<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934*
(Amendment No. 1)
TELEPORT COMMUNICATIONS GROUP INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Class A Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
879463 107
- --------------------------------------------------------------------------------
(CUSIP Number)
Stanley Wang Stephen M. Brett, Esq. Andrew A. Merdek
Comcast Corporation Tele-Communications, Inc. Cox Communications, Inc.
1500 Market Street 5619 DTC Parkway 1400 Lake Hearn Dr., NE
Philadelphia, PA 19102-2148 Englewood, CO 80111 Atlanta, GA 30319
(215) 665-1700 (303) 267-5500 (404) 843-5564
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 8, 1998
- --------------------------------------------------------------------------------
(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 [ ].
Check the following box if a fee is being paid with this statement [ ]. (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 less than five percent 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 should 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).
CUSIP No. 879463 107
Page 1 of 11
<PAGE> 2
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
Tele-Communications, Inc.
84-1260157
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [x]
(3) SEC Use Only
(4) Source of Funds
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 2 of 11
<PAGE> 3
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
Comcast Corporation
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [x]
(3) SEC Use Only
(4) Source of Funds
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Pennsylvania
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 3 of 11
<PAGE> 4
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
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
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 4 of 11
<PAGE> 5
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
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
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 5 of 11
<PAGE> 6
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
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
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 6 of 11
<PAGE> 7
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
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
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 7 of 11
<PAGE> 8
CUSIP No. 879463 107
<TABLE>
<S> <C>
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
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
00
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially
Owned by
Each Reporting
Person With:
(8) Shared Voting Power 113,489,040 - Class B; 1,011,528 - Class A; see Items 3
and 5(a), and 6
(9) Sole Dispositive Power None; see Items 3 and 5(a)
(10) Shared Dispositive Power 113,489,040 - Class B; see Items 3 and 5(a)
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
113,489,040 - Class B; 1,011,528 - Class A; see Items 3 and 5(a)
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]
(13) Percent of Class Represented by Amount in Row (11)
65.5%; see Items 3 and 5(a). Because each share of
Class A Common Stock is entitled to one vote per
share while each share of Class B Common Stock is
entitled to ten votes per share, the Filing Persons
may be deemed to beneficially own shares representing
approximately 94.9% of the aggregate voting power of
the outstanding common stock of the Issuer.
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 8 of 11
<PAGE> 9
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 1)
Statement Of
TELE-COMMUNICATIONS, INC., COMCAST CORPORATION, AND COX
COMMUNICATIONS, INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
TELEPORT COMMUNICATIONS GROUP INC.
The Filing Persons hereby amend and supplement their Report on
Schedule 13D, as originally filed on July 17, 1996 (as amended to date, the
"Report"), with respect to the Class A Common Stock, par value $.01 per share
("Class A Common Stock"), of Teleport Communications Group Inc., a Delaware
corporation (the "Issuer"). Such Report has been separately amended by Comcast
on December 23, 1996, May 15, 1997, and October 27, 1997. Unless otherwise
indicated, capitalized terms used but not defined herein shall have the meanings
given to such terms in the Report.
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 2. IDENTITY AND BACKGROUND
Item 2 of the Report is hereby amended and supplemented by
adding the following information thereto:
The Filing Persons no longer include Continental or any of its
affiliates. The remaining Filing Persons believe that Continental sold all of
its remaining shares of common stock of the Issuer on or about November 6, 1997
in a registered public offering, and as a result the remaining Filing Persons no
longer share beneficial ownership of any shares of Class A Common Stock with
Continental or any of its affiliates. Revised information concerning the
directors and executive officers of TCI, Cox Teleport, Cox, CHI, CICI, and CEI
is attached as Exhibit 99.4.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Report is hereby amended and supplemented by
adding the following information thereto:
The information set forth in Item 6 below is incorporated by
reference in this Item 4.
Page 9 of 11
<PAGE> 10
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 of the Report is hereby amended and supplemented by
adding the following information thereto:
The information set forth in Item 6 below is incorporated by
reference in this Item 5.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF ISSUER
Item 6 of the Report is hereby amended and supplemented by
adding the following information thereto:
In connection with the execution of the Agreement and Plan of
Merger (the "Merger Agreement"), dated as of January 8, 1998, among AT&T Corp.
("AT&T"), TA Merger Corp. and the Issuer providing for the Merger of the Issuer
with a subsidiary of AT&T (the "Merger"), TCI, Comcast and Cox (and certain of
their respective affiliates) (the "Cable Stockholders") and AT&T entered into a
Voting Agreement, (the "Voting Agreement"), dated as of January 8, 1998,
pursuant to which each of the Cable Stockholders has agreed to vote or cause to
be voted all shares of Class B Common Stock and Class A Common Stock owned by it
in favor of the approval and adoption of the Merger Agreement, the Merger, and
certain related actions, including voting against any actions that would result
in a breach of the Merger Agreement by the Issuer and against certain Competing
Transactions (as defined in the Voting Agreement). In addition, pursuant to the
Voting Agreement, each of the Cable Stockholders has agreed not to sell,
transfer, or otherwise dispose of its Shares of Class A Common Stock except
pursuant to the Merger, Section 3(b) of the Voting Agreement (providing for the
conversion of shares of Class B Common Stock to Class A Common Stock by the
Cable Stockholders in certain circumstances), or with the consent of AT&T. In
connection with the execution and delivery of the Merger Agreement and the
Voting Agreement, each Cable Stockholder executed and delivered a written
consent consenting to, approving and adopting the Merger Agreement. As a result,
subject to certain exceptions, no further vote of the stockholders of the Issuer
will be required for the consummation of the Merger.
In connection with execution of the Voting Agreement, AT&T and
the Cable Stockholders also entered into a Registration Rights Agreement, dated
as of January 8, 1998, relating to the shares of AT&T common stock to be
acquired by the Cable Stockholders in the Merger.
The Voting Agreement also provides that AT&T will not agree to
the inclusion, in any authorization required in connection with the Merger, of
any restriction on the Cable Stockholders' exercise and enjoyment of full rights
of ownership of the AT&T common stock to be acquired by them in the Merger, any
material modification of any license, franchise, or permit held by such Cable
Stockholder or any of its affiliates, the imposition of any requirement relating
to the divesture or rearrangement of the composition of any material assets of
such Cable Stockholder or any of its affiliates, any material limitation on such
Cable Stockholder's or any of its affiliate's freedom of action with respect to
future acquisitions of assets or with respect to any existing or future business
activities or relationships or the enjoyment by such Cable Stockholder or any of
its affiliates of the full rights of ownership, possession and use of any
material asset now owned or hereafter acquired by such Cable Stockholder or any
of its affiliates (including the AT&T common stock to be acquired by such Cable
Stockholder in the Merger), or any other material restrictions, limitations,
requirements, or conditions which are reasonably likely to be burdensome on such
Cable
Page 10 of 11
<PAGE> 11
Stockholder or its affiliates (any of the foregoing, a "Prohibited Effect"), in
the case of any of the foregoing that is unacceptable to such Cable Stockholder
in its reasonable judgment. The Voting Agreement provides that no Cable
Stockholder shall be required to consent to any Prohibited Effect that it finds
unacceptable in its reasonable judgment.
The Merger Agreement provides that, without the further
approval of the stockholders of the Issuer, AT&T and the Issuer will not (i)
amend the Merger Agreement in a manner that would alter or change any of the
terms and conditions of the Merger Agreement if such alteration or change would
adversely affect the stockholders of the Issuer; (ii) waive any condition to the
Merger if such waiver would materially adversely affect the stockholders of the
Issuer; or (iii) consummate the Merger after a time at which the Issuer would be
entitled to terminate the Merger Agreement pursuant to Section 9.2(a). All
stockholders of the Issuer are third party beneficiaries of the foregoing
provision.
The summary descriptions of certain provisions of the Voting
Agreement and the Merger Agreement contained herein are qualified in their
entirety by reference to the complete texts of such agreements, which agreements
have been filed as Exhibits hereto and incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Report is hereby amended and supplemented by
adding the following information thereto:
The following documents are filed as exhibits to this
statement:
Exhibit 99.4: Amended information regarding executive
officers & directors of the Filing Persons
and certain entities controlling the Filing
Persons
Exhibit 99.5: Voting Agreement among Tele-Communications,
Inc., Comcast Corporation, Cox
Communications, Inc., and AT&T Corp., dated
January 8, 1998
Exhibit 99.6: Agreement and Plan of Merger among AT&T
Corp., TA Merger Corp. and Teleport
Communications Group Inc., dated January 8,
1998
Page 11 of 11
<PAGE> 12
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information in this statement is true,
complete and correct.
Dated: January 20, 1998
TELE-COMMUNICATIONS, INC.
By:/s/ Bernard W. Schotters
--------------------------------
Name: Bernard W. Schotters
Title: Senior Vice President
COMCAST CORPORATION
By:/s/ Arthur Block
--------------------------------
Name: Arthur Block
Title: 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
<PAGE> 13
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
<PAGE> 14
EXHIBIT INDEX
Exhibit 99.4: Amended information regarding executive
officers & directors of the Filing Persons
and certain entities controlling the Filing
Persons
Exhibit 99.5: Voting Agreement among Tele-Communications,
Inc., Comcast Corporation, Cox
Communications, Inc., and AT&T Corp., dated
January 8, 1998
Exhibit 99.6: Agreement and Plan of Merger among AT&T
Corp., TA Merger Corp. and Teleport
Communications Group Inc., dated January 8,
1998
<PAGE> 1
EXHIBIT 99.4
Directors, Executive Officers and Controlling Persons
of
Tele-Communications, Inc. ("TCI")
DIRECTORS
<TABLE>
<CAPTION>
Name Principal Occupation & Principal Business or Organization in
Business Address which such employment is conducted
<S> <C> <C>
Donne F. Fisher Consultant & Director of TCI; Business Cable television & telecommunications
Executive & programming services
5619 DTC Parkway
Englewood, CO 80111
John W. Gallivan Director of TCI; Chairman of the Board Newspaper publishing
of Kearns-Tribune Corporation
400 Tribune Building
Salt Lake City, UT 84111
Paul A. Gould Director of TCI, Managing Director of Investment banking services
Allen & Company Incorporated
711 5th Avenue
New York, New York 10022
Leo J. Hindery, Jr. President, Chief Operating Officer and Cable television & telecommunications
Director of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
Director of TCI; Business Consultant; Special Business Consulting; Law
Jerome H. Kern Counsel to Baker & Botts, L.L.P.
5619 DTC Parkway
Englewood, CO 80111
Kim Magness Director of TCI; Business Executive Management of various business
4000 E. Belleview enterprises
Englewood, CO 80111
John C. Malone Chairman of the Board, Chief Executive Cable television & telecommunications
Officer & Director of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
Robert A. Naify Director of TCI; President & Chief Executive Provider of services to the motion
Officer of Todd-AO Corporation picture industry
172 Golden Gate Avenue
San Francisco, CA 94102
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Name Principal Occupation & Principal Business or Organization in
Business Address Which such Employment Is Conducted
<S> <C> <C>
J.C. Sparkman Consultant & Director of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
EXECUTIVE OFFICERS
Gary K. Bracken Senior Vice President & Controller Cable television & telecommunications
of TCI Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Robert R. Bennett Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
Stephen M. Brett Executive Vice President, Secretary Cable television & telecommunications
& General Counsel of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
Gary S. Howard President and Chief Executive Officer of TCI Cable television & telecommunications
Ventures Group, LLC & programming services
5619 DTC Parkway
Englewood, CO 80111
Marvin Jones Director, Executive Vice President & Chief Cable television & telecommunications
Operating Officer of TCI Communications, & programming services
Inc.
5619 DTC Parkway
Englewood, CO 80111
Larry E. Romrell Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
Bernard W. Senior Vice President & Treasurer of TCI Cable television & telecommunications
Schotters, II Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Fred A. Vierra Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
</TABLE>
<PAGE> 3
EXECUTIVE OFFICERS AND DIRECTORS OF COX COMMUNICATIONS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
James O. Robbins Executive Officer and President and Chief Executive Officer
Director Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Ajit M. Dalvi Executive Officer Senior Vice President/Programming &
Strategy
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Jimmy W. Hayes Executive Officer Senior Vice President/Finance and
Chief Financial Officer
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Alex B. Best Executive Officer Senior Vice President/Engineering
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
David M. Woodrow Executive Officer Senior Vice President/Broadband Services
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
James A. Hatcher Executive Officer Vice President/Legal and Regulatory Affairs
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
John M. Dyer Executive Officer Vice President/Accounting and
Financial Planning
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
1
<PAGE> 4
EXECUTIVE OFFICERS AND DIRECTORS OF COX COMMUNICATIONS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
Jayson R. Juraska Executive Officer Vice President/Operations
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Claus F. Kroeger Executive Officer Vice President/Operations
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Margaret A. Bellville Executive Officer Vice President/Operations
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Janet Morrison Clarke Director Managing Director - Global
Database Marketing
Citibank
One Court Square
40th Floor
Long Island City, NY 11120
John R. Dillon Director Managing Director - Cravey, Green & Wahlen
12 Piedmont Center, Suite 210
Atlanta, GA 30305
David E. Easterly Director President and Chief Operating Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Robert F. Erburu Director Chairman of the Board (Retired) of
The Times Mirror Company
Times Mirror Square
Los Angeles, CA 90053
</TABLE>
2
<PAGE> 5
EXECUTIVE OFFICERS AND DIRECTORS OF COX COMMUNICATIONS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
James C. Kennedy Director Chairman and Chief Executive Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew J. Young Director Co-Chairman - Good Work International
Sun Trust Plaza, Suite 4800
303 Peachtree Street, N.E.
Atlanta, GA 30308
</TABLE>
3
<PAGE> 6
EXECUTIVE OFFICERS AND DIRECTORS OF COX TELEPORT PARTNERS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
James O. Robbins Executive Officer President of Cox Teleport Partners, Inc.,
and Director President and Chief Executive Officer of
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Jimmy W. Hayes Executive Officer Vice President of Cox Teleport Partners, Inc.
and Director Senior Vice President/Finance and Chief
Financial Officer of
Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
James A. Hatcher Director Vice President/Legal and Regulatory
Affairs of Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Teleport
Partners, Inc.; Vice President/Tax of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
David M. Woodrow Executive Officer Vice President of Cox Teleport Partners, Inc;
Senior Vice President/Broadband
Services of Cox Communications, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President of Cox Teleport Partners,
Inc.; Vice President/New Media of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
4
<PAGE> 7
EXECUTIVE OFFICERS AND DIRECTORS OF COX TELEPORT PARTNERS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
Andrew A. Merdek Executive Officer Secretary of Cox Teleport Partners, Inc.
Vice President/Legal Affairs and
Corporate Secretary of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
5
<PAGE> 8
EXECUTIVE OFFICERS AND DIRECTORS OF COX ENTERPRISES, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
James C. Kennedy Executive Officer Chairman, Chief Executive Officer
and Director Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
David E. Easterly Executive Officer President, Chief Operating Officer
and Director Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President/Tax
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Timothy W. Hughes Executive Officer Senior Vice President/Administration
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President/New Media
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Marybeth Leamer Executive Officer Vice President, Human Resources
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Alexander V. Executive Officer Vice President, Public Policy
Netchvolodoff Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Barbara Cox Anthony Executive Officer Vice President
and Director Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
6
<PAGE> 9
EXECUTIVE OFFICERS AND DIRECTORS OF COX ENTERPRISES, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
Anne Cox Chambers Executive Officer Vice President
and Director Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew A. Merdek Executive Officer Vice President/Legal Affairs
Corporate Secretary
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer Vice President/Business Development
and Planning
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Vice President and Treasurer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Arthur M. Blank Director President and Chief Executive 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
Chief Administrative Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
7
<PAGE> 10
EXECUTIVE OFFICERS AND DIRECTORS OF COX ENTERPRISES, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
Ben F. Love Director Director, Consultant of
Texas Commerce Bank, N.A.
600 Travis Street
Houston, TX 77252
Robert C. O'Leary Executive Officer Senior Vice President and Chief
and Director Financial Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Scott A. Hatfield Executive Officer Vice President and Chief Information Officer
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Michael J. Mannheimer Executive Officer Vice President/Materials Management
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Paul J. Rizzo Director Vice Chairman (retired 1/1/95) of
IBM Corporation
73 Weaver Street (residence)
Unit #16
Greenwich, CT 06830
</TABLE>
8
<PAGE> 11
EXECUTIVE OFFICERS AND DIRECTORS OF COX HOLDINGS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
David E. Easterly Executive Officer President of Cox Holdings, Inc., President
and Director and Chief Operating Officer of Cox
Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer Vice President of Cox Holdings,
and Director Vice President/Business Development
and Planning of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
William L. Killen, Jr. Executive Officer Vice President of Cox Holdings,
Vice President/New Media of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew A. Merdek Executive Officer Vice President and Secretary of Cox
and Director Holdings, Vice President/Legal Affairs
and Corporate Secretary of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Treasurer of Cox Holdings, Inc., Vice
President and Treasurer
of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Holdings,
Vice President/Tax of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
9
<PAGE> 12
EXECUTIVE OFFICERS AND DIRECTORS OF COX INVESTMENT COMPANY, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name Position and Business Address
---- -------- --------------------
<S> <C> <C>
David E. Easterly Executive Officer President of Cox Investment Company, Inc.,
and Director President and Chief Operating Officer of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Dean H. Eisner Executive Officer Vice President of Cox Investment Company, Inc.
and Director Vice President/Business Development
and Planning of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Preston B. Barnett Executive Officer Vice President of Cox Investment
Company, Inc.
Vice President/Tax of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Andrew A. Merdek Executive Officer Secretary of Cox Investment Company, Inc.
and Director Vice President/Legal Affairs and Corporate
Secretary of Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
Richard J. Jacobson Executive Officer Treasurer of Cox Investment Company, Inc.
Vice President and Treasurer of
Cox Enterprises, Inc.
1400 Lake Hearn Dr., NE
Atlanta, GA 30319
</TABLE>
Shares of Class A Common Stock of Teleport
owned by Cox Executive Officers and Directors*
<TABLE>
Name Number of Shares
---- ----------------
<S> <C>
Anne Cox Chambers 30,000
John R. Dillon 3,500
James O. Robbins 4,700
David M. Woodrow 1,500
Alexander V. Netchvolodoff 1,100
Preston B. Barnett 663
Claus F. Kroeger 300
James A. Hatcher 500
</TABLE>
* Each of the above persons' holdings represent less than 1% of the outstanding
shares of Class A Common Stock of Teleport.
10
<PAGE> 1
EXHIBIT 99.5
VOTING AGREEMENT
AGREEMENT, dated as of January 8, 1998, by and among AT&T Corp., a
New York corporation ("Parent"), on the one hand, and Comcast Corporation,
Comcast Teleport, Inc., Comcast Communications Properties, Inc. (Comcast
Corporation, Comcast Teleport, Inc., Comcast Communications Properties, Inc.,
collectively, "Comcast"), Tele-Communications, Inc., TCI Teleport, Inc.
(together with Tele-Communications, Inc., "TCI"), Cox Communications, Inc. and
Cox Teleport Partners, Inc. (together with Cox Communications, Inc., "Cox"), on
the other hand. Comcast, TCI and Cox shall be referred to herein each as a
"Stockholder" (each reference to a "Stockholder" referring to the two or three
companies collectively constituting Comcast, TCI or Cox, as the case may be),
and Comcast, TCI or Cox together are collectively referred to as the
"Stockholders". Each Stockholder is executing this Agreement only in its
capacity as a stockholder of Teleport Communications Group Inc., a Delaware
corporation (the "Company"). The Company is executing this Agreement solely with
respect to Section 6(e) and Annex B.
WHEREAS, concurrently herewith, Parent, TA Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"; capitalized terms used without definition herein having the meanings
ascribed thereto in the Merger Agreement);
WHEREAS, each Stockholder is the record and beneficial owner of the
number of Shares set forth opposite such Stockholder's name in Schedule I
hereto;
WHEREAS, approval of the Merger Agreement by the Company's
stockholders is a condition to the consummation of the Merger;
WHEREAS, the Board of Directors of the Company has, prior to the
execution of this Agreement, duly and validly approved and adopted the Merger
Agreement and approved this Agreement, and such approvals and adoption have not
been withdrawn; and
WHEREAS, Parent is unwilling to enter into the Merger Agreement
unless the Stockholders enter into this Agreement concurrently with the
execution of the Merger Agreement and execute and deliver the Stockholders
Consent immediately thereafter, and the Stockholders desire and are willing to
induce Parent to enter into the Merger Agreement by their entry into this
Agreement and their agreement to execute and deliver the Stockholders Consent;
-1-
<PAGE> 2
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
Section 1. Consent; Agreement to Vote. (a) Each Stockholder agrees
(for itself and not as to any other Stockholder) that, immediately following the
execution and delivery of this Agreement and the Merger Agreement, it shall
execute and deliver, or cause to be executed and delivered by the record owner
thereof, in accordance with Section 228 of the DGCL, the Stockholders Consent in
the form attached hereto as Annex A with respect to all Shares that are owned
beneficially or of record by such Stockholder or as to which such Stockholder
has, directly or indirectly, the right to vote or direct the voting.
(b) Unless one of the events specified in clause (i), (ii) or (iii)
of Section 7.3(b) of the Merger Agreement has occurred or Parent has breached
Section 6(d) below in any material respect, each Stockholder hereby further
agrees (for itself and not as to any other Stockholder) that, during the term of
this Agreement, it shall, from time to time, at the request of Parent, (i)
timely execute and deliver (or cause to be timely executed and delivered) an
additional written consent with respect to, or (ii) vote, or cause to be voted,
at any meeting of stockholders of the Company held prior to the earlier of the
Effective Time (as defined in the Merger Agreement) and the termination of this
Agreement or at any adjournment or postponement thereof, in person or by proxy,
all Shares, and any other voting securities of the Company (whether acquired
heretofore or hereafter), that are beneficially owned by such Stockholder or
its Affiliates or as to which such Stockholder or any of its Affiliates has,
directly or indirectly, the right to vote or direct the voting, (x) in favor of
approval and adoption of the Merger Agreement, the Merger, and any action
required in furtherance thereof, (y) against any action or agreement that would
result in a material breach of any representation, warranty, covenant or
obligation of the Company contained in the Merger Agreement, and (z) against any
Competing Transaction (as defined below). Each Stockholder agrees, during the
period commencing on the date hereof and ending on the earlier of the Effective
Time and the termination of this Agreement, not to, and not to permit any of its
Affiliates to, execute any written consent in lieu of a stockholders meeting or
vote of the Company, if such consent or vote by the stockholders of the Company
would be inconsistent with or frustrate the purposes of the other agreements of
such Stockholder pursuant to this paragraph (it being understood that the
Stockholders may vote for or consent to transactions expressly permitted by the
Merger Agreement). A "Competing Transaction" means any Acquisition Proposal,
other than the transactions contemplated or expressly permitted by the Merger
Agreement, or any amendment to the certificate of incorporation of the Company
or any other proposal that frustrates or hinders the Merger or the other
transactions contemplated by the Merger Agreement.
-2-
<PAGE> 3
(c) Each Stockholder agrees that it will not, and will not permit
any of its Affiliates to, contract to sell, sell or otherwise pledge, encumber,
transfer or dispose of any of the Shares owned beneficially or of record by it
or any interest therein or securities convertible thereinto or any voting rights
with respect thereto, other than (i) pursuant to the Merger, (ii) pursuant to
Section 3(b) hereof or (iii) with Parent's prior written consent.
(d) Each Stockholder hereby revokes any and all previous proxies
with respect to such Person's Shares or any other voting securities of the
Company.
(e) Each Stockholder hereby agrees to, and to cause its Affiliates
to, cooperate reasonably with Parent and the Company in connection with the
Merger Agreement and con summation of the transactions contemplated thereby.
Parent agrees to cooperate reasonably with each Stockholder in connection with
any filings required to be made by such Stockholder pursuant to the HSR Act in
connection with the Merger Agreement and consummation of the transactions
contemplated thereby. Each Stockholder agrees that it and its Affiliates will
not, and will use reasonable best efforts to cause their respective officers,
employees, representatives and agents not to, directly or indirectly, encourage,
solicit or engage in discussions or negotiations with any third party (other
than Parent) concerning any Acquisition Proposal, other than the transactions
contemplated hereby and by the Merger Agreement. Each such Stockholder shall
immediately request that any Person (other than such Stockholder's agents,
advisors and representatives) that has received directly or indirectly from such
Stockholder any confidential information relating to the Company or any of its
Subsidiaries in connection with an Acquisition Proposal within the past 180 days
return all copies thereof to the Company. Each Stockholder and its Affiliates
shall, and shall use reasonable best efforts to cause their respective officers,
employees, representatives and agents to, terminate all discussions or
negotiations with any Person with respect to any Acquisition Proposal. Each such
Stockholder will notify Parent immediately of any Acquisition Proposal (or
inquires with respect thereto) that are received by, or any negotiations or
discussions with respect thereto of which it is aware that are sought to be
initiated with, such Stockholder or any of its Affiliates or the Company or any
of its Subsidiaries, will advise Parent of the identity of any Person making any
such Acquisition Proposal and of the terms thereof and shall keep Parent
apprised with respect to all matters relating thereto.
Section 2. Securities Act Covenants and Representations. In addition
to, and not in lieu of, the other covenants and representations set forth
herein, each Stockholder hereby agrees and represents to Parent as follows:
-3-
<PAGE> 4
(a) Such Stockholder understands that, to the extent such
Stockholder is considered an "affiliate" of the Company at the time the Merger
Agreement is submitted for a vote of the stockholders of the Company or for
action by written consent of stockholders of the Company, any public offering,
sale or other disposition by such Stockholder or any of its Affiliates of any
Parent Common Shares received by such Person in the Merger (collectively, the
"Restricted Sales") will, under current law, require any of (i) the further
registration under the Securities Act of any Parent Common Shares to be sold by
such Person, (ii) compliance with applicable provisions of Rule 145 promulgated
by the SEC under the Securities Act or (iii) the availability of another
exemption from such registration under the Securities Act. Each Stockholder
agrees not to, or permit any of its Affiliates to, make any Restricted Sale
unless the conditions of clause (i), (ii) or (iii) are met.
(b) Such Stockholder also understands that stop transfer
instructions will be given to Parent's transfer agents with respect to the
Parent Common Shares, and that a legend will be placed on the certificates for
the Parent Common Shares, issued to such Stockholder, or any substitutions
therefor to reflect the restrictions referred to in Sections 2(a) and 3 hereof
on such Stockholder's ability to sell Parent Common Shares.
Section 3. Pooling Covenants and Representations. In addition to,
and not in lieu of, the other covenants and representations set forth herein,
each Stockholder hereby agrees and represents to Parent that:
(a) from and after the date hereof, such Stockholder will not, and
will not permit any of its Affiliates to, sell, transfer, hedge, or
otherwise dispose of or reduce its rights with respect to any Shares
(whether owned as of the date hereof or hereafter acquired) or any Parent
Common Shares received by such Stockholder in the Merger or other shares
of capital stock of Parent until after such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent, in the form of a quarterly earnings report, an
effective registration statement filed with the SEC, a report to the SEC
on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the combined results of operations, except for transfers or
other dispositions that, in the reasonable opinion of Parent's independent
accountants, will not prevent Parent from accounting for the Merger as a
pooling of interests, taking into account the actions of other Affiliates
of the Company or the Stockholders; and
(b) upon Parent's request, in connection with the transactions
contemplated by the ACC Agreement (as defined in the Merger Agreement) and
in order to permit such transaction to be accounted for on a pooling of
interests basis, such Stockholder shall, or
-4-
<PAGE> 5
shall cause its Affiliates to, convert into Class A Common Stock such
number of shares of Class B Common Stock as will constitute its pro rata
portion (rounded up to the nearest whole share) of that number of shares
of Class B Common Stock that would be necessary, when taken together with
such conversions of all of the other Stockholders, to permit the Company's
pending business combination with Ace to be accounted for as a pooling of
interests.
Section 4. Tax Covenants and Representations. In addition to, and
not in lieu of, the other covenants and representations set forth herein, each
Stockholder hereby represents and warrants to Parent that, as of the date hereof
and as of the Closing Date, such Stockholder has and shall have no present plan
or intention to sell, exchange or otherwise dispose of Parent Common Shares to
be received by such Stockholder in the Merger having a value, as of the
Effective Time, greater than (a) 50 percent of the value as of the Effective
Time of all of such Stockholder's Shares as of the Effective Time minus (b) such
Stockholder's pro rata portion of the value of any Excess Parent Common Shares
identified in the certificate required pursuant to Section 7.10 of the Merger
Agreement (which amount shall not be less than zero). For purposes of the
foregoing, "Excess Parent Common Shares" shall mean 50% of the number of Parent
Common Shares owned by Persons other than the Stockholders, and "pro rata
portion" as to any Stockholder shall mean the number of Parent Common Shares
owned by such Stockholder divided by the total number of Parent Common Shares
owned by all Stockholders. For purposes of this representation, Shares exchanged
for cash in lieu of fractional Parent Common Shares will be treated as
outstanding Shares on the Effective Time. Moreover, Shares and Parent Common
Shares held by stockholders of the Company and otherwise sold, redeemed or
disposed of prior or subsequent to the Merger will be considered in making this
representation. Each Stockholder agrees to deliver to Parent's counsel, if so
requested by Parent's counsel, and to the Company's counsel, if so requested by
the Company's counsel, a certificate setting forth the above representations in
this Section 4 by such Stockholder, which certificate (and the representations
therein) may be relied upon by Parent's counsel and by the Company's counsel in
connection with the opinions contemplated by Sections 8.2(d) and 8.3(d) of the
Merger Agreement.
Section 5. Registration Rights. The Registration Rights Agreement
shall be executed by the parties set forth therein as signatories thereto
immediately following execution of this Agreement, and shall become effective as
of the Effective Time.
Section 6. Other Covenants and Agreements.
(a) Consent to this Agreement. Each Stockholder hereby consents, for
purposes of the Stockholders' Agreement, to the execution of this Agreement and
the Stockholders Con-
-5-
<PAGE> 6
sent by each other Stockholder and the consummation of the transactions
contemplated hereby (and waives any rights such Stockholder would otherwise have
pursuant to the Stockholders' Agreement by virtue of the execution of this
Agreement and the Stockholders Consent).
(b) Further Assurances. Unless one of the events specified in clause
(i), (ii) or (iii) of Section 7.3(b) of the Merger Agreement has occurred or
Parent has breached Section 6(d) below in any material respect, each party shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of its obligations under this Agreement. Without
limiting the generality of the foregoing, none of the parties hereto shall enter
into any agreement or arrangement (or alter, amend or terminate any existing
agreement or arrangement) if such action would materially impair the ability of
such party to effectuate, carry out or comply with all of the terms of this
Agreement.
(c) Release of Certain Restrictions. Effective as of the Effective
Time, each Stockholder hereby releases the Company and its Affiliates (other
than the Stockholders and their other Affiliates) from, and waives in all
respects, any obligation that may exist to such Stockholder or any other
agreement with such Stockholder (i) not to compete with such Stockholder or any
of its Affiliates anywhere in the world, (ii) not to engage, or to refrain from
engaging, in any activity anywhere in the world, or (iii) that otherwise
restricts or limits the ability of the Company or any of its Affiliates to
engage in any business anywhere in the world; provided however that the
foregoing shall not apply to (x) any provision of the Restated Facilities
Agreements (as defined in Annex B) or (y) the Agreement entered into as of the
18th day of April 1996 among Teleport and Comcast Corporation, provided that as
of the Effective Time paragraph 2(e) of such agreement is hereby amended to be
inapplicable to the extent and for so long as compliance therewith by the
Company would violate existing legal obligations of Parent and its Affiliates.
(d) Other Matters. Parent will not agree to the inclusion, in any
Authorization required in connection with the Merger, of the imposition by any
Governmental Body of any restriction on any Stockholder's exercise and enjoyment
of full rights of ownership of Parent Common Shares to be acquired by such
Stockholder in the Merger, any material modification of any license, franchise
or permit held by such Stockholder or any of its Affiliates, the imposition of
any requirement relating to the divestiture or rearrangement of the composition
of any material assets of such Stockholder or any of its Affiliates, material
limitation on such Stockholder's or any of its Affiliate's freedom of action
with respect to future acquisitions of assets or with respect to any existing or
future business activities or relationship or the enjoyment by such Stockholder
or any of its Affiliates of the full rights of ownership, possession and use of
any material asset
-6-
<PAGE> 7
now owned or hereafter acquired by such Stockholder or any of its Affiliates
(including the Parent Common Shares to be acquired by such Shareholder in the
Merger), or any other material restrictions, limitations, requirements, or
conditions which are reasonably likely to be burdensome on such Stockholder or
its Affiliates (any of the foregoing, a "Prohibited Effect"), in the case of any
of the foregoing that is unacceptable to such Stockholder in its reasonable
judgment. Notwithstanding anything in this Agreement to the contrary, no
Stockholder shall be required to consent to any Prohibited Effect that is
unacceptable to such Stockholder in its reasonable judgment.
(e) Facilities Arrangements. Each of the Stockholders agrees that
the Existing Arrangements (as defined in Annex B hereto) between such
Stockholder and/or any of its Affiliates, on the one hand, and the Company
and/or any of its Affiliates, on the other hand, shall be amended as specified
in Annex B hereto, effective immediately (which Annex B is incorporated herein
by reference).
Section 7. Representations and Warranties of Parent. Parent
represents and warrants to each Stockholder as follows:
(a) This Agreement and the Registration Rights Agreement have been
approved by the Board of Directors of Parent, representing all necessary
corporate action on the part of Parent for the execution and performance hereof
and thereof by Parent (no action by the stockholders of Parent being required).
(b) This Agreement has been, and the Registration Rights Agreement
will be, duly executed and delivered by a duly authorized officer of Parent.
(c) This Agreement constitutes, and the Registration Rights
Agreement when duly executed and delivered will constitute, a valid and binding
agreement of Parent, enforceable against Parent in accordance with its terms.
(d) The execution and delivery of this Agreement by Parent does not,
and the execution and delivery of the Registration Rights Agreement by Parent
will not, violate or breach, and will not give rise to any violation or breach,
of Parent's charter or bylaws, or, except as will not materially impair its
ability to effectuate, carry out or comply with all of the terms of this
Agreement and the Registration Rights Agreement, any law, contract, instrument,
arrangement or agreement by which Parent is bound.
-7-
<PAGE> 8
Section 8. Representations and Warranties of the Stockholders. Each
Stockholder, as to such Stockholder only, represents and warrants to Parent as
follows:
(a) Schedule I sets forth, opposite such Stockholder's name, the
number and type of Shares of which such Stockholder is the record or beneficial
owner. Such Stockholder is the lawful owner of such Shares, free and clear of
all liens, charges, encumbrances, voting agreements and commitments of every
kind, other than this Agreement, the Stockholders' Agreement and as disclosed
on Schedule I. Except as set forth in Schedule I and except for the
Stockholders' Agreement, neither such Stockholder nor any of its Affiliates owns
or holds any rights to acquire any additional Shares or other securities of the
Company or any interest therein or any voting rights with respect to any
additional Shares or any other securities of the Company.
(b) This Agreement has been approved by the Board of Directors and,
to the extent necessary, the stockholders of such Stockholder, representing all
necessary corporate action on the part of such Stockholder for the execution
and performance hereof by such Stockholder.
(c) This Agreement has been duly executed and delivered by a duly
authorized officer of such Stockholder.
(d) This Agreement constitutes the valid and binding agreement of
such Stockholder, enforceable against such Person in accordance with its terms.
(e) The execution and delivery of this Agreement by such Stockholder
does not violate or breach, and will not give rise to any violation or breach,
of such Stockholder's charter or bylaws, or, except as will not materially
impair the ability of such Stockholder to effectuate, carry out or comply with
all of the terms of this Agreement, any law, contract, instrument, arrangement
or agreement by which such Stockholder is bound.
(f) The execution and delivery of this Agreement by such Stockholder
does not create or give rise to any right in such Stockholder or any of their
respective Affiliates with respect to the Shares or any other security of the
Company (including, without limitation voting rights and rights to purchase or
sell any such Shares or other securities) pursuant to the Stockholders'
Agreement, other than any such right as is duly and validly waived pursuant to
Section 6(a) of this Agreement.
-8-
<PAGE> 9
(g) The execution and delivery of the Stockholders Consent by the
Stockholders are adequate to approve and adopt the Merger Agreement and the
Merger without the vote or consent of any other stockholder of the Company.
(h) The Reorganization (as defined in the Company's prospectus dated
November 6, 1997) of the Company under the Reorganization Agreement dated as of
April 18, 1996 among the Company, the Stockholders and Continental Cablevision,
Inc. (the "Reorganization Agreement") has been completed in accordance with the
terms thereof. Each Stockholder, on behalf of itself and its Affiliates, hereby
waives all defaults and executory rights under the Reorganization Agreement or
any partnership agreement of any Local Market Partnership (as defined in the
Reorganization Agreement) to any of Continental Cablevision, Inc. or any of the
Stockholders or any of their respective Affiliates.
Section 9. Effectiveness and Termination. In the event the Merger
Agreement is terminated in accordance with its terms (other than pursuant to the
last sentence of Section 9.2 thereof), this Agreement shall automatically
terminate and be of no further force or effect. Upon such termination, except
for any rights any party may have in respect of any breach by any other party of
its obligations hereunder, none of the parties hereto shall have any further
obligation or liability hereunder. The provisions of Section 6(e) hereof shall
survive the Merger.
Section 10. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid in each case to the applicable addresses set
forth below:
If to Parent:
AT&T Corp.
295 North Maple Ave.
Basking Ridge, NJ 07920
Attention: Vice President-Law
and Corporate Secretary
Facsimile: (908) 221-6618
with a copy to:
-9-
<PAGE> 10
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Richard D. Katcher, Esq. and
Steven A. Rosenblum, Esq.
Telecopy: (212) 403-2000
If to the Company:
Teleport Communications Group Inc.
429 Ridge Road
Dayton, New Jersey 08810
Attention: Chairman, President and CEO
Facsimile: (732) 392-3600
with a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: Leonard J. Baxt, Esq.
Timothy J. Kelley, Esq.
Facsimile: (202) 776-2222
and with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Philip T. Ruegger, Esq.
Michael Wolfson, Esq.
Facsimile: (212) 455-2502
If to Comcast:
-10-
<PAGE> 11
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
Attention: General Counsel
Facsimile: (215) 981-7794
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis Hersch, Esq.
Facsimile: (212) 450-4800
If to TCI:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, CO 80111-3000
Attention: Leo J. Hendery, Jr.
Facsimile: (303) 488-3200
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
29th Floor
New York, New York 10022-6030
Attention: Elizabeth M. Markowski, Esq.
Facsimile: (212) 705-5125
If to Cox:
Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
Attention: David M. Woodrow
Facsimile: (404) 847-6029
-11-
<PAGE> 12
with a copy to:
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: Stuart A. Sheldon, Esq.
Facsimile: (202) 776-2222
or to such other address as such party shall have designated by notice received
by each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or, except as expressly set
forth in Section 9, terminated, except by an instrument in writing signed by
each party hereto.
(c) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns; provided that, except as contemplated by the
Merger Agreement, neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the other parties
except that Parent may assign its rights under Section 6(e) to any Subsidiary
(as defined in the Merger Agreement).
(d) Entire Agreement. This Agreement (together with the Merger
Agreement and the other agreements and documents expressly contemplated hereby
and thereby) embodies the entire agreement and understanding among the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement and the Merger Agreement.
(e) Severability. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such term to
the other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law, provided that, in
such event, the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
-12-
<PAGE> 13
(f) Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief or any requirement for a bond.
(g) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(i) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of and shall not be enforceable by any person or entity who
or which is not a party hereto.
(j) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware or the
United States District Court of Delaware or any court of the State of Delaware
in any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph (j) and
shall not be deemed to be a general submission to the jurisdiction of said
Courts or in the State of Delaware other than for such purposes. Each party
hereto hereby waives any right to a trial by jury in connection with any such
action, suit or proceeding.
(k) Governing Law. This Agreement and all disputes hereunder shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to principles of conflicts of law.
-13-
<PAGE> 14
(l) Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
(m) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
(n) Expenses. Each of Parent and each Stockholder shall bear its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, except that in the event of a dispute concerning the terms
or enforcement of this Agreement, the prevailing party in any such dispute shall
be entitled to reimbursement of reasonable legal fees and disbursements from the
other party or parties to such dispute.
(o) Action in Stockholder Capacity Only. No Stockholder makes any
agreement or understanding herein as a director or officer of the Company. Each
Stockholder signs solely in its capacity as a record holder and beneficial owner
of Shares and nothing herein shall limit or affect any actions taken by a
representative of such Stockholder in such representative's capacity as an
officer or director of the Company (it being understood and agreed that the
provisions of this paragraph shall not affect the rights and obligations of any
party to the Merger Agreement or any other agreement).
(p) Obligations Several. The obligations of each Stockholder under
this Agreement (including Annex B hereto) shall be several and not joint. No
Stockholder shall have any liability, duty or obligation arising out of or
resulting from any failure by any other Stockholder (or any Affiliate thereof)
to comply with the terms and conditions of this Agreement.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
AT&T CORP.
By: /s/ John D. Zeglis
Name: John D. Zeglis
Title: President
COMCAST CORPORATION
By: /s/ Lawrence S. Smith
Name: Lawrence S. Smith
Title: Executive Vice
President
COX COMMUNICATIONS, INC.
By: /s/ Jimmy W. Hayes
Name: Jimmy W. Hayes
Title: Senior Vice President
of Finance; Chief
<PAGE> 16
Financial Officer
TELE-COMMUNICATIONS, INC.
By: /s/ Bernard W. Schotters
Name: Bernard W. Schotters
Title: Senior Vice President
Finance & Treasurer
<PAGE> 17
COMCAST TELEPORT, INC.
By: /s/ Lawrence S. Smith
Name: Lawrence S. Smith
Title:
TCI TELEPORT, INC.
By: /s/ Bernard W. Schotters
Name: Bernard W. Schotters
Title:
COX TELEPORT PARTNERS, INC.
By: /s/ Jimmy W. Hayes
Name: Jimmy W. Hayes
Title:
COMCAST COMMUNICATIONS PROPERTIES,
INC.
<PAGE> 18
By: /s/ Lawrence S. Smith
Name: Lawrence S. Smith
Title:
<PAGE> 19
Teleport Communications Group Inc. hereby acknowledges its agreement with the
pro visions of Annex B hereto.
TELEPORT COMMUNICATIONS GROUP INC.
By: /s/ Robert Annunziata
Name: Robert Annunziata
Title: Chairman, President
and CEO
<PAGE> 20
Schedule I
Share Ownership
<TABLE>
<CAPTION>
Name of Stockholder Shares Owned Beneficially
Class A Common Stock Class B Common Stock
-------------------- --------------------
Shares Options Shares Options
------ ------- ------ -------
<S> <C> <C> <C> <C>
Comcast Corporation None None 25,622,058 None
Tele-Communications, Inc. 1,011,528 None 48,779,388 None
Cox Communications, Inc. None None 39,087,594 None
Total
<CAPTION>
Name of Stockholder of Record Shares Owned of Record
Class A Common Stock Class B Common Stock
-------------------- --------------------
Shares Options Shares Options
------ ------- ------ -------
<S> <C> <C> <C> <C>
TCI Teleport, Inc. 1,011,528 None 48,779,388 None
Comcast Teleport, Inc. None None 25,438,036 None
Comcast Communications None None 184,022 None
Properties, Inc.
Cox Teleport Partners, Inc. None None 39,087,594 None
Total
</TABLE>
<PAGE> 21
Annex A
WRITTEN CONSENT
OF STOCKHOLDERS OF
TELEPORT COMMUNICATIONS GROUP INC.
Pursuant to the provisions of Section 228 and Section 251 of the General
Corporation Law of the State of Delaware, the undersigned each holding that
number of shares of Class A Common Stock, par value $.01, of Teleport
Communications Group Inc. (the "Company") and that number of shares of Class B
Common Stock, par value $.01, of the Company (together, "Shares") set forth
adjacent to its name below, collectively constituting a majority of the voting
power of the issued and outstanding Shares, do hereby consent to, approve and
adopt the following resolution:
WHEREAS, the Board of Directors of the Company has approved the
Merger Agreement (as defined below) and has directed that the Merger
Agreement be submitted to the stockholders of the Company for their
approval;
NOW THEREFORE, BE IT RESOLVED, that the Agreement and Plan of
Merger, dated as of January 8, 1998, among AT&T Corp., a New York
corporation, TA Merger Corp., a Delaware corporation and a direct wholly
owned subsidiary of AT&T Corp., and the Company, in the form attached to
this consent (the "Merger Agreement"), be, and it hereby is, consented to,
approved and adopted in all respects.
This Consent may be executed in one or more counterparts, all of which shall be
considered one and the same instrument.
TCI TELEPORT, INC. 1,011,528 shares Class A Common Stock
48,779,388 shares Class B Common Stock
<PAGE> 22
By:_____________
Name:
Title:
Date:___________
COX TELEPORT
PARTNERS, INC. No shares Class A Common Stock
39,087,594 shares Class B Common Stock
By:_____________
Name:
Title:
Date:___________
COMCAST TELEPORT, INC. No shares Class A Common Stock
25,438,036 shares Class B Common Stock
By:_____________
Name:
Title:
Date:___________
<PAGE> 23
COMCAST COMMUNICATIONS
PROPERTIES, INC. No shares Class A Common Stock
184,022 shares Class B Common Stock
By:_____________
Name:
Title:
Date:___________
<PAGE> 1
EXHIBIT 99.6
AGREEMENT AND PLAN OF MERGER
AMONG
AT&T CORP.,
TA MERGER CORP.
AND
TELEPORT COMMUNICATIONS GROUP INC.
DATED AS OF JANUARY 8, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..................................................... 1
ARTICLE II THE MERGER; EFFECTIVE TIME; CLOSING............................. 7
2.1. The Merger...................................................... 7
2.2. Effective Time.................................................. 7
2.3. Closing......................................................... 7
ARTICLE III TERMS OF MERGER................................................. 8
3.1. Certificate of Incorporation.................................... 8
3.2. The By-Laws..................................................... 8
3.3. Directors....................................................... 8
3.4. Officers........................................................ 8
ARTICLE IV SHARE CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN
THE MERGER...................................................... 8
4.1. Share Consideration; Conversion or Cancellation of Shares
in the Merger................................................... 8
4.2. Payment for Shares in the Merger................................ 11
4.3. Fractional Shares............................................... 13
4.4. Transfer of Shares after the Effective Time..................... 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 14
5.1. Organization, Etc. of the Company............................... 14
5.2. Subsidiaries.................................................... 14
5.3. Agreement....................................................... 14
5.4. Permits; Compliance............................................. 15
5.5. Fairness Opinion................................................ 15
5.6. Capital Stock................................................... 15
5.7. Litigation...................................................... 16
5.8. Compliance with Other Instruments, Etc.......................... 17
5.9. Employee Benefit Plans.......................................... 17
5.10. Taxes.......................................................... 19
5.11. Intellectual Property.......................................... 20
5.12. Reports and Financial Statements............................... 20
5.13. Absence of Certain Changes or Events........................... 21
5.14. Affiliated Transactions and Certain Other Agreements........... 21
5.15. Brokers and Finders............................................ 22
i
<PAGE> 3
5.16. S-4 Registration Statement and Information Statement/Prospectus 22
5.17. ACC Agreement.................................................. 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 23
6.1. Organization, Etc. of Parent.................................... 23
6.2. Subsidiaries.................................................... 23
6.3. Agreement....................................................... 23
6.4. Permits; Compliance............................................. 24
6.5. Capital Stock................................................... 24
6.6. Parent Common Shares............................................ 25
6.7. Litigation...................................................... 25
6.8. Compliance with Other Instruments, Etc.......................... 25
6.9. Taxes........................................................... 26
6.10. Intellectual Property.......................................... 26
6.11. Reports and Financial Statements............................... 26
6.12. Brokers and Finders............................................ 27
6.13. S-4 Registration Statement and Information Statement/Prospectus 27
6.14. Ownership of Merger Sub; No Prior Activities; Assets of Merger
Sub............................................................ 28
6.15. Ownership of Company or ACC Stock.............................. 28
ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS........................... 29
7.1. Conduct of Business of the Company.............................. 29
7.2. Other Transactions.............................................. 33
7.3. Stockholder Approval............................................ 34
7.4. Registration Statement.......................................... 34
7.5. Reasonable Efforts.............................................. 35
7.6. Access to Information........................................... 36
7.7. Indemnification of Directors and Officers....................... 37
7.8. Registration and Listing of Parent Common Shares................ 39
7.9. Affiliates of Parent and the Company............................ 39
7.10. Tax Matters.................................................... 39
7.11. New York Real Property Transfer Tax............................ 40
7.12. Employee Matters............................................... 40
7.13. Certain Covenants of Parent.................................... 41
7.14. Right of First Offer........................................... 41
ARTICLE VIII CONDITIONS................................................... 41
8.1. Conditions to Each Party's Obligations.......................... 41
8.2. Conditions to Obligations of Parent and Merger Sub.............. 43
8.3. Conditions to Obligations of the Company........................ 44
ii
<PAGE> 4
ARTICLE IX TERMINATION..................................................... 46
9.1. Termination by Mutual Consent................................... 46
9.2. Termination by Either Parent or the Company..................... 46
9.3. Termination by the Company...................................... 46
9.4. Termination by Parent and Merger Sub............................ 46
9.5. Effect of Termination and Abandonment........................... 47
ARTICLE X MISCELLANEOUS AND GENERAL....................................... 47
10.1. Expenses....................................................... 47
10.2. Notices, Etc................................................... 47
10.3. Amendments, Waivers, Etc....................................... 48
10.4. No Assignment.................................................. 48
10.5. Entire Agreement............................................... 49
10.6. Specific Performance........................................... 49
10.7. Remedies Cumulative............................................ 49
10.8. No Waiver...................................................... 49
10.9. No Third Party Beneficiaries................................... 49
10.10. Jurisdiction.................................................. 50
10.11. Public Announcements.......................................... 50
10.12. Governing Law................................................. 50
10.13. Name, Captions, Etc........................................... 50
10.14. Counterparts.................................................. 50
10.15. Survival of Representations, Warranties, Covenants and
Agreements.................................................... 50
10.16. Severability.................................................. 51
10.17. Disclosure Statements......................................... 51
EXHIBITS
A Form of Affiliate Agreement
B Employee Entering into Employment Agreements
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
8, 1998, among AT&T Corp., a New York corporation ("Parent"), TA Merger Corp., a
Delaware corporation and a direct wholly owned subsidiary of Parent ("Merger
Sub"), and Teleport Communications Group Inc., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company each have determined that it is in the best interests of their
respective stockholders for Merger Sub to merge with and into the Company, upon
the terms and subject to the conditions of this Agreement (the "Merger");
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Code (as defined herein);
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
WHEREAS, Parent and Merger Sub have required, as a condition to
their willingness to enter into this Agreement, that the Cable Stockholders (as
defined herein) contemporaneously enter into the Voting Agreement and execute
and deliver the Stockholders Consent (as defined herein) immediately following
the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and
the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
<PAGE> 6
"ACC": ACC Corp., a Delaware corporation.
"ACC Agreement": The Agreement and Plan of Merger by and among the
Company, TCG Merger Co., Inc. and ACC dated as of November 26, 1997, as it may
be amended from time to time.
"Acquisition Proposal": As defined in Section 7.2.
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Authorization": Any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including pursuant
to the HSR Act) by, or filing, registration, qualification, declaration or
designation with, any Governmental Body.
"Benefit Arrangement": As defined in Section 5.9(a).
"Cable Stockholder": Each of Comcast Corporation, Comcast Teleport,
Inc., Comcast Communications Properties, Inc., Cox Communications, Inc., Cox
Teleport Partners, Inc., Tele-Communications, Inc. and TCI Teleport, Inc.
(which, collectively, shall be referred to herein as the "Cable Stockholders").
"Certificate of Merger": The certificate of merger with respect to
the merger of Merger Sub with and into the Company, containing the provisions
required by, and executed in accordance with, Section 251 of the DGCL.
"Certificates": As defined in Section 4.2(b).
"Claim": As defined in Section 7.7(a).
"Class A Common Stock": Class A Common Stock, par value $.01 per
share, of the Company.
"Class B Common Stock": Class B Common Stock, par value $.01 per
share, of the Company.
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Code": The Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
2
<PAGE> 7
"Company": Teleport Communications Group Inc., a Delaware
corporation.
"Company Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by the Company to Parent.
"Company Option": As defined in Section 4.1(e).
"Company Permits": As defined in Section 5.4.
"Company SEC Reports": As defined in Section 5.12.
"Company Stock Incentive Right": As defined in Section 4.1(f).
"Company Stock Purchase Plan": As defined in Section 4.1(h).
"Company Stock Unit": As defined in Section 4.1(g).
"Controlled Group Liability": As defined in Section 5.9(e).
"DGCL": The Delaware General Corporation Law.
"Effective Time": As defined in Section 2.2.
"Employee Plan": As defined in Section 5.9(a).
"Employees": As defined in Section 5.9(a).
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in effect from time to
time.
"ERISA Affiliates": Any trade or business, whether or not
incorporated, that is now or has at any time in the past five years been treated
as a single employer with the Company or any of its Subsidiaries under Section
414(b) or (c) of the Code and the Treasury Regulations thereunder.
"Excess Shares": As defined in Section 4.3.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Agent": As defined in Section 4.2(a).
"Exchange Fund": As defined in Section 4.2(a).
3
<PAGE> 8
"Exchange Ratio": As defined in Section 4.1(a).
"FCC": The Federal Communications Commission.
"FCC Consent": Actions by the FCC granting its consent to the
transfer of control of the FCC Licenses in connection with the consummation of
the transactions contemplated hereby.
"FCC Licenses": All licenses, permits, construction permits and
other authorizations issued by the FCC in connection with the business and
operations of the Company and its Subsidiaries.
"Fractional Securities Fund": As defined in Section 4.3.
"Governmental Body": Any federal, state, municipal, political
subdivision or other governmental department, court, commission, board, bureau,
agency or instrumentality, domestic or foreign.
"HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indemnified Parties": As defined in Section 7.7(a).
"Information Statement/Prospectus": As defined in Section 7.4.
"Intellectual Property": All industrial and intellectual property
rights, including Proprietary Technology, patents, patent applications,
trademarks, trademark applications and registrations, service marks, service
mark applications and registrations, copyrights, know-how, licenses, trade
secrets, proprietary processes, formulae and customer lists. "Proprietary
Technology" means all proprietary processes, formulae, inventions, trade
secrets, know-how, development tools and other proprietary rights used by the
Company and its Subsidiaries or Parent and its Subsidiaries, as the case may be,
pertaining to any product, software or service manufactured, marketed, licensed
or sold by the Company and its Subsidiaries or Parent and its Subsidiaries, as
the case may be, in the conduct of their business or used, employed or exploited
in the development, license, sale, marketing, distribution or maintenance
thereof, and all documentation and media constituting, describing or relating to
the above, including manuals, memoranda, know-how, notebooks, software, records
and disclosures.
"knowledge": With respect to the Company, the actual knowledge of
any executive officer (determined in accordance with Rule 16a-1(f) under the
Exchange Act as in effect on the date hereof) of the Company and, with respect
to Parent or Merger Sub, the actual knowledge of any executive officer
(determined in accordance with Rule
4
<PAGE> 9
16a-1(f) under the Exchange Act as in effect on the date hereof) of Parent or
Merger Sub, as the case may be.
"Law": Any foreign or domestic law, statute, code, ordinance, rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by a Governmental Body.
"LEC": A local exchange carrier.
"Material Adverse Effect": On any Person, a material adverse effect
on the business, properties, operations or financial condition of such Person
and its Subsidiaries taken as a whole, other than any such effect (i) arising
out of or resulting from general economic conditions, (ii) arising out of or
resulting from changes in or affecting the telecommunications business
generally, or, in the case of a determination with respect to Parent and its
Subsidiaries, the long distance telecommunications business generally, or, in
the case of a determination with respect to the Company and its Subsidiaries,
the competitive local exchange carrier business generally, or (iii) arising out
of or resulting from, in the case of a determination with respect to the Company
and its Subsidiaries, any loss of customer revenues attributable to the
announcement of this Agreement and the transactions contemplated hereby, or, in
the case of a determination with respect to Parent and its Subsidiaries, the
entry of the Regional Bell Operating Companies into the long distance
telecommunications business.
"Merger": The merger of Merger Sub with and into the Company as
contemplated by Section 2.1.
"Merger Sub": TA Merger Corp., a Delaware corporation.
"NYSE": The New York Stock Exchange, Inc.
"Parent": AT&T Corp., a New York corporation.
"Parent Common Shares": Shares of common stock, par value $1.00 per
share, of Parent.
"Parent Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by Parent to the Company.
"Parent Option": As defined in Section 4.1(e).
"Parent Permits": As defined in Section 6.4.
"Parent Representatives": As defined in Section 7.6.
5
<PAGE> 10
"Parent SEC Reports": As defined in Section 6.10(a).
"Parent Stock Incentive Right": As defined in Section 4.1(f).
"Parent Stock Unit": As defined in Section 4.1(g).
"Permit": Any franchise, grant, authorization, license, permit,
easement, variance, exception, consent, certificate, approval, clearance or
order of any Governmental Body.
"Person": Any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.
"Proposed Financing": As defined in Section 7.14.
"Rule 145 Affiliate": As defined in Section 7.9.
"S-4 Registration Statement": As defined in Section 7.4.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Share Consideration": As defined in Section 4.1(b).
"Shares": Collectively, the shares of Class A Common Stock and the
shares of Class B Common Stock.
"Stockholders' Agreement": The Amended and Restated Stockholders'
Agreement, dated June 26, 1996, by and among the Company and Comcast Teleport,
Inc., Comcast Communications Properties, Inc., Cox Teleport Partners, Inc., and
TCI Teleport, Inc.
"Stockholders Consent": As defined in Section 7.3.
"Subsidiary": As to any Person, any other Person of which at least
50% of the equity and voting interests are owned, directly or indirectly, by
such first Person.
"Surviving Corporation": The surviving corporation in the Merger.
"Tax": As defined in Section 5.10(d).
"Tax Return": As defined in Section 5.10(d).
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"US Wats": US Wats, Inc., a New York corporation.
"US Wats Agreement": The Agreement and Plan of Merger, dated as of
October 28, 1997, by and among ACC, ACC Acquisition - Blue Corp. and US Wats.
"Voting Agreement": The Voting Agreement, dated the date hereof, by
and among Parent and each of the Cable Stockholders.
"Wholly-Owned Subsidiary": As to any Person, a Subsidiary of such
Person 100% of the equity and voting interest in which is owned, directly or
indirectly, by such Person.
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company in accordance with the provisions of Section 251 of the DGCL and with
the effect provided in Sections 259 and 261 of the DGCL. The separate corporate
existence of Merger Sub shall thereupon cease and the Company shall be the
Surviving Corporation and shall continue its corporate existence as a Subsidiary
of Parent and shall continue to be governed by the laws of the State of
Delaware. At the election of Parent, any direct Wholly-Owned Subsidiary of
Parent with respect to which the representation and warranty set forth in
Section 6.14 is true and correct may be substituted for Merger Sub as a
constituent corporation in the Merger.
2.2. Effective Time. The Merger shall become effective on the date
and at the time (the "Effective Time") that the Certificate of Merger shall have
been accepted for filing by the Secretary of State of the State of Delaware (or
such later date and time as may be specified in the Certificate of Merger by
mutual agreement of Parent, Merger Sub and the Company), which shall be on the
Closing Date or as soon as practicable thereafter.
2.3. Closing. Subject to the fulfillment or waiver of the conditions
set forth in Article VIII, the Closing shall take place (a) at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, at
10:00 a.m. on the earliest practicable date (but no later than the fifth
business day) following the satisfaction or waiver of the conditions set forth
in Article VIII (other than those conditions to be satisfied or waived at the
Closing) or (b) at such other place and/or time and/or on such other date as
Parent, Merger Sub and the Company may agree.
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ARTICLE III
TERMS OF MERGER
3.1. Certificate of Incorporation. As of the Effective Time, the
Certificate of Incorporation of the Company shall be amended pursuant to the
Certificate of Merger to be identical to the Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time, except that
Article FIRST thereof shall read as follows: "The name of the Corporation (which
is hereinafter called the "Corporation") is Teleport Communications Group Inc."
Such Certificate of Incorporation as so amended shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and of the DGCL. Prior to the Effective Time, Parent
shall take such steps as are necessary so that immediately prior to the
Effective Time the Certificate of Incorporation of Merger Sub shall include the
provisions of Articles V.B. and VIII of the Certificate of Incorporation of the
Company.
3.2. The By-Laws. The By-Laws of the Company shall be amended as of
the Effective Time to be identical to the By-Laws of Merger Sub in effect
immediately prior to the Effective Time and, in such amended form, shall be the
By-Laws of the Surviving Corporation, until duly amended in accordance with the
terms thereof, of the Certificate of Incorporation of the Surviving Corporation
and of the DGCL.
3.3. Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
3.4. Officers. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1. Share Consideration; Conversion or Cancellation of Shares in
the Merger. Subject to the provisions of this Article IV, at the Effective Time,
by virtue of
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the Merger and without any action on the part of the holders thereof, the shares
of the constituent corporations shall be converted or cancelled as follows:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent or the Company or any of
their respective Wholly-Owned Subsidiaries) shall be converted into .943
of a Parent Common Share (the "Exchange Ratio"). If, prior to the
Effective Time, Parent should split or combine the Parent Common Shares,
or pay a stock dividend or other stock distribution in Parent Common
Shares, or otherwise change the Parent Common Shares into any other
securities, or make any other dividend or distribution on the Parent
Common Shares (other than normal quarterly dividends as the same may be
adjusted from time to time in the ordinary course), then the Exchange
Ratio will be appropriately adjusted to reflect such split, combination,
dividend or other distribution or change.
(b) All Shares to be converted into Parent Common Shares pursuant to
this Section 4.1 shall cease to be outstanding, shall be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall thereafter cease to have any rights
with respect to such Shares, except the right to receive for each of the
Shares, upon the surrender of such certificate in accordance with Section
4.2, the amount of Parent Common Shares specified above (the "Share
Consideration") and cash in lieu of fractional Parent Common Shares as
contemplated by Section 4.3.
(c) Each Share issued and outstanding and owned by Parent or the
Company, or any of their respective Wholly-Owned Subsidiaries,
immediately prior to the Effective Time shall cease to be outstanding,
shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(d) Each share of Common Stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one share of common stock of the Surviving Corporation.
(e) At the Effective Time, each of the then outstanding stock
options, if any, to purchase Shares (each, a "Company Option") issued by
the Company pursuant to any stock option or similar plan of the Company,
and any non-plan options set forth in Section 5.6 of the Company
Disclosure Statement issued by the Company pursuant to an option agreement
or otherwise, shall, by virtue of the Merger, and without any further
action on the part of any holder thereof, be assumed by Parent and
converted into an option (a "Parent Option") to purchase that number of
Parent Common Shares determined by multiplying the number of Shares
subject to such Company Option at the Effective Time by the Exchange
Ratio, at an exercise price per Parent Common Share equal to the exercise
price
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per share of such Company Option immediately prior to the Effective Time
divided by the Exchange Ratio, rounded down to the nearest whole cent. If
the foregoing calculation results in an assumed Company Option being
exercisable for a fraction of a Parent Common Share, then the number of
Parent Common Shares subject to such option shall be rounded up to the
nearest whole number of shares, with no cash being payable for such
fractional share. The terms and conditions of each Parent Option shall
otherwise remain as set forth in the Company Option converted into such
Parent Option. The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the
Code) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(f) At the Effective Time, each of the then outstanding stock
incentive rights to acquire Shares (each, a "Company Stock Incentive
Right") held by any Person as a result of the consummation of the
transactions contemplated by the ACC Agreement shall, by virtue of the
Merger, and without any further action on the part of any holder thereof,
be assumed by Parent and converted into a right (a "Parent Stock Incentive
Right") to acquire that number of Parent Common Shares determined by
multiplying the number of Shares subject to such Company Stock Incentive
Right at the Effective Time by the Exchange Ratio. If the foregoing
calculation results in an assumed Company Stock Incentive Right providing
the right to acquire a fraction of a Parent Common Share, then the number
of Parent Common Shares subject to such right shall be rounded up to the
nearest whole number of shares, with no cash being payable for such
fractional share. The terms and conditions of each Parent Stock Incentive
Right shall otherwise remain as set forth in the Company Stock Incentive
Right converted into such Parent Stock Incentive Right.
(g) At the Effective Time, each of the then outstanding share units
under the Company's 1996 Equity Incentive Plan (each, a "Company Stock
Unit") shall, by virtue of the Merger, and without any further action on
the part of any holder thereof, be assumed by Parent and converted into a
right (a "Parent Stock Unit") to receive that number of Parent Common
Shares determined by multiplying the number of Shares subject to such
Company Stock Unit at the Effective Time by the Exchange Ratio. If the
foregoing calculation results in an assumed Company Stock Unit providing
the right to acquire a fraction of a Parent Common Share, then the number
of Parent Common Shares subject to such right shall be rounded up to the
nearest whole number of shares, with no cash being payable for such
fractional share. The terms and conditions of each Parent Stock Unit shall
otherwise remain as set forth in the Company Stock Unit converted into
such Parent Stock Unit. The Company shall take all necessary action prior
to the Effective Time to amend the Company's 1996 Equity Incentive Plan to
permit the assumption and conversion described in this Section 4.1(g) and
to provide that all
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determinations made by reference to Shares shall be made by reference to
Parent Common Shares.
(h) The Company shall terminate the Company's 1997 Employee Stock
Purchase Plan (the "Company Stock Purchase Plan") effective as of no later
than two business days prior to the Closing Date.
4.2. Payment for Shares in the Merger. The manner of making payment
for Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to an
exchange agent selected by Parent and reasonably acceptable to the Company
(the "Exchange Agent"), for the benefit of those Persons who immediately
prior to the Effective Time were the holders of Shares, a sufficient
number of certificates representing Parent Common Shares required to
effect the delivery of the aggregate Share Consideration required to be
issued pursuant to Section 4.1 (the certificates representing Parent
Common Shares comprising such aggregate Share Consideration being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Parent Common Shares
contemplated to be issued pursuant to Section 4.1 and effect the sales
provided for in Section 4.3 out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record (other than holders of certificates for Shares
referred to in Section 4.1(c)) of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares
(the "Certificates") (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with such
letter of transmittal duly executed and any other required documents, the
holder of such Certificates shall be entitled to receive for each of the
Shares represented by such Certificates the Share Consideration and the
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, Certificates shall represent solely the right to receive the
Share Consideration and any cash in lieu of fractional Parent Common
Shares as contemplated by Section 4.3 with respect to each of the Shares
represented thereby. No dividends or other distributions that are declared
on the Parent Common Shares and payable to the holders of record thereof
after the Effective Time will be paid to Persons entitled by reason of the
Merger to receive Parent Common Shares until such Persons surrender their
Certificates. Upon such surrender, there shall be paid to the Person in
whose name the Parent Common
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Shares are issued any dividends or other distributions having a record
date after the Effective Time and payable with respect to such Parent
Common Shares between the Effective Time and the time of such surrender.
After such surrender, there shall be paid on the applicable payment date,
to the Person in whose name the Parent Common Shares are issued, any
dividends or other distributions on such Parent Common Shares which shall
have a record date after the Effective Time and prior to such surrender
and a payment date after such surrender. In no event shall the Persons
entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. If any cash or
any certificate representing Parent Common Shares is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates for such Parent Common
Shares in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the reasonable satisfaction
of the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Shares for any Parent Common Shares
or dividends thereon or other distributions with respect thereto or, in
accordance with Section 4.3, proceeds of the sale of fractional interests,
delivered to a public official pursuant to applicable escheat law. The
Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the Parent Common Shares held by it from time to
time hereunder, except that, subject to applicable escheat law, it shall
receive and hold all dividends or other distributions paid or distributed
with respect to such Parent Common Shares for the account of the Persons
entitled thereto.
(c) Certificates surrendered for exchange by any Person constituting
a Rule 145 Affiliate of the Company shall not be exchanged for
certificates representing Parent Common Shares until Parent has received a
written agreement from such Person as provided in Section 7.9.
(d) Any portion of the Exchange Fund and the Fractional Securities
Fund (and any dividends or other distributions with respect to such
portion of the Exchange Fund) which remains unclaimed by the former
stockholders of the Company for one year after the Effective Time shall be
delivered to Parent, upon demand of Parent, and any former stockholders of
the Company shall thereafter look only to Parent for payment of their
claim for the Share Consideration (and any such dividends or other
distributions) or for any cash in lieu of fractional Parent Common Shares.
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(e) In the event that any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a
bond in such reasonable amount as Parent may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, Parent will, in exchange for such lost, stolen or
destroyed Certificate, issue or cause to be issued the number of Parent
Common Shares and pay or cause to be paid any amounts deliverable in
respect thereof pursuant to this Article IV.
4.3. Fractional Shares. No fractional Parent Common Shares
shall be issued in the Merger. In lieu of any such fractional securities, each
holder of Shares who would otherwise have been entitled to a fraction of a
Parent Common Share upon surrender of Certificates for exchange pursuant to this
Article IV will be paid an amount in cash (without interest) equal to such
holder's proportionate interest in the net proceeds from the sale or sales in
the open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional Parent Common Shares issued pursuant to this Article IV. As
soon as practicable following the Effective Time, the Exchange Agent shall
determine the excess of (a) the number of full Parent Common Shares delivered to
the Exchange Agent by Parent over (b) the aggregate number of full Parent Common
Shares to be distributed to holders of Shares (such excess being herein called
the "Excess Shares"), and the Exchange Agent, as agent for the former holders of
Shares, shall sell the Excess Shares at the prevailing prices on the NYSE. The
sale of the Excess Shares by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in round lots
to the extent practicable. Parent shall pay all commissions, transfer taxes and
other out-of-pocket transaction costs, including the expenses and compensation
of the Exchange Agent, incurred in connection with such sale of Excess Shares.
Until the net proceeds of such sale have been distributed to the former
stockholders of the Company, the Exchange Agent will hold such proceeds in trust
for such former stockholders (the "Fractional Securities Fund"). As soon as
practicable after the determination of the amount of cash to be paid to former
stockholders of the Company in lieu of any fractional interests, the Exchange
Agent shall make available in accordance with this Agreement such amounts to
such former stockholders.
4.4. Transfer of Shares after the Effective Time. No transfers
of Shares shall be made on the stock transfer books of the Company after the
close of business on the day prior to the date of the Effective Time.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the Company Disclosure Statement (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant as specified therein):
5.1. Organization, Etc. of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and to carry on its business as now conducted and
proposed by the Company to be conducted. The Company is duly qualified and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to be so qualified or in good
standing has or would have, individually or in the aggregate, a Material Adverse
Effect on the Company.
5.2. Subsidiaries. Section 5.2 of the Company Disclosure
Statement contains a complete and accurate list of all of the Subsidiaries of
the Company as of the date hereof. Each Subsidiary of the Company (a) is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or similar power and
authority to own its properties and conduct its business and operations as
currently conducted, except where the failure to be duly organized, validly
existing and in good standing or to have such power and authority does not and
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company, and (b) is duly qualified and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or in good standing does not and would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.
5.3. Agreement. The Company has all necessary corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
and the consummation of the transactions contemplated hereby have been
unanimously approved by the Board of Directors of the Company and have been duly
authorized by all other necessary corporate action on the part of the Company,
except, in the case of the Merger only, for the approval of the Company's
stockholders contemplated by Section 7.3. This Agreement has been duly executed
and delivered by a duly authorized officer of the Company and constitutes a
valid and binding agreement of the Company, enforceable
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against the Company in accordance with its terms. The Board of Directors of the
Company has unanimously approved the transactions contemplated by this Agreement
and the Voting Agreement, including the Merger, so as to render the provisions
of Section 203 of the DGCL inapplicable to the transactions contemplated by this
Agreement and to Parent and Merger Sub in connection with this Agreement and the
Voting Agreement. The Board of Directors of the Company has directed that this
Agreement be submitted to the stockholders of the Company for their approval.
The affirmative approval, by vote or written consent, of the holders of Shares
representing a majority of the votes that may be cast by the holders of all
outstanding Shares (voting as a single class) is the only vote of the holders of
any class or series of capital stock of the Company necessary to adopt this
Agreement and approve the Merger.
5.4. Permits; Compliance. Each of the Company and its
Subsidiaries is in possession of all Permits from appropriate Governmental
Bodies (including the FCC) necessary for the Company or any of its Subsidiaries
to own, lease and operate its properties or to carry on their respective
businesses as they are now being conducted (the "Company Permits"), and all such
Company Permits are valid, and in full force and effect, except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits does not and would not, individually or in the aggregate, (a) have a
Material Adverse Effect on the Company or (b) prevent or materially delay the
performance of this Agreement by the Company. No suspension or cancellation of
any of the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits does not and would not, individually or in the
aggregate, (x) have a Material Adverse Effect on the Company or (y) prevent or
materially delay the performance of this Agreement by the Company. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or any of its Subsidiaries
or by which any property, asset or operation of the Company or any of its
Subsidiaries is bound or affected or (ii) any Company Permits, except for such
conflicts, defaults or violations that do not and would not, individually or in
the aggregate, (A) have a Material Adverse Effect on the Company or (B) prevent
or materially delay the performance of this Agreement by the Company.
5.5. Fairness Opinion. The Board of Directors of the Company
has received the opinion, dated as of the date hereof, of Merrill Lynch, Pierce,
Fenner & Smith Incorporated to the effect that the Exchange Ratio is fair to the
stockholders of the Company from a financial point of view.
5.6. Capital Stock. The authorized capital stock of the
Company consists of (a) 450,000,000 shares of Class A Common Stock, of which
61,273,746 shares were outstanding as of the close of business on the day prior
to the date hereof, (b) 300,000,000 shares of Class B Common Stock, of which
113,489,040 shares were outstanding as of the close of business on the day prior
to the date hereof, and (c)
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150,000,000 shares of preferred stock, par value $.01 per share, none of which
is outstanding. All outstanding Shares are duly authorized, validly issued,
fully paid and nonassessable, and no class of capital stock of the Company is
entitled to preemptive rights. There are no options, warrants or other rights to
acquire capital stock (or securities convertible into or exercisable or
exchangeable for capital stock) from the Company, other than (a) the issuance of
up to a maximum of 23,239,673 shares of Class A Common Stock pursuant to the ACC
Agreement (including with respect to options or other rights to acquire common
stock of ACC that are or may become outstanding and that will be converted into
similar rights to acquire shares of Class A Common Stock upon consummation of
the transactions contemplated by the ACC Agreement), (b) the right of the
holders of Class B Common Stock to convert shares of Class B Common Stock into
Class A Common Stock pursuant to the Certificate of Incorporation of the
Company, (c) options or other rights outstanding as of the close of business on
the day prior to the date hereof representing in the aggregate the right to
purchase or otherwise acquire up to 6,278,000 shares of Class A Common Stock
pursuant to Employee Plans or Benefit Arrangements (plus any options granted in
accordance with Section 7.1(a) after the date hereof), and (d) the right of
eligible employees to purchase shares of Class A Common Stock pursuant to the
terms of the Company Stock Purchase Plan as in effect on the date hereof. From
the close of business on the day prior to the date hereof until the execution of
this Agreement, the Company has not issued any capital stock or any options,
warrants or other rights to acquire capital stock (or securities convertible
into or exercisable or exchangeable for capital stock) other than the issuance
of shares of Class A Common Stock pursuant to options referred to in clause (c)
of the immediately preceding sentence that were outstanding as of the close of
business on the day prior to the date hereof. All outstanding shares of capital
stock of, or other equity or voting interest in, the Subsidiaries of the Company
are owned by the Company or a direct or indirect Wholly-Owned Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature and no Person has any right to acquire any shares of capital stock
of, or other equity or voting interest in, any Subsidiary of the Company.
5.7. Litigation. Except as disclosed in the Company SEC
Reports filed prior to January 1, 1998, there are no actions, suits,
investigations or proceedings (adjudicatory, rulemaking or otherwise) pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries (or any Employee Plan or Benefit Arrangement), or any property
of the Company or any such Subsidiary (including Intellectual Property), before
any arbitrator of any kind or in or before or by any Governmental Body, except
actions, suits, investigations or proceedings which, individually or in the
aggregate, do not and would not (a) have a Material Adverse Effect on the
Company or (b) prevent or materially delay the performance of this Agreement by
the Company.
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5.8. Compliance with Other Instruments, Etc. Neither the
Company nor any Subsidiary of the Company is in violation of any term of (a) its
charter, by-laws, other organizational documents or the Stockholders' Agreement,
or (b) any agreement or instrument related to indebtedness for borrowed money or
any other agreement to which it is a party or by which it is bound, the
consequences of which violation, whether individually or in the aggregate, do or
would (i) have a Material Adverse Effect on the Company or (ii) prevent or
materially delay the performance of this Agreement by the Company. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in any violation of or
conflict with, constitute a default under, require any consent, waiver or notice
under any term of, or result in the reduction or loss of any benefit or the
creation or acceleration of any right or obligation under, (a) the charter,
by-laws or other organizational document of the Company (or any of its
Subsidiaries) or (b) any agreement, note, bond, mortgage, indenture, contract,
lease, Permit or other obligation or right (excluding options, restricted stock,
employment contracts and other employee related obligations or rights which are
addressed in Section 5.9(f)) to which the Company or any of its Subsidiaries is
a party or by which any of the assets or properties of the Company or any of its
Subsidiaries is bound, or any instrument or Law, or result in the creation of
(or impose any obligation on the Company or any of its Subsidiaries to create)
any mortgage, lien, charge, security interest or other encumbrance upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to
any such term, except in the case of clause (b) where any of the foregoing,
individually or in the aggregate, does not and would not (i) have a Material
Adverse Effect on the Company or (ii) prevent or materially delay the
performance of this Agreement by the Company.
5.9. Employee Benefit Plans. (a) The Company Disclosure
Statement sets forth as of the date hereof a true and complete list of each
"employee benefit plan" (as defined in Section 3(3) of ERISA) of the Company and
its Subsidiaries in which current or former employees, agents, directors, or
independent contractors of the Company or its Subsidiaries ("Employees")
participate or pursuant to which the Company or any of its Subsidiaries may have
a liability with respect to Employees (each, an "Employee Plan"), and each other
plan, program, policy, contract or arrangement of the Company and its
Subsidiaries providing for bonuses, pensions, deferred pay, stock or stock
related awards, severance pay, salary continuation or similar benefits,
hospitalization, medical, dental or disability benefits, life insurance or other
employee benefits, or compensation to or for any Employees or any beneficiaries
or dependents of any Employees (other than directors' and officers' liability
policies), whether or not insured or funded (each, a "Benefit Arrangement").
Except as disclosed on the Company Disclosure Statement, neither the Company nor
any of its Subsidiaries has any commitment to establish any additional Employee
Plans or Benefit Arrangements or to modify or change any existing Employee Plan
or Benefit Arrangement. The Company has made available to Parent with respect to
each Employee Plan and Benefit Arrangement: (i) a true and complete copy of all
written documents comprising such
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Employee Plan or Benefit Arrangement (including amendments and individual
agreements relating thereto) or, if there is no such written document, an
accurate and complete description of such Employee Plan or Benefit Arrangement;
(ii) the most recent Form 5500 or Form 5500-C (including all schedules thereto),
if applicable; (iii) the most recent financial statements and actuarial reports,
if any; (iv) the summary plan description currently in effect and all material
modifications thereof, if any; and (v) the most recent Internal Revenue Service
determination letter, if any.
(b) Each Employee Plan and Benefit Arrangement has been
established and maintained in accordance with its terms and in compliance with
all applicable Laws, including ERISA and the Code (and the prohibited
transaction provisions of ERISA and the Code), and all contributions required to
be made to the Employee Plans and Benefit Arrangements have been made in a
timely fashion, except where such failure to establish, maintain or comply, or
to make such contributions, individually or in the aggregate, does not and would
not have a Material Adverse Effect on the Company. Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service, and, to the
knowledge of the Company, no event has occurred which results or would result in
a revocation of such letter.
(c) No Employee Plan is subject to Title IV of ERISA.
(d) No Employee Plan is a "multiemployer plan" (as defined in
Section 3(37) of ERISA) or a "multiple employer plan" described in Section
4063(a) of ERISA, and the Company has not at any time in the past five years,
contributed to or been obligated to contribute to such a multiemployer plan or
multiple employer plan.
(e) Neither the Company nor any ERISA Affiliate has any
material Controlled Group Liability, nor do any circumstances exist that could
result in any of them having any Controlled Group Liability. "Controlled Group
Liability" means any and all liabilities under (i) Title IV of ERISA, (ii)
Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, or (iv) the
continuation coverage requirements of Sections 601 et seq. of ERISA and section
4980B of the Code.
(f) None of the execution or delivery of this Agreement, the
Voting Agreement, stockholder approval of the Merger by the stockholders of the
Company pursuant to the Stockholders Consent or otherwise, or the consummation
of the transactions contemplated hereby or thereby (either alone or together
with any additional or subsequent events), constitutes an event under any
Employee Plan, Benefit Arrangement, loan to, or individual agreement or contract
with, an Employee that may result in any payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any Employee Plan or
Benefit Agreement, acceleration of payment or
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vesting, increase in benefits or compensation, or required funding, with respect
to any Employee, or the forgiveness of any loan or other commitment of any
Employees.
(g) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for benefits)
pending or, to the Company's knowledge, threatened, with respect to any Employee
Plan or Benefit Arrangement, except for any of the foregoing that do not and
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(h) Except as disclosed on the Company Disclosure Statement,
no amounts paid or payable by the Company or any Subsidiary to or with respect
to any Employee (including any such amounts that may be payable as a result of
the execution and delivery of this Agreement or the Voting Agreement or the
consummation of the transactions contemplated hereby or thereby) will fail to be
deductible for United States federal income tax purposes by reason of Section
280G of the Code.
(i) No Employees and no beneficiaries or dependents of
Employees are entitled under any Employee Plan or Benefit Arrangement to
post-employment welfare benefits of any kind, including death or medical
benefits, other than coverage mandated by Section 4980B of the Code.
(j) There are no agreements with, or pending petitions for
recognition of, a labor union or association as the exclusive bargaining agent
for any of the employees of the Company or any of its Subsidiaries; no such
petitions have been pending at any time within two years of the date of this
Agreement and, to the knowledge of the Company, there has not been any
organizing effort by any union or other group seeking to represent any employees
of the Company or any of its Subsidiaries as their exclusive bargaining agent at
any time within two years of the date of this Agreement. There are no labor
strikes, work stoppages or other labor troubles, other than routine grievance
matters, now pending, or, to the Company's knowledge, threatened, against the
Company or any of its Subsidiaries which have or would have, individually or in
the aggregate, a Material Adverse Effect on the Company, and there have not been
any such labor strikes, work stoppages or other labor troubles, other than
routine grievance matters, with respect to the Company or any of its
Subsidiaries at any time within two years of the date of this Agreement.
5.10. Taxes. (a) The Company and its Subsidiaries have filed
all income Tax Returns and all material other United States federal, state,
county, local and foreign Tax Returns required to be filed by them. The Company
and its Subsidiaries have paid all material Taxes due, other than Taxes
appropriate reserves for which have been made in the Company's financial
statements (and, to the extent material, such reserves have been accurately
described to Parent). There are no material assessments or adjustments that have
been asserted in writing against the Company or its Subsidiaries for any period
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for which the Company has not made appropriate reserves in the Company's
financial statements included in the Company SEC Reports.
(b) There are no material claims or assessments pending
against the Company or any of its Subsidiaries for any alleged deficiency in any
Tax, and the Company has not been notified in writing of any proposed material
Tax claims or assessments against the Company or any of its Subsidiaries (other
than, in each case, claims or assessments for which adequate reserves in the
Company financial statements have been established or which are being contested
in good faith or are immaterial in amount).
(c) There are no liens for Taxes on the assets of the Company
or any of its Subsidiaries, except for statutory liens for current Taxes not yet
due and payable (and except for liens which do not and would not, individually
or in the aggregate, have a Material Adverse Effect on the Company).
(d) For purposes of this Agreement, the term "Tax" means any
United States federal, state, county or local, or foreign or provincial income,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, value added, alternative or added minimum, ad valorem or transfer tax,
or any other tax, custom, duty or governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty imposed by
any Governmental Body. The term "Tax Return" means a report, return or other
information (including any attached schedules or any amendments to such report,
return or other information) required to be supplied to or filed with a
Governmental Body with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
5.11. Intellectual Property. The Company and its Subsidiaries
own, or have the defensible right to use, the Intellectual Property used in
their respective businesses, except where the failure to own or have the right
to use such Intellectual Property, individually or in the aggregate, does not
and would not have a Material Adverse Effect on the Company.
5.12. Reports and Financial Statements. (a) The Company has
filed all reports (including proxy statements) and registration statements
required to be filed with the SEC since its initial public offering
(collectively, the "Company SEC Reports"). The Company has previously furnished
or made available to Parent true and complete copies of all the Company SEC
Reports filed prior to the date hereof. None of the Company SEC Reports, as of
their respective dates, contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the balance sheets (including the related notes)
included in the Company SEC Reports presents fairly, in all material respects,
the consolidated financial
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position of the Company and its Subsidiaries as of the respective dates thereof,
and the other related statements (including the related notes) included in the
Company SEC Reports present fairly, in all material respects, the results of
operations and the changes in financial position of the Company and its
Subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments. All of the Company SEC Reports, as of their
respective dates, complied as to form in all material respects with the
requirements of the Exchange Act, the Securities Act and the applicable rules
and regulations thereunder.
(b) The Company and its Subsidiaries have not made any
misstatements of fact, or omitted to disclose any fact, to any Governmental
Body, or taken or failed to take any action, which misstatements or omissions,
actions or failures to act, individually or in the aggregate, subject or would
subject any Company Permits referred to in Section 5.4 to revocation or failure
to renew, except where such revocation or failure to renew, individually or in
the aggregate, does not and would not have a Material Adverse Effect on the
Company.
(c) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of the Company as of September 30, 1997 included in
the Company SEC Reports, or (ii) as incurred after the date thereof in the
ordinary course of business consistent with prior practice and not prohibited by
this Agreement, the Company does not have any liabilities or obligations of any
nature, absolute, accrued, contingent or otherwise and whether due or to become
due, that, individually or in the aggregate, have or would have a Material
Adverse Effect on the Company.
5.13. Absence of Certain Changes or Events. During the period
since September 30, 1997, except as disclosed in the Company SEC Reports filed
prior to January 1, 1998, (a) the business of the Company and its Subsidiaries
has been conducted only in the ordinary course, consistent with past practice,
except for the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and except as otherwise expressly
permitted by this Agreement, (b) neither the Company nor any of its Subsidiaries
has taken any action or omitted to take any action, or entered into any
contract, agreement, commitment or arrangement to take any action or omit to
take any action, which, if taken or omitted after the date hereof, would violate
Section 7.1 (other than paragraphs (a), (d), (l) or (p) thereof), and (c) there
has not been, and nothing has occurred that would have, a Material Adverse
Effect on the Company.
5.14. Affiliated Transactions and Certain Other Agreements.
Set forth in Section 5.14 of the Company Disclosure Statement is an accurate and
complete listing, as of the date hereof, of (a) all contracts, leases,
agreements or understandings, whether written or oral, that are material to the
Company and its Subsidiaries taken as a whole,
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with or on behalf of any Affiliate of the Company (other than its Wholly-Owned
Subsidiaries) or any of the Cable Stockholders or any of their respective
Affiliates, to which the Company or any of its Subsidiaries is a party or is
otherwise bound, or by which any of their respective properties or assets is
subject or bound, (b) all contracts, leases, agreements or understandings,
whether written or oral, to which the Company or any of its Subsidiaries is a
party or is otherwise bound which contain any restriction or limitation on the
ability of the Company or any of its Affiliates (other than the Cable
Stockholders and their non-Company Affiliates) to engage in any business
anywhere in the world, other than any such contracts, leases, agreements or
understandings the loss or breach of which, individually or in the aggregate,
does not and would not have a Material Adverse Effect on the Company, and (c)
all contracts, leases, agreements or understandings, whether written or oral,
giving any Person the right to require the Company to register Shares or to
participate in any registration of Shares. The Company has previously provided
or made available to Parent true and complete copies of each of the foregoing
agreements.
5.15. Brokers and Finders. Except for the fees and expenses
payable to Merrill Lynch, Pierce, Fenner & Smith Incorporated, which fees and
expenses are reflected in its agreements with the Company, copies of which have
been furnished to Parent, the Company has not employed any investment banker,
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
5.16. S-4 Registration Statement and Information
Statement/Prospectus. None of the information supplied or to be supplied by the
Company in writing for inclusion or incorporation by reference in the S-4
Registration Statement or the Information Statement/Prospectus will (a) in the
case of the S-4 Registration Statement, at the time it becomes effective,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or (b) in the case of the Information
Statement/Prospectus, at the time of the mailing thereof, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to the Company, its officers
and directors or any of its Subsidiaries shall occur which is required to be
described in an amendment of, or a supplement to, the Information
Statement/Prospectus or the S-4 Registration Statement, the Company shall notify
Parent thereof by reference to this Section 5.16 and such event shall be so
described. Any such amendment or supplement shall be promptly filed with the SEC
and, as and to the extent required by law, disseminated to the stockholders of
the Company, and such amendment or supplement shall comply in all material
respects with all provisions of applicable Law.
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The Information Statement/Prospectus will (with respect to the Company) comply
as to form in all material respects with the requirements of the Exchange Act.
5.17. ACC Agreement. As of the date hereof, to the knowledge
of the Company, ACC is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in the ACC
Agreement. None of the Company or any of its Subsidiaries is in breach in any
material respect of any of their respective representations, warranties,
covenants or agreements contained in the ACC Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each represents and warrants to the
Company that, except as set forth in the Parent Disclosure Statement (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant as specified therein):
6.1. Organization, Etc. of Parent. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and
proposed by Parent to be conducted. Parent is duly qualified and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary and where the failure to be so qualified or in good standing has or
would have, individually or in the aggregate, a Material Adverse Effect on
Parent.
6.2. Subsidiaries. Each Subsidiary of Parent (a) is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or similar power and
authority to own its properties and conduct its business and operations as
currently conducted, except where the failure to be duly organized, validly
existing and in good standing or to have such power and authority does not and
would not have, individually or in the aggregate, a Material Adverse Effect on
Parent, and (b) is duly qualified and in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing does not and would not have, individually or
in the aggregate, a Material Adverse Effect on Parent.
6.3. Agreement. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. This
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Agreement and the consummation of the transactions contemplated hereby have been
approved by the respective Boards of Directors of Parent and Merger Sub and by
Parent as the sole stockholder of Merger Sub, and have been duly authorized by
all other necessary corporate action on the part of Parent or Merger Sub. This
Agreement has been duly executed and delivered by a duly authorized officer of
Parent and of Merger Sub and constitutes a valid and binding agreement of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms. Neither Parent nor Merger Sub, nor any of their respective Subsidiaries
was an "interested stockholder" of the Company, as defined for purposes of
Section 203 of the DGCL, immediately prior to the approval of the transactions
contemplated by this Agreement and the Voting Agreement by the Board of
Directors of the Company.
6.4. Permits; Compliance. Each of Parent and its Subsidiaries
is in possession of all Permits from appropriate Governmental Bodies (including
the FCC) necessary for Parent or any of its Subsidiaries to own, lease and
operate its properties or to carry on their respective businesses as they are
now being conducted (the "Parent Permits"), and all such Parent Permits are
valid, and in full force and effect, except where the failure to have, or the
suspension or cancellation of, any of the Parent Permits does not and would not,
individually or in the aggregate, (a) have a Material Adverse Effect on Parent
or (b) prevent or materially delay the performance of this Agreement by Parent
or Merger Sub. No suspension or cancellation of any of the Parent Permits is
pending or, to the knowledge of Parent, threatened, except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits does not
and would not, individually or in the aggregate, (x) have a Material Adverse
Effect on Parent or (y) prevent or materially delay the performance of this
Agreement by Parent or Merger Sub. Neither Parent nor any of its Subsidiaries is
in conflict with, or in default or violation of, (i) any Law applicable to
Parent or any of its Subsidiaries or by which any property, asset or operation
of Parent or any of its Subsidiaries is bound or affected or (ii) any Parent
Permits, except for such conflicts, defaults or violations that do not and would
not, individually or in the aggregate, (A) have a Material Adverse Effect on
Parent or (B) prevent or materially delay the performance of this Agreement by
Parent or Merger Sub.
6.5. Capital Stock. As of the date hereof, the authorized
capital stock of Parent consists of (a) 2,000,000,000 Parent Common Shares and
(ii) 100,000,000 shares of preferred stock, $1.00 par value per share. All of
the outstanding shares of capital stock of Parent are duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock of Parent is
entitled to preemptive rights. As of the close of business on January 1, 1998,
(i) 1,624,213,505 Parent Common Shares and no shares of Parent preferred stock
were issued and outstanding and (ii) 1,269,953 Parent Common Shares were held in
the treasury of Parent. Except as disclosed in the Parent SEC Reports, all
outstanding shares of capital stock of the Significant Subsidiaries (as defined
for purposes of Regulation S-X under the Exchange Act) of Parent are owned by
Parent or a direct or indirect Wholly-Owned Subsidiary of Parent, free and clear
of all liens,
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charges, encumbrances, claims and options of any nature. As of the close of
business on January 1, 1998, there were outstanding options to acquire no more
than 69,000,000 Parent Common Shares.
6.6. Parent Common Shares. The Parent Common Shares to be
issued pursuant to Article IV will, when issued, be duly authorized, validly
issued, fully paid and nonassessable and no stockholder of Parent will have any
preemptive right of subscription or purchase in respect thereof. The Parent
Common Shares to be issued in the Merger will, when issued, be registered under
the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws.
6.7. Litigation. Except as disclosed in the Parent SEC Reports
filed prior to January 1, 1998, there are no actions, suits, investigations or
proceedings (adjudicatory, rulemaking or otherwise) pending or, to the knowledge
of Parent, threatened against Parent or any of its Subsidiaries or any Benefit
Plans of Parent or any of its Subsidiaries, or any property of Parent or any
such Subsidiary (including Intellectual Property), in any court or before any
arbitrator of any kind or in or before or by any Governmental Body, except
actions, suits, investigations or proceedings or which, individually or in the
aggregate, do not and would not (a) have a Material Adverse Effect on Parent or
(b) prevent or materially delay the performance of this Agreement by Parent or
Merger Sub.
6.8. Compliance with Other Instruments, Etc. Neither Parent
nor any Subsidiary of Parent is in violation of any term of (a) its charter,
by-laws or other organizational documents, or (b) any agreement or instrument
related to indebtedness for borrowed money or any other agreement to which it is
a party or by which it is bound, the consequences of which violation, whether
individually or in the aggregate, do or would (i) have a Material Adverse Effect
on Parent or (ii) prevent or materially delay the performance of this Agreement
by Parent or Merger Sub. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any violation of or conflict with, constitute a default under, require
any consent, waiver or notice under any term of, or result in the reduction or
loss of any benefit or the creation or acceleration of any obligation under, (a)
the charter, by-laws or other organizational document of Parent (or any of its
Subsidiaries) or (b) any agreement, note, bond, mortgage, indenture, contract,
lease, Permit or other obligation or any instrument to which Parent or any of
its Subsidiaries is a party or by which any of the assets or properties of
Parent or any of its Subsidiaries is bound or any instrument or Law, or result
in the creation of (or impose any obligation on Parent or any of its
Subsidiaries to create) any mortgage, lien, charge, security interest or other
encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries pursuant to any such term, except in the case of clause (b) where
any of the foregoing, individually or in the aggregate, does not and would not
(i) have a Material Adverse Effect on Parent or (ii) prevent or materially delay
the performance of this Agreement by Parent or Merger Sub.
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6.9. Taxes. (a) Parent and its Subsidiaries have filed all
income Tax Returns and all material other United States federal, state, county,
local and foreign Tax Returns required to be filed by them. Parent and its
Subsidiaries have paid all material Taxes due, other than Taxes appropriate
reserves for which have been made in Parent's financial statements (and, to the
extent material, such reserves have been accurately described to the Company).
There are no material assessments or adjustments that have been asserted in
writing against Parent or its Subsidiaries for any period for which Parent has
not made appropriate reserves in Parent's financial statements included in
Parent SEC Reports.
(b) There are no material claims or assessments pending
against Parent or any of its Subsidiaries for any alleged deficiency in any Tax,
and Parent has not been notified in writing of any proposed material Tax claims
or assessments against Parent or any of its Subsidiaries (other than, in each
case, claims or assessments for which adequate reserves in Parent financial
statements have been established or which are being contested in good faith or
are immaterial in amount).
(c) There are no liens for Taxes on the assets of Parent or
any of its Subsidiaries, except for statutory liens for current Taxes not yet
due and payable (and except for liens which do not and would not, individually
or in the aggregate, have a Material Adverse Effect on Parent).
6.10. Intellectual Property. Parent and its Subsidiaries own,
or have the defensible right to use, the Intellectual Property used in their
respective businesses, except where the failure to own or have the right to use
such Intellectual Property, individually or in the aggregate, does not and would
not have a Material Adverse Effect on Parent.
6.11. Reports and Financial Statements. (a) Parent has filed
all reports (including proxy statements) and registration statements required to
be filed with the SEC since January 1, 1996 (collectively, the "Parent SEC
Reports"). Parent has previously furnished or made available to the Company true
and complete copies of all Parent SEC Reports filed prior to the date hereof.
None of the Parent SEC Reports, as of their respective dates, contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
balance sheets (including the related notes) included in the Parent SEC Reports
presents fairly, in all material respects, the consolidated financial position
of Parent and its Subsidiaries as of the respective dates thereof, and the other
related statements (including the related notes) included in the Parent SEC
Reports present fairly, in all material respects, the results of operations and
the changes in financial position of Parent and its Subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the
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periods involved, except as otherwise noted therein and subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments. All
of the Parent SEC Reports, as of their respective dates, complied as to form in
all material respects with the requirements of the Exchange Act, the Securities
Act and the applicable rules and regulations thereunder.
(b) Parent and its Subsidiaries have not made any
misstatements of fact, or omitted to disclose any fact, to any Governmental
Body, or taken or failed to take any action, which misstatements or omissions,
actions or failures to act, individually or in the aggregate, subject or would
subject any Parent Permits referred to in Section 6.4 to revocation or failure
to renew, except where such revocation or failure to renew, individually or in
the aggregate, does not and would not have a Material Adverse Effect on Parent.
(c) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of Parent as of September 30, 1997 included in the
Parent SEC Reports, or (ii) as incurred after the date thereof in the ordinary
course of business consistent with prior practice and not prohibited by this
Agreement, Parent does not have any liabilities or obligations of any nature,
absolute, accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, have or would have a Material Adverse
Effect on Parent.
(d) During the period since September 30, 1997, except as
disclosed in the Parent SEC Reports filed prior to January 1, 1998, there has
not been, and nothing has occurred that would have, a Material Adverse Effect on
Parent.
6.12. Brokers and Finders. Except for the fees and expenses
payable to CS First Boston Corporation and Goldman Sachs & Co., which fees and
expenses will be paid by Parent, Parent has not employed any investment banker,
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
6.13. S-4 Registration Statement and Information
Statement/Prospectus. None of the information to be supplied by Parent or Merger
Sub in writing for inclusion or incorporation by reference in the S-4
Registration Statement or the Information Statement/Prospectus will (a) in the
case of the S-4 Registration Statement, at the time it becomes effective,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or (b) in the case of the Information
Statement/Prospectus, at the time of the mailing thereof, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not
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misleading. If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its Subsidiaries shall occur which
is required to be described in an amendment of, or a supplement to, the
Information Statement/Prospectus or the S-4 Registration Statement, Parent shall
notify the Company thereof by reference to this Section 6.13 and such event
shall be so described. Any such amendment or supplement shall be promptly filed
with the SEC and, as and to the extent required by law, disseminated to the
stockholders of the Company, and such amendment or supplement shall comply in
all material respects with all provisions of applicable Law. The S-4
Registration Statement will comply (with respect to Parent and Merger Sub and
information provided in writing therefor by Parent or Merger Sub) as to form in
all material respects with the provisions of the Securities Act.
6.14. Ownership of Merger Sub; No Prior Activities; Assets of
Merger Sub.
(a) Merger Sub was formed by Parent solely for the purpose of
engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital
stock of Merger Sub is and will be owned 100% by Parent directly. Further, there
are not as of the date hereof and there will not be at the Effective Time any
outstanding or authorized options, warrants, calls, rights, commitments or any
other agreements of any character to or by which Merger Sub is a party or may be
bound requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
shares of capital stock of Merger Sub.
(c) As of the date hereof and immediately prior to the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated hereby
and by the Voting Agreement, Merger Sub has not and will not have incurred,
directly or indirectly through any Subsidiary or Affiliate, any obligations or
liabilities or engaged in any business or activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.
(d) Parent will take all action necessary to ensure that
Merger Sub at no time prior to the Effective Time owns any material assets other
than an amount of cash necessary to incorporate Merger Sub and to pay the
expenses of the Merger attributable to Merger Sub if the Merger is consummated.
6.15. Ownership of Company or ACC Stock. Neither Parent nor
any Subsidiary of Parent (excluding any employee benefit plan, or related trust,
of Parent or its Subsidiaries) owns or, to the knowledge of Parent, has owned
within the last two
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years, any shares of the capital stock of either the Company or ACC. Between the
date of this Agreement and the Effective Time, neither Parent nor any Subsidiary
of Parent (excluding any employee benefit plan, or related trust, of Parent or
its Subsidiaries) will purchase or otherwise acquire any shares of the capital
stock of either the Company or ACC (except pursuant to the terms of this
Agreement or as provided in the ACC Agreement).
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1. Conduct of Business of the Company. Except as set forth
in Section 7.1 of the Company Disclosure Statement, as expressly permitted by
this Agreement, as required by any change in applicable Law, or as otherwise
agreed by Parent in writing, during the period from the date of this Agreement
to the Effective Time, (i) the Company will, and will cause each of its
Subsidiaries to, conduct its operations according to its ordinary course of
business consistent with past practice, and (ii) to the extent consistent with
the foregoing, the Company will, and will use all reasonable efforts to cause
each of its Subsidiaries to, seek to preserve intact its current business
organizations, keep available the service of its current officers and employees,
and preserve its relationships with customers, suppliers and others having
business dealings with it, with the objective that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, from and including the date hereof to the Effective
Time, the Company will not, and will not permit any of its Subsidiaries to,
without the prior written consent of Parent (except to the extent set forth in
Section 7.1 of the Company Disclosure Statement):
(a) except for (i) Shares issued upon exercise of options or
other rights outstanding as of the date hereof under Employee Plans or
Benefit Arrangements, (ii) (A) options to purchase, and awards of, no
more than an aggregate of 300,000 Shares, granted in connection with
new hires or promotions, directors' retainers, and bonus award
programs, in the ordinary course of business consistent with past
practice under currently existing Employee Plans or Benefit
Arrangements, and (B) options to purchase no more than an aggregate of
700,000 Shares issued pursuant to or in accordance with the terms of
the ACC Agreement (which options are included within the aggregate
maximum number of Shares issuable pursuant to the ACC Agreement as set
forth in Section 5.6), and the issuance of Shares upon the exercise
thereof, (iii) Shares issued pursuant to the terms of the ACC Agreement
(a copy of which, as in effect on the date hereof, has been provided to
Parent), (iv) Shares issued in accordance with the terms of the Company
Stock Purchase Plan as in effect on the date hereof, and (v) shares of
Class A Common Stock issued upon conversion of shares of Class B Common
Stock outstanding on the date hereof, in accordance with the terms of
the
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Company's Certificate of Incorporation as in effect on the date hereof,
issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of its capital stock of any
class (including the Shares), or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or
acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of its capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding
securities (including the Shares);
(c) except for conversions of shares of Class B Common Stock
outstanding on the date hereof into shares of Class A Common Stock, in
accordance with the terms of the Company's Certificate of Incorporation
as in effect on the date hereof, split, combine, subdivide or
reclassify any shares of its capital stock or declare, set aside for
payment or pay any dividend, or make any other actual, constructive or
deemed distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity as such
(other than dividends or distributions paid by any Wholly-Owned
Subsidiary of the Company);
(d) (i) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of
business consistent with past practice, (ii) pay or award or agree to
pay or award any pension, retirement allowance, or other nonequity
incentive awards, or other employee benefit, not required by any of the
Employee Plans or Benefit Arrangements to any current or former
director, officer or employees, whether past or present, or to any
other Person, except for payments or awards that are in the ordinary
course of business, consistent with past practice, and that are not
material, (iii) pay or award or agree to pay or award any stock option
or equity incentive awards except as expressly permitted by Section
7.1(a), (iv) enter into any new or amend any existing employment
agreement with any director, officer or employee, except for employment
agreements with new employees entered into in the ordinary course of
business consistent with past practice and except for amendments in the
ordinary course of business, consistent with past practice, that do not
materially increase benefits or payments, (v) enter into any new or
amend any existing severance agreement with any current or former
director, officer or employee, except for agreements or amendments in
the ordinary course of business,
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consistent with past practice, that do not provide for material
benefits, or (vi) become obligated under any new Employee Plan or
Benefit Arrangement, which was not in existence on the date hereof, or
amend or exercise discretion pursuant to any such Employee Plan or
Benefit Arrangement in existence on the date hereof, except for any
such amendment or exercise of discretion in the ordinary course of
business, consistent with past practice, that does not provide for
material benefits;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries not
constituting an inactive Subsidiary (other than the Merger, and other
than (i) with respect to any Subsidiary of the Company such of the
foregoing as do not change the beneficial ownership interest of the
Company in such Subsidiary and (ii) with respect to the Company, any
such merger, consolidation, restructuring, recapitalization or other
reorganization that is used to effect an acquisition permitted pursuant
to Section 7.1(f) and which does not result in a change of control of
the Company or change the Shares into a different number or kind of
securities);
(f) make any acquisition, by means of merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in or
assets comprising any business enterprise or operation or (ii) except
in the ordinary course and consistent with past practice, any other
assets; provided, however, that the Company may make such acquisitions
for cash in an amount not to exceed $10 million in the case of any
single acquisition or $100 million for all such acquisitions in the
aggregate; provided further that such acquisitions do not and would not
prevent or materially delay the consummation of the Merger; and
provided further that the foregoing shall not prevent the Company from
exploring on a preliminary basis and conducting diligence
investigations (including having discussions with any potential
acquisition target) with respect to any potential acquisition that
would require Parent's consent hereunder, for the purpose of
determining the desirability of such potential acquisition and
developing the basis on which to seek Parent's consent, so long as the
Company does not submit any formal proposal or indication of interest
to such acquisition target, or make any binding commitments with
respect to such potential acquisition, without obtaining Parent's
consent;
(g) (i) dispose of any direct or indirect ownership interest
in any CLEC system or in any other local services or access system
(including any shares of capital stock of any Subsidiary holding any
such interest) or any controlling interest in any other material
business enterprise or operation, (ii) make any other disposition of
any other direct or indirect ownership interest in or assets comprising
any CLEC system or any other local service or access system or other
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material business enterprise or operation (except for the replacement
or upgrade of assets, or disposition of unnecessary assets, in the
ordinary course and consistent with past practice), or (iii) except in
the ordinary course and consistent with past practice, dispose of any
other assets;
(h) adopt any amendments to its Certificate of Incorporation
or ByLaws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any Subsidiary not constituting an inactive Subsidiary of
the Company;
(i) incur any indebtedness for borrowed money or guarantee any
indebtedness of any other Person or make any loans, advances or capital
contributions to, or investments in, any other Person (other than to
the Company or any Wholly-Owned Subsidiary of the Company), except that
if the Company shall have complied with the provisions of Section 7.14
hereof with respect thereto, the Company may incur additional
indebtedness after the date hereof, under existing credit facilities
(or any renewals thereof) or in the high yield debt market, resulting
in aggregate net proceeds to the Company from such additional
indebtedness not exceeding $350 million;
(j) engage in the conduct of any business other than
telecommunications and related businesses;
(k) enter into any agreement or exercise any discretion
providing for acceleration of payment or performance as a result of a
change of control of the Company or its Subsidiaries;
(l) enter into any contracts, arrangements or understandings
requiring in the aggregate the purchase of equipment, materials,
supplies or services in excess of $35 million more than the amounts set
forth for capital expenditures in the Company's 1998 operating plan
approved by the Company's Board of Directors prior to the date hereof,
a copy of which has been provided by the Company to Parent;
(m) enter into or amend or waive any right under any agreement
with any Affiliates of the Company (other than its Subsidiaries) or
with any Cable Stockholder or any Affiliate of any Cable Stockholder,
other than any of the foregoing as may be done in the ordinary course
of business and that is not material, individually or in the aggregate,
to the Company and its Subsidiaries;
(n) settle or compromise any material litigation or waive,
release or assign any material rights or claims, except in the ordinary
course of business consistent with past practice;
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(o) amend, modify, supplement, or waive any right or condition
under, the ACC Agreement or consent to ACC doing any of the foregoing
under the US Wats Agreement, except, in either case, for amendments,
modifications, supplements or waivers which are not adverse to Parent
or the Company in any material respect and which in any event do not
(i) increase the consideration payable per share or in the aggregate to
shareholders of ACC under the ACC Agreement or US Wats under the US
Wats Agreement, (ii) otherwise increase the maximum aggregate number of
Shares that may be issuable under the ACC Agreement, or (iii) extend
the "drop-dead" date under either such agreement beyond November 26,
1998; or
(p) authorize, recommend or propose (other than to Parent), or
announce an intention to do any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing.
7.2. Other Transactions. Prior to the Effective Time, the
Company and its Subsidiaries shall not, and shall use all reasonable efforts to
cause their respective officers, employees, representatives, agents and
Affiliates not to, directly or indirectly, encourage, solicit or engage in
discussions or negotiations with any third party (other than Parent) concerning
any merger, consolidation, share exchange or similar transaction involving the
Company or any of its Subsidiaries, or any purchase of all or a significant
portion of the assets of or equity interest in the Company or any of its
Subsidiaries, or any other transaction that would involve the transfer or
potential transfer of control of the Company or any of its Subsidiaries (an
"Acquisition Proposal"), or provide any confidential information relating to the
Company or any of its Subsidiaries in connection with or in contemplation of an
Acquisition Proposal, other than the transactions contemplated hereby. The
Company shall immediately request that any Person that has received any
confidential information involving the Company or any of its Subsidiaries in
connection with an Acquisition Proposal return all copies thereof to the
Company, and the Company and its Subsidiaries shall, and shall use all
reasonable efforts to cause their respective officers, employees,
representatives, agents and Affiliates to, terminate all discussions or
negotiations with any Person with respect to any Acquisition Proposal. The
Company will notify Parent promptly of any written inquiries or proposals with
respect to any such transaction that are received by, or any such negotiations
or discussions that are sought to be initiated with, the Company or any of its
Subsidiaries after the date hereof, will advise Parent of the identity of any
Person making any such Acquisition Proposal and of the material terms thereof,
and shall keep Parent apprised with respect to all material matters relating
thereto. Nothing contained in this Agreement shall prohibit or restrict the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position in accordance with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to a tender offer or an exchange offer for Shares
commenced by a third party, provided that Parent shall be given reasonable
advance
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<PAGE> 38
notice thereof, and provided, further, that nothing in this Agreement shall be
deemed to relieve the Cable Stockholders from their obligations under the Voting
Agreement.
7.3. Stockholder Approval. (a) Pursuant to the Voting
Agreement, each of the Cable Stockholders has agreed to execute, or cause to be
executed, immediately following execution and delivery of this Agreement a
written consent with respect to all Shares owned by it or which it has the right
to vote or consent in favor of approval and adoption of the Merger and this
Agreement (the "Stockholders Consent"). Notwithstanding the foregoing, if Parent
so requests, the Company will take all action necessary in accordance with
applicable law and its Certificate of Incorporation and By-Laws to convene a
meeting of its stockholders to consider and vote upon the approval and adoption
of this Agreement and the transactions contemplated hereby, and to submit this
Agreement to the stockholders of the Company for their approval, or to solicit a
further written consent, in lieu of a stockholders' meeting, of its stockholders
approving and adopting this Agreement and the transactions contemplated hereby,
and the Company and its Board of Directors shall take all lawful reasonable
action to solicit, and use all reasonable efforts to obtain, such approval.
(b) Notwithstanding the provisions of Section 7.3(a), after
the adoption of this Agreement by the stockholders of the Company, without the
affirmative approval, by vote or written consent, of the holders of Shares
representing a majority of the votes that may be cast by the holders of all then
outstanding Shares, the Company will not (i) enter into any amendment to this
Agreement that would alter or change any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the holders of
Shares, (ii) waive any condition set forth in Section 8.1 or Section 8.3 if such
waiver would materially adversely affect the holders of Shares or (iii)
consummate the Merger after a time at which the Company would be entitled to
terminate the Agreement pursuant to Section 9.2(a) (without regard to any
amendment of such Section not approved pursuant to this Section 7.3(b)).
(c) Parent, as the sole stockholder of Merger Sub, hereby
consents to the adoption of this Agreement by Merger Sub and agrees that such
consent shall be treated for all purposes as a vote duly adopted at a meeting of
the stockholders of Merger Sub held for this purpose.
7.4. Registration Statement. Parent will, as promptly as
practicable, prepare and file with the SEC a registration statement on Form S-4
(the "S-4 Registration Statement"), containing an information
statement/prospectus, in connection with the registration under the Securities
Act of the Parent Common Shares issuable upon conversion of the Shares and the
other transactions contemplated hereby. The Company will, as promptly as
practicable, prepare and file with the SEC an information statement that will be
the same information statement/prospectus contained in the S-4 Registration
Statement (such information statement/prospectus together with any amendments
thereof
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<PAGE> 39
or supplements thereto, in the form or forms mailed to the Company's
stockholders, "Information Statement/Prospectus"). Parent and the Company will
use all reasonable efforts to have or cause the S-4 Registration Statement to be
declared effective as promptly as practicable, and also will take any other
action reasonably required to be taken under federal or state securities laws,
and the Company will use all reasonable efforts to cause the Information
Statement/Prospectus to be mailed to stockholders of the Company at the earliest
practicable date. If, pursuant to Section 7.3, Parent requests a meeting of the
stockholders of the Company, then the S-4 Registration Statement shall include a
proxy statement/prospectus meeting the requirements of the Exchange Act and all
references herein to the Information Statement/Prospectus shall be deemed to
refer to such proxy statement/prospectus. Each party hereto agrees to cooperate
reasonably with each other party in connection with the preparation and filing
of the S-4 Registration Statement and Information Statement/Prospectus, and of
the registration statement and the proxy statement/prospectus to be used in
connection with the ACC Agreement, including providing information to the other
party with respect to itself as may be reasonably required in connection
therewith.
7.5. Reasonable Efforts. (a) Subject to Section 7.5(c), the
Company and Parent shall, and shall use all reasonable efforts to cause their
respective Subsidiaries, as applicable, to: (i) promptly make all filings and
seek to obtain all Authorizations required under all applicable Laws with
respect to the Merger and the other transactions contemplated hereby and will
reasonably consult and cooperate with each other with respect thereto; (ii) not
take any action (including effecting or agreeing to effect or announcing an
intention or proposal to effect, any acquisition, business combination or other
transaction) which would impair the ability of the parties to consummate the
Merger (regardless of whether such action would otherwise be permitted or not
prohibited hereunder); and (iii) use all reasonable efforts to promptly take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate to satisfy the conditions set forth in
Article VIII (unless waived) and to consummate and make effective the
transactions contemplated by this Agreement on the terms and conditions set
forth herein (including seeking to remove promptly any injunction or other legal
barrier that may prevent such consummation); provided, however, that nothing in
this sentence shall prohibit the Company from effecting the transactions
contemplated by the ACC Agreement in accordance with its terms. Each party shall
promptly notify the other party of any communication to that party from any
Governmental Body in connection with any required filing with, or approval or
review by, such Governmental Body in connection with the Merger and permit the
other party to review in advance any proposed communication to any Governmental
Body in such connection to the extent permitted by applicable law.
Notwithstanding the foregoing, in connection with any filing or submission
required or action to be taken by either the Company or Parent or any of their
respective Subsidiaries to effect the Merger and to consummate the other
transactions contemplated hereby, (A) neither the Company nor any of its
Subsidiaries shall, without Parent's prior written consent, commit to any
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<PAGE> 40
divestiture or hold separate or similar transaction and each of the Company and
its Subsidiaries shall commit to, and shall use reasonable efforts to effect,
such thereof (which may, at the Company's option, be conditioned upon and
effective as of the Effective Time) as Parent shall request, and (B) neither
Parent nor any of its Subsidiaries shall be required to divest or hold separate
or otherwise take (or refrain from taking) or commit to take (or refrain from
taking) any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any of its Subsidiaries or any material
portion of the assets of the Company and its Subsidiaries, or any of the
business, product lines or assets of Parent or any of its Subsidiaries, if any
of the foregoing, individually or in the aggregate, would have a Material
Adverse Effect on the Company (or an effect on Parent and its Subsidiaries that,
were such effect applied to the Company and its Subsidiaries, would constitute a
Material Adverse Effect on the Company).
(b) The Company and its Subsidiaries shall use their
reasonable best efforts (i) not to take any action (regardless of whether such
action would otherwise be permitted or not prohibited hereunder) that, to the
Company's knowledge based on consultation with its independent accountants
(which consultation shall be required before the Company may use its lack of
knowledge as a defense), prevents or would prevent Parent from accounting for
the Merger as a pooling of interests and (ii) to take any action necessary to
cure any action previously taken by or any condition relating to the Company or
any of its Subsidiaries that, to the Company's knowledge based on consultation
with its independent accountants (which consultation shall be required before
the Company may use its lack of knowledge as a defense), prevents or would
prevent Parent from accounting for the Merger as a pooling of interests, in each
case unless Parent shall have irrevocably and unconditionally waived in writing
the condition set forth in Section 8.2(e).
(c) Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall prevent or restrict Parent and its
Subsidiaries from engaging in any merger, acquisition, business combination or
other transaction (whether or not Parent is the surviving corporation); provided
that such merger, acquisition, business combination or other transaction would
not (i) prevent, or delay beyond March 31, 1999, the ability of Parent to
consummate the Merger or (ii) cause the Merger, or the merger contemplated by
the ACC Agreement, to fail to qualify as a tax-free reorganization.
7.6. Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company (which the Company
represents and warrants are not material), and upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of Parent
("Parent Representatives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books and
records (including, subject to execution of appropriate access letters, the work
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<PAGE> 41
papers of independent accountants), such access not to unreasonably interfere
with the Company's business or operations, and, during such period, shall (and
shall cause each of its Subsidiaries to) furnish promptly to such Parent
Representatives all information concerning its business, properties and
personnel as may reasonably be requested, provided that no investigation
pursuant to this Section 7.6 shall affect or be deemed to modify any of the
respective representations or warranties made by the Company. Parent agrees that
it will not, and will cause the Parent Representatives not to, use any
information obtained pursuant to this Section 7.6 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement. Subject to
the requirements of law, Parent will keep confidential, and will cause the
Parent Representatives to keep confidential, all information and documents
obtained pursuant to this Section 7.6 except as otherwise consented to by the
Company; provided, however, that Parent shall not be precluded from making any
disclosure which it deems required by law in connection with the Merger. In the
event Parent is required to disclose any information or documents pursuant to
the immediately preceding sentence, Parent shall promptly give prior written
notice of such disclosure that is proposed to be made to the Company so that
Parent and the Company can work together to limit the disclosure to the greatest
extent possible and, in the event that Parent is legally compelled to disclose
any information, to seek a protective order or other appropriate remedy or both.
Upon any termination of this Agreement, Parent will collect and deliver to the
Company all documents obtained pursuant to this Section 7.6 or otherwise from
the Company or its Subsidiaries by Parent or the Parent Representatives then in
their possession and any copies thereof. All requests for access to the Company
and their Subsidiaries pursuant to this Section 7.6 shall be made through the
representatives of the Company named in Section 7.6 of the Company Disclosure
Statement.
7.7. Indemnification of Directors and Officers. (a) From and
after the Effective Time, Parent and the Surviving Corporation shall jointly and
severally indemnify, defend and hold harmless the present and former officers,
directors and employees of the Company and any of its Subsidiaries, and any
Person who is or was serving at the request of the Company as an officer,
director or employee or agent of another Person, against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under applicable Law (and shall also,
subject to Section 7.7(b), advance expenses as incurred to the fullest extent
permitted under applicable Law, provided that the Person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification); provided,
however, that such indemnification shall be provided only to the extent any
directors' and officers' liability insurance policy of the Company or its
Subsidiaries does not provide coverage and actual payment thereunder with
respect to the matters that would otherwise be subject to indemnification
hereunder (it being understood that the Surviving Corporation shall, subject to
Section 7.7(b), advance expenses on a current basis as provided in this
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paragraph (a) notwithstanding such insurance coverage to the extent that
payments thereunder have not yet been made, in which case Parent or the
Surviving Corporation, as the case may be, shall be entitled to repayment of
such advances from the proceeds of such insurance coverage). Parent and Merger
Sub agree that all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action, suit or proceeding,
whether civil, criminal, administrative or investigative (each, a "Claim"),
existing in favor of the present or former directors, officers, employees,
fiduciaries and agents of the Company or any of its Subsidiaries, and any Person
who is or was serving at the request of the Company as an officer, director or
employee or agent of another Person (collectively, the "Indemnified Parties") as
provided in the Company's Certificate of Incorporation or By-Laws or pursuant to
other agreements, or certificates of incorporation or by-laws or similar
documents of any of the Company's Subsidiaries, as in effect as of the date
hereof, with respect to matters occurring through the Effective Time, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Claim asserted, made or commenced
within such period shall continue until the final disposition of such Claim. The
Surviving Corporation shall maintain in effect for not less than six years after
the Effective Time the current policies of directors' and officers' liability
insurance maintained by the Company and the Company's Subsidiaries with respect
to matters occurring prior to the Effective Time; provided, however, that (i)
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to the
Indemnified Parties with an insurance company or companies, the claims paying
ability of which is substantially equivalent to the claims paying ability of the
insurance company or companies providing such insurance coverage for directors
and officers of Parent and (ii) the Surviving Corporation shall not be required
to pay an annual premium for such insurance in excess of three times the last
annual premium paid prior to the date hereof, but in such case shall purchase as
much coverage as possible for such amount.
(b) In the event that any Claim relating hereto or to the
transactions contemplated by this Agreement is commenced, before the Effective
Time, the parties hereto agree to cooperate and use their respective reasonable
efforts to vigorously defend against and respond thereto. Any Indemnified Party
wishing to claim indemnification under paragraph (a) of Section 7.7, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, whereupon Parent or the Surviving Corporation
shall have the right, from and after the Effective Time, to assume and control
the defense thereof, and upon such assumption, the Surviving Corporation shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof. The Surviving Corporation shall not be
liable for any settlement effected without its prior written consent.
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(c) This Section 7.7 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Merger Sub
and the Surviving Corporation.
7.8. Registration and Listing of Parent Common Shares. (a)
Parent will use all reasonable efforts to register the Parent Common Shares to
be issued pursuant to this Agreement, and upon exercise of stock options granted
to employees of the Company and its Subsidiaries, under the applicable
provisions of the Securities Act and, if required, under any applicable state
securities laws.
(b) Parent will use all reasonable efforts to cause the Parent
Common Shares to be issued pursuant to this Agreement and upon exercise of stock
options granted to employees of the Company and its Subsidiaries, to be listed
for trading on the NYSE.
7.9. Affiliates of Parent and the Company. Concurrently with
the execution of this Agreement, each of the directors of the Company has
executed an agreement to the effect set forth in this Section 7.9. Prior to the
Effective Time, the Company shall deliver to Parent a letter identifying all
other Persons who, to the Company's knowledge, at the time of the execution and
delivery of the Stockholders Consent or at the Effective Time, may be deemed to
be "affiliates" of the Company for purposes of Rule 145 under the Securities Act
or who may otherwise be deemed to be Affiliates of the Company (the "Rule 145
Affiliates"). The Company shall use all reasonable efforts to cause each Person
who is identified as a Rule 145 Affiliate in such list to deliver to Parent on
or prior to the 30th day prior to the Effective Time, a written agreement, in
the form attached hereto as Exhibit A, that such Rule 145 Affiliate will not (a)
sell, pledge, transfer or otherwise dispose of any Parent Common Shares issued
to such Rule 145 Affiliate pursuant to the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 under the
Securities Act or an exemption from the registration requirements of the
Securities Act, or (b) sell, pledge, transfer or otherwise dispose of, or hedge
or otherwise reduce its risk with respect to, any Shares or any Parent Common
Shares, in each case from the 30th day prior to the Effective Time to the time
that results covering at least 30 days of combined operations of the Company and
Parent have been published by Parent in the form of a quarterly earnings report,
an effective registration statement filed with the SEC, a report to the SEC on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes the combined results of operations.
7.10. Tax Matters. Each of the parties shall use all
reasonable efforts to cause each of (i) the Merger and (ii) the merger
contemplated by the ACC Agreement to constitute a tax-free "reorganization"
under Section 368(a) of the Code. None of the parties will knowingly take any
action, and none of the parties will permit any of its Subsidiaries or
Affiliates knowingly to take any action, that would cause either (i) the
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Merger or (ii) the merger contemplated by the ACC Agreement to fail to qualify
as tax-free reorganizations under Section 368(a) of the Code. Each of the
parties shall use all reasonable efforts to permit Wachtell, Lipton, Rosen &
Katz and Dow, Lohnes & Albertson, PLLC to issue their opinions provided in
Sections 8.2(d) and 8.3(d), respectively, and to permit Dow, Lohnes & Albertson,
PLLC to issue its opinion pursuant to Section 6.3.7 of the ACC Agreement as in
effect on the date hereof. If so requested by Wachtell, Lipton, Rosen & Katz or
Dow, Lohnes & Albertson, PLLC, the Company shall deliver to each such counsel a
certificate signed by an officer of the Company to the effect that, except to
the extent set forth and identified in such certificate, to the knowledge of the
Company, there is no plan or intention by the stockholders of the Company who
own 5% or more of the issued and outstanding Shares, and, to the knowledge of
the Company, there is no present plan or intention on the part of the remaining
stockholders of the Company to sell, exchange, or otherwise dispose of Parent
Common Shares received in the Merger (it being understood that Shares exchanged
for cash in lieu of fractional Parent Common Shares and Shares and Parent Common
Shares held by stockholders of the Company and otherwise sold, redeemed or
disposed of prior or subsequent to the Merger will be considered in making this
representation). Each party agrees to report the Merger on all tax returns and
other filings as a tax-free reorganization under Section 368(a) of the Code.
7.11. New York Real Property Transfer Tax. Any liability
arising out of New York State and/or New York City Real Property Transfer Taxes,
with respect to interests in real property owned, directly or indirectly, by the
Company immediately prior to the Merger, if applicable and due with respect to
the Merger, shall be borne by the Company and expressly shall not be a liability
of the stockholders of the Company.
7.12. Employee Matters. As soon as practicable following the
Closing (using reasonable best efforts to accomplish the transition by the later
of January 1, 1999 or 90 days after Closing), all employees of the Company and
its Subsidiaries who remain employed by the Company or its Subsidiaries (or who
become employed by Parent or its Subsidiaries) immediately after the Closing
("Company Employees"), and their dependents and beneficiaries if applicable,
shall be eligible to participate in the employee benefit and compensation
arrangements, plans, programs and practices of the Parent generally applicable
to other similarly situated employees of the Parent (the "Parent Plans").
Company Employees shall be credited with all service with the Company and its
Subsidiaries and their predecessors prior to the Closing for purposes of
determining eligibility to participate, vesting and benefit accrual (to the
extent applicable) in the Parent Plans, but not for (i) purposes of benefit
accruals under any of the Parent's defined benefit pension plans, or the
schedule of benefits under Parent's severance pay and short-term disability
plans and programs, (ii) eligibility to receive post-retirement ancillary
benefits (consisting at this time of medical, dental, death and telephone
concession benefits) or (iii) calculating Parent service for purposes of
"bridging" prior Parent service under Parent Plans. In the event any Company
Employee's employment with Parent or
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its Subsidiaries is involuntarily terminated (other than for cause) prior to the
first anniversary of the Closing, such Company Employee shall receive a
severance benefit calculated in accordance with the schedule of benefits set
forth in Section 7.12 of the Company Disclosure Statement, taking into account
all years of such Company Employee's service, including service with the Company
or its Subsidiaries and their predecessors prior to the Closing. Thereafter,
Company Employees who remain employed by Parent or its Subsidiaries shall be
eligible to participate in the applicable Parent severance pay plan, and
benefits payable under the terms of such plan shall be based on such Company
Employee's actual service with Parent or its Subsidiaries from and after
Closing.
7.13. Certain Covenants of Parent. Except as otherwise
permitted in this Agreement, prior to the Effective Time Parent will not,
without the prior written consent of the Company, adopt a plan of complete or
partial liquidation or dissolution, or authorize, recommend, propose or announce
an intention to do so or enter into any contract, agreement, commitment or
arrangement to do so.
7.14. Right of First Offer. Whenever the Company or any of its
Subsidiaries intends to incur any indebtedness for borrowed money as permitted
pursuant to Section 7.1(i) hereof, the Company shall notify Parent in writing of
the expected terms, conditions, amount, uses, lenders or other alternative
financing sources and other material provisions thereof (the "Proposed
Financing") and shall provide Parent with the opportunity to provide all of the
Proposed Financing on the same terms and conditions. Parent shall notify the
Company of its determination to provide all of the Proposed Financing on such
terms and conditions within seven business days of receipt of such notice from
the Company. If Parent so elects to provide all of the Proposed Financing, the
Company shall not enter into any alternative financing arrangements with respect
thereto. If Parent does not elect to provide all of the Proposed Financing, the
Company and its Subsidiaries may enter into the Proposed Financing with any
Person other than Parent on terms and conditions no less favorable in any
material respect to the Company and its Subsidiaries than those offered to
Parent pursuant to this Section 7.14. Nothing in this Section 7.14 shall require
Parent to accept any offer or to provide any Proposed Financing to the Company.
ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any
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or all of which may be waived in whole or in part by the party being benefitted
thereby, to the extent permitted by applicable Law:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been duly approved and adopted or
ratified by the requisite holders of Shares in accordance with
applicable Law and the Certificate of Incorporation and By-Laws of the
Company and the provisions of Section 7.3(b) hereof (it being agreed
that the condition set forth in this Section 8.1(a) shall not be waived
by the parties);
(b) HSR Act; FCC. Any waiting period applicable to the Merger
under the HSR Act shall have expired or early termination thereof shall
have been granted, and the FCC Consent shall have been granted, in each
case without limitation, restriction or condition that has or would
have a Material Adverse Effect on the Company (or an effect on Parent
and its Subsidiaries that, were such effect applied to the Company and
its Subsidiaries, would constitute a Material Adverse Effect on the
Company).
(c) No Injunction. There shall not be in effect any judgment,
writ, order, injunction or decree of any court or Governmental Body of
competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or
permitting such consummation only subject to any condition or
restriction that has or would have a Material Adverse Effect on the
Company (or an effect on Parent and its Subsidiaries that, were such
effect applied to the Company and its Subsidiaries, would constitute a
Material Adverse Effect on the Company).
(d) Registration Statement. The S-4 Registration Statement
shall have been declared effective and shall be effective at the
Effective Time, and no stop order suspending effectiveness shall have
been issued, no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities laws or
the Securities Act or Exchange Act relating to the issuance or trading
of the Parent Common Shares shall have been received.
(e) Listing of Parent Common Shares on NYSE. The Parent Common
Shares required to be issued hereunder shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
(f) Information Statement. At least twenty business days shall
have elapsed from the mailing of the Information Statement/Prospectus
to the stockholders of the Company.
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8.2. Conditions to Obligations of Parent and Merger Sub. The
respective obligations of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following additional conditions, any or all of
which may be waived in whole or part by Parent and Merger Sub, as the case may
be, to the extent permitted by applicable Law:
(a) Representations and Warranties True. The representations
and warranties of the Company contained herein or otherwise required to
be made after the date hereof in a writing expressly referred to herein
by or on behalf of the Company pursuant to this Agreement, to the
extent qualified by materiality or Material Adverse Effect, shall have
been true and, to the extent not qualified by materiality or Material
Adverse Effect, shall have been true in all material respects, in each
case when made and on and as of the Closing Date as though made on and
as of the Closing Date (except for representations and warranties made
as of a specified date, which need be true, or true in all material
respects, as the case may be, only as of the specified date).
(b) Performance. The Company shall have performed or complied
in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at
the time of the Closing.
(c) Compliance Certificate. The Company shall have delivered
to Parent a certificate, dated the date of the Closing, signed by the
President or any Vice President of the Company (but without personal
liability thereto), certifying as to the fulfillment of the conditions
specified in Sections 8.2(a) and 8.2(b).
(d) Tax Opinion. Parent shall have received an opinion of
Wachtell, Lipton, Rosen & Katz, dated the Effective Time, to the effect
that (i) the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code; (ii)
each of Parent, Merger Sub and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; (iii)
no gain or loss will be recognized by the Company, Parent or Merger Sub
as a result of the Merger; and (iv) no gain or loss will be recognized
by a stockholder of the Company as a result of the Merger with respect
to the Shares converted solely into Parent Common Shares. In rendering
such opinion, Wachtell, Lipton, Rosen & Katz may receive and rely upon
representations contained in certificates of the Company, Parent,
Merger Sub, the Cable Stockholders and others, in each case in form and
substance reasonably acceptable to Wachtell, Lipton, Rosen & Katz.
(e) Pooling Covenant. The Company and its Subsidiaries shall
have complied with the covenant contained in Section 7.5(b) hereof.
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(f) Other Authorizations. All Authorizations (other than those
specified in Section 8.1(b) hereof) required in connection with the
execution and delivery of this Agreement and the performance of the
obligations hereunder shall have been made or obtained, without any
limitation, restriction or condition that has or would have a Material
Adverse Effect on the Company (or an effect on Parent and its
Subsidiaries that, were such effect applied to the Company and its
Subsidiaries, would constitute a Material Adverse Effect on the
Company), except for such Authorizations the failure of which to have
been made or obtained does not and would not, individually or in the
aggregate, have a Material Adverse Effect on the Company (or an effect
on Parent and its Subsidiaries that, were such effect applied to the
Company and its Subsidiaries, would constitute a Material Adverse
Effect on the Company).
(g) Employment Agreements. Each of the employment agreements
between the Company and each employee of the Company identified in
Exhibit B hereto (which employment agreements are being executed
concurrently with the execution of this Agreement) shall be in full
force and effect, and each such employee shall be employed thereunder,
unless the failure of such employee to be employed thereunder results
from the death or disability of such employee.
(h) Consents Under Facilities Agreements. All required
authorizations, consents or approvals of any third parties (other than
a Governmental Body) with respect to any contracts, leases, agreements
or understandings between the Company and/or any of its Subsidiaries,
on the one hand, and any other Person, on the other, relating to the
use of or access to the facilities of such Person for the purpose of
providing telecommunications services, the failure to obtain which has
or would have, individually or in the aggregate, a Material Adverse
Effect on the Company, shall have been obtained.
(i) Voting Agreement. There shall not have been a material
breach of the Voting Agreement by any of the Cable Stockholders.
(j) Other Transactions. The transactions contemplated by the
ACC Agreement shall have been consummated in accordance with the terms
of such agreement or such agreement shall have been terminated and,
prior thereto, the transactions contemplated by the US Wats Agreement
shall have been consummated in accordance with the terms of such
agreement or such agreement shall have been terminated.
8.3. Conditions to Obligations of the Company. The obligations
of the Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any
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or all of which may be waived in whole or in part by the Company to the extent
permitted by applicable Law:
(a) Representations and Warranties True. The representations
and warranties of Parent and Merger Sub contained herein or otherwise
required to be made after the date hereof in a writing expressly
referred to herein by or on behalf of Parent and Merger Sub pursuant to
this Agreement, to the extent qualified by materiality or Material
Adverse Effect, shall have been true and, to the extent not qualified
by materiality or Material Adverse Effect, shall have been true in all
material respects, in each case when made and on and as of the Closing
Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need
be true, or true in all material respects, as the case may be, only as
of the specified date).
(b) Performance. Parent shall have performed or complied in
all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at
the time of the Closing.
(c) Compliance Certificate. Parent shall have delivered to the
Company a certificate, dated the date of the Closing, signed by the
President or any Vice President of Parent (but without personal
liability thereto), certifying as to the fulfillment of the conditions
specified in Sections 8.3(a) and 8.2(b).
(d) Tax Opinion. The Company shall have received an opinion of
Dow, Lohnes & Albertson, PLLC, dated the Effective Time, to the effect
that (i) the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code; (ii)
each of Parent, Merger Sub and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; (iii)
no gain or loss will be recognized by the Company as a result of the
Merger; and (iv) no gain or loss will be recognized by a stockholder of
the Company as a result of the Merger with respect to the Shares
converted solely into Parent Common Shares. In rendering such opinion,
Dow, Lohnes & Albertson, PLLC may receive and rely upon representations
contained in certificates of Parent and Merger Sub, the Company, the
Cable Stockholders and others, in each case in form and substance
reasonably acceptable to Dow, Lohnes & Albertson, PLLC.
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ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, either by the mutual
written consent of Parent and the Company, or by mutual action of their
respective Boards of Directors.
9.2. Termination by Either Parent or the Company. This
Agreement may be terminated (upon notice from the terminating party to the other
parties) and the Merger may be abandoned by action of the Board of Directors of
either Parent or the Company if (a) the Merger shall not have been consummated
by December 31, 1998, provided that the right to terminate this Agreement under
this clause (a) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date, and provided, further, that such
date shall be extended to March 31, 1999 in the event that the failure of the
Merger to occur on or before December 31, 1998 is the result of (i) a delay
attributable to any transaction permitted pursuant to Section 7.5(c) or (ii) the
failure of any of the conditions set forth in Section 8.1(b), 8.1(c), 8.2(f) or
8.2(j) to be satisfied or waived prior to December 31, 1998, or (b) any court of
competent jurisdiction in the United States or Governmental Body in the United
States shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable.
In addition, this Agreement may be terminated by Parent (upon notice from Parent
to the Company) and the Merger may be abandoned by action of the Board of
Directors of Parent if any of the Cable Stockholders shall have breached any of
its representations, covenants or obligations under the Voting Agreement in any
material respect and such breach shall not be curable.
9.3. Termination by the Company. This Agreement may be
terminated (upon notice to Parent) by the Company and the Merger may be
abandoned by action of the Board of Directors of the Company if Parent or Merger
Sub breaches or fails in any material respect to perform or comply with its
covenants and agreements contained herein or breaches its representations and
warranties, in each case that is not curable, such that the conditions set forth
in Sections 8.3(a) and (b) cannot be satisfied.
9.4. Termination by Parent and Merger Sub. This Agreement may
be terminated (upon notice to the Company) by Parent and Merger Sub, and the
Merger may be abandoned by action of the Board of Directors of Parent if the
Company breaches or fails in any material respect to perform or comply with its
covenants and agreements contained herein or breaches its representations and
warranties, in each case that is not curable, such that the conditions set forth
in Section 8.2(a) and (b) cannot be satisfied.
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9.5. Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 7.6 and except that nothing herein will relieve any party
from liability for any breach of this Agreement.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. Expenses. Except as set forth in Section 7.11, each
party shall bear its own expenses, including the fees and expenses of any
attorneys, accountants, investment bankers, brokers, finders or other
intermediaries or other Persons engaged by it, incurred in connection with this
Agreement and the transactions contemplated hereby; provided, however, that the
costs and expenses of filing the Information Statement/Prospectus with the SEC
and any other applicable Governmental Body or securities regulatory authority,
and of printing the Information Statement/Prospectus, shall be paid by Parent.
10.2. Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or upon receipt after being mailed by
first-class mail, postage prepaid and return receipt requested in each case to
the applicable addresses set forth below:
If to the Company:
Teleport Communications Group Inc.
429 Ridge Road
Dayton, New Jersey 08810
Attn: Chairman, President and CEO
Facsimile: (732) 392-3600
with a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C.
Attn: Leonard J. Baxt, Esq.
Timothy J. Kelley, Esq.
Facsimile: (202) 776-2222
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and a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Philip T. Ruegger, Esq.
Michael Wolfson, Esq.
Facsimile: (212) 455-2502
If to Parent or Merger Sub:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Vice President-Law
and Corporate Secretary
Facsimile: (908) 221-6618
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Richard D. Katcher, Esq.
Steven A. Rosenblum, Esq.
Facsimile: (212) 403-2000
or to such other address as such party shall have designated by notice so given
to each other party.
10.3. Amendments, Waivers, Etc. This Agreement may be amended,
changed, supplemented, waived or otherwise modified only by an instrument in
writing signed by the party (or, in the case of Section 7.7, the Indemnified
Party) against whom enforcement is sought; provided that, after the adoption of
this Agreement by the stockholders of the Company, no such amendment, change,
supplement or waiver shall be made without the further requisite approval of
such stockholders if such amendment, change, supplement or waiver by law
requires the further approval by such stockholders.
10.4. No Assignment. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns; provided that, except as otherwise expressly
set forth in this Agreement, neither the rights nor the obligations of any party
may be assigned or delegated without the prior written consent of the other
party.
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10.5. Entire Agreement. Except as otherwise provided herein,
this Agreement (together with the Confidentiality Agreement between Parent and
the Company and the other agreements expressly contemplated hereby) embodies the
entire agreement and understanding between the parties relating to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter. There are no representations, warranties or covenants by
the parties hereto relating to such subject matter other than those expressly
set forth in this Agreement (including the Company Disclosure Statement and the
Parent Disclosure Statement) and any writings expressly required hereby.
10.6. Specific Performance. The parties acknowledge that money
damages are not an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief.
10.7. Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.
10.8. No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
10.9. No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of and shall not be enforceable by any Person or
entity who or which is not a party hereto, except for the indemnification
provisions contained in Section 7.7, which provisions may be enforced by any
Indemnified Party referred to therein and except that the provisions of Section
7.3(b) may be enforced by holders of Shares. Notwithstanding anything to the
contrary contained in this Agreement, the provisions of Section 7.7 of this
Agreement may not be amended or altered in any manner with respect to any
Indemnified Party without the written consent of such Indemnified Party. No
assignment of this Agreement shall relieve Parent from its obligations to any
Indemnified Party contained in Section 7.7 of this Agreement.
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10.10. Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for the District
of Delaware or the Chancery Court of the State of Delaware in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding shall be brought only in such court (and waives
any objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section 10.10 and shall not be deemed to be a
general submission to the jurisdiction of said courts or in the State of
Delaware other than for such purpose. Parent, Merger Sub and the Company hereby
waive any right to a trial by jury in connection with any such action, suit or
proceeding.
10.11. Public Announcements. Parent and the Company will agree
upon the timing and content of the initial press release to be issued describing
the transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable Law or regulation. To the extent reasonably requested by either
party, each party will thereafter consult with and provide reasonable
cooperation to the other in connection with the issuance of further press
releases or other public documents describing the transactions contemplated by
this Agreement.
10.12. Governing Law. This Agreement and all disputes
hereunder shall be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware, without regard to principles of conflict
of laws.
10.13. Name, Captions, Etc. The name assigned this Agreement
and the section captions used herein are for convenience of reference only and
shall not affect the interpretation or construction hereof. Unless otherwise
specified, (a) the terms "hereof", "herein" and similar terms refer to this
Agreement as a whole and (b) references herein to Articles or Sections refer to
articles or sections of this Agreement. Wherever appearing herein, the word
"including" shall be deemed to be followed by the words "without limitation."
10.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one instrument. Each counterpart may consist
of a number of copies each signed by less than all, but together signed by all,
the parties hereto.
10.15. Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of the parties
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement,
notwithstanding any investigation made or information obtained by the other
parties, but shall terminate at the Effective Time. The respective covenants and
agreements of the parties contained herein or in any
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certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement and shall only terminate in
accordance with their respective terms.
10.16. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
10.17. Disclosure Statements. The parties acknowledge that the
Company Disclosure Statement and the Parent Disclosure Statement to this
Agreement (i) relate to certain matters concerning the disclosures required and
transactions contemplated by this Agreement, (ii) are qualified in their
entirety by reference to specific provisions of this Agreement, (iii) are not
intended to constitute and shall not be construed as indicating that such matter
is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to the Company or
Parent, as the case may be, except to the extent required by this Agreement, and
(iv) disclosure of the information contained in one section or part of the
Company Disclosure Statement or the Parent Disclosure Statement shall be deemed
as proper disclosure for all sections or parts of the Company Disclosure
Statement or the Parent Disclosure Statement, as the case may be, only if
appropriately cross-referenced or if the relevance thereof is clearly apparent
from the context in which it appears.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below.
TELEPORT COMMUNICATIONS GROUP INC.
By: /s/ Robert Annunziata
Name: Robert Annunziata
Title: Chairman, President and CEO
AT&T CORP.
By: /s/ C. Michael Armstrong
Name: C. Michael Armstrong
Title: Chairman and CEO
TA MERGER CORP.
By: /s/ Daniel E. Somers
Name: Daniel E. Somers
Title: President
52
