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EXHIBIT 10.3
Draft of May 23, 1997
MANAGEMENT SERVICES AGREEMENT
Dated as of June __, 1997
by and between
IRIDIUM WORLD COMMUNICATIONS LTD.
and
IRIDIUM LLC
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Draft of May 23,1997
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT is dated as of June __,
1997 and is made by and between IRIDIUM LLC, a Delaware limited liability
company ("Iridium" or the "Manager"), and IRIDIUM WORLD COMMUNICATIONS LTD., a
Bermuda company (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") and subject to the
Manager observing and complying with the Memorandum of Association and Bye-Laws
of the Company, 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 be conducted the ordinary and usual business and
affairs of the Company in accordance with and as limited by this
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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 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 reasonably
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
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defense thereof, Iridium shall not be liable to such indemnified party under
such section 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 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 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 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)
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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.
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. The Manager agrees that, 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
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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 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 or agents 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 Securities Act 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, 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.
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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 and furnish to the Company Board
as soon as practicable, and in any event within 45 days after the end of each
fiscal quarter, a report of the Company consisting 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.
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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. Notwithstanding any other
provision of this Management Agreement, 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(b) 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 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 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 Agreement or any rights of the Manager hereunder.
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5.2 Assignment. Neither the Company nor the Manager may
assign, transfer, convey or delegate in any manner, any of their respective
duties and obligations under this Management Agreement without the prior
written consent of the other Party hereto; provided that, the Manager shall
have no authority to provide such consent on behalf of the Company.
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 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.
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.
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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 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 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 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
cc: General Counsel
The Manager: Iridium LLC
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
cc: General Counsel
5.10 Captions. Article and 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 Management 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
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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 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 or she has
full authority to execute this Management Agreement on behalf of such entity
and the execution of this Management Agreement and entry into this transaction
by the undersigned has been duly authorized by such entity.
5.14 Entire Agreement. This Management 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; provided that, the
Manager shall have no authority to provide such consent on behalf of the
Company.
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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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