
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(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement for the period required for the disposition of
the Company Securities in accordance with the terms of the Directed
Offering and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of the Company Securities covered
by such registration statement;
(iii) for a reasonable period prior to the filing of such registration
statement, and throughout the period required for the disposition of the
Company Securities in accordance with the terms of the Directed Offering,
and upon reasonable notice, make available for inspection by Iridium, any
underwriter participating in any distribution pursuant to the registration
statement, and any attorney or accountant designated by Iridium, at a
reasonable time and in a reasonable manner, financial and other information
and books and records of the Company, and cause the officers, directors and
employees of the Company to respond to such inquiries and supply
information reasonably requested by Iridium and any such underwriter,
attorney or accountant in the course of conducting a reasonable
investigation within the meaning of Section 11 of the Securities Act;
(iv) promptly notify Iridium, and the managing underwriter or
underwriters, if any, thereof and confirm such advice in writing, (A) when
such registration statement or supplement or post-effective amendment has
been declared or becomes effective, (B) of the issuance by the Commission
of any stop order suspending the effectiveness of such registration
statement or the initiation or threatening of any proceedings for that
purpose, (C) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Company Securities Offered in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (D) of the happening of any event during the period such
registration statement is effective which makes any statement made in such
registration statement or the related prospectus untrue in any material
respect or which requires the making of any changes in such registration
statement or prospectus in order to make the statements therein not
misleading;
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(v) upon the occurrence of any event contemplated by Section
3.04(a)(iv)(D) hereof, use its reasonable best efforts to prepare a
supplement or post-effective amendment to such registration statement or
the related prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Company Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(vi) use its reasonable best efforts to obtain promptly the
withdrawal of any order suspending the effectiveness of such registration
statement or any post-effective amendment thereto;
(vii) provide copies of any prospectus, any amendment to the
registration statement or amendment or supplement to any prospectus or any
document which is to be incorporated by reference into such registration
statement or any prospectus after initial filing of such registration
statement, a reasonable time prior to the filing of any such prospectus,
amendment, supplement or document, to Iridium and the underwriters, if any,
and make the representatives of the Company available to Iridium and the
underwriters, if any, for discussion of any such document;
(viii) use its reasonable best efforts to (A) register or qualify the
Company Securities to be included in such registration statement under such
Securities laws or blue sky laws of such jurisdictions as Iridium and each
placement or sales agent, if any, therefor and each underwriter, if any,
thereof shall reasonably request in writing on a timely basis, (B) take any
and all other actions as may be reasonably necessary or advisable to enable
each such holder, agent, if any, and each underwriter, if any, to
consummate the disposition in such jurisdictions of the Company Securities;
and
(ix) use its reasonable best efforts to obtain the consent or approval
of each governmental agency or authority, whether federal, state or local,
in the U.S. or Bermuda which may be required to effect the registration or
the offering or sale in connection therewith of the Company Securities;
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(b) Iridium hereby agrees to provide the Company with all assistance
reasonably necessary for the Company to comply with its obligations under
Section 3.04(a).
Section 3.05. Expenses of Directed Offerings. Iridium shall promptly
pay all expenses incurred by the Company in connection with any Directed
Offering conducted pursuant to this Agreement.
ARTICLE IV
IRIDIUM'S EXCHANGE RIGHTS WITH RESPECT
TO CLASS A OPTIONS AND CLASS A RIGHTS
Section 4.01. General Exchange Rights of Iridium. Upon exercise of
any Class A Options or exercise or conversion of Class A Rights by the holder
thereof (the "Holder") and notice by Iridium of such exercise or conversion
pursuant to Section 4.02(c), the Company shall have the obligation to issue and
deliver, in accordance with Section 4.03, the number of registered, fully paid
and non-assessable shares of Class A Common Stock such Holder is entitled to
have delivered upon exercise of such Class A Options or Class A Rights (the
"Underlying Shares of Class A Common Stock"). In exchange for each Underlying
Share of Class A Common Stock delivered by the Company pursuant to this Article
IV, Iridium shall create, issue and deliver to the Company one fully paid and
non-assessable Class 1 Interest, subject to adjustment as provided in Article
V. The number of shares of Class A Common Stock to be delivered by the Company
pursuant to this Article V in exchange for one such Class 1 Interest is
hereinafter referred to as the "Exchange Rate." At any time and from time to
time after the IPO Date, Iridium shall have the right to issue additional Class
A Options and Class A Rights pursuant to any Iridium Benefit Plan.
Section 4.02. Information and Notice Obligations of Iridium; Share
Reservation Obligations of the Company. (a) Iridium has heretofore delivered
to the Company a copy of the 1996 Option Plan and agrees to provide the Company
with copies of any other Iridium Benefit Plan that permits Iridium to offer
Class A Options or Class A Rights. Iridium hereby agrees to provide the
Company with a schedule no later than the 30th Business Day following the last
day of each calendar quarter listing (i) all authorized and outstanding Class A
Options and Class A Rights under Iridium Benefit Plans and (ii) the total
number of Underlying Shares of Class A Common Stock issuable in respect of all
authorized and outstanding Class A Options and Class A
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Rights (the "Authorized Shares") as of the last Business Day of such calendar
quarter (the "Benefit Plan Schedule"); provided that (i) Iridium may provide a
Benefit Plan Schedule at any time and (ii) Iridium shall not be required to
provide a Benefit Plan Schedule if there has been no change from the most
recently provided Benefit Plan Schedule.
(b) The Company hereby agrees to authorize and reserve for
issuance pursuant to this Agreement a number of shares of Class A Common Stock
that is not less than the number of Authorized Shares; and the Company agrees
that, if a Benefit Plan Schedule lists a greater number of Authorized Shares
than the number of shares of Class A Common Stock the Company has authorized
and reserved for issuance pursuant to this Agreement, the Company shall
immediately act to increase the number of shares of Class A Common Stock
authorized and reserved for issuance pursuant to this Agreement to a number of
shares of Class A Common Stock that is not less than the number of Authorized
Shares listed in such Benefit Plan Schedule.
(c) In order for the Company to have the obligation to deliver
Underlying Shares of Class A Common Stock upon a Holder's exercise or
conversion of a Class A Option or a Class A Right, Iridium must provide the
Company with written notice (an "Exchange Notice") of (i) such Holder's
exercise of, or intention to exercise, Class A Options or Class A Rights, (ii)
the number of Underlying Shares of Class A Common Stock to be delivered by the
Company as a result of such exercise and (iii) the person in whose name such
Underlying Shares of Class A Common Stock are to be registered.
Section 4.03. Procedures for Delivery by the Company and Iridium. On
a date that is not more than three Business Days after the date the Company
receives the Exchange Notice or on such other date as the Company and Iridium
may mutually agree, the Company shall deliver to Iridium the number of
Underlying Shares of Class A Common Stock requested by the Exchange Notice,
registered in the names specified in the Exchange Notice, and Iridium shall
deliver to the Company certificates representing the Class 1 Interests to be
exchanged for such Underlying Shares of Class A Common Stock pursuant to this
Article IV.
Section 4.04. Company's Obligation to Maintain Effective Registration
Statement. The Company hereby agrees to prepare and file with the Commission,
a registration statement with respect to the Underlying Shares of Class A
Common Stock to be delivered pursuant to this Article IV on
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any form which may be used by the Company and will permit the delivery of
registered Underlying Shares of Class A Common Stock in accordance with this
Article IV and to use its best efforts to cause such registration statement or
statements to become effective as of the IPO Date or as soon as practicable
thereafter; and the Company hereby agrees to use its best efforts to prepare
and file with the Commission such amendments and supplements to such
registration statement, or to file and seek the effectiveness of additional
registration statements, if any, as may be necessary to maintain an effective
registration statement that will permit the delivery of registered Underlying
Shares of Class A Common Stock in accordance with this Article IV at any time
after the IPO Date.
Section 4.05. Cooperation in Preparation of Registration Statements;
Customary Agreements. Iridium and the Company hereby agree to cooperate in the
preparation of any registration statement required to be filed with the
Commission pursuant to Section 4.04. Iridium and the Company hereby agree to
enter into and deliver all customary Agreements as are reasonably requested of
the Company or Iridium to expedite or facilitate the issuance of registered
Underlying Shares of Class A Common Stock in accordance with this Article IV.
Section 4.06. Expenses. Iridium shall promptly pay, or reimburse the
Company for the payment of, all expenses incurred by the Company in connection
with the transactions contemplated by this Article IV.
ARTICLE V
ADJUSTMENT OF EXCHANGE RATE
The Exchange Rate shall be adjusted from time to time as follows:
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Class A Common
Stock, the Exchange Rate in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by multiplying
such Exchange Rate by a fraction the numerator of which shall be the sum of the
number of shares of Class A Common Stock outstanding at the close of business
on the date fixed for such determination and the total number of shares
constituting such dividend or other distribution and the denominator of which
shall be such
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number of shares of Class A Common Stock outstanding at the close of business
on the date fixed for such determination, such increase to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this subsection (a), the number of
shares of Class A Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
(b) In case Iridium shall pay or make a dividend or other
distribution on any class of Iridium Interests in Class 1 Interests, the
Exchange Rate in effect at the opening of business on the day following the
date fixed for the termination of Iridium members entitled to receive such
dividend or other distribution shall be decreased by multiplying such Exchange
Rate by a fraction the denominator of which shall be the sum of the number of
Class 1 Interests outstanding at the close of business on the date fixed for
such determination and the total number of Class 1 Interests constituting such
dividend or other distribution and the numerator of which shall be such number
o Class 1 Interests outstanding at the close of business on the date fixed for
such determination, such decrease to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this subsection (b), the number of Class 1 Interests at any
time outstanding shall not include shares held in the treasury of Iridium.
(c) In case the Company shall issue rights or warrants to all
holders of any class of Common Stock entitling them to subscribe for, purchase
or acquire shares of Class A Common Stock at a price per share less than the
current market price per share (determined as provided in subsection (k) below)
of the Class A Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Exchange Rate in
effect at the opening of business on the day following the date fixed for such
determination shall be increased by multiplying such Exchange Rate by a
fraction the numerator of which shall be the number of shares of Class A Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Class A Common Stock so offered for
subscription, purchase or acquisition, and the denominator of which shall be
the number of shares of Class A Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Class A Common Stock which the aggregate of the offering price of the total
number of shares of Class A Common Stock so offered for subscription, purchase
or acquisition would purchase at such current
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market price, such increase to become effective immediately after the opening
of business on the day following the date fixed for such determination. For
the purposes of this subsection (c), the number of shares of Class A Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company. The Company agrees not to pay any dividend or make any
distribution on shares of Common Stock held in its treasury.
(d) In case Iridium shall issue rights or warrants to all holders
of Class 1 Interests entitling them to subscribe for, purchase or acquire Class
1 Interests at a price per Class 1 Interest less than the current market price
per share (determined as provided in subsection (k) below) of the Class A
Common Stock multiplied by the Exchange Rate on the date fixed for the
determination of Class 1 Interest holders entitled to receive such rights or
warrants, the Exchange Rate in effect at the opening of business on the day
following the date fixed for such determination shall be decreased by
multiplying such Exchange Rate by a fraction the denominator of which shall be
the number of Class 1 Interests outstanding at the close of business on the
date fixed for such determination plus the number of Class 1 Interests so
offered for subscription, purchase or acquisition, and the numerator of which
shall be the number of Class 1 Interests outstanding at the close of business
on the date fixed for such determination plus the number of Class 1 Interests
which the aggregate of the offering price of the total number of Class 1
Interests so offered for subscription, purchase of acquisition would purchase
at a price per Class 1 Interest equal to the market price per Share of Class A
Common Stock multiplied by the Exchange Rate, such increase to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this subsection (d), the number of
Class 1 Interests at any time outstanding shall not include shares held in the
treasury of Iridium. Iridium agrees not to pay any dividend or make any
distribution on Class 1 Interests held in its treasury.
(e) In case the outstanding shares of Class A Common Stock shall
be subdivided into a greater number of shares of Class A Common Stock, the
Exchange Rate in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be proportionately
increased, and, conversely, in case the outstanding shares of Class A Common
Stock shall each be combined into a smaller number of shares of Class A Common
Stock, the Exchange Rate in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately
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reduced, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(f) In case the outstanding Class 1 Interests shall be subdivided
into a greater number of Class 1 Interests, the Exchange Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately decreased, and, conversely, in case
the outstanding Class 1 Interests shall each be combined into a smaller number
of Class 1 Interests, the Exchange Rate in effect at the opening of business on
the day following the day upon which such combination becomes effective shall
be proportionately increased, such increase or reduction, as the case may be,
to become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.
(g) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Class A Common Stock evidences of its
indebtedness or assets (including securities but excluding (A) any rights or
warrants referred to in subsection (c) above, (B) any dividend or distribution
referred to in subsection (a) above, and (C) any dividend or distribution paid
in cash out of current or accumulated earnings), then in each case, the
Exchange Rate in effect at the opening of business on the day following the
date fixed for the determination of holders of Class A Common Stock entitled to
receive such distribution shall be adjusted by multiplying such Exchange Rate
by a fraction of which the numerator shall be the current market price per
share (determined as provided in subsection (k) below) of the Class A Common
Stock on such date of determination (or, if earlier, on the date on which the
Class A Common Stock goes "ex-dividend" in respect of such distribution) less
the then Fair Market Value as determined by the Company Board (whose
determination shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed (and for which an adjustment to the Exchange Rate
has not previously been made pursuant to the terms of this Article V)
applicable to one share of Class A Common Stock, and the denominator shall be
such current market price per share of the Class A Common Stock, such
adjustment to become effective immediately after the opening of business on the
day following such date of determination.
(h) In case Iridium shall, by dividend or otherwise, distribute to
all holders of its Class 1 Interests evidence of its indebtedness or assets
(including
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securities but excluding (A) any rights or warrants referred to in subsection
(d) above, (B) any dividend of distribution referred to in subsection (b)
above, and (C) any dividend or distribution paid in cash out of current or
accumulated earnings), then in each case, the Exchange Rate in effect at the
opening of business on the day following the date fixed for the determination
of holders of Class 1 Interests entitled to receive such distribution shall be
adjusted by multiplying such Exchange Rate by a fraction of which the
denominator shall be the current market price per share (determined as provided
in subsection (k) below) of the Class A Common Stock on such date of
determination multiplied by the Exchange Rate (or, if earlier, on the date on
which the Class 1 Interests go "ex-dividend" in respect of such distribution)
less the then Fair Market Value as determined by the Iridium Board (whose
determination shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed (and for which an adjustment to the Exchange Rate
has not previously been made pursuant to the terms of this Article V)
applicable to one Class 1 Interest, and the numerator shall be such current
market price per share of the Class A Common Stock multiplied by the Exchange
Rate, such adjustment to become effective immediately after the opening of
business on the day following such date of determination.
(i) The reclassification or change of Class A Common Stock into
securities including securities other than Class A Common Stock (other than any
reclassification upon a consolidation or merger to which subsection (n) below
applies) shall be deemed to involve (A) a distribution of such securities other
than Class A Common Stock to all holders of Class A Common Stock (and the
effective date of such reclassification shall be deemed to be "the date fixed
for the determination of holders of Class A Common Stock entitled to receive
such distribution" within the meaning of subsection (g) above), and (B) a
subdivision or combination, as the case may be, of the number of shares of
Class A Common Stock outstanding immediately prior to such reclassification
into the number of shares of Class A Common Stock outstanding immediately
thereafter (and the effective date of such reclassification shall be deemed to
be "the day upon which such subdivision becomes effective" or "the day upon
which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the
meaning of subsection (e) above).
(j) The reclassification or change of Class 1 Interests into
interests or securities including Iridium Interests other than Class 1
Interests shall be deemed to
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involve (A) a distribution of such interests or securities other than Class 1
Interests to all holders of Class 1 Interests (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
holders of Class 1 Interests entitled to receive such distribution" within the
meaning of subsection (h) above), and (B) a subdivision or combination, as the
case may be, of the number of shares of Class 1 Interests outstanding
immediately prior to such reclassification into the number of Class 1 Interests
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such subdivision becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
become effective" within the meaning of subsection (f) above).
(k) For the purpose of any computation under subsection (c), (d),
(g) or (h) above, the current market price per share of Class A Common Stock on
any day shall be deemed to be the average of the Closing Prices of the Class A
Common Stock for the 20 consecutive Trading Days selected by the Company Board
commencing no more than 30 Trading Days before and ending no later than the
second Trading Day before the day in question; provided, that, in the case of
subsection (3), if the period between the date of the public announcement of
the dividend or distribution and the date for the determination of holders of
Class A Common Stock entitled to receive such dividend or distribution (or, if
earlier, the date on which the Common Stock goes "ex-dividend" in respect of
such dividend or distribution) shall be less than 20 Trading Days, the period
shall be such lesser number of Trading Days but, in any event, not less than
five Trading Days.
(l) No adjustment in the Exchange Rate shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
rate; provided, however, that any adjustments which by reason of this clause
(l) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment and provided, further, that adjustments shall be
required and made in accordance with the provisions of this Article V (other
than this clause (l)) not later than such time as may be required in order to
preserve the tax free nature of a distribution to the holders of shares of
Common Stock. Anything in this clause (l) to the contrary notwithstanding, the
Company shall be entitled, at its option, to make such increases in the
Exchange Rate, in addition to those required by this Article V, as it in its
discretion shall determine to be advisable in order that any stock dividend,
subdivision or
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combination of shares, distribution of capital stock or rights or warrants to
purchase stock or securities, or distribution of evidences of indebtedness or
assets (other than cash dividends or distributions paid from current or
accumulated earnings) or other event shall be a tax free distribution to
holders for United States federal income tax purposes. All calculations under
this clause (h) shall be made to the nearest cent.
(m) Iridium shall notify the Company of any event requiring an
adjustment in the Exchange Rate pursuant to subsection (b), (d), (f), (h) or
(j), and whenever the Exchange Rate is adjusted as herein provided, the Company
shall notify Iridium which notice shall include the Exchange Rate after such
adjustment and shall set forth a brief statement of the facts requiring such
adjustment and the manner of computing the same.
(n) In case of any consolidation of the Company with, or merger of
the Company into, any other entity, any merger of another entity into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Class A Common
Stock) or any sale or transfer of all or substantially all of the assets of the
Company, Iridium shall have the right thereafter to exchange Class 1 Membership
only into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Class A Common Stock into which such Class 1 Interests might have
been exchanged immediately prior to such consolidation, merger, sale or
transfer, assuming such holder of Class A Common Stock is not the entity with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
(a "constituent person"), or an affiliate of a constituent person and failed to
exercise its rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
sale or transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer is
not the same for each share of Class A Common Stock held immediately prior to
such consolidation, merger, sale or transfer by others than a constituent
entity or an affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this subsection (n) the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind
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and amount so receivable per share by a plurality of the non-electing shares.
If necessary, appropriate adjustment shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of Iridium, so that the provisions set forth herein shall thereafter be
applicable, as nearly as may reasonably be practicable, to any shares of stock
or other securities or property thereafter deliverable on the exchange of the
Class 1 Interests. Any adjustment under this subsection (j) shall be evidenced
by a certificate of the Company and a notice of such adjustment filed and
mailed in the manner set forth in subsection (i). The above provisions shall
similarly apply to successive consolidations, mergers, sales or transfers.
In case (x) the Company shall take any action that would result in an
adjustment to the Exchange Rate; or (y) of any consolidation or merger to which
the Company is a party and for which approval of any shareholders of the
Company is required, or of the sale or transfer of all or substantially all of
the assets of the Company; or (z) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then the Company shall provide to
Iridium, at least 15 days prior to the applicable record or effective date
hereinafter specified, a notice stating (A) the date on which a record is to be
taken for the purpose of such actions, or, if the record is not to be taken,
the date as of which the holders of Common Stock or Class A Common Stock, as
the case may be, of record are to be determined, or (B) the date on which such
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective, and the date as of which it is expected that
holders of Class A Common Stock of record shall be entitled to exchange their
shares of Class A Common Stock for securities, cash or other property
deliverable upon such consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Neither the failure to give such notice nor any
defect therein shall affect the legality or validity of the proceedings
described in clauses (x) through (z) above.
ARTICLE VI
RESTRICTIONS ON TRANSFER
The Iridium Interests sold or exchanged hereunder are subject to the
restrictions on Transfer (as hereinafter defined) contained in the LLC
Agreement. In addition, such Iridium Interests will not be registered under
any United
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States federal or state securities laws and may not be Transferred unless such
laws do not apply or unless such registration is otherwise not required. As
used herein, "Transfer" means to sell, transfer, assign, pledge or otherwise
encumber or dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law), directly or indirectly.
ARTICLE VII
INDEMNIFICATION
Section 7.01. Indemnification by Iridium. Iridium will indemnify and
hold harmless the Company and each of its officers, directors and employees
(each an "indemnified party") against any losses, claims, damages or
liabilities to which such indemnified party may become subject, under the
Securities Act or otherwise, that directly or indirectly, arise out of or are
related to, the transactions contemplated by this Agreement, and will reimburse
such indemnified party for any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim, as such losses, damages, liabilities or expenses are incurred;
provided, however, that Iridium shall not be liable in any such case to any
indemnified party to the extent that any such loss, claim, damage or liability
arises out of or is based upon an intentional act or omission of the
indemnified party which was contrary to any written instruction or request of
Iridium or which amounted to willful misconduct on the part of the indemnified
party.
Section 7.02. Proceedings. Promptly after receipt by an indemnified
party of notice of the commencement of any action, suit or proceeding as to
which a claim in respect thereof is to be made against Iridium under Section
6.01, the indemnified party shall notify Iridium in writing of the commencement
thereof, but the omission so to notify Iridium shall not relieve Iridium from
any liability which it may have to any indemnified party otherwise than under
such section. In case any such action shall be brought against any indemnified
party and it shall notify Iridium of the commencement thereof, Iridium shall be
entitled to participate therein and, to the extent that it shall wish, to
assume the defense thereof, with counsel satisfactory to such indemnified party
(which shall not, except with the consent of the indemnified party, be counsel
to Iridium), and, after notice from Iridium to such indemnified party of its
election so to assume the defense thereof, Iridium shall not be liable to such
indemnified
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party under such subsection for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party,
in connection with the defense thereof other than reasonable costs of
investigation. Iridium shall not, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party. No indemnified party shall effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution has been or may be sought hereunder without the prior written
consent of Iridium.
Section 7.03. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 6.01 is for any reason held to be unenforceable
although applicable in accordance with its terms, Iridium shall contribute to
the losses, liabilities, claims, damages and expenses of the type contemplated
by such indemnity agreement incurred by any indemnified party in such
proportion as shall be appropriate to reflect (i) the relative benefits
received, directly or indirectly, by Iridium on the one hand and the
indemnified party on the other hand, from the sale or exchange of the Company
Securities and the issuance and sale of the Class 1 Interests, and (ii) the
relative fault of Iridium on the one hand and the indemnified party on the
other, with respect to the acts or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect thereof, as well as
any other relevant equitable considerations. Iridium and the Company agree
that it would not be just and equitable if contribution pursuant to this
Section 6.03 were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the relevant equitable
considerations. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from Iridium if Iridium was not guilty of such fraudulent
misrepresentation.
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The indemnity and contribution obligations in this Article VI are
solely obligations of Iridium and no recourse may be had thereunder against any
member, director, officer, employee or agent of Iridium.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Effectiveness of Agreement. This Agreement shall
become effective only upon the first date on which the Company purchases Class
1 Interests from Iridium.
Section 8.02. Acknowledgment. The Company hereby acknowledges
pursuant to the 1996 Option Plan that shares of Class A Common Stock are
available for purposes of the 1996 Option Plan.
Section 8.03. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties; provided that this Agreement may not be assigned by the Company
without the written consent of Iridium.
Section 8.04. Notices. All notices and other communications provided
for in this Agreement shall be in writing, shall be in the English language and
shall be sufficiently given if made (i) by hand delivery, (ii) by telecopier,
or (iii) by reputable express courier service (charges prepaid), if to the
Company, at the following address:
Iridium World Communications Ltd.
c/o Iridium, LLC
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 000000
X.X.X.
Attention: General Counsel
Phone: (000) 000-0000
Telecopier: (000) 000-0000
or if to Iridium, at the following address:
Iridium, LLC
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
X.X.X.
Attention: General Counsel
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Phone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address as the Company or Iridium shall have furnished in
writing one to the other. Such notice shall be deemed to have been given when
actually received.
Section 8.05. Entire Agreement. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings among such parties with respect
to such subject matter.
Section 8.06. Governing Law; Severability. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE DOMESTIC LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF
LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE. If it shall be determined by a court of
competent jurisdiction that any provision or wording of this Agreement shall be
invalid or unenforceable under applicable law, such invalidity or
unenforceability shall not invalidate this entire Agreement. In that case,
this Agreement shall be construed so as to limit any term or provision so as to
make it enforceable or valid within the requirements of any applicable law,
and, in the event such term or provision cannot be so limited, this Agreement
shall be construed to omit such invalid or unenforceable provisions.
Section 8.07. Jurisdiction and Service of Process. Any suit, action
or proceeding against any party with respect to this Agreement may be brought
in a court of the United States sitting in the State of Delaware or, if
jurisdiction is lacking in such a court, in a court of record in the State of
Delaware, and each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection that it may have, whether now or in the future,
to the laying of venue in, or to the jurisdiction of, any and each of such
courts for the purpose of any such suit, action, proceeding or judgment and
further waives any claim that any such suit, action, proceeding or judgment has
been brought in an inconvenient forum, and the party hereby submits to such
jurisdiction. Each party hereto hereby agrees that service of all writs,
process and summonses in any such suit, action or proceeding brought in the
State of Delaware may be made upon The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or such alternate process agent in the
United States designated with respect to the party in a writing delivered to
the other party (the "Process Agent") and each of
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the parties hereto hereby irrevocably appoints the Process Agent in its name,
place and stead to receive and forward such service of any and all such writs,
process and summonses and agrees that the failure of the Process Agent to give
any notice of any such service of process to such party shall not impair or
affect the validity of such service or of any judgment based thereon. If the
Process Agent is no longer able to so act for any reason whatsoever, the party
agrees to appoint a substitute process agent, which substitute process agent
shall thereafter be deemed to be the Process Agent hereunder, and to give
notice of such appointment to the other party.
Section 8.08. Amendments to the Agreement. This Agreement may not be
changed or amended or the observance of any provisions waived without the
written consent of each of the Company and Iridium.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
IRIDIUM WORLD COMMUNICATIONS LTD.
By:
-----------------------------
Name:
Title:
IRIDIUM LLC
By:
-----------------------------
Name:
Title:
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