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EXHIBIT 1
AGREEMENT
AGREEMENT dated as of September 29, 1997, among Teligent, L.L.C., a
Delaware limited liability company (together with any corporation resulting
from, or which is the successor to Teligent, L.L.C. upon, the conversion of
Teligent, L.L.C. to a corporation, the "Company"), Digital Services Corporation,
a Virginia corporation and a Member of the Company ("DSC"), Telcom-DTS
Investors, L.L.C., a Delaware limited liability company and an Affiliate of DSC
("Telcom"), the members of Telcom, all of whom are listed on Schedule I hereto
(collectively, the "Telcom Members"), Microwave Services, Inc., a Delaware
corporation and a Member of the Company ("MSI"), and The Associated Group, Inc.,
a Delaware corporation and the owner of all of the outstanding capital stock of
MSI ("AGI").
The Company has substantially negotiated a Securities Purchase
Agreement to be entered into by the Company, DSC and MSI with Nippon Telegraph
and Telephone Corporation (the "Investor"), providing for the purchase by the
Investor of a Member Interest (the "Securities Purchase Agreement"), and for the
execution and delivery by MSI, DSC and the Investor at the First Closing under
the Securities Purchase Agreement (the "First Closing") of an Amended and
Restated Limited Liability Company Agreement of the Company (the "Amended LLC
Agreement").
In connection with entering into the Securities Purchase Agreement and
the Amended LLC Agreement and the consummation of the transactions contemplated
thereby, the parties desire to provide for certain rights and obligations of
DSC, Telcom, MSI and AGI relating to their ownership interests in the Company.
In consideration of the foregoing, and the agreements set forth herein,
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Registration Rights. The Company agrees that DSC will have the
registration rights set forth in this Section 1 with respect to equity interests
or securities of the Company held by DSC at the time of consummation of the
Company's initial public offering of equity securities ("Registrable
Securities").
(a) "Piggyback" Registration Rights. (i) After the consummation by
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the Company of an initial public offering of equity securities (the "IPO"), if
the Company at any time proposes to register under the Securities Act of 1933,
as amended (the "Securities Act") (other than a registration on Form S-4 or S-8
or any successor or similar forms thereto and other than a registration pursuant
to paragraph 1(b) below), whether or not for sale for its own account
(including, without limitation, pursuant to the exercise by any other person or
entity of any registration rights granted by the Company), on a form and in a
manner that would permit registration of Registrable Securities for sale to the
public under the Securities Act, it will give written notice to DSC of its
intention to do so, describing such securities and specifying the form and
manner and the other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an underwritten offering of equity securities and, if so, the
identity of the managing underwriter and whether such offering will be pursuant
to a "best efforts" or "firm commitment" underwriting and (y) the anticipated
price range at which such equity securities are reasonably expected to be sold
to the public). Upon the written request of DSC delivered to the Company within
15 calendar days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by DSC and the
intended method of disposition thereof), the Company will use reasonable best
efforts to effect the registration under the Securities Act of the Registrable
Securities that the Company has been so requested to register, subject to the
further provisions of this agreement;
(ii) If a registration pursuant to this Section 1 involves an
underwritten offering and the managing underwriter advises the Company that, in
its opinion, the number of Registrable Securities proposed to be included in
such registration should be limited due to market conditions, then the Company
may exclude Registrable Securities requested to be included pursuant to Section
1(a) pro rata, based on the respective numbers of Registrable Securities as to
which registration has been so requested by each holder of Registrable
Securities.
(iii) In connection with any underwritten offering with
respect to which holders of Registrable Securities shall have requested
registration pursuant to this Section 1, the Company shall have the right to
select the managing underwriter with respect to the offering.
(b) Demand Registration Rights. (i) In addition to the registration
rights afforded by Section 1(a) above, at any time commencing six months after
the closing of the IPO (the "Demand Date"), DSC shall be entitled to demand in
writing that the Company effect a registration under the Securities Act and
under such state securities laws as DSC may reasonably request (provided that
the Company shall not be required to
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consent to general service of process in any jurisdiction where it is not then
so subject) in respect of all or part of the Registrable Securities held by DSC,
provided that (A) such demand registration right shall apply only if the amount
of Registrable Securities to be registered (1) constitutes at least 20% of the
amount of Registrable Securities owned by DSC or (2) has an anticipated
aggregate offering price (before underwriters' fees, commissions and discounts)
of at least $20,000,000, (B) the Company shall not be obligated to use its
reasonable best efforts to cause to become effective a registration statement
pursuant to this Section 1(b) until a period shall have elapsed from the
effective date of the most recent previous registration statement under the
Securities Act with respect to a public offering of equity securities of the
Company (a "Prior Public Offering") equal to the greater of (1) 120 days and (2)
the shortest period of any lockup of shareholders of the Company required by the
lead managing underwriter of such Prior Public Offering (the "Holdback Period")
and (C) if, while a registration request is pending pursuant to this Section
1(b), the Board of Directors of the Company makes a good faith determination
that the filing or effectiveness of a registration statement would require the
public disclosure of material information, the disclosure of which would
adversely affect the Company, the Company shall not be required to effect a
registration pursuant to this Section 1(b) until such material information is
disclosed to the public or ceases to be material; provided, further, however,
that the foregoing delay shall in no event exceed 120 days. Notwithstanding the
foregoing provisions of Section 1(b), the Company shall not be obligated to
effect more than three registrations pursuant to this Section 1(b)(i).
(ii) At any time after the Demand Date, DSC shall be entitled to
demand in writing that the Company effect a registration under the Securities
Act of all or part of its Registrable Securities on Form S-3 or any similar
short-form ("Short-Form") registration statement ("Short-Form Registrations"),
if available, specifying in the request the number of Registrable Securities to
be registered by DSC and the intended method of distribution thereof (such
notice is hereinafter referred to as an "S-3 Holder Request"); provided, that
the Company shall be obligated to effect a registration of Registrable
Securities pursuant to this Section 1(b)(ii) only if the anticipated aggregated
offering price for such Registrable Securities is in excess of $10,000,000,
provided, further, that the Company shall not be obligated to file and use its
reasonable best efforts to cause to become effective a registration statement
pursuant to this Section 1(b) until a period equal to the Holdback Period shall
have elapsed from the effective date of the Prior Public Offering. The holders
of Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations. After the Company has become subject to the reporting
requirements of the Securities Exchange Act of 1934, the Company will use
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its reasonable best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities.
(iii) If, in connection with any underwritten
offering pursuant to this Section 1(b), the managing underwriter thereof advises
the Company in writing that in its opinion the number of securities (including,
for purposes of this Section 1(b), securities of the Company which the Company
has proposed to include in such offering) proposed to be included in such
offering should be limited due to market conditions, the Company will promptly
so advise all holders seeking to participate in such offering, and securities
shall be excluded from such offering in the following order until such
limitation has been met: (A) securities requested to be included in such
offering by holders other than DSC, if any, shall be excluded until all such
other securities shall be so excluded, (B) securities that the Company has
elected to include in such offering, if any, shall be excluded until all such
securities have been excluded, and, (C) thereafter, any Registrable Securities
requested to be included in such offering shall be excluded pro rata, based on
the respective number of Registrable Securities as to which registration has
been so requested by each holder thereof.
(iv) If a requested registration pursuant to this
Section 1(b) involves an underwritten offering, the holders of a majority of
Registrable Securities included in such registration shall have the right, with
the approval of the Company (which approval shall not be unreasonably withheld),
to select the managing underwriter for such offering.
(c) [Intentionally Omitted]
(d) Registration Procedures.
(i) If and whenever the Company is required to use its reasonable
best efforts to effect or cause the registration of any Registrable Securities
under the Securities Act as provided in Section 1(a) or 1(b), the Company will,
as expeditiously as possible:
(A) Prepare and promptly file with the
Securities and Exchange Commission (the "Commission") a registration statement
with respect to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become and remain effective;
(B) Prepare and file with the Commission
such amendments (including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period as may be
requested by holders desiring to register their Registrable Securities for sale
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not exceeding 90 days and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Holder or Holders thereof set forth in such
registration statement.
(C) Furnish to each holder of
Registrable Securities covered by the registration statement and to each
underwriter, if any, of such Registrable Securities, such number of copies of a
prospectus and preliminary prospectus for delivery in conformity with the
requirements of the Securities Act, and such other documents, as such Person may
reasonably request, in order to facilitate the public sale or other disposition
of the Registrable Securities.
(D) Use its reasonable best efforts to
register or qualify such Registrable Securities covered by such registration
Statement under such other securities or blue sky laws of such jurisdictions as
each holder thereof shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such holder to
consummate the disposition of the Registrable Securities owned by such holder
in such jurisdictions, except that the Company shall not for any such purpose be
required (A) to qualify to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this Section 1(d)(i)(D)), it is
not then so qualified, or (B) to subject itself to taxation in any such
jurisdiction, or (C) to take any action which would subject it to general or
unlimited service of process in any such jurisdiction where it is not then so
subject.
(E) Use its reasonable best efforts to
cause such Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the holder or holders thereof to consummate the
disposition of such Registrable Securities.
(F) Immediately notify each holder of
Registrable Securities covered by such registration statement, at any time when
a prospectus thereto is required to be delivered under the Securities Act within
the appropriate period mentioned in Section 1(d)(i)(B), if the Company becomes
aware that the prospectus included in such registration statement, as ten in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and, at
the request of any such holder, deliver reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such
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Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(G) Otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders, in each case as soon as
practicable, but not later than 45 calendar days after the close of the period
covered thereby (90 calendar days in case the period covered corresponds to a
fiscal year of the Company), an earnings statement of the Company which will
satisfy the provisions of Section 11(a) of the Securities Act.
(H) Use its reasonable best efforts in
connection with the underwriters of list such Registrable Securities on each
securities exchange as they may reasonably designate.
(I) In the event the offering is an
underwritten offering, use its reasonable best efforts to obtain a "cold
comfort" letter from the independent public accountants for the Company in
customary form and covering such matters of the type customarily covered by such
letters.
(J) Execute and deliver all instruments
and documents (including in an underwritten offering an underwriting agreement
in customary form) and taken such other actions and obtain such certificates and
opinions as are customary in an underwritten public offering.
(ii) Each holder of Registrable Securities will, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 1(d)(i)(F), forthwith discontinue disposition of the Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 1(d)(i)(F).
(iii) If a registration pursuant hereto involves an underwritten
offering, the Company agrees, if so required by the managing underwriter of such
offering, not to effect any public sale or distribution of any of its equity
securities or securities convertible into or exchangeable or exercisable for any
of such equity securities during a period of up to 180 calendar days after the
effective date of such registration, except for securities sold in such
underwritten offering or except in connection with an option plan, purchase
plan, savings or similar plan, or an acquisition, merger or exchange offer.
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(iv) If a registration pursuant hereto involves an underwritten
offering, each holder of Registrable Securities, whether or not such holder's
Registrable Securities are included in such registration, will, if and to the
extent request by the managing underwriter in such offering, enter into an
agreement not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities act (but excluding those Registrable
Securities sold n such offering), of any of the Company's excluding those
Registrable Securities sold in such offering), of any of the Company's equity
securities owned by such holder or securities, without the consent of such
managing underwriter, during a period commencing on the effective date of such
registration and ending a number of calendar days thereafter not exceeding 180
days as such managing underwriter shall reasonably determine is required to
effect a successful offering; provided such agreement is substantially identical
in form and substance to other "lock-up" agreements of the Company's other
stockholders who execute such agreements in connection with such offering.
(e) Indemnification.
(i) In the event of any registration of any securities of the Company
under the Securities Act pursuant hereto, the Company will, and it hereby agreed
to, indemnify and hold harmless, to the extent permitted by law, each holder of
any Registrable Securities covered by such registration statement, its directors
and officers or general and limited partners, each other Person who participates
as an underwriter in the offering or sale of such securities and each other
person, if any, who controls such holder or any such underwriter within the
meaning of the Securities Act, as follows:
(A) against any and all loss, liability, claim, damage and expense
whatsoever arising out of or based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement (or any
amendment or supplement thereto), including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus or prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein not
misleading;
(B) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
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omission, if such settlement is effected with the written consent of the
Company; and
(C) against any and all expense reasonably incurred by them in
connection with investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, to the extent that any such expense is not paid under subparagraph (A)
or (B) above;
provided, however, that this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such holder, underwriter or control person expressly for use in the preparation
of any registration statement (or any amendment or supplement thereto) and
provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
or to any other Person, if any , who controls such underwriter with the meaning
of the Securities or to any other Person, if any, who controls such underwriter
with the meaning of the Securities Act, in any such case to the extent that such
loss, liability, claim, damage or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in the final prospectus.
(ii) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance
herewith that the Company shall have received an undertaking reasonably
satisfactory to it from the prospective seller of such Registrable Securities to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 1(e)(i) the Company, each director of the Company, each officer
of the Company and each other Person, if any, who controls the Company within
the meaning of the Securities Act with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such holder specifically stating
that it is for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement. Such
indemnity shall
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remain in full force and effect regardless of any investigation made by or on
behalf of the Company or such director, officer or controlling Person and shall
survive the transfer of such securities by such holder. In that event, the
obligations of the Company and such holders pursuant to this Section 1(e) are to
be several and not joint; provided, however, that with respect to each claim
pursuant to this Section 1(e)(ii), each such holder's liability under this
Section 1(e)(ii) shall be limited to an amount equal to the net proceeds (after
deducting the underwriting discount and expenses) received by such holder from
the sale of such Registrable Securities by such holder.
(iii) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a claim
referred to in this Section 1(e), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 1(e), except to the extent (not including any such notice of an
underwriter) that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim (in which case the indemnifying party shall not be liable for the fees and
expenses of more than one firm of counsel for a majority of the sellers of
Registrable Securities or more than one firm of counsel for the underwriters in
connection with any one action or separate but similar or related actions), the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that it may wish with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof. No
indemnified party shall consent to the entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
indemnifying party and for which an indemnifying party may have indemnification
liability hereunder with the consent of such indemnifying party.
(iv) The Company and each seller of Registrable Securities shall
provide for the foregoing indemnity (with appropriate modifications) in any
underwriting agreement with respect to any required registration or other
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qualification of securities under any federal or state law or regulation of any
governmental authority.
(f) Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by Section
1(e) is for any reason not available, the parties required to indemnify by the
terms thereof shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, any seller of Registrable Securities and one or more of
the underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts which the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each), the parties relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement of omission and any other equitable considerations
appropriate under the circumstances. The Company and each Seller of Registrable
Securities agree with each other that no seller of Registrable Securities shall
be required to contribute any amount in excess of the amount such seller would
have been required to pay to an indemnified party if the indemnity under Section
1(e)(ii) were available. The Company and each such seller agree with each other
and the underwriters of the Registrable Securities, if requested by such
underwriters, that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the underwriters
were treated as one entity for such purpose) or for the underwriters' portion of
such contribution to exceed the percentage that the underwriting discount bears
to the initial public offering price of the Registrable Securities. For purposes
of this Section 1(f), each Person, if any, who controls an underwriter within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such underwriter, and each director and officer of the Company
who signed the registration statement, and each Person, if any, who controls the
Company or a seller of Registrable Securities within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as the Company
or a seller of Registrable Securities, as the case may be.
(g) Expenses. The Company shall bear all registration expenses
(exclusive of underwriting fees, discounts and commissions) in connection with
the registrations effected by it pursuant to Section 1(b) and such registration
expenses incurred in connection with up to three fully completed registrations
of Registrable Securities pursuant to Section 1(a).
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(h) Transfer of Registration Rights. DSC may assign its rights under
this Section 1 to any person or entity to whom or which DSC sells, transfers or
assigns not less than 20% of the Registrable Securities; provided that such
person or entity agrees in writing with the Company to be bound by this
Agreement to the same extent as DSC was bound at the time of such sale, transfer
or assignment.
(i) Cessation of Registrable Security Status. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of under such registration statement, (ii) such securities
shall have been transferred pursuant to Rule 144 under the Securities Act, (iii)
such securities shall have been otherwise transferred or disposed of, and new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company, and subsequent transfer or disposition of
such securities shall not require their registration or qualification under the
Securities Act or any similar state law then in force, or (iv) such securities
shall have ceased to be outstanding.
2. Change in Control Covenants.
(a) Pre-IPO. MSI covenants and agrees with DSC that if, prior to an
IPO, there is a "Change in Control" of MSI or AGI (as defined below), it will
promptly take all action available to it to cause Section 4.1(c) of the Amended
LLC Agreement to be amended in a manner such that (i) MSI will no longer have
the right and power to elect a majority of the members of the Board of Directors
of the Company and (ii) MSI's voting power as a Member (as defined in Amended
LLC Agreement) will be proportionate to its Membership Percentage (as defined in
the Amended LLC Agreement).
(b) Post-IPO. AGI covenants and agrees with DSC that if, from and after
the consummation of an IPO, there is a Change in Control of AGI or MSI, AGI will
immediately convert, and will cause all of its controlled Affiliates to convert,
all of the Class B Common Stock of the Company beneficially owned by AGI and
such Affiliates into shares of Class A Common Stock of the Company such that,
under the Company's Certificate of Incorporation as then in effect, AGI, alone
or together with its controlled Affiliates, will no longer have the right to
elect a majority of the Company's Board of Directors.
(c) Shareholder Meeting; Resignations. Promptly upon a Change in
Control of MSI or AGI, MSI agrees with DSC that it will (i) cause the MSI
Directors to cause the Company's Board of Directors to convene a meeting of
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Members (in the case of such a Change in Control of MSI or AGI referred to in
Section 2(a)) or of the Company's stockholders (in the case of such a Change in
Control of MSI or AGI, referred to in Section 2(b)) and (ii) promptly after
taking the action required by clause (i) above, cause such number of the MSI
Directors to resign from the Company's Board of Directors so that the MSI
Directors will no longer constitute a majority thereof.
(d) Definition of "Change in Control" of MSI or AGI. For purposes of
this Section 2, a "Change in Control" of MSI or AGI shall occur (i) in the case
of MSI, if (A) any person or entity, or group of affiliated persons or entities,
other than AGI and its controlled Affiliates, (1) acquires voting securities of
MSI representing a majority of the voting power of all outstanding voting
securities of MSI or (2) otherwise acquires, directly or indirectly, the power
to direct the management and policies of MSI, (B) AGI and its controlled
Affiliates shall cease to be, directly or indirectly, the sole beneficial owners
of voting securities representing at least 50.1% of the voting power of all
outstanding voting securities of MSI and at least 50.1% of the equity ownership
in MSI or (C) individuals who, as of the date hereof, constitute the board of
directors of MSI (the "Incumbent MSI Board") cease for any reason to constitute
a majority of the board of directors of MSI, provided, however, that any
individual becoming a director of MSI after the date hereof whose election, or
nomination for election by MSI's shareholder(s), was approved by a vote of a
majority of the directors of MSI then comprising the Incumbent MSI Board shall
be considered as though such individual were a member of the Incumbent MSI
Board, but excluding for this purpose any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors of MSI or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person, entity or group other than the board of directors of MSI, and (ii) in
the case of AGI, if (A) any person or entity, or group of affiliated persons or
entities, other than any person or entity, or group of affiliated persons or
entities (including for this purpose any director of AGI as of the date hereof,
their respective spouses and children, any estates or trusts (and the executors,
trustees or legal representatives thereof) of which such directors, spouses or
children are an executor, trustee or beneficiary and any entities controlled by
any of such persons) (such persons, entity or group being referred to as the
"Current Control Group") who or which, individually or taken together, as of the
date hereof, own or have the right to acquire voting securities of AGI
representing 15% or more of the voting power of all outstanding voting
securities of AGI, (1) acquires voting securities of AGI representing a majority
of the voting power of all outstanding voting securities of AGI or (2) otherwise
acquires, directly or indirectly, the power to direct the management and
policies of AGI; (B) individuals who are either (1) members
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of the Current Control Group or (2) persons whose election, or nomination for
election by the stockholders of AGI, was requested, directly or indirectly, by a
member of the Current Control Group and who have a fiduciary, employment or
similar relationship with the Company or a member of the Current Control Group
(the "Incumbent AGI Board"), cease for any reason (other than death) to
constitute at least 50% of the board of directors of AGI, provided, however,
that any individual becoming a director of AGI after the date hereof whose
election, or nomination for election by AGI's shareholder(s), was approved by a
vote of a majority of the directors of AGI then comprising the Incumbent AGI
Board shall be considered as though such individual were a member of the
Incumbent AGI Board, but excluding, for this purpose, (y) any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors of AGI or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person, entity or group other than the board of directors of AGI and (z)
any such individual nominated for election to the board of directors of AGI by
any stockholder or group of affiliated stockholders of AGI other than a member
or members of the Current Control Group; or (C) the members of the Current
Control Group cease to beneficially hold (and retain the right to exercise all
voting and dispositive rights with respect to) voting securities of AGI
representing at least 10% of the voting power of all outstanding voting
securities of AGI and any other person or entity, or group of affiliated persons
or entities, beneficially owns voting securities of AGI representing 40% or more
of the voting power of all outstanding voting securities of AGI. Notwithstanding
the foregoing, a Change in Control of MSI or AGI shall not be deemed to have
occurred if, at the time of determination, Telcom and its Affiliates do not have
the Telcom Threshold Membership Percentage. For this purpose, Telcom and its
Affiliates shall be deemed not to have the Telcom Threshold Membership
Percentage if (i) any person or entity, or group of affiliated persons or
entities, other than ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, any estates or trusts (and the
executors, trustees or legal representatives thereof) of which such persons are
an executor, trustee or beneficiary and any entities controlled by any of such
persons) (such persons, entity or group being referred to as the "Singh Control
Group"), (A) acquires voting securities (or other interests) of Telcom
representing a majority of the voting power of all outstanding voting securities
(or other interests) of Telcom or (B) otherwise acquires, directly or
indirectly, the power to direct the management and policies of Telcom; (ii)
individuals who are either (A) members of the Singh Control Group or (B) persons
whose election, or nomination for election by the stockholders (or members) of
Telcom, was requested, directly or indirectly, by a member of the Singh Control
Group, and who have a fiduciary, employment or similar relationship with the
Company or a member of the Singh Control Group (the "Incumbent Telcom
14
Board"), cease for any reason (other than death) to constitute at least 50% of
the board of directors (or other governing body) of Telcom, provided, however,
that any individual becoming a director (or member of the governing body) of
Telcom after the date hereof whose election, or nomination for election by
Telcom's shareholder(s) (or members), was approved by a vote of a majority of
the directors (or persons comprising the governing body of Telcom) then
comprising the Incumbent Telcom Board shall be considered as though such
individual were a member of the Incumbent Telcom Board, but excluding, for this
purpose, (y) any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors (or persons comprising the governing body) of Telcom, or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person, entity or group other than the board of directors (or other
governing body) of Telcom and (z) any such individual nominated for election to
the board of directors (or other governing body) of Telcom by any stockholder
(or member) or group of affiliated stockholders (or members) of Telcom other
than a member or members of the Singh Control Group; or (C) the members of the
Singh Control Group cease to beneficially hold (and retain the right to exercise
all voting and dispositive rights with respect to) voting securities (or other
interests of Telcom) representing at least 10% of the voting power of all
outstanding voting securities (or other interests) of Telcom and any other
person or entity, or group of affiliated persons or entities, beneficially owns
voting securities (or other interests) of Telcom representing 40% or more of the
voting power of all outstanding voting securities (or other interests) of
Telcom.
3. Other Agreements. DSC irrevocably agrees with MSI and AGI that it
will (i) execute and deliver the Securities Purchase Agreement substantially in
the form reviewed by DSC and its counsel through the date hereof, and will cause
Telcom, at the First Closing, to execute and deliver the Amended LLC Agreement
substantially in the form reviewed by DSC and its counsel through the date
hereof, (ii) cause the DSC Director (as defined in the LLC Agreement) to vote to
approve the Securities Purchase Agreement, the Amended LLC Agreement, the
Registration Rights Agreement contemplated by the Securities Purchase Agreement
and the transactions contemplated by such agreements and (iii) otherwise fully
support such transactions and not take, or cause or allow any of its Affiliates
to take, any action inconsistent with its agreements contained in this Section
3. Each of MSI and DSC irrevocably agrees with the other that it will not
exercise its rights under Section 5.1(d)(i) of the LLC Agreement with respect to
the $100 million capital contribution to be made by the Investor pursuant to the
Securities Purchase Agreement. Each of AGI and MSI agrees with DSC that it will
not transfer control of any entity which holds a member interest
15
in, or Class B Common Stock of, the Company to any third party (other than an
Affiliate of AGI, provided such Affiliate agrees to be bound by the provisions
of this Agreement applicable to MSI) without the consent of DSC unless,
concurrently with or prior to such transfer, AGI and MSI take the steps
contemplated by Section 2(a) (in the case of such a transfer prior to an IPO) or
Section 2(b) (in the case of such a transfer concurrently with or after an IPO).
4. Rights of First Refusal and Co-Sale; Certain Representations. MSI
and Telcom agree with the other that, from and after the consummation of the
IPO, each will have right of refusal and co-sale rights, respectively, with
respect to any sale or transfer by the other or its Affiliates of Class A Common
Stock, Class B Common Stock or other class of common stock of the Company
(collectively, "Common Stock") (and AGI, on the one hand, and each of the Telcom
Members, on the other, agree with each other that such right of first refusal
and co-sale rights shall also apply to any sale or transfer by them of shares of
MSI, or member or other equity interests of Telcom, respectively, if, at the
time of such sale or transfer, shares of Common Stock constitute all or
substantially all of the assets of MSI or Telcom, respectively), to the same
extent and exercisable in accordance with the same procedures as set forth in
Sections 10.3(a) and 10.3(b), respectively, of the Amended LLC Agreement (as if
such Sections were in effect and references in such Sections to an "Interest"
being deemed for this purpose to refer to Common Stock or to shares of MSI, or
member or other equity interests of Telcom, respectively, as contemplated
above). Notwithstanding the foregoing, it is acknowledged and agreed that (i)
pursuant to Section 5.8 of the Amended LLC Agreement, upon the conversion of
Teligent, L.L.C. to a corporation in connection with the IPO (the "Conversion"),
the Company will cease to have any rights pursuant to such Sections 10.3(a) and
10.3(b) of the LLC Agreement, and (ii) the right of first refusal and co-sale
rights provided for in this Section 4 will in any event not apply with respect
to (A) any sale or transfer of Common Stock (or of shares of MSI, or member or
other equity interests of Telcom, respectively) which was acquired pursuant to a
public market transaction, (B) any public sale or distribution of Common Stock
(or of shares of MSI, or member or other equity interests of Telcom,
respectively), whether pursuant to a registration statement under the Securities
Act, Rule 144 thereunder or otherwise, (C) any sale or transfer of Common Stock
(or of shares of MSI, or member or other equity interests of Telcom,
respectively) to an Affiliate of the selling or transferring party, provided
such Affiliate executes and delivers to the parties hereto an instrument
agreeing to be bound hereby or (D) any pledge of, or grant of a security
interest in, Common Stock (or shares of MSI, or member or other equity interests
of Telcom, respectively), provided such pledge or grant meets the requirements
set forth in Section 10.2(a)(ii), (a)(iii) and (a)(iv) of the
16
Amended LLC Agreement (as if such Section were still in effect). Associated
hereby represents and warrants to Telcom that, as of the date hereof, it is the
owner of all of the outstanding capital stock of MSI. MSI hereby represents and
warrants to Telcom that, immediately after the Conversion, MSI will be the sole
record and beneficial owner of the shares of Common Stock into which the member
interest in Teligent, L.L.C. currently held by MSI is converted pursuant to the
Conversion. Each of the Telcom Members, severally and not jointly, hereby
represent and warrant to AGI and MSI that, as of the date hereof, they are the
owners of the respective percentage membership interests in Telcom set forth on
Schedule I hereto. DSC and Telcom hereby represent and warrant to AGI and MSI
that, immediately after the Conversion, Telcom will be the sole record and
beneficial owner of the shares of Common Stock into which the member interest in
Teligent, L.L.C. currently held by DSC is converted pursuant to the Conversion.
Each party hereto represents and warrants to the other parties that such party
has the full legal right, power and authority to execute, deliver and perform
this Agreement, and that this Agreement constitutes the valid and binding
obligation of such party enforceable against such party in accordance with its
terms.
5. Miscellaneous.
(a) Effectiveness. Except for Section 3 hereof and this Section 5,
which shall be effective immediately upon the execution and delivery hereof,
this Agreement shall not be effective, and no party shall have any rights or
obligations hereunder, until the First Closing has occurred, whereupon this
Agreement shall automatically be in full force and effect.
(b) Definitions. Capitalized terms used by not defined herein have the
respective meanings ascribed thereto in the Amended LLC Agreement.
(c) Successors and Assigns. Except as otherwise provided herein, all of
the terms and provisions of this Agreement (to the extent they are or have
become effective pursuant to Section 5(a)) shall be binding upon, shall inure to
the benefit of and shall be enforceable by and against the respective successors
and assigns of the parties hereto, including without limitation, in the case of
DSC, Telcom upon consummation of the transfer and assignment contemplated by
Section 5.9 of the Amended LLC Agreement.
(d) Amendment, Waiver. This Agreement may be amended only by a written
instrument duly executed by the parties hereto. Any failure of any of the
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with
17
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
(e) Notices. Any notice, request, claim, demand, docureceipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex or telecopy (with such telex or telecopy confirmed promptly in writing
sent by first class mail), or by reputable overnight courier or other similar
means of communication, as follows:
i) If to the Company, addressed to the
Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, to
the attention of the Company's General Counsel
(Facsimile No. 703-762-5227);
ii) If to MSI or AGI, addressed to it at ▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, to the attention of AGI's
General Counsel;
iii) If to DSC, Telcom or any of the parties listed on
Schedule I hereto, addressed to such party c/o Telcom Ventures,
L.L.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
to the attention of President and General Counsel (Facsimile No.
703-706-3801);
or, in each case, to such other address or telex or telecopy number as
such party may designate in writing to the other by written notice given
in the manner specified in this Section 5(e).
(f) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior oral and written agreements and memoranda and undertakings
between the parties hereto with regard to such subject matter.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
giving effect to its conflicts of laws principles.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the day and year first written.
18
TELIGENT, L.L.C.
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
MICROWAVE SERVICES, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
THE ASSOCIATED GROUP, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
DIGITAL SERVICES CORPORATION
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
TELCOM-DTS INVESTORS, L.L.C.
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
FOR PURPOSES OF SECTION 4 ONLY:
TELCOM VENTURES, L.L.C.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CHERRYWOOD HOLDINGS, INC.
19
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
TC GROUP, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇
Title: Vice President
BIG BEND INVESTMENTS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE I
Members of Telcom-DTS Investors, L.L.C.
Percentage
Name Interest
---- ----------
Telcom Ventures, L.L.C., a Delaware limited liability company 98.01%
Cherrywood Holdings Inc., a Kansas corporation 0.75%
TC Group, L.L.C., a Delaware limited liability company 0.25%
Big Bend Investments, L.P., a Texas limited partnership 0.89%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 0.10%
--------------
100.00%
