UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-K/A
Amendment No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 000-23387
TELIGENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1866562
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
8065 LEESBURG PIKE
VIENNA, VIRGINIA 22182
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 762-5100
Securities registered pursuant to Section 12(b) of the Act:
11 1/2% Senior Notes due 2007
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, Class A, par value $.01 per share
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days: Yes [X] No [_].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in the definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K [X].
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant was approximately $201 million on March 20,
1998, based on the closing sales price of the registrant's Class A
Common Stock as reported on The Nasdaq Stock Market as of such date.
The number of shares outstanding of each of the registrant's classes
of common stock as of March 20, 1998 was as follows:
Common Stock, Class A 8,163,270
Common Stock, Class B 44,426,299
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
- --------------------
Alex J. Mandl 54 Chairman of the Board and Chief Executive
Officer
Kirby G. Pickle, Jr. 41 President and Chief Operating Officer
Laurence E. Harris 62 Senior Vice President, General Counsel
and Assistant Secretary
Abraham L. Morris 39 Senior Vice President, Chief Financial
Officer and Treasurer
Steven F. Bell 48 Senior Vice President for Human Resources
Other Officers
- ----------------
Richard J. Hanna 42 Senior Vice President for Sales and Marketing
Keith W. Kaczmarek 41 Senior Vice President for Engineering and
Operations
David S. Turetsky 41 Vice President for Law and Regulatory Affairs
Cindy L. Tallent 40 Vice President and Controller
Philip C. McKinney 37 Vice President for Information Technology
Robert H. Schwartz 32 Vice President for Corporate Development
and Strategy
Scott G. Bruce 36 Secretary
Other Directors
- ---------------
Myles P. Berkman ** 61 Director
David J. Berkman 36 Director
William H. Berkman 33 Director
Donald H. Jones * 60 Director
Tetsuro Mikami *,** 46 Director
Rajendra Singh *,** 43 Director
* Member of the Company's Audit Committee
** Member of the Company's Compensation Committee
ALEX J. MANDL has been Chairman and Chief Executive Officer since
September 1996. Prior to joining Teligent, Mr. Mandl served as
President and Chief Operating Officer of AT&T. As President and Chief
Operating Officer, Mr. Mandl oversaw AT&T's operations including its
long-distance, wireless and local communications services, in addition
to its credit card and Internet businesses. As Chief Financial Officer
of AT&T from 1991 to 1993, Mr. Mandl directed AT&T's financial strategy,
policy and operations, and managed the acquisition of McCaw Cellular
Communications, Inc. Earlier, Mr. Mandl served as Chairman and CEO of
Sea-Land Services, Inc., an ocean transportation and distribution
services company. Mr. Mandl serves on the boards of the Warner-Lambert
Company, Dell Computer Corporation, Forstmann Little & Co. and NextLevel
Corporation.
-2-
<PAGE>
KIRBY G. PICKLE, JR., has served as President and Chief Operating
Officer since February 1997. Prior to that, Mr. Pickle served as
Executive Vice President of MFS Communications Company, Inc. and
President and Chief Operating Officer of one of its subsidiaries, UUNET
Technologies, Inc. Earlier, as President and COO of MFS Intelenet,
Inc., Mr. Pickle managed three businesses that generated a majority of
MFS' revenues. Prior to his service for MFS, Mr. Pickle was a Vice
President at US Sprint (now known as Sprint), a regional sales manager
for MCI Communications Corporation, Inc. and held various management
positions at AT&T.
LAURENCE E. HARRIS has been Senior Vice President and General
Counsel since December 1996. Prior to joining the Company, Mr. Harris
served as Senior Vice President of Law and Public Policy for MCI
Communications Corporation. Earlier, Mr. Harris was President and Chief
Operating Officer of Metromedia Telecommunications, Inc. and CRICO
Communications, a privately-held paging company. Mr. Harris also served
as chief of the FCC's Mass Media Bureau where he was responsible for
regulation and policy for cable, television and radio broadcasting. Mr.
Harris was also responsible for regulatory and antitrust activities at
MCI before serving at the FCC.
ABRAHAM L. MORRIS joined Teligent in April 1997 as Senior Vice
President, Chief Financial Officer and Treasurer. Prior to that, he
served as Senior Vice President for Operations Support at MFS
Communications Company, Inc., where Mr. Morris was involved in business
development, revenue assurance and co-carrier/local service activities.
Earlier, Mr. Morris was Vice President and Chief Transition
Officer for MFS Intelenet, Inc., and previusly was Treasurer of MFS. Mr.
Morris was involved in MFS' capital raising activities, including its
initial public offering. Before joining MFS, Mr. Morris served as
General Manager, Mergers and Acquisitions at Peter Kiewit Sons', Inc., a
diversified industrial services company.
STEVEN F. BELL assumed the position of Senior Vice President for
Human Resources in April 1997. Prior to joining Teligent, Mr. Bell
served as Vice President for Human Resources and Organization
Development at COMSAT Corporation where he was responsible for executive
and staff recruitment and development at the 4,000-employee satellite
communications company. Earlier, Mr. Bell was Vice President, Human
Resources for the worldwide technologies division of American Express
Corporation.
RICHARD J. HANNA joined Teligent in April 1997 as Senior Vice
President for Sales and Marketing. Prior to joining Teligent, Mr. Hanna
served as President and Chief Executive Officer of MFS Intelenet, Inc.
Prior to that, he served as Vice President of Sales and Marketing for
AT&T where he was responsible for developing its commercial sales
channel. Mr. Hanna also served in senior sales and marketing
positions at MCI Communications Corporation and Sprint.
KEITH W. KACZMAREK joined Teligent in May 1997 as Senior Vice
President of Engineering and Operations. Prior to joining Teligent, he
served as Vice President of Engineering and Operations for AirTouch/PCS
PrimeCo, where he managed the development and installation of PCS
deployment of CDMA wireless technology. Between 1993 and 1995, as Vice
President of Technology Development and Product Development for Nextel
Communications, Mr. Kaczmarek managed technology development for the
company's digital mobile wireless networks. He has also held senior
positions at AirTouch Communications, GTE Corp. and GTE Mobilnet, Inc.
DAVID S. TURETSKY joined Teligent in May 1997 as Vice President
for Law and Regulatory Affairs. He served in the Antitrust Division of
the U.S. Department of Justice as Deputy Assistant Attorney General for
Civil and Regulatory Affairs and originally as senior counsel to the
Assistant Attorney General. He assisted in developing the Clinton
Administration's telecommunications policy, including the
Telecommunications Act of 1996, and was responsible for the Division's
telecommunications work. While at the U.S. Department of Justice, he
represented the United States in international telecommunications and
antitrust matters and assisted in overseeing a telecommunications
services accord through the World Trade Organization. Earlier, he was a
partner in the law offices of LeBoeuf, Lamb, Leiby & MacRae.
CINDY L. TALLENT joined Teligent in September 1997 as Vice
President and Controller. Prior to joining the Company, Ms. Tallent was
Senior Vice President, Finance for Global TeleSystems Group, Inc.
There she was involved in establishing and managing international joint
ventures, securing financing and implementing systems and controls.
-3-
<PAGE>
Ms. Tallent also held various finance positions at GTE where she was
employed for ten years and was Vice President and Chief Financial
Officer for GTE Spacenet when she left in 1995. Prior to GTE, Ms.
Tallent was a senior accountant with Price Waterhouse LLP.
PHILIP C. MCKINNEY joined Teligent in March 1997 as Vice President
for Information Technology. Prior to joining the Company, Mr. McKinney
was Director of Consulting Services for Computer Sciences Corporation
where he oversaw client engagements for start-up and established
providers in the communication industry. Earlier, Mr. McKinney was
Director of Operations where he managed customer care, billing and
information technology outsourcing services to telecommunication clients
in North America.
ROBERT H. SCHWARTZ joined Teligent upon inception in March 1996 as
Vice President of Corporate Development and Strategy. Previously, Mr.
Schwartz served as Director of Corporate Development for Nextel where he
was involved in strategic planning, mergers and acquisitions and various
investment transactions including public fundraising activities. Prior
to that, Mr. Schwartz performed consulting work in the communications
industry including satellite, cable television, and wireless
telecommunications companies.
SCOTT G. BRUCE has been Secretary of the Company since its
inception in March 1996. Mr. Bruce is also General Counsel and
Secretary of Associated and served as the Company's General Counsel
until December 1996. Mr. Bruce has experience in the fields of
corporate mergers and acquisitions and securities law. Between 1987 and
1992, he was a corporate attorney at Wolf, Block, Schorr and Solis-Cohen
in Philadelphia. Earlier, he worked in the New York office of Touche
Ross & Co., the predecessor to Deloitte & Touche LLP.
MYLES P. BERKMAN has been a director of the Company since its
inception in March 1996. Mr. Berkman is Chairman, President, Chief
Executive Officer and Treasurer of Associated, positions he has held
since 1994 with the exception of Chairman which has been since november
1995. In addition to owning the largest interest in the Company through
MSI, Associated is engaged in the development of wireless location
services, and has operations and interests in international wireless
telephony, radio broadcasting and cable television. From 1979 to 1994,
Mr. Berkman was President, Chief Operating Officer and Treasurer of
Associated Communications Corporation ("ACC"), the parent corporation
of Associated prior to 1995, which also was a publicly traded company.
Mr. Berkman developed ACC into one of the larger U.S. cellular operators
at the time of its sale to SBC Communications Inc in 1994. Mr. Berkman
is the father of William H. Berkman and David J. Berkman, each of whom
is also a director of the Company.
DAVID J. BERKMAN has been a director of Teligent since its
inception in March 1996. Since 1994, Mr. Berkman has served as
Executive Vice President and a director of Associated. From 1993 to
1994, Mr. Berkman was Executive Vice President and a member of the Board
of Directors of ACC. Prior to 1993 Mr. Berkman was a Vice President of
ACC. He is a member of the Board of Directors of Teletrac, Inc. and a
former member of both the Board of Directors and the Executive Committee
of the Cellular Telephone Industry Association. Mr. Berkman also serves
as director of Grupo Portatel, S.A. de C.V., and is Vice Chairman of
Portatel del Sureste, S.A. de C.V., both of which are engaged in the
ownership and operation of a cellular telephone system in Mexico.
David J. Berkman is the son of Myles P. Berkman and the brother of
William H. Berkman, each of whom is also a director of the Company.
WILLIAM H. BERKMAN has been a director of Teligent since its
inception in March 1996. Mr. Berkman is currently President of MSI, a
wholly owned subsidiary of Associated. Since June 5, 1997, Mr. Berkman
has served as an Assistant Secretary of Associated. Before joining
Associated, Mr. Berkman held several executive positions at The News
Corporation, Ltd. William H. Berkman is the son of Myles P. Berkman and
the brother of David J. Berkman, each of whom is also a director of the
Company.
DONALD H. JONES has been a director of the Company since November
1997. He has served as a director of Associated since 1994. Prior to
1994, Mr. Jones served as a director of ACC beginning in 1986, as well
as a consultant to ACC beginning in 1982. Mr. Jones is President of DHJ
Enterprises, Inc., a firm engaged in the development of new business
enterprises and investment activities. Until April 1997, Mr. Jones was
Vice Chairman of Net Inc., formerly Industry Net Corporation, a company
that was engaged in electronic database publishing, and from 1992 to
-4-
<PAGE>
June 1996, was its Chairman. Mr. Jones is a director of Respironics
Inc., a corporation engaged in the development, manufacturing and
marketing of medical equipment, and PNC Equity Management Corporation, a
corporation engaged in the investment in growth companies. Mr. Jones
also serves as an adjunct professor of entrepreneurship at the Carnegie
Mellon Graduate School of Business.
TETSURO MIKAMI has been a director of the Company since November
1997. Since 1993, Mr. Mikami has been General Manager, Business
Solutions Group, Long Distance, Nippon Telegraph and Telephone
Corporation. Mr. Mikami has been with NTT for over twenty years and has
served in various senior management roles. He currently resides in
Tokyo, Japan.
DR. RAJENDRA SINGH has been a director of Teligent since its
inception in March 1996. Since December 1993, Dr. Singh has served as
Chairman of the Board and Chief Executive Officer of Telcom Ventures,
L.L.C. and he also served as President of that company, through
September 1997. Dr. Singh also serves as President and Treasurer of
DSC. Dr. Singh founded Telcom Ventures in 1993 and, together with his
family, is one of the principal owners of that company. He also serves
as Chairman of the Board of LCC International, Inc., a worldwide
provider of wireless engineering and design services and related
products, which he co-founded in 1983 and which is an affiliate of
Telcom Ventures. The Singh family and The Carlyle Group are the
principal owners of Telcom Ventures. Dr. Singh has created widely-used
standards of system design and methodology in the cellular industry.
Dr. Singh organized and participated in the Cellular Telephone Industry
Association's scientific panel which investigated time dispersion for
Time Division Multiple Access and Frequency Division Multiple Access
wireless technologies.
Directors' Compensation
- -----------------------
Directors do not receive compensation in their capacities as directors.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the summary of all compensation
earned by the Chief Executive Officer and the four other most highly
compensated executive officers for the fiscal years ended 1997 and 1996
for services to the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Name and Principal Fiscal Securities Underlying All Other
Position Year Salary Bonus Stock Options Compensation
- -------- ----- ------ ----- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Alex J. Mandl 1997 $500,000 $500,000 6,009,732 (1) $3,988,270 (2)
Chairman and Chief 1996 165,753 166,666 -- --
Executive Officer
Kirby G. Pickle, Jr. 1997 329,808 250,000 1,011,101 (1) 192,081 (3)
President and Chief 1996 -- -- -- --
Operating Officer
Laurence E. Harris 1997 275,000 150,000 606,661 (1) 4,750 (4)
Senior Vice President, 1996 15,865 250,000 -- --
General Counsel and
Assistant Secretary
Abraham L. Morris 1997 179,808 125,000 606,661 (1) --
Senior Vice President, 1996 -- -- -- --
Chief Financial Officer
and Treasurer
Steven F. Bell 1997 164,423 100,000 404,440 (1) 3,375 (4)
Senior Vice President 1996 -- -- -- --
for Human Resources
</TABLE>
-5-
<PAGE>
(1) Consists of CARs which were converted on November 21, 1997 to options
to purchase shares of the Company's Class A Common Stock.
(2) Includes $3,983,520 of forgiveness of indebtedness to MSI and DSC
pursuant to Mr. Mandl's Employment Agreement, and $4,750 of
contributions by the Company to the Company's 401(k) Savings Plan.
(3) Includes $187,331 in relocation costs paid to Mr. Pickle, and $4,750
of contributions by the Company to the Company's 401(k) Savings Plan.
(4) Consists of contributions by the Company to the Company's 401(k)
Savings Plan.
Stock Options
- -------------
Upon consummation of the Equity Offering, all outstanding CARs and
Appreciation Units were converted into options (the "Conversion Options") to
purchase a number of shares of Class A Common Stock at respective exercise
prices such that the intrinsic value of the stock options approximated the
The Conversion Options are governed by and subject to the terms of the
Company's 1997 Stock Incentive Plan and have the same vesting schedule,
vesting rights and term as the applicable CAR's or Appreciation Units
which were converted.
The following table sets forth certain stock option information for
each of the named executive officers.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------
% of Total
Number of Options
Securities Granted to Weighted Average
Underlying Employees Exercise
Name Options Granted in Fiscal Year Price ($/share)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Alex J. Mandl 6,009,732 45.65% $12.41
Kirby G. Pickle, Jr 1,011,101 7.68% 6.52
Laurence E. Harris 606,661 4.61% 6.52
Abraham L. Morris 606,661 4.61% 6.52
Steven F. Bell 404,440 3.07% 6.52
<CAPTION>
Individual Grants
----------------- at assumed Annual Rates of
Expiration Grant Date
Name Date Present Value $
- -------------------------------------------------------
<S> <C> <C>
Alex J. Mandl 09/01/06 *
Kirby G. Pickle, Jr 01/20/07 *
Laurence E. Harris 12/09/06 *
Abraham L. Morris 04/10/07 *
Steven F. Bell 04/07/07 *
</TABLE>
* The CARs held by Mr. Mandl and the Appreciation Units held by Mr. Harris
were granted in 1996, and the Appreciation Units held by Messrs. Pickle,
Morris, and Bell were granted in 1997, in each case prior to the Conversion.
Although the Conversion did not result in the grant of additional equity to
any of the named executive officers, using the Black-Scholes option pricing
model (assuming a dividend yield of 0%, a risk free interest rate of 6.6%,
an expected life of 10 years, and an expected volatility of .50) the grant
date present value for each of the named executive officers would be as
follows: Mr. Mandl, $122.8 million; Mr. Pickle, $18.9 million; each of
Messrs. Harris and Morris, $11.4 million; and Mr. Bell, $7.6 million.
Exercise of Stock Options
- -------------------------
No stock options were exercised by any of the named executive officers
during the fiscal year ended December 31, 1997. The following table
sets forth information regarding the value at December 31, 1997 of any
unexercised stock options granted under the Plan.
-6-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year End Option Values
-----------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year End at Fiscal Year End (1)
-------------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alex J. Mandl 1,001,622 5,008,110 $21,309,508 73,529,071
Kirby G. Pickle, Jr. -- 1,011,101 -- 18,305,984
Laurence E. Harris 121,332 485,329 2,196,719 8,786,878
Abraham L. Morris -- 606,661 -- 10,983,597
Steven F. Bell -- 404,440 -- 7,322,386
</TABLE>
(1) The closing stock price of the Company's Class A Common Stock on
December 1, 1997 was $24.625.
The Mandl Employment Agreement
- ------------------------------
The Mandl Employment Agreement took effect September 1, 1996 and
expires on September 1, 2002, unless further extended pursuant to its
terms. Under the Mandl Employment Agreement, Mr. Mandl is entitled to
a minimum salary of $500,000 per annum (which may be increased from time
to time at the discretion of the Board after the first two years) and an
annual bonus of $500,000 per annum for the first three fiscal years of
employment, subject to increase after three years at the discretion of
the Board. After such period, Mr. Mandl shall also be entitled to
participate in all annual non-equity-based executive compensation plans.
Pursuant to the Mandl Employment Agreement, Mr. Mandl (a) has received a
$15 million recourse loan from MSI and DSC (see "Certain Relationships
and Related Transactions--Loans to Executive Officers") and (b) will be
entitled to a $5 million special payment upon the fifth anniversary of
his employment. The recourse loan will be automatically forgiven (i)
twenty percent in year one, twenty percent in year two, and sixty percent
in year five, (ii) upon the termination of his employment by him for
Good Reason (as defined in the Mandl Employment Agreement) or by the
Company without Cause (as defined in the Mandl Employment Agreement)
or (iii) his death or disability.
The Mandl Employment Agreement provides that if either MSI or DSC
sells any of their respective member interests in the Company to a third
party, such seller shall be obligated to require the purchaser of such
interests to purchase, and may require Mr. Mandl to sell to such third
party, a proportionate percentage of the vested equity interest
represented by Mr. Mandl's CARs valued as of the date of such purchase,
at the same price paid by the third party for the interests of such seller.
The Mandl Employment Agreement also provides for a right of first refusal
on the part of MSI and DSC with respect to the disposition by Mr. Mandl
of an equity interest in the Company. In the event of a Change in Control
of the Company (as defined in the Mandl Employment Agreement), all CARs
shall vest immediately, the principal balance remaining on the $15 million
loan shall be immediately forgiven and the remainder of the $5 million
fifth anniversary special payment shall be paid.
In addition, in the Mandl Employment Agreement the Company granted
Mr. Mandl certain registration rights with respect to the shares of Class
A Common Stock which are subject to the options into which the CARs were
converted pursuant to the Conversion described under "Stock Options"
(such shares as to which such registration rights apply being referred
to as "Mandl Registrable Securities", and the number of such shares as
of the date Teligent, L.L.C. was converted to a corporation (the
"Conversion Date"), as adjusted for splits, combinations and the like,
being referred to as the "Maximum Amount"). Under the Mandl Employment
Agreement, the Company is required, if requested by Mr. Mandl, to use its
reasonable best efforts to cause to be included in any registration
statement with respect to a public offering of shares of Class A Common
Stock, a number of shares of Mandl Registrable Securities proportionate
to the number of shares of Common Stock then owned by MSI and the Telcom
Stockholder which are included in such registration statement (based on
the total number of shares of Common Stock then owned by MSI and the
Telcom Stockholder, and the Maximum Amount, respectively). Because no
shares of Common Stock were sold by MSI or the Telcom Stockholder in the
-7-
<PAGE>
Equity Offerings, Mr. Mandl had no right to, and did not, sell any Mandl
Registrable Securities in the Equity Offerings. In addition, in each of
four twelve-month periods, the first of which commences on the Conversion
Date and each of the remaining three of which commences on each of the
remaining three respective subsequent anniversaries thereof, the Company
is required, if requested by Mr. Mandl (which request may not be made
prior to six months after consummation of the Equity Offerings), to use
its reasonable best efforts to promptly cause to be registered under the
Securities Act for public sale by Mr. Mandl a number of Mandl Registrable
Securities constituting at least 25% of the Maximum Amount (the "Maximum
Annual Amount"), provided that in no event may Mr. Mandl sell publicly
more than the Maximum Annual Amount in any such twelve-month period. The
Company has filed a registration statement on Form S-8 registering shares
of Class A Common Stock authorized for issuance under the Stock Plan,
including the Mandl Registrable Securities.
The Mandl Employment Agreement (other than certain restrictive
covenants of Mr. Mandl and certain severance obligations of the Company)
may be terminated (a) by the Company (i) without Cause by giving 30-days
notice or (ii) for Cause upon the Board's confirmation that the employee
has failed to cure the grounds for termination within ten days after
notice thereof by the Company and (b) by Mr. Mandl (i) without Good
Reason by giving a 120-day notice or (ii) for Good Reason upon the
Company's failure to cure the grounds for termination within 20 days
after notice thereof by Mr. Mandl. The Mandl Employment Agreement
prohibits disclosure by Mr. Mandl of any Company confidential
information at any time. In addition, while he is employed by the
Company and for two years thereafter, Mr. Mandl is prohibited from
engaging or significantly investing in competing business activities
and from soliciting any Company employee to be employed elsewhere.
-8-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 20, 1998
regarding the beneficial ownership of each class of the Company's Common
Stock by (i) each person known by the Company to own 5% of any class of
the Company's Common Stock, (ii) each director of the Company, (iii) each
Named Executive Officer, and (iv) all directors and officers as a group.
The address for the directors and officers of the Company is Teligent, Inc.,
8065 Leesburg Pike, Vienna, VA 22182.
<TABLE>
<CAPTION>
Class A Common Class B Common
Stock Stock
------------------- ------------------
Name and Address of Number % Number %
Beneficial Owner (13) (14) (13) (14)
- ------------------- --------- ---- ---------- -----
<S> <C> <C> <C> <C>
The Associated Group, Inc. (1) -- -- 21,436,689 48.3%
200 Gateway Towers
Pittsburgh, PA 15222
Telcom Ventures, L.L.C. (2) -- -- 17,206,210 38.7%
200 N. Union Street
Suite 300
Alexandria, VA 22201
Lynn Forester 1,831,410 22.4% -- --
c/o FirstMark Holdings
527 Madison Avenue
New York, NY 10022
Nippon Telegraph and Telephone
Corporation -- -- 5,783,400 13.0%
Tokyo Opera City Tower
20-2 Nishi-Shinjuku 3-chome
Shinjuku-ku, Tokyo 163-24
Japan
Alex J. Mandl (3) 1,226,622 13.4% -- --
Myles P. Berkman (4) 10,000 * -- --
David J. Berkman (5) 120,968 1.5% -- --
William H. Berkman (6) 120,968 1.5% -- --
Donald H. Jones 3,000 * -- --
Tetsuro Mikami -- -- -- --
Dr. Rajendra Singh (7) 80,888 1.0% -- --
Kirby G. Pickle, Jr. (8) 217,220 2.6% -- --
Larence E. Harris (9) 121,332 1.5% -- --
Abraham L. Morris (10) 124,332 1.5% -- --
Steven F. Bell (11) 80,888 1.0% -- --
All directors and executive
Officers as a group (11
Persons) (12) 2,106,218 21.0% -- --
<CAPTION>
Class B Common Stock
----------------------------------------
Series B-1 Common Series B-2 Common
Stock Stock
------------------- ------------------
Name and Address of Number % Number %
Beneficial Owner (13) (14) (13) (14)
- ------------------- --------- ---- ---------- -----
<S> <C> <C> <C> <C>
The Associated Group, Inc. (1) 21,436,689 100.0% -- --
200 Gateway Towers
Pittsburgh, PA 15222
Telcom Ventures, L.L.C. (2) -- -- 17,206,210 100.0%
200 N. Union Street
Suite 300
Alexandria, VA 22201
Lynn Forester -- -- -- --
c/o FirstMark Holdings
527 Madison Avenue
New York, NY 10022
Nippon Telegraph and Telephone
Corporation -- -- -- --
Tokyo Opera City Tower
20-2 Nishi-Shinjuku 3-chome
Shinjuku-ku, Tokyo 163-24
Japan
Alex J. Mandl (3) -- -- -- --
Myles P. Berkman (4) -- -- -- --
David J. Berkman (5) -- -- -- --
William H. Berkman (6) -- -- -- --
Donald H. Jones -- -- -- --
Tetsuro Mikami -- -- -- --
Dr. Rajendra Singh (7) -- -- -- --
Kirby G. Pickle, Jr. (8) -- -- -- --
Larence E. Harris (9) -- -- -- --
Abraham L. Morris (10) -- -- -- --
Steven F. Bell (11) -- -- -- --
All directors and executive
Officers as a group (11
Persons) (12) -- -- -- --
<CAPTION>
Class B Common Stock
-------------------
Series B-3 Common Percentage
Stock of Voting
------------------- Power
Name and Address of Number % Outstanding
Beneficial Owner (13) (14) (13)
- ------------------- --------- ---- -----
<S> <C> <C> <C>
The Associated Group, Inc. (1) -- -- 40.8%
200 Gateway Towers
Pittsburgh, PA 15222
Telcom Ventures, L.L.C. (2) -- -- 32.7%
200 N. Union Street
Suite 300
Alexandria, VA 22201
Lynn Forester -- -- 3.5%
c/o FirstMark Holdings
527 Madison Avenue
New York, NY 10022
Nippon Telegraph and Telephone
Corporation 5,783,400 100.0% 11.0%
Tokyo Opera City Tower
20-2 Nishi-Shinjuku 3-chome
Shinjuku-ku, Tokyo 163-24
Japan
Alex J. Mandl (3) -- -- 2.3%
Myles P. Berkman (4) -- -- *
David J. Berkman (5) -- -- *
William H. Berkman (6) -- -- *
Donald H. Jones -- -- *
Tetsuro Mikami -- -- --
Dr. Rajendra Singh (7) -- -- *
Kirby G. Pickle, Jr. (8) -- -- *
Larence E. Harris (9) -- -- *
Abraham L. Morris (10) -- -- *
Steven F. Bell (11) -- -- *
All directors and executive
Officers as a group (11
Persons) (12) -- -- 3.9%
</TABLE>
-9-
<PAGE>
* - Less than 1%.
(1)All shares shown are held of record by Microwave Services, Inc., a
wholly owned subsidiary of The Associated Group, Inc.
(2)All shares shown are held of record by Telcom-DTS Investors, L.LC.,
an affiliate of Telcom Ventures, L.L.C.
(3)Includes 1,001,622 shares of Class A Common Stock issuable upon
exercise of Mr. Mandl's stock options.
(4)Does not include 21,436,689 shares of Class B Common Stock held of
record by Microwave Services, Inc., a wholly owned subsidiary of The
Associated Group, Inc. As a Director and Chairman, President, Chief
Executive Officer and Treasurer of The Associated Group, Inc.,
Myles P. Berkman may be deemed to be the beneficial owner of the shares
of Class B Common Stock held by Microwave Services, Inc.
(5)All such 120,968 shares of Class A Common Stock are issuable upon
exercise of David J. Berkman's stock options. Does not include
21,436,689 shares of Class B Common Stock held of record by Microwave
Services, Inc., a wholly owned subsidiary of The Associated Group, Inc.
As a Director and Executive Vice President of The Associated Group,
Inc., David J. Berkman may be deemed to be the beneficial owner of
the shares of Class B Common Stock held by Microwave Services, Inc.
(6)All such 120,968 shares of Class A Common Stock are issuable upon
exercise of William H. Berkman's stock options.
(7)All such 80,888 shares of Class A Common Stock are issuable upon
exercise of Dr. Singh's stock options which are exercisable within
60 days. Does not include 17,206,210 shares of Class B Common Stock
held of record by Telcom-DTS Investors, L.L.C., a subsidiary of Telcom
Ventures, L.L.C. As the Chief Executive Officer, a Director and,
together with members of his family, the principal owner of Telcom
Ventures, L.L.C., Dr. Singh may be deemed to be the beneficial owner
of the shares of Class B Common Stock held by Telcom-DTS Investors,
L.L.C.
(8)Includes 202,220 shares of Class A Common Stock issuable upon exercise
of Mr. Pickle's stock options.
(9)All such 121,332 shares of Class A Common Stock are issuable upon
exercise of Mr. Harris' stock options.
(10)Includes 121,332 shares of Class A Common Stock issuable upon
exercise of Mr. Morris' stock options which are exercisable within
60 days.
(11)All such 80,898 shares of Class A Common Stock are issuable upon
exercise of Mr. Bell's stock options which are exercisable within
60 days.
(12)Includes 1,850,218 shares of Class A Common Stock issuable upon
exercise of stock options held by all directors and executive officers
as a group. Does not include 21,436,689 and 17,206,210 shares of
Class B Common Stock held of record by Microwave Services, Inc. and
Telcom-DTS Investors, L.L.C, respectively. See footnotes 4, 5 and 7.
(13)Unless otherwise indicated, each beneficial owner has both sole voting
and sole investment power with respect to the shares beneficially owned
by such person, entity or group. The number of shares shown as
beneficially owned include all options exercisable within 60 days,
warrants and convertible securities held by such person,entity or group.
(14)The percentages of beneficial ownership as to each person, entity or
group assume the exercise or conversion of all options, warrants and
convertible securities held by such person, entity or group, but not
the exercise or conversion of options, warrants and convertible
securities held by others shown in the table.
-10-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Members Agreement
- -----------------
Prior to the Company entering into the NTT Purchase Agreement, the
Company, MSI, Associated, DSC, Telcom-DTS Investors, L.L.C., an affiliate
of Telcom Ventures (the "Telcom Stockholder") and the owners of the Telcom
Stockholder entered into an agreement (the "Members Agreement") whereby the
Company granted to DSC certain registration rights substantially similar
to those granted to NTT (see "Certain Transactions-Strategic Equity
Investment-Registration Rights Agreement") with respect to Common Stock
held by DSC at the time of consummation of the Equity Offerings. In
addition, in the Members Agreement, Associated and MSI agreed with DSC
that upon a "Change in Control" (as defined in the Members Agreement) of
Associated or MSI, (i)Associated will immediately convert, and cause its
controlled affiliates (ii) to immediately convert, all of the Series B-1
Common Stock owned by them into Class A Common Stock such that, under the
Company's Certificate of Incorporation as then in effect, Associated,
alone or together with its controlled affiliates, will no longer have the
right to elect a majority of the Company's Board, (ii) MSI will cause
its designees on the Company's Board to cause the Board to convene a
meeting of the Company's stockholders and (iii) promptly after taking
the action described in (ii) immediately above, MSI will cause such
number of its designees on the Company's Board to resign so that such
designees no longer constitute a majority thereof. In the Members
Agreement, each of Associated and MSI also agreed with DSC that it will
not transfer control of any entity which holds Class B Common Stock of
the Company to any third party (other than an affiliate of Associated,
provided such affiliate agrees to be bound by the provisions of the
Members Agreement applicable to MSI) without the consent of DSC unless,
concurrently with or prior to such transfer, AGI and MSI take the
actions described in clauses (i) through (iii) above. In addition,
in the Members Agreement, MSI and the Telcom Stockholder granted to
each other rights of first refusal and co-sale rights with respect to
any sale or transfer by the other (other than to an affiliate or
pursuant to a pledge arrangement, and excluding any public sale or
distribution whether pursuant to a registration statement, Rule 144
or otherwise) of shares of Common Stock (other than Common Stock acquired
in public market transactions). Pursuant to the Members Agreement,
Associated and the owners of the Telcom Stockholder also granted to
each other rights of first refusal and co-sale rights, with the same
exceptions, with respect to any sale or transfer by the other of shares
of MSI, or member or other equity interests of the Telcom Stockholder,
but only if shares of Common Stock constitute all or substantially all
of the assets of MSI or the Telcom Stockholder, respectively.
Common Stock
- ------------
Voting Rights. Except as otherwise required by law or, as described
below, by the Certificate of Incorporation, the holders of shares of Common
Stock will vote together as a single class. Each share of Common Stock
will entitle the registered holder thereof to one vote. There will be no
cumulative voting.
The holders of Series B-1 Common Stock voting as a separate class,
will be entitled to elect that number of directors equal to the minimum
number necessary to constitute a majority of members of the Company's
Board of Directors (the "Series B-1 Directors"); provided however, that
if at any time the number of issued and outstanding shares of Series B-1
Common Stock (exclusive of any shares held in the Company's treasury or by
subsidiaries of the Company) is less than 20% of the aggregate number of
issued and outstanding shares of Common Stock (exclusive of shares held in
the Company's treasury or by subsidiaries of the Company) then, without any
further action of any party of the Company, all of such issued and
outstanding shares of Series B-1 Common Stock will automatically and
irrevocably be converted into an equal number of shares of Class A Common
Stock and the holders of Series B-1 Common Stock so converted will no
longer be entitled to elect Series B-1 Directors.
The holders of Series B-2 Common Stock voting as a separate class,
will be entitled to elect one member of the Company's Board of Directors
(the "Series B-2 Directors"); provided however, that if at any time the
number of issued and outstanding shares of Series B-2 Common Stock
(exclusive of any shares held in the Company's treasury or by subsidiaries
of the Company) is less than 10% of the aggregate number of issued and
-11-
<PAGE>
outstanding shares of Common Stock (exclusive of shares held in the
Company's treasury or by subsidiaries of the Company) then, without any
further action of any party of the Company, all of such issued and
outstanding shares of Series B-2 Common Stock will automatically and
irrevocably be converted into an equal number of shares of Class A Common
Stock and the holders of Series B-2 Common Stock so converted will no
longer be entitled to elect a Series B-2 Director.
The holders of Class A Common Stock and Class B Common Stock voting
together as a single class will be entitled to elect all members of the
Company's Board of Directors, other than any Series B-1 Directors, Series
B-2 Director or Series B-3 Director (the "Common Directors").
The holders of Series B-3 Common Stock, voting as a separate class,
will be entitled to elect one member of the Company's Board of Directors
(the "Series B-3 Director), subject to adjustment in certain circumstances.
Any series B-1 Director, Series B-2 Director or Series B-3 Director
may be removed with or without cause, but only by the affirmative vote of
the holders of a majority of the shares of the series of Class B Common
Stock entitled to elect such director, voting as a separate class. Any
Common Director may be removed with or without cause, but only by the
affirmative vote of the holders of a majority of the shares of Class A
Common Stock and Class B Common Stock voting together as a single class.
Conversion into Series A Common Stock. Pursuant to the Certificate
of Incorporation, each share of Class B Common Stock will be convertible
at any time, at the option of the registered holder thereof, into one fully
paid and nontransferable share of Class A Common Stock, subject to
adjustment for any stock split.
Stockholders Agreement
- -----------------------
Prior to the consummation of the Equity Offerings, the Company
entered into a Stockholders Agreement (the "Stockholders Agreement")
with NTTA&T and the other stockholders of the Company (other than the
FirstMark Sole Stockholder) (the "Stockholder Parties") whereby, NTTA&T
and the Telcom Stockholder have certain rights and obligations with
respect to their ownership interest in, and the governance of, the
Company. The Stockholders Agreement also provides that so long as the
Telcom Stockholder and NTTA&T, respectively, have the right to elect a
member of the Company's Board, the Company will afford to representatives
of the Telcom Stockholder and NTTA&T, respectively, certain business
consultation rights as defined in the Stockholders Agreement. Under the
Stockholders Agreement, so long as NTTA&T and the Telcom Stockholder,
respectively, have the right to elect a member of the Company's Board,
such respective members of the Company's Board or their designated
representative have visitation rights at meetings of all significant
internal operating committees and will be a member of any technical,
compensation or audit committees or any other committee of the Board.
Pursuant to the Stockholders Agreement, so long as NTTA&T is entitled
to elect a member of the Company's Board, NTTA&T has the right, at its
expense, to secund to the Company employees of NTTA&T or its affiliates
(not exceeding a total of five such employees in any three month period)
to observe the Company's operations, including its technical and marketing
activities (such secunded employees being referred to as the "Secunded
Employees"). NTTA&T's right to elect a director to the Company's Board
terminates (as a result of the automatic conversion of all Series B-3
Common Stock into Class A Common Stock), thereby terminating NTTA&T's
rights under the Stockholders Agreement as described above, if at any
time the number of issued and outstanding shares of Series B-3 Common
Stock is less than (i) 3% of the aggregate number of issued and
outstanding shares of Common Stock (exclusive of shares held in the
Company's treasury or by the subsidiaries of the Company) or (ii) 50% of
the aggregate number of shares of Series B-3 Common Stock issued and
outstanding (exclusive of shares held in the Company's treasury or by
the subsidiaries of the Company) immediately following the Reorganization
or if NTTA&T or any of its affiliates engage in certain activities which
are competitive with the Company as provided in the Certificate of
Incorporation. The Telcom Stockholder's right to elect a director to
the Company's Board terminates (as a result of the automatic conversion
of all Series B-2 Common Stock into Class A Common Stock), thereby
terminating the Telcom Stockholder's rights under the Stockholders
Agreement as described above, if at any time the number of issued and
outstanding shares of Series B-2 Common Stock is less than 10% of the
-12-
<PAGE>
aggregate number of issued and outstanding shares of Common Stock
(exclusive of shares held in the Company's treasury). The Stockholder's
Agreement also provides that the Stockholder Parties will vote for the
election of the Company's Chief Executive Officer as a member of the
Company's Board.
To enable NTTA&T to benefit from secunding the Secunded Employees
in the Stockholders Agreement, the Company granted to NTTA&T and its
affiliates a non-exclusive, perpetual, irrevocable, royalty free right
and license to use, solely in the business of NTTA&T and its affiliates
outside the United States, such product, service, marketing, operational
and technical information of the Company as shall be learned or obtained
by the Secunded Employees. Such right and license does not include any
specific patent, copyright, trademark, tradename or similar property
rights of the Company and will not be assignable to any third party.
The Stockholders Agreement also provides that until November 13, 1999,
the second anniversary of the First Closing under the NTT Purchase
Agreement, each Stockholder Party must continue to hold at least one-half
of the shares of Common Stock held by such Pre-IPO Stockholder as of the
Second Closing under the NTT Purchase Agreement, except that such
requirement lapses and is without further effect automatically as to NTTA&T
and the Telcom Stockholder, respectively, if a Consultation Event occurs
even though NTTA&T or the Telcom Stockholder, respectively, has objected
thereto. Under the Stockholders Agreement, if such requirement so
lapses with respect to the Telcom Stockholder and, at the time of such
lapsing, MSI is not entitled, pursuant to the Certificate of
Incorporation, to elect a majority of the members of the Company's
Board, then such requirement also lapses and is without further effect
with respect to MSI. In addition, in the Stockholders Agreement, MSI
and the Telcom Stockholder have granted to NTTA&T co-sale rights with
respect to any sale or transfer by either of them (other than to an
affiliate or pursuant to a pledge arrangement, and excluding any public
sale or distribution whether pursuant to a registration statement, Rule
144 or otherwise) of shares of Common Stock (other than Common Stock
acquired in public market transactions).
The Stockholders Agreement also provides for certain rights and
obligations relating to the Company's compliance with the foreign
ownership restrictions under the Communications Act of 1934 and the
rules, regulations and decisions of the FCC.
Loans to Executive Officers
- ---------------------------
On September 1, 1996, Mr. Mandl was obligated to MSI and DSC in
the form of loans for an aggregate principal amount of $15.0 million at
an interest rate of 6.53% per year, which principal and interest accrued
thereon will become due and payable on September 3, 2001. On September
1, 1997, the first anniversary of Mr. Mandl's employment with the
Company, 20% of the principal and all underlying accrued interest was
forgiven. The remaining principal amount will be forgiven as to 20%
thereof and the incremental underlying accrued interest on the second
anniversary of his employment with the Company and as to 60% thereof on
the fifth such anniversary, provided that he is employed by the Company
on such dates. If Mr. Mandl's employment with the Company is terminated
prior to September 3, 2001 by the Company other than for cause or by Mr.
Mandl for good reason or by reason of his death or disability, the
outstanding principal balance and accrued interest thereon will be
forgiven; if his employment with the Company is terminated prior to
September 3, 2001 for any other reason, the outstanding principal
balance (and interest accrued thereof) will become immediately due and
payable to MSI and DSC.
Messrs. Pickle, Morris and Bell received loans each in the aggregate
principal amounts of $1,000,000. Such loans bear interest at annual
interest rates of 5.73%, 5.76% and 5.83%, respectively. The principal
amount and accrued interest on such loans will become due and payable
generally on February 1, 2000, April 10, 2000 and April 7, 2000,
respectively. Each of the loans provides for the forgiveness of the
principal balance and interest accrued thereon; generally, these
provisions become applicable either incrementally during the term of
the loan or as of its maturity date (in any case, subject to the
executive's continued employment with the Company as of such date) or,
among other things, in the event the executive's employment is terminated
under certain circumstances. In addition, each of the loans provides
that the remaining principal balance and interest accrued thereon will
become immediately due and payable in the event the executive's employment
-13-
<PAGE>
with the Company is terminated by the Company for cause or, generally, by
the executive other than by reason of death or disability. Mr. Harris
received a loan in the aggregate principal amount of $600,000, bearing
interest at an annual rate of 6.54%. Mr. Harris' loan is forgivable
only if he is terminated by the Company other than for cause, otherwise,
his loan is due and payable to the Company on June 8, 2000. Mr. Harris
also received an upfront payment of $250,000, paid in January 1997. At
the time Mr. Harris'options are exercised, the $250,000 will be deducted
from his option payout.
FirstMark Agreement
- -------------------
Pursuant to the FirstMark Agreement, the Company granted the
FirstMark Sole Stockholder certain registration rights with respect to
the shares of Class A Common Stock into which the Firstmark Sole
Stockholder's member interest in Teligent, L.L.C. will be converted
pursuant to the Reorganization (the "FirstMark Sole Stockholder
Registrable Securities"). Such registration rights include
"piggyback" rights substantially similar to those granted to Mr. Mandl
pursuant to the Mandl Employment Agreement. Such "piggy-back" rights
are subject to a customary underwriter's "cutback" whereby all shares of
Common Stock to be sold by the Company will first be included in the
applicable registration statement and thereafter all other shares requested
to be included in such registration statement will be subject to exclusion
on a pro rata basis. The FirstMark Sole Stockholder had no right to, and
did not, sell any FirstMark Sole Stockholder Registrable Securities in
the Equity Offerings. Commencing on the first anniversary of the
consummation of the Equity Offerings (November 26, 1998) the FirstMark
Sole Stockholder is entitled under certain conditions, to one demand
registration under the Securities Act in respect of FirstMark Sole
Stockholder Registrable Securities. In the FirstMark Agreement, the
FirstMark Sole Stockholder has agreed not to engage, directly or indirectly,
in any business which provides or proposes to provide in the United States
digital electronic message services in the 18 GHz frequency band or such
other frequency band to which digital electronic message services are
relocated by the FCC, or which provides fixed wireless voice, video or data
transmission services in any frequency band in Canada.
Associated
- ----------
Prior to the First Closing, Associated agreed to make the ACLA
Contribution, and in consideration of such agreement received an
approximate 1% increase in its member interest in Teligent, L.L.C. The
Company has authorized a registration rights agreement with MSI whereby
the Company will grant to MSI certain registration rights substantially
similar to those granted to NTT (see "Certain Transactions-the
Strategic Equity Investment- Registration Rights Agreement") and to DSC
(see "Certain Relationships and Related Transactions-Members
Agreement"). In addition, Associated provides certain general and
administrative services to Teligent for a monthly fee of approximately
$150,000.
Associated owns, operates and invests in a variety of
communications activities and enterprises that may be in competition
with the Company. There can be no assurance that Associated's current or
future business activities will not be in competition with the Company's
business.
NTT
- ---
In connection with the NTT Purchase Agreement, the Company entered
into the Technical Services Agreement with NTT America. See "Certain
Transactions-The Strategic Equity Investment-Technical Services
Agreement."
-14-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
The following documents are filed as part of this report:
Financial Statements
- --------------------
Balance Sheets, December 31, 1997 and 1996
Statements of Operations for the year ended December 31, 1997
and the periods from March 5, 1996 (date of inception) to
December 31, 1997 and 1996
Statements of Stockholders' Equity (Deficit) for the period
from March 5, 1996 (date of inception) to December 31, 1997
Statements of Cash Flows for the year ended December 31, 1997
and the periods from March 5, 1996 (date of inception) to
December 31, 1997 and 1996
Notes to Financial Statements
Financial Statement Schedules
- -----------------------------
All schedules are omitted because they are not applicable or
not required or because the required information is
incorporated herein by reference or included in the financial
statements or notes thereto included elsewhere in this
report.
(b)Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1997.
(c)Exhibits. The following exhibits were previously filed as a part of
the Annual Report on Form 10-K:
3.1 Form of Certificate of Incorporation of Registrant, filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-1
(Registration No. 333-37381), dated November 26, 1997, and
incorporated herein by reference.
3.2 Form of By-laws of Registrant, filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1 (Registration No.
333-37381), dated November 26, 1997, and incorporated herein by
reference.
4.1 Form of Stockholders Agreement, filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Registration No.
333-37381), dated November 26, 1997, and incorporated herein by
reference.
4.2 Form of Indenture between the Registrant, as issuer, and First
Union National Bank, as Trustee, relating to Registrant's Senior
Notes due 2007, including form of Note, filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-1 (Registration
No. 333-37381), dated November 26, 1997, and incorporated herein
by reference.
4.3 Form of Pledge Agreement between Registrant, as issuer, and First
Union National Bank, as Escrow Agent, relating to Registrant's
Senior Notes due 2007, filed as Exhibit 4.3 to the Company's
Registration Statement on Form S-1 (Registration No. 333-37381),
dated November 26, 1997, and incorporated herein by reference.
4.4 Form of Indenture between the Registrant, as issuer, and First
Union National Bank, as Trustee, relating to Registrant's Senior
Discount Notes due 2008, including form of Note.
4.5 Form of Certificate for the Class A Common Stock, filed as Exhibit
4.4 to the Company's Registration Statement on Form S-1
(Registration No. 333-37381), dated November 26, 1997, and
incorporated herein by reference.
10.1 Employment Agreement, dated August 19, 1996, between Associated
Communications, L.L.C. and Alex J. Mandl, filed as Exhibit 10.1
to the Company's Registration Statement on Form S-1 (Registration
No. 333-37381), dated November 26, 1997, and incorporated herein
by reference.
10.2 Stock Contribution Agreement, dated as of March 10, 1997, among
Associated Communications, L.L.C., FirstMark Communications, Inc.
and Lynn Forester, filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (Registration No. 333-37381),
dated November 26, 1997, and incorporated herein by reference.
10.3 Securities Purchase Agreement, dated as of September 30, 1997, by
-15-
<PAGE>
and among Teligent, L.L.C., Microwave Services, Inc., Digital
Services Corporation, and Nippon Telegraph and Telephone
Corporation, filed as Exhibit 10.3 to the Company's Registration
Statement on Form S-1 (Registration No. 333-37381), dated
November 26, 1997, and incorporated herein by reference.
10.4 Form of Registration Rights Agreement, by and among Teligent,
L.L.C. and Nippon Telegraph and Telephone Corporation, filed as
Exhibit 10.4 to the Company's Registration Statement on Form S-1
(Registration No. 333-37381), dated November 26, 1997, and
incorporated herein by reference.
10.5 Form of Technical Services Agreement, by and among Teligent,
L.L.C. and NTT America, Inc. , filed as Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (Registration No.
333-37381), dated November 26, 1997, and incorporated herein by
reference.
10.6 Agreement, dated September 29, 1997, among Teligent, L.L.C.,
Digital Services Corporation, Telcom-DTS Investors, L.L.C.,
Microwave Services, Inc., The Associated Group, Inc. and certain
other parties, filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-1 (Registration No. 333-37381),
dated November 26, 1997, and incorporated herein by reference.
10.7 Agreement and Plan of Merger, dated as of October 6, 1997, by and
between Teligent, Inc. and Teligent, L.L.C. , filed as Exhibit
10.7 to the Company's Registration Statement on Form S-1
(Registration No. 333-37381), dated November 26, 1997, and
incorporated herein by reference.
10.8 Form of Lease Agreement, dated as of July 22, 1997, for the 8065
Leesburg Pike, Vienna, Virginia office space lease between NHP
Incorporated and Teligent, L.L.C. , filed as Exhibit 10.8 to the
Company's Registration Statement on Form S-1 (Registration No.
333-37381), dated November 26, 1997, and incorporated herein by
reference.
10.9 Form of Teligent, Inc. 1997 Stock Incentive Plan, filed as Exhibit
10.9 to the Company's Registration Statement on Form S-1
(Registration No. 333-37381), dated November 26, 1997, and
incorporated herein by reference.
10.10 Network Products Purchase Agreement, dated December 11, 1997, by
and between Northern Telecom Inc. and Teligent, Inc. *
10.11 Financing Commitment Letter of Intent, dated October 28,
1997, by and between Northern Telecom Inc. and Teligent, Inc,
filed as Exhibit 10.9 to the Company's Registration Statement on
Form S-1 (Registration No. 333-37381), dated November 26, 1997,
and incorporated herein by reference.
10.12 Promissory Note, dated February 1, 1997, by Kirby G. Pickle,
Jr. to Associated Communications, L.L.C., filed as Exhibit 10.10
to the Company's Registration Statement on Form S-1 (Registration
No. 333-37381), dated November 26, 1997, and incorporated herein
by reference.
10.13 Promissory Notes, each dated October 29, 1997, by Abraham L.
Morris to Teligent, L.L.C., filed as Exhibit 10.11 to the
Company's Registration Statement on Form S-1 (Registration No.
333-37381), dated November 26, 1997, and incorporated herein by
reference.
10.14 Promissory Note, dated August 5, 1997, by Laurence E. Harris
to Associated Communications, L.L.C., filed as Exhibit 10.12 to
the Company's Registration Statement on Form S-1 (Registration
No. 333-37381), dated November 26, 1997, and incorporated herein
by reference.
10.15 Promissory Note, dated April 7, 1997, by Steven F. Bell to
Associated Communications, L.L.C., filed as Exhibit 10.14 to
the Company's Registration Statement on Form S-1 (Registration
No. 333-37381), dated November 26, 1997, and incorporated herein
by reference.
10.16 Registration rights agreement dated as of March 6, 1998, by
and between Teligent, Inc., and Microwave Services, Inc.
10.17 Registration rights agreement dated as of February 20, 1998,
by and between Teligent, Inc., and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Goldman, Sachs & Co., Salomon Brothers Inc, and TD Securities
(USA) Inc. (1)
21.1 Significant Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
27.1 Financial Data Schedule (filed only electronically with the
Securities and Exchange Commission)
* - Portions of this document have been omitted pursuant to a request
for confidential treatment.
(1) Filed with this Form 10-K/A on April 30, 1998.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELIGENT, INC.
(Registrant)
Date: April 30, 1998 By: /s/ Alex J. Mandl
-----------------
Alex J. Mandl
Chairman of the Board, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date: ApriL 30, 1998 By: /s/ Alex J. Mandl
-----------------
Alex J.Mandl
Chairman of the Board, Chief
Executive Officer and Director
Date: April 30, 1998 By: /s/ Abraham L. Morris
---------------------
Abraham L. Morris
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
Date: April 30 , 1998 By: /s/ Cindy L. Tallent
--------------------
Cindy L. Tallent
Vice President and Controller
(Principal Accounting Officer)
Date: April ___, 1998 By:
-----------------------
Myles P. Berkman
Director
-17-
<PAGE>
Date: April 30, 1998 By: /s/ David J. Berkman
--------------------
David J. Berkman
Director
Date: April 30, 1998 By: /s/ William H. Berkman
----------------------
William H. Berkman
Director
Date: April 30, 1998 By: /s/ Donald H. Jones
-----------------
Donald H. Jones
Director
Date: April 30, 1998 By: /s/ Tetsuro Mikami
------------------
Tetsuro Mikami
Director
Date: April 30, 1998 By: /s/ Rajendra Singh
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Rajendra Singh
Director
-18-
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of February 20, 1998, by and between Teligent, Inc., a Delaware
corporation (the "Company"), and Merril Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), Goldman, Sachs & Co., Salomon
Brothers Inc, and TD Securities (USA) Inc. (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
February 12, 1998 between the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of $440,000,000 aggregate principal amount at maturity
of the Company's 11 1/2% Senior Discount Notes due 2008 (the "Initial
Notes"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Initial
Purchasers and their direct and indirect transferees and assigns the
registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
--------
time to time, and the rules and regulations of the SEC promulgated
thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
--------
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"Closing Time" shall mean the Closing Time as defined in the
------------
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of this
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Agreement and also includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City
of New York.
"Exchange Notes" shall mean 11 1/2% Series B Senior Discount Notes
--------------
due 2008 issued by the Company under the Indenture containing terms identical
to the Initial Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such
interest has been paid, from February 20, 1998, (ii) the transfer
restrictions thereon shall be eliminated and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated) to be offered to Holders of Notes in exchange for Notes
pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
---------------------------
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
-------------------------------------
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Holders" shall mean the Initial Purchasers, for so long as they
-------
own any Registrable Notes, and each of their successors, assigns and direct
and indirect transferees who become owners of Registrable Notes under the
Indenture.
"Indenture" shall mean the Indenture relating to the Notes dated
---------
as of February 20, 1998 between the Company and First Union National Bank,
as trustee, as the same may be amended from time to time in accordance with
the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
------------------
preamble of this Agreement.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Notes; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the
Company or any of its affiliates (as such term is defined in Rule 405
under the 1933 Act) (other than the Initial Purchasers or subsequent
holders of Registrable Notes if such subsequent holders are deemed to be
such affiliates solely by reason of their holding of such Registrable
Notes) shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
------
company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
------------------
preamble of this Agreement.
"Registrable Notes" shall mean the Initial Notes; provided, however,
-----------------
that the Initial Notes shall cease to be Registrable Notes when (i) a
Registration Statement with respect to such Notes shall have been
declared effective under the 1933 Act and such Notes shall have been
disposed of pursuant to such Registration Statement, (ii) such Notes
shall have been sold to the public pursuant to Rule 144 (or any similar
provision then in force, but not Rule 144A) under the 1933 Act, (iii) such
Notes shall have ceased to be outstanding or (iv) such Notes have been
exchanged for Exchange Notes upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident
---------------------
to performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange, "over-the-counter"
market or National Association of Securities Dealers, Inc. ("NASD")
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state or other securities or blue sky laws
and compliance with the rules of the NASD (including reasonable fees and
disbursements of one counsel for any underwriters and Holders in
connection with state or other securities or blue sky qualification of any
of the Exchange Notes or Registrable Notes), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities
sales agreements, certificates representing the Exchange Notes and other
documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and expenses incurred
in connection with the listing, if any, of any of the Registrable Notes on
any securities exchange or exchanges, (vi) all fees and disbursements
relating to the qualification of the Indenture under applicable securities
laws, (vii) the fees and disbursements of counsel for the Company and, in
the case of a Shelf Registration Statement, the reasonable fees and
disbursements (including the expenses of preparing and distributing any
underwriting or securities sales agreement) of one counsel (in addition to
appropriate local counsel) for the Holders (which counsel shall be
selected in writing by the Majority Holders), (viii) the fees and expenses
of the independent public accountants of the Company, including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, (ix) the fees and expenses of
a "qualified independent underwriter" as defined by Conduct Rule 2720 of
the NASD, if required by the NASD rules, in connection with the offering
of the Registrable Notes, (x) the fees and expenses of the trustee,
including its counsel, and any escrow agent or custodian, and (xi) any
fees and disbursements of the underwriters customarily required to be paid
by issuers or sellers of securities and the reasonable fees and expenses
of any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Notes by a Holder.
"Registration Statement" shall mean any registration statement of
----------------------
the Company which covers any of the Exchange Notes or Registrable Notes
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers all of the then Registrable Notes on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Notes under the
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Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
Registration. To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall (i) file within
90 days after the Closing Time an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange all of the
Registrable Notes for Exchange Notes, (ii) use its best efforts to cause
such Exchange Offer Registration Statement to be declared effective by the
SEC within 150 days after the date hereof, (iii) use its best efforts to
cause such Exchange Offer Registration Statement to remain effective until
the closing of the Exchange Offer and (iv) use its best efforts to consummate
the Exchange Offer within 180 days following the date hereof. The Exchange
Notes will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer to enable
each Holder (other than Participating Broker-Dealers (as defined in
Section 3(f))) eligible and electing to exchange Registrable Notes for
Exchange Notes (assuming that (i) such Holder is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (ii) acquires
the Exchange Notes in the ordinary course of such Holder's business and
(iii) has no arrangements or understandings with any person to participate
in the Exchange Offer for the purpose of distributing the Exchange Notes)
to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the 1933 Act and without material
restrictions under the securities laws of a substantial proportion of
the several states of the United States.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 business
days after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer with
respect to Notes evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Registrable Notes delivered for exchange, and a
statement that such Holder is withdrawing its election to have such Notes
exchanged; and
(v) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Notes duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes so accepted for exchange by the
Company; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Notes to each Holder of Registrable Notes equal in amount to
the Registrable Notes of such Holder so accepted for exchange.
Interest on each Exchange Note will accrue from the last date on
which interest was paid on the Registrable Notes surrendered in exchange
therefor or, if no interest has been paid on the Registrable Notes, from
February 20, 1998. The Exchange Offer shall not be subject to any
conditions, other than that the Exchange Offer, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC. Each Holder of Registrable Notes
(other than Participating Broker-Dealers) who wishes to exchange such
Registrable Notes for Exchange Notes in the Exchange Offer shall have
represented that (i) it is not an affiliate (as defined in Rule 405 under
the 1933 Act) of the Company, or, if it is such an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (ii) any Exchange Notes to be
received by it were acquired in the ordinary course of business, (iii)
at the time of the commencement of the Exchange Offer it has no
arrangement with any person to participate in the distribution (within
the meaning of the 1933 Act) of the Exchange Notes and (iv) it is not
acting on behalf of any Person who could not make the representations
in clauses (i) through (iii). The Company shall inform the Initial
Purchasers of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Initial Purchasers shall have the right to contact
such Holders and otherwise facilitate the tender of Registrable Notes in
the Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law or
------------------
applicable interpretations thereof by the staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
or (ii) if for any other reason the Exchange Offer Registration Statement is
not declared effective within 150 days following the date hereof, or the
Exchange Offer cannot be consummated within 180 days following the date hereof,
or (iii) if any Holder (other than an Initial Purchaser) is not eligible to
participate in the Exchange Offer or (iv) upon the written request of any
Initial Purchaser (with respect to any Registrable Notes which it acquired from
the Company) following the consummation of the Exchange Offer if any such
Initial Purchaser shall hold Registrable Notes which it acquired directly from
the Company and if such Initial Purchaser is not permitted, in the opinion of
counsel to such Initial Purchaser, pursuant to applicable law or applicable
interpretation of the staff of the SEC to participate in the Exchange Offer,
the Company will, at its own cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the then
outstanding Registrable Notes by the Holders from time to time in
accordance with the methods of distribution elected by the Majority
Holders of such Registrable Notes and set forth in such Shelf
Registration Statement, and use its best efforts to cause such Shelf
Registration Statement to be declared effective by the SEC by the
180th day after the date hereof (or promptly in the event of a
request any Initial Purchaser pursuant to clause (iv) above). In
the event that the Company is required to file a Shelf Registration
Statement upon the request of any Holder (other than an Initial
Purchaser) not eligible to participate in the Exchange Offer pursuant
to clause (iii) above or upon the request of any Initial Purchaser
pursuant to clause (iv) above, the Company shall file and use its
best efforts to have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect
to all Registrable Notes and a Shelf Registration Statement (which
may be a Registration Statement combined with the Exchange Offer
Registration Statement) with respect to offers and sales of
Registrable Notes held by such Holder or such Initial Purchaser
after completion of the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the
date hereof or such shorter period which will terminate when all of
the Registrable Notes covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or all of
the Registrable Notes become eligible for resale pursuant to Rule
144 under the 1933 Act without volume restrictions; and
(C) notwithstanding any other provisions hereof, use its efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement
thereto complies in all material respects with the 1933 Act, (ii) any
Shelf Registration Statement and any amendment thereto does not, when
it becomes effective, contain 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 and (iii)
any Prospectus forming part of any Shelf Registration Statement,
and any supplement to such Prospectus (as amended or supplemented
from time to time), does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements, in light of the circumstances under which they were made,
not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by Holders with respect to
information relating to the Holders and otherwise as required by Section 3(b)
below, to use all reasonable efforts to cause any such amendment to become
effective and such Shelf Registration to become usable as soon as practicable
thereafter and to furnish to the Holders of Registrable Notes copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
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connection with the registration pursuant to Section 2(a) and 2(b). Each
Holder shall pay all expenses of its counsel other than as set forth in the
preceding sentence, underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable Notes
pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company will be
--------------------------------
deemed not to have used its best efforts to cause a Registration Statement to
become, or to remain, effective during the requisite periods set forth herein
if it voluntarily takes any action that would result in any such Registration
Statement not being declared effective or in the Holders of Registrable Notes
covered thereby not being able to exchange or offer and sell such Registrable
Notes during that period unless such action is required by applicable law so
long as the Company promptly complies with the requirements of Section 3(k)
hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Notes pursuant to a Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Notes pursuant
to such Registration Statement may legally resume.
(e)Increase in Interest Rate. In the event that (i) the Exchange
-------------------------
Offer Registration Statement is not filed with the SEC on or prior to the 90th
day following the date hereof, (ii) the Exchange Offer Registration Statement
is not declared effective on or prior to the 150th day following the date
hereof or (iii) the Exchange Offer is not consummated prior to the 180th day
following the date hereof or a Shelf Registration Statement with respect to the
Registrable Notes is not declared effective on or prior to the 180th day
following the date hereof, cash interest ("Additional Interest") will accrue and
become payable at a rate of one-quarter of one percent per annum following such
90-day period in the case of clause (i) above, following such 150-day period in
the case of clause (ii) above, or following such 180-day period in the case of
clause (iii) above, which rate will be increased by an additional one-quarter
of one percent per annum for each 90-day period that any additional interest
continues to accrue, provided that the aggregate increase in such interest rate
will in no event exceed one percent per annum. Such Additional Interest shall
become payable semi-annually on each March 1 and September 1, as applicable,
following the periods set forth in clauses (i), (ii) and (iii) above. Upon (x)
the filing of the Exchange Offer Registration Statement after the 90-day period
described in clause (i) above, (y) the effectiveness of the Exchange Offer
Registration Statement, after the 150-day period described in clause (ii) above
or (z) consummation of the Exchange Offer, or the effectiveness of the Shelf
Registration Statement, as the case may be, after the 180-day period described
in clause (iii) above, the interest rate borne by the Notes from the date of
such filing, effectiveness or consummation, as the case may be, will be reduced
to the original interest rate if the Company is otherwise in compliance with
this paragraph; provided, however, that, if after any such reduction in interest
rate, a different event specified in clauses (i), (ii) or (iii) above occurs,
the interest rate will again be increased and thereafter reduced pursuant to the
foregoing conditions.
(f) Specific Enforcement. Without limiting the remedies available
--------------------
to the Initial Purchasers and the Holders, the Company acknowledges that any
failure by it to comply with its obligations under Sections 2(a) and 2(b) hereof
may result in material irreparable injury to the Initial Purchasers or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company' obligations under
Sections 2(a) and 2(b) hereof.
3. Registration Procedures. In connection with the obligations
-----------------------
of the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within
the time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the
Registrable Notes by the selling Holders thereof and (iii) shall comply as
to form in all material respects with the requirements of the applicable
form required by the SEC and include or incorporate by reference all
financial statements required by the SEC to be filed therewith, and use
its best efforts to cause such Registration Statement to become effective
and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-
effective amendments to (i) the Exchange Offer Registration Statement as
may be necessary under applicable law to keep such Exchange Offer
Registration Statement effective for the period required to comply with
Section 2(a) (except to the extent the Company is unable to consummate the
Exchange Offer and the Company complies with Section 2(b), subject in all
respects to Section 3(f) hereof), and (ii) the Shelf Registration
Statement as may be necessary under applicable law to keep such Shelf
Registration Statement effective for the period required pursuant to
Section 2(b) hereof; cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the 1933 Act; and comply with the provisions of
the 1933 Act with respect to the disposition of all securities covered by
each Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the selling Holders
thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Notes, at least ten days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Notes is being
filed and advising such Holders that the distribution of Registrable Notes
will be made in accordance with the method elected by the Majority
Holders; and (ii) furnish to each Holder of Registrable Notes, to counsel
for the Initial Purchasers, to counsel for the Holders and to each
underwriter of an underwritten offering of Registrable Notes, if any,
without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or underwriter may reasonably request,
including financial statements and schedules and, if the Holder so
requests, all exhibits (including those incorporated by reference) in
order to facilitate the public sale or other disposition of the
Registrable Notes; and (iii) subject to the last paragraph of Section 3,
hereby consent to the use of the Prospectus, including each preliminary
Prospectus, or any amendment or supplement thereto by each of the selling
Holders of Registrable Notes in connection with the offering and sale of
the Registrable Notes covered by the Prospectus or any amendment or
supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Notes under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Notes shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, to cooperate with the Holders
in connection with any filings required to be made with the NASD, keep
each such registration or qualification effective during the period such
Registration Statement is required to be effective and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction
of such Registrable Notes owned by such Holder; provided, however, that
the Company shall not be required to (i) qualify as a foreign corporation
or as a dealer in securities in any jurisdiction where they would not
otherwise be required to qualify but for this Section 3(d) or (ii) take
any action which would subject them to general service of process or
taxation in any such jurisdiction if they are not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes and counsel for such Holders promptly and, if requested
by such Holder or counsel, confirm such advice in writing promptly (i)
when a Registration Statement has become effective and when any post-
effective amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for post-effective
amendments and supplements to a Registration Statement and Prospectus or
for additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
during the period a Registration Statement is effective, the
representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to such offering cease to be true and correct
in all material respects, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening of
any event or the discovery of any facts during the period a Shelf
Registration Statement is effective which makes any statement made in such
Shelf Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such Shelf
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vii) of any determination by the Company that
a post-effective amendment to a Registration Statement would be
appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Notes for Exchange Notes for the resale of such Exchange
Notes, (ii) for a period of 90 days, furnish to each broker-dealer who
desires to participate in the Exchange Offer and any other persons, if
any, with similar prospectus delivery requirements, without charge, as
many copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or
supplement thereto, as such broker-dealer may reasonably request, (iii)
include in the Exchange Offer Registration Statement a statement that any
broker-dealer who holds Registrable Notes acquired for its own account as
a result of market-making activities or other trading activities (a
"Participating Broker-Dealer"), and who receives Exchange Notes for
Registrable Notes pursuant to the Exchange Offer, may be a statutory
underwriter and must deliver a prospectus meeting the requirements of the
1933 Act in connection with any resale of such Exchange Notes, (iv)
subject to the last paragraph of Section 3, hereby consent to the use of
the Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any broker-dealer in connection
with the sale or transfer of the Exchange Notes covered by the Prospectus
or any amendment or supplement thereto, and (v) include in the transmittal
letter or similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following provision:
"If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Notes. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account
in exchange for Registrable Notes, it represents that the
Registrable Notes to be exchanged for Exchange Notes were acquired
by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus
meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Notes pursuant to the Exchange Offer;
however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter"
within the meaning of the 1933 Act";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the broker-
dealer will not be deemed to admit that it is an underwriter within the
meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer participates in
the Exchange Offer, the Company shall use its best efforts to cause to be
delivered at the request of an entity representing the Participating
Broker-Dealers (which entity shall be one of the Initial Purchasers,
unless it elects not to act as such representative) only one, if any,
"cold comfort" letter with respect to the Prospectus in the form existing
on the last date for which exchanges are accepted pursuant to the Exchange
Offer and with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer participates in
the Exchange Offer, the Company shall use its best efforts to maintain
the effectiveness of the Exchange Offer Registration Statement for a
period of one year following the closing of the Exchange Offer; and
(D) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement as would
otherwise be contemplated by Section 3(b), or take any other action as a
result of this Section 3(f), for a period exceeding 180 days after the
last date for which exchanges are accepted pursuant to the Exchange Offer
(as such period may be extended by the Company) and Participating Broker-
Dealers shall not be authorized by the Company to, and shall not, deliver
such Prospectus after such period in connection with resales contemplated
by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Notes copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable and provide immediate notice to each Holder of the withdrawal
of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Notes to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold and
not bearing any restrictive legends; and cause such Registrable Notes to
be in such denominations (consistent with the provisions of the Indenture)
in a form eligible for deposit with the Depositary and registered in such
names as the selling Holders or the underwriters, if any, may reasonably
request at least one business day prior to the closing of any sale of
Registrable Notes;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by Section
3(e)(vi) hereof, use its best efforts to prepare a supplement or post-
effective amendment to a Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Notes, such Prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as promptly
as practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such numbers of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(l) obtain a CUSIP number for all Exchange Notes, or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates
for the Exchange Notes or the Registrable Notes, as the case may be, in a
form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Notes, or Registrable Notes, as the case may
be, (ii) cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for the Indenture to be so qualified
in accordance with the terms of the TIA and (iii) execute, and use their
best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such
Registrable Notes and in such connection whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration:
(i) make such representations and warranties to the Holders
of such Registrable Notes and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if
any, and the holders of a majority in principal amount of the
Registrable Notes being sold) addressed to each selling Holder and
the underwriters, if any, covering the matters customarily covered
in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably requested by
such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to
the underwriters, if any, and will use best efforts to have such
letters addressed to the selling Holders of Registrable Notes, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Notes, which agreement shall be
in form, substance and scope customary for similar offerings; and
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 5 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to
said Section; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings.
The above shall be done at (i) the effectiveness of such Shelf
Registration Statement (and, if appropriate, each post-effective amendment
thereto) and (ii) each closing under any underwriting or similar agreement
as and to the extent required thereunder. In the case of any underwritten
offering, the Company shall provide written notice to the Holders of all
Registrable Notes of such underwritten offering at least 30 days prior to
the filing of a prospectus supplement for such underwritten offering.
Such notice shall (x) offer each such Holder the right to participate in
such underwritten offering, (y) specify a date, which shall be no earlier
than 10 days following the date of such notice, by which such Holder must
inform the Company of its intent to participate in such underwritten
offering and (z) include the instructions such Holder must follow in order
to participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable Notes and
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such
Holders or underwriters, all financial and other records, pertinent
corporate documents and properties of the Company reasonably requested by
any such persons, and cause the respective officers, directors, employees,
and any other agents of the Company to supply all information reasonably
requested by any such representative, underwriter, special counsel or
accountant in connection with such Shelf Registration Statement;
(p) (i) a reasonable time prior to the filing of any Exchange
Offer Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the Initial
Purchasers, and make such changes in any such document prior to the filing
thereof as any of the Initial Purchasers or their counsel may reasonably
request; (ii) in the case of a Shelf Registration, a reasonable time prior
to filing any Shelf Registration Statement, any Prospectus forming a part
thereof, any amendment to such Shelf Registration Statement or amendment
or supplement to such Prospectus, provide copies of such document to the
Holders of Registrable Notes, to the Initial Purchasers, to counsel on
behalf of the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Notes, if any, and make such changes
in any such document prior to the filing thereof as the Holders of
Registrable Notes, the Initial Purchasers on behalf of such Holders, their
counsel and any underwriter may reasonably request; and (iii) cause the
representatives of the Company to be available for discussion of such
document as shall be reasonably requested by the Holders of Registrable
Notes, the Initial Purchasers on behalf of such Holders or any underwriter
and shall not at any time make any filing of any such document of which
such Holders, the Initial Purchasers on behalf of such Holders, their
counsel or any underwriter shall not have previously been advised and
furnished a copy or to which such Holders, the Initial Purchasers on
behalf of such Holders, their counsel or any underwriter shall reasonably
object;
(q) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities to be listed on any securities exchange
on which similar debt securities issued by the Company are then listed if
requested by the Majority Holders or by the underwriter or underwriters of
an underwritten offering of Registrable Securities, if any;
(r) in the case of a Shelf Registration, unless the rating in
effect for the Notes applies to the Exchange Notes and the Notes to be
sold pursuant to a Shelf Registration, use its best efforts to cause the
Registrable Notes to be rated with the appropriate rating agencies, if so
requested by the Majority Holders or by the underwriter or underwriters of
an underwritten offering of Registrable Notes, if any, unless the
Registrable Notes are already so rated;
(s) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
at least 12 months which shall satisfy the provisions of Section 11(a) of
the 1933 Act and Rule 158 thereunder; and
(t) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as
a condition to such Holder's participation in the Shelf Registration) require
each Holder of Registrable Notes to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Notes as the Company may from time to time reasonably request in
writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(ii)-
(vi) hereof, such Holder will forthwith discontinue disposition of Registrable
Notes pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(k)
hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at their expense) all copies in its possession, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Notes current at the time of receipt of such notice. If the Company
shall give any such notice to suspend the disposition of Registrable Notes
pursuant to a Shelf Registration Statement as a result of the happening of any
event or the discovery of any facts, each of the kind described in Section
3(e)(vi) hereof, the Company shall be deemed to have used its best efforts to
keep the Shelf Registration Statement effective during such period of suspension
provided that the Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Shelf Registration Statement and shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
4. Underwritten Registrations. If any of the Registrable Notes
--------------------------
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Majority Holders of such
Registrable Notes included in such offering and shall be reasonably acceptable
to the Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
5. Indemnification and Contribution. (a) The Company shall
--------------------------------
indemnify and hold harmless each Initial Purchaser, each Holder, including
Participating Broker-Dealers, each underwriter who participates in an offering
of Registrable Notes, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who controls any
of such parties within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Notes or
Registrable Notes were registered under the 1933 Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any 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, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any 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; provided that (subject to Section
5(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including fees and disbursements of counsel chosen by any indemnified
party), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 5(a);
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by the Initial Purchasers, any Holder, including Participating
Broker-Dealers or any underwriter, expressly for use in the Registration
Statement (or any amendment or supplement thereto) or the Prospectus (or
any amendment or supplement thereto).
(b) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
Initial Purchaser, each underwriter who participates in an offering of
Registrable Notes and the other selling Holders and each of their respective
directors and officers (including each officer of the Company who signed the
Registration Statement) and each Person, if any, who controls the Company, any
Initial Purchaser, any underwriter or any other selling Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense whatsoever described in
the indemnity contained in Section 5(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Holder,
as the case may be, expressly for use in the Registration Statement (or any
amendment thereto), or the Prospectus (or any amendment or supplement thereto);
provided, however, that no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale
of Registrable Notes pursuant to such Shelf Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to either paragraph (a) or
paragraph (b) above, such person (the "indemnified party") shall give notice as
promptly as reasonably practicable to each person against whom such indemnity
may be sought (the "indemnifying party"), but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party
may participate at its own expense in the defense of such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim hatsoever in respect of which indemnification or
contribution could be sought under this Section 5 hereof (whether or not the
indemnified parties are actual or potential parties thereof), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than
45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request with such request prior to the date of such
settlement.
(e) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party,
as incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by such indemnifying party or parties on the one hand, and
such indemnified party or parties on the other hand from the offering of the
Exchange Notes or Registrable Notes included in such offering or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other hand
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by such indemnifying
party or parties and such indemnified party or parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Initial Purchasers and the Holders
of the Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if the Initial Purchasers were treated as one entity, and the Holders were
treated as one entity, for such purpose) or by another method of allocation
which does not take account of the equitable considerations referred to above in
Section 5. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
5 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by an governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1993 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 5,
each person, if any, who controls an Initial Purchaser or Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as such Initial Purchaser or Holder, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to any Initial
Purchaser pursuant to the Purchase Agreement shall not be deemed to be a benefit
received by any Initial Purchaser in connection with the offering of the
Exchange Securities or Registrable Securities in such offering.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as
------------- ----------------------
the Company is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company covenants that it will file the reports required to be
filed by it under Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will upon the request of any Holder of Registrable
Notes (i) make publicly available such information as is necessary to permit
sales pursuant to Rule 144 under the 1933 Act, (ii) deliver such information to
a prospective purchaser as is necessary to permit sales pursuant to Rule 144A
under the 1933 Act and it will take such further action as any Holder of
Registrable Notes may reasonably request, and (iii) take such further action
that is reasonable in the circumstances, in each case, to the extent required
from time to time to enable such Holder to sell its Registrable Notes without
registration under the 1933 Act within the limitation of the exemptions provided
by (x) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (y) Rule 144A under the 1933 Act, as such Rule may be amended from time to
time, or (z) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Notes, the Company will deliver to
such Holder a written statement as to whether they have complied with such
requirements.
(b) No Inconsistent Agreements. The Company has not entered into
--------------------------
nor will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company' other issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or departure; provided, however, that no amendment, modification, supplement or
waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Notes unless consented to in
writing by such Holder.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telecopier, or any courier guaranteeing overnight delivery (i) if to
a Holder (other than an Initial Purchaser), at the most current address set
forth on the records of the Registrar under the Indenture, (ii) if to an Initial
Purchaser, at the most current address given by such Initial Purchaser to the
Company by means of a notice given in accordance with the provisions of this
Section 6(d), which address initially is the address set forth in the Purchase
Agreement; and (iii) if to the Company, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 6(d).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next business day if
timely delivered to an air courier guaranteeing overnight delivery.
Copies ofall such notices, demands, or other communications shall be
Concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Registrable Notes, in
any manner, whether by operation of law or otherwise, such Registrable Notes
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Notes, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TELIGENT, INC.
By:
-------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
TD SECURITIES (USA) INC.
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By:
--------------------------
Name:
Title:
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
TELIGENT, INC.
ISSUER
and
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
TD SECURITIES (USA) INC.
INITIAL PURCHASERS
Dated: February 20, 1998
- -------------------------------------------------------------------------------
