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EXHIBIT 10.4
Draft of May 23, 1997
1997 SUBSCRIPTION AGREEMENT
Dated as of June [ ], 1997
by and between
IRIDIUM WORLD COMMUNICATIONS LTD.
and
IRIDIUM LLC
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This 1997 SUBSCRIPTION AGREEMENT (this "Agreement") is dated as of
June [ ], 1997 and is by and between IRIDIUM WORLD COMMUNICATIONS LTD., a
company incorporated under the laws of Bermuda (the "Company"), and IRIDIUM LLC
("Iridium"), a limited liability company organized under the laws of the State
of Delaware.
WHEREAS, the Company intends to consummate an underwritten initial
public offering (the "Offering") of 10,000,000 shares of its Class A Common
Stock, par value $.01 per share (the "Class A Common Stock") (11,500,000 shares
if the Underwriters' over-allotment options are exercised in full) and to use
the proceeds of the Offering to purchase an equivalent number of Class 1
Membership Interests ("Class 1 Interests") in Iridium as described in the
registration statement on Form S-1 (File No. 333-23419) filed with the U.S.
Securities and Exchange Commission, as amended (the "Registration Statement").
WHEREAS, upon consummation of the Offering, Iridium intends to issue
and sell to the Company 10,000,000 Class 1 Interests (11,500,000 Class 1
Interests if the Underwriters' over-allotment options are exercised in full) at
a purchase price per Class 1 Interest equal to the per share public offering
price of the Class A Common Stock less the per share underwriting discount.
WHEREAS, Iridium owns all 1,200,000 currently outstanding shares of
Class A Common Stock (the "Outstanding Shares") and in connection with, and as
a condition to, the sale of the Class 1 Interests, Iridium intends to surrender
the Outstanding Shares to the Company and the Company intends to retire and
cancel the Outstanding Shares upon such surrender by Iridium.
NOW, THEREFORE, the parties hereto, intending to be bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Reference to Registration Statement. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Registration Statement.
Section 1.2. Certain Definitions. As used in this Agreement the
following terms have the following respective meanings:
"Agreement" means this 1997 Subscription Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Class 1 Interests" means the Class 1 Membership Interests of Iridium
LLC.
"Firm Interests" has the meaning assigned to the term in Section 2.1
of this Agreement.
"Firm Shares" means the shares of Class A Common Stock purchased by
the Underwriters pursuant to the Purchase Agreements without giving effect to
the exercise of over-allotment options.
"Iridium Bermuda" means the Company as such term is used in the LLC
Agreement referenced herein.
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"LLC Agreement" means the Limited Liability Company Agreement of
Iridium LLC dated as of July 29, 1996, as amended.
"Offering" means the initial public offering by the Company of its
Class A Common Stock as described in the Registration Statement.
"Option Interests" has the meaning assigned to the term in Section 2.2
of this Agreement.
"Option Shares" means the shares of Class A Common Stock purchased by
the Underwriters pursuant to the over-allotment options granted in the Purchase
Agreements.
"Registration Statement" means the Company's registration statement on
Form S-1 (File No. 333-23419) filed with the U.S. Securities and Exchange
Commission, as amended.
ARTICLE II
PURCHASE OF CLASS 1 INTERESTS
BY THE COMPANY
Section 2.1. Firm Interests. Subject to the terms and conditions set
forth herein, Iridium agrees to create, issue and sell 10,000,000 Class 1
Interests to the Company (the "Firm Interests") and the Company agrees to
purchase the Firm Interests at a price per Firm Interest equal to the per share
price paid to the Company by the Underwriters for the 10,000,000 Firm Shares of
Class A Common Stock purchased by the Underwriters pursuant to the Purchase
Agreements.
Section 2.2. Over-Allotment Interests. Subject to terms and
conditions set forth herein, Iridium agrees to create, issue and sell up to
1,500,000 Class 1 Interests to the Company (the "Option Interests") and the
Company agrees to purchase an aggregate number of Option Interests that is
equal to the number of Option Shares of Class A Common Stock purchased by the
Underwriters pursuant to the Purchase Agreements at a price per Option Interest
equal to the price paid by the Underwriters for the Option Shares of Class A
Common Stock purchased by the Underwriters pursuant to the Purchase Agreements.
ARTICLE III
DELIVERY AND PAYMENT FOR INTERESTS
Section 3.1. Delivery of and Payment for Firm Interests. Delivery of
certificates for the Firm Interests shall be made at the time and location of
the delivery of the Firm Shares under the Purchase Agreements against payment
of the purchase price therefor in immediately available funds.
Section 3.2. Delivery of and Payment for Option Interests. Delivery
of certificates for the Option Interests shall be made at the time and location
of the delivery of the Option Shares under the Purchase Agreements against
payment of the purchase price therefor in immediately available funds.
Section 3.3. Delivery and Cancellation of Outstanding Shares.
Iridium hereby agrees that in addition to its other obligations under this
Agreement, upon payment by the Company of the purchase price for the Firm
Shares pursuant to Section 3.1 above, Iridium shall surrender the Outstanding
Shares to the Company and shall relinquish any rights in or claims on the
Outstanding Shares. The
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Company hereby agrees that upon delivery of the Outstanding Shares by Iridium,
the Company shall retire and cancel such Outstanding Shares.
ARTICLE IV
ADMISSION OF THE COMPANY TO IRIDIUM LLC
Section 4.1. Admission of the Company. The Company wishes to be
admitted as a Class 1 Member in Iridium and agrees to be bound by all of the
applicable provisions of the LLC Agreement. Prior to the first issuance of any
Class 1 Interests hereunder, the Company will execute and deliver a counterpart
of the LLC Agreement in substantially the form set forth in Annex A hereto.
This Agreement constitutes the Company's written request that Iridium's
Members' Interest Register be amended to reflect the Company's admission as a
Member and Iridium agrees that its Members' Interest Register will be so
amended, and the Company will be admitted as a Member in Iridium, on the date
of the issuance of the Firm Interests hereunder.
Section 4.2. Rights of the Company. The Class 1 Interests issued to
the Company hereunder shall be entitled to all of the rights of Class 1
Interests under the LLC Agreement, including the rights of "Iridium Bermuda"
described thereunder.
ARTICLE V
EXPENSES OF THE OFFERING
Iridium shall promptly pay, or reimburse the Company for the payment
of, all expenses incurred by the Company in connection with the Offering and
the transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS OF THE PARTIES' OBLIGATIONS
Section 6.1. Firm Interests. The respective obligations of the
parties with respect to the Firm Interests are subject to the performance by
the Underwriters of their obligations to purchase the 10,000,000 Firm Shares
under the Purchase Agreements.
Section 6.2. Option Interests. The respective obligations of the
parties with respect to the Option Interests, if any, are subject to the
performance by the Underwriters of their obligations, if any, to purchase
Option Shares under the Purchase Agreements.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of Iridium. Iridium hereby
represents and warrants that it has duly and validly executed and delivered
this Agreement and that the Firm Interests and the Option Interests, if any,
when issued against payment therefore by the Company pursuant to Article III,
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will be duly and validly authorized and issued and fully-paid and
non-assessable, subject to the Company's waiver of limited liability pursuant
to Section 2.09 of the LLC Agreement.
Section 7.2 Representations and Warranties of the Company. The
Company hereby represents and warrants that it has duly and validly executed
and delivered this Agreement and will duly and validly execute the LLC
Agreement pursuant to Article IV.
ARTICLE VIII
INDEMNIFICATION AND CONTRIBUTION
Section 8.1. 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 8.2. 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
8.1, 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 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.
Section 8.3. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 8.1 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
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received, directly or indirectly, by Iridium on the one hand and the
indemnified party on the other hand, from (a) the sale of the Firm Shares and
the Option Shares, if any, and (b) the sale of the Firm Interests and the
Option Interests, if any, 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 8.3 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.
The indemnity and contribution obligations in this Article VIII are
solely obligations of Iridium and no recourse may be had thereunder against any
member, director, officer, employee or agent of Iridium.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. Governing Law; Severability. This Agreement is governed
by, and shall be construed and enforced in accordance with, the laws of the
State of New York without regard to principles of conflicts of laws. 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 9.2. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 9.3. 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 9.4. 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 9.5. 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:
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Iridium World Communications Ltd.
c/o Iridium, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇.▇.▇.
Attention: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or if to Iridium, at the following address:
Iridium, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇.▇.▇.
Attention: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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 9.6. 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, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
Section 9.7. 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 have hereunto signed their names in
the space provided below.
IRIDIUM WORLD COMMUNICATIONS LTD.
By:
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Name:
Title:
IRIDIUM LLC
By:
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Name:
Title:
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ANNEX A
TO 1997 SUBSCRIPTION AGREEMENT
FORM OF COUNTERPART TO LLC AGREEMENT
The undersigned agrees to be bound by the Limited Liability Company
Agreement of Iridium LLC, dated as of July 29, 1996, as amended, to which this
signature page is attached.
IN WITNESS WHEREOF, the undersigned has hereunto set its hand as of
this day of June, 1997.
MEMBER
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IRIDIUM WORLD COMMUNICATIONS LTD.
By:
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Name:
Title: