<PAGE>
As filed with the Securities and Exchange Commission on July 1, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
Teleport Communications Group Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3173139
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
437 Ridge Road, Executive Building 3 08810
Dayton, New Jersey (Zip Code)
(Address of Principal Executive Offices)
-------------------------
TELEPORT COMMUNICATIONS GROUP INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(Full title of plan)
-------------------------
JOHN W. THOMSON, ESQ.
Vice President and Secretary
Teleport Communications Group Inc.
One Teleport Drive
Staten Island, New York 10311-1011
(Name and Address of agent for service)
-------------------------
Telephone number of agent for service:
(718) 355-2000
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Proposed Proposed
maximum maximum
offering aggregate Amount of
Title of security Amount being price per offering registration
being registered registered* share** price fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Common Stock, $.01 Par
Value 1,500,000 $ 31.32 $ 46,980,000 $ 14,237
================================================================================
</TABLE>
* In addition, pursuant to Rule 416 under the Securities Act of 1933, this
registration statement also covers an indeterminate number of additional shares
which may be offered and issued in accordance with the Plan terms to prevent
dilution from stock splits, stock dividends or similar transactions plus an
indeterminate amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
** The maximum offering price per share is calculated pursuant to Rule 457(c)
and (h) using the average high and low prices of the security as of June 24,
1997 as reported in NASDAQ.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing information specified in the instructions to Part I of
Form S-8 will be sent or given to employees participating in the Plan as
specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the
"Securities Act"). Those documents and the documents incorporated by reference
into this Registration Statement pursuant to Item 3 of Part II of this
Registration Statement, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act of 1933, as amended.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Teleport Communications Group Inc. (the "Company") hereby incorporates,
or will be deemed to have incorporated, herein by reference the following
documents:
(1) The Company's Annual Report on Form 10K for the fiscal year ended
December 31, 1996 and the Company's Quarterly Report on Form 10-Q for the period
ending March 31, 1997;
(2) The Company's Current Reports on Form 8-K filed on January 23,
1997, February 20, 1997, March 7, 1997, March 17, 1997, April 4, 1997, and May
14, 1997 and all other reports filed pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") since December
31, 1996;
(3) The description of the Company's Class A Common Stock contained in
the Company's most recent Exchange Act registration statement on Form 8-A filed
on June 21, 1996, including any amendment thereto or report filed for the
purpose of updating such description;
(4) The Company's Notice of Annual Stockholders Meeting and Proxy
Statement for its annual meeting of stockholders held on May 14, 1997, filed
pursuant to Section 14 of the Exchange Act; and
(5) All documents filed by the Company or the Teleport Communications
Group Inc. 1997 Employee Stock Purchase Plan pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel.
None.
Item 6. Indemnification of Officers and Directors
Article V of the Amended and Restated Certificate of Incorporation of
the Company, (the "Certificate of Incorporation"), provides that to the fullest
extent of Section 102 of the General Corporation Law of the State of Delaware
(the "DGCL"), a director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director.
<PAGE>
Section 102(b)(7) of the DGCL, provides that a corporation (in its original
certificate of incorporation or an amendment thereto) may eliminate or limit the
personal liability of a director (or certain persons who, pursuant to the
provisions of the certificate of incorporation, exercise or perform duties
conferred or imposed upon directors by the DGCL) to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which the director derived an improper personal benefit.
Under Section 145 of the DGCL, in general, a corporation may indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties to which they may be made parties by reason of their being or
having been directors, officers, employees or agents and shall so indemnify such
persons if they acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. Article VIII of the Certificate of Incorporation provides
that the Company shall indemnify its officers, directors, employees and agents
to the full extent permitted by Delaware law.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
*3.6 Amended and Restated Certificate of Incorporation of the
Company, as revised
*3.7 Amended and Restated By-laws of the Company, as revised
*4.2 Form of Amended and Restated Stockholders' Agreement
*4.3 Form of Indenture between the Company and United States
Trust Company of New York, as Trustee, relating to the 11
1/8% Senior Discount Notes due 2007 of the Company
*4.4 Form of Indenture between the Company and United States
Trust Company of New York, as Trustee, relating to 9 7/8%
Senior Notes due 2006 of the Company
*4.5 Form of Stock Certificate for Teleport Communications Group
Inc.
5 Opinion of Dow, Lohnes & Albertson, PLLC
10.38 Teleport Communications Group Inc. 1997 Employee Stock
Purchase Plan
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Dow, Lohnes & Albertson
(contained in their opinion in Exhibit 5)
* Incorporated by reference to the corresponding exhibit of TCGI's Registration
Statements on Form S-1 (File Nos. 333-3850 and 333-3984)
<PAGE>
Item 9. Undertakings
(1) The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(b) that, for the purpose of determining any liability under the
Securities Act, each such post effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
Annual Report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dayton, State of New Jersey on the 30th day of June,
1997.
TELEPORT COMMUNICATIONS GROUP INC.
By: /s/ Robert Annunziata
-------------------------------------------
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Plan
Administrators have duly caused this Registration Statement to be signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Robert Annunziata Chairman of the Board of June 30, 1997
- ------------------------- Directors, President and
Robert Annunziata Chief Executive Officer
/s/ John A. Scarpati Senior Vice President and June 30, 1997
- ------------------------- Chief Financial Officer
John A. Scarpati (Principal Financial Officer)
/s/ Maria Terranova-Evans Vice President and Controller June 30, 1997
- ------------------------- (Principal Accounting
Maria Terranova-Evans Officer)
/s/ James O. Robbins Director June 30, 1997
- -------------------------
James O. Robbins
/s/ Brian L. Roberts Director June 27, 1997
- -------------------------
Brian L. Roberts
/s/ Brendan R. Clouston Director June 30, 1997
- -------------------------
Brendan R. Clouston
/s/ John R. Dillon Director June 25, 1997
- -------------------------
John R. Dillon
/s/ Gerald W. Gaines Director June 30, 1997
- -------------------------
Gerald W. Gaines
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Lawrence S. Smith Director June 30, 1997
- -------------------------
Lawrence S. Smith
/s/ Larry E. Romrell Director June 30, 1997
- -------------------------
Larry E. Romrell
/s/ David M. Woodrow Director June 30, 1997
- -------------------------
David M. Woodrow
/s/ James Bruce Llewellyn Director June 30, 1997
- -------------------------
James Bruce Llewellyn
/s/ C.B. Rogers, Jr. Director June 25, 1997
- -------------------------
C.B. Rogers, Jr.
/s/ Jimmy W. Hayes Director June 30, 1997
- -------------------------
Jimmy W. Hayes
/s/ Bernard W. Schotters Director June 30, 1997
- -------------------------
Bernard W. Schotters
</TABLE>
<PAGE>
Exhibit 5
[FIRM LETTERHEAD APPEARS HERE]
June 30, 1997
Teleport Communications Group Inc.
One Teleport Drive
Staten Island New York, New York 10311-1033
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
We have acted as special counsel for Teleport Communications Group Inc., a
Delaware corporation ("Teleport"), in connection with the preparation of the
Registration Statement on Form S-8 (the "Registration Statement") pertaining to
1,500,000 shares (the "Shares") of Teleport Class A Common Stock, $.01 par value
per share, being issued by Teleport pursuant to the Teleport Communications
Group Inc. 1997 Employee Stock Purchase Plan (the "Plan") and an indeterminate
number of interests in the Plan (the "Interests") that may be acquired
thereunder.
In preparing this opinion, we have reviewed (a) the Registration Statement;
(b) Teleport's Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws; (c) the Plan; and (d) certain records of Teleport's corporate
proceedings as reflected in its minute and stock books.
As to matters of fact relevant to our opinion, we have relied upon oral
representations of officers of Teleport without further investigation. With
respect to the foregoing documents, we have assumed: (i) the authenticity of
all documents submitted to us as originals, the conformity with authentic
original documents of all documents submitted to us as copies or forms, the
genuineness of all signatures and the legal capacity of natural persons, and
(ii) that the foregoing documents, in the forms thereof submitted for our
review, have not been altered, amended or repealed in any respect material to
our opinion as stated herein. We have not reviewed any documents other than the
documents listed above for purposes of rendering our opinion as expressed
herein, and we assume that there exists no provision of any such other document
that bears upon or is inconsistent with our opinion as expressed herein. We
have conducted no independent factual investigation of our own but rather have
relied solely upon the foregoing documents, the statements and information set
forth therein and the additional matters recited or assumed herein, all of which
we assume to be true, complete and accurate in all material respects.
<PAGE>
Teleport Communications Group Inc.
June 30, 1997
Page 2
Our opinion is limited to matters of law arising under the General
Corporation Law of the State of Delaware, insofar as such law applies, and we
express no opinion as to conflicts of law rules or the laws of any states or
jurisdictions, including federal laws regulating securities, other federal laws
or the rules and regulations of stock exchanges or any other regulatory body,
other than as specified above.
Based upon and subject to the foregoing and any other qualifications stated
herein, we are of the opinion that (i) the Shares, when and to the extent issued
and paid for pursuant to the provisions of the Plan, will be validly issued,
fully paid and non-assessable and (ii) the Plan confers legally enforceable
Interests to employees participating in the Plan to the extent and upon the
terms and conditions described therein, subject to limitations imposed by
bankruptcy, insolvency, reorganization, moratorium or similar laws and related
court decisions of general applicability relating to or affecting creditors'
rights generally.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement, and to all references to our firm in the Registration
Statement, provided, that in giving such consent we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder. Except as provided for hereinabove, without our
prior written consent, this opinion may not be furnished or quoted to, or relied
upon by, any other person or entity for any purpose.
Very truly yours,
DOW, LOHNES & ALBERTSON, PLLC
By: /s/ Paul R. Lang
-------------------------------
Paul R. Lang
Member of the Firm
<PAGE>
Exhibit 10.38
TELEPORT COMMUNICATIONS GROUP INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
Effective July 1, 1997
The purpose of this Plan is to attract and retain qualified employees to
promote the business of Teleport Communications Group Inc. by providing its
employees with an opportunity to purchase its Class A common stock.
1. Definitions
-----------
"Average Market Price" shall mean the average of the closing price of the
Corporation's Shares on the NASDAQ National Market System on the ten (10)
trading days prior to a given day.
"Beneficiary" shall have the meaning set forth in Section 25.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee appointed by the Board of
Directors of the Corporation.
"Compensation" shall mean the annual compensation paid by the Corporation
or its Subsidiaries to a Participant as determined in the sole discretion of the
Committee.
"Corporation" shall mean Teleport Communications Group Inc.
"Disability" shall mean, with respect to any Participant, a disability
which entitles the Participant to benefits under the Company's long-term
disability insurance policy, or in the absence of any such policy, a total and
permanent disability as determined by the Committee in its sole discretion.
"Eligible Employee" shall have the meaning set forth in Section 4.
"Exercise Date" shall mean with respect to any offering, the last day of
the Offering Period or any day(s) within the Offering Period designated by the
Committee. In no event shall the Exercise Date be more than twenty seven (27)
months from the Grant Date, unless the purchase price is to be no less than
eighty-five percent (85%) of the Average Market Price of the Shares on the
Exercise Date, in which event the Exercise Date shall be no more than five (5)
years from the Grant Date.
<PAGE>
"Grant Date" shall mean the first business day of each Offering Period.
"Offering Period" shall mean a period of three (3) months or more,
determined at the sole discretion of the Committee, beginning on the date
determined by the Committee for the issuance of Options.
"Option" shall mean a right granted to an Eligible Employee by the
Committee pursuant to the Plan to purchase shares in an Offering Period.
"Participant" shall mean an Eligible Employee who elects to participate in
the Plan pursuant to Section 6.
"Plan" means the Teleport Communications Group Inc. Employee Stock Purchase
Plan as set forth herein and amended from time to time.
"Plan Year" means the twelve-month period commencing July 1 and ending June
30.
"Retirement" shall mean termination of employment following a Participant's
attainment of (i) age sixty-five (65), or (ii) early retirement date as defined
in the Teleport Communications Group Inc. Retirement Savings Plan or a successor
plan.
"Shares" shall mean shares of the Class A common stock, $.01 par value per
share, of the Corporation.
"Subsidiary" shall mean a subsidiary of the Corporation within the meaning
of Section 424(f) of the Code and the regulations promulgated thereunder, which
has been designated by the Committee as a participating employer in this Plan.
2. Administration. The Plan shall be administered by the Committee.
--------------
Members of the Committee shall not be Eligible Employees. The Committee shall
have the sole and discretionary authority to make rules and regulations for the
administration of the Plan and to interpret the Plan. The Committee's
interpretations and decisions with regard thereto shall be final, binding and
conclusive on all interested parties. The Committee's interpretations, if any,
of identical terms used in employee stock purchase plan(s) previously adopted by
the Corporation shall apply under this Plan, unless the Committee determines
otherwise.
3. Stock Subject to the Plan. The Corporation hereby reserves and makes
-------------------------
available for purchase under the Plan One Million Five Hundred Thousand
(1,500,000) Shares. In the event any Option granted under the Plan is canceled
or expires unexercised, the number of Shares no longer subject to such Option
shall automatically become available for new awards under the Plan.
4. Eligible Employees. All employees of the Corporation or any of its
------------------
Subsidiaries as of a Grant Date shall be eligible to participate in the Plan,
except employees (i) whose customary employment is twenty (20) hours or less per
week or not more than five (5) months in any calendar
<PAGE>
year, or (ii) who immediately after any Grant Date, would own five (5) percent
or more of the total combined voting power or value of all classes of stock of
the Corporation or any Subsidiary. For purposes of the preceding sentence, the
rules of Sections 423(b)(3) and 424(d) of the Code shall apply in determining
the employee's percentage of stock ownership.
5. Offerings. On each Grant Date, the Committee shall grant each
---------
Eligible Employee an Option to purchase Shares under the Plan.
6. Participation. An Eligible Employee on the Grant Date may become a
-------------
Participant in such offering by completing any election forms deemed appropriate
by the Committee.
7. Payment. A Participant may pay for any Shares by completing a payroll
-------
deduction authorization form and forwarding it to his or her employer's payroll
department. The form will authorize a regular payroll deduction from the
Participant's compensation for the purpose of purchasing Shares, and will
specify the date on which such deduction is to commence, which may not be
retroactive. A Participant may not change his or her payroll deduction but may
cancel his or her payroll deduction pursuant to Section 8. At the sole
discretion of the Committee, a Participant may pay for any Shares by: (i)
making a lump-sum contribution to his or her employer's payroll department at
least five (5) business days prior to the Exercise Date; (ii) delivering to the
Committee at least ten (10) business days prior to the Exercise Date a properly
executed exercise notice together with irrevocable instructions to a broker to
sell such Shares from the Participant's Option as are necessary to satisfy the
purchase price and to promptly remit such sale proceeds to the Corporation; or
(iii) delivering to the Committee at least ten (10) business days prior to the
Exercise Date written directions to the Corporation to withhold from the
Participant's Option such Shares as are necessary to satisfy the purchase price.
8. Cancellation. A Participant may, at any time and for any reason,
------------
cancel his or her payroll deduction authorization, provided the balance
accumulated in the Participant's payroll deduction account shall be applied to
the purchase of Shares on the Exercise Date, subject to Sections 9 and 12
hereof. Any cancellation shall be in writing delivered to the Vice President,
People Services. Once a Participant cancels his or her payroll authorization he
or she may not thereafter begin payroll deductions again during the remainder of
the Offering Period. A Participant may not withdraw amounts accumulated through
payroll deduction.
9. Options.
-------
(a) Each Eligible Employee as of each Grant Date will be granted an
Option to purchase a number of Shares under a uniform formula specified by the
Committee, provided no Employee shall be granted in one year Options for a
number of Shares in excess of 10 percent of his or her Compensation divided by
the purchase price for each Share. No Eligible Employee may be granted an
Option which permits him or her during any one calendar year to purchase Shares
under the Plan, and any other stock purchase plan of the Corporation or its
Subsidiaries, which exceed in value twenty-five thousand dollars ($25,000) based
on the Average Market Price of the Shares on the Grant Date of the Option.
<PAGE>
(b) The purchase price for each Share purchased under the Plan shall
be determined by the Committee, in accordance with Section 423 of the Code, and
will be no less than eighty-five percent (85%) of the Average Market Price at
the Grant Date or Exercise Date; provided, however, that in no event shall the
purchase price be less than the par value of such Shares. Shares shall be
purchased on the Exercise Date and certificates showing ownership shall be
available to be issued to a Participant (automatically or at the request of the
Participant, as determined by the Committee) as soon as practicable thereafter.
(c) Any Options outstanding on the Exercise Date automatically shall
be exercised to the extent the Participant's accumulated payroll deductions
satisfy the purchase price, provided Options shall be exercised only to the
extent of full shares; Options may not be exercised to purchase fractional
Shares. Any Options which are not exercised by the Exercise Date shall be
canceled. Any balance remaining in a Participant's payroll deduction account
after Shares have been purchased on the Exercise Date shall be rolled forward
and applied to the next succeeding Offering Period or, if the Participant so
elects, refunded to the Participant without interest.
10. Registration of Certificates. Share certificates may be registered
----------------------------
only in the name of the Participant, or, if the Participant so indicates on his
or her election form, in joint tenancy with a member of the Participant's
family, with right of survivorship. A Participant who is a resident of a
jurisdiction which does not recognize such a joint tenancy may have certificates
registered in the Participant's name as tenant in common or as community
property with a member of the Participant's family, without right of
survivorship.
11. Rights as a Stockholder. None of the rights or privileges of a
-----------------------
stockholder of the Corporation shall exist with respect to Options issued under
the Plan unless and until Shares have been purchased on behalf of the
Participant and stock certificates have been issued.
12. Rights on Retirement, Death or Termination of Employment. In the
--------------------------------------------------------
event of a Participant's Retirement, death, or Disability prior to the Exercise
Date, and the Participant or his or her Beneficiary do not cancel the Option
prior to the Exercise Date, any Options outstanding on the Exercise Date shall
be exercised to the extent of the Participant's accumulated payroll deductions
satisfy the purchase price plus the lump sum payment, if any (to the extent
permitted by the Committee), made by the Participant or his or her beneficiary
within five (5) business days of the Exercise Date. If, prior to the Exercise
Date the Participant terminates employment for any reason other than Retirement,
Death or Disability, his or her Option shall be canceled and his or her payroll
deductions, if any, shall be refunded without interest. All refunds of payroll
deduction contributions made under the Plan shall be made as promptly as
possible.
13. Rights Not Transferable. A Participant shall not assign, sell,
-----------------------
encumber, transfer or otherwise dispose of any rights or interests under the
Plan, other than by will or the laws of descent and distribution. Any attempted
disposition in violation of the preceding sentence shall be null and void. Any
Option hereunder must be exercised by the employee during his or her lifetime,
or, after his or her death, by his or her Beneficiary.
<PAGE>
14. Application of Funds. All payroll deduction contributions held by the
--------------------
Corporation under the Plan may be used for any corporate purpose prior to its
application to the purchase price for an Option.
15. Adjustment in Case of Changes Affecting the Corporation's Stock. In
---------------------------------------------------------------
the event of any stock dividend, stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or any
purchase of Shares at a price substantially below fair market value, or of any
similar change affecting the capital structure of the Corporation, the number
and kind of Shares available for awards under the Plan shall be appropriately
adjusted, consistent with such change, in such manner as the Committee in its
sole discretion may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, the Participants
hereunder. The Committee shall give notice to each Participant of any
adjustment made pursuant to this Section, and such adjustment shall be effective
and binding for all purposes of the Plan.
16. Amendment of the Plan. The Board of Directors may at any time, or
---------------------
from time to time, retroactively or prospectively, amend the Plan in any
respect, except that, without the approval of a majority of the shares of stock
of the Corporation then issued and outstanding and entitled to vote, no
amendment shall be made (i) increasing or decreasing the number of Shares
authorized for the Plan under Section 3 (other than as provided in Section 15),
(ii) decreasing the purchase price per Share under Section 9(b), (iii)
withdrawing the administration of the Plan from the Committee, or (iv)
permitting any Options under the Plan to be granted to a member of the Committee
or to a person who is administering any stock option plan of the Corporation or
a Subsidiary or any employee stock purchase plan of the Corporation or a
Subsidiary. The Administrative Committee under the Retirement Savings Plan may
make any amendments to the Plan necessary to continue the Plan's qualification
as a Plan described in Section 423 of the Code.
17. Termination of the Plan. This Plan and all rights of employees under
-----------------------
any offering hereunder shall terminate at any time, at the discretion of the
Board of Directors. Upon termination of the Plan, all Options shall be canceled
and all amounts in the payroll deduction accounts of Participants shall be
carried forward into the Participant's payroll deduction account under a
successor Plan, if any, or refunded to the Participant with interest equal to
five percent (5%) per annum.
18. Investment Representation. A Participant, if required by the
-------------------------
Committee, shall deliver to the Committee at the time of any exercise of an
Option or portion thereof a written representation that the Shares to be
acquired upon such exercise are to be acquired for investment and not for resale
or with a view to the distribution thereof. Upon such demand, delivery of such
representation to the Corporation prior to the delivery of any Shares issued
upon exercise of any Option and prior to the expiration of the Offering Period
shall be a condition precedent to the right of the Participant or his or her
Beneficiary to purchase any Shares.
19. Plan Shares Purchases. The Committee may purchase outstanding Shares
---------------------
on behalf of the Plan, upon such terms as the Committee may approve, for
delivery under the Plan or use authorized but unissued Shares reserved by the
Corporation for issuance hereunder.
<PAGE>
20. Governing Law. The Plan shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without reference to the
principles of conflicts of law thereof. The Plan is intended to qualify as a
Plan which satisfies the requirements of Section 423 of the Code. Any
interpretation hereunder shall be made in accordance with such Code Section and
the regulations promulgated thereunder.
21. No Liability of Committee Members. No member of the Committee shall
---------------------------------
be personally liable (i) by reason of any contract or other instrument executed
by such member or by his or her authorized agent in his or her capacity as a
member of the Committee, or (ii) for any mistake of judgment made in good faith,
and the Corporation shall indemnify and hold harmless each employee, officer and
director of the Corporation and its Subsidiaries to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or reasonable expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Board of Directors of the Corporation) arising out of any act or omission to
act in connection with the Plan unless arising out of such person's own fraud or
bad faith. The indemnification provided for in this Section 21 shall be in
addition to any rights of indemnification such individual has as a director or
officer pursuant to law, or under his or her employer's certificate of
incorporation or by-laws.
22. Successor Corporation. The obligations of the Corporation under the
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Plan shall be binding upon the successor corporation or organization resulting
from the merger, consolidation or other reorganization of the Corporation.
23. Withholding. Upon the exercise of any Option under the Plan, the
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Participant's employer shall have the right to require the Participant (or his
or her representative): (i) to remit an amount sufficient to satisfy all
Federal, state and local withholding tax requirements prior to the delivery of
any Share certificate; or (ii) in the alternative, the Committee in its
discretion may either permit the Participant to provide irrevocable instructions
to a broker to sell such Shares from the Participant's Option as are necessary
to satisfy any tax withholding obligation and to promptly remit such sale
proceeds to the Corporation or have withheld from the Participant's Option such
Shares as are necessary to satisfy any tax withholding obligation.
24. Notice of Premature Disposition. A Participant or former Participant
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who disposes of Shares acquired under the Plan within (i) two (2) years of the
Grant Date of the Options by which such Shares were acquired, or (ii) twelve
(12) months of the date of transfer of Shares to him or her, shall notify in
writing the Secretary of the Corporation of such disposition and shall make
appropriate arrangements for satisfying income and payroll tax withholding
requirements.
25. Beneficiary. A Participant may file a written designation of a
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beneficiary who is to receive any Shares and/or payment under the Plan in the
event of the Participant's death. Such designation may be changed by the
Participant at any time by written notice to the Vice President, People Services
of the Corporation, but to be effective such notice must be received prior to
the Participant's death. In the event a Participant dies without designating a
Beneficiary, or if the
<PAGE>
designated Beneficiary predeceases the Participant, the Participant's spouse
shall be his or her Beneficiary, or in the absence of a spouse, the
Participant's estate shall be his or her Beneficiary.
26. Corporation's Payment of Expenses Related to the Plan. The
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Corporation will bear all expenses incurred in administering the Plan, including
expenses of issuing Shares provided hereunder.
27. Plan and Rights to Purchase Common Stock Not to Confer Rights with
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Respect to Continuance of Employment. The Plan and any right to purchase Shares
- ------------------------------------
under the Plan shall not confer upon any employee any right with respect to
continuance of employment by the Corporation or a Subsidiary and shall not
restrict or interfere in any way with the right of the Corporation or a
Subsidiary to terminate his or her employment at any time.
28. Gender and Number; Captions. Whenever used in the Plan, the masculine
---------------------------
gender shall include the feminine, and the singular shall include the plural,
unless the context indicates otherwise. The captions preceding the Sections of
the Plan have been inserted solely as a matter of convenience and in no way
define or limit the scope or intent of any provisions of the Plan.
29. Effective Date. The Plan is effective as of July 1, 1997, provided it
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has received approval by the shareholders of the Corporation.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of our report dated February 21, 1997 (February 28, 1997 and March 1,
1997 as to Note 3) appearing in and incorporated by reference in the Annual
Report on Form 10-K of Teleport Communications Group Inc. for the year ended
December 31, 1996.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
June 30, 1997
