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Exhibit 10.3
FORM OF
MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT dated as of __________, 1997 between
IRIDIUM LLC, a Delaware limited liability company ("Iridium" or the "Manager"),
and IRIDIUM WORLD COMMUNICATIONS LTD., a Bermuda corporation (the "Company").
Iridium and the Company are sometimes referred to herein collectively as the
"Parties" and each individually as a "Party".
WHEREAS, Iridium was organized pursuant to a Limited Liability Company
Agreement dated as of July 29, 1996, as amended (the "LLC Agreement");
WHEREAS, Iridium is commercializing the IRIDIUM System, a wireless
communications system designed to provide global wireless telephone service;
WHEREAS, the Company has been established to serve as the entity
through which Iridium will seek to obtain access to the equity capital markets
and through which special financial transactions will be conducted; and
WHEREAS, the Parties hereto desire to enter into this Management
Services Agreement ("Management Agreement") pursuant to which Iridium shall
supervise and manage the day-to-day operations of the Company on the terms set
forth herein;
NOW THEREFORE in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties hereto agree as follows:
ARTICLE 1
GENERAL DUTIES OF MANAGER
1.1 General Duties of Manager. (a) From and after the date hereof
until the earlier of the date (the "Termination Date") (i) on which the parties
mutually agree that this Management Agreement shall terminate or (ii) specified
by Iridium in a Termination Notice (as defined below) pursuant to Section
1.1(b), the Manager shall, subject to the direction and oversight of the Board
of Directors of the Company (the "Company Board") supervise and manage the
day-to-day operations of the Company. The Manager shall implement or cause to
be implemented all policy decisions relating to the operations of the Company
approved by the Company Board and shall conduct or cause to
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be conducted the ordinary and usual business and affairs of the Company in
accordance with and as limited by this Management Agreement. The Manager shall
have the authority on behalf of the Company to take all actions and make all
decisions (including and in addition to those described in Sections 1.2 through
1.14) other than as provided in Article 3.
(b) Iridium shall have the right within 120 days after the
occurrence of an Iridium Bermuda Change of Control (as defined in the LLC
Agreement), to terminate this Management Agreement by giving written notice to
the Company (the "Termination Notice") stating the date on which the
termination of this Management Agreement shall become effective.
1.2 Treasury. The Manager shall administer all of the Company's
treasury functions including collection and disbursement of funds and
management of receivables and payables. The Company's funds shall not be
commingled with the Manager's funds.
1.3 Legal; Indemnification. (a) The Manager shall administer all of
the Company's legal affairs including any litigation by, against or involving
the Company.
(b) Iridium shall 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 United States Securities Act of 1933, as amended (the
"Securities Act") or otherwise, that directly or indirectly, arise out of or
are related to, the Company's participation in the management and business of
Iridium, including but not limited to capital raising activities conducted at
the request of Iridium, 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.
(c) Proceedings. Promptly after receipt by an indemnified party
of notice of the commencement of any
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action, suit or proceeding as to which a claim in respect thereof is to be made
against Iridium under Section 1.3(b) 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 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.
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 1.3 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 nature 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, with respect to the Company's participation in the management and
business of
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Iridium, including but not limited to capital raising activities conducted at
the request of Iridium, and (ii) the relative fault of Iridium on the one hard
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 1.3 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.
(e) To the extent that (i) the Company is required to pay or
reimburse any director, secretary or other officer of the Company, or any of
their heirs, executors or administrators (each, a "Company Indemnified Party"),
pursuant to the indemnification provided by Bye-Law 30 of the Company's
Bye-Laws (the "Company Indemnity") and (ii) such Company Indemnified Party is
not otherwise entitled to indemnification by, or contribution from, Iridium
pursuant to this Section 3.1 or the LLC Agreement, the Manager shall, on behalf
of the Company, promptly pay the amount due to such Company Indemnified Party
pursuant to the Company Indemnity. In addition, to the extent that (i) the
Company is required to conditionally advance funds to cover expenses incurred
by any Company Indemnified Party pursuant to the provisions of Bye-Law 30 of
the Company's Bye-Laws and (ii) such Company Indemnified Party is not otherwise
entitled to the advancement of such funds pursuant to the LLC Agreement, the
Manager shall, on behalf of the Company, promptly advance funds to the Company
Indemnified Party to cover such expenses upon receipt of an undertaking by or
on behalf of the Company Indemnified Party to repay such advanced funds to the
Manager if it shall ultimately be determined that such Company Indemnified
Party is not entitled to the Company Indemnity.
The indemnity and contribution obligations in this Section 1.3 are
solely obligations of Iridium and no recourse may be had thereunder against any
member, director, officer, employee or agent of Iridium.
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1.4 Accounting System. The Manager shall maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles consistently applied and a set of audit procedures that
are consistent with generally accepted auditing standards.
1.5 Books and Records of the Company. The Manager shall maintain the
books of account and other records of the Company including without limitation
all tax returns, financial statements, contracts and licenses of the Company at
all times at the Manager's principal executive offices or at such other place
or places approved by the Company Board. The Manager shall maintain the books
of account of the Company on an accrual basis in accordance with generally
accepted accounting principles consistently applied. To the extent required
under Bermuda law or the Company's Memorandum of Association or Bye-Laws, each
stockholder of the Company (a "Stockholder") shall have the right at all
reasonable times during normal business hours to examine the books of account
of the Company. Such right may be exercised through any agent or employee of a
Stockholder designated by it or by an independent public accountant designated
by such Stockholder.
1.6 Tax Returns and Elections; Payment of Tax Liabilities. The
Manager shall cause the Company's certified public accountants (the
"Accountants") to prepare the tax returns of the Company, and the Manager shall
use all reasonable efforts to cause the Accountants to prepare such tax returns
as soon as reasonably practicable after the end of each fiscal year of the
Company. The Manager shall use all reasonable efforts to cause such tax
returns to be filed on a timely basis and shall, promptly after the receipt
thereof from such Accountants, deposit such copies with the Company's permanent
records. The Manager shall make all elections required or permitted to be made
by the Company under applicable law, consistent with any instructions issued by
the Company Board. In the event that the Company is required to pay any tax or
similar governmental charge and the Company does not have sufficient funds
available to pay such tax or charge, the Manager shall pay to the appropriate
authority the amount of such tax or governmental charge (the "Tax Advance") on
behalf of the Company upon receipt of an undertaking by the Company to promptly
repay the Manager for the Tax Advance (in whole or in installments) immediately
upon the availability of funds for such purpose, provided that, in any fiscal
year, the Manager shall not be required to provide aggregate Tax Advances for
the payment of U.S. federal, state and local
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income tax liabilities of the Company in an amount greater than the amount of
the Minimum Dividend (as defined in the LLC Agreement) for such fiscal year
(without adjustment for any shortfall in Minimum Dividend payments for previous
years).
1.7 Administration of Borrowing Documentation. The Manager shall
administer the Company's obligations and responsibilities under any loan
documents and related security and other documents relating to borrowings of
the Company, including without limitation submitting certificates required of
the Company thereunder and administering the Company's compliance with all loan
covenants and obligations under such loan documents.
1.8 Insurance. The Manager shall implement the Company's insurance
program, including procuring and maintaining any and all insurance required to
be maintained by the Company pursuant to any agreement to which the Company is
a party. The Manager also shall be responsible for administering all claims
and making all collections on behalf of the Company under insurance policies
covering the Company. The Manager shall be named as an additional insured or a
named insured, as appropriate, under each of the insurance policies which
include the Company as a named or additional insured.
1.9 Licenses and Permits. The Manager shall cause the Company to
obtain, and the Manager shall monitor and maintain compliance with, all
permits, licenses and governmental approvals necessary or desirable for the
conduct of the Company's business. Where permits must be obtained, modified or
renewed by the Company, the Manager shall prepare any application, filing or
notice relating thereto, shall cause such materials to be submitted to, and
shall represent the Company in contacts with, the appropriate governmental
agency, and shall perform all ministerial or administrative acts necessary for
timely issuance and the continued effectiveness thereof.
1.10 Investor Relations. The Manager shall be responsible for all
matters relating to the relations between the Company and its Stockholders and
other investors, including but not limited to, promptly providing the notice of
an annual general meeting, or a special general meeting, of the Company as
required by the Company's Bye-Laws, upon receipt of written notice from the
Company Board of the scheduling of such meetings. The Manager shall appoint,
and oversee the performance of, the registrar and transfer agent for the
Company's common stock.
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1.11 Public Relations. The Manager shall be responsible for all
public and community relations matters of the Company.
1.12 Securities Law and Other Filings. The Manager shall be
responsible for making all filings required (a) under any applicable securities
laws, including without limitation the United States Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and (b) by any
securities exchange or market on which any of the Company's securities are
listed or traded.
1.13 Other. The Manager shall as promptly as practicable after
obtaining knowledge thereof inform the Company Board of any event, action or
condition that the Manager believes is reasonably likely to have a material
effect on the operations or financial condition of the Company. In addition,
the Manager shall provide any other assistance or services reasonably requested
by the Company in connection with the management of the Company.
1.14 Personnel; Payment of Outside Directors' Fees and Expenses. (a)
The Manager shall provide and make available as necessary all professional,
supervisory, managerial, administrative and other personnel as are necessary to
perform its obligations hereunder, which personnel may be employees of the
Manager and/or its affiliates. Such personnel shall be qualified and
experienced in the duties to which they are assigned.
(b) The Manager shall pay the directors of the Company who also serve
as directors of Iridium pursuant to Section 1.05(a) of the LLC Agreement an
annual fee in the amount authorized by the Board of Directors of Iridium from
time to time and shall reimburse such directors for any expenses incurred by
such directors in attending any meetings of the Company Board or any committee
thereof, or any meetings of the Board of Directors of Iridium or any committee
thereof.
1.15 Standards for Performance of Services. (a) The Manager shall
perform its obligations hereunder in a prudent and efficient manner.
(b) The Manager shall use all reasonable efforts to perform its
obligations hereunder in accordance with all applicable laws, regulations,
codes, permits, licenses and standards.
1.16 The Company Board's Right to Deliver Instructions. The Company,
by action of the Company Board,
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may from time to time deliver to the Manager written instructions with respect
to matters arising under this Management Agreement and the Manager shall follow
such instructions, provided that such instructions are consistent with the
terms and conditions of this Management Agreement.
1.17 Manager's Right to Request Instructions. At any time, the
Manager may, if it reasonably deems it necessary or appropriate, request
written instructions from the Company Board within a reasonable period prior to
the necessity for taking action with respect to any matter contemplated by this
Management Agreement, and may defer action thereon pending receipt of such
written instructions. Actions taken by the Manager, its officers, employees and
representatives in accordance with the written instructions of the Company
Board, or failure to act by such persons pending the receipt of such written
instructions, shall be deemed to be proper conduct within the scope of the
Manager's authority under this Management Agreement.
ARTICLE 2
REPORTS
2.1 Financial Statements; Periodic Reports. (a) The Manager shall
have prepared and shall furnish to the Company Board as soon as practicable,
but in any event within 90 days after the end of each fiscal year of the
Company, an audited consolidated balance sheet as at the end of such fiscal
year and audited statements of income and results of operations and cash flows
for such fiscal year (including notes thereto), setting forth in each case in
comparative form corresponding figures for the preceding fiscal year. Such
financial statements shall be accompanied by the report thereon of the
Accountants to the effect that such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior years (except as otherwise specified in such report).
The Manager shall use all reasonable efforts to conduct the business of the
Company so that such report of the Accountants will not contain any
qualifications as to the scope of the audit or with respect to the Company's
compliance with generally accepted accounting principles consistently applied,
except for changes in methods of accounting in which such Accountants concur.
(b) The Manager shall prepare as soon as practicable, and in any event
within 45 days after the end of each fiscal quarter, a report of the Company
consisting
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of an unaudited consolidated balance sheet as at the end of such quarter and an
unaudited statement of operations, setting forth in each case in comparative
form the corresponding figures for the preceding fiscal quarter. All such
reports shall be certified by the Manager to be correct and complete, to fairly
present in all material respects the consolidated financial condition of the
Company at the date shown and the results of its operations for the period then
ended and to have been prepared in accordance with generally accepted
accounting principles consistently applied except for year end adjustments.
The reports for each calendar quarter shall include a narrative discussion
prepared by the Manager describing the business and operations of the Company
during the preceding quarter.
ARTICLE 3
LIMITATIONS ON AUTHORITY
3.1 Interested Transactions. The Manager shall have no authority to
give any notice, to consent to the taking of any action under, or otherwise to
act on behalf of the Company with respect to, any matter under the LLC
Agreement, unless the Manager has received written instructions from the
Company Board or authorization from the Company Board to act on behalf of the
Company as to any specific matter or classes of matters.
3.2 Section 2.09(b) Actions. The Manager shall have no authority to
consent or approve on behalf of the Company any of the actions set forth in
Section 2.09 of the LLC Agreement.
3.3 Reserved Actions. The Manager shall have no authority to take
any actions on behalf of the Company which actions may only be taken by the
Company Board under Bermuda law or the Company's Memorandum of Association or
Bye-Laws.
ARTICLE 4
FEES AND CHARGES
The Manager shall perform the services to be performed hereunder free
of any charge to the Company and all of the costs and expenses associated with
the performance of all services hereunder shall be paid or reimbursed by the
Manager including, without limitation, the funds required to be paid or
advanced pursuant to Section 1.3, the fees and expenses of the Accountants, the
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funds required to be advanced pursuant to Section 1.6 (subject to the Company's
repayment obligation), the costs of the insurance referred to in Section 1.8,
the fees and costs of the filings referred to in Section 1.12 and the
directors' fees and expenses referred to in Section 1.14.
ARTICLE 5
MISCELLANEOUS
5.1 Term. This Agreement shall terminate on the Termination Date (as
defined in Section 1.1). No termination shall affect any rights of the Company
against the Manager in respect of any breach by the Manager of any provision of
this Management Services Agreement or any rights of the Manager hereunder.
5.2 Assignment. Neither the Company nor the Manager shall assign,
transfer, convey or delegate in any manner, any of their respective duties and
obligations under this Management Services Agreement.
5.3 Non-Recourse. Each representation, warranty, undertaking and
agreement made in this Management Agreement on the part of either Party hereto
was not made or intended to be made as a personal or individual representation,
undertaking or agreement on the part of any past, present, or future general or
limited partner of either Party or any such Party's incorporator, stockholder,
director, officer, employee or agent or of any such person's incorporators,
stockholders, directors, officers, employees, agents or partners, and no
personal or individual liability or responsibility is assumed by, nor shall any
recourse at any time be asserted or enforced against, any past, present, or
future general or limited partner of either Party or any such partner's
incorporator, stockholder, director, officer, employee or agent or against any
such person's incorporators, stockholders, directors, officers, employees,
agents or partners, all of which recourse (whether in common law, in equity, by
statute or otherwise) is hereby forever waived and released. It is intended by
the Parties hereto that the Manager shall be solely responsible for its
performance of its obligations under this Management Services Agreement and the
Company expressly waives any obligation it may have now or in the future
against any individual officer, employee or agent of the Manager who performs
or omits to perform any actions hereunder on behalf of the Manager.
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5.4 Major Decisions. The Manager shall not be obligated to perform
its duties or obligations hereunder to the extent but only to the extent the
performance of such duties or obligations is subject to the authorization of
the Company Board pursuant to Article 3 of this Management Services Agreement
and such authorization has not been obtained.
5.5 Independent Contractor. The Manager shall be an independent
contractor with respect to the performance of its obligations hereunder. In no
event shall the relationship between the Company and the Manager be construed
as a partnership or joint venture for any purpose. Neither the Manager nor its
employees or other agents employed by the Manager in connection with the
performance of its obligations hereunder shall be deemed to be agents of the
Company, except to the extent of the agency created hereunder pursuant to the
authority granted to the Manager under Article 1.
5.6 Counterparts. This Management Agreement may be executed in
several counterparts and all such counterparts shall constitute one Agreement,
binding on the Parties hereto, notwithstanding that all of the parties are not
signatory to the original or the same counterpart.
5.7 Binding on Successors. This Management Agreement shall be
binding upon and shall inure to the benefit of the successors and permitted
assigns of the Parties.
5.8 Severability. In the event any one or more of the provisions
contained in this Management Agreement should be rendered invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid, legal and
enforceable provisions, the economic effect of which come as close as possible
to that of such invalid, illegal or unenforceable provisions.
5.9 Notices. All notices under this Management Services Agreement
shall be in writing and shall be given to the person entitled thereto, by
personal service, or by certified or registered mail, return receipt requested,
posted to the address for that person set forth below or at any other address
that he specifies in writing. Any such notice shall be deemed given on the
date delivered, when so
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given by personal service, or on the fourth day after the date mailed, when so
given by certified or registered mail.
The Company: c/o Iridium LLC
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX
cc: General Counsel
The Manager: Iridium LLC
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX
cc: General Counsel
5.10 Captions. Section titles or captions contained in this
Management Agreement are inserted only as a matter of convenience and for
reference. The titles and captions in no way define, limit, extend or describe
the scope of this Management Agreement nor the intent of any provision hereof.
5.11 Choice of Law. This Management Agreement shall be construed
under the laws of the State of New York as if this Management Agreement were
executed in and to be performed entirely within the State of New York.
5.12 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 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
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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.
5.13 Authority. Each individual executing this Management Agreement
on behalf of an entity represents and warrants that he has full authority to
execute this Management Agreement on behalf of such entity and the execution of
this Management Services Agreement and entry into this transaction by the
undersigned has been duly authorized by such entity.
5.14 Entire Agreement. This Management Services Agreement
constitutes the entire agreement between the Parties with respect to the
subject matter herein contained and supersedes all agreements, representations,
warranties, statements, provisions, and undertakings, whether oral or written,
with respect to the subject matter hereof.
5.15 Amendments. This Management Agreement may be amended or
modified only with the written consent of both Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Management
Agreement as of the date first above written.
IRIDIUM LLC
By:
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IRIDIUM WORLD COMMUNICATIONS LTD.
By:
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