<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:
<TABLE>
<S> <C>
[ ] 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))
</TABLE>
NTL Incorporated
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Lauren Hochman Blair, Esq.
- - --------------------------------------------------------------------------------
(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:
<PAGE> 2
[LOGO OF NTL INCORPORATED]
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT AND
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1997
---------------------------
The Annual Meeting of Stockholders of NTL Incorporated (the "Company") will
be held at 9:45 a.m., local time, on Tuesday, June 3, 1997, at The Helmsley Park
Lane Hotel, The Ballroom Suite, located at 36 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 appointment by the Board of Directors of Ernst & Young
LLP as independent auditors for the year ending December 31, 1997.
3. To approve an amendment to the Company's Employee Stock Option Plan.
4. To transact any other business that may properly be brought before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 14, 1997,
as the record date for the determination of the stockholders entitled to notice
of and to vote at the meeting. Accordingly, only stockholders of record at the
close of business on that date will be entitled to vote at the meeting. The
transfer books will not be closed. A list of the stockholders entitled to vote
at the meeting will be located at the Company's principal executive offices, 110
East 59th Street, New York, New York 10022, at least ten days prior to the
meeting and will also be available for inspection at the meeting.
A copy of the Annual Report for 1996 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,
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1997
<PAGE> 3
NTL INCORPORATED
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
------------------------
PROXY STATEMENT
------------------------
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the Annual Meeting of Stockholders of
NTL Incorporated, formerly International CableTel Incorporated (the "Company" or
"NTL"), 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 solicits this 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 the stockholders is necessary in order to
ensure a quorum and to avoid expenses and delay.
Holders of record of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), at the close of business on April 14, 1997, will be
entitled to vote at the meeting. At the close of business on April 14, 1997,
32,096,667 shares of Common Stock were outstanding and entitled to vote at the
meeting. Each share of Common Stock is entitled to one vote.
The 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 meeting you may, if you wish, revoke your proxy by voting in
person. This proxy statement and the accompanying proxy materials are being
mailed to stockholders on or about April 28, 1997.
The meeting will be held at 9:45 a.m., local time, on Tuesday, June 3,
1997, at The Helmsley Park Lane Hotel, The Ballroom Suite, located at 36 Central
Park South, New York, New York 10019.
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 $4,000, 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.
NAME CHANGE
In March 1997, the Company changed its name from International CableTel
Incorporated to NTL Incorporated to reflect the integration of the services
provided by the Company and NTL Group Limited (which the Company acquired in May
1996) to create a national telecommunications company in the United Kingdom and
to capitalize on NTL Group Limited's legacy in the United Kingdom as a provider
of reliable communications services in a variety of disciplines.
<PAGE> 4
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 10, 1997, by (i) each executive
officer and director of the Company, (ii) all directors and executive officers
as a group and (iii) stockholders holding 5% or more of the Company's Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------
PRESENTLY
EXERCISABLE
EXECUTIVE OFFICERS, DIRECTORS COMMON OPTIONS AND
AND PRINCIPAL STOCKHOLDERS STOCK WARRANTS(1) TOTAL PERCENT (2)
- - ------------------------------------------ -------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
George S. Blumenthal (3).................. 128,785 1,686,759 1,815,544 5.38%
J. Barclay Knapp.......................... 140,932 1,632,779 1,773,711 5.26
Richard J. Lubasch (4).................... 23,279 206,462 229,741 *
Leigh Costikyan Wood...................... 695 75,889 76,584 *
Gregg Gorelick............................ 41,426 36,630 78,056 *
John F. Gregg............................. 800 68,000 68,800 *
Thomas S. DellaRocco (5).................. 4,755 165,555 170,310 *
Steven L. Wagner.......................... -- 61,332 61,332 *
Hamid R. Heidary.......................... 2,500 72,000 74,500 *
Ted H. McCourtney (6)..................... 85,120 55,009 140,129 *
Del Mintz (7)............................. 487,725 55,009 542,734 1.69
Sidney R. Knafel (8)...................... 1,843,106 364,944 2,208,050 6.81
Alan J. Patricof (9)...................... 7,227 55,009 62,236 *
Warren Potash............................. 1,389 55,009 56,398 *
Michael S. Willner (10)................... 553,088 347,000 900,088 2.78
All directors and officers as a group (15
in number).............................. 3,320,827 4,937,386 8,258,213 22.31
Neuberger & Berman L.P. (11).............. 4,184,127 -- -- 13.04
605 Third Avenue
New York, NY 10158
General Electric Investment Corporation
(12).................................... 2,828,824 -- -- 8.82
G.E. Investment Management Incorporated
(12).................................... 712,131 -- -- 2.22
3003 Summer Street
Stamford, CT 06904
Baron Capital, Inc.
Ronald Baron (13)......................... 1,988,458 -- -- 6.20
767 Fifth Avenue
New York, NY 10153
Hyder plc (14)............................ 1,950,000 -- -- 6.08
Swalec Head Offices
Newport Road
St. Mellons, Cardif
South Glamorgen, Wales CF3 9XW
The Capital Group Companies, Inc. (15).... 1,804,610 -- -- 5.62
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
(footnotes on the following page)
- - ---------------
* Represents less than one percent. (footnotes on the following page)
2
<PAGE> 5
(1) Includes shares of Common Stock which may be purchased upon the exercise of
options and warrants which are currently exercisable or become exercisable
in the next 60 days ("Presently Exercisable Options"). Of the options and
warrants shown in the table above, (a) 435,584 options were assumed by NTL
in the Merger, having a weighted average exercise price of $1.62 per share;
(b) 4,417,702 options are employee and non-employee director options that
have been issued by NTL under the 1993 Employee Stock Option Plan, the 1993
Non-Employee Director Stock Option Plan or certain other stock option
agreements, having a weighted average exercise price of $12.84 per share;
and (c) 619,870 are NTL seven-year warrants that were issued pursuant to
certain non-competition agreements having an exercise price of $5.57 per
share.
(2) Includes Common Stock and Presently Exercisable Options and Warrants.
(3) Includes 2,112 shares of Common Stock held by trusts for the benefit of Mr.
Blumenthal's children and 75,000 shares held by the George S. Blumenthal
Annuity Trust.
(4) Includes 111 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
(5) Includes 133 shares of Common Stock owned by Mr. DellaRocco's wife and 76
shares of Common Stock owned by Mr. DellaRocco's son.
(6) Includes 74,073 shares of Common Stock held by a partnership in which Mr.
McCourtney is a general partner and 556 shares of Common Stock held by
trusts for the benefit of Mr. McCourtney's children, as to which shares Mr.
McCourtney disclaims beneficial ownership.
(7) Includes 39,181 shares of Common Stock owned by Mr. Mintz's children or by
Mr. Mintz's children as trustees for their children and 25 shares owned by
Mr. Mintz's wife, as to which shares Mr. Mintz disclaims beneficial
ownership.
(8) Includes 32,692 shares of Common Stock owned by Mr. Knafel's wife and
754,134 shares of Common Stock owned by a trust account for the benefit of
Mr. Knafel's children, as to which shares Mr. Knafel disclaims beneficial
ownership. Includes 26,000 shares owned by a corporation directly and 2,500
shares owned by a trust, as to which Mr. Knafel disclaims beneficial
ownership. An additional 78,581 shares are owned by an adult child of Mr.
Knafel or by a trust account for the benefit of Mr. Knafel's children as to
which shares Mr. Knafel disclaims beneficial ownership.
(9) Includes 69 shares of Common Stock owned by Mr. Patricof's wife and 268
shares owned by, or in trust for the benefit of, Mr. Patricof's children,
as to which shares Mr. Patricof disclaims beneficial ownership.
(10) Includes 117,667 shares of Common Stock held by a trust account for the
benefit of Mr. Willner's children, as to which shares Mr. Willner disclaims
beneficial ownership.
(11) Based solely upon Schedule 13-G (Amendment No. 1), dated February 10, 1997,
filed by Neuberger & Berman L.P. with the Securities and Exchange
Commission (the "SEC").
(12) Based solely upon Schedule 13-G (Amendment No. 1), dated February 4, 1997,
filed by General Electric Investment Corporation with the SEC, with respect
to an aggregate of 3,540,955 shares.
(13) Based solely upon Schedule 13-D, dated April 30, 1996, filed by Baron
Capital, Inc. with the SEC.
(14) Based solely upon Schedule 13-D, dated December 19, 1996, filed by Hyder
plc with the SEC.
(15) Based solely upon Schedule 13-G, dated February 14, 1997, filed by The
Capital Group Companies, Inc. with the SEC.
3
<PAGE> 6
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 ten percent 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 Companys. Officers, directors
and greater than ten percent beneficial owners are required by the SEC's
regulation 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, 1996, its
officers, directors and greater than ten percent beneficial owners have complied
with all Section 16(a) filing requirements applicable to them, except that Mr.
Willner was inadvertently late in filing a form reporting the sale of Common
Stock and each of Mr. Willner and Mr. Knafel inadvertently failed to file a form
reporting the distribution of shares from a liquidating trust. Messrs. Willner
and Knafel each intend to file such form promptly.
ELECTION OF DIRECTORS
(ITEM 1)
ELECTION OF DIRECTORS
Pursuant to the Company's Restated Certificate of Incorporation, 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 sketches appear
in the section immediately following. Each of the nominees are now serving as
directors of the Company and were previously elected by the stockholders 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 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 STOCKHOLDERS
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
stockholders in 1995 and 1996. The current directors will serve for the terms
indicated and until their successors are duly elected and qualified.
4
<PAGE> 7
PRESENT DIRECTORS WHO ARE NOMINEES FOR REELECTION
<TABLE>
<CAPTION>
POSITION
NAME AGE (PROPOSED TERM AS DIRECTOR)
---------------------------------- --- ----------------------------
<S> <C> <C>
Alan J. Patricof.................. 62 Director (2000)
Warren Potash..................... 65 Director (2000)
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
POSITION
NAME AGE (TERM AS DIRECTOR)
---------------------------------- --- ----------------------------
<S> <C> <C>
Sidney R. Knafel.................. 66 Director (1998)
Ted H. McCourtney................. 58 Director (1998)
Del Mintz......................... 69 Director (1998)
George S. Blumenthal.............. 53 Director, Chairman of the
Board and Treasurer (1999)
J. Barclay Knapp.................. 40 Director, President, Chief
Executive Officer and Chief
Financial Officer (1999)
Michael S. Willner................ 45 Director (1999)
</TABLE>
Additional information as of April 15, 1997 regarding the two nominees for
election as directors and the continuing directors and information regarding
executive officers of the Company is as follows:
NOMINEES
Alan J. Patricof, a director of NTL since its formation, is Chairman of
Patricof & Co. Ventures, Inc., a venture capital firm he founded in 1969. Mr.
Patricof also serves as a director of Cellular Communications International,
Inc. ("CCII"), CoreComm Incorporated, the newly formed parent of Cellular
Communications of Puerto Rico, Inc. ("CoreComm") and other privately owned
companies.
Warren Potash, has been a director of NTL since its formation. Mr. Potash
retired in 1991 as President and Chief Executive Officer of the Radio
Advertising Bureau, a trade association, a position he had held since February
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 is also a director of CCII and
CoreComm.
CONTINUING DIRECTORS
George S. Blumenthal, has been Chairman, Treasurer and a director of NTL
since its formation and has been Chairman, Treasurer and a director of OCOM
Corporation, now a subsidiary of NTL ("OCOM") since its inception in 1990. Mr.
Blumenthal was also Chief Executive Officer of NTL until October 1996. Mr.
Blumenthal was President of Blumenthal Securities, Inc. (and its predecessors),
a member firm of The New York Stock Exchange, from 1967 until 1992. Mr.
Blumenthal was Chairman, Treasurer and a director of Cellular Communications,
Inc. ("CCI"), which positions he held since CCI's founding in 1981 until its
merger (the "CCI Merger") in August 1996 into a subsidiary of AirTouch
Communications, Inc. ("AirTouch"). Mr. Blumenthal is Chairman, CEO, Treasurer
and a director of CoreComm and is also a director of Andover Togs, Inc.
J. Barclay Knapp, is the President, Chief Executive Officer, Chief
Financial Officer and a director of NTL and has held these positions since its
formation with the exception that Mr. Knapp was Chief Operating Officer until
October 1996 when he was appointed Chief Executive Officer. Mr. Knapp has also
held these positions at OCOM since its inception in 1990, with the exception
that he was the Executive Vice President from 1990 until April 1993, when he was
appointed President. In addition, Mr. Knapp was also Executive Vice President,
Chief Operating Officer, Chief Financial Officer and a director of CCI, until
the CCI Merger.
5
<PAGE> 8
Mr. Knapp is Executive Vice President, Chief Operating Officer and a director of
CCII and also holds the position of President, Chief Operating Officer, Chief
Financial Officer and director of CoreComm.
Sidney R. Knafel, a director of NTL since its formation, has been Managing
Partner of SRK Management Company, a private investment company, 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., CCII, CoreComm and some privately
owned companies.
Ted H. McCourtney, a director of NTL since its formation, is a General
Partner of Venrock Associates, a venture capital investment partnership, a
position he has held since 1970. Mr. McCourtney also serves as a director of
MedPartners Inc., CCII, CoreComm and several privately owned companies.
Del Mintz, a director of NTL since its formation, is President of Cleveland
Mobile Tele Trak, Inc. and President of 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 predecessor of these companies since June 1967.
Mr. Mintz is President of several other companies, and was President and a
principal stockholder of Cleveland Mobile Cellular Telephone, Inc. before such
company was acquired by merger with CCI's predecessor in May 1985. Mr. Mintz is
also a director of CCII, CoreComm and several privately owned companies.
Michael S. Willner, a director of NTL since October 1993, has served as
President and Chief Operating Officer of Insight Communications Company, L.P.
since 1985. Mr. Willner is currently President of Insight Communications, Inc.,
a position he has held since 1985. Mr. Willner is also a director of Young
Broadcasting, Inc.
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Richard J. Lubasch, 50, has been the Company's Senior Vice
President-General Counsel and Secretary since its formation and has held these
positions at OCOM since its inception in 1990. Mr. Lubasch was Vice
President-General Counsel and Secretary of CCI from July 1987 until the CCI
Merger. Mr. Lubasch is also Senior Vice President-General Counsel and Secretary
of CCII and CoreComm, as well as Treasurer of CCII.
Leigh Costikyan Wood, 39, has been the Company's Senior Vice President
since October 1996 and is the Chief Operating Officer of the Company's U.K.
operations. From April 1993 until the CCI Merger, Ms. Wood had been the Chief
Executive Officer of a Joint Venture between CCI and AirTouch. From October 1982
until November 1984, she was Deputy Chief Financial Officer of General Atlantic
Corp., a private investment firm. Previously, she was employed by Peat Marwick
Mitchell & Co. Ms. Wood is a certified public accountant and holds an M.B.A.
from New York University. Ms. Wood had been Vice President-Operations of CCI
from 1984 until the CCI Merger, and continues to hold that position at CoreComm
and CCII.
Gregg Gorelick, 38, has been the Company's Vice President-Controller 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. He also holds
that position at CCII and CoreComm.
John F. Gregg, 33, has been the Company's Vice President of Corporate
Development since August of 1996. Mr. Gregg joined the Company in 1994 as
Managing Director of Corporate Development. He is Vice Chairman and a director
of Virgin Net, a joint venture between the Company and Virgin Communications
Group. Prior to his employment by the Company, Mr. Gregg was employed by Golder,
Thoma & Cressey, a venture capital firm. Mr. Gregg has a B.S. from Georgetown
University and an M.B.A. from Harvard University.
Thomas S. DellaRocco, 39, is the Company's Vice President-Networks and
Group Director of Network Services of the Company's U.K. operations. Mr.
DellaRocco joined the Company in 1993 as Group Director and head of Construction
and Planning. Mr. DellaRocco has been a Vice President of NTL since June 1994.
6
<PAGE> 9
Previously, Mr. DellaRocco held positions in the CCI/AirTouch joint venture as
Vice President of Network Services (1991), Vice President of Technical
Operations (1989) and Project Manager (1987).
Steven L. Wagner, 45, is the Company's Vice President-Marketing and is
Group Managing Director of the National Media Services division in the Company's
U.K. operations. Mr. Wagner joined the Company in February 1994 as Group
Director of Consumer Services of the Company's U.K. operations and was appointed
Vice President-Consumer Services of NTL in June 1994. Mr. Wagner has spent the
past fifteen years in consumer and business related activities. Most recently,
Mr. Wagner served as Vice President, Eastern Region for the Walt Disney
Company's premium television service, The Disney Channel.
Hamid R. Heidary, 40, is the Company's Vice President-Operations and the
Group Managing Director of the Local Telecoms and Television Services division
in the Company's U.K. operations. Mr. Heidary joined the Company in 1993 and has
served as the Group Managing Director of the Company's U.K. operations and had
been Group Director of Network Services. Mr. Heidary was first appointed as a
Vice President of NTL in June 1994. Mr. Heidary has spent over fifteen years in
various technical roles within the cable television and communications industry.
Prior to joining the Company, Mr. Heidary held the position of Vice President of
Engineering at C-COR Electronics, Inc. of Pennsylvania, USA.
Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
During calendar 1996, eleven meetings (including regularly scheduled and
special meetings) of the Board of Directors of NTL were held. The Board of
Directors has a compensation and option committee and an audit committee.
Messrs. Knafel, McCourtney and Mintz serve as members of the Board of Directors'
compensation and option committee and Messrs. Mintz, Patricof and Potash serve
as members of the Board of Directors' audit committee. The compensation and
option committee has a subcommittee comprised of Messrs. McCourtney and Mintz.
The compensation and option 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 1996, the compensation and option
committee held three meetings and the audit committee held one meeting. No
director during 1996 attended fewer than 77% of the meetings of the Board of
Directors of the Company and committee meetings of the Board of which he was a
member. Directors are reimbursed for out-of-pocket expenses incurred in
attending meetings of the Board and the committees. In addition, as of December
31, 1996, Messrs. Knafel, McCourtney, Mintz, Patricof, Potash and Willner have
each been granted options at the fair market value on the date of grant to
purchase an aggregate of 38,666 shares of Common Stock at a weighted average
price of $10.35 per share. In addition, Messrs. Knafel, McCourtney, Mintz,
Patricof and Potash have each been granted options from OCOM at the fair market
value on the date of grant to purchase an aggregate of 17,943 shares of Common
Stock at a weighted average price of $2.28 per share. Directors who are not
officers are paid a fee of $500 for each Board of Directors meeting and
committee meeting that they attend.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
The Compensation and Option Committee of the Board of Directors (the
"Committee") has the responsibility for the design and implementation of the
Company's executive compensation program. The Committee is composed entirely of
nonemployee 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 compensated its executive officers by tying a very significant
portion of an executive's aggregate compensation to the appreciation in the
Company's stock
7
<PAGE> 10
price. In addition, executive bonuses are linked to the achievement of
operational goals and therefore relate to shareholder return. The objective of
this approach 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.
Each year the Committee conducts a review of the Company's executive
compensation 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 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 long-term value for shareholders over the course of the
Company's existence. In determining the annual compensation for the Chief
Executive Officer, the Committee uses the same criteria as it does for the other
named executives.
BASE SALARY
In furtherance of the Company's incentive-oriented compensation approach
set forth above, cash compensation (annual base salary and bonus) is set below
levels paid by comparable sized telecommunications companies and is supplemented
by equity-based option grants. With respect to 1996, the aggregate annual base
salary for the named executive officers increased by approximately $247,000 from
1995 levels. The 1996 base salary for George S. Blumenthal, the Chief Executive
Officer of the Company until October 1996, was raised by $82,500 to $137,500. In
October 1996, J. Barclay Knapp was named Chief Executive Officer of the Company.
The 1996 base salary for Mr. Knapp was raised by $87,500 to $137,500. Prior to
the CCI Merger, Messrs. Blumenthal and Knapp received most of their salaries
from CCI, the cost of which was indirectly paid by the Company (See footnote (1)
to Summary Compensation Table). As a result of the CCI Merger, the amount of
their salary paid directly rather than indirectly, has now increased.
STOCK OPTIONS
Under the Company's stock option plan, stock options were granted to
certain Company executive officers during 1996. Information with respect to such
option grants to the named executive officers is set forth in the "Option Grants
Table."
Stock options are designed to align the interest of executives with those
of shareholders. The options generally are granted at an exercise price equal to
the market price of the Common Stock on the date of grant and vest over a period
of five years. Accordingly, the executives are provided additional incentive to
create shareholder value over the long term since the full benefit of the
options cannot be realized unless stock price appreciation occurs over a number
of years.
In determining individual option grants, the 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 Committee
also strives to provide each option recipient with an appropriate incentive to
increase shareholder value, taking into consideration their cash compensation
levels.
In 1993, Mr. Blumenthal received an option to purchase 1,386,667 shares of
the Common Stock with an exercise price of $8.81 (the fair market value of
OCOM's common stock on the date of the grant adjusted to reflect a 4-for-3 stock
split (the "Stock Split") by way of stock dividend paid in August 1995). In 1994
and 1996, Mr. Blumenthal did not receive an option grant and in 1995, Mr.
Blumenthal received an option to purchase 266,667 shares of Common Stock with an
exercise price of $22.88 (the fair market value of the Common Stock on the date
of grant adjusted to reflect the Stock Split). In 1996, Mr. Blumenthal exercised
options with respect to 100,000 shares of Common Stock at an exercise price of
$2.44 per share. Mr. Blumenthal now owns 128,785 shares of Common Stock and
holds options to purchase an additional 1,793,426 shares. In 1993, Mr. Knapp
received an option to purchase 1,386,667 shares of the Common Stock
8
<PAGE> 11
with an exercise price of $8.81 (the fair market value of OCOM's common stock on
the date of the grant adjusted to reflect the Stock Split). In 1994 and 1996,
Mr. Knapp did not receive an option grant and in 1995, Mr. Knapp received an
option to purchase 266,667 shares of Common Stock with an exercise price of
$22.88 (the fair market value of the Common Stock on the date of grant adjusted
to reflect the Stock Split). In 1996, Mr. Knapp exercised options with respect
to an aggregate of 128,793 shares of Common Stock at a weighted average exercise
price of $3.86 per share. Mr. Knapp now owns 140,932 shares of Common Stock and
holds options to purchase an additional 1,739,446 shares. The Committee believes
that the equity interests in the Company held by the named executive officers,
including Messrs. Blumenthal and Knapp, represent a significant incentive to
increase overall shareholder value.
COMPENSATION DEDUCTION CAP POLICY
In 1996, the Company's stockholders approved an amendment to the Company's
stock option plan to, among other things, comply with the requirements regarding
non-deductibility of compensation in excess of $1 million under sec.162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Any compensation
realized from the exercise of such stock options granted at fair market value as
of the date of grant thus would generally 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
Sidney R. Knafel
Ted H. McCourtney
Del Mintz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the members of the Compensation and Option Committee were
Sidney R. Knafel, Ted H. McCourtney and Del Mintz.
The Company has entered into a Non-Competition Agreement with Mr. Knafel
which prohibits Mr. Knafel from entering into a competitive business in the
United Kingdom for a period expiring in October 1998. Under the terms of such
agreement, the Company is entitled to an injunction against any violation or
threatened violation of the Agreement. Mr. Knafel has received warrants to
purchase 309,935 shares of Common Stock which are currently exercisable in
consideration of his agreement not to compete. The Company had entered into a
Consulting Agreement with an entity controlled by Mr. Knafel which has since
expired. The aggregate payment made in 1996 under the Consulting Agreement was
$270,000. See "Transactions with Related Parties."
9
<PAGE> 12
GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer, the Company's former Chief Executive Officer who resigned in
October 1996 and the four other most highly paid executive officers for the
three years ended December 31, 1996.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ------------
OTHER ANNUAL COMMON STOCK
SALARY BONUS COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($)(3) ($)(4) OPTIONS(#) COMPENSATION(5)
- - --------------------------- ---- --------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal (2)... 1996 137,500 -- -- -- 3,000
Chairman and Treasurer 1995 55,000 -- -- 266,667 --
1994 50,000 -- -- -- --
J. Barclay Knapp (2)....... 1996 137,500 -- -- -- 3,000
President, Chief 1995 50,000 100,000 -- 266,667 --
Executive Officer and 1994 50,000 75,000 -- -- --
Chief Financial
Officer
Thomas S. DellaRocco....... 1996 149,000 63,100 88,133(a) 35,000 2,500
Vice President -- 1995 131,000 54,400 62,690(b) 33,333 --
Networks 1994 120,000 53,400 57,647(c) 33,333 --
Steven L. Wagner........... 1996 186,000 84,600 98,393(d) 50,000 2,500
Vice President -- 1995 168,000 70,000 140,163(e) 33,333 --
Marketing 1994 136,800 77,000 96,999(f) 26,667 --
Hamid R. Heidary........... 1996 184,000 84,600 82,490(g) 50,000 2,500
Vice President -- 1995 159,000 68,600 79,236(h) 33,333 --
Operations 1994 140,000 66,700 74,645(i) 40,000 --
John F. Gregg.............. 1996 123,750 -- -- 50,000 4,803
Vice President -- 1995 108,333 135,000 -- 53,333 --
Corporate Development 1994 90,000 60,000 -- 20,000 --
</TABLE>
- - ---------------
(1) Through August 1996, officers and other employees of CCI provided
management, financial and legal services to the Company. Amounts charged to
the Company for these services consisted of salaries and indirect costs
allocated to NTL. For the years ended December 31, 1996, 1995 and 1994, CCI
charged the Company approximately $1,194,000, $1,644,000 and $977,000,
respectively. In August 1996, officers and other employees of the Company
began providing management, financial and legal services to CCII and
CoreComm. In 1996, the Company charged CCII and CoreComm $351,000 and
$200,000, respectively, which included salaries and indirect costs. In the
opinion of management of the Company, the above allocations are reasonable.
Through August 1996, Messrs. Blumenthal and Knapp also received salaries
from CCI.
(2) In October 1996, Mr. Blumenthal resigned as Chief Executive Officer of the
Company and Mr. Knapp was appointed Chief Executive Officer of the Company.
(3) As to Messrs. Blumenthal, Knapp and Gregg, 1996 bonuses have not yet been
determined.
10
<PAGE> 13
(4) Other annual compensation reflects perquisites, including housing allowances
and car and fuel allowances, as follows:
(a) housing allowance of $85,966 and car and fuel allowance of $2,167.
(b) housing allowance of $49,617 and car and fuel allowance of $13,073.
(c) housing allowance of $47,585 and car and fuel allowance of $10,062.
(d) housing allowance of $85,351 and car and fuel allowance of $13,042.
(e) housing allowance of $120,339 and car and fuel allowance of $19,824.
(f) housing allowance of $92,145 and car and fuel allowance of $4,854.
(g) housing allowance of $70,808 and car and fuel allowance of $11,682.
(h) housing allowance of $65,113 and car and fuel allowance of $14,123.
(i) housing allowance of $64,416 and car and fuel allowance of $10,229.
(5) All Other Compensation reflects the Company's match of employee
contributions to a 401(k) plan.
OPTION GRANTS TABLE
The following table provides information on stock option grants during 1996
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES
-------------------------------------------- OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES OR BASE ------------------------
GRANTED IN FISCAL PRICE EXPIRATION 5%($) 10%($)
NAME (#)(1) YEAR ($/SHARE) DATE $39.30 $62.58
- - ------------------------------------- --------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal................. -- -- -- -- -- --
J. Barclay Knapp..................... -- -- -- -- -- --
Thomas S. DellaRocco................. 35,000 2.53% 24.125 03/25/06 531,125 1,345,925
Steven L. Wagner..................... 50,000 3.62 24.125 03/25/06 758,750 1,922,750
Hamid R. Heidary..................... 50,000 3.62 24.125 03/25/06 758,750 1,922,750
John F. Gregg........................ 50,000 3.62 24.125 03/25/06 758,750 1,922,750
</TABLE>
- - ---------------
(1) All options were granted on March 26, 1996 at an exercise price equal to the
closing price of the Common Stock on The Nasdaq Stock Market's National
Market ("NNM") on such date; 20% were exercisable upon issuance, 20% became
exercisable on January 1, 1997 and an additional 20% will become exercisable
on each of January 1, 1998, 1999 and 2000. Upon a change of control of the
Company (other than as contemplated by the Subscription Agreement) all
unvested options become fully vested and exercisable.
(2) 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.
11
<PAGE> 14
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information regarding option exercises
during 1996 by the named executive officers and the value at December 31, 1996
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
UNDERLYING UNEXERCISED IN-THE-
SHARES UNEXERCISED OPTIONS MONEY OPTIONS AT
ACQUIRED ON AT FY-END (#) FY-END ($)*
EXERCISE VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME (#) REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- - ----------------------------- ----------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
George S. Blumenthal......... 100,000 2,262,500 1,356,093(E) 21,863,194(E)
437,333(U) 4,938,680(U)
J. Barclay Knapp............. 128,793 3,430,698 1,302,113(E) 20,767,503(E)
437,333(U) 4,938,680(U)
Thomas S. DellaRocco......... -- -- 125,222(E) 1,608,084(E)
81,333(U) 501,914(U)
Steven L. Wagner............. -- -- 39,333(E) 158,916(E)
70,667(U) 169,836(U)
Hamid R. Heidary............. -- -- 47,333(E) 216,166(E)
76,000(U) 208,000(U)
John F. Gregg................ -- -- 43,332(E) 148,914(E)
80,001(U) 179,002(U)
</TABLE>
- - ---------------
* Based on the closing price on the NNM on December 31, 1996 of $25.25.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph sets forth the Company's cumulative shareholder return
during the period from October 14, 1993 through December 31, 1996 as well as The
Nasdaq Stock Market (U.S.) Index and the Center for Research in Security Prices
("CRSP") Index of Nasdaq Telecommunications Stocks during such period.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) NTL INC PEER GROUP BROAD MARK
<S> <C> <C> <C>
10/14/93 100.00 100.00 100.00
12/31/93 108.50 91.83 100.51
12/31/94 127.59 76.64 98.25
12/31/95 112.64 100.36 138.94
12/31/96 116.09 102.59 170.91
</TABLE>
- - ---------------
NOTE: Stock price performance shown above for the Common Stock is historical
and not necessarily indicative of future price performance.
13
<PAGE> 16
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
Subject to ratification by the stockholders, 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, 1997.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the 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 1997 will require the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present in person or
represented by proxy at the annual meeting 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 have no effect on the outcome
of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR SUCH RATIFICATION
PROPOSAL TO AMEND EMPLOYEE STOCK OPTION PLAN
(ITEM 3)
GENERAL
In 1993, the then sole stockholder of the Company approved the
International CableTel Incorporated 1993 Stock Option Plan which has since been
amended and restated and renamed the NTL Incorporated 1993 Stock Option Plan
(the "Option Plan"). In order to continue and to enhance the effectiveness of
the Option Plan, the Board of Directors has approved a proposal (the "Proposal")
to amend the Option Plan, subject to approval by stockholders at the Annual
Meeting. Summaries of the Proposal and the other material Option Plan provisions
are set forth below. The summaries are qualified in their entirety by the full
text of the Option Plan, as amended to reflect the Proposal, attached to this
Proxy Statement as Appendix A. The provision added to the Option Plan by the
Proposal is underlined. The provision deleted by the Proposal is crossed out
with a solid line on such appendix.
SUMMARY OF PROPOSAL
The Proposal seeks to amend the Option Plan by increasing the total number
of shares available for issuance under the Option Plan from 5,053,333 to
6,653,333 shares (an increase of 1,600,000 shares, or approximately 4.9% of the
total shares of Common Stock outstanding as of the record date). Any options
granted with respect to the 1,600,000 shares referred to above will be granted
at no less than 85% of the fair market value of such shares on the date of
grant.
SUMMARY OF MATERIAL PLAN PROVISIONS NOT AFFECTED BY PROPOSAL
Under the terms of the 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 Option Plan. The closing price of the Common Stock on the Nasdaq Stock
Market's National Market on April 14, 1997 was $19.875.
14
<PAGE> 17
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 stockholders 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 15 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 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 the period).
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, 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 Option Plan after the expiration of 10
years following its effective date. In general, the Option Plan shall be
administered by the Compensation and Option Committee of the Board of Directors.
The Committee will decide 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 may interpret the 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 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.
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 Option Plan. This summary is not intended to be exhaustive and,
among other things, does not describe state, local or foreign tax consequences.
15
<PAGE> 18
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 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.
16
<PAGE> 19
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.
VOTE REQUIRED FOR ADOPTION
The affirmative vote of the holders of shares representing a majority of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the subject matter is required for approval of the Proposal. In
determining whether the Proposal has received the requisite number of
affirmative votes, abstentions will be counted and 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 Option Plan amendment will become
effective if and when the stockholders vote in favor of the Proposal. If the
Proposal should not be approved by the stockholders, the Option Plan will be
continued as in effect prior to the amendment described herein.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR SUCH PROPOSAL
TRANSACTIONS WITH RELATED PARTIES
In October 1993, the Company entered into a consulting agreement (the
"Consulting Agreement") with Insight Communications Company, L.P. ("Insight
U.S."), under which Insight U.S. provides advice and assistance to the Company
with respect to its cable television and telecommunications operations in the
United Kingdom. Mr. Knafel, through a wholly-owned corporation, is a limited
partner in Insight U.S., and controls indirectly the general partner of Insight
U.S. Mr. Willner is a limited partner in Insight U.S. and its general partner.
Pursuant to the Consulting Agreement, which had an initial term of three years,
the Company agreed to pay Insight U.S. a fee of $50,000 per month for the first
year, $40,000 per month for the second year and $30,000 per month for the third
year. The Consulting Agreement was terminated in accordance with the terms of
the agreement and expired in October 1996.
In October 1993, the Company also entered into non-competition agreements
with Sidney R. Knafel, Michael S. Willner and other persons associated with
Insight U.K. The non-competition agreements prohibit Messrs. Knafel and Willner
and others from entering into a competitive business in the United Kingdom for a
17
<PAGE> 20
period ending in 1998 with respect to Mr. Knafel, ending in 1998 (subject to
reduction) for Mr. Willner, and a shorter period of time for the others. Under
the terms of such agreements, the Company is entitled to an injunction against
any violation or threatened violation of the non-competition agreements. Messrs.
Knafel and Willner and others have received warrants to purchase an aggregate of
898,364 shares of Common Stock which are currently exercisable in consideration
of their agreements not to compete.
Pursuant to an acquisition agreement entered into in 1993, at the 1996
Annual Meeting of Stockholders, the Company nominated Michael S. Willner for
reelection to the Board of Directors for an additional three-year term.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting must be received by the Company at the address set forth on the first
page of this Proxy Statement on or before December 29, 1997, to be considered
for inclusion in the Company's Proxy Statement and Form of Proxy relating to
that meeting.
OTHER BUSINESS
The management does not intend to bring any other matters before the
meeting. The management is not informed of any other business which others may
bring before the meeting. However, if any other matters should properly come
before the meeting, or at any adjournment or adjournments 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,
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1997
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APPENDIX A
NTL INCORPORATED
1993 STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JUNE 3, 1997)
1. PURPOSE; CONSTRUCTION.
This NTL Incorporated 1993 Stock Option Plan, as amended and restated
effective June 3, 1997 (the "Plan"), is intended to encourage stock ownership by
employees of NTL Incorporated (the "Corporation") and its divisions and
subsidiary and parent 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 on such date or on the last preceding
date on which there was a sale of Common Stock in such market, (ii) if the
shares of Common Stock are then admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or
other comparable quotation system and have been designated as a National
Market System ("NMS") security, or if the shares of Common Stock are then
listed on a national securities exchange, the closing sales price per share
on such date 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, admitted to quotation on
NASDAQ or other comparable quotation system, or listed on 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
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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.
(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 Option Agreements (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.
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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.
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 and Subsidiary Corporations and Parent Corporations and (ii) in
the case of Nonqualified Stock Options, also 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.
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 5,053,333
6,653,333. 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(f),
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. Any options granted as Incentive Stock Options
shall be traded as Nonqualified Stock Options 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 such 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 Option Price 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
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 and the portion, if any, constitutes a Nonqualified Stock Option.
(c) Option Price. Each Option Agreement shall state the Option Price,
which, 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 which, in
the case of Nonqualified Stock Options, shall be determined by the
Committee. The Option Price shall be subject to adjustment as provided in
Section 8(i) hereof. An Option shall be considered to be granted on the
later of the date the Committee adopts a resolution expressly granting such
Option or the date the Plan is approved by the Stockholders of the Company.
(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 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 permissible 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, this such exercise period shall not exceed ten (10)
years from the date of grant of such Option. The exercise period shall be
subject to earlier termination as provided in Sections 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 individual(s) as the
Committee may from time to time designate.
(f) Limitation on Awards. Commencing with the 1996 calendar year,
grants of options under the Plan to any individual in any calendar year
shall be limited to Options to purchase no greater than 300,000 shares of
Common Stock.
(g) Termination. Except as provided in this Section 8(g) and in
Section 8(h) hereof, an Option may not be exercised by the Optionee to whom
it was granted or by a transferee to whom such Option was terminated (as
provided in Section 6(j)) 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. In the event that the employment of 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 by the Optionee or by a
transferee within three (3) months after such termination; provided,
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however, that if the employment of an Optionee shall terminate for cause,
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 the right of the Corporation or any such division, Parent or
Subsidiary Corporation or affiliated entity to terminate such employment.
(h) Death, Disability or Retirement of Optionee. If an Optionee shall
die while employed by the Corporation or a division thereof 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, 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 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 Option by bequest or
inheritance or otherwise by reason of the 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 and 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. To the
extent the Option Agreement so provides, and 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 Options granted to such Optionee pursuant to such
agreement, 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 his or her
immediate family, or to a partnership or partnerships 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 and the Plan shall be binding
upon a permissible transferee, and the beneficiaries, executors,
administrators, heirs and successors of the Optionee and, as applicable, a
permissible transferee.
(j) 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, 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 rounded to the nearest whole share. 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.
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(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"), 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 15% of the
combined voting power of the Corporation is acquired by any "person"
as defined in section 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.
Notwithstanding the foregoing, the transactions contemplated by the
Subscription Agreement or the transactions related thereto shall not
give rise to an Acceleration Date (including, but not limited to, any
distribution or acquisition by any Person deemed not to be an "Acquiring
Person" under the shareholders rights plan referred to in the
Subscription Agreement). The "Subscription Agreement" means that certain
Subscription Agreement, dated as of April 8, 1993, by and among Insight
Communications Company U.K., L.P., OCOM Corporation and the Corporation,
as amended.
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(4) Paragraphs (2) and (3) of this Section 8(j) shall not apply to
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. 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.
(7) Except as hereinbefore expressly provided in this Section 8(j),
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.
(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) Rights as an Employee. Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any Optionee any right to
continue in the employ of the Corporation or affect the right of the
Corporation to terminate the employment of any Optionee at any time with or
without cause.
(m) 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.
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise, each
Optionee shall agree that --
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(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 and employment taxes of
any kind required by law to be withheld upon the exercise of such Option
from any payment 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, or the
date the Plan is approved by the stockholders of the Corporation, whichever is
earlier.
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 Delaware 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
permissible transferee (as provided in Section 8(i)) 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 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.
A-8
<PAGE> 29
NTL INCORPORATED, 110 EAST 59TH STREET, NEW YORK, N.Y. 10022
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 3,
1997
The undersigned hereby appoints George S. Blumental, J. Barclay Knapp and
Richard J. Lubasch, and each of them, with full power of substitution, proxies
that represent the undersigned at the Annual Meeting of Stockholders of NTL
Incorporated ("the Company") to be held at 9:45 a.m., local time, on Tuesday,
June 3, 1997, at The Helmsley Park Lane Hotel, The Ballroom Suite, located at 36
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. The Board of Directors recommends that you vote
FOR the following proposals.
1. Election of Directors: Nominees: Alan J. Patricof and Warren Potash
<TABLE>
<S> <C>
[ ] VOTE FOR both nominees listed, except as marked to the contrary above [ ] VOTE WITHHELD from both
(IF ANY). (To withhold your votes for either individual nominee strike nominees.
a line through the nominee's name in the list above.)
</TABLE>
2. Ratify the appointment of Ernst & Young LLP as the independent auditors of
the Company for the fiscal year ending December 31, 1997.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
3. Approve an amendment to the Company's Employee Stock Option Plan.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Please date and sign on reverse side and return promptly.)
<PAGE> 30
(Continued from other side)
4. In their discretion, to act upon such other business as may properly come
before the 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" THE PROPOSALS 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 JUDGMENT.
-----------------------------------
Signature
-----------------------------------
Signature
Dated , 1997
In case of joint owners, each joint
owner must sign. If signing for a
corporation or partnership or as
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.
