<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
CoreComm Limited
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed: April 27, 2000.
<PAGE> 2
[CORECOMM LOGO]
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT AND
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
------------------------
The Annual Meeting of Shareholders of CoreComm Limited (the "Company") will
be held at 11:15 a.m., local time, on Wednesday, May 31, 2000, at the Essex
House, Hyde Park Suite, located at 160 Central Park South, New York, New York
10019, for the following purposes:
1. To elect two directors to the Board of Directors.
2. To ratify the adoption of the CoreComm Limited 1999 Stock Option Plan.
3. To ratify the adoption of the CoreComm Limited 2000 Stock Option Plan.
4. To ratify the appointment by the Board of Directors of Ernst & Young LLP
as independent auditors for the year ending December 31, 2000; and
5. To transact any other business that may properly be brought before the
meeting or any adjournment or postponement thereof.
At the meeting, the Company's audited consolidated financial statements for
the fiscal year ended December 31, 1999 will be received.
Notice of the meeting has been sent to all holders of record of the
Company's common shares at the close of business on April 14, 2000. All holders
of record of the common shares on the date of the meeting will be entitled to
attend and vote at the meeting. Any shareholder who does not receive a copy of
the proxy statement may obtain a copy at the meeting or by contacting the
Company. A list of the shareholders entitled to vote at the meeting will be
located at the Company's offices, 110 East 59th Street, New York, New York
10022, prior to the meeting and will also be available for inspection at the
meeting.
A copy of the Annual Report for 1999 is being mailed together with this
proxy material.
It is important that your shares be represented at the meeting. Regardless
of whether you plan to attend the meeting, please execute the enclosed proxy and
return it promptly in the accompanying postage-paid envelope. Submitting this
executed proxy will not preclude your right to revoke it and to vote in person
at the meeting.
By order of the Board of Directors,
/s/ Richard J. Lubasch
RICHARD J. LUBASCH
Secretary
New York, New York
April 27, 2000
<PAGE> 3
CORECOMM LIMITED
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 31, 2000
------------------------
PROXY STATEMENT
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the Annual Meeting of Shareholders of
CoreComm Limited (the "Company" or "CoreComm") to be held at 11:15 a.m., local
time, on Wednesday, May 31, 2000, at the Essex House, Hyde Park Suite, located
at 160 Central Park South, New York, New York 10019, or at any adjournment or
postponement thereof (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting. The Board of Directors of the Company is
soliciting the accompanying form of proxy and urges you to sign the proxy, fill
in the date, and return it immediately to the Secretary of the Company. The
prompt cooperation of shareholders is necessary in order to ensure a quorum and
to avoid expenses and delay.
Notice of the meeting has been sent to all holders of record of the
Company's Common Stock who held such shares as of the close of business on April
14, 2000. Holders of record of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), on the date of the Annual Meeting, will be entitled
to vote at the Annual Meeting. At the close of business on April 14, 2000,
39,914,852 shares of Common Stock were outstanding and entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote. Any
shareholder who does not receive a copy of the proxy statement and accompanying
proxy card may obtain a copy at the meeting or by contacting the Company. All
holders of record of the Company's Common Stock on the date of the meeting will
be entitled to attend and vote at the meeting.
In accordance with Section 84 of the Companies Act 1981 of Bermuda, the
audited consolidated financial statements of the Company for the fiscal year
ended December 31, 1999 will be presented at the meeting. There is no
requirement under Bermuda law that such statements be approved by shareholders,
and no such approval will be sought at the meeting.
The accompanying proxy is revocable on written instructions, including a
subsequently received proxy, signed in the same manner as the proxy, and
received by the Secretary of the Company at any time at or before the balloting
on the matter with respect to which such proxy is to be exercised. If you attend
the Annual Meeting you may, if you wish, revoke your proxy by voting in person.
This proxy statement and the accompanying proxy materials are first being mailed
to shareholders on or about April 27, 2000.
All expenses of soliciting proxies, including clerical work, printing and
postage, will be paid by the Company. Proxies may be solicited personally, or by
mail, telephone or facsimile, by current and former directors, officers and
other employees of the Company, but the Company will not pay any compensation
for such solicitations. In addition, the Company has agreed to pay D.F. King &
Co., Inc. a fee of $5,000, plus reasonable expenses, for proxy solicitation
services. The Company will also reimburse brokers and other persons holding
shares in their names or in the names of nominees for their expenses for sending
material to principals and obtaining their proxies.
<PAGE> 4
CORECOMM LIMITED
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 24, 2000 by (i) each executive
officer and director of the Company, (ii) all directors and executive officers
as a group and (iii) shareholders holding 5% or more of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------
PRESENTLY
EXERCISABLE
OPTIONS,
WARRANTS AND
EXECUTIVE OFFICERS, DIRECTORS COMPANY CONVERTIBLE
AND PRINCIPAL STOCKHOLDERS (1) STOCK NOTES (2) TOTAL PERCENT (3)
- ------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Barclay Knapp(4)............................................ 1,446,997 985,167 2,432,164 5.93%
George S. Blumenthal(5)..................................... 1,763,186 800,019 2,563,205 6.28%
Richard J. Lubasch(6)....................................... 301,081 234,607 535,688 1.33%
Patty J. Flynt.............................................. 218,631 111,485 330,116 *
Gregg Gorelick.............................................. 125,639 127,141 252,780 *
Sidney R. Knafel............................................ 414,395 93,598 507,993 1.27%
Ted H. McCourtney(7)........................................ 733,554 110,642 844,196 2.10%
Del Mintz(8)................................................ 1,543,688 119,155 1,662,843 4.14%
Alan J. Patricof(9)......................................... 175,201 93,598 268,799 *
Warren Potash(10)........................................... 70,464 117,115 187,579 *
All directors and officers as a group
(10 in number)............................................ 6,792,836 2,792,527 9,585,363 22.39%
Ronald Baron(11)............................................ 6,090,177 740,052 6,830,229 16.76%
Baron Capital Group, Inc.(11)
Bamco, Inc.(11)
Baron Capital Management, Inc.(11)
Baron Asset Fund(11)
767 Fifth Avenue
New York, NY 10153
Prime 66 Partners, L.P.(12)................................. 2,849,981 73,019 2,923,000 7.29%
Composite 66, L.P.
H & S Partners I
201 Main Street, Suite 3200
Fort Worth, Texas 76102
NWQ Investment Management Company(13)....................... 2,092,197 0 2,092,197 5.23%
2049 Century Park East, 4th Floor
Los Angeles, CA 90067
</TABLE>
- ---------------
* Represents less than one percent
(1) Unless otherwise noted, the business address of each person is 110 East
59th Street, New York, NY 10022
(2) Includes shares of Common Stock purchased upon the exercise of options
which are exercisable or become so in the next 60 days ("Presently
Exercisable Options"), warrants and shares of Common Stock purchased upon
the conversion of the Company's 6% Convertible Subordinated Notes due 2006
(the "6% Notes").
(3) Includes Common Stock, Presently Exercisable Options, warrants and 6%
Notes.
(4) Includes $300,000 of the 6% Notes, convertible into 10,952 shares of common
stock.
(5) Includes 4,455 shares of Common Stock owned by trusts for the benefit of
Mr. Blumenthal's children. An additional 6,750 shares of Common Stock are
owned by Mr. Blumenthal's wife, as to which shares Mr. Blumenthal disclaims
beneficial ownership. Also includes 584,840 shares of common stock and
168,100 options held by Grantor Retained Annuity Trusts.
(6) Includes 234 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
2
<PAGE> 5
(7) Includes 616,500 shares of Common Stock held by various entities of which
Mr. McCourtney is a general partner, as to which shares Mr. McCourtney
disclaims beneficial ownership except to the extent of his pro-rata
interest. An additional 3,212 shares of Common Stock are held by trusts for
the benefit of Mr. McCourtney's children, as to which shares Mr. McCourtney
disclaims beneficial ownership.
(8) Includes 57 shares of Common Stock owned by Mr. Mintz's wife, as to which
shares Mr. Mintz disclaims beneficial ownership. Also includes $700,000 of
the 6% Notes, convertible into 25,554 shares of common stock.
(9) Includes 2,395 shares of Common Stock owned by Mr. Patricof's wife, as to
which shares Mr. Patricof disclaims beneficial ownership.
(10) Includes $250,000 of the 6% Notes, convertible into 9,126 shares of common
stock.
(11) Based upon Schedule 13-G (Amendment No. 1), dated February 11, 2000, filed
by Ronald Baron, Baron Capital Group, Inc., Bamco, Inc., Baron Capital
Management, Inc. and Baron Asset Fund with the Securities and Exchange
Commission (the "SEC") and $9,998,774 of the 6% Notes, convertible into
365,052 shares of common stock.
(12) Based solely upon Schedule 13-G (Amendment No. 1), dated April 21, 2000,
filed by Prime 66 Partners, L.P., Composite 66, L.P. and H&S Partners. Also
includes 73,019 shares obtainable on conversion of the Issuer's 6%
Convertible Subordinated Notes Due 2006.
(13) Based solely upon Schedule 13-G, dated February 23, 2000, filed by NWQ
Investment Management Company with the SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors and executive officers,
and persons who own more than 10% of a registered class of the Company's equity
securities file with the SEC, and with each exchange on which the Common Stock
trades, initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% beneficial owners are required by the SEC's regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except in connection with
the following: Each of Sidney R. Knafel, Barclay Knapp, Gregg N. Gorelick,
Richard J. Lubasch, Ted H. McCourtney, Del Mintz and Alan J. Patricof failed to
report a single transaction on a timely basis. In each case, this was corrected
by a subsequent filing.
ELECTION OF DIRECTORS
(ITEM 1)
Pursuant to the Company's Memorandum of Association, which provides for a
classified Board of Directors, the Board of Directors consists of three classes
of directors with overlapping three year terms. One class of directors is to be
elected each year with terms expiring on the third succeeding annual meeting
after such election. The terms of two directors expire this year. Accordingly,
at the meeting, two directors will be elected to serve for a three year term and
until their successors shall have been elected and qualified. Unless otherwise
indicated on any proxy, the proxy holders intend to vote the shares it
represents for each of the nominees whose biographical information appears in
the section immediately following. Each of the nominees are now serving as
directors of the Company and were previously elected by the shareholders of the
Company. The proxies cannot be voted for a greater number of persons than the
number of nominees named.
The election to the Board of Directors of each of the nominees identified
in this Proxy Statement will require the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or
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<PAGE> 6
represented by proxy at the annual meeting and entitled to vote. In tabulating
the vote, abstentions from voting and broker non-votes will be disregarded and
have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION TO THE BOARD OF DIRECTORS OF
EACH OF THE NOMINEES IDENTIFIED BELOW
The votes applicable to the shares represented by proxies in the
accompanying form will be cast in favor of the two nominees below. While it is
not anticipated that any of the nominees will be unable to serve, if any should
be unable to serve, the proxy holders reserve the right to substitute any other
person.
The continuing directors of the Company were elected by the Company's
shareholders in 1998. The current directors will serve for the terms indicated
and until their successors are duly elected and qualified.
PRESENT DIRECTORS WHO ARE NOMINEES FOR REELECTION
<TABLE>
<CAPTION>
TERM EXPIRES
AT ANNUAL
NAME AGE MEETING IN
- ---- --- ------------
<S> <C> <C>
George S. Blumenthal........................................ 56 2000
Barclay Knapp............................................... 43 2000
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
TERM EXPIRES
AT ANNUAL
NAME AGE MEETING IN
- ---- --- ------------
<S> <C> <C>
Alan J. Patricof............................................ 65 2001
Warren Potash............................................... 68 2001
Sidney R. Knafel............................................ 69 2002
Ted H. McCourtney........................................... 61 2002
Del Mintz................................................... 72 2002
</TABLE>
NOMINEES
George S. Blumenthal has been a director of CoreComm since March 18, 1998.
Mr. Blumenthal was the Chairman, Treasurer and a director of Cellular
Communications of Puerto Rico ("CCPR") from February 1992 until its sale in
August 1999 (the "CCPR Sale") and was Chief Executive Officer from March 1994
until March 1998. In addition, Mr. Blumenthal is Chairman, Treasurer and a
director of NTL Incorporated ("NTL"). Mr. Blumenthal was Chairman, Treasurer and
a director of Cellular Communications International ("CCII") from its
organization until April 1994. Mr. Blumenthal was also Chairman, Treasurer and a
director of Cellular Communications, Inc. ("CCI") from CCI's founding in 1981
until its merger in 1996 into a subsidiary of AirTouch Communications, Inc. (the
"CCI Merger").
Barclay Knapp has been President, Chief Executive Officer, Chief Financial
Officer and a director of CoreComm since March 1998. Mr. Knapp was appointed
President of CCPR in March 1994 and Chief Executive Officer in March 1998, and
he remained in those positions until the CCPR Sale. Additionally, Mr. Knapp was
a director of CCPR from February 1992 and was Chief Financial Officer from that
date to 1997. Mr. Knapp was Executive Vice President, Chief Operating Officer
and a director of CCII from July 1991 until June 1998. He is President, Chief
Executive Officer, Chief Financial Officer and a director of NTL. Mr. Knapp is
also a director of Bredbandsbolaget, a Swedish company in which NTL holds a 25%
interest. Mr. Knapp was also Executive Vice President, Chief Operating Officer,
Chief Financial Officer and a director of CCI until the CCI Merger.
4
<PAGE> 7
CONTINUING DIRECTORS
Sidney R. Knafel has been a director of CoreComm since March 18, 1998. Mr.
Knafel has also been Managing Partner of SRK Management Company, a private
investment concern, since 1981. In addition, Mr. Knafel is Chairman of Insight
Communications, Inc. and BioReliance Corporation. Mr. Knafel is also a director
of General American Investors Company, Inc., IGENE Biotechnology, Inc., Source
Media Inc. and some privately owned companies, was a director of CCII from July
1991 until the CCII Sale, was a director of CCPR from February 1992 until the
CCPR Sale, and has been a director of NTL since its formation.
Ted H. McCourtney has been a director of CoreComm since March 18, 1998. Mr.
McCourtney is a General Partner of Venrock Associates, a venture capital
investment partnership, a position he has held since 1970. Mr. McCourtney also
has been a director of NTL since its formation and serves as a director of Care
Mark, RX, Inc., Visual Networks, Inc. and several privately owned companies.
Del Mintz has been a director of CoreComm since March 18, 1998. Mr. Mintz
is President of Cleveland Mobile Tele Trak, Inc., Cleveland Mobile Radio Sales,
Inc. and Ohio Mobile Tele Trak, Inc., companies providing telephone answering
and radio communications services in Cleveland and Columbus, respectively. Mr.
Mintz has held similar positions with the predecessors of these companies since
1967. Mr. Mintz is president of several other companies, and was President and a
principal shareholder of Cleveland Mobile Cellular Telephone, Inc. before that
company was acquired through a merger with CCI's predecessor in 1985. Mr. Mintz
was also a director of CCII from July 1991 until the CCII Sale and was a
director of CCPR until the CCPR Sale. Additionally, Mr. Mintz has been a
director of NTL since its formation and is a director of several privately owned
companies.
Alan J. Patricof has been a director of CoreComm since March 18, 1998. Mr.
Patricof is Chairman of Patricof & Co. Ventures, Inc., a venture capital firm he
founded in 1969. Mr. Patricof was a director of CCII from July 1991 until its
sale in March 1999 (the "CCII Sale") and was a director of CCPR from February
1992 until the CCPR Sale. Additionally, Mr. Patricof has been a director of NTL
since its formation and is a director of other privately owned companies.
Warren Potash has been a director of CoreComm since March 18, 1998. Mr.
Potash retired in 1991 as President and Chief Executive Officer of the Radio
Advertising Bureau, a trade association, a position he held since 1989. Prior to
that time, and beginning in 1986, he was President of New Age Communications,
Inc., a communications consultancy firm. Until his retirement in 1986, Mr.
Potash was a Vice President of Capital Cities/ABC Broadcasting, Inc., a position
he held since 1970. Mr. Potash was also a director of CCII from July 1991 until
the CCII Sale, and was a director of CCPR from February 1992 until the CCPR
Sale. Mr. Potash has also been a director of NTL since its formation.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
During calendar 1999, six meetings (including regularly scheduled and
special meetings) of the Board of Directors were held. The Board of Directors
has a Compensation and Option Committee (the "Compensation Committee") and an
Audit Committee. Messrs. Knafel, Mintz and McCourtney serve as members of the
Compensation Committee and Messrs. Mintz, Patricof and Potash serve as members
of the Audit Committee. The Compensation Committee reviews and makes
recommendations regarding annual compensation for Company officers, and the
Audit Committee oversees the Company's financial reporting process on behalf of
the Company's Board of Directors. During calendar year 1999, the Compensation
and Audit Committees each held one meeting. No Director during 1999 attended
fewer than 83% of the meetings of the Board of Directors of the Company and
committee meetings of which he was a member. Directors are reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
and the committees. In addition, as of December 31, 1999, Messrs. Knafel, Mintz
and Patricof have each been granted options to purchase an aggregate of 208,855
shares of Common Stock at a weighted average price of $17.02, $20.08 and $19.87
per share, respectively and Messrs. Potash and McCourtney have been granted
options to purchase an aggregate of 202,996 shares of common stock at a weighted
average price of $11.38 per share and an aggregate of
5
<PAGE> 8
203,230 shares of common stock at a weighted average price of $14.75 per share,
respectively. Directors who are not officers are paid a fee of $250 for each
Board meeting and each committee meeting that they attend.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the persons
who serve as executive officers of CoreComm. Executive officers of CoreComm are
elected annually by the Board of Directors and serve until their successors are
duly elected and qualified.
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
George S. Blumenthal............................... 56 Chairman of the Board
Barclay Knapp...................................... 43 President, Chief Executive Officer and
Chief Financial Officer
Patty J. Flynt..................................... 48 Senior Vice President -- Chief Operating
Officer
Richard J. Lubasch................................. 53 Senior Vice President -- General Counsel
and Secretary
Gregg N. Gorelick.................................. 41 Vice President -- Controller and Treasurer
</TABLE>
Set forth below is a brief description of the present and past business
experience of each of the persons who serve as executive officers of CoreComm
who are not also serving as directors.
Patty J. Flynt has been CoreComm's Senior Vice President and Chief
Operating Officer since 1998 and was OCOM Corporation's President from 1996
until 1998. Previously she served as Group Managing Director -- Information
Systems for NTL and Vice President of Information Systems for CCI. Prior to
joining OCOM Corporation in 1996, Ms. Flynt was a Vice President of New Par, a
joint venture of CCI and AirTouch Communications, Inc. from 1989 until 1996.
Richard J. Lubasch has been CoreComm's Senior Vice President -- General
Counsel and Secretary since 1998. Additionally, Mr. Lubasch was CCPR's Senior
Vice President -- General Counsel and Secretary from February 1992 until the
CCPR Sale. He was also the Senior Vice President -- General Counsel, Secretary
and Treasurer of CCII from July 1991 until the CCII Sale, and has been Executive
Vice President -- General Counsel and Secretary of NTL since 1999 and was Senior
Vice President since its formation. Mr. Lubasch was Vice President -- General
Counsel and Secretary of CCI from July 1987 until the CCI Merger.
Gregg N. Gorelick has been CoreComm's Vice President -- Controller and
Treasurer since 1998. Mr. Gorelick was CCPR's Vice President -- Controller from
February 1992 until the CCPR Sale, held that position at CCII from July 1991
until the CCII Sale and has held that position at NTL since its formation. From
1981 to 1986 he was employed by Ernst & Whinney (now known as Ernst & Young
LLP). Mr. Gorelick is a certified public accountant and was Vice
President -- Controller of CCI from 1986 until the CCI Merger.
BERMUDA RESIDENT REPRESENTATIVE AND SECRETARY
CoreComm is required, as a matter of Bermuda law, to maintain a
representative presence in Bermuda and has elected to appoint a resident
representative. The resident representative is entitled to attend and speak, but
not to vote at, meetings of the board or any committee of the board or of the
shareholders. Hugh Gillespie, an attorney with Appleby, Spurling & Kempe,
CoreComm's Bermuda legal advisor, is also CoreComm's initial resident
representative.
Claire Sousa is employed by A.S. & K. Services Ltd., a Bermuda corporation,
and an affiliate of Appleby, Spurling & Kemp, as a corporate administrator, and
serves as CoreComm's Secretary resident in Bermuda.
6
<PAGE> 9
CORECOMM
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
The Compensation Committee of the Board of Directors has the responsibility
for the design and implementation of the Company's executive compensation
program. The Compensation Committee is composed entirely of independent
non-employee directors.
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to shareholders. To this end, the
Company has developed an overall compensation strategy and specific compensation
plans that tie a very significant portion of an executive's aggregate
compensation to the appreciation in the Company's stock price. In addition,
executive bonuses are linked to the achievement of operational goals and
therefore relate to shareholder return. The overall objective of this strategy
is to attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy and
to link executive and shareholder interests through equity-based compensation,
thereby seeking to enhance the Company's profitability and shareholder value.
The Compensation Committee also recognizes that the cash portion of
compensation for Messrs. Knapp, Blumenthal, Lubasch and Gorelick is small in
light of their compensation from NTL (which is reimbursed to NTL by the Company
based on a reasonable estimate of the time these executives spent on Company
activity in the relevant period). The Compensation Committee believes that for
such executives, stock-based compensation becomes even more significant.
Each year the Compensation Committee conducts a review of the Company's
executive compensation program to determine the appropriate level and forms of
compensation. Such review permits an annual evaluation of the link between the
Company's performance and its executive compensation.
In assessing compensation levels for the named executives, the Compensation
Committee recognizes the fact that certain executives have participated in the
development of the Company (and its predecessors) from its earliest stages, and
have produced significant consistent long-term value for shareholders of the
Company (and its predecessors) over such period. In determining the annual
compensation for the Chief Executive Officer, the Compensation Committee uses
the same criteria as it does for the other named executives.
BASE SALARY AND BONUS
In furtherance of the Company's incentive-oriented compensation goals set
forth above, cash compensation (annual base salary and bonus) is supplemented by
equity-based option grants. With respect to 1999, the base salary for Mr. Knapp,
Mr. Blumenthal, Mr. Lubasch and Mr. Gorelick was $51,667, $51,667, $39,583 and
$27,417, respectively. The base salary for Ms. Flynt was $206,250. With respect
to Messrs. Knapp, Blumenthal, Lubasch and Gorelick, 1999 bonuses in the amount
of $57,750, $57,750, $41,250 and $24,750, respectively, have been paid by NTL
and NTL has been reimbursed by the Company. For these individuals, fourth
quarter 1999 bonuses have not yet been determined. Ms. Flynt received a bonus of
$100,435 in 1999.
STOCK OPTIONS
In 1998, CoreComm's Board of Directors adopted the CoreComm Limited 1998
Stock Option Plan (the "1998 Option Plan") and in June 1999, CoreComm's Board of
Directors adopted the CoreComm Limited 1999 Stock Option Plan (the "1999 Option
Plan"), reserving thereunder shares for issuances to employees and directors.
Additionally, in April 2000, CoreComm's Board of Directors adopted the CoreComm
Limited 2000 Stock Option Plan (the "2000 Option Plan" and together with the
1998 Option Plan and the 1999 Option Plan, the "1998, 1999 and 2000 Option
Plans"), reserving thereunder shares for issuances to employees and directors.
The 1998, 1999 and 2000 Option Plans are intended to encourage stock
ownership by employees of the Company and its divisions and subsidiary
corporations and other affiliates, so that they may acquire or increase
7
<PAGE> 10
their proprietary interest in the Company, and to encourage such employees and
directors who are employees to remain in the employ of the Company or its
affiliates and to put forth maximum efforts for the success of the business. The
1998, 1999 and 2000 Option Plans provide for grants of options to acquire shares
of Common Stock, which options may be "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). The terms of options granted pursuant to the 1998, 1999 and 2000 Option
Plans, including provisions regarding vesting, exercisability, exercise price
and duration, are generally set by the Compensation Committee. See the
descriptions of the 1999 Option Plan and the 2000 Option Plan under the sections
below titled "PROPOSAL TO APPROVE THE ADOPTION OF THE CORECOMM LIMITED 1999
STOCK OPTION PLAN" and "PROPOSAL TO APPROVE THE ADOPTION OF THE CORECOMM LIMITED
2000 STOCK OPTION PLAN."
In January 1999, CoreComm, Inc., one of the Company's wholly-owned
subsidiaries, adopted a stock option plan. Options granted under that plan were
not to be become exercisable unless and until there was either a registered
public offering of CoreComm, Inc.'s common stock or a spin-off of CoreComm, Inc.
However, under the terms of the options granted under that plan, the Company
reserved the right to cancel the plan and issue new options in the parent
company, CoreComm Limited. In March 2000, the compensation and option committee
of the Company's Board of Directors approved the cancellation of the CoreComm,
Inc. plan and the issuance of options in CoreComm Limited to eligible employees
of CoreComm, which resulted in the issuance of options to purchase approximately
2.7 million shares of Common Stock. The strike prices of the new grants are
approximately 30% of the fair market value of Common Stock on the date of the
approval of the Board of Directors, $14.55. Eligibility for receiving the new
grants was determined by, among other things, continued employment with the
Company.
In determining individual options grants, the Compensation Committee takes
into consideration the number of options previously granted to that individual,
the amount of time and effort dedicated to the Company during the preceding year
and expected commitment to the Company on a forward-looking basis. The
Compensation Committee also strives to provide each option recipient with an
appropriate incentive to increase shareholder value, taking into consideration
their cash compensation levels.
The Compensation Committee believes that the equity interests in the
Company held by the named executive officers represent a significant incentive
to increase overall shareholder value.
In 1998, Messrs. Knapp and Blumenthal each received a warrant to purchase
1,842,188 shares of Common Stock at an exercise price of $5.86 and $7.03 per
share, respectively. In 1999, these warrants were exercised or cancelled and, in
accordance with the plan under which these warrants were issued, Messrs. Knapp
and Blumenthal each received replacement options to purchase 1,842,188 shares of
common stock at an exercise price of $19.98 and $21.00, respectively. Messrs.
Knapp and Blumenthal now own 1,446,997 shares and 1,763,186 shares,
respectively, of Common Stock and hold options to purchase an additional
2,079,527 shares and 1,905,331 shares, respectively, of Common Stock.
COMPENSATION DEDUCTION CAP POLICY
The 1998 Option Plan and, once approved by CoreComm shareholders, the 1999
and 2000 Option Plans, are intended to comply with the requirements regarding
exemption from non-deductibility of compensation derived from stock options in
excess of $1 million under sec.162(m) of the Code. Any compensation realized
from the exercise of such stock options granted at fair market value as of the
date of grant thus generally would be exempt from the deduction limitations
under sec.162(m) of the Code. Other annual compensation, such as salary and
bonus, is not expected to exceed $1 million per executive. The Compensation and
Option Committee does retain the ability to make awards that may not comply with
sec.162(m), whether or not made under the Option Plans.
THE COMPENSATION AND OPTION COMMITTEE
Sidney R. Knafel
Ted H. McCourtney
Del Mintz
8
<PAGE> 11
GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for the
year ended December 31, 1999 and for the period from March 16, 1998 (the date of
inception) to December 31, 1998.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- -------------
COMMON
OTHER ANNUAL STOCK ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(2) OPTIONS(#)(3) ($)
- --------------------------- ---- ------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Barclay Knapp.............. 1999 51,667 -- -- --
President and Chief 1998 21,200 1,842,190
Executive and Financial
Officer
George S. Blumenthal(1).... 1999 51,667 -- -- --
Chairman 1998 20,600 1,842,188
Richard J. Lubasch......... 1999 39,583 -- -- 30,000
Senior Vice President -- 1998 17,300 385,313
General Counsel and
Secretary
Patty J. Flynt............. 1999 206,250 100,435 -- 450,001
Senior Vice President and 1998 183,600 131,400 67,500
Chief Operating Officer
Gregg N. Gorelick.......... 1999 27,417 -- 562,775(2) 22,501
Vice President, 1998 10,000 57,900(2) 56,250
Controller and Treasurer
</TABLE>
- ---------------
* NTL provides management, financial, legal and technical services to the
Company. Amounts charged to the Company consist of salaries and direct costs
allocated to the Company. In 1999 and 1998, NTL charged the Company
$2,268,000 and $313,000, respectively. It is not practicable to determine
the amounts of these expenses that would have been incurred had the Company
operated as an unaffiliated entity. However, in the opinion of management of
the Company, the allocation method is reasonable. The named executives,
except Ms. Flynt, receive salaries from NTL and spend portions of their time
providing executive management to the Company.
(1) Mr. Blumenthal resigned as Chief Executive Officer in March 1998, and Mr.
Knapp was appointed Chief Executive Officer in March 1998.
(2) Other annual compensation consists of relocation expenses of $562,775 and
$57,900 for 1999 and 1998, respectively.
(3) 1998 option grants do not include an aggregate of 508,246 options issued to
the named executives as a result of an adjustment to pre-existing options in
CCPR as a consequence of the spin-off. 1999 option grants do not include an
aggregate of 4,110,207 options issued to the named executives, as
replacement options, upon the exercise or cancellation of their respective
warrants or options, in accordance with the plan under which these warrants
or options were issued.
9
<PAGE> 12
OPTION GRANTS TABLE
The following table provides information on stock option grants during 1999
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATE OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM(**)
UNDERLYING GRANTED TO EXERCISE OR -----------------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION 5%($) 10%($)
NAME GRANTED(*) FISCAL YEAR ($/SHARE) DATE $36.38 $57.92
- ---- ---------- ------------ ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Barclay Knapp............. --(1) -- -- -- -- --
George S. Blumenthal...... --(2) -- -- -- -- --
Richard J. Lubasch........ 30,000(3) 0.43 22.33 09/13/09 421,367 1,067,821
Patty J. Flynt............ 450,001 6.43 22.33 09/13/09 6,320,521 16,017,345
Gregg N. Gorelick......... 22,501(4) 0.32 22.33 09/13/09 316,039 800,901
</TABLE>
- ---------------
* All options were granted on September 14, 1999; 20% were exercisable upon
issuance, 20% became exercisable on January 1, 2000 and an additional 20%
will become exercisable on each of January 1, 2001, 2002 and 2003. Upon a
change of control of the Company, all unvested options become fully vested
and exercisable.
** The amounts shown in these columns are the potential realizable value of
options granted at assumed rates of stock price appreciation (5% and 10%)
specified by the SEC, and have not been discounted to reflect the present
value of such amounts. The assumed rates of stock price appreciation are not
intended to forecast the future appreciation of the Common Stock.
(1) Does not include 1,842,190 options issued as a result of the exercise or
cancellation of an aggregate of 1,842,190 warrants.
(2) Does not include 1,842,188 options issued as a result of the exercise or
cancellation of an aggregate of 1,842,188 warrants.
(3) Does not include 385,313 options issued as a result of the exercise or
cancellation of an aggregate of 385,313 warrants.
(4) Does not include 46,516 options issued as a result of the exercise or
cancellation of an aggregate of 46,516 options.
10
<PAGE> 13
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on stock option exercises during
1999 by the named executive officers and the value at December 31, 1999 of
unexercised in-the-money options held by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR-END AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FY-END(#) FY-END($)*
EXERCISE REALIZED EXERCISABLE(E)/ EXERCISABLE(E)/
NAME (#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
- ---- ----------- ---------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Barclay Knapp.............. 1,426,301 25,743,732 605,777(E) 16,753,423(E)
1,473,750(U) 29,177,487(U)
George S. Blumenthal....... 1,380,104 25,733,733 431,581(E) 9,328,391(E)
1,473,750(U) 27,379,512(U)
Richard J. Lubasch......... 293,694 4,978,686 151,545(E) 4,401,974(E)
332,250(U) 6,824,977(U)
Patty J. Flynt............. -- -- 131,063(E) 3,015,673(E)
400,502(U) 7,574,943(U)
Gregg N. Gorelick.......... 46,516 606,103 100,210(E) 3,317,804(E)
98,704(U) 2,742,290(U)
</TABLE>
- ---------------
* Based on the closing price on the NASDAQ on December 31, 1999 of $39.58.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Common Stock with
The Nasdaq Stock Market (U.S.) Index (the "Nasdaq (U.S.) Index"), the Center for
Research in Security Prices Index of Nasdaq Telecommunications Stocks (the "CRSP
Index") and the Peer Group Index. In the Company's view, the Peer Group Index,
which includes Allegiance Telecom, Inc., e.spire Communications, Inc., US LEC
Corp., MGC Communications, Inc., IDT Corporation and ITC Deltacom, Inc.,
provides a better representation of the performance of telecommunications
companies over the required period than the broader based CRSP Index.
The graph assumes that $100 was invested on September 2, 1998 (the date the
Company began trading on the NASDAQ) in each of the Common Stock, the CRSP
Index, the Peer Group Index and the Nasdaq (U.S.) Index.
COMPARISON OF CORECOMM LIMITED,
THE CRSP INDEX, THE PEER GROUP INDEX AND THE NASDAQ (U.S.) INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NASDAQ(U.S.) INDEX CRSP INDEX CORECOMM PEER
------------------ ---------- -------- ----
<S> <C> <C> <C> <C>
02-Sep-98 100.00 100.00 100.00 100.00
30-Sep-98 108.13 106.38 47.67 101.49
31-Dec-98 139.97 146.58 69.03 89.30
31-Mar-99 157.13 180.93 161.08 149.44
30-Jun-99 171.47 191.70 211.48 234.67
30-Sep-99 175.30 182.83 216.55 222.21
31-Dec-99 259.77 297.14 390.37 317.34
</TABLE>
- ---------------
NOTE: Stock price performance shown above for the Common Stock is historical and
not necessarily indicative of future price performance.
12
<PAGE> 15
PROPOSAL TO RATIFY THE ADOPTION OF THE CORECOMM LIMITED
1999 STOCK OPTION PLAN
(ITEM 2)
GENERAL
In June 1999, the Board of Directors of the Company adopted the 1999 Option
Plan. The number of shares of Common Stock as to which options may be granted
from time to time under the 1999 Option Plan will not exceed 5,625,000. The 1999
Option Plan is subject to ratification by the holders of record of a majority of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote.
MATERIAL PLAN PROVISIONS
Under the terms of the 1999 Option Plan, incentive stock options within the
meaning of sec.422 of the Code ("ISOs") and nonqualified stock options ("NQSOs")
to purchase Common Stock may be granted to employees (herein after referred to
as an "optionee") of the Company and any of its subsidiaries or parent
corporations, or affiliates. ISOs may be granted only to employees (including,
without limitation, officers and directors who are employees) of the Company,
its present or future divisions and subsidiary corporations and parent
corporations and NQSOs may also be granted to employees of affiliated entities
of the Company who are designated by the Board of Directors to participate in
the 1999 Option Plan. The closing price of the Common Stock on the Nasdaq Stock
Market's National Market on April 24, 2000 was $31.13.
Each ISO and NQSO will be exercisable over a period, determined by the
Committee (as hereinafter defined) in its discretion, not to exceed 10 years
from the date of grant. Options may be exercisable during the option period at
such times, and in such amount, in accordance with such terms and conditions,
and subject to such restrictions as are set forth in the option agreement
evidencing the grant of such options. Outstanding options will be exercisable in
full if (i) any corporation, person or other entity (other than the Company)
makes a tender or exchange offer for shares of Common Stock pursuant to which
purchases are made, (ii) the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another corporation
or to sell or otherwise dispose of all or substantially all of its assets, or
adopt a plan of liquidation, (iii) the beneficial ownership of securities
representing more than 20 percent of the voting power of the Company is acquired
by any person or (iv) during any period of two consecutive years, individuals
who at the beginning of such period were members of the Board of Directors cease
for any reason to constitute at least a majority thereof (unless the election,
or the nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period). These events
are subject to certain exceptions.
The exercise price of an ISO may not be less than 100 percent of the fair
market value of the shares of the Common Stock on the date of grant of such
option. (The exercise price of an ISO or a NQSO is referred to hereinafter as
the "Option Price.") The Option Price of, and the number of shares covered by,
each option will not change during the life of the option, except for
adjustments to reflect stock dividends, stock splits or other specified
corporate transactions. Options may be exercised in whole or in part at any time
during the option period by giving written notice of exercise to the Corporation
specifying the number of shares to be purchased, accompanied by payment of the
Option Price. Payment of the Option Price is to be made in such manner as the
Committee may provide in the applicable stock option agreement.
Except as specifically provided in the applicable option agreement, no
option may be transferred by an optionee during his lifetime. If the option
agreement so provides, an optionee may transfer NQSOs during his or her lifetime
to certain family members or family controlled trusts or partnerships. If the
employment of an optionee terminates for any reason (other than for cause or by
reason of death, disability or, in the case of NQSOs, retirement) the optionee
(or, as applicable, a permitted transferee) may, within a three month period
following such termination, exercise an option to the extent he or she was
entitled to do so at the date of termination. If an optionee dies while employed
(or within three months after termination of employment, other than termination
for cause), or terminates employment by reason of disability or, in the case of
NQSOs,
13
<PAGE> 16
retirement, all previously granted options (to the extent otherwise
exercisable), except those that have previously terminated, may be exercised by
the person or persons to whom the optionee's rights pass within one year after
the optionee's death or by the optionee (or, as applicable, by a permitted
transferee) within one year after the optionee's disability or retirement. In no
case, however, may options be exercised later than the expiration date specified
in the grant.
No options may be granted under the 1999 Option Plan after the expiration
of 10 years following its effective date. In general, the 1999 Option Plan is
administered by the Compensation and Option Committee of the Board of Directors.
The Committee decides when and to whom to make grants, the number of shares to
be covered by the grants, the type of options to be granted, and the terms,
conditions, provisions and kind of consideration relating to the exercise of the
options. The Committee interprets the 1999 Option Plan and may at any time adopt
such rules and regulations for the Option Plan as it deems advisable. The Board
of Directors may at any time amend or terminate the 1999 Option Plan and change
its terms and conditions, and any such amendment will become effective without
shareholder approval unless required by applicable law or the rules or
regulations of a securities exchange or regulatory agency.
As the Committee has discretion to make grants, the amounts that could be
granted to executive officers and other participants cannot be determined at
this time.
The full 1999 Option Plan is attached hereto as Annex A.
CERTAIN UNITED STATES INCOME TAX CONSEQUENCES
The following discussion is a brief summary of the principal United States
income tax consequences under current United States income tax laws relating to
grants under the 1999 Option Plan. This summary is not intended to be exhaustive
and, among other things, does not describe state, local or foreign tax
consequences.
NQSOS
Grant: An optionee will not recognize any income, and the Company will not
be entitled to a deduction, upon the grant of a NQSO.
Exercise: Except as noted below, upon the exercise of a NQSO the optionee
will recognize ordinary income in an amount equal to the excess of the fair
market value of the shares acquired on the date of exercise over the exercise
price. The Company will be generally entitled to a deduction of a corresponding
amount at that time. The Company's deduction upon exercise of NQSO by an
executive officer may be subject to the limitations of sec.162(m) of the Code if
the NQSO was granted at an exercise price less than fair market value of the
shares on the date of grant. If an optionee's sale of shares acquired by the
exercise of a NQSO could subject the optionee to suit under Section 16(b) of the
Exchange Act ("Section 16(b) liability"), then the recognition and determination
of the amount of income by the employee, and the corresponding deduction by the
Company, may be postponed to a later date. However, the optionee may elect under
sec.83(b) of the Code, within thirty days after exercise, to be taxed as of the
exercise date in the manner described above. As recently amended, Section 16(b)
of the Exchange Act generally does not impose Section 16(b) liability upon a
sale of shares received upon exercise of a NQSO if the grant of the NQSO
satisfied certain approval requirements under Rule 16b-3 as promulgated under
Section 16(b) of the Exchange Act (provided that no other nonexempt purchases
have been made less than six months either before or after such sale).
An optionee's tax basis for shares acquired upon exercise of a NQSO will be
equal to the fair market value of such shares on the date that governs the
determination of optionee's ordinary income. The holding period for such shares
will commence on such date and, accordingly, will not include the period during
which the NQSO was held.
Sale: In the event of a sale of shares received upon exercise of a NQSO,
any gain or loss after the date ordinary income is recognized by the optionee in
respect of the option exercise will generally be a capital gain or loss,
assuming the shares are held as capital assets. The capital gain or loss will be
a long-term capital gain
14
<PAGE> 17
or loss if the shares were held for more than one year after the date on which
ordinary income is recognized by the optionee in respect of the option exercise.
In the event an optionee transfers, without consideration, a NQSO to
certain family members or family-related entities, the transfer should generally
not result in the recognition of income by the optionee. The exercise of the
NQSO by the transferee will generally result in the recognition of ordinary
income by the optionee who transferred the option (or, in the event the optionee
dies prior to the exercise, by the optionee's estate) in an amount and at the
time described above. The Company should be entitled to a tax deduction in an
amount equal to the amount of ordinary income recognized by the optionee upon
the exercise of the transferred NQSO. If the shares of Common Stock acquired
upon exercise of the NQSO are thereafter disposed of, the transferee will
generally recognize a capital gain (or loss) equal to the difference between the
amount realized on the disposition and the transferee's basis in the shares. The
transferee's basis in the shares of Common Stock acquired upon exercise of the
NQSO will be equal to the fair market value of the shares on the date that
governs the determination of the optionee's ordinary income.
ISOS
Grant: An optionee will not recognize any income, and the Company will not
be entitled to a deduction, upon the grant of an ISO.
Exercise: An optionee will not recognize any income, and the Company will
not be entitled to a deduction, upon the timely exercise of an ISO. The timely
exercise of an ISO may, however, affect the computation of the optionee's
alternative minimum tax. Exercise by an optionee of an ISO will be timely if
made while the optionee is employed by the Company or within three months after
the cessation of such employment (one year if the optionee is disabled within
the meaning of Section 22(e)(3) of the Code). If the exercise of an ISO is not
timely, the ISO will be taxed according to the rules described above for NQSOs.
An optionee's tax basis for shares acquired upon exercise of an ISO will be
equal to the exercise price paid for such shares. The holding period for the
shares will begin on the date of exercise and, accordingly, will not include the
period during which the ISO was held.
To the extent that the aggregate fair market value of shares (determined as
of the date of grant) with respect to which ISOs are exercisable for the first
time during any calendar year exceeds $100,000, such ISOs will be taxed
according to the rules described above for NQSOs.
Sale: If an optionee makes a disposition of shares pursuant to an ISO, and
such shares were held for more than two years from the date of grant of such ISO
and one year from the transfer of such shares to the optionee, then any gain or
loss realized upon such disposition will be treated as a long-term capital gain
or loss. Under such circumstances, the Company will not be entitled to any
deduction. If, however, the optionee makes a disposition of shares acquired
pursuant to an ISO within either two years from the date of the grant of such
ISO or one year from the transfer of such shares of the optionee (a
"Disqualifying Disposition"), then any gain realized will generally be taxable
as follows: (i) as ordinary income in an amount equal to any excess of (a) the
lesser of the fair market value of the shares on the date the ISO is exercised
(the value and timing of recognition on a later date may govern in the case of
an optionee whose sale of the shares could subject him or her to suit under
Section 16(b) of the Exchange Act as discussed above for NQSOs) or the amount
realized on the Disqualifying Disposition, over (b) the exercise price, and (ii)
as capital gain to the extent of any excess of the amount realized on the
Disqualifying Disposition over the fair market value of the shares on the date
that governs the determination of this ordinary income. In such case, the
Company will be entitled to a deduction at the time of the Disqualifying
Disposition for the amount taxable to the optionee as ordinary income, subject
to the application of Section 162(m) of the Code. Any loss realized upon a
Disqualifying Disposition will generally be a capital loss, and will be a
long-term capital loss if the holding period for the disposed shares is more
than one year.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR SUCH PROPOSAL
15
<PAGE> 18
PROPOSAL TO RATIFY THE ADOPTION OF THE CORECOMM LIMITED
2000 STOCK OPTION PLAN
(ITEM 3)
In April 2000, the Board of Directors of the Company adopted the 2000
Option Plan. The number of shares of Common Stock as to which options may be
granted from time to time under the 2000 Option Plan will not exceed 8,000,000.
The 2000 Option Plan is subject to ratification by the holders of record of a
majority of the shares of Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote.
MATERIAL PLAN PROVISIONS
The terms of the 2000 Option Plan are substantially identical to those of
the 1999 Option Plan, with the following exceptions described below.
The Option Price of any options granted under the 2000 Option Plan cannot
be less than 100 percent of the fair market value of the shares of the Common
Stock on the date of grant of such option. Additionally, certain events which
trigger the immediate and full exercisability of options under the 2000 Option
Plan are limited to transactions in which the shareholders of CoreComm cease to
have a significant stake in the combined company resulting from such a
transaction.
Thus, all outstanding options will become fully exercisable as of the date
(the "Acceleration Date") that (i) any corporation, person or other entity
(other than the Company) makes a tender or exchange offer for shares of the
Company's Common Stock pursuant to which purchases are made, excluding any
tender or exchange offer that would result in the voting securities of the
Corporation outstanding immediately prior to such merger or consolidation
continuing to represent at least 60% of the combined voting power of the
securities of the Corporation or such surviving entity or any parent thereof
outstanding immediately after such transaction, (ii) the shareholders of the
Company approve a definitive agreement to merge or consolidate the Company with
or into another company or to sell or otherwise dispose of all or substantially
all of the Company's assets, or adopt a plan of liquidation, excluding any
merger, consolidation, sale or other disposition that would result in the voting
securities of the Corporation outstanding immediately prior to such merger or
consolidation continuing to represent at least 60% of the combined voting power
of the securities of the Corporation or such surviving entity or any parent
thereof outstanding immediately after such transaction, (iii) any corporation,
person or other entity (other than the Company) acquires "beneficial ownership"
(as defined in Rule 13d-3 of the Exchange Act) of securities representing more
than 20% of the combined voting power of the Company, excluding any transaction
excluded from (i) or (ii) above, or (iv) during any period of two consecutive
years, individuals who at the beginning of such period were members of the Board
of Directors cease for any reason to constitute at least a majority thereof
(unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period). These events are subject to certain exceptions.
The full 2000 Option Plan is attached hereto as Annex B.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR SUCH PROPOSAL
16
<PAGE> 19
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 4)
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the year ending December 31, 2000.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
The ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 2000 will require the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present at the Annual
Meeting, in person or represented by proxy, and entitled to vote. In determining
whether the proposal has received the requisite number of affirmative votes,
abstentions will be counted and will have the same effect as a vote against the
proposal; broker non-votes will be disregarded and will have no effect on the
outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
SUCH RATIFICATION
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting must be received by the Company on or before December 29, 2000 to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. Bermuda law obliges the Company to circulate a
shareholder proposal which requires a vote, which is supported by the lesser of:
(1) shareholders holding 5% of the voting rights at the meeting: or (2) not less
than 100 shareholders. Any proposal which is to be circulated in accordance with
Bermuda law must be received not less than six weeks prior to the 2001 Annual
Meeting.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth in this proxy statement that will be presented for action at the Annual
Meeting and does not intend to bring any other matters before the Annual
Meeting. However, if any other matters should properly come before the Annual
Meeting, or at any adjournment or postponement thereof, it is the intention of
the persons named in the accompanying proxy to vote on such matters as they, in
their discretion, may determine.
By order of the Board of Directors,
/s/ Richard J. Lubasch
RICHARD J. LUBASCH
Secretary
New York, New York
April 27, 2000
17
<PAGE> 20
ANNEX A
CORECOMM LIMITED
1999 STOCK OPTION PLAN
1. PURPOSE; CONSTRUCTION.
This CoreComm Limited 1999 Stock Option Plan (the "Plan"), is intended to
encourage stock ownership by employees and non-employee directors of CoreComm
Limited (the "Corporation") and its divisions and subsidiary corporations and
other affiliates, so that they may acquire or increase their proprietary
interest in the Corporation, and to encourage such employees and directors who
are employees to remain in the employ of the Corporation or its affiliates and
to put forth maximum efforts for the success of the business. It is further
intended that options ("Options") granted by the Committee pursuant to Section 6
of this Plan shall constitute "incentive stock options" ("Incentive Stock
Options") within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder (the "Code"), and
options granted by the Committee pursuant to Section 7 of this Plan shall
constitute "nonqualified stock options" ("Nonqualified Stock Options").
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(b) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(c) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) if the shares of common stock, par value $.01 per share, of the
Corporation ("Common Stock") are then traded on an over-the-counter market,
the average of the closing bid and asked prices for the shares of Common
Stock in such over-the-counter market for the last preceding date on which
there was a sale of such Common Stock in such market, (ii) if the shares of
Common Stock are then listed on the Nasdaq Stock Market's National Market
or other national securities exchange, the closing sales price per share on
the date of grant or on the last preceding date on which there was a sale
of such Common Stock on such exchange, or (iii) if the shares of Common
Stock are not then traded in an over-the-counter market or listed on Nasdaq
or a national securities exchange, such value as the Committee in its
discretion may determine.
(d) "OPTIONEE" shall mean a person who has been granted an option
under the Plan.
(e) "PARENT CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the employer corporation owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(f) "RULE 16b-3" shall mean Rule 16b-3 promulgated under Section 16 of
the Exchange Act (or any other comparable provisions in effect at the time
or times in question).
(g) "SUBSIDIARY CORPORATION" shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
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(h) "TEN PERCENT STOCKHOLDER" shall mean an Optionee who, at the time
an Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Corporation or of its Parent or Subsidiary Corporations.
3. ADMINISTRATION.
The Plan shall be administered by the Compensation and Option Committee of
the Corporation's Board of Directors or such other committee appointed either by
the Board of Directors of the Corporation (the "Board") or by such Compensation
and Option Committee (the "Committee"); provided, however, to the extent
determined necessary to satisfy the requirements for exemption from Section
16(b) of the Exchange Act, with respect to the acquisition or disposition of
securities hereunder, action by the Committee may be by a subcommittee of a
committee of the Board composed solely of two or more "non-employee directors,"
within the meaning of Rule 16b-3, appointed by the Board or by the Compensation
and Option Committee of the Board, or by a committee composed solely of two or
more "non-employee directors," within the meaning of Rule 16b-3, as a result of
the recusal of those members who do not qualify as non-employee directors; and,
provided further, to the extent determined necessary to satisfy the requirements
for the exception for qualified performance based compensation under Section
162(m) of the Code and the treasury regulations thereunder, action by the
Committee may be by a committee comprised solely of two or more "outside
directors," within the meaning of Section 162(m) of the Code and the treasury
regulations thereunder, appointed by the Board or by the Compensation and Option
Committee. Notwithstanding anything in the Plan to the contrary, and to the
extent determined to be necessary to satisfy an exemption under Rule 16b-3 with
respect to a grant hereunder (and, as applicable, with respect to the
disposition to the Corporation of a security hereunder), or as otherwise
determined advisable by the Committee, the terms of such grant and disposition
under the Plan shall be subject to the prior approval of the Board. Any prior
approval of the Board, as provided in the preceding sentence, shall not
otherwise limit or restrict the authority of the Committee to make grants under
the Plan, including, but not limited to, the authority of the Committee to make
grants qualifying for the performance-based compensation exception under Section
162(m) of the Code and the treasury regulations thereunder.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options; to determine
which Options shall constitute Incentive Stock Options and which Options shall
constitute Nonqualified Stock Options; to determine the purchase price of the
shares of Common Stock covered by each Option (the "Option Price"); to determine
the persons to whom, and the time or times at which, Options shall be granted;
to determine the number of shares to be covered by each Option; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Options (which need not be
identical) entered into in connection with Options granted under the Plan; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee, and may
at any time remove one or more Committee members and substitute others. One
member of the Committee may be selected by the Board as chairman. The Committee
shall hold its meetings at such times and places as it shall deem advisable. All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at any meeting
or by written consent. The Committee may appoint a secretary and make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
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4. ELIGIBILITY.
Options may be granted (i) to employees (including, without limitation,
officers and directors who are employees) of the Corporation, its present or
future divisions, Subsidiary Corporations and Parent Corporations and (ii) in
the case of Nonqualified Stock Options, to non-employee directors of the
Corporation and to employees of an affiliated entity of the Corporation (an
"Affiliated Entity") which is designated by the Board to participate in the
Plan. In determining the persons to whom Options shall be granted and the number
of shares to be covered by each Option, the Committee shall take into account
the duties of the respective persons, their present and potential contributions
to the success of the Corporation and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan. A person
to whom an option has been granted hereunder is sometimes referred to herein as
an "Optionee."
An Optionee shall be eligible to receive more than one grant of an Option
during the term of the Plan, but only on the terms and subject to the
restrictions hereinafter set forth.
5. STOCK.
The stock subject to Options hereunder shall be shares of the Corporation's
Common Stock. Such shares may, in whole or in part, be authorized but unissued
shares or shares that shall have been or that may be reacquired by the
Corporation. The aggregate number of shares of Common Stock as to which Options
may be granted from time to time under the Plan shall not exceed 2,500,000. The
limitation established by the preceding sentence shall be subject to adjustment
as provided in Section 8(h) hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is cancelled, surrendered or otherwise terminated without having been
exercised in full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been terminated) become
available for subsequent grants of Options under the Plan. Notwithstanding the
foregoing, the expiration, cancellation, surrender or termination of an Option,
to the extent consistent with Section 162(m) of the Code and the treasury
regulations thereunder, shall not be disregarded for purposes of applying the
individual limit on the maximum number of shares, as provided in Section 8(d),
that may be purchased in connection with Options granted under the Plan with
respect to any individual.
6. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 6 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
8 hereof.
(a) VALUE OF SHARES. In no event may Incentive Stock Options be granted to
an Optionee to the extent that the aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of Common Stock
with respect to which such Options granted under this Plan and all other option
plans of the Corporation and any Parent or Subsidiary Corporation which would
become exercisable for the first time by an Optionee during any calendar year
exceeds $100,000.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the exercise price (the "Option
Price") of an Incentive Stock Option shall not be less than one hundred ten
percent (110%) of the Fair Market Value of the shares of Common Stock of the
Corporation on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 8 hereof.
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8. TERMS AND CONDITIONS OF OPTIONS.
(a) OPTION PRICE. The Option Price, in the case of Incentive Stock
Options, shall be not less than one hundred percent (100%) of the Fair Market
Value of the shares of Common Stock of the Corporation on the date of grant of
the Option, and, in the case of Nonqualified Stock Options, shall be the price
determined by the Committee. The Option Price shall be subject to adjustment as
provided in Section 8(h) hereof.
(b) MEDIUM AND TIME OF PAYMENT. Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Corporation specifying the number of shares of Common Stock to be
purchased, accompanied by payment of the purchase price. Payment of the purchase
price shall be made in such manner as the Committee may permit, which may
include cash (including cash equivalents, such as by certified or bank check
payable to the Corporation), delivery of unrestricted shares of Common Stock
that have been owned by the Optionee or, as applicable, a transferee (as
provided in Section 8(g)) for at least six months, any other manner permitted by
law as determined by the Committee, or any combination of the foregoing.
(c) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the
exercise period as and at the times and upon the conditions that the Committee
may determine; provided, however, that the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate; and further
provided, however, that such exercise period shall not exceed ten (10) years
from the date of grant of such Option. The exercise period may be subject to
earlier termination as provided in Section 8(e) and 8(f) hereof. An Option may
be exercised, as to any or all full shares of Common Stock as to which the
Option has become exercisable, by giving written notice of such exercise to the
Committee or to such individuals) as the Committee may from time to time
designate.
(d) LIMITATION ON AWARDS. Grants of options under the Plan to any
individual in any calendar year shall be limited to Options to purchase no
greater than 2,000,000 shares of Common Stock.
(e) TERMINATION. The Committee may provide that an option may not be
exercised unless the Optionee is then in the employ of the Corporation or a
division or any corporation which was at the time of grant of such Option, a
Subsidiary Corporation or Parent Corporation thereof (or a corporation or a
Parent or Subsidiary Corporation of such corporation issuing or assuming the
Option in a transaction to which Section 424(a) of the Code applies) or an
Affiliated Entity, and unless the Optionee has remained continuously so employed
since the date of grant of the Option. The Committee may further provide that,
in the event that the employment of such an Optionee shall terminate (other than
by reason of death, Disability or, in the case of Nonqualified Stock Options,
retirement), all Options granted to such Optionee or transferred by such
Optionee (as provided in Section 8(g)) that are exercisable at the time of such
termination may, unless earlier terminated in accordance with their terms, be
exercised within three (3) months after such termination; provided, however,
that if the employment of such an Optionee shall terminate for cause (as
determined by the Committee, in its good faith discretion), all Options
theretofore granted to such Optionee or transferred by such Optionee (as
provided in Section 8(g)) shall, to the extent not theretofore exercised,
terminate forthwith. Nothing in the Plan or in any Option granted pursuant
hereto shall confer upon an individual any right to continue in the employ of
the Corporation or any of its divisions, Parent or Subsidiary Corporations or
Affiliated Entities or interfere in any way with the right of the Corporation or
any such division, Parent or Subsidiary Corporation or Affiliated Entity to
terminate such employment. An Option subject to the provisions of this Section
8(e) is referred to herein as an "Employment Option."
(f) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee who has
been granted an Employment Option shall die while employed by the Corporation or
a division or any corporation which was, at the time of grant of such Employment
Option, a Subsidiary Corporation or Parent Corporation thereof (or a corporation
or a Parent or Subsidiary Corporation of such corporation issuing or assuming
the Employment Option in a transaction to which Section 424(a) of the Code
applies) or an Affiliated Entity, or within three (3) months after the
termination of such Optionee's employment, other than for cause, or if the
Optionee's employment shall terminate by reason of Disability (or, in the case
of Nonqualified Stock Options, retirement), all Employment Options theretofore
granted to such Optionee or transferred by such Optionee
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(as provided in Section 8(g)), to the extent otherwise exercisable at the time
of death or termination of employment, may, unless earlier terminated in
accordance with their terms, be exercised by the Optionee or by the Optionee's
estate or by a person who acquired the right to exercise such Employment Option
by bequest or inheritance or otherwise by reason of death or Disability of the
Optionee or by a transferee (as provided in Section 8(g)), at any time within
one year after the date of death, Disability or retirement of the Optionee.
(g) NONTRANSFERABILITY OF OPTIONS. Except as provided in this Section 8(g)
or as otherwise provided by the Board, no Option granted hereunder shall be
transferable by the Optionee to whom granted, other than by will or the laws of
descent or distribution, and the Option may be exercised during the lifetime of
such Optionee only by the Optionee or such Optionee's guardian or legal
representative. Subject to such conditions as the Committee may prescribe, an
Optionee may, upon providing written notice to the General Counsel of the
Corporation, elect to transfer the Nonqualified Stock Option granted to such
Optionee, without consideration therefor, to members of his or her immediate
family (as defined below), to a trust or trusts maintained solely for the
benefit of the Optionee and/or the members of the Optionee and/or the members of
his or her immediate family, or to a partnership whose only partners are the
Optionee and/or the members of his or her immediate family. Any purported
assignment, alienation, pledge, attachment, sale, transfer, or encumbrance that
does not qualify as a permissible transfer under this Section 8(g) shall be void
and unenforceable against the Plan and the Corporation. For purposes of this
Section 8(g), the term "immediate family" shall mean, with respect to a
particular Optionee, the Optionee's spouse, children or grandchildren, and such
other persons as may be determined by the Committee. The terms of any such
Option and the Plan shall be binding upon a permissible transferee, and the
beneficiaries, heirs and successors of the Optionee and, as applicable, a
permissible transferee. Notwithstanding anything in the Plan to the contrary,
the Committee or Board may also provide that certain Options granted pursuant to
the Plan shall be fully and immediately transferable.
(h) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common Stock
through the declaration of stock or cash dividends, or recapitalization
resulting in stock splits, or combinations or exchanges of such shares or
other corporate transactions affecting the capitalization of the
Corporation, the aggregate number of shares of Common Stock available for
Options, the aggregate number of shares of Common Stock available for
distribution under the Plan to any single individual with respect to
Options granted hereunder, the number of such shares covered by outstanding
Options, the number of shares set forth in Section 8(d) hereof and the
price per share of such Options shall be proportionately adjusted by the
Committee to reflect any increase or decrease in the number of issued
shares of Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. In the event of any
other extraordinary corporate transaction, including, but not limited to
distributions of cash or other property to the Corporation's shareholders,
the Committee may equitably adjust outstanding Options as it deems
appropriate.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or division,
including, but not limited to, split-up, split-off or spin-off, or in the
event of a merger or consolidation of the Corporation with another
corporation, the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option (at its then
Option Price) solely for the kind and amount of shares of stock and other
securities, property, cash or any combination thereof receivable upon such
dissolution, liquidation, or corporate separation or division, or merger or
consolidation by a holder of the number of shares of Common Stock for which
such Option might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division, or merger or
consolidation; or the Committee may provide, in the alternative, that each
Option granted under the Plan shall terminate as of a date to be fixed by
the Committee; provided, however, that not less than thirty (30) days'
written notice of the date so fixed shall be given to each Optionee, who
shall have the right, during the period of thirty (30) days preceding such
termination, to exercise the Options (unless earlier terminated in
accordance with their terms) as to all or any part of the shares of Common
Stock covered thereby, including shares as to which such Options would not
otherwise be
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exercisable; provided, further, that failure to provide such notice shall
not invalidate or affect the action with respect to which such notice was
required.
(3) If while unexercised Options remain outstanding under the Plan;
(i) any corporation, person or other entity (other than the
Corporation) makes a tender or exchange offer for shares of the Common
Stock pursuant to which purchases are made ("Offer"), or
(ii) the stockholders of the Corporation approve a definitive
agreement to merge or consolidate the Corporation with or into another
corporation or to sell or otherwise dispose of all or substantially all of
its assets, or adopt a plan of liquidation, or
(iii) the "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) of securities representing more than 20% of the combined
voting power of the Corporation is acquired by any "person" as defined in
Sections 13(d) and 14(d) of the Exchange Act, or
(iv) during any period of two consecutive years, individuals who at
the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election, or the
nomination for election by the Corporation's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period),
then from and after the date of the first purchase of Common Stock
pursuant to such Offer, or the date of any such stockholder approval or
adoption, or the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in
the composition of the Board set forth above shall have occurred,
whichever is applicable (the applicable date being referred to
hereinafter as the "Acceleration Date") , all Options shall be
exercisable in full, whether or not otherwise exercisable. Following the
Acceleration Date, the Committee shall, in the case of a merger,
consolidation or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for Options, and to the amount and kind of shares or other
securities or property receivable upon exercise of any outstanding
Options after the effective date of such transaction, and the price
thereof.
(4) Paragraphs (2) and (3) of this Section 8(h) shall not apply to a
merger or consolidation in which the Company is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or
merger of another corporation into the Corporation in which the Corporation
is the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive cash or other property)
of the shares of Common Stock (other than a change in par value, or from
par value to no par value, or as a result of a subdivision or combination,
but including any change in such shares into two or more classes or series
of shares), the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option solely for the
kind and amount of shares of stock and other securities (including those of
any new direct or indirect parent of the Corporation), property, cash or
any combination thereof receivable upon such reclassification, change,
consolidation or merger by the holder of the number of shares of Common
Stock for which such Option might have been exercised.
(5) In the event of a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within the meaning of
the Plan.
(6) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option granted pursuant to
this Plan shall not be adjusted in a manner that causes such Option to fail
to continue to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code.
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(7) Except as hereinbefore expressly provided in this Section 8(h),
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation; and
any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to the Option. The grant of an
Option pursuant to the Plan shall not affect in any way the right or power
of the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structures or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer all or part of
its business or assets.
(i) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares covered by the
Option until the date of the issuance of a stock certificate to him for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 8(j) hereof.
(j) OTHER PROVISIONS. The Options authorized under the Plan shall contain
such other provisions, including, without limitation, (i) the imposition of
restrictions upon the exercise of an Option, and (ii) in the case of an
Incentive Stock Option, the inclusion of any condition not inconsistent with
such Option qualifying as an Incentive Stock Option, as the Committee shall deem
advisable. Without limiting the generality of the foregoing, the Committee shall
have the power to grant options with renewable features as hereinafter
described. To the extent an Option with a renewable feature (an "Original
Option") subsequently is exercised (including exercise through delivery of (X)
previously acquired shares of Common Stock, (Y) cash, or (Z) shares acquired
through the exercise of such Original Option), the Optionee automatically will
be granted, at the time of such exercise, a new Option (the "Renewed Option") to
purchase the number of shares of Common Stock so delivered (or, in the case of
an exercise for cash, a number of shares determined by the Committee upon the
grant of the Original Option), provided, however, that no such Renewed Option
shall be granted if, at the time of exercise of the Original Option,
insufficient shares are available under the Plan to cover the grant of the
Renewed Option. Each Renewed Option will be exercisable upon substantially the
same terms and conditions as the Original Option to which it relates, except
that (A) the per share exercise price of the Renewed Option shall be 100% of the
Fair Market Value of the Common Stock on the date of exercise of the Original
Option, and (B) the Renewed Option shall not itself have renewable features.
Notwithstanding the foregoing, the Committee shall have full authority to alter
the terms of any Renewed Option at the time of exercise of the Original Option
to which it relates. The Committee may also provide that a Renewed Option will
be granted to an Optionee upon the sale by such Optionee of an Original Option
to a financial institution acceptable to the Committee, provided, however, that
such financial institution certifies in a form acceptable to the Committee the
intention to immediately exercise the Original Option in accordance with its
terms. A Renewed Option granted pursuant to such a sale shall not itself have
renewable features and will have a per share exercise price of 100% of the Fair
Market Value of the Common Stock on the date of the sale of the Original Option
to such financial institution.
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise, each
Optionee shall agree that;
(a) no later than the date of exercise of any Option granted hereunder, the
Optionee will pay to the Corporation or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind
required by law to be withheld upon the exercise of such Option, and
(b) the Corporation shall, to the extent permitted or required by law, have
the right to deduct federal, state and local taxes of any kind required by law
to be withheld upon the exercise of such Option from any payment of any kind
otherwise due to the Optionee.
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10. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that no amendment that requires
stockholder approval under applicable law, under the rules or regulations of any
securities exchange or regulatory agency, or in order for the Plan to continue
to comply with Rule 16b-3 or, if applicable, to comply with the exception for
qualified performance-based compensation under Code Section 162(m), or in order
for Options intended to constitute Incentive Stock Options to satisfy the
requirements of Section 422 of the Code shall be effective unless the same shall
be approved by the requisite vote of the stockholders of the Corporation. Except
as provided in Section 8 hereof, no suspension, termination, modification or
amendment of the Plan may adversely affect any Option previously granted, unless
the written consent of the Optionee or, as applicable, a transferee, is
obtained.
12. INTERPRETATION.
The Plan is designed and intended to comply with Rule 16b-3 and, to the
extent applicable, Sections 162(m) and 422 of the Code, and all provisions
hereof shall be construed in a manner to so comply.
13. APPROVAL AND RATIFICATION BY STOCKHOLDERS.
The Plan shall take effect as set forth in Section 16 upon its adoption by
the Board of Directors, but the Plan (and awards made pursuant to the Plan)
shall be subject to its approval and ratification by the holders of a majority
of the issued and outstanding shares of Common Stock of the Corporation, which
approval and ratification must occur within twelve months after the date that
the Plan is adopted by the Board.
14. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
15. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
16. EFFECTIVE DATE OF PLAN.
The effective date of the Plan is the date the Plan is adopted by the
Board.
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ANNEX B
CORECOMM LIMITED
2000 STOCK OPTION PLAN
1. PURPOSE; CONSTRUCTION.
This CoreComm Limited 2000 Stock Option Plan (the "Plan"), is intended to
encourage stock ownership by employees and non-employee directors of CoreComm
Limited (the "Corporation") and its divisions and subsidiary corporations and
other affiliates, so that they may acquire or increase their proprietary
interest in the Corporation, and to encourage such employees and directors who
are employees to remain in the employ of the Corporation or its affiliates and
to put forth maximum efforts for the success of the business.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(b) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(c) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(d) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) if the shares of common stock, par value $.01 per share, of the
Corporation ("Common Stock") are then traded on an over-the-counter market,
the average of the closing bid and asked prices for the shares of Common
Stock in such over-the-counter market for the last preceding date on which
there was a sale of such Common Stock in such market, (ii) if the shares of
Common Stock are then listed on the NASDAQ Stock Market's National Market
or other national securities exchange, the closing sales price per share on
the date of grant or on the last preceding date on which there was a sale
of such Common Stock on such exchange, or (iii) if the shares of Common
Stock are not then traded in an over-the-counter market or listed on NASDAQ
or a national securities exchange, such value as the Committee in its
discretion may determine.
(e) "OPTIONEE" shall mean a person who has been granted an option
under the Plan.
(f) "PARENT CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
Corporation if, at the time of granting an Option, each of the corporations
other than the Corporation owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(g) "RULE 16b-3" shall mean Rule 16b-3 promulgated under Section 16 of
the Exchange Act (or any other comparable provisions in effect at the time
or times in question).
(h) "SUBSIDIARY CORPORATION" shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning with the
Corporation if, at the time of granting an Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(i) "TEN PERCENT STOCKHOLDER" shall mean an Optionee who, at the time
an Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Corporation or of its Parent or Subsidiary Corporations.
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3. ADMINISTRATION.
The Plan shall be administered by the Compensation and Option Committee of
the Corporation's Board of Directors or such other committee appointed either by
the Board of Directors of the Corporation (the "Board") or by such Compensation
and Option Committee (the "Committee"); provided, however, to the extent
determined necessary to satisfy the requirements for exemption from Section
16(b) of the Exchange Act, with respect to the acquisition or disposition of
securities hereunder, action by the Committee may be by a subcommittee of a
committee of the Board composed solely of two or more "non-employee directors,"
within the meaning of Rule 16b-3, appointed by the Board or by the Committee, or
by a committee composed solely of two or more "non-employee directors," within
the meaning of Rule 16b-3, as a result of the refusal of those members who do
not qualify as non-employee directors; and, provided further, to the extent
determined necessary to satisfy the requirements for the exception for qualified
performance based compensation under Section 162(m) of the Code and the treasury
regulations thereunder, action by the Committee may be by a committee comprised
solely of two or more "outside directors," within the meaning of Section 162(m)
of the Code and the treasury regulations thereunder, appointed by the Board or
by the Committee. Notwithstanding anything in the Plan to the contrary, and to
the extent determined to be necessary to satisfy an exemption under Rule 16b-3
with respect to a grant hereunder (and, as applicable, with respect to the
disposition to the Corporation of a security hereunder), or as otherwise
determined advisable by the Committee, the terms of such grant and disposition
under the Plan shall be subject to the prior approval of the Board. Any prior
approval of the Board, as provided in the preceding sentence, shall not
otherwise limit or restrict the authority of the Committee to make grants under
the Plan, including, but not limited to, the authority of the Committee to make
grants qualifying for the performance-based compensation exception under Section
162(m) of the Code and the treasury regulations thereunder.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options; to determine
which Options shall constitute "incentive stock options" ("Incentive Stock
Options") within the meaning of Section 422 of the Code, and which Options shall
constitute nonqualified stock options; to determine the purchase price of the
shares of Common Stock covered by each Option (the "Option Price"); to determine
the persons to whom, and the time or times at which, Options shall be granted;
to determine the number of shares to be covered by each Option; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Options (which need not be
identical) entered into in connection with Options granted under the Plan; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee, and may
at any time remove one or more Committee members and substitute others. One
member of the Committee may be selected by the Board as chairman. The Committee
shall hold its meetings at such times and places as it shall deem advisable. All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at any meeting
or by written consent. The Committee may appoint a secretary and make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
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4. ELIGIBILITY.
Options may be granted (i) to employees (including, without limitation,
officers and directors who are employees) of the Corporation, its present or
future divisions, Subsidiary Corporations and Parent Corporations and (ii) in
the case of Nonqualified Stock Options, to non-employee directors of the
Corporation and to employees of an affiliated entity of the Corporation (an
"Affiliated Entity") which is designated by the Board to participate in the
Plan. In determining the persons to whom Options shall be granted and the number
of shares to be covered by each Option, the Committee shall take into account
the duties of the respective persons, their present and potential contributions
to the success of the Corporation and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan. A person
to whom an option has been granted hereunder is sometimes referred to herein as
an "Optionee."
An Optionee shall be eligible to receive more than one grant of an Option
during the term of the Plan, but only on the terms and subject to the
restrictions hereinafter set forth.
5. STOCK.
The stock subject to Options hereunder shall be shares of the Corporation's
Common Stock. Such shares may, in whole or in part, be authorized but unissued
shares or shares that shall have been or that may be reacquired by the
Corporation. The aggregate number of shares of Common Stock as to which Options
may be granted from time to time under the Plan may equal but shall not exceed
8,000,000. The limitation established by the preceding sentence shall be subject
to adjustment as provided in Section 8(j) hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is canceled, surrendered or otherwise terminated without having been
exercised in full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been terminated) become
available for subsequent grants of Options under the Plan. Notwithstanding the
foregoing, the expiration, cancellation, surrender or termination of an Option,
to the extent consistent with Section 162(m) of the Code and the treasury
regulations thereunder, shall not be disregarded for purposes of applying the
individual limit on the maximum number of shares, as provided in Section 8(e),
that may be purchased in connection with Options granted under the Plan with
respect to any individual.
6. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 6 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
8 hereof.
(a) VALUE OF SHARES. In no event may Incentive Stock Options be granted to
an Optionee to the extent that the aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of Common Stock
with respect to which such Options granted under this Plan and all other option
plans of the Corporation and any Parent or Subsidiary Corporation which would
become exercisable for the first time by an Optionee during any calendar year
exceeds $100,000.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the exercise price (the "Option
Price") of an Incentive Stock Option shall not be less than one hundred ten
percent (110%) of the Fair Market Value of the shares of Common Stock of the
Corporation on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 8 hereof.
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8. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a written
Option Agreement (an "Option Agreement") between the Corporation and the
Optionee, which agreement shall comply with and be subject to the following
terms and conditions:
(a) NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) TYPE OF OPTION. Each Option Agreement shall specifically identify
the portion, if any, of the Option which constitutes an Incentive Stock
Option.
(c) OPTION PRICE. The Option Price shall be not less than one hundred
percent (100%) of the Fair Market Value of the shares of Common Stock of
the Corporation on the date of grant of the Option. The Option Price shall
be subject to adjustment as provided in Section 8(j) hereof.
(d) MEDIUM AND TIME OF PAYMENT. Options may be exercised in whole or
in part at any time during the option period by giving written notice of
exercise to the Corporation specifying the number of shares of Common Stock
to be purchased, accompanied by payment of the purchase price. Payment of
the purchase price shall be made in such manner as the Committee may
provide in the Option Agreement, which may include cash (including cash
equivalents, such as by certified or bank check payable to the
Corporation), delivery of unrestricted shares of Common Stock that have
been owned by the Optionee or, as applicable, a transferee (as provided in
Section 8(i)) for at least six months, any other manner permitted by law as
determined by the Committee, or any combination of the foregoing.
(e) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over
the exercise period as and at the times and upon the conditions that the
Committee may determine, as reflected in the Option Agreement; provided,
however, that the Committee shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate; and further
provided, however, that such exercise period shall not exceed ten (10)
years from the date of grant of such Option. The exercise period may be
subject to earlier termination as provided in Section 8(g) and 8(h) hereof.
An Option may be exercised, as to any or all full shares of Common Stock as
to which the Option has become exercisable, by giving written notice of
such exercise to the Committee or to such individuals) as the Committee may
from time to time designate.
(f) LIMITATION ON AWARDS. Grants of options under the Plan to any
individual in any calendar year shall be limited to Options to purchase no
greater than sixty percent of the shares of Common Stock available for
issuance under this plan.
(g) TERMINATION. The Committee may provide that an option may not be
exercised unless the Optionee is then in the employ of the Corporation or a
division or any corporation which was at the time of grant of such Option,
a Subsidiary Corporation or Parent Corporation thereof (or a corporation or
a Parent or Subsidiary Corporation of such corporation issuing or assuming
the Option in a transaction to which Section 424(a) of the Code applies) or
an Affiliated Entity, and unless the Optionee has remained continuously so
employed since the date of grant of the Option. The Committee may further
provide that, in the event that the employment of such an Optionee shall
terminate (other than by reason of death, Disability or, in the case of
Nonqualified Stock Options, retirement), all Options granted to such
Optionee or transferred by such Optionee (as provided in Section 8(i)) that
are exercisable at the time of such termination may, unless earlier
terminated in accordance with their terms, be exercised within three (3)
months after such termination; provided, however, that if the employment of
such an Optionee shall terminate for cause (as determined by the Committee,
in its good faith discretion), all Options theretofore granted to such
Optionee or transferred by such Optionee (as provided in Section 8(i))
shall, to the extent not theretofore exercised, terminate forthwith.
Nothing in the Plan or in any Option granted pursuant hereto shall confer
upon an individual any right to continue in the employ of the Corporation
or any of its divisions, Parent or Subsidiary Corporations or Affiliated
Entities or interfere in any way with
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<PAGE> 32
the right of the Corporation or any such division, Parent or Subsidiary
Corporation or Affiliated Entity to terminate such employment. An Option
subject to the provisions of this Section 8(g) is referred to herein as an
"Employment Option."
(h) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee who
has been granted an Employment Option shall die while employed by the
Corporation or a division or any corporation which was, at the time of
grant of such Employment Option, a Subsidiary Corporation or Parent
Corporation thereof (or a corporation or a Parent or Subsidiary Corporation
of such corporation issuing or assuming the Employment Option in a
transaction to which Section 424(a) of the Code applies) or an Affiliated
Entity, or within three (3) months after the termination of such Optionee's
employment, other than for cause, or if the Optionee's employment shall
terminate by reason of Disability (or, in the case of Nonqualified Stock
Options, retirement), all Employment Options theretofore granted to such
Optionee or transferred by such Optionee (as provided in Section 8(i)), to
the extent otherwise exercisable at the time of death or termination of
employment, may, unless earlier terminated in accordance with their terms,
be exercised by the Optionee or by the Optionee's estate or by a person who
acquired the right to exercise such Employment Option by bequest or
inheritance or otherwise by reason of death or Disability of the Optionee
or by a transferee (as provided in Section 8(i)), at any time within one
year after the date of death, Disability or retirement of the Optionee.
(i) NONTRANSFERABILITY OF OPTIONS. Except as provided in this Section
8(i), no Option granted hereunder shall be transferable by the Optionee to
whom granted, other than by will or the laws of descent or distribution,
and the Option may be exercised during the lifetime of such Optionee only
by the Optionee or such Optionee's guardian or legal representative.
Subject to such conditions as the Committee may prescribe, an Optionee may,
upon providing written notice to the General Counsel of the Corporation,
elect to transfer the Nonqualified Stock Option granted to such Optionee,
without consideration therefor, to members of his or her immediate family
(as defined below), to a trust or trusts maintained solely for the benefit
of the Optionee and/or the members of the Optionee and/or the members of
his or her immediate family, or to a partnership whose only partners are
the Optionee and/or the members of his or her immediate family. Any
purported assignment, alienation, pledge, attachment, sale, transfer, or
encumbrance that does not qualify as a permissible transfer under this
Section 8(i) shall be void and unenforceable against the Plan and the
Corporation. For purposes of this Section 8(i), the term "immediate family"
shall mean, with respect to a particular Optionee, the Optionee's spouse,
children or grandchildren, and such other persons as may be determined by
the Committee. The terms of any such Option Agreement and the Plan shall be
binding upon a permissible transferee, and the beneficiaries, heirs and
successors of the Optionee and, as applicable, a permissible transferee.
Notwithstanding anything in the Plan to the contrary, the Committee or
Board may also provide that certain Options granted pursuant to the Plan
shall be fully and immediately transferable.
(j) EFFECT OF CERTAIN CHANGES.
(1) (i) If there is any change in the number of shares of Common
Stock through the declaration of stock or cash dividends, or
recapitalization resulting in stock splits, or combinations or exchanges
of such shares or other corporate transactions affecting the
capitalization of the Corporation, the aggregate number of shares of
Common Stock available for Options, the aggregate number of shares of
Common Stock available for distribution under the Plan to any single
individual with respect to Options granted hereunder, the number of such
shares covered by outstanding Options, the number of shares set forth in
Section 8(f) hereof and the price per share of such Options shall be
adjusted by the Committee to reflect any increase or decrease in the
number of issued shares of Common Stock; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated. In
the event of any other extraordinary corporate transaction, including,
but not limited to distributions of cash or other property to the
Corporation's shareholders, or in connection with the transaction
described in Section 424(a) of the Code, the Committee may, in its sole
discretion, equitably adjust outstanding Options, in any and all ways,
as it deems appropriate, and the Committee's powers shall include
without limitation, the power to adjust the
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<PAGE> 33
number and/or kind of shares or property in respect to which options may
be exercised, and the power to change the issuer of the option to give
appropriate effect to any such transaction. The Committee may equitably
adjust outstanding Options as it deems appropriate.
(ii) Options may, in the discretion of the Committee, be made
under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Corporation or a company acquired by
the Corporation or with which the Corporation combines ("Substitute
Options"). The number of shares of Common Stock of the Corporation
underlying any Substitute Options shall be counted against the
aggregate number of shares of Common Stock of the Corporation
available for Options under the Plan.
(iii) Any shares of Common Stock of the Corporation delivered
pursuant to an Option may consist, in whole or in part, of authorized
and unissued shares of Common Stock of the Corporation or of treasury
shares.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or division,
including, but not limited to, split-up, split-off or spin-off, or in
the event of a merger or consolidation of the Corporation with another
corporation, the Committee may provide that the holder of each Option
then exercisable shall have the right to exercise such Option (at its
then Option Price) solely for the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable
upon such dissolution, liquidation, or corporate separation or division,
or merger or consolidation by a holder of the number of shares of Common
Stock for which such Option might have been exercised immediately prior
to such dissolution, liquidation, or corporate separation or division,
or merger or consolidation; or the Committee may provide, in the
alternative, that each Option granted under the Plan shall terminate as
of a date to be fixed by the Committee; provided, however, that not less
than thirty (30) days' written notice of the date so fixed shall be
given to each Optionee, who shall have the right, during the period of
thirty (30) days preceding such termination, to exercise the Options
(unless earlier terminated in accordance with their terms) as to all or
any part of the shares of Common Stock covered thereby, including shares
as to which such Options would not otherwise be exercisable; provided,
further, that failure to provide such notice shall not invalidate or
affect the action with respect to which such notice was required.
(3) If while unexercised Options remain outstanding under the Plan;
(i) any corporation, person or other entity (other than the
Corporation) makes a tender or exchange offer for shares of the
Common Stock pursuant to which purchases are made ("Offer"),
excluding any tender or exchange offer that would result in the
voting securities of the Corporation outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 60% of the
combined voting power of the securities of the Corporation or such
surviving entity or any parent thereof outstanding immediately after
such transaction; or
(ii) the stockholders of the Corporation approve a definitive
agreement to merge or consolidate the Corporation with or into
another corporation or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation,
excluding any merger, consolidation, sale or other disposition that
would result in the voting securities of the Corporation outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the securities of the
Corporation or such surviving entity or any parent thereof
outstanding immediately after such transaction; or
(iii) the "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act) of securities representing more than 20% of the
combined voting power of the Corporation is
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<PAGE> 34
acquired by any "person" as defined in Sections 13(d) and 14(d) of
the Exchange Act, excluding any transaction excluded from (i) or (ii)
above.
(iv) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for
any reason to constitute at least a majority thereof (unless the
election, or the nomination for election by the Corporation's
stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors
at the beginning of such period), then from and after the date of the
first purchase of Common Stock pursuant to such Offer, or the date of
any such stockholder approval or adoption, or the date of
consummation of the acquisition of such percentage shall have been
made, or the date on which the change in the composition of the Board
set forth above shall have occurred, whichever is applicable (the
applicable date being referred to hereinafter as the "Acceleration
Date"), all Options shall be exercisable in full, whether or not
otherwise exercisable. Following the Acceleration Date, the Committee
shall, in the case of a merger, consolidation or sale or disposition
of assets, promptly make an appropriate adjustment to the number and
class of shares of Common Stock available for Options, and to the
amount and kind of shares or other securities or property receivable
upon exercise of any outstanding Options after the effective date of
such transaction, and the price thereof.
(4) Paragraphs (2) and (3) of this Section 8(j) shall not apply to
(i) a merger or consolidation in which the Corporation is the surviving
corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash or any
other thing of value or (ii) the transaction contemplated by the
Recapitalization Agreement and Plan of Merger By and Among ATX
Telecommunications Services, Inc., Thomas Gravina, Debra Buruchian,
Michael Karp and the Florence Karp Trust and the Corporation dated as of
March 9, 2000. The determination of the applicability of this Section
8(j)(4) shall be made in the sole and complete discretion of the
Committee. Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the Corporation in
which the Corporation is the surviving corporation and in which there is
a reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result
of a subdivision or combination, but including any change in such shares
into two or more classes or series of shares), the Committee may provide
that the holder of each Option then exercisable shall have the right to
exercise such Option solely for the kind and amount of shares of stock
and other securities (including those of any new direct or indirect
parent of the Corporation), property, cash or any combination thereof
receivable upon such reclassification, change, consolidation or merger
by the holder of the number of shares of Common Stock for which such
Option might have been exercised.
(5) In the event of a change in the Common Stock of the Corporation
as presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within the meaning of
the Plan.
(6) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive, provided that each Incentive Stock Option granted
pursuant to this Plan shall not be adjusted in a manner that causes an
Option which is intended to be an Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option.
(7) Except as hereinbefore expressly provided in this Section 8(i),
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares
of stock of any class or by reason of any dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another
corporation; and any issue by the Corporation of shares of stock of any
class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof
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<PAGE> 35
shall be made with respect to, the number or price of shares of Common
Stock subject to the Option. The grant of an Option pursuant to the Plan
shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its
capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business or
assets.
(k) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares covered by
the Option until the date of the issuance of a stock certificate to him for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 8(j)
hereof.
(l) OTHER PROVISIONS. The Option Agreements authorized under the Plan
shall contain such other provisions, including, without limitation, (i) the
imposition of restrictions upon the exercise of an Option, and (ii) in the
case of an Incentive Stock Option, the inclusion of any condition not
inconsistent with such Option qualifying as an Incentive Stock Option, as
the Committee shall deem advisable.
Without limiting the generality of the foregoing, the Committee shall have
the power to grant options with renewable features as hereinafter described. To
the extent an Option with a renewable feature (an "Original Option")
subsequently is exercised (including exercise through delivery of (X) previously
acquired shares of Common Stock, (Y) cash, or (Z) shares acquired through the
exercise of such Original Option), the Optionee automatically will be granted a
the time of such exercise, a new Option (the "Renewed Option") to purchase the
number of shares of Common Stock so delivered, provided, however, that no such
Renewed Option shall be granted if, at the time of exercise of the Original
Option, either (a) insufficient shares are available under the Plan to cover the
grant of the Renewed Option, or (b) fewer than eighteen months have elapsed
since the date on which CoreComm Incorporated ("CCI") distributed the Common
Stock to the shareholders of CCI. Each Renewed Option will be exercisable upon
substantially the same terms and conditions as the Original Option to which it
relates, except that (A) the per share exercise price of the Renewed Option
shall be 105% of the Fair Market Value of the Common Stock on the date of
exercise of the Original Option, and (B) the Renewed Option shall not itself
have renewable features Notwithstanding the foregoing, the Committee shall have
full authority to alter the terms of any Renewed Option at the time of exercise
of the Original Option to which it relates.
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise, each
Optionee shall agree that;
(a) no later than the date of exercise of any Option granted hereunder, the
Optionee will pay to the Corporation or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind
required by law to be withheld upon the exercise of such Option, and
(b) the Corporation shall, to the extent permitted or required by law, have
the right to deduct federal, state and local taxes of any kind required by law
to be withheld upon the exercise of such Option from any payment of any kind
otherwise due to the Optionee.
10. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that no amendment that requires
stockholder approval under applicable law, under the rules or regulations of any
securities exchange or regulatory agency, or in order for the Plan to continue
to comply with Rule 16b-3 or, if applicable, to comply with the exception for
qualified performance-based
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compensation under Code Section 162(m), or in order for Options intended to
constitute Incentive Stock Options to satisfy the requirements of Section 422 of
the Code shall be effective unless the same shall be approved by the requisite
vote of the stockholders of the Corporation. Except as provided in Section 8
hereof, no suspension, termination, modification or amendment of the Plan may
adversely affect any Option previously granted, unless the written consent of
the Optionee or, as applicable, a transferee, is obtained.
12. INTERPRETATION.
The Plan is designed and intended to comply with Rule 16b-3 and, to the
extent applicable, Sections 162(m) and 422 of the Code, and all provisions
hereof shall be construed in a manner to so comply.
13. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
14. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
15. EFFECTIVE DATE OF PLAN.
The effective date of the Plan is the date the Plan is adopted by the
Board.
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PROXY
CORECOMM LIMITED
110 EAST 59TH STREET, NEW YORK, NEW YORK 10022
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON
MAY 31, 2000
The undersigned hereby appoints George S. Blumenthal, J. Barclay Knapp and
Richard J. Lubasch, and each of them, with full power of substitution, proxies
to represent the undersigned at the Annual Meeting of Shareholders of CoreComm
Limited (the "Company") to be held on Wednesday, May 31, 2000 at 11:15 a.m.,
local time, at the Essex House, Hyde Park Suite, located at 160 Central Park
South, New York, New York 10019, and at any adjournment or postponement thereof
and thereat to vote all of the shares of stock which the undersigned would be
entitled to vote, with all the powers the undersigned would possess if
personally Present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Unless otherwise specified in the boxes provided below, this Proxy will be voted
FOR the nominees for Director, FOR proposals 2, 3 and 4 and, in the discretion
of the above named persons, as to any other matter that may properly come before
the Annual Meeting.
<TABLE>
<S> <C>
1. Election of Directors: Nominees: George S. Blumenthal and Barclay Knapp
[ ] VOTE FOR all nominees listed, except as marked to [ ] VOTE WITHHELD
the contrary above. (TO WITHHOLD YOUR VOTE FOR ANY from all nominees
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
</TABLE>
2. Ratify the adoption of the CoreComm Limited 1999 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratify the adoption of the CoreComm Limited 2000 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratify the appointment of Ernst & Young LLP as the independent auditors of
the Company for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please date and sign on reverse side and return promptly.)
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5. In the discretion of the persons named above, to act upon such other business
as may properly come before the Annual Meeting or any adjournment or
postponement thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" ALL NOMINEES FOR DIRECTOR AND A
VOTE "FOR" PROPOSALS 2, 3 AND 4 SET FORTH ON THE REVERSE SIDE HEREOF. IF ANY
FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL MEETING, IT IS THE INTENTION OF
THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN ACCORDANCE WITH THEIR BEST
JUDGEMENT.
--------------------------------
Signature
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Signature
Dated: 2000
In case of joint owners, each
joint owner must sign. If
signing for a corporation or
partnership or an agent,
attorney or fiduciary, indicate
the capacity in which you are
signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS
ON THIS CARD AND RETURN IN THE ENCLOSED ENVELOPE
