UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No._____)*
TELEPORT COMMUNICATIONS GROUP INC.
(Name of Issuer)
CLASS A COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
879463 107
(CUSIP Number)
Amos B. Hostetter, Jr. Stephen M. Brett
Continental Cablevision, Inc. Tele-Communications, Inc.
The Pilot House, Lewis Wharf Terrace Tower II
Boston, Massachusetts 02110 Englewood, Colorado 80111
(617) 742-9500 (303) 267-5500
Stanley Wang Andrew A. Merdek
Comcast Corporation Cox Communications, Inc.
1500 Market Street 1400 Lake Hearn Dr., NE
Philadelphia, Pennsylvania 19102-2148 Atlanta, Georgia 30319
(215) 665-1700 (404) 843-5564
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications)
July 2, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box o.
Check the following box if a fee is being paid with the statement.|X| (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 2 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Continental Cablevision, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
75,000 - Class A; See Items 3 and 5(a)
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 3 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Comcast Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a)
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 4 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Teleport Partners, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 5 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Communications, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632- Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 6 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Holdings, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 7 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Investment Company, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 8 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Enterprises, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3 and 5(a).
9 SOLE DISPOSITIVE POWER
None; See Items 3 and 5(a).
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3 and 5(a).
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3 and 5(a).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3 and 5(a)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 9 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tele-Communications, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES None; See Items 3 and 5(a).
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
131,274,632 - Class B; 1,086,528 - Class A;
See Items 3, 5(a) and 6.
9 SOLE DISPOSITIVE POWER
1,011,528 - Class A; See Items 3, 5(a) and 6.
10 SHARED DISPOSITIVE POWER
131,274,632 - Class B; See Items 3, 5(a) and 6.
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,274,632 - Class B; 1,086,528 - Class A; See Items 3, 5(a) and 6.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.8%; See Items 3, 5(a) and 6.
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 10 of 18 Pages
The summary descriptions contained in this Report of certain agreements
and documents are qualified in their entirety by reference to the complete texts
of such agreements and documents filed as Exhibits hereto, which agreements and
documents are hereby incorporated herein by reference.
Item 1. Security and issuer.
This statement relates to the Class A Common Stock, $.01 par value per
share (the "Class A Common Stock"), of Teleport Communications Group Inc., a
Delaware corporation (the "Issuer"). The principal executive offices of the
Issuer are at One Teleport Drive, Staten Island, New York 10311-1011.
Each share of Class A Common Stock entitles the holder to one vote and
each share of Class B Common Stock entitles the holder to 10 votes on each
matter to be voted upon by the holders of the Common Stock. The holders of the
shares of Class A Common Stock and Class B Common Stock vote as one class on all
matters to be voted on by stockholders, including, without limitation, the
election of directors and any proposed amendment to the Amended and Restated
Certificate of Incorporation of the Issuer that would increase the authorized
number of shares of Common Stock or any class thereof or any other class or
series of stock or decrease the number of authorized shares of any class or
series of stock (but not below the number thereof then outstanding), except as
required by the Delaware General Corporation Law and except that, for a period
of five years from the date of the filing of the Issuer's Amended and Restated
Certificate of Incorporation, so long as the holders of Class B Common Stock
represent at least 50% of the voting power of the outstanding Common Stock, the
approval of the holders of a majority of the Class B Common Stock is required
for the Company to provide (i) wireless communications services that use radio
spectrum for cellular, personal communications service (PCS), enhanced
specialized mobile radio (ESMR), paging, mobile telecommunications and any other
voice or data wireless services whether fixed or mobile; provided, however, that
the Issuer may provide and brand telecommunications products and services
delivered via point-to-point microwave transmissions; and (ii)
telecommunications services to residences; provided, however, that the Issuer
may provide telecommunications services to residences to the extent required by
a regulatory authority having jurisdiction over the Issuer's business, including
requirements of the Issuer's local exchange carrier certificates and common
carrier obligations, if any, or in any geographic area in which such services
are offered as of July 1, 1996, but only to the extent of the services then so
offered.
Item 2. Identity and background.
This statement is filed pursuant to Reg. ss.13(d)-1(f)(1) on behalf of
the following persons, who are collectively referred to as the "Filing Persons"
and sometimes individually referred to as a "Filing Person":
Continental Cablevision, Inc., a Delaware corporation ("Continental"),
holds the stock of the Issuer reported herein through two wholly owned
subsidiaries, Continental Teleport, Inc. ("Continental Teleport"), a Delaware
corporation and Continental Cablevision Investments, Inc., a Delaware
corporation ("Continental Investments"). Continental is a provider of broadband
communications services and a cable television operator in the United States.
The principal offices and businesses of Continental, Continental Teleport, and
Continental Investments are located at The Pilot House, Lewis Wharf, Boston,
Massachusetts 02110. Amos B. Hostetter, Jr., the Chairman and Chief Executive
Officer of Continental beneficially owns 45,207,362 shares of Common Stock of
Continental, which represents approximately 31.86% of the aggregate voting power
of the outstanding capital stock of Continental, and, accordingly, may be deemed
to be a "controlling person" of Continental.
Cox Teleport Partners, Inc., a Delaware corporation ("Cox Teleport"),
holds stock of the Issuer reported herein and is a wholly owned subsidiary of
Cox Communications, Inc., a Delaware corporation ("Cox"), which is controlled by
Cox Holdings, Inc., a Delaware corporation ("CHI"), which is a wholly owned
subsidiary of Cox Investment Company, Inc., a Delaware corporation ("CICI"),
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 11 of 18 Pages
which is a wholly owned subsidiary of Cox Enterprises, Inc., a Delaware
corporation ("CEI"). As a trustee of the Barbara Cox Anthony Atlanta Trust and
of the Dayton Cox Trust A, Anne Cox Chambers exercises beneficial ownership over
an aggregate of approximately 69.6% of the outstanding capital stock of CEI. As
a trustee of the Anne Cox Chambers Atlanta Trust and of the Dayton Cox Trust A,
Barbara Cox Anthony exercises beneficial ownership over an aggregate of
approximately 69.6% of the outstanding capital stock of CEI. Thus, Mrs. Chambers
and Mrs. Anthony share ultimate control over CEI. Cox is the fifth largest
operator of cable television systems in the United States and is a fully
integrated, diversified media and broadband communications company with
operations and investments in three related areas: (i) U.S. broadband networks;
(ii) United Kingdom broadband networks; and (iii) cable television programming.
Cox Teleport, CICI and CHI are holding companies. The principal businesses of
CEI are publishing, cable television, broadcasting and automobile auctions. The
principal office and business address of Cox Teleport, Cox, CHI, CICI and CEI is
1400 Lake Hearn Drive, Atlanta, Georgia 30319.
Comcast Corporation, a Pennsylvania corporation ("Comcast"), holds
stock of the Issuer reported herein through a wholly owned subsidiary Comcast
Teleport, Inc. ("Comcast Teleport"), a Delaware corporation. Comcast is
principally engaged in the development, operation and management of wired
telecommunications including cable television and telephone services; wireless
telecommunications include cellular, personal communication services and direct
to home satellite television, and content through programming investments with
its principal office and business located at 1500 Market Street, Philadelphia,
PA 19102-2148. As of February 29, 1996, Sural Corporation ("Sural"), a Delaware
corporation, owned 1,845,037 shares of Class A Common Stock of Comcast
Corporation. Mr. Ralph J. Roberts, and members of his family own all of the
voting securities of Sural. Pursuant to Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), Mr. Roberts is deemed to be the
beneficial owner of the shares of Class A Common Stock owned by Sural. As of
February 29, 1996, Sural was the sole owner of Comcast's Class B Common Stock.
Pursuant to Rule 13d-3 of the Exchange Act, Mr. Roberts is deemed to be the
beneficial owner of the shares of Class B Common Stock owned by Sural. Since
each share of Class B Common Stock is entitled to 15 votes, the shares of Class
A Common Stock and Class B Common Stock owned by Sural constitute approximately
79% of the voting power of the two classes of Comcast's voting Common Stock
combined. The Class B Common Stock is convertible on a share-for-share basis
into Class A Common Stock or Class A Special Common Stock. If Sural and Mr.
Roberts were to convert the Class B Common Stock which they are deemed to
beneficially own into Class A Common Stock, Mr. Roberts would beneficially own
11,507,232 shares of Class A Common Stock (approximately 24.6% of the Class A
Common Stock).
Tele-Communications, Inc., a Delaware corporation ("TCI"), currently
holds the stock of the Issuer reported herein through an indirect subsidiary,
TCI Teleport, Inc., a Colorado corporation. TCI is principally engaged in the
construction, acquisition, ownership and operation of cable television systems
and the provision of satellite-delivered video entertainment, information and
home shopping programming services to various video distribution media,
principally cable television systems. Its principal office and business are
located at 5619 DTC Parkway, Englewood, Colorado 80111.
Information concerning the executive officers and directors of the
Filing Persons and the persons controlling such Filing Persons, if any, is set
forth in Exhibit 99.2 to this statement. Unless otherwise set forth in Exhibit
99.2, each of such executive officers and directors is a citizen of the United
States. None of the Filing Persons nor, to the best of their knowledge, any
person named in Exhibit 99.2 to this statement, during the last five years (i)
has been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors); or (ii) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
A joint filing agreement among the Filing Persons is attached hereto as
Exhibit 99.1. None of the Filing Persons hereby affirms the existence of a
"group" (within the meaning of Rule 13d-5 under the Exchange Act).
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 12 of 18 Pages
Item 3. Source and amount of funds or other consideration.
Prior to the initial public offering of 27,025,000 shares of Class A
Common Stock by the Issuer (the "Offering"), the Issuer was owned by the Filing
Persons (TCI (30%), Cox (30%), Comcast (20%) and Continental (20%)). The
business was operated through the Issuer and, beginning in 1992, TCG Partners, a
New York general partnership owned by the Filing Persons prior to the Offering
in the same percentages as the Issuer. The Issuer, TCG Partners, the Filing
Persons and other cable operators invested in partnerships (the "Local Market
Partnerships") to develop and operate local telecommunications networks, which
were managed by the Issuer. Prior to the Offering, the Filing Persons (i)
exchanged their interests in TCG Partners and the Local Market Partnerships and
(ii) contributed outstanding indebtedness owed by the Issuer to them in exchange
for shares of Class B Common Stock, $.01 par value per share, of the Issuer (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Common
Stock")) in a reorganization of the Teleport-related entities (the
"Reorganization") pursuant to a Reorganization Agreement (the "Reorganization
Agreement"). The Filing Persons received the following numbers of shares of
Class B Common Stock in exchange for such partnership interests and indebtedness
in the Reorganization:
Continental 11,761,260
Cox 18,045,594
Comcast 11,621,988
TCI 27,821,388
Also, pursuant to the Reorganization Agreement, prior to the Offering,
each share of common stock of the Issuer outstanding immediately prior to the
Reorganization was automatically converted into shares of Class B Common Stock
on a 42,000 for 1 basis. The Filing Persons received the following numbers of
shares of Class B Common Stock in exchange for their existing shares of common
stock:
Continental 14,000,070
Cox 21,042,000
Comcast 14,000,070
TCI 20,958,000
As part of the Reorganization, TCI also acquired beneficial ownership of
1,011,528 shares of Class A Common Stock in consideration for two proposed
transfers to the Issuer of certain Local Market Partnership interests that it
has acquired or expects to acquire from an unrelated third party.
Shortly after the Offering, pursuant to the Reorganization Agreement,
the Issuer redeemed from Continental 7,975,738 shares of Class B Common Stock
received by Continental in the Reorganization at a price per share equal to the
initial public offering price of the Class A Common Stock in the Offering, less
underwriting discounts and a pro rata portion of the registration fees, or
approximately $15.17 per share. Continental also acquired in the Offering,
through Continental Investments, 75,000 shares of Class A Common Stock at the
initial public offering price of $16.00 per share. The purchase was made out of
funds provided from working capital. The information required to be disclosed
under Item 3 for the persons named in Exhibit 2 to this Report is listed on
Exhibit 2 hereto and is incorporated herein by reference.
Item 4. Purpose of transaction.
The Reorganization was necessary to simplify the ownership structure of
the Issuer in preparation for the Offering. Prior to the Offering, the filing
persons owned 100% of the outstanding common stock of Issuer. As a result of the
Offering and the Reorganization, the Filing Persons, who hold all of the
outstanding Class B Common Stock and control approximately 98% of the combined
voting power of the Issuer's outstanding Common Stock, generally have the
collective ability to control all matters requiring stockholder approval,
including the nomination and election of directors.
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 13 of 18 Pages
The Filing Persons have entered into the Amended Stockholders'
Agreement, as defined below, which provides that the Board of Directors of the
Issuer will consist of 13 directors and that at each annual meeting at which
directors are elected, the Filing Persons will vote their shares in favor of
nominees for director to be designated as follows: (i) the Filing Persons will
designate 10 nominees (with the right of a holder of Class B Common Stock to
designate one or more nominees depending on the percentage of the Class B Common
Stock held by it), (ii) the Board of Directors of the Issuer will designate the
Chief Executive Officer of the Issuer as a nominee and (iii) the Board of
Directors, with the unanimous approval of the holders of Class B Common Stock
that have the right to designate nominees for director, will designate by
unanimous consent two individuals who are neither employed by nor affiliated
with the Issuer or any holder of Class B Common Stock as nominees for director.
Continental does not currently have any right to designate a director. See Item
6. Except as noted below, none of such persons, or to the best of such person's
knowledge, any of its executive officers, directors or controlling persons has
any present plans or proposals which relate to or would result in any of the
following:
(a) The acquisition by any person of additional securities of the
Issuer or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended, or
(j) Any action similar to any of those enumerated above.
Continental has recently announced that it has entered into an
agreement pursuant to which it will merge with and into U S WEST, Inc. The
Department of Justice and Continental are currently engaged in discussions
regarding such merger and, as a result, Continental may be required to divest
its interest in the Issuer within a time frame to be agreed upon, but which
would not be earlier than June 30, 1997.
Although directors of the Issuer who are also directors, officers or
employees of the Filing Persons or any of their respective affiliates have
certain fiduciary obligations to the Issuer under Delaware law, such directors
and the Filing Persons, as the controlling stockholders of the Issuer, are in
positions that may create conflicts of interest with respect to certain business
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 14 of 18 Pages
opportunities available to and certain transactions involving the Issuer. The
Filing Persons have not adopted any special voting procedures to deal with such
conflicts of interest and there can be no assurance that any such conflict will
be resolved in favor of the Issuer. In this regard, the Issuer's Amended and
Restated Certificate of Incorporation provides that the Issuer may not provide
certain (i) wireless communications services (other than products and services
delivered via point-to-point microwave and milliwave transmissions) or (ii)
telecommunications services to residences until, in each case, the earlier of
the date that is five years after the filing of its Amended and Restated
Certificate of Incorporation or the date on which the holders of Class B Common
Stock no longer represent at least 50% of the voting power of the outstanding
Common Stock of the Company, without the affirmative vote of the holders of a
majority of the Class B Common Stock, subject to certain exceptions.
As described in Item 6 below, pursuant to the Amended Stockholders'
Agreement, a holder of Class B Common Stock generally is entitled to designate
one director nominee for each 9% of the outstanding shares of Class B Common
Stock held by it and its affiliates. The holders of the Class A Common Stock do
not have the right, as a class, under the Issuer's Amended and Restated
Certificate of Incorporation or the Amended Stockholders' Agreement to nominate
any individuals for election to the Board of Directors. Three current members of
the Board of Directors are the designees of Cox, three such members are the
designees of TCI and two are designees of Comcast. In addition, each of Cox and
TCI has the right to and will designate an additional director.
Affiliates of TCI, Cox and Comcast, which collectively will designate a
majority of the directors of the Issuer, together with an affiliate of Sprint
Corporation ("Sprint"), have formed Sprint Spectrum, a partnership created to
provide certain wireless telecommunications services. The investments by TCI,
Cox and Comcast in Sprint Spectrum and in the Issuer may encourage these
companies to promote arrangements between the Issuer and Sprint Spectrum. As
recently as January 1996, TCI, Cox and Comcast expressed their intention to
attempt to integrate the business of the Issuer with the business of Sprint
Spectrum. At present, TCI, Cox and Comcast are not in any discussions with
Sprint or Sprint Spectrum with respect to the Issuer.
Except as otherwise disclosed in this Report, no Filing Person has made
any decision concerning its course of action with respect to the Issuer. Any of
the Filing Persons could decide, depending on market and other factors, to
dispose of shares of the Issuer's Common Stock beneficially owned by it, to
acquire additional Common Stock or other equity securities of the Issuer, to
seek a strategic or other partner to share its interest in the Issuer or to take
any other available course of action. In this regard, each of the Filing Persons
intends to continuously review its investment in the Issuer. In reaching any
conclusion as to its future course of action, each Filing Person will take into
consideration various factors, including without limitation the Issuer's
business and financial condition and prospects, other developments concerning
the Issuer, the effect of legal and regulatory requirements applicable to the
Issuer and the Filing Person, other business opportunities available to the
Filing Person, developments with respect of the business of the Filing Person,
developments in the cable television and telecommunications industries
generally, general economic conditions and money and stock market conditions.
Item 5. Interest in securities of the issuer.
(a) The following table indicates, with respect to each Filing Person
and the Filing Persons collectively as a group, (i) the number of shares of
Class A Common Stock currently owned, (ii) the number of shares of Class A
Common Stock that may be acquired within 60 days as a result of the conversion
on a one for one basis of shares of Class B Common Stock currently owned, (iii)
the total number of shares of Class A Common Stock owned, treating the Class B
Common Stock currently owned as if it had been converted into Class A Common
Stock, and (iv) the percentage of Class A Common Stock represented by the total
number of shares of Class A Common Stock owned, treating the Class B Common
Stock as if it had been converted into Class A Common Stock. The percentage
ownership for the Filing Persons as a group assumes the conversion of shares of
Class B Common Stock into Class A Common Stock by all members of the group. The
percentage ownership for each Filing Person assumes conversion by only that
stockholder. As a group, the Filing Persons control approximately 98% of the
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 15 of 18 Pages
combined voting power of the outstanding Common Stock. Neither the filing of
this Report nor any of its contents shall be deemed to constitute an admission
that any of the Filing Persons are the beneficial owners of the Issuer's Common
Stock referred to in this statement as held by any of the other Filing Persons
for purposes of Section 13(d) of the Exchange Act or for any other purpose, and
such beneficial ownership is expressly disclaimed. Neither the filing of this
Report nor any of its contents shall be deemed to constitute an admission that
Cox Enterprises, Inc., Cox Investment Company, Inc., or Cox Holdings, Inc. are
the beneficial owner of any of the Issuer's Common Stock referred to in this
statement for purposes of Section 13(d) of the Exchange Act or for any other
purposes, and such beneficial ownership is expressly disclaimed.
<TABLE>
<CAPTION>
Class A Class A Common
Common Stock Stock that may be Total Class A
Currently Acquired within Common Stock Percentage of Class A
Owned 60 days Owned Common Stock
------ ------- ----- ------------
<S> <C> <C> <C> <C>
Cox* ............ -- 39,087,594 39,087,594 58.61%
TCI* ............ 1,011,528 48,779,388 49,790,916 64.34%
Comcast* ........ -- 25,622,058 25,622,058 48.14%
Continental* .... 75,000 17,785,592 17,860,592 39.35%
---------- ----------- ----------- -----
Total as a Group* 1,086,528 131,274,632 132,361,160 82.78%
<FN>
- -----
* Each Filing Person may be de emed to beneficially own each other Filing
Person's shares of Class A Common Stock and Class B Common Stock.
</FN>
</TABLE>
(b) Each Filing Person may be deemed to share voting power over each
other Filing Person's shares of Class A Common Stock and Class B Common Stock
due to the existence of the voting arrangements contained in the Amended
Stockholders' Agreement. Each Filing Person may be deemed to share dispositive
power over each other Filing Person's shares of Class B Common Stock due to the
existence of the restrictions on transfer contained in the Amended Stockholders'
Agreement. As a result, each Filing Person may be deemed to beneficially own
each other Filing Person's shares of Class A Common Stock and Class B Common
Stock.
(c) All of the transactions described in Item 3 or in Exhibit 2 hereto
above were effected during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, arrangements, understandings or relationships
with respect to securities of the issuer.
Wholly owned subsidiaries of each of the Filing Persons and the Issuer
are parties to an Amended and Restated Stockholders' Agreement dated as of June
26, 1996 (the "Amended Stockholders' Agreement"). The Amended Stockholders'
Agreement provides that at each annual meeting of the Issuer's stockholders at
which directors are elected, the holders of the Class B Common Stock will vote
their shares of Class A Common Stock and Class B Common Stock in favor of
nominees for directors to be designated as follows: (i) the holders of Class B
Common Stock will designate ten nominees (with the right of a holder of Class B
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 16 of 18 Pages
Common Stock to designate one or more nominees depending on the percentage of
the Class B Common Stock held by it), (ii) the Board of Directors of the Issuer
will designate by unanimous consent the Chief Executive Officer of the Issuer as
a nominee and (iii) the Board of Directors with the unanimous approval of the
holders of Class B Common Stock that have the right to designate nominees for
director shall designate two individuals who are neither employed by nor
affiliated with the Issuer or any holder of Class B Common Stock as nominees for
director. Under the Amended Stockholders' Agreement, a holder of Class B Common
Stock generally is entitled to designate one director nominee for each 9% of the
outstanding shares of Class B Common Stock held by it and its affiliates. The
holders of the Class A Common Stock do not have the right, as a class, under the
Issuer's Amended and Restated Certificate of Incorporation or the Amended
Stockholders' Agreement to nominate any individuals for election to the Board of
Directors. Three current members of the Board of Directors are the designees of
Cox, three such members are the designees of TCI and two are designees of
Comcast. In addition, each of Cox and TCI has the right to and will designate an
additional director. Continental does not currently have any right to designate
a director.
The Amended Stockholders' Agreement prohibits any transfer of Class B
Common Stock held by the parties thereto, unless expressly permitted under the
terms thereof. Parties to the Amended Stockholders' Agreement have certain
rights of first offer and rights of first refusal thereunder with respect to
proposed sales of the Class B Common Stock.
Each holder of Class B Common Stock has the right to sell all or a part
of its Class B Common Stock upon receiving a bona fide offer from an
unaffiliated third party, subject to giving notice to the other holders of Class
B Common Stock who have designated at least one director, which notice shall
contain an offer to sell such stock to such other holders of Class B Common
Stock on the terms and conditions set forth in the offer from the third party.
Subject to certain limitations, the non-selling holders of Class B Common Stock
have the right to purchase pro rata all, but not less than all, of the Class B
Common Stock offered. If the non-selling holders of Class B Common Stock do not
purchase all of the Class B Common Stock offered, the offering holders of Class
B Common Stock may sell the Class B Common Stock to the third party on the terms
contained in the offer made to the other holders of Class B Common Stock.
However, unless the amount of Class B Common Stock is sufficient to entitle the
transferee to designate a nominee for director under the Amended Stockholders'
Agreement (i.e., the total percentage of Class B Common Stock that would be held
by the transferee and certain of its affiliates is at least nine percent) and
the transferee agrees to become a party to the Amended Stockholders' Agreement,
any Class B Common Stock included in the stock being sold must be converted to
Class A Common Stock.
If any party desires to convert Class B Common Stock to Class A Common
Stock, it must first offer that stock to the other holders of Class B Common
Stock who have designated at least one director. If such other holders do not
elect to buy such stock, then such stock can be converted to Class A Common
Stock and sold by the selling stockholder free of restrictions under the Amended
Stockholders' Agreement.
The parties to the Amended Stockholders' Agreement have demand
registration rights on the following terms: (i) no demand may be made for the
first six months after the Offering, (ii) such parties collectively have the
right to make one demand per year (with any such party having the right to make
such demand), (iii) the amount which can be sold pursuant to any demand may be
limited if the managing underwriter selected by the Issuer with the approval of
the party to the Amended Stockholders' Agreement that has included the largest
number of shares in the registration advises the Issuer that marketing factors
require a limitation of the number of shares to be underwritten and (iv) if the
amount determined pursuant to clause (iii) is less than the aggregate amount
which such parties want to sell in such offering, each such party will have the
right to sell its pro rata portion of the maximum amount; provided, however,
that during the period ending 42 months after the date of the Offering, if
Continental is subject to a regulatory requirement as a result of its merger
with U S WEST, Inc. to reduce or eliminate its investment in the Issuer,
Continental will have a priority claim in specified percentages on the amount
specified in clause (iii) above and the balance will be split proportionately
among the other stockholders which are a party to the Amended Stockholders'
Agreement. The parties to the Amended Stockholders' Agreement participating in
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 17 of 18 Pages
the registration must reimburse the Issuer for its out-of-pocket expenses
incurred in connection with any such demand registration. The Amended
Stockholders Agreement will terminate when the aggregate voting power of the
Class B Common Stock represents less than 30% of the aggregate voting power of
all outstanding Common Stock.
The summary description of the provisions of the Amended Stockholders'
Agreement contained herein is qualified in its entirety by reference to the
Exhibits attached hereto, which are hereby incorporated by reference.
Item 7. Material to be filed as exhibits.
The following documents are filed as exhibits to this statement:
Exhibit 99.1: Joint Filing Agreement, dated July 12, 1996.
Exhibit 99.2: Executive Officers and Directors of each Filing Person
and entities controlling the Filing Persons
Exhibit 99.3: Amended and Restated Stockholders' Agreement, dated
June 26, 1996
<PAGE>
SCHEDULE 13D
CUSIP No. 879463 107 Page 18 of 18 Pages
SIGNATURES
After reasonable inquiry and to the best of their knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: July 11, 1996 CONTINENTAL CABLEVISION, INC
By:/s/P. Eric Kraus
Name: P. Eric Krauss
Title: Vice President and Treasurer
COMCAST CORPORATION
By:/s/Stanley Wang
Name: Stanley Wang
Title: Senior Vice President
COX TELEPORT PARTNERS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX COMMUNICATIONS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX HOLDINGS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX INVESTMENT COMPANY, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX ENTERPRISES, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
TELE-COMMUNICATIONS, INC.
By:/s/Stephen M. Brett
Name: Stephen M. Brett
Title: Executive Vice President
EXHIBIT 99.1
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1(f)(1) under the Securities Exchange Act of 1934,
the undersigned hereby agree that only one statement containing the information
required by Schedule 13D (or any amendment thereof) need be filed on their
behalf with respect to the beneficial ownership of any equity securities of
Teleport Communications Group Inc. or any subsequent acquisitions or
dispositions of equity securities of Teleport Communications Group Inc. by any
of the undersigned.
Dated: July 12, 1996 CONTINENTAL CABLEVISION, INC
By:/s/P. Eric Kraus
Name: P. Eric Krauss
Title: Vice President and Treasurer
COMCAST CORPORATION
By:/s/Stanley Wang
Name: Stanley Wang
Title: Senior Vice President
COX TELEPORT PARTNERS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX COMMUNICATIONS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX HOLDINGS, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX INVESTMENT COMPANY, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
COX ENTERPRISES, INC.
By:/s/Andrew A. Merdek
Name: Andrew A. Merdek
Title: Secretary
TELE-COMMUNICATIONS, INC.
By:/s/Stephen M. Brett
Name: Stephen M. Brett
Title: Executive Vice President
Exhibit 99.2
<TABLE>
<CAPTION>
Executive Officers and Directors of Continental Cablevision, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Amos B. Hostetter, Jr. Executive Officer and Chairman and Chief Executive Officer Ownership and operation of
Director Continental Cablevision, Inc. cable television systems and
The Pilot House broadband communication
Lewis Wharf services
Boston, MA 02110
Timothy P. Neher Executive Officer and Vice Chairman Ownership and operation of
Director Continental Cablevision, Inc. cable television systems and
The Pilot House broadband communication
Lewis Wharf services
Boston, MA 02110
William T. Schleyer Executive Officer and President and Chief Operating Officer Ownership and operation of
Director Continental Cablevision, Inc. cable television systems and
The Pilot House broadband communication
Lewis Wharf services
Boston, MA 02110
Roy F. Coppedge III Director Director of Boston Ventures Venture Capital
Management, Inc.
21 Custom House Street
Boston, MA 02110
Stephen Hamblett Director Chairman, Chief Executive Officer of Television broadcasting and
The Providence Journal Company newspaper publishing
75 Fountain Street businesses
Providence, RI 02902
Jonathan H. Kagan Director Managing Director of Lazard Fieres & Investment Banking
Co. LLC
30 Rockefeller Plaza
New York, NY 10020
Robert B. Luick Director Of Counsel to Sullivan & Worcester Lawyer
LLP
One Post Office Square
Boston, MA 02109
Henry F. McCance Director President and General Partner of Venture Capital
Greylock Management Co.
One Federal Street
Boston, MA 02109
Trygve E. Myhren Director Former President and Chief Operating
Officer of
The Providence Journal Company
30 Appletree Lane
Barrington, RI 02806
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Lester Pollack Director Managing Director of Venture Capital
Centre Partners L.P.
30 Rockefeller Plaza
New York, NY 10020
Michael J. Ritter Director Former President and Chief Operating
Officer of
Continental Cablevision, Inc.
240 North Lake Drive
Crystal Bay, NV 89402
Vincent J. Ryan Director Chairman of Schooner Capital Investment concern
Corporation
745 Atlantic Avenue
Boston, MA 02111
Ronald H. Cooper Executive Officer Executive Vice President of Ownership and operation of
Continental Cablevision, Inc. cable television systems and
The Pilot House broadband communications
Lewis Wharf services
Boston, MA 02110
Jeffrey T. DeLorme Executive Officer Executive Vice President of Ownership and operation of
Continental Cablevision, Inc. cable television systems and
The Pilot House broadband communications
Lewis Wharf services
Boston, MA 02110
Nancy Hawthorne Executive Officer Senior Vice President and Chief Ownership and operation of
Financial Officer of cable television systems and
Continental Cablevision, Inc. broadband communications
The Pilot House services
Lewis Wharf
Boston, MA 02110
2
<PAGE>
<CAPTION>
Executive Officers and Directors of Continental Teleport
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Amos B. Hostetter, Jr. Executive Officer and Chairman and Chief Executive Officer Ownership and operation of
Director Continental and Continental Teleport cable television systems
The Pilot House
Lewis Wharf
Boston, MA 02110
Timothy Neher Executive Officer Vice Chairman of Continental Ownership and operation of
The Pilot House cable television systems
Lewis Wharf
Boston, MA 02110
William T. Schleyer Executive Officer President and Chief Operating Officer Ownership and operation of
Continental and Continental Teleport cable television systems
The Pilot House
Lewis Wharf
Boston, MA 02110
Nancy Hawthorne Executive Officer Senior Vice President and Chief Ownership and operation of
Financial Officer of cable television systems
Continental and Continental Teleport
The Pilot House
Lewis Wharf
Boston, MA 02110
Ronald H. Cooper Executive Officer Executive Vice President of Ownership and operation of
Continental and Continental Teleport cable television systems
The Pilot House
Lewis Wharf
Boston, MA 02110
Jeffrey T. DeLorme Executive Officer Executive Vice President of Ownership and operation of
Continental cable television systems
The Pilot House
Lewis Wharf
Boston, MA 02110
W. Lee H. Dunham Director Partner at Sullivan & Worcester LLP Law
One Post Office Square
Boston, MA 02109
3
<PAGE>
<CAPTION>
Executive Officers and Directors of Cox Communications, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
James O. Robbins Executive Officer President and Chief Executive Officer Operation of cable television
and Director Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Barry R. Elson Executive Officer Executive Vice President/Operations Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Ajit M. Dalvi Executive Officer Senior Vice President/Marketing and Operation of cable television
Programming systems and fully integrated
Cox Communications, Inc. and diversified media and
1400 Lake Hearn Dr., NE broadband communications
Atlanta, GA 30319 company
Jimmy W. Hayes Executive Officer Senior Vice President/Finance and Operation of cable television
Chief Financial Officer systems and fully integrated
Cox Communications, Inc. and diversified media and
1400 Lake Hearn Dr., NE broadband communications
Atlanta, GA 30319 company
Robert C. O'Leary Executive Officer Senior Vice President/Operations Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Alex B. Best Executive Officer Senior Vice President/Engineering Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
David M. Woodrow Executive Officer Senior Vice President/Broadband Operation of cable television
Services systems and fully integrated
Cox Communications, Inc. and diversified media and
1400 Lake Hearn Dr., NE broadband communications
Atlanta, GA 30319 company
James A. Hatcher Executive Officer Vice President/Legal and Regulatory Operation of cable television
Affairs systems and fully integrated
Cox Communications, Inc. and diversified media and
1400 Lake Hearn Dr., NE broadband communications
Atlanta, GA 30319 company
4
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Claus F. Kroeger Executive Officer Vice President/Operations Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Margaret A. Bellville Executive Officer Vice President/Operations Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Michael D. Horan Executive Officer Controller Operation of cable television
Cox Communications, Inc. systems and fully integrated
1400 Lake Hearn Dr., NE and diversified media and
Atlanta, GA 30319 broadband communications
company
Janet Morrison Clarke Director Senior Vice President of
RR Donnlley & Sons Co.
99 Park Avenue
New York, NY 10016
John R. Dillon Director Senior Vice President and Chief Publishing, cable television,
Financial Officer of broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
David E. Easterly Director President and Chief Operating Officer Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Robert F. Erburu Director Chairman of the Board (Retired) of
The Times Mirror Company
Times Mirror Square
Los Angeles, CA 90053
James C. Kennedy Director Chairman and Chief Executive Officer Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Andrew J. Young Director Vice Chairman of
Law Companies Group
114 TownPark Drive
Kennesaw, GA 30144
5
<PAGE>
<CAPTION>
Executive Officers and Directors of Cox Teleport Partners, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
James O. Robbins Executive Officer and President of Cox Teleport Partners, Operation of cable television
Director Inc., President and Chief Executive systems and fully integrated
Officer and diversified media and
of Cox Communications, Inc. broadband communications
1400 Lake Hearn Dr., NE company
Atlanta, GA 30319
Jimmy W. Hayes Executive Officer and Vice President of Cox Teleport Operation of cable television
Director Partners, Inc., systems and fully integrated
Senior Vice President/Finance and and diversified media and
Chief Financial Officer of broadband communications
Cox Communications, Inc. company
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
James A. Hatcher Executive Officer and Vice President of Cox Teleport Operation of cable television
Director Partners, Inc., Vice President/Legal systems and fully integrated
and Regulatory Affairs of and diversified media and
Cox Communications, Inc. broadband communications
1400 Lake Hearn Dr., NE company
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Teleport Publishing, cable television,
Partners, Inc.; broadcasting and automobile
Vice President/Tax of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
David M. Woodrow Executive Officer Vice President of Cox Teleport Operation of cable television
Partners, Inc.; systems and fully integrated
Senior Vice President/Broadband and diversified media and
Services of broadband communications
Cox Communications, Inc. company
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President of Cox Teleport Publishing, cable television,
Partners, Inc.; broadcasting and automobile
Senior Vice President/New Media of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
6
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Andrew A. Merdek Executive Officer Secretary of Cox Teleport Partners, Publishing, cable television,
Inc. broadcasting and automobile
Vice President/Legal Affairs and auctions
Corporate Secretary of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacboson Executive Officer Treasurer of Cox Teleport Partners, Publishing, cable television,
Inc. and Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
7
<PAGE>
<CAPTION>
Executive Officers and Directors of Cox Enterprises, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
James C. Kennedy Executive Officer and Chairman, Chief Executive Officer Publishing, cable television,
Director Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
David E. Easterly Executive Officer and President, Chief Operating Officer Publishing, cable television,
Director Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
John R. Dillon Executive Officer and Senior Vice President and Chief Publishing, cable television,
Director Executive Officer broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President/Tax Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
John G. Boyette Executive Officer Vice President and Controller Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Timothy W. Hughes Executive Officer Senior Vice President/Administration Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President/New Media Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Marybeth Leamer Executive Officer Vice President, Human Resources Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Alexand V. Executive Officer Vice President, Public Policy Publishing, cable television,
Netchvolodoff Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Charles W. Rochner Executive Officer Vice President and Corporate Publishing, cable television,
Secretary broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
8
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Barbara Cox Anthony Executive Officer and Vice President Publishing, cable television,
Director Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Anne Cox Chambers Executive Officer and Vice President Publishing, cable television,
Director Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Andrew A. Merdek Executive Officer Vice President/Legal Affairs and Publishing, cable television,
Corporate Secretary broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer Vice President/Business Development Publishing, cable television,
and Planning broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Treasurer Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Arthur M. Blank Director President and Chief Operating Officer
The Home Depot, Inc.
One Paces West
2727 Paces Ferry Road, NW
Atlanta, GA 30339
Thomas O. Cordy Director President
CI Cascade Corporation
5350 Cascade Road
Atlanta, GA 30331
Carl R. Gross Director Retired Senior Vice President and
Chief Administrative Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Ben F. Love Director Director, Consultant of
Texas Commerce Bank,N.A.
600 Travis Street
Houston, TX 77252
9
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Paul J. Rizzo Director Vice President (retired 1/1/95) of
IBM Corporation
73 Weaver Street (residence)
Unit #16
Greenwich, CT 06830
David C. Scott Executive Officer Vice President/Internet Publishing, cable television,
Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
10
<PAGE>
<CAPTION>
Executive Officers and Directors of Cox Holdings, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
John R. Dillon Executive Officer and President of Cox Holdings, Inc. Publishing, cable television,
Director Senior Vice President and Chief broadcasting and automobile
Financial Officer of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer and Vice President of Cox Holdings, Inc. Publishing, cable television,
Director Vice President/Business Development broadcasting and automobile
and Planning of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President of Cox Holdings, Inc. Publishing, cable television,
Vice President/New Media of broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew A. Merdek Executive Officer and Secretary of Cox Holdings, Inc. Publishing, cable television,
Director Vice President/Legal Affairs and broadcasting and automobile
Corporate Secretary of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Treasurer of Cox Holdings, Inc. Publishing, cable television,
Treasurer of Cox Enterprises, Inc. broadcasting and automobile
1400 Lake Hearn Dr., NE auctions
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Holdings, Inc. Publishing, cable television,
Vice President/Tax of broadcasting and automobile
Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
11
<PAGE>
<CAPTION>
Executive Officers and Directors of Cox Investment Company, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
John R. Dillon Executive Officer and President of Cox Investment Company, Publishing, cable television,
Director Inc. broadcasting and automobile
Senior Vice President and Chief auctions
Financial Officer of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer and Vice President and Treasurer of Cox Publishing, cable television,
Director Investment Company, Inc. broadcasting and automobile
Vice President/Business Development auctions
and Planning of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Investment Publishing, cable television,
Company, Inc. broadcasting and automobile
Vice President/Tax of auctions
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew A. Merdek Executive Officer and Secretary of Cox Investment Publishing, cable television,
Director Company, Inc. broadcasting and automobile
Vice President/Legal Affairs and auctions
Corporate Secretary of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Treasurer of Cox Investment Publishing, cable television,
Company, Inc. broadcasting and automobile
Treasurer of Cox Enterprises, Inc. auctions
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
12
<PAGE>
Shares of Class A Common Stock of Teleport
owned by Cox Executive Officers and Directors*
Number
Name of Shares
James C. Kennedy 62,500
Anne Cox Chambers 30,000
John G. Boyette 11,000
John R. Dillon 6,000
James O. Robbins 4,700
Alex B. Best 2,500
David E. Easterly 2,500
Michael D. Horan 2,500
Richard J. Jacobson 2,000
Ajit M. Dalvi 1,500
Robert C. O'Leary 1,500
David M. Woodrow 1,500
Alexander V. Netchvolodoff 1,100
Jimmy W. Hayes 1,100
Preston B. Barnett 1,080
Barry R. Elson 750
Margaret A. Bellville 600
Timothy W. Hughes 600
Marybeth Leamer 600
Claus F. Kroeger 300
James A. Hatcher 500
* The above executive officers and directors of Cox purchased shares of Class A
Common Stock of Teleport on July 2, 1996 at a purchase price of $16 per share.
Each of the above persons' holdings represent less than 1% of the outstanding
shares of Class A Common Stock of Teleport.
13
<PAGE>
<TABLE>
<CAPTION>
Executive Officers and Directors of Comcast Corporation
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Ralph J. Roberts Executive Officer and Chairman of the Board of Ownership and operation of
Director Comcast Corporation cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Julian A. Brodsky Executive Officer and Vice Chairman, Assistant Secretary Ownership and operation of
Director and Treasurer of cable television systems and
Comcast Corporation broadband communication
1500 Market Street services
Philadelphia, PA
Brian L. Roberts Executive Officer President of Ownership and operation of
Comcast Corporation cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
John R. Alchin* Executive Officer Senior Vice President and Treasurer of Ownership and operation of
Comcast Corporation cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Lawrence S. Smith Executive Officer Executive Vice President of Ownership and operation of
Comcast Corporation cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Stanley Wang Executive Officer Senior Vice President, Secretary and Ownership and operation of
General Counsel of cable television systems and
Comcast Corporation broadband communication
1500 Market Street services
Philadelphia, PA
Daniel Aaron Director Retired Ownership and operation of
Comcast Corporation cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Gustave Amsterdam Director Retired
135 South 19th Street
Philadelphia, PA
Sheldon M. Bonovitz Director Duane, Morris & Heckscher Law
One Liberty Place
Philadelphia, PA
- --------
<FN>
* Citizen of Australia
</FN>
14
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Joseph L. Castle Director Chairman, CEO and Director of Energy business
Castle Energy Corporation
One Radnor Corporate Center
Suite 250
Radnor, PA 19087
Bernard C. Watson Director President and CEO of Charitable foundation
William Penn Foundation
The HMA Foundation
1314 Chestnut Street
Philadelphia, PA
Irving A. Wechsler Director Partner with Public Accounting
Wechsler, Wolsh & Associates
340 One Olive Place
Pittsburgh, PA
Anne Wexler Director Chairman of Consulting for government
The Wexler Group relations and public affairs
1317 F Street, NW
Washington, DC
</TABLE>
15
<PAGE>
Shares of Class A Common Stock of Teleport
by Comcast Executive Officers and Directors*
Number
Name of Shares
Ralph J. Roberts 11,000
Brian L. Roberts 1,000
* The above executive officers and directors purchased shares of Class A Common
Stock of Teleport on June 27, 1996 at a purchase price of $16 per share.
Each of the above persons' holdings represent less than 1% of the outstanding
shares of Class A Common Stock of Teleport.
16
<PAGE>
<TABLE>
<CAPTION>
Executive Officers and Directors of Comcast Teleport
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
John R. Alchin* Executive Officer Senior Vice President and Treasurer of Ownership and operation of
Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Julian A. Brodsky Executive Officer and Vice Chairman, Assistant Secretary Ownership and operation of
Director and Assistant Treasurer of cable television systems and
Comcast broadband communication
1500 Market Street services
Philadelphia, PA
Brian L. Roberts Executive Officer President of Ownership and operation of
Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Ralph J. Roberts Executive Officer and Chairman of the Board of Comcast Ownership and operation of
Director 1500 Market Street cable television systems and
Philadelphia, PA broadband communication
services
Lawrence S. Smith Executive Officer Executive Vice President of Ownership and operation of
Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Stanley Wang Executive Officer Executive Vice President of Ownership and operation of
Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
_____________________
<FN>
* Citizen of Australia
</FN>
17
<PAGE>
<CAPTION>
Executive Officers and Directors of Sural Corporation
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Ralph J. Roberts Executive Officer and President and Chairman of the Board Ownership and operation of
Director Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Suzanne F. Roberts Executive Officer and
Director
Brian L. Roberts Executive Officer and President Ownership and operation of
Director Comcast cable television systems and
1500 Market Street broadband communication
Philadelphia, PA services
Julian A. Brodsky Executive Officer and Vice Chairman, Assistant Secretary Ownership and operation of
Director and Assistant Treasurer cable television systems and
Comcast broadband communication
1500 Market Street services
Philadelphia, PA
18
<PAGE>
<CAPTION>
Executive Officers and Directors of Tele-Communications, Inc.
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Bob Magness Director Chairman of the Board and Director of Acquisition, development
Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
John C. Malone Executive Officer and President and Chief Executive Officer Acquisition, development
Director of Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
Donne F. Fisher Executive Officer and Consultant and Director of Acquisition, development
Director Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
John W. Gallivan Director Director of Tele-Communications, Inc. Newspaper publishing
Chairman of the Board of
Kearns-Tribune Corporation
400 Tribune Building
Salt Lake City, UT 84111
Anthony Lee Coelho Director Director of Tele-Communications, Inc.; Investment services
Chairman and CEO of ETC w/tci;
President and CEO of
Coelho & Associates LLP
1325 Avenue of the Americas,
26th Floor
New York, NY 10019
Kim Magness Director Director of Tele-Communications, Inc. Investment management
Manages various personal investments
4000 E. Bellview
Englewood, CO 80111
Robert A. Naify Director Director of Tele-Communications, Inc. Motion picture industry
President and CEO of
Todd-AO Corporation
172 Golden Gate Avenue
San Francisco, CA 94102
Jerome H. Kern Director Director of Tele-Communications, Inc. Law
Special Counsel to
Baker & Botts, L.L.P.
599 Lexington Avenue, 29th Floor
New York, NY 10022
Gary K. Bracken Executive Officer Senior Vice President and Controller Acquisition, development
of Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
19
<PAGE>
<CAPTION>
Principal Business
Principal Occupation in which such
Name Position and Business Address employment is conducted
<S> <C> <C> <C>
Stephen M. Brett Executive Officer Executive Vice President, Secretary Acquisition, development
and General Counsel of and operation of cable
Tele-Communications, Inc. television systems and cable
5619 DTC Parkway television programming
Englewood, CO 80111
Brendan R. Clouston Executive Officer Executive Vice President and Acquisition, development
Chief Operating Officer of and operation of cable
Tele-Communications, Inc. television systems and cable
5619 DTC Parkway television programming
Englewood, CO 80111
Barry Marshall Executive Officer Executive Vice President of Acquisition, development
TCI Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
Larry E. Romrell Executive Officer Executive Vice President of Acquisition, development
Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
Bernard W. Schotters, II Executive Officer Senior Vice President and Treasurer of Acquisition, development
TCI Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
Robert N. Thomson Executive Officer Senior Vice President, Government Acquisition, development
Affairs of and operation of cable
TCI Communications, Inc. television systems and cable
5619 DTC Parkway television programming
Englewood, CO 80111
Fred A. Vierra Executive Officer Executive Vice President of Acquisition, development
Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
Peter R. Barton Executive Officer Executive Vice President of Acquisition, development
Tele-Communications, Inc. and operation of cable
5619 DTC Parkway television systems and cable
Englewood, CO 80111 television programming
</TABLE>
20
EXHIBIT 99.3
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
OF
TELEPORT COMMUNICATIONS GROUP INC.
June 26, 1996
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND OTHER GENERAL MATTERS......................1
1.1 Definitions...........................................1
1.2 Cross References......................................4
1.3 Terms Generally.......................................6
1.4 Voting; Written Consent...............................7
SECTION 2 BOARD OF DIRECTORS AND STOCKHOLDERS........................7
2.1 Composition of the Board..............................7
2.2 Removal of Directors..................................9
2.3 Vacancies............................................10
2.4 Conflicting Charter or By-law Provisions.............10
SECTION 3 TRANSFERS AND CONVERSIONS.................................11
3.1 Restrictions on Transfer and Conversion..............11
3.2 Legend...............................................12
3.3 Exceptions to Restrictions on Transfers..............12
3.4 Conversion of Class B Common Stock to Class A
Common Stock; Right of First Offer.................13
3.5 Right of First Refusal...............................17
3.6 Pre-IPO Right of First Offer.........................22
3.7 Terms and Conditions of Sales Pursuant to Sections
3.4, 3.5 and 3.6...................................26
3.8 Transferee Consenting Stockholders...................28
3.9 Continental Waiver...................................28
3.10 Cooperation..........................................29
SECTION 4 REGISTRATION RIGHTS.......................................30
4.1 Demand Registrations.................................30
4.2 Lockup Agreements....................................34
4.3 Registration Procedures..............................34
4.4 Expenses.............................................36
4.5 Preparation of Registration Statement................36
4.6 Indemnification......................................36
SECTION 5 ADDITIONAL AGREEMENTS.....................................39
5.1 Confidentiality......................................39
5.2 Issuance of Additional Class B Common Stock..........39
5.3 Voting on Scope of Business Limitations..............40
SECTION 6 MISCELLANEOUS.............................................40
6.1 Expiration and Termination...........................40
6.2 Assignment...........................................40
6.3 Notices..............................................40
6.4 Entire Agreement.....................................42
6.5 Amendment and Waiver.................................42
6.6 Governing Law........................................43
- i -
<PAGE>
6.7 Severability.........................................43
6.8 Consent to Jurisdiction; Specific Performance........43
6.9 Counterparts.........................................44
6.10 Headings............................................44
- ii -
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT is made as of June
26, 1996, by and among TELEPORT COMMUNICATIONS GROUP INC., a Delaware
corporation (the "Company"), and the other parties listed on the signature page
hereof.
RECITALS:
The parties hereto other than the Company own all of the issued and
outstanding shares of Class B Common Stock of the Company. The parties desire to
set forth herein their agreement concerning the ownership of the Common Stock of
the Company and such other matters as are set forth herein.
AGREEMENTS:
In consideration of the foregoing and of the promises and covenants
contained in this Agreement, the parties agree as follows:
SECTION 1 DEFINITIONS AND OTHER GENERAL MATTERS
1.1 Definitions. The following terms shall be used in this Agreement
with the meanings set forth in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediates controls, is controlled
by or is under common control with the first specified Person. For purposes of
this Agreement, neither the Company, nor any Person controlled by the Company,
shall be deemed to be an Affiliate of a Consenting Stockholder.
"Agreement" means this Amended and Restated Stockholders' Agreement,
as it may be amended, restated, modified or supplemented from time to time in
accordance with its terms.
"Board" means the Board of Directors of the Company.
"Business Day" means any day (other than a day which is a Saturday or
Sunday) on which banks are permitted to be open for business in the City of New
York.
"CEO" means the officer elected by the Board as the chief executive
officer of the Company. Robert Annunziata is currently the CEO.
<PAGE>
"Certificate of Incorporation" means, as of any date, the Amended and
Restated Certificate of Incorporation of the Company as in effect on such date.
"Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value $0.01
per share, of the Company.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock.
"Consenting Stockholder" means any owner of shares of Class B Common
Stock that is a party to this Agreement or becomes a party to this Agreement
pursuant to Section 3.3, Section 3.5(c) or Section 3.8(b).
"Continental" means Continental Teleport, Inc., a Delaware
corporation, and any permitted transferee of Continental that becomes a party to
this Agreement pursuant to Section 3.3 or Section 3.5(c), including the
Continental Trust.
"Continental Merger" means the merger of Continental's Parent into U S
West, Inc. as contemplated by the Continental Merger Agreement.
"Continental Merger Agreement" means the Agreement and Plan of Merger
dated as of February 27, 1996, with respect to the merger of Continental's
Parent into U S West, Inc., as the same may be amended from time to time.
"Continental Trust" means any trust that is formed in order to comply
with any regulatory requirement imposed as a result of the U S West Transaction
for the sole purpose of holding and disposing of Continental's interest in the
Company and of which Continental is the sole beneficiary.
"control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person whether
through the ownership of equity interests or voting securities, by contract or
otherwise.
"Controlled Affiliate," with respect to any Person as of any relevant
date, means the Parent of such Person and each Subsidiary of such Parent.
"Designating Stockholder" means, as of any date, a Consenting
Stockholder that is included in a Consenting Stockholder Group that has,
pursuant to Section 2.1(b)(i), Section 2.1(b)(iv) or Section 2.3, designated an
Agreed Nominee who has been elected to and is then serving on the Board.
- 2 -
<PAGE>
"Indirect Transfer" means a transfer of common stock or other equity
interests of a Consenting Stockholder or of a Person (other than the Parent of
such Consenting Stockholder) of which such Consenting Stockholder is a direct or
indirect Subsidiary to any Person after giving effect to which such Consenting
Stockholder is no longer a Subsidiary of the Person that was its Parent prior to
such transfer.
"Local Joint Venture" means a partnership, joint venture or other
Person created to conduct and operate local telecommunications systems in a
local market and in which the Company has a direct or indirect equity interest
which in the aggregate does not exceed 50% of the equity interests of such
partnership, joint venture or other Person.
"Market Price" means, with respect to any share of Class B Common
Stock as of any date, the average for the twenty full Trading Days preceding
such date of (i) the last reported sales prices, regular way, as reported on the
principal national securities exchange on which the Class A Common Stock is
listed or admitted for trading or (ii) if the Class A Common Stock is not listed
or admitted for trading on any national securities exchange, the last reported
sales prices, regular way, as reported on the Nasdaq National Market or, if the
Class A Common Stock is not listed on the Nasdaq National Market, the average of
the highest bid and lowest asked prices on each such Trading Day as reported on
the Nasdaq Stock Market, or (iii) if the Class A Common Stock is not listed or
admitted to trading on any national securities exchange, the Nasdaq National
Market or the Nasdaq Stock Market, the average of the highest bid and lowest
asked prices on each such Trading Day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization. For purposes of this definition, a "Trading Day" means a
day on which the principal national securities exchange on which the Class A
Common Stock is listed or admitted to trading, or the Nasdaq National Market or
the Nasdaq Stock Market, as applicable, if the Class A Common Stock is not
listed or admitted to trading on any national securities exchange, is open for
the transaction of business (unless such trading shall have been suspended for
the entire day) or, if the Class A Common Stock is not listed or admitted to
trading on any national securities exchange, the Nasdaq National Market or the
Nasdaq Stock Market, any Business Day.
"Parent," with respect to any Person as of any relevant date, means
such Person if it is its own ultimate parent entity (within the meaning of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder, as in effect on the date hereof) or if
it has no ultimate parent entity that is a corporation or partnership;
otherwise, "Parent" means such
- 3 -
<PAGE>
ultimate corporate or partnership parent entity of such Person; provided,
however, that, with respect to Comcast Teleport, Inc., so long as Comcast
Teleport, Inc. is a Subsidiary of Comcast Corporation, "Parent" means Comcast
Corporation.
"Person" means any individual, general partnership, limited
partnership, corporation, limited liability company, joint venture, trust,
business trust, cooperative or association, or any other legal entity.
"Public Offering" means an offering of Class A Common Stock in
compliance with Section 5 of the Securities Act pursuant to a registration
statement on a form applicable to the sale of securities to the general public.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder.
"SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Subsidiary" of any Parent means a Person (a) more than fifty percent
of the voting power of the outstanding shares or securities of which
(representing the right to vote for the election of directors or other managing
authority) are owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Parent or (b) which does not have outstanding shares or
securities, but more than fifty percent of the ownership interests of which
representing the right to make the decisions for such Person are owned or
controlled, directly or indirectly through one or more Subsidiaries, by such
Parent; provided, however, that in each case, such Person shall be deemed to be
a Subsidiary of such Parent only for so long as such ownership or control
exists.
"Supplemental Agreement" means the Supplemental Agreement, dated as of
the date hereof, among the parties to this Agreement.
"U S West Transaction" means the Continental Merger or any other
transaction upon the consummation of which Continental would be acquired by or
become a Subsidiary of U S West, Inc.
1.2 Cross References. For purposes of this Agreement, the following
terms have the meanings set forth in the sections indicated:
Term Section
Adjusted Class B Percentage Section 2.1(b)(i)
- 4 -
<PAGE>
Term Section
Agreed Nominee Section 2.1(b)
Allocable First Offer Shares Section 3.4(a)(ii)
Company Indemnified Parties Section 4.6(a)
Company Notice Section 4.1(a)
Consenting Stockholder Group Section 2.1(b)
Converting Stockholder Section 3.4(a)
Demand Notice Section 4.1(a)
Demand Registrations Section 4.1(a)
Electing Stockholder Section 3.4(a)(i)
Eligible Holder Section 4.1(a)
Excess Shares Section 3.7(a)
Excess Shares Stockholder Section 3.7(a)
First Appraiser Section 3.5(d)(i)
First Offer Electing Stockholder Section 3.4(a)(i)
First Offer Notice of Sale Section 3.4(a)
First Offer Shares Section 3.4(a)
First Refusal Electing Section 3.5(a)(i)
Stockholder
First Refusal Notice of Sale Section 3.5(a)
First Refusal Shares Section 3.5(a)
First Refusal Stockholders Section 3.5(a)
Free-to-Convert Date Section 3.4(b)
Free-to-Convert Shares Section 3.4(b)
Independent Director Section 2.1(b)(iii)
Maximum Amount Section 4.1(f)
Minimum Condition Section 4.1(a)
Notices of Sale Section 3.6(a)
Offered Shares Section 3.6(a)
Pre-IPO Electing Stockholder Section 3.6(a)(i)
- 5 -
<PAGE>
Term Section
Pre-IPO Notice of Sale Section 3.6(a)
Pre-IPO Offered Shares Section 3.6(a)
Pre-IPO Offeror Section 3.6(a)
Pre-IPO Period Section 3.6(a)
Qualifying First Offer Amount Section 3.4(a)
Reorganization Agreement Section 3.3(c)
Second Appraiser Section 3.5(d)(i)
Selling Stockholder Section 3.5(a)
Stockholder Indemnified Parties Section 4.6(b)
Third Appraiser Section 3.5(d)(iii)
Third Party Offer Section 3.5(a)
Third Party Offeror Section 3.5(a)
1.3 Terms Generally. The definitions in Section 1.1 and elsewhere in
this Agreement shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "herein," "hereof," "hereto" and "hereunder" and words of
similar import refer to this Agreement in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Sections shall be deemed references to Sections of this Agreement unless the
context shall otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any corresponding provisions of successor statutes or
regulations). Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
- 6 -
<PAGE>
1.4 Voting; Written Consent.
(a) Any agreement by a Consenting Stockholder herein to vote its
shares of Common Stock in a certain manner shall be deemed, in each instance, to
include an agreement by that Consenting Stockholder to use its best efforts to
take all actions necessary to call, or cause the Company and the appropriate
officers and directors of the Company to call, as promptly as practicable, a
special meeting of stockholders or to act by written consent.
(b) When any action is required to be taken by a Consenting
Stockholder pursuant to this Agreement, such Consenting Stockholder shall take
all steps necessary to implement such action, including executing or causing to
be executed, as promptly as practicable, a consent in writing in lieu of an
annual or special meeting of the stockholders pursuant to Section 228 of the
General Corporation Law of Delaware or any successor statute thereto to effect
such stockholder action.
SECTION 2 BOARD OF DIRECTORS AND STOCKHOLDERS
2.1 Composition of the Board.
(a) The Board shall consist of thirteen directors. Individuals to
serve on the Board shall be nominated in accordance with this Agreement and
nomination procedures established by the Board, the Company's By-Laws and the
rules and regulations of the SEC and the principal stock exchange or
association, if any, on which the Common Stock is listed. Directors shall be
elected in accordance with the Company's Certificate of Incorporation and
By-Laws and the General Corporation Law of Delaware.
(b) No Consenting Stockholder shall nominate or vote for any
individual to serve as a director of the Company except an individual designated
pursuant to the provisions of this Section 2.1(b) or Section 2.3. A Consenting
Stockholder may nominate for election as a director any individual designated by
such Consenting Stockholder pursuant to Section 2.1(b)(i), Section 2.1(b)(iv) or
Section 2.3 or any individual designated pursuant to Section 2.1(b)(ii) if, in
any such case, such individual was not duly nominated in connection with such
election by the Board or a nominating committee of the Board pursuant to the
Company's nomination procedures. Each Consenting Stockholder hereby agrees to
vote all shares of Common Stock owned by such Consenting Stockholder to cause
the election to the Board of the individuals designated in accordance with this
Section 2.1(b) and Section 2.3. For purposes of this Agreement, an individual
designated in accordance with this Section 2.1(b) or Section 2.3 to which the
foregoing covenants in this Section
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2.1(b) apply is referred to as an "Agreed Nominee." For purposes of this
Agreement, each Consenting Stockholder none of the Controlled Affiliates of
which is also a Consenting Stockholder and each group of two or more Consenting
Stockholders that are Controlled Affiliates of each other shall constitute a
"Consenting Stockholder Group."
(i) Subject to Section 2.1(c), each Consenting Stockholder
Group shall have the right to designate a number of Agreed Nominees equal to the
largest integer that is less than or equal to its Adjusted Class B Percentage
divided by nine percent. A Consenting Stockholder Group's "Adjusted Class B
Percentage" equals the number, designated as a percentage, determined by
dividing (x) the aggregate number of shares of Class B Common Stock owned by
such Consenting Stockholder Group by (y) the aggregate number of shares of Class
B Common Stock outstanding (but excluding all shares of Class B Common Stock
owned by Continental and its Controlled Affiliates if the Consenting Stockholder
Group that includes Continental is not at such time entitled to designate one or
more Agreed Nominees pursuant to Section 2.1(c));
(ii) The CEO shall be an Agreed Nominee;
(iii) Two individuals nominated by the Board or a nominating
committee of the Board to be Independent Directors shall be Agreed Nominees if
(A) such individuals were nominated by the Board and all individuals then
serving on the Board who were Agreed Nominees pursuant to Section 2.1(b)(i)
voted for their nomination or (B) such individuals were nominated by a
nominating committee of the Board, the members of the nominating committee
included at least one Agreed Nominee previously designated by each Consenting
Stockholder Group pursuant to Section 2.1(b)(i) and each member of the
nominating committee who was an Agreed Nominee pursuant to Section 2.1(b)(i)
voted for their nomination; as used herein, an "Independent Director" means a
director who is neither employed by nor affiliated with the Company or any
Consenting Stockholder; and
(iv) If the number of Agreed Nominees designated by the
Consenting Stockholder Groups pursuant to Section 2.1(b)(i) and pursuant to any
prior application of this Section 2.1(b)(iv) is less than ten, the Consenting
Stockholder Group (other than (A) the Consenting Stockholder Group that includes
Continental if such Consenting Stockholder Group is not entitled to designate an
Agreed Nominee as a result of Section 2.1(c) and (B) a Consenting Stockholder
Group that designated an additional Agreed Nominee pursuant to a prior
application of this Section 2.1(b)(iv)) that then has the smallest difference
between its Adjusted Class B Percentage and the next highest integral multiple
of 9% shall designate an additional Agreed Nominee.
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(c) After the earlier to occur of a Public Offering and the
consummation of the U S West Transaction, the Consenting Stockholder Group that
includes Continental shall only be entitled to designate one or more Agreed
Nominees pursuant to Section 2.1(b) if:
(i) no Affiliate of Continental is a local exchange carrier;
(ii) the Company shall have received an opinion from a law
firm reasonably acceptable to the Consenting Stockholders (other than
Continental) to the effect that such Consenting Stockholder Group's designation
of an Agreed Nominee and such person's serving as a director of the Company
would not violate any law, rule or regulation or any order, award or decree of
any governmental body or administrative authority, including the Department of
Justice; and
(iii) a majority of the Board (excluding any director of the
Company who was an Agreed Nominee designated by the Consenting Stockholder Group
that includes Continental) approves such Consenting Stockholder Group's
designation of one or more Agreed Nominees in accordance with the provisions of
Section 2.1(b).
(d) The Consenting Stockholder Groups shall initially designate
Agreed Nominees and the Consenting Stockholders shall cause such Agreed Nominees
to be elected as directors promptly following the date hereof to serve until the
next annual meeting of the stockholders of the Company. Thereafter, the
Consenting Stockholder Groups shall designate Agreed Nominees prior to each
annual meeting of the stockholders of the Company in a manner that is consistent
with the Company's nomination procedures and the rules and regulations of the
SEC and the principal stock exchange or association, if any, on which the Common
Stock is listed.
2.2 Removal of Directors.
(a) Each Consenting Stockholder shall vote all shares of Common
Stock owned by it for the removal (with or without cause) of any director who
was an Agreed Nominee designated by a Consenting Stockholder Group pursuant to
Section 2.1(b)(i), Section 2.1(b)(iv) or Section 2.3(c) if the Consenting
Stockholder Group that so designated such Agreed Nominee (i) requests such
removal by notice to the other Consenting Stockholders, (ii) ceases to hold a
number of shares of Class B Common Stock that entitle such Consenting
Stockholder Group to designate the number of Agreed Nominees previously
designated by such Consenting Stockholder Group pursuant to Section 2.1(b)
(except that, upon any such reduction in its ownership of shares of Class B
Common Stock, such Consenting Stockholder Group shall
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be entitled to identify a number of such directors who shall not be removed
pursuant to this clause (ii) equal to the number of Agreed Nominees that such
Consenting Stockholder is then entitled to designate pursuant to Section
2.1(b)(i) and Section 2.1(b)(iv)), or (iii) is no longer entitled to designate
any Agreed Nominees pursuant to Section 2.1(c).
(b) Each Consenting Stockholder shall vote all shares of Common
Stock owned by it for the removal of an individual designated as an Agreed
Nominee pursuant to Section 2.1(b)(ii) and thereafter elected as a director if
such individual ceases to serve as CEO for any reason.
(c) An Independent Director may be removed in accordance with the
Company's Certificate of Incorporation and By-laws.
2.3 Vacancies. If, as a result of death, disability, retirement,
resignation, removal (with or without cause) or otherwise there shall exist or
occur any vacancies on the Board, individuals to fill such vacancies shall be
nominated and elected in the manner provided in this Agreement and in the
Company's Certificate of Incorporation and By-laws. Agreed Nominees with respect
to an election to fill any such vacancies shall be designated as follows:
(a) in the case of the CEO, the successor CEO shall be an Agreed
Nominee;
(b) in the case of an Independent Director, an individual
nominated in the manner described in Section 2.1(b)(iii); and
(c) in all other cases, by the Consenting Stockholder Group or
Consenting Stockholder Groups that, under Section 2.1, are then entitled to
designate a greater number of Agreed Nominees than the number of directors
currently sitting on the Board who are Agreed Nominees designated by such
Consenting Stockholder Group (by each such Consenting Stockholder Group
according to the number of additional Agreed Nominees that each such Consenting
Stockholder Group is so entitled to designate).
2.4 Conflicting Charter or By-law Provisions. Each Consenting
Stockholder shall vote its shares of Common Stock, and shall take all other
actions necessary, to ensure that the Company's Certificate of Incorporation and
By-laws facilitate and do not at any time conflict with the provisions of this
Agreement.
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SECTION 3 TRANSFERS AND CONVERSIONS
3.1 Restrictions on Transfer and Conversion.
(a) A Consenting Stockholder shall not offer, sell, transfer,
assign, grant a participation in or option with respect to, pledge, encumber or
otherwise dispose of, or convert to Class A Common Stock, any of its shares of
Class B Common Stock except in a transaction that is expressly permitted by
Section 3.3 or in compliance with Section 3.4, 3.5 or 3.6, as applicable. Any
attempt to sell, transfer, assign, grant a participation in or option with
respect to, pledge, encumber or otherwise dispose of, or convert to Class A
Common Stock, any shares of Class B Common Stock in a manner that does not
comply with this Agreement shall be ineffective.
(b) Except as expressly permitted or required by this Agreement,
(i) each Consenting Stockholder shall be the record and beneficial owner of such
shares of Class B Common Stock indicated in the Company's records as being owned
by such Consenting Stockholder, in each case free and clear of any pledge, lien,
security interest, charge, claim, equity, option or encumbrance of any kind, and
(ii) no Consenting Stockholder shall enter into any agreement or arrangement
with respect to the exercise of its rights to designate Agreed Nominees or to
request the removal of a director pursuant to this Agreement (other than an
agreement or arrangement solely among Consenting Stockholders that are included
in the same Consenting Stockholder Group); provided, however, that the foregoing
shall not be construed to limit the ability of a Consenting Stockholder to enter
into agreements with respect to the voting of its shares of Common Stock pending
a sale of such stock permitted by Section 3.1(a) or to enter into agreements not
inconsistent with this Agreement that restrict such Consenting Stockholder's
ability to transfer shares of Class B Common Stock.
(c) Each Consenting Stockholder agrees that no Indirect Transfer
shall occur with respect to such Consenting Stockholder except for:
(i) an Indirect Transfer in connection with the sale or
other disposition to the transferee or its Controlled Affiliate (including by
merger, consolidation or share exchange) of (A) all or substantially all of the
assets of the Parent of such Consenting Stockholder or (B) assets owned or
controlled directly or indirectly by such Parent if the aggregate value of the
Class B Common Stock then owned by such Consenting Stockholder represents less
than thirty-five percent of the aggregate value of the assets (including the
stock of such Consenting Stockholder) being disposed of; or
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(ii) an Indirect Transfer permitted by Section 3.5.
(d) The Company agrees not to record any transfer or conversion
of Class B Common Stock by any Consenting Stockholder in the stock transfer
books of the Company unless the transfer complies with all provisions of this
Agreement.
3.2 Legend. Each certificate evidencing outstanding shares of Class B
Common Stock held by a Consenting Stockholder shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO,
AND TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF
AN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF
JUNE 26, 1996, AS AMENDED, AMONG TELEPORT COMMUNICATIONS GROUP
INC. AND CERTAIN STOCKHOLDERS THEREOF. A COPY OF THIS
AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF
TELEPORT COMMUNICATIONS GROUP INC. AT TWO TELEPORT DRIVE,
STATEN ISLAND, NEW YORK 10311-1011.
All certificates evidencing shares of Class B Common Stock hereafter issued by
the Company to a Consenting Stockholder shall bear the legend set forth above.
Upon termination of this Agreement and surrender to the Company for such purpose
of any certificates bearing the legend set forth above, the Company shall
reissue such certificates to the owner thereof without such legend.
3.3 Exceptions to Restrictions on Transfers. The restrictions
contained in Sections 3.1, 3.4, 3.5 and 3.6 shall not apply to the following
(provided such transfers comply with applicable law):
(a) a transfer by a Consenting Stockholder to its Parent or to
any Subsidiary of its Parent of shares of Class B Common Stock if the transferee
assumes the obligations of the transferor under this Agreement with respect to
such shares and becomes a party to this Agreement;
(b) a transfer by Continental to the Continental Trust of shares
of Class B Common Stock if the Continental Trust assumes the obligations of
Continental under this Agreement with respect to such shares and becomes a party
to this Agreement;
(c) a sale by Continental of shares of Class B Common Stock to
the Company pursuant to Section 6 of the Reorganization Agreement dated as of
April 18, 1996, among the Company, Cox Communications, Inc., TCI Communications,
Inc., Comcast Corporation and Continental Cablevision, Inc. (the "Reorganization
Agreement"); or
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(d) a transfer by TCI Teleport, Inc. of shares of Class B Common
Stock to the Company pursuant to Section 3.4 of the Reorganization Agreement.
3.4 Conversion of Class B Common Stock to Class A Common Stock; Right
of First Offer.
(a) Except as expressly permitted pursuant to Section 3.5(c) or
Section 3.6, no Consenting Stockholder shall convert any shares of Class B
Common Stock to Class A Common Stock prior to the consummation of the Company's
initial Public Offering. After the consummation of the Company's initial Public
Offering, if a Consenting Stockholder (a "Converting Stockholder") desires to
convert all or any portion of its shares of Class B Common Stock to Class A
Common Stock, it shall first deliver to each other Designating Stockholder a
written notice (a "First Offer Notice of Sale") of its intention to so convert
such shares of Class B Common Stock (the "First Offer Shares"). The Converting
Stockholder shall not convert any of its shares of Class B Common Stock to Class
A Common Stock unless and until it has delivered a First Offer Notice of Sale
with respect to such shares to such other Designating Stockholders pursuant to
this Section 3.4 and otherwise complied with the provisions of this Section 3.4
(except as expressly permitted pursuant to Section 3.5(c) or Section 3.6). The
First Offer Notice of Sale shall contain the Converting Stockholder's offer to
sell the First Offer Shares to such other Designating Stockholders at a price
per share equal to the Market Price as of the date of the First Offer Notice of
Sale (which price shall, unless otherwise agreed by the Converting Stockholder
and the Designating Stockholders accepting such offer, be payable in cash). As
used in this Section 3.4, the "Qualifying First Offer Amount" means, with
respect to any First Offer Notice of Sale, the amount, if any, by which the
number of First Offer Shares specified in such First Offer Notice of Sale
exceeds two percent of the number of shares of Common Stock outstanding at the
time such First Offer Notice of Sale is delivered (or such lesser amount as may
be specified in the First Offer Notice of Sale or as may otherwise be agreed to
by the Converting Stockholder).
(i) If a Designating Stockholder desires to accept all or
any portion of the offer set forth in a First Offer Notice of Sale, such
Designating Stockholder (a "First Offer Electing Stockholder") shall, within ten
Business Days of receipt of such First Offer Notice of Sale, notify the
Converting Stockholder of its intention to acquire First Offer Shares and the
number of such shares it desires to acquire, and deliver a copy of such notice
to each other Designating Stockholder.
(ii) If, after giving effect to any amendment to any First
Offer Electing Stockholder's notice
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pursuant to Section 3.4(a)(iii), the First Offer Electing Stockholders desire to
acquire, in the aggregate, either (x) all the First Offer Shares, or (y) a
number of First Offer Shares that is not more than the Qualifying First Offer
Amount, then the First Offer Electing Stockholders shall have the right to
acquire, in the case of clause (x), all the First Offer Shares or, in the case
of clause (y), the number of shares that the First Offer Electing Stockholders
desire to acquire (such shares that the First Offer Electing Stockholders have
the right to acquire, the "Allocable First Offer Shares"), allocated among them
as follows (or in such other manner as the First Offer Electing Stockholders may
agree):
(A) the Allocable First Offer Shares shall be allocated
among the First Offer Electing Stockholders pro rata (based on the number of
shares of Class B Common Stock owned by each of them) until all of the Allocable
First Offer Shares have been allocated or any First Offer Electing Stockholder
has been allocated the number of First Offer Shares that it desires to acquire,
as specified in its notice to the Converting Stockholder, as it may have been
amended pursuant to Section 3.4(a)(iii);
(B) if all Allocable First Offer Shares are not
allocated pursuant to paragraph (A) or any prior application of this paragraph
(B), any Allocable First Offer Shares that were not allocated pursuant to
paragraph (A) or any prior application of this paragraph (B) shall be allocated
among the First Offer Electing Stockholders (other than any First Offer Electing
Stockholder that has been allocated the number of First Offer Shares that it
desires to acquire, as specified in its notice to the Converting Stockholder, as
it may have been amended pursuant to Section 3.4(a)(iii)) pro rata (based on the
number of shares of Class B Common Stock owned by each of them); and
(C) if all Allocable First Offer Shares are not
allocated pursuant to paragraph (A) and any prior application of paragraph (B),
any Allocable First Offer Shares that were not allocated pursuant to paragraph
(A) and any prior application of paragraph (B) shall be allocated by continuing
to apply paragraph (B) as required.
(iii) If the First Offer Electing Stockholders desire to
acquire, in the aggregate, less than all of the First Offer Shares, then the
Converting Stockholder shall so notify the First Offer Electing Stockholders
and:
(A) subject to Section 3.4(a)(iii)(B), each First Offer
Electing Stockholder shall have the right, by written notice sent to the
Converting Stockholder (with a copy of such notice to each other Designating
Stockholder) within five days after its receipt of the notice from the
Converting
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Stockholder pursuant to this Section 3.4(a)(iii) to amend the notice it
delivered pursuant to 3.4(a)(i) to increase or decrease the number of First
Offer Shares that it desires to purchase;
(B) notwithstanding Section 3.4(a)(iii)(A), no notice
by any First Offer Electing Stockholder pursuant to this Section 3.4(a)(iii)
shall constitute an amendment of the notice it delivered pursuant to 3.4(a)(i)
if the number of shares that the First Offer Electing Stockholders originally
desired to acquire, in the aggregate, as specified in their notices pursuant to
3.4(a)(i) was less than or equal to the Qualifying First Offer Amount and the
number of shares that the First Offer Electing Stockholders subsequently desired
to acquire, in the aggregate, as specified in their notices as proposed to be
amended pursuant to this Section 3.4(a)(iii), was greater than the Qualifying
First Offer Amount but less than all the First Offer Shares; if this Section
3.4(a)(iii)(B) applies, the First Offer Electing Stockholders shall have the
right to acquire the number of shares that the First Offer Electing Stockholders
originally desired to acquire, allocated among them in accordance with Section
3.4(a)(ii);
(C) if, after giving effect to any amendment to any
First Offer Electing Stockholder's notice pursuant to this Section 3.4(a)(iii),
the First Offer Electing Stockholders desire to acquire, in the aggregate,
either (x) all the First Offer Shares, or (y) a number of First Offer Shares
that is not more than the Qualifying First Offer Amount, then the First Offer
Electing Stockholders shall have the right to acquire, in the case of clause
(x), all the First Offer Shares or, in the case of clause (y), the number of
shares that the First Offer Electing Stockholders desire to acquire, allocated
among them in accordance with Section 3.4(a)(ii);
(D) if, after giving effect to any amendment to any
First Offer Electing Stockholder's notice pursuant to this Section 3.4(a)(iii)
(but subject to Section 3.4(a)(iii)(B)), the First Offer Electing Stockholders
desire to acquire, in the aggregate, a number of First Offer Shares that is
greater than the Qualifying First Offer Amount but less than all the First Offer
Shares, then the Converting Stockholder's offer of the First Offer Shares shall
be deemed rejected in full as of the last day for a First Offer Electing
Stockholder to amend its notice pursuant to this Section 3.4(a)(iii); and
(E) if, after giving effect to any amendment to any
First Offer Electing Stockholder's notice pursuant to this Section 3.4(a)(iii),
the First Offer Electing Stockholders desire to acquire, in the aggregate, a
number of First Offer Shares that is less than or equal to the Qualifying First
Offer Amount, then the Converting Stockholder's offer of the First Offer Shares
shall be deemed accepted as to the number
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of First Offer Shares that the First Offer Electing Stockholders desire to
acquire (and the First Offer Electing Stockholders shall have the right to
acquire such shares as provided in Section 3.4(a)(iii)(C)) and shall be deemed
rejected with respect to that portion of the First Offer Shares that exceeds the
number of First Offer Shares that the First Offer Electing Stockholders desire
to acquire as of the last day for a First Offer Electing Stockholder to amend
its notice pursuant to this Section 3.4(a)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 3.4(a), the allocation of Allocable First Offer Shares among the First
Offer Electing Stockholders shall be subject to Section 3.7(a).
(b) If (i) the Converting Stockholder's offer of the First Offer
Shares is rejected (in whole or in part) as provided in Section 3.4(a), or (ii)
the purchase of the First Offer Shares is not consummated within the period set
forth in Section 3.7(b) for any reason other than a breach by the Converting
Stockholder of any of its covenants, representations or warranties that are a
condition to consummation of such purchase, then, beginning on the date that the
Converting Stockholder's offer of the First Offer Shares is deemed rejected or
the day following the last day of the period set forth in Section 3.7(b), as
applicable (such applicable date, the "Free- to-Convert Date"), the Converting
Stockholder shall have the right to convert the First Offer Shares with respect
to which the Converting Stockholder's offer was rejected or the First Offer
Shares that were not purchased within the period set forth in Section 3.7(b), as
applicable (such First Offer Shares, the "Free-to-Convert Shares"), to shares of
Class A Common Stock at any time prior to the later of (i) the ninetieth day
after the Free-to-Convert Date, or (ii) if prior to or within ten Business Days
after the Free-to-Convert Date the Converting Stockholder either delivers a
Demand Notice pursuant to Section 4.1 or submits a written request in response
to a Company Notice pursuant to Section 4.1 with respect to the registration of
the shares of Class A Common Stock into which the Free-to-Convert Shares may be
converted, either (A) the date on which the registration statement filed by the
Company with respect to such shares of Class A Common Stock becomes effective or
(B) the date on which such registration statement is withdrawn, as applicable.
If the Converting Stockholder does not convert the Free-to- Convert Shares into
shares Class A Common Stock during the applicable period, the procedure set
forth above with respect to the First Offer Notice of Sale shall be repeated
with respect to any subsequent proposed conversion of shares of Class B Common
Stock to shares of Class A Common Stock by the Converting Stockholder.
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3.5 Right of First Refusal.
(a) If a Consenting Stockholder (a "Selling Stockholder") or its
Parent or other Controlled Affiliate shall receive at any time a bona fide offer
in writing, which the Selling Stockholder or its Parent or other Controlled
Affiliate proposes to accept (a "Third Party Offer"), from a third party (the
"Third Party Offeror") to acquire all or part of its shares of Class B Common
Stock (the "First Refusal Shares") or to effect an Indirect Transfer (in which
case the "First Refusal Shares" shall be all the shares of Class B Common Stock
owned by the Selling Stockholder), the Selling Stockholder shall deliver to each
other Designating Stockholder (the "First Refusal Stockholders") a notice (a
"First Refusal Notice of Sale") containing a copy of the Third Party Offer, the
identity of the Third Party Offeror and an offer to sell the First Refusal
Shares to the First Refusal Stockholders on the following terms: (i) if the
Third Party Offer contemplates a purchase of the First Refusal Shares by the
Third Party Offeror for consideration consisting solely of cash, then the
Selling Stockholder's offer shall be to sell the First Refusal Shares for cash
in an amount equal to the purchase price specified in, and otherwise on the
terms and conditions contained in, the Third Party Offer, and (ii) if the Third
Party Offer contemplates an acquisition of the First Refusal Shares by the Third
Party Offeror for consideration any portion of which is not cash or if the Third
Party Offer contemplates an Indirect Transfer, then the Selling Stockholder's
offer shall be to sell the First Refusal Shares for cash in an amount equal to
the fair market value of the First Refusal Shares (as determined pursuant to
Section 3.5(d)) and otherwise on the terms and conditions contained in the Third
Party Offer. The First Refusal Notice of Sale shall specify the price at which
the First Refusal Shares are offered, as provided in the preceding sentence. No
Consenting Stockholder shall sell or assign, or offer to sell or assign, or
otherwise dispose of any of its shares of Class B Common Stock (other than a
disposition pursuant to Section 3.3, 3.4 or 3.6) or permit an Indirect Transfer
to occur with respect to such Consenting Stockholder (other than pursuant to
Section 3.1(c)(i)), unless and until such Consenting Stockholder has delivered a
First Refusal Notice of Sale with respect to such shares to the First Refusal
Stockholders pursuant to this Section 3.5 and otherwise complied with the
provisions of this Section 3.5. The First Refusal Stockholders shall enter into
an appropriate confidentiality agreement reasonably requested by the Selling
Stockholder with respect to the Third Party Offer.
(i) If a First Refusal Stockholder desires to accept all or
any portion of the offer set forth in a First Refusal Notice of Sale as to any
part of the First Refusal Shares, such First Refusal Stockholder (a "First
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Refusal Electing Stockholder") shall, within ten Business Days of receipt of
such First Refusal Notice of Sale, notify the Selling Stockholder of its
intention to acquire First Refusal Shares and the number of such shares it
desires to acquire, and deliver a copy of such notice to each other First
Refusal Stockholder.
(ii) If the First Refusal Electing Stockholders desire to
acquire, in the aggregate, all of the First Refusal Shares, then the First
Refusal Electing Stockholders shall have the right to acquire all the First
Refusal Shares, allocated among them as follows (or in such other manner as the
First Refusal Electing Stockholders may agree):
(A) the First Refusal Shares shall be allocated among
the First Refusal Electing Stockholders pro rata (based on the number of shares
of Class B Common Stock owned by each of them) until all of the First Refusal
Shares have been allocated or any First Refusal Electing Stockholder has been
allocated the number of First Refusal Shares that it desires to acquire, as
specified in its notice to the Selling Stockholder, as it may have been amended
pursuant to Section 3.5(a)(iii);
(B) if all First Refusal Shares are not allocated
pursuant to paragraph (A) or any prior application of this paragraph (B), any
First Refusal Shares that were not allocated pursuant to paragraph (A) or any
prior application of this paragraph (B) shall be allocated among the First
Refusal Electing Stockholders (other than any First Refusal Electing Stockholder
that has been allocated the number of First Refusal Shares that it desires to
acquire, as specified in its notice to the Selling Stockholder, as it may have
been amended pursuant to Section 3.5(a)(iii)) pro rata (based on the number of
shares of Class B Common Stock owned by each of them); and
(C) if all First Refusal Shares are not allocated
pursuant to paragraph (A) and any prior application of paragraph (B), any First
Refusal Shares that were not allocated pursuant to paragraph (A) and any prior
application of paragraph (B) shall be allocated by continuing to apply paragraph
(B) as required.
(iii) If the First Refusal Electing Stockholders desire to
acquire, in the aggregate, less than all of the First Refusal Shares, then the
Selling Stockholder shall so notify the First Refusal Electing Stockholders and:
(A) each First Refusal Electing Stockholder shall have the
right, by written notice sent to the Selling Stockholder (with a copy of such
notice to each other Designating Stockholder) within five days after its receipt
of the notice from the Selling Stockholder pursuant to this Section
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3.5(a)(iii) to amend its notice to increase the number of First Refusal Shares
that it desires to purchase;
(B) if, after giving effect to any amendment to any First
Refusal Electing Stockholder's notice pursuant to this Section 3.5(a)(iii), the
First Refusal Electing Stockholders desire to acquire, in the aggregate, all of
the First Refusal Shares, then the First Refusal Electing Stockholders shall
have the right to acquire all the First Refusal Shares, allocated among them in
accordance with Section 3.5(a)(ii); and
(C) if, after giving effect to any amendment to any First
Refusal Electing Stockholder's notice pursuant to this Section 3.5(a)(iii), the
First Refusal Electing Stockholders desire to acquire, in the aggregate, less
than all of the First Refusal Shares, then the Selling Stockholder's offer of
the First Refusal Shares shall be deemed rejected as of the last day for a First
Refusal Electing Stockholder to amend its notice pursuant to this Section
3.5(a)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 3.5(a), the allocation of the First Refusal Shares among the First
Refusal Electing Stockholders shall be subject to Section 3.7(a).
(b) If (i) the Selling Stockholder's offer of the First Refusal
Shares is rejected as provided in Section 3.5(a), or (ii) the purchase of the
First Refusal Shares is not consummated within the period set forth in Section
3.7(b) for any reason other than a breach by the Selling Stockholder of any of
its covenants, representations or warranties that are a condition to
consummation of such purchase, then the Selling Stockholder shall have the
right, at any time during the sixty-day period beginning on the date that the
Seller Stockholder's offer of the First Refusal Shares is deemed rejected or the
day following the last day of the period set forth in Section 3.7(b), as
applicable, to enter into a binding agreement to sell all of the First Refusal
Shares to the Third Party Offeror, or to effect the Indirect Transfer
contemplated by the Third Party Offer, as applicable, in either case on terms
and conditions no less favorable in the aggregate to the Selling Stockholder
(and, in the case of an Indirect Transfer, its Parent) than those set forth in
the Third Party Offer, and thereafter (within the period specified below in this
Section 3.5(b)) to sell all of the First Refusal Shares to the Third Party
Offeror or effect the Indirect Transfer, as applicable, pursuant to such
agreement. The Selling Stockholder shall, as promptly as practicable and prior
to the closing of such sale or Indirect Transfer, provide to the First Refusal
Stockholders a copy of the agreement for the sale of the First Refusal Shares so
as to permit the First Refusal Stockholders to confirm for themselves that the
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terms and conditions of such sale are not less favorable in the aggregate to the
Selling Stockholder (and, in the case of an Indirect Transfer, its Parent) than
those set forth in the Third Party Offer. If the Selling Stockholder does not
enter into such an agreement during such sixty-day period, or does not close the
sale thereunder within the period provided in Section 3.7(b), the procedure set
forth above with respect to the First Refusal Notice of Sale shall be repeated
with respect to any subsequent proposed sale, assignment or other disposition of
shares of Common Stock by the Selling Stockholder.
(c) If the First Refusal Shares include a sufficient number of
shares of Class B Common Stock to entitle the holder thereof to designate at
least one Agreed Nominee under Section 2.1, then the Selling Stockholder shall
have the right to sell to the Third Party Offeror such shares of Class B Common
Stock or permit the Indirect Transfer, as applicable, without converting such
shares to Class A Common Stock so long as (i) in the case of a sale of the First
Refusal Shares, the Third Party Offeror assumes the obligations of the Selling
Stockholder under this Agreement and, if it is then in effect, the Supplemental
Agreement with respect to such shares and becomes a party to this Agreement and,
if it is then in effect, the Supplemental Agreement, and (ii) in the case of an
Indirect Transfer, the Third Party Offeror, upon taking control of the Selling
Stockholder, causes the Selling Stockholder to confirm in writing the continuing
validity and effectiveness of its obligations under this Agreement and the
Supplemental Agreement. If the First Refusal Shares do not include a sufficient
number of shares of Class B Common Stock to entitle the holder thereof to
designate at least one Agreed Nominee under Section 2.1, or if the Third Party
Offeror refuses to become a party to this Agreement or, if it is then in effect,
the Supplemental Agreement, then the Selling Stockholder shall, prior to
transferring the First Refusal Shares to the Third Party Offeror or effecting
the Indirect Transfer, as applicable, convert all shares of Class B Common Stock
included in the First Refusal Shares to Class A Common Stock and shall not have
the right to sell Class B Common Stock to the Third Party Offeror or to permit
the Indirect Transfer while the Selling Stockholder holds shares of Class B
Common Stock. The conversion of shares of Class B Common Stock to Class A Common
Stock pursuant to the foregoing sentence shall not be subject to the provisions
of Section 3.3, 3.4 or 3.6. If the Third Party Offeror receives only shares of
Class A Common Stock, then it shall not be required to become a party to this
Agreement and shall not become a party to this Agreement except as provided in
the following sentence. If the Third Party Offeror receives only shares of Class
A Common Stock and such shares represent at least five percent of the number of
shares of Common Stock then outstanding, then it shall have the right, at its
option, to become a party to this Agreement.
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(d) Before submitting a First Refusal Notice of Sale pursuant to
Section 3.5(a) in response to a Third Party Offer that contemplates (i) a sale
of the First Refusal Shares in conjunction with other assets, (ii) an
acquisition of the First Refusal Shares by the Third Party Offeror for
consideration any portion of which is not cash or (iii) an Indirect Transfer,
the Selling Stockholder and the other Designating Stockholders shall cause (A)
if the Third Party Offer contemplates a sale of the First Refusal Shares in
conjunction with other assets, the total consideration specified in the Third
Party Offer to be allocated between the First Refusal Shares and such other
assets, (B) if the Third Party Offer contemplates an acquisition of the First
Refusal Shares by the Third Party Offeror for consideration any portion of which
is not cash or if the Third Party Offer contemplates an Indirect Transfer, the
fair market value of the First Refusal Shares to be determined, in each case
pursuant to this Section 3.5(d):
(i) The Selling Stockholder shall deliver to each other
Designating Stockholder a notice stating that the Selling Stockholder intends to
deliver a First Refusal Notice of Sale to which this Section 3.5(d) applies and
identifying an appraiser (the "First Appraiser") who has been retained by the
Selling Stockholder to allocate the total consideration specified in the Third
Party Offer or to conduct an appraisal of the First Refusal Shares, as
applicable, pursuant to this Section 3.5(d). Within ten Business Days after its
receipt of the Selling Stockholder's notice pursuant to the preceding sentence,
the Designating Stockholder (other than the Selling Stockholder) that, together
with its Controlled Affiliates, owns the greatest number of shares of Class B
Common Stock, shall send a notice to the Selling Stockholder and the other
Designating Stockholders identifying a second appraiser (the "Second Appraiser")
who shall be retained by the Selling Stockholder to make such allocation or
conduct such appraisal, as applicable, pursuant to this Section 3.5(d).
(ii) The First Appraiser and the Second Appraiser shall
submit their independent determinations of the amount of consideration allocable
to the First Refusal Shares or the fair market value of the First Refusal
Shares, as applicable, within thirty days after the date on which the Second
Appraiser is retained. If the respective determinations of the First Appraiser
and the Second Appraiser vary by less than ten percent of the higher
determination, the amount of consideration allocable to the First Refusal Shares
or the fair market value of the First Refusal Shares, as applicable, for
purposes of Section 3.5(a), shall be the average of the two determinations.
(iii) If the respective determinations of the First
Appraiser and the Second Appraiser vary by ten percent or more of the higher
determination, the two Appraisers shall promptly designate a third appraiser
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(the "Third Appraiser"), who shall be retained by the Selling Stockholder to
make an allocation or conduct an appraisal pursuant to this Section 3.5(d). The
First Appraiser and the Second Appraiser shall be instructed not to, and no
party to this Agreement or any Controlled Affiliate of any party to this
Agreement shall, provide any information to the Third Appraiser as to the
determinations of the First Appraiser and the Second Appraiser or otherwise
influence the Third Appraiser's determination in any way. The Third Appraiser
shall submit its determination of the amount of consideration allocable to the
First Refusal Shares or the fair market value of the First Refusal Shares, as
applicable, within thirty days after the date on which the Third Appraiser is
retained. If a Third Appraiser is retained, the amount of consideration
allocable to the First Refusal Shares or the fair market value of the First
Refusal Shares, as applicable, for purposes of Section 3.5(a), shall equal the
average of the two closest of the three determinations, except that, if the
difference between the highest and middle determinations is no more than 105%
and no less than 95% of the difference between the middle and lowest
determinations, then the amount of consideration allocable to the First Refusal
Shares or the fair market value of the First Refusal Shares, as applicable, for
purposes of Section 3.5(a), shall equal the middle determination.
(iv) Any appraiser retained pursuant to this Section 3.5(d)
shall be nationally recognized as being qualified and experienced in the
appraisal of assets comparable to the First Refusal Shares and, if applicable,
any other assets proposed to be sold pursuant to the Third Party Offer and shall
not be an Affiliate of any party to this Agreement. All fees and expenses of any
appraiser retained pursuant to this Section 3.5(d) shall be paid by the Selling
Stockholder.
(v) In determining the fair market value of the First
Refusal Shares, if applicable, each appraiser retained pursuant to this Section
3.5(d) shall: (A) assume that the fair market value of the applicable asset is
the price at which the asset would change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or sell and each
having reasonable knowledge of all relevant facts; (B) assume that the
applicable asset would be sold for cash; and (C) use valuation techniques then
prevailing in the relevant industry.
3.6 Pre-IPO Right of First Offer.
(a) If the Company's initial Public Offering has not been
consummated by September 30, 1996, then each Consenting Stockholder shall have
the right, at any time thereafter but prior to the consummation of a Public
Offering (the "Pre-IPO Period"), to deliver to the other Designating
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Stockholders a notice (a "Pre-IPO Notice of Sale" and, together with the First
Offer Notice of Sale and the First Refusal Notice of Sale, the "Notices of
Sale") of such Consenting Stockholder's intention to sell, assign or otherwise
dispose of the shares of Class A Common Stock into which all or part of its
shares of Class B Common Stock may be converted (the "Pre-IPO Offered Shares,"
and, together with the First Offer Shares and the First Refusal Shares, the
"Offered Shares"). Such Consenting Stockholder (the "Pre-IPO Offeror") shall not
sell or assign, or offer to sell or assign, or otherwise dispose of any of its
shares of Class B Common Stock (other than a disposition pursuant to Section
3.3, 3.4 or 3.5), or convert such shares into shares of Class A Common Stock,
unless and until it has delivered a Pre-IPO Notice of Sale with respect to such
shares to the other Designating Stockholders pursuant to this Section 3.6 and
otherwise complied with the provisions of this Section 3.6. Such Pre-IPO Notice
of Sale shall contain the Pre-IPO Offeror's offer to sell the Pre-IPO Offered
Shares to the other Designating Stockholders, and shall specify the terms and
conditions of such sale, including the number of Pre-IPO Offered Shares and the
price per Pre-IPO Offered Share (which price shall, unless otherwise agreed by
the Pre-IPO Offeror and the Designating Stockholders accepting such offer, be
payable in cash).
(i) If any of the other Designating Stockholders desires to
accept all or any portion of the offer set forth in a Pre-IPO Notice of Sale,
such Designating Stockholder (a "Pre-IPO Electing Stockholder" and, together
with the First Offer Electing Stockholders and the First Refusal Electing
Stockholders, the "Electing Stockholders") shall, within ten Business Days of
receipt of such Pre-IPO Notice of Sale, notify the Pre-IPO Offeror of its
intention to acquire Pre-IPO Offered Shares and the number of such shares it
desires to acquire, and deliver a copy of such notice to each other Designating
Stockholder.
(ii) If the Pre-IPO Electing Stockholders desire to acquire,
in the aggregate, all of the Pre-IPO Offered Shares, then the Pre-IPO Electing
Stockholders shall have the right to acquire all the Pre-IPO Offered Shares,
allocated among them as follows (or in such other manner as the Pre-IPO Electing
Stockholders may agree):
(A) the Pre-IPO Offered Shares shall be allocated among the
Pre-IPO Electing Stockholders pro rata (based on the number of shares of Class B
Common Stock owned by each of them) until all of the Pre-IPO Offered Shares have
been allocated or any Pre-IPO Electing Stockholder has been allocated the number
of Pre-IPO Offered Shares that it desires to acquire, as specified in its notice
to the Pre-IPO Offeror, as it may have been amended pursuant to Section
3.6(a)(iii);
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(B) if all Pre-IPO Offered Shares are not allocated pursuant
to paragraph (A) or any prior application of this paragraph (B), any Pre-IPO
Offered Shares that were not allocated pursuant to paragraph (A) or any prior
application of this paragraph (B) shall be allocated among the Pre-IPO Electing
Stockholders (other than any Pre-IPO Electing Stockholder that has been
allocated the number of Pre-IPO Offered Shares that it desires to acquire, as
specified in its notice to the Pre-IPO Offeror, as it may have been amended
pursuant to Section 3.6(a)(iii)) pro rata (based on the number of shares of
Class B Common Stock owned by each of them); and
(C) if all Pre-IPO Offered Shares are not allocated pursuant
to paragraph (A) and any prior application of paragraph (B), any Pre-IPO Offered
Shares that were not allocated pursuant to paragraph (A) and any prior
application of paragraph (B) shall be allocated by continuing to apply paragraph
(B) as required.
(iii) If the Pre-IPO Electing Stockholders desire to
acquire, in the aggregate, less than all of the Pre-IPO Offered Shares, then the
Pre-IPO Offeror shall so notify the Pre- IPO Electing Stockholders and:
(A) each Pre-IPO Electing Stockholder shall have the right,
by written notice sent to the Pre-IPO Offeror (with a copy of such notice to
each other Designating Stockholder) within five days after its receipt of the
notice from the Pre-IPO Offeror pursuant to this Section 3.6(a)(iii) to amend
its notice to increase the number of Pre-IPO Offered Shares that it desires to
purchase;
(B) if, after giving effect to any amendment to any Pre-IPO
Electing Stockholder's notice pursuant to this Section 3.6(a)(iii), the Pre-IPO
Electing Stockholders desire to acquire, in the aggregate, all of the Pre-IPO
Offered Shares, then the Pre-IPO Electing Stockholders shall have the right to
acquire all the Pre-IPO Offered Shares, allocated among them in accordance with
Section 3.6(a)(ii); and
(C) if, after giving effect to any amendment to any Pre-IPO
Electing Stockholder's notice pursuant to this Section 3.6(a)(iii), the Pre-IPO
Electing Stockholders desire to acquire, in the aggregate, less than all of the
Pre-IPO Offered Shares, then the Pre-IPO Offeror's offer of the Pre-IPO Offered
Shares shall be deemed rejected as of the last day for a Pre-IPO Electing
Stockholder to amend its notice pursuant to this
Section 3.6(a)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 3.6(a), the allocation of the Pre-IPO Offered Shares among the Pre-IPO
Electing Stockholders shall be subject to Section 3.7(a).
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<PAGE>
(b) If (i) the Pre-IPO Offeror's offer of the Pre-IPO Offered
Shares is rejected as provided in Section 3.6(a), or (ii) the purchase of the
Pre-IPO Offered Shares is not consummated within the period set forth in Section
3.7(b) for any reason other than a breach by the Pre-IPO Offeror of any of its
covenants, representations or warranties that are a condition to consummation of
such purchase, then the Pre-IPO Offeror shall have the right, at any time during
the sixty-day period beginning on the date that the Pre-IPO Offeror's offer of
the Pre-IPO Offered Shares is deemed rejected or the day following the last day
of the period set forth in Section 3.7(b), as applicable, to convert all Class B
Common Stock included in the Pre-IPO Offered Shares to Class A Common Stock and
to enter into a binding agreement to sell all of such shares of Class A Common
Stock to a third party on terms and conditions no less favorable in the
aggregate to the Pre-IPO Offeror than those set forth in the Pre- IPO Notice of
Sale and thereafter (within the period specified below in this Section 3.6(b))
to sell all of such shares of Class A Common Stock to such third party pursuant
to such agreement. In no event shall the Pre-IPO Offeror have the right to
transfer any shares of Class B Common Stock pursuant to this Section 3.6 except
to the Pre-IPO Electing Stockholders. The Pre-IPO Offeror shall, as promptly as
practicable and prior to the closing of such sale, provide to the other
Designating Stockholders a copy of the agreement for the sale of the Pre-IPO
Offered Shares so as to permit the Designating Stockholders to confirm for
themselves that the terms and conditions of such sale are not less favorable in
the aggregate to the Pre-IPO Offeror than those set forth in the Pre-IPO Notice
of Sale. If the Pre-IPO Offeror does not enter into such an agreement during
such sixty-day period, or does not close the sale thereunder within sixty days
after the execution of such an agreement (subject to extension for a maximum of
180 additional days to the extent required to obtain all required governmental,
regulatory and other third party consents and approvals), the procedure set
forth above with respect to the Pre-IPO Notice of Sale shall be repeated with
respect to any subsequent proposed sale, assignment or other disposition of
shares of Common Stock by such Pre-IPO Offeror during the Pre-IPO Period.
(c) If, during the sixty-day period after the expiration of the
relevant period set forth in Section 3.6(b), the Pre-IPO Offeror receives a bona
fide offer in writing from any third party to purchase only a part of the shares
of Class A Common Stock into which the Pre-IPO Offered Shares may be converted
or to purchase all of the shares of Class A Common Stock into which the Pre-IPO
Offered Shares may be converted on terms and conditions less favorable in the
aggregate to the Pre- IPO Offeror than those set forth in the Pre-IPO Notice of
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<PAGE>
Sale, and the Pre-IPO Offeror desires to accept such offer, the Pre-IPO Offeror
shall give notice of the terms of such offer to the other Designating
Stockholders and the procedure set forth above with respect to the initial
Pre-IPO Notice of Sale shall be repeated with respect to such offer.
3.7 Terms and Conditions of Sales Pursuant to Sections 3.4, 3.5 and
3.6.
(a) The acquisition by any Electing Stockholder (the "Excess
Shares Stockholder"), as a result of its election to exercise rights granted
pursuant to Section 3.4(a), 3.5(a) or 3.6(a), of any shares of Class B Common
Stock (the "Excess Shares") which, when added to the shares of Class B Common
Stock held by such Electing Stockholder immediately prior to such election,
would cause its percentage of the total outstanding Class B Common Stock to
exceed 49% shall be subject to the application of this Section 3.7(a). If, in
connection with any offer made pursuant to Section 3.4(a), 3.5(a) or 3.6(a), any
Electing Stockholder would, but for the application of this Section 3.7(a), have
the right to acquire Excess Shares, then (i) the Excess Shares Stockholder shall
have the right to acquire that number of Excess Shares which, when added to the
shares of Class B Common Stock held by the Excess Shares Stockholder immediately
prior to such election, would cause its percentage of the total outstanding
Class B Common Stock to equal 49% and (ii) each Electing Stockholder other than
the Excess Shares Stockholder shall have the right to acquire its pro rata
portion (based on the number of shares of Class B Common Stock owned by it and
the number of shares of Class B Common Stock owned by all such Electing
Stockholders other than the Excess Shares Stockholder), or such other portion as
such other Electing Stockholders may agree among themselves, of the remaining
Excess Shares; provided, however, that if there are two Excess Shares
Stockholders in connection with any election to exercise rights granted pursuant
to Section 3.4(a), 3.5(a) or 3.6(a), then each Excess Shares Stockholder shall
have the right to acquire that number of Excess Shares which, when added to the
shares of Class B Common Stock held by such Excess Shares Stockholder
immediately prior to such election, would cause its percentage of the total
outstanding Class B Common Stock to equal 49% and any remaining Excess Shares
shall be split equally between such Excess Shares Stockholders. Each Excess
Shares Stockholder shall have the right to acquire any portion of the Excess
Shares which the other Electing Stockholders have not agreed to acquire.
(b) Any purchase and sale of Common Stock pursuant to Section
3.4, 3.5 or 3.6 shall be subject to the following terms and conditions:
(i) the selling Consenting Stockholder shall represent and
warrant that the buying Consenting Stockholders will receive good and valid
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title to the Offered Shares, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, limitations on voting rights,
charges and other encumbrances of any nature whatsoever except as set forth in
this Agreement and except for governmental, regulatory and other third party
consents and approvals required for transfers of shares of Common Stock
generally;
(ii) closing of the purchase and sale shall be subject to
the satisfaction of following conditions:
(A) all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder, shall have expired or been terminated;
(B) all governmental approvals and other third party
consents expressly required with respect to the transactions to be consummated
at such closing shall have been obtained, to the extent the failure to obtain
such approvals or consents would prevent the Converting Stockholder, the Selling
Stockholder or the Pre-IPO Offeror, as the case may be, from performing any of
its material obligations under the transaction documents or would result in any
materially adverse change in, or materially adverse effect on, the business,
assets, results of operations, financial condition or prospects of the Company
and the Persons controlled by the Company taken as a whole;
(C) there shall be no preliminary or permanent injunction or
other order by any court of competent jurisdiction restricting, preventing or
prohibiting the consummation of the transactions to be consummated at such
closing;
(D) the representation and warranty of the Converting
Stockholder, the Selling Stockholder or the Pre- IPO Offeror, as the case may
be, contemplated by clause (i) of this sentence shall be true and correct at the
closing of such sale with the same force and effect as if then made; and
(iii) The closing of any purchase and sale of Common Stock
pursuant to Section 3.4, 3.5 or 3.6 shall take place as promptly as practicable,
but in any event within sixty days after the acceptance of the applicable offer,
subject to extension for a maximum of one hundred eighty additional days to the
extent required to obtain all required governmental, regulatory and other third
party consents and approvals.
(c) In furtherance of the rights set forth in Sections 3.4, 3.5
and 3.6, the Company agrees that, on reasonable notice following the delivery of
a Notice of Sale, at reasonable times and without interfering with the business
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or operations of the Company, it will assist the Converting Stockholder, the
Selling Stockholder or the Pre-IPO Offeror, as the case may be, in obtaining all
necessary consents to any disposition of the Offered Shares.
3.8 Transferee Consenting Stockholders.
(a) A Consenting Stockholder shall remain a Consenting
Stockholder for so long as it owns any Class B Common Stock regardless of the
percentage of Class B Common Stock it may own from time to time. Any transferee
of a Consenting Stockholder required to become a party to this Agreement
pursuant to Section 3.3 or Section 3.5(c) of this Agreement shall become a
Consenting Stockholder by delivering to the Company (which shall promptly send
notice thereof to the Consenting Stockholders) a counterpart signature page to
this Agreement and, if it is then in effect, the Supplemental Agreement. No
further action by the Company or the Consenting Stockholders shall be required
for such person to become a party to this Agreement. Following any Indirect
Transfer permitted by this Agreement, the Consenting Stockholder with respect to
which such Indirect Transfer has occurred shall confirm to the other Consenting
Stockholders in writing the continuing validity and effectiveness of its
obligations under this Agreement and, if it is then in effect, the Supplemental
Agreement.
(b) If TCI Communications, Inc. elects in accordance with Section
3.4(a) of the Reorganization Agreement to cause shares of Class B Common Stock
allocable to the Viacom Interests (as defined in the Reorganization Agreement)
to be issued to a Subsidiary of TCI Communications, Inc. other than TCI
Teleport, Inc., such Subsidiary shall become a party to this Agreement and shall
become a Consenting Stockholder by delivering to the Company (which shall
promptly send notice thereof to the Consenting Stockholders) a counterpart
signature page to this Agreement and, if it is then in effect, the Supplemental
Agreement.
3.9 Continental Waiver. Continental agrees to consent to any request
for a waiver from the transfer restrictions contained in this Section 3 which is
requested by Consenting Stockholders that hold at least fifty percent of the
outstanding shares of Class B Common Stock held by Consenting Stockholders other
than Continental, so long as Continental is offered the same opportunity either
(as determined by the Consenting Stockholders that made such request):
(a) to participate in the transfer for which such waiver is
requested on a pro rata basis (based on the ratio that the number of shares of
Class B Common Stock subject to such request bears to the total number of shares
of Class B Common Stock held by all Consenting Stockholders other than
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Continental), and on the same terms and conditions, as the proposed transferor
or transferors with respect to which such request is made; or
(b) to receive cash in exchange for shares of Class B Common
Stock in an amount equal to the fair market value of the consideration that
Continental would have been entitled to receive upon the transfer of a like
number of shares of Class B Common Stock had Continental participated in the
transfer for which such waiver is requested on a pro rata basis as described in
Section 3.9(a); for purposes of this Section 3.9(b), if the transferors in a
transaction with respect to which such a request is made contribute their shares
of Class B Common Stock to an entity and receive capital contribution credit
therefor in an amount determined by arms' length negotiations between the
transferors and one or more Persons that are not Affiliates of the transferors,
then the fair market value of the consideration received by the transferors with
respect to such contribution shall be equal to the amount of such capital
contribution credit and the fair market value of the consideration that
Continental would have been entitled to receive had it participated in the
transaction shall be proportionate to that received by the transferors (based on
the relative numbers of shares of Class B Common Stock involved).
3.10 Cooperation. Each Consenting Stockholder shall use commercially
reasonable efforts to cooperate with any transferring Consenting Stockholder in
connection with its efforts to transfer any interest in its Common Stock in
accordance with the provisions of this Section 3, including making qualified
personnel available for attending hearings and meetings respecting any consents,
approvals and authorizations required for such transfer and, at the request of
the transferring Consenting Stockholder, making all filings with, and giving all
notices to, third parties and governmental authorities that may be necessary or
reasonably required to be made or given by such of the Consenting Stockholders
in order to effect the contemplated transfers. Subject to the other provisions
of this Section, no Consenting Stockholder shall take any action to delay,
impair or impede the receipt of any required consents, approvals or
authorizations. "Commercially reasonable efforts" as used in this Section shall
not require any party to undertake extraordinary or unreasonable measures to
obtain any consents, approvals or other authorizations, including requiring such
party to make any material expenditures (other than normal filing fees or the
like) or to accept any material changes in the terms of the contract, license or
other instrument for which a consent, approval or authorization is sought.
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SECTION 4 REGISTRATION RIGHTS
4.1 Demand Registrations.
(a) Requests for Registration. At any time after the date which
is six months after the closing of the Company's initial Public Offering, any
stockholder of the Company which is a party to this Agreement (an "Eligible
Holder") may request that the Company effect the registration under the
Securities Act of all or part of its shares of Class A Common Stock (including
shares of Class A Common Stock issuable upon conversion of shares of Class B
Common Stock held by it) for sale in the manner specified in such request. A
stockholder that previously owned shares of Class B Common Stock but ceased to
be a Consenting Stockholder upon the conversion of its shares of Class B Common
Stock to shares of Class A Common Stock shall continue to be a party to this
Agreement so long as it owns any shares of Class A Common Stock and therefore
shall be an Eligible Holder. Such request shall be made by furnishing written
notice thereof (a "Demand Notice") to the Company, setting forth the number of
shares of Class A Common Stock requested to be registered and such Eligible
Holder's preferred method of distribution. Within ten days after receipt of any
Demand Notice, the Company shall give written notice of such Demand Notice to
all other Eligible Holders. Following receipt of a Demand Notice from the
Company (the "Company Notice"), each such other Eligible Holder may give the
Company a written request to register any or all of such Eligible Holder's Class
A Common Stock (including shares of Class A Common Stock issuable upon
conversion of shares of Class B Common Stock held by it) in the registration
described in the Company Notice, provided that such written request is given
within fifteen days after the date on which the Company Notice is given (with
such request stating (i) the number of shares of Class A Common Stock to be so
included, (ii) such other Eligible Holder's preferred method of distribution of
such shares and (iii) any other information that the Company Notice reasonably
requests be included in such notice from such Eligible Holder). All
registrations requested pursuant to this Section 4.1(a) are referred to herein
as "Demand Registrations." The Company shall not be required to effect a Demand
Registration unless the aggregate number of shares of Class A Common Stock
demanded to be so registered is at least two percent of the number of shares of
Common Stock then outstanding (the "Minimum Condition"). If the Minimum
Condition is met, then, subject to Sections 4.1(b), 4.1(c) and 4.1(f) below, the
Company shall, as soon as practicable, file with the SEC and use all
commercially reasonable efforts to cause to become effective as promptly as
practicable, a Registration Statement which shall cover the shares of Class A
Common Stock requested to be registered pursuant to such Demand Notices.
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(b) Number of Demand Registrations. Once a Demand Registration
has been effected, the Company shall not be obligated to register Class A Common
Stock pursuant to another Demand Registration prior to the expiration of twelve
months from the date on which the previous Demand Registration was declared
effective; provided, however, that a registration will not count as a Demand
Registration unless it has become effective, and such effectiveness has been
maintained under the Securities Act (and not subject to any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason) for the period specified in Section 4.3(b). Each
Eligible Holder may, before any Registration Statement becomes effective,
withdraw its shares of Class A Common Stock from inclusion therein if the terms
of the proposed distribution are not satisfactory to such Eligible Holder. If
after giving effect to such withdrawal or withdrawals of shares from a Demand
Registration the Minimum Condition would no longer be satisfied, then such
Registration Statement shall be withdrawn. A registration that is withdrawn at
the request of the Eligible Holders that demanded such Demand Registration will
not count as a Demand Registration.
(c) Restrictions on Registrations. The Company may postpone for
up to three months after its receipt of a Demand Notice the filing of a
registration statement for a Demand Registration if the Company reasonably
believes that such Demand Registration would have a material adverse effect on
any proposal or plan by the Company or any of its Subsidiaries to engage in any
financing, acquisition of assets (other than in the ordinary course of business)
or any merger, consolidation, tender offer or other significant transaction and
notifies the Eligible Holders in writing of such postponement; provided that the
Company shall have the right to so postpone such filing or effectiveness only
one time during any period of twelve consecutive months; and provided, further,
that the three-month limitation contained above in this Section 4.1(c) and the
limitation contained in the first proviso to this Section 4.1(c) shall not apply
if the shares proposed to be registered by the Eligible Holder furnishing the
applicable Demand Notice could then be sold without restrictions (including any
volume limitation) under the Securities Act.
(d) Underwriting.
(i) Subject to Section 4.1(e), the distribution of the Class
A Common Stock covered by the Demand Registration shall be effected by means of
a firm commitment underwriting, and the right of any Eligible Holder to
registration pursuant to this Section 4 shall be conditioned upon such Eligible
Holders' participation in such underwriting and the inclusion of such Eligible
Holder's Class A Common Stock in the underwriting (unless otherwise mutually
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agreed by a majority in interest of the other Eligible Holders) to the extent
provided herein. The Company (together with all Eligible Holders proposing to
distribute their Class A Common Stock through such underwriting) shall enter
into an underwriting agreement in customary form with a managing underwriter of
nationally recognized standing selected for such underwriting by the Company
with the approval of the Eligible Holder that has included the largest number of
shares in the Demand Registration, such approval not to be withheld
unreasonably. No Eligible Holder may participate in any Demand Registration
unless such Eligible Holder (A) agrees to sell its Class A Common Stock on the
basis provided in such underwriting agreement and (B) completes and executes all
questionnaires, powers of attorney, indemnities and other documents required
under the terms of such underwriting agreement.
(ii) Notwithstanding any other provision of this Section 4,
if the managing underwriter advises the Company and the Eligible Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the managing underwriter may exclude shares requested to
be included in such Demand Registration. The number of shares of Class A Common
Stock that may be included in the Demand Registration and underwriting shall be
allocated among the Eligible Holders who have requested registration in
accordance with the provisions of Section 4.1(f). No Class A Common Stock
excluded from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such Demand Registration.
(iii) If any Eligible Holder participating in a Demand
Registration disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company, the managing underwriter
and the other Eligible Holders. If by such withdrawal a greater number of shares
of Class A Common Stock held by other Eligible Holders may be included in such
Demand Registration (up to the maximum of any limitation imposed by the managing
underwriter), then the Company shall offer to all Eligible Holders participating
in the Demand Registration the right to include additional shares of Class A
Common Stock, which additional shares shall be allocated among the Eligible
Holders who have requested registration in accordance with the provisions of
Section 4.1(f).
(e) Shelf Registration. If at the time of a Demand Notice, the
Company is eligible to file a registration statement on Form S-3 (or any
equivalent successor form), then Eligible Holders who hold at least 51% of the
shares of Class A Common Stock which are to be included in a Demand Registration
may request that the Demand Registration be effected pursuant to a shelf
registration under Rule 415 of the Securities Act; provided, however, that (i)
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if the Company shall reasonably determine, after consultation with an
independent investment banking firm of nationally recognized standing, that such
method of distribution would adversely affect the public market for the Class A
Common Stock, then the Company shall not be obligated to effect the Demand
Registration pursuant to such method of distribution, and (ii) during the term
of any such shelf registration, the Company may require from time to time that
the Eligible Holders refrain from selling pursuant to such registration
statement under the circumstances, in the manner and for the time period
described in Section 4.1(c).
(f) Allocation among Eligible Holders. If the managing
underwriter imposes a limit on the number of shares of Class A Common Stock to
be included in the Demand Registration, then each Eligible Holder shall have the
right to include in such Demand Registration up to its pro rata share (based on
the ratio that the number of shares of Class A Common Stock proposed to be sold
by it bears to the total number of shares of Class A Common Stock proposed to be
sold by all Eligible Holders who have elected to participate in the Demand
Registration) of the maximum number of shares permitted by the managing
underwriter to be included in the Demand Registration (the "Maximum Amount");
provided, however, that, if and to the extent that Continental is then subject
to a regulatory requirement as a result of the U S West Transaction that it
reduce or eliminate its investment in the Company, during the period ending on
the date which is thirty months after the date of the Company's initial Public
Offering, Continental shall have the right (to the extent it has elected to
participate in such Demand Registration) to include in the Demand Registration
up to one-half of the Maximum Amount, and the balance of the Maximum Amount
shall be allocated among the other participating Eligible Holders pro rata as
provided in the main clause of this sentence; and provided, further, that, if
and to the extent that Continental is then subject to a regulatory requirement
as a result of the U S West Transaction that it reduce or eliminate its
investment in the Company, during the twelve-month period commencing on the date
which is thirty months after the date of the Company's initial Public Offering,
Continental shall have the right (to the extent it has elected to participate in
such Demand Registration) to include in the Demand Registration all of the
Maximum Amount, and any portion of the Maximum Amount that exceeds the number of
shares that Continental elects to include in the Demand Registration shall be
allocated among the other participating Eligible Holders pro rata as provided in
the main clause of this sentence.
(g) Inclusion of Shares by Company. If the managing underwriter
has not limited the number of shares of Class A Common Stock to be underwritten
or if the number of shares which the Eligible Holders have requested to be
registered is less than the Maximum Amount, then the Company may include
securities for its own account or for the account of others in such Demand
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Registration if the managing underwriter so agrees and if the number of shares
of Class A Common Stock held by Eligible Holders which would otherwise have been
included in such Demand Registration and underwriting will not thereby be
limited. The inclusion of such shares shall be on the same terms as the
registration of shares held by the Eligible Holders. In the event that the
managing underwriter excludes some of the securities to be registered, the
securities to be sold for the account of the Company and any other holders shall
be excluded in their entirety prior to the exclusion of any shares of Class A
Common Stock of the Eligible Holders.
4.2 Lockup Agreements. Each Eligible Holder agrees not to effect any
public sale or other distribution of Class A Common Stock during the seven days
prior to the effective date of any Public Offering or Demand Registration or
during the ninety-day period beginning on such effective date (except in either
case as part of such Demand Registration and except that Continental shall not
be prohibited from effecting any such public sale or other distribution during
such period after the effective date of a Public Offering not being made
pursuant to a Demand Registration if it is required to sell within such period
by any regulatory requirement resulting from the U S West Transaction), unless
the managing underwriter otherwise agrees. The Company agrees not to effect any
public sale or other distribution of Class A Common Stock during the seven days
prior to the effective date of any Demand Registration or during the ninety-day
period beginning on such effective date (except in either case as part of such
Demand Registration or pursuant to registrations on Form S-8 or any successor
form), unless the managing underwriter otherwise agrees.
4.3 Registration Procedures. Whenever the Company is obligated by the
provisions of this Agreement to effect a registration of any shares of Class A
Common Stock under the Securities Act, the Company shall use commercially
reasonable efforts to effect such registration and the sale of the shares of
Class A Common Stock covered thereby in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the SEC a registration statement with
respect to such shares and use all commercially reasonable efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed ninety
days;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective until the
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sooner to occur of the sale of all such shares or the ninetieth day following
the effective date of such registration statement and comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each Eligible Holder participating in such Demand
Registration and the underwriters such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as such seller or underwriters may reasonably request in order
to facilitate the sale of the shares being sold;
(d) use all reasonable efforts to register or qualify the shares
being sold under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the shares owned by such seller; provided,
however, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) conform its capitalization or the composition of
its assets to the securities or blue sky laws of such jurisdictions or (iii)
consent to general service of process in any such jurisdiction;
(e) cause all such shares to be listed or authorized for
quotation on each securities exchange or automated quotation system on which
similar securities issued by the Company are then listed or quoted;
(f) notify each seller of such shares, promptly after it shall
receive notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;
(g) notify each seller of such shares of any request by the SEC
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(h) prepare and file with the SEC, promptly upon the request of
any seller of such shares, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel selected by the holders
of a majority of the shares being registered, is required under the Securities
Act in connection with the distribution of shares by such seller;
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(i) prepare and promptly file with the SEC each amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading; and
(j) advise each seller of such shares, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for such purpose and promptly use
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
4.4 Expenses. Each Eligible Holder that participates in a Demand
Registration (including a Demand Registration that is withdrawn prior to
becoming effective) shall pay all underwriting discounts and commissions and any
transfer taxes attributable to the sale of such Eligible Holder's shares, the
fees and expenses of counsel for such Eligible Holder, any other out-of-pocket
expenses of such Eligible Holder incurred in connection with its participation
in such Demand Registration and its pro rata share (based on the ratio that the
number of shares of Class A Common Stock to be sold by it bears to the total
number of shares of Class A Common Stock to be sold by all Eligible Holders who
have elected to participate in the Demand Registration) of any out-of-pocket
expenses incurred by the Company in connection with such Demand Registration.
4.5 Preparation of Registration Statement. Each Eligible Holder agrees
to furnish to the Company such written information concerning such Eligible
Holder as may reasonably be requested by the Company which is necessary in
connection with any Demand Registration.
4.6 Indemnification.
(a) In the event that the Company effects a registration of any
shares owned by an Eligible Holder, such Eligible Holder shall indemnify and
hold the Company, and each of its directors and officers and each person, if
any, who controls the Company within the meaning of the federal securities laws
(the "Company Indemnified Parties") harmless against all losses, liabilities and
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expenses of any nature whatsoever which the Company Indemnified Parties may
incur as a result of or arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement filed by the Company (including any prospectus contained in such
registration statement and any post-effective amendment or supplement thereto)
or as a result of or arising out of or based upon the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, which untrue statement or omission or alleged untrue
statement or omission was made in such registration statement (including any
prospectus contained in such registration statement and any post-effective
amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing by or behalf of such Eligible Holder for
inclusion therein; provided, however, that such Eligible Holder shall not be
liable to the extent that the losses, liabilities or expenses arise out of or
are based upon (i) the use by the Company or another Eligible Holder of any
prospectus after such time as the obligation of the Company to keep the same
effective and current has expired or (ii) the use by the Company or another
Eligible Holder of any prospectus after such time as such Eligible Holder has
advised the Company that the filing of a post-effective amendment or supplement
thereto is required with respect to any information contained in such prospectus
concerning such Eligible Holder, except such prospectus as so amended or
supplemented.
(b) In the event that the Company effects a registration of any
shares owned by an Eligible Holder, the Company shall indemnify and hold such
Eligible Holder, and each of its directors and officers and each person, if any,
who controls the Eligible Holder within the meaning of the federal securities
laws (the "Stockholder Indemnified Parties") harmless against all losses,
liabilities and expenses of any nature whatsoever which such Stockholder
Indemnified Parties may incur as a result of or arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement filed by the Company (including any prospectus contained
in such registration statement and any post-effective amendment or supplement
thereto) or as a result of or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided, however,
that the Company will not be liable in any such case to the extent that the
losses, liabilities or expenses arise out of or are based upon (i) any untrue
statement or omission or alleged untrue statement or omission made in such
registration statement (including any prospectus contained in such registration
statement and any post-effective amendment or supplement thereto) in reliance
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upon and in conformity with information furnished in writing by or on behalf of
such Eligible Holder to the Company for inclusion therein in connection
therewith, (ii) the use of any prospectus after such time as the obligation of
the Company to keep the same effective and current has expired, or (iii) the use
of any prospectus after such time as the Company has advised the Eligible Holder
that the filing of a post-effective amendment or supplement thereto is required,
except such prospectus as so amended or supplemented.
(c) With respect to the indemnities provided above in this
Section 4.6, an indemnified party shall, with respect to any claim made against
such indemnified party, notify the indemnifying party in writing of the nature
of the claim as soon as practicable but not more than ten days after the
indemnified party shall have received notice of the assertion thereof before any
court or governmental authority. The failure by an indemnified party to give
notice as provided in the foregoing sentence shall not relieve the indemnifying
party of its obligations under this section except to the extent that the
failure results in the failure of actual notice to the indemnifying party and
the indemnifying party is damaged solely as a result of the failure to give
notice. Upon receipt of notice by an indemnifying party from an indemnified
party of the assertion of any such claim, the indemnifying party shall employ
counsel reasonably acceptable to the indemnified party and shall assume the
defense of such claim. The indemnified party shall have the right to employ
separate counsel and to participate in (but not control) any such action, but
the fees and expenses of such counsel shall be the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying party, (ii) the indemnified party shall have been
advised by its counsel in writing that there is a conflict of interest between
the indemnifying party and the indemnified party in the conduct of the defense
of such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of such
counsel shall be at the expense of the indemnifying party. An indemnifying party
shall not be liable for any settlement of an action effected without its written
consent (which consent shall not be unreasonably withheld). No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such action.
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SECTION 5 ADDITIONAL AGREEMENTS
5.1 Confidentiality.
(a) Each Consenting Stockholder agrees that it will not, directly
or indirectly, without the prior written consent of the Company, use or disclose
to any person, firm or corporation, any information, trade secrets, confidential
customer information, technical data or know-how relating to the products,
processes, methods, equipment or business practices of the Company or any of its
Subsidiaries, except (a) to the extent any of the foregoing is or becomes
available to the public other than as a result of disclosure by such Consenting
Stockholder or any of its Affiliates or the directors, officers, employees,
agents, advisors and controlling persons of it or any of its Affiliates, (b) as
necessary to effect a transaction under and in compliance with Section 3 or 4,
(c) as may be required by law and (d) as any Consenting Stockholder may disclose
to its lenders, rating agencies and business, legal and financial advisors. In
the event any Consenting Stockholder is required by applicable law or regulation
or by legal process to disclose any of the foregoing, it will provide the
Company and other Consenting Stockholders with prompt notice thereof to enable
them to seek an appropriate protective order. The covenants made by a Consenting
Stockholder in this Section 5.1 shall continue to apply for a period of two
years after such Consenting Stockholder ceases to be a Consenting Stockholder.
(b) At any time that the Continental Merger Agreement or any
other agreement with respect to a U S West Transaction is in effect, and at any
time after the consummation of the U S West Transaction, the Company shall not
provide to Continental, and Continental shall not request from the Company, any
strategic or confidential information about the Company or any of its
Subsidiaries or Affiliates (other than annual and quarterly financial statements
prepared by the Company); provided, however, that, notwithstanding this Section
5.1(b), a director of the Company who was an Agreed Nominee designated by the
Consenting Stockholder Group that includes Continental shall be entitled to
receive any information that is furnished to the directors of the Company (in
their capacities as directors of the Company) to the extent that a director of a
Delaware corporation is entitled to such information under the General
Corporation Law of Delaware.
5.2 Issuance of Additional Class B Common Stock. Without the consent
of each Designating Stockholder, the Company shall not issue any additional
shares of Class B Common Stock other than shares of Class B Common Stock issued:
(a) in connection with a stock split;
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(b) as a stock dividend with respect to issued and outstanding
shares of Class B Common Stock; or
(c) pursuant to Section 3.4(a) of the Reorganization Agreement.
5.3 Voting on Scope of Business Limitations. Continental agrees that,
so long as it holds any Class B Common Stock, it will vote in favor of, or
consent to, any proposal submitted for a vote of the holders of the Class B
Common Stock pursuant to Article IV.B.2.c of the Certificate of Incorporation,
if it is requested to do so by holders of a majority of the shares of Class B
Common Stock held by Consenting Stockholders other than Continental.
SECTION 6 MISCELLANEOUS
6.1 Expiration and Termination. This Agreement (other than any
provision for which a different term is specified) shall terminate if and when
the aggregate voting power of the Class B Common Stock represents less than 30%
of the aggregate voting power of all the outstanding Common Stock.
6.2 Assignment. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Notwithstanding the preceding sentence, neither this
Agreement nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by the Company without the prior written
consent of all of the Consenting Stockholders, or by any other party except as
expressly provided herein.
6.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered by hand, by telecopier device
(confirmed by hand delivery or overnight courier service) or by overnight
courier service to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to the Company, to:
Teleport Communications Group Inc.
Two Teleport Drive, Suite 301
Staten Island, NY 10311-1011
Attention: Robert Annunziata, Chairman and Chief
Executive Officer
(with a copy similarly addressed to the
attention of the Teleport Communications
Group Inc. Legal Department)
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with copies to each other Consenting Stockholder and to:
Kevin F. Reed, Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Ave., N.W., Suite 800
Washington, DC 20036-6802
if to Cox Teleport Partners, Inc., to:
Cox Teleport Partners, Inc.
c/o Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
Attention: John R. Dillon
Senior Vice President and Chief
Financial Officer
with copies to:
Andrew A. Merdek, Esq.
Vice President, Legal Affairs
Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
and
David D. Wild, Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Ave., N.W., Suite 800
Washington, DC 20036-6802
if to TCI Teleport, Inc., to:
TCI Teleport, Inc.
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, CO 80111-3000
Attention: Gerald W. Gaines
(with a copy similarly addressed to the
attention of the Tele-Communications,
Inc. Legal Department)
with a copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
599 Lexington Avenue
29th Floor
New York, New York 10022-6030
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if to Comcast Teleport, Inc., to:
Comcast Teleport, Inc.
1500 Market Street
Philadelphia, PA 19102-2148
Attention: General Counsel
if to Continental, to:
Continental Teleport, Inc.
c/o Continental Cablevision, Inc.
The Pilot House
Lewis Wharf
Boston, MA 02110
Attention: Ronald H. Cooper
with copies to:
Howard B. Homonoff, Esq.
Director of Corporate Legal Affairs
Continental Cablevision, Inc.
The Pilot House
Lewis Wharf
Boston, MA 02110
and
Patrick K. Miehe, Esq.
Sullivan & Worcester
One Post Office Square
Boston, MA 02109
6.4 Entire Agreement. As of the date hereof, this Agreement, together
with the Supplemental Agreement and the Reorganization Agreement, represents the
entire understanding of the parties with reference to the matters set forth
herein. This Agreement supersedes, from and after the date hereof with respect
to all periods commencing on or after the date hereof, the Amended and Restated
Stockholders' Agreement dated as of May 5, 1993, as amended, among the Company
and the Consenting Stockholders, and all prior negotiations, discussions,
correspondence, communications and prior agreements among the parties relating
to the subject matter herein. Neither the Company nor any Consenting Stockholder
shall have any rights after the date of this Agreement under the Amended and
Restated Stockholders' Agreement dated as of May 5, 1993, as amended.
6.5 Amendment and Waiver. Subject to Section 3.8, this Agreement may
not be amended or modified in any respect except by an instrument in writing
signed by all of the parties hereto. Any failure of any party hereto to comply
with any obligation, covenant, agreement or condition contained herein may
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<PAGE>
be waived by the party or parties entitled to the benefits thereof, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
6.6 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware (without regard to its
laws pertaining to conflicts of law) applicable to contracts executed in and to
be performed entirely in such state.
6.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.
6.8 Consent to Jurisdiction; Specific Performance.
(a) Each Consenting Stockholder hereby irrevocably submits to the
non-exclusive jurisdiction of any Delaware State or Federal court in any action
or proceeding arising out of or relating to this Agreement, and each Consenting
Stockholder hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such Delaware State or Federal
court. Each Consenting Stockholder hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(b) Nothing in this Section 6.8 shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against any other party or
its property in the courts of any other jurisdictions. The consents to
jurisdiction set forth in this Section 6.8 shall not constitute general consents
to service of process in the State of Delaware, shall have no effect for any
purpose except as provided in this Section 6.8 and shall not be deemed to confer
rights on any Person other than the parties to this Agreement.
(c) Without intending to limit the remedies available to any of
the parties hereto, each of the parties
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<PAGE>
hereto acknowledges and agrees that a violation by such party of any term of
this Agreement will cause the other parties hereto irreparable injury for which
an adequate remedy at law is not available. Therefore, the parties hereto agree
that each such party shall be entitled to an injunction, restraining order or
other form of equitable relief from any court of competent jurisdiction
restraining any other party hereto from committing any breach or threatened
breach of, or otherwise specifically to enforce, any provision of this
Agreement.
6.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement.
6.10 Headings. The section headings used in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
any term or provision of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Stockholders' Agreement as of the date and year first above written.
TELEPORT COMMUNICATIONS GROUP INC.
By: /s/Wayne G. Fox
Name: Wayne G. Fox
Title:________________________
COX TELEPORT PARTNERS, INC.
By: /s/Preston B. Barnett
Name: Preston B. Barnett
Title: Vice President
TCI TELEPORT, INC.
By: /s/Gerald W. Gaines
Name: Gerald W. Gaines
Title:________________________
COMCAST TELEPORT, INC.
By: /s/Arthur R. Block
Name: Arthur R. Block
Title: Vice President
CONTINENTAL TELEPORT, INC.
By: /s/Ronald H. Cooper
Name: Ronald H. Cooper
Title: Executive Vice President
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