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
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 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 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, 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.
(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 "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 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 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 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).
(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
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
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 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
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
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
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
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.
(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.
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
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%
