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EXHIBIT 10.46
AGREEMENT REGARDING GUARANTEE
This Agreement Regarding Guarantee (this "Agreement") is dated
as of , 1998, between Kyocera Corporation, a
corporation, ("Kyocera"), Iridium Operating LLC, a Delaware limited liability
company ("Iridium") and Iridium LLC, a Delaware limited liability company and
the parent of Iridium ("Parent").
WHEREAS, Iridium and Kyocera have entered into the Standby
Purchase Agreement dated as of , 1998 (the "Purchase Agreement").
WHEREAS, pursuant to the Purchase Agreement Iridium may become
obligated to purchase hand-held phones or belt-worn pagers to be used in the
IRIDIUM System from Kyocera.
WHEREAS, in order to fund any such obligations under the
Purchase Agreement to Kyocera, Iridium will be required to borrow funds from
one or more lenders (the "Borrowings").
WHEREAS, Kyocera wishes to assist Iridium in obtaining
Borrowings, which Kyocera acknowledges will be to Kyocera's benefit, by
guaranteeing the obligations of Iridium relating to such Borrowings.
WHEREAS, Parent will benefit from the foregoing arrangements.
NOW THEREFORE, the parties agree as follows:
1. Kyocera Agreement to Guarantee. Kyocera hereby
agrees to provide a guarantee of Iridium's obligations relating to any
Borrowings (the "Guarantee") in form and substance reasonably satisfactory to
any lenders ("Lenders", which term shall include any agents or representatives
thereof), under any credit agreement, note, or other loan document or documents
(the "Credit Documents") under which Borrowings are made.
2. Reimbursement Obligation.
(a) Iridium Default. Other than as set forth under
Section 2(b) below, to the extent that any Lenders demand that Kyocera pay, and
Kyocera does pay, any amount pursuant to the Guarantee (a "Guarantee Payment"),
Iridium shall, promptly upon receipt from Kyocera of a written demand for
reimbursement, reimburse Kyocera for such
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Guarantee Payment, plus interest accruing at a rate equal to that which would
be in effect under any Credit Documents pursuant to which the relevant
Borrowing was made. The obligations under this Section 2(a) shall be without
duplication for obligations under the Credit Documents pursuant to which the
relevant Borrowing was made.
(b) Kyocera Default. If a Guarantee Payment is made in
respect of a Borrowing that has been accelerated or otherwise become due as a
result of a default under the Credit Documents arising out of any action, event
or failure to take action by or with respect to Kyocera (a "Kyocera-Based
Default"), then (i) Kyocera shall assume and become subject to the obligations
of the Lenders under the Credit Documents vis-a-vis Iridium (including, without
limitation, any remaining obligation to make loans in the aggregate principal
amount of such Lenders' commitments under such Credit Documents), (ii) Kyocera
shall assume and become entitled to the benefits of the rights of the Lenders
under such Credit Documents vis-a-vis Iridium (including, without limitation,
the right to receive payments in respect of loans made under such Credit
Documents, upon acceleration or otherwise), but not including any provisions
relating to a Guarantee or any right or remedy arising as a result of the
occurrence of a Kyocera-Based Default, (iii) Iridium shall become obligated to
reimburse Kyocera for such Guarantee Payment and to repay any additional
amounts for which Iridium may become indebted to Kyocera pursuant to clause
(ii) above on the terms and conditions contained in such Credit Documents as
such Credit Documents are modified by clause (ii) above, and (iv) Iridium shall
continue to be subject to the terms and conditions of such Credit Documents
(including, without limitation, the covenants contained therein), as such
Credit Documents are modified by clause (ii) above, it being expressly
understood that Kyocera shall in such circumstances have the right to
accelerate payments under and otherwise exercise its rights under any such
Credit Documents to the extent set forth therein as if it were a Lender
thereunder to the extent that such right to accelerate or other rights arise
from some event or circumstance, other than a Kyocera-Based Default or a
Guarantee.
(c) Costs and Expenses. Iridium further agrees to
reimburse Kyocera for all reasonable out-of-pocket costs and expenses
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with any enforcement of Iridium's obligations under
Section 2(a) (including, without limitation, any such fees and expenses
incurred in connection with any bankruptcy proceedings).
(d) Subordination. The rights of Kyocera under this
Section 2 shall be subordinated in right of payment and collection to the
rights of the Lenders under the Credit Documents.
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3. (a) High Yield Equivalent Compensation. During any
period in which Borrowings are outstanding, (i) Iridium will pay Kyocera cash
compensation ("High Yield Equivalent Compensation") for the Guarantee, in an
amount equal to (x) the average daily principal amount of Borrowings
outstanding during any period during which Borrowings are outstanding
multiplied by the excess, if any, of (A) the weighted average interest rate
applicable to the Series A and Series B Notes of Iridium over (B) the average
daily interest rate actually charged by the Lenders under the Credit Documents
for such period, and (ii) Parent will issue to Kyocera warrants to purchase
Class 1 Interests of Parent (such warrants to be on terms comparable to those
warrants issued pursuant to Section 2(e) of the Amended and Restated Agreement
Regarding Guarantee between Parent and Motorola, Inc., dated July 11, 1997
("Motorola Agreement")) in an amount equal to the average daily principal
amount of Borrowings outstanding during such period multiplied by the daily
equivalent of the warrant compensation payable to holders of the Series A Notes
of Iridium with respect to such amount (calculated on a pro rata daily basis
from the date of the issuance of such Series A Notes to the stated maturity
thereof); in each case (i) and (ii) multiplied by the number of days the
Borrowings are outstanding. High Yield Equivalent Compensation shall be paid
semi-annually in arrears within 45 days after the end of each semi-annual
period.
(b) Warrant Compensation. At Iridium's option in lieu of
any compensation under Section 3(a) above, Kyocera will be compensated for
providing the Guarantee with warrants (the "Warrants") issued by Parent to
purchase Class 1 Interests in Parent ("Shares"). The Warrants shall (i) be in
substantially the form of the warrants issuable pursuant to Section 2(a) of the
Motorola Agreement, (ii) provide for a ten year term and an exercise price of
$0.00013 per Class 1 Interest (subject to adjustment as contemplated in the
Motorola Agreement); (iii) become exercisable on and (iv)
provide for issuance of Shares that (A) with respect to Shares issued for
Warrants received on or prior to the Commercial Activation Date, may be sold
without transfer restrictions (other than transfer restrictions imposed by the
Parent's Limited Liability Company Agreement, the Interest Exchange Agreement
and applicable securities law ("Mandatory Restrictions") at any time after the
fifth anniversary of the exercise of the Warrants and (B) with respect to
Shares issued for Warrants received after the Commercial Activation Date, may
be sold without transfer restrictions (other Mandatory Restrictions) at any
time after the exercise of the Warrants. In addition, in the event that
Kyocera earns Warrants with respect to periods beginning after
, Iridium shall compensate Kyocera with Shares issued by Parent directly to
Motorola in the amounts described below in lieu of Warrants. On the 45th day
following the end of each calendar quarter during which any Borrowings were
outstanding at any time, Parent shall issue a certificate to Kyocera evidencing
the Warrants or Shares earned by Kyocera in respect of the total of such
Borrowings outstanding in such quarter.
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(c) Calculation of Warrant Compensation. Kyocera shall
earn Warrants or Shares based on the amount and duration of Borrowings. The
number of Warrants or Shares shall be earned according to the following
sentence, pro rated both (A) for the actual principal amount of Borrowings
outstanding during each relevant period and (B) for the number of days such
Borrowings were outstanding during such period. The maximum amount of Warrants
or Shares issuable for each full $100 million of Borrowings, assuming such
Borrowings were outstanding during the entire relevant period, shall be 412,500
per year.
For example, if there is $50,000,000 of Borrowings outstanding for a period of
one year, Kyocera will have earned Warrants relating to 6,187,500 Shares
($50,000,000 / 100,000,000 = .5; .5* 412,500 = 206,250).
4. Iridium Covenants. Iridium covenants that:
(a) any representations and warranties of Iridium set
forth in the Credit Documents will be true and
correct in all material respects on the date given;
(b) Iridium will use the proceeds of any Borrowings made
under any Credit Documents solely (i) to make
payments to Kyocera at the times and in the amounts
required pursuant to the Purchase Agreement and (ii)
to pay fees and expenses payable to the Lenders in
connection with the Credit Documents.
(c) copies of any and all material information, notices
and correspondence provided by or on behalf of
Iridium to any Lender under any Credit Documents
shall be promptly sent to Kyocera.
5. Iridium Representation and Warranties. Iridium
represents and warrants that this Agreement (I) has been duly executed and
delivered by Iridium and this constitutes a valid and binding obligation of
Iridium, enforceable in accordance with its terms, subject only to various
laws, such as bankruptcy law, which may effect its enforceability; and (II) does
not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon
Iridium's assets pursuant to, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, (v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or other action by
or notice or declaration to, or filing with, any court or administrative or
governmental body or agency pursuant to, the charter, limited liability company
agreement
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or bylaws of Iridium, or any law, statute, rule or regulation to which Iridium
is subject, or any agreement, instrument, order, judgment or decree to which
Iridium is subject.
6. Kyocera Representation and Warranties. Kyocera
represents and warrants that this Agreement (I) has been duly executed and
delivered by Kyocera and this constitutes a valid and binding obligation of
Kyocera, enforceable in accordance with its terms, subject to bankruptcy
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles; and (II) does not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon Kyocera's assets pursuant to, (iv) give any third
party the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, the
charter, limited liability company agreement or bylaws of Kyocera, or any law,
statute, rule or regulation to which Kyocera is subject, or any agreement,
instrument, order, judgment or decree to which Kyocera is subject.
7. Notices under this Agreement. All notices, requests,
demands, claims, and other communications hereunder will be in writing. Any
notice, request, demand, claim or other communication hereunder shall be deemed
duly given (i) when delivered, if personally delivered, (ii) when receipt is
electronically confirmed, if faxed (with hard copy to follow via first class
mail, postage prepaid) or (iii) one day after deposit with a reputable
overnight courier, in each case addressed to the intended recipient as set
forth below:
If to Iridium:
Iridium Operating LLC
1575 Eye Street, NW
Washington, D.C. 20005
Attention: Vice President and Chief Financial Officer and
Vice President - General Counsel
Telecopy #: (202) 842-0006
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If to Parent:
Iridium LLC
1575 Eye Street, NW
Washington, D.C. 20005
Attention: Vice President and Chief Financial Officer and
Vice President - General Counsel
Telecopy #: (202) 842-0006
If to Kyocera:
Kyocera Corporation
Address:
Attention: ______________
Telecopy #: _____________
8. Miscellaneous. This Agreement (a) is made under and
shall be governed by the laws of the State of New York without regard to
principles of conflict of laws, (b) is intended for the benefit of the parties
hereto and is not intended to benefit any other person and no person other than
the parties hereto may rely upon the provisions hereof, (c) may be executed in
counterparts, each of which taken together shall constitute one and the same
instrument, and (d) may be amended or waived only if such amendment or waiver
is in writing and signed by the party against whom it is sought to be enforced.
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IN WITNESS WHEREOF, the parties have entered into this
Agreement Regarding Guarantee in each case as of the date first above written.
IRIDIUM OPERATING LLC
By:____________________________
Name:
Title:
IRIDIUM LLC
By:____________________________
Name:
Title:
KYOCERA CORPORATION
By:____________________________
Name:
Title: