25.26. SHAREHOLDER LAWSUITS

The benefit to Motorola, potentially at the expense of Iridium and its investors, did not go unnoticed. At least 20 investor groups filed suit against Motorola and Iridium, citing:

• Motorola milked Iridium and used the partners' money to finance its own foray into satellite communication technology.

• By using Iridium, Motorola ensured that its reputation would not be tarnished if the project failed.

• Most of the money raised through the IPOs went to Motorola for designing most of the satellite and ground-station hardware and software.

• Iridium used the proceeds of its $1.45 billion in bonds, with interest rates from 10.875 to 14 percent, mainly to pay Motorola for satellites.

• Defendants falsely reported achievable subscriber numbers and revenue figures.

• Defendants failed to disclose the seriousness of technical issues.

• Defendants failed to disclose delays in handset deliveries.

• Defendants violated covenants between itself and its lenders.

• Defendants delayed disclosure of information, provided misleading information, and artificially inflated Iridium's stock price.

• Defendants took advantage of the artificially inflated price to sell significant amounts of their own holdings for millions of dollars in personal profit.