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 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 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
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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 mate rial;
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 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
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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
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,
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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 disposi tion 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 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.
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(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.
(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
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"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 o ut 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 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
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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 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
8
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 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 circum-
9
stances. 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).
(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.
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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 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
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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 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
12
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 Xxxxxxxx Xxxxx, Xxxxx Xxxxx, 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 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
substan-
13
tially 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 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
14
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 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
15
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 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 0000 Xxxxxxxx Xxxx, Xxxxxx, XX 00000, to
the attention of the Company's General Counsel
(Facsimile No. 703-762-5227);
ii) If to MSI or AGI, addressed to it at 0
Xxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx, XX 00000, 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., 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000, 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.
16
(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.
TELIGENT, L.L.C.
By:/s/ Xxxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President
MICROWAVE SERVICES, INC.
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
THE ASSOCIATED GROUP, INC.
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
DIGITAL SERVICES CORPORATION
By:/s/ Xxxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxx
Title: President
TELCOM-DTS INVESTORS, L.L.C.
17
By:/s/ Xxxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxx
Title: President
FOR PURPOSES OF SECTION 4 ONLY:
TELCOM VENTURES, L.L.C.
By: /s/ Xxxxxxxx Xxxxx
------------------------------
Name: Xxxxxxxx Xxxxx
Title: President
CHERRYWOOD HOLDINGS, INC.
By: /s/ Xxxxxxxx Xxxxx
------------------------------
Name: Xxxxxxxx Xxxxx
Title: President
TC GROUP, L.L.C.
By: /s/ Xxxx Xxx
------------------------------
Name: Xxxx Xxx
Title: Vice President
BIG BEND INVESTMENTS, L.P.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: General Partner
/s/ Xxxxxxx Xxxxxx
------------------------------
XXXXXXX XXXXXX
18
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%
Xxxxxxx Xxxxxx 0.10%
---------------
100.00%
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