<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Audio Communications Network, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AUDIO
----------------------------
COMMUNICATIONS NETWORK, INC.
Orlando, Florida 32801
NOTICE OF AND PROXY STATEMENT
FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
MAY 30, 1996
April 19, 1996
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders
which will be held at 10:30 AM (EDT), Thursday, May 30, 1996. A formal notice
setting forth the business to come before the meeting and a proxy statement are
attached.
In order that your shares may be represented, please sign and return the
enclosed proxy form. If you do attend the meeting, you may withdraw your proxy
and vote in person, if you wish.
Shareholders of record at the close of business on April 3, 1996, will be
entitled to vote at the meeting. A copy of the Annual Report for 1995 has been
mailed to each shareholder of the Company.
/s/ A. J. Schell
A. J. Schell
Chairman and Chief Executive Officer
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC.
Orlando, Florida 32801
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 30, 1996
TO THE SHAREHOLDERS OF
AUDIO COMMUNICATIONS NETWORK, INC.:
The Annual Meeting of Shareholders of Audio Communications Network, Inc.
will be held on Thursday May 30, 1996, at 10:30 AM (EDT) at the Radisson Plaza
Hotel, 60 South Ivanhoe Boulevard, Orlando, Florida 32804.
The meeting will be held for the following purposes:
1. To elect eight (8) Directors of the Company for the ensuing year and
until their successors have been elected and qualified.
2. Approval of new Incentive Stock Option Plan.
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Shareholders of record at the close of business on April 3, 1996, will
be entitled to vote at the Annual Meeting.
It is hoped that you will be able to attend the meeting, but in any event,
we will appreciate it if you will date, sign and return the proxy in the
enclosed envelope as promptly as possible. If you are able to be present at the
meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors
/s/ Doris K. Krummenacker
Doris K. Krummenacker
Secretary
Dated: April 19, 1996
2
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC.
1000 Legion Place, Suite 1515
Orlando, Florida 32801
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 30, 1996
This proxy statement and the enclosed form of proxy are being sent to
shareholders of Audio Communications Network, Inc. on or about April 19, 1996,
in connection with the solicitation by the Board of Directors of proxies to be
used at the Annual Meeting of Shareholders of the Company. The meeting will be
held on Thursday, May 30, 1996, at 10:30 AM (EDT) at the Radisson Plaza Hotel,
60 South Ivanhoe Boulevard, Orlando, Florida 32804.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked by written revocation received by the Company before such proxy is
exercised. The shares represented by the proxy will be voted unless the proxy
is mutilated or otherwise received in such form or at such time as to render it
not votable.
The record of shareholders entitled to vote will be taken at the close of
business on April 3, 1996. On that date, the Company had outstanding and
entitled to vote 2,243,821 shares of common stock, $.25 par value. Each share
of common stock entitled the holder to one vote. Shareholders representing a
majority of the outstanding common stock must be present to constitute a quorum
at the Annual Meeting.
ELECTION OF DIRECTORS
The bylaws of the Company provide for eight (8) Directors and at this
meeting a full board of eight (8) will be elected by plurality vote for one year
and until the election and qualification of their successors. Each nominee is
at present available for election. If any nominee should become unavailable,
which is not now anticipated, the persons voting the accompanying proxy may, in
their discretion, vote for a substitute. Information concerning the nominees is
set forth as follows. The information with respect to ownership of shares of
Audio Communications Network, Inc. is as of February 29, 1996.
MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES.
3
<PAGE>
DIRECTORS NOMINATED FOR ELECTION AT THE MEETING
<TABLE>
<CAPTION>
Shares of
Company Common
Year Stock Owned
Term First Beneficially as of
Name Will Principal Occupation Became February 29, 1996
(Age) Expire or Employment Director (Percent of Class)
----- ------ -------------------- -------- ------------------
<S> <C> <C> <C> <C>
A. J. Schell 1997 Chairman of the Board, President & 1987 597,986 (1)
(60) Chief Executive Officer of (26.7%)
the Company for more than the past
five years. President and Owner of
American Music Network, Inc.,
Fresno, California, 1976 to March 1994.
Doris K. 1997 Vice President, Secretary/Treasurer 1990 18,607 (2)
Krummenacker of the Company for more than the (0.8%)
(69) past five years.
Ralph L. Weber 1997 Consultant to the Company, 1956 57,650
(82) June 1990 to 1994; formerly (2.6%)
Chairman of the Board and Chief
Executive Officer.
Nat M. Turnbull 1997 Vice President & Secretary of the 1959 26,139
(82) Company, 1969 to June 1990. (1.2%)
Senior member of the law firm of
Turnbull, Abner & Daniels, Winter
Park, Florida. A practicing attorney
since 1948.
Ben B. Moss 1997 President, Florida Brace Corp., 1965 20,569
(74) Winter Park, Florida since 1964. (0.9%)
This company is engaged in the
business of manufacture and
distribution of orthopedic appliances.
</TABLE>
(1) Includes exercisable options for 25,000 shares.
(2) Includes exercisable options for 6,500 shares.
4
<PAGE>
<TABLE>
<CAPTION>
Shares of
Company Common
Year Stock Owned
Term First Beneficially as of
Name Will Principal Occupation Became February 29, 1996
(Age) Expire or Employment Director (Percent of Class)
----- ------ -------------------- -------- ------------------
<S> <C> <C> <C> <C>
C. Lee Maynard 1997 Formerly Chairman of the Board & 1985 30,900
(54) Chief Executive Officer, Enterprise (1.4%)
National Bank of Tampa, 1987 to
1992. Real Estate Investor from 1992
to present.
Patrick J. 1997 Certified Public Accountant since 1988 11,297
Dougherty 1970; President of Patrick J. (0.5%)
(52) Dougherty, CPA, PA, since 1982.
Robert Dyer 1997 Partner in the Orlando law firm of 1990 33,701
(63) Allen, Dyer, Doppelt, Franjola & (1.5%)
Milbrath since November 1980;
specializes in retail securities law.
Practicing attorney since 1961.
</TABLE>
The current Executive Officers are A. J. Schell (Chairman of the Board,
President and Chief Executive Officer) and Doris K. Krummenacker (Vice
President, Secretary and Treasurer), as to whom information is presented above
in the list of nominees for election as Directors, and Mary Flemmings (age 40)
who serves as Vice President/Administration. She has been employed by the
Company in various capacities since 1987. She became a Vice President in
January 1990.
5
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of February 29, 1996, information with
respect to common stock ownership of each person known by the Company to own
beneficially more than 5% of the shares of the Company's common stock, and all
Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Name & Address of Number of Shares Percentage of Common
Beneficial Owner Beneficially Owned Stock Outstanding
----------------- ------------------ --------------------
<S> <C> <C>
A. J. Schell 597,986 (1) 26.7%
1000 Legion Place, Suite 1515
Orlando, FL 32801
B. Waring Partridge III 160,000 (2) 7.1%
900 Holland Rd.
Far Hills, NJ 07931-2637
William D. Balthrope 160,000 (2) 7.1%
4242 N. Pan American Expwy.
San Antonio, TX 78219
Fred C. Edwards 175,600 (2) 7.8%
748 Banana Lake Road
Lake Mary, FL 32746
A.E.I. Music Network, Inc. 134,175 (2) 6.0%
900 E. Pine Street
Seattle, WA 98122
All Directors and Executive Officers 796,949 (3) 35.5%
as a group (9 persons)
</TABLE>
(1) Includes exercisable options for 25,000 shares.
(2) Based on information provided in Schedules 13D filed with the Company
pursuant to the rules of the Securities and Exchange Commission.
(3) Includes exercisable options for 36,500 shares.
6
<PAGE>
SUMMARY COMPENSATION TABLE
The table below sets forth certain summary compensation information as to the
Company's Chief Executive Officer for the years shown. No other executive
earned as much as $100,000 in annual compensation for any such year.
<TABLE>
<CAPTION>
Annual Compensation
- ---------------------------------------------------------
Name and All Other
Principal Position Year Salary ($) Bonus ($)(1) Compensation ($)(2)
- ------------------------------------------------------------- -------------------
<S> <C> <C> <C> <C>
A. J. Schell 1995 232,650 50,000 23,607
Chairman, President & 1994 207,199 25,000 20,528
Chief Executive Officer 1993 206,473 - 17,947
</TABLE>
(1) Bonus amounts are shown in the year for which they were awarded.
(2) Represents amounts contributed by the Company for Mr. Schell's account in
the Company's target benefit pension plan.
AGGREGATE OPTIONS TABLE
The following table sets forth information concerning unexercised options held
by the Company's Chief Executive Officer at December 31, 1995. He exercised no
options in 1995. The options were granted under the Company's prior Incentive
Stock Option Plan.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
At Fiscal Year End (#) At Fiscal Year End ($)
- ---------------------------------------------------------------------------------
Name Exercisable (1) Unexercisable Exercisable (2) Unexercisable
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A. J. Schell 25,000 shares None $15,625 None
</TABLE>
(1) The options have a weighted exercise price per share of $1.50, with an
expiration date of December 18, 1996.
(2) Based on the difference between the exercise price and the fair market
value of the common stock on December 31, 1995.
ARRANGEMENTS WITH DIRECTORS
Directors are compensated with cash or stock at the rate of $300.00 per
meeting attended. Seven Directors received stock in lieu of cash for the year at
the fair market value of the stock on the date of the meetings. Prices ranged
from $1.125 to $2.125 per share. One Director received $300.00 per meeting for
each meeting he attended.
In addition, the Company pays fees for legal services to the law firm of
Turnbull, Abner & Daniels, of which Nat M. Turnbull is a partner, and pays fees
for tax advice to Patrick J. Dougherty, CPA, PA, of which Patrick J. Dougherty
is a principal.
7
<PAGE>
INCENTIVE STOCK OPTION PLAN
The Board of Directors approved, on February 28, 1996, a new Incentive
Stock Option Plan (the "Plan"). The Plan is intended to replace the Company's
prior Incentive Stock Option Plan, under which no further Incentive Stock
Options may be granted. The Plan (in the form attached as Exhibit A to this
proxy statement) is presented for approval by the shareholders at the Annual
Meeting. The affirmative vote of the holders of a majority of the shares of
common stock represented in person or by proxy at the meeting will be required
for approval of the Plan. Please refer to Exhibit A for the full text of the
Plan.
The objectives of the Plan are to motivate key employees and officers of
the Company and its subsidiaries to continue and to accelerate their efforts to
improve the success and growth of the Company. The class of currently eligible
employees now consists of approximately 82 persons.
The Plan covers 400,000 shares of common stock, subject to possible
adjustment for stock dividends, stock splits and/or other changes in the
Company's capitalization and corporate structure. The common stock subject to
the Plan may be authorized but unissued shares, treasury shares, or shares
otherwise acquired by the Company.
Directors who are not also Officers or employees of the Company or its
subsidiaries are not eligible to participate in the Plan.
The Board of Directors of the Company may amend or terminate the Plan at
any time, however, certain amendments may not be adopted without the approval of
the shareholders including any amendment that would increase the total number of
shares issuable under the Plan.
The Plan will be administered by a Committee of disinterested Directors,
currently the Company's Compensation Committee, for as long as may be required
to exempt grants from Section 16(b) of the Securities Exchange Act of 1934. With
respect to Incentive Stock Options, the aggregate fair market value (based on
the grant date) of common stock as to options of an individual first becoming
exercisable in any calendar year shall not exceed $100,000. The option price per
share shall be at least equal to the fair market value of the common stock on
the date the option is granted. For any optionee owning more than 10% of the
outstanding common stock, the option price per share of an Incentive Stock
Option must be 110% of the fair market value of the common stock on the date the
option is granted, and the option may not be exercisable for longer than five
years after the grant date. As of March 14, 1996, the market value of the common
stock (based on quotations from the NASD OTC Bulletin Board) was $2.125 per
share.
Options may only be exercised when the optionee is an Officer or
employee of the Company or within three or twelve months of the date of
termination depending on the reason for termination, and the term of an option
may not exceed ten years. The exercise price for option shares will be payable
in cash.
Options issuable under the Plan are intended to qualify as "Incentive
Stock Options" under Section 422 of the Internal Revenue Code of 1986 as
amended. Generally, upon the exercise of an Incentive Stock Option, the optionee
will recognize no income for federal income tax purposes. The difference between
the exercise price of the Incentive Stock Option and the fair market value of
the shares subject to the option at the time of exercise is an item of tax
preference which may require payment of an alternative minimum tax. On the sale
of shares acquired by exercise of an Incentive Stock Option (assuming that the
sale does not occur within two years of the date of grant of the option or
within one year from the date of exercise), any gain will be taxed to the
optionee as long-term capital gain.
The Company will not be entitled to a tax deduction upon the grant or
exercise of an Incentive Stock Option or upon the sale of any share acquired
pursuant to such an exercise except that a deduction may be available to the
Company if the employee sells the shares so acquired within two years of the
date the
8
<PAGE>
option was granted or one year of the date of exercise.
No options will be granted under the Plan until shareholder approval of the
Plan. Benefits which may be received by eligible employees if the Plan is
approved (or which would have been received if the Plan had been in effect in
the last fiscal year) are not determinable.
MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" THE PLAN.
1993 EMPLOYEE STOCK PURCHASE AND STOCK BONUS PLAN
In February 1993, the Board adopted an Employee Stock Purchase and Stock Bonus
Plan. The Plan permits the purchase of up to 200,000 shares of common stock
from the Company by employees of the Company (other than officers and directors)
and subsidiaries from time to time at fair market value. The Plan also permits
up to 300,000 shares of common stock of the Company to be issued to key
employees of the Company and subsidiaries, including officers, at fair market
value, in lieu of cash bonuses, in whole or in part. The term of the Plan is
for ten years. The Plan may be amended or terminated by the Board of Directors
at any time.
CERTAIN TRANSACTIONS
As previously reported, pursuant to the Company's plan to build long-term
shareholder value through acquisitions and expansion of its subscriber base, the
Company acquired on March 4, 1994, all the outstanding stock of American Music
Network, Inc. ("AMN"), previously owned by Mr. Schell since 1976, in exchange
for 528,474 newly issued shares of the Company's common stock. The transaction
was unanimously approved by all of the Company's disinterested Directors in
accordance with Florida law. In addition, the Board of Directors received an
opinion from an independent financial advisor that the consideration received by
the Company was fair to the Company's shareholders from a financial point of
view. The valuation of AMN in the transaction was based on a multiple of its
recurring monthly revenues (which were approximately $82,000), less AMN's
liabilities, in accordance with standard industry practices. The Company common
stock component of the exchange ratio was fixed at $2.75 per share, which was
substantially above the market value. If market value had been used, Mr. Schell
would have received a substantially larger number of shares. Upon consummation
of the transaction, the Company's lending bank released Mr. Schell as a
guarantor of approximately $1,200,000 in AMN bank debt. Mr. Schell now owns
572,986 shares, or 25.5%, of the Company's outstanding common stock, in addition
to exercisable options for 25,000 shares. Mr. Schell has waived any right to
assert that the transaction constituted a change of control of the Company under
his revised employment agreement (described below), but has not waived any
rights with respect to future changes of control under the employment agreement.
EMPLOYMENT AGREEMENT
Believing that the continued services and contribution of certain key executives
are in the best interest of the Company's stockholders and are essential to the
Company's well-being, the Company has entered into an employment agreement with
Mr. A. J. Schell.
The agreement is for a term of five years (revised in September 1993 and
extended until May 31, 1998) and provides for the terms and conditions of his
employment. It also provides that in the event of his termination following a
change in working control in management of the Company, Mr. Schell will receive
a sum of money in cash equal to three (3) times his then annual compensation.
Additionally, Mr. Schell shall have the right to exercise immediately any
issued, but unexercised, employee stock option.
9
<PAGE>
BOARD OF DIRECTORS AND STANDING COMMITTEES
If elected, the eight (8) persons named as Director nominees in the
foregoing table will constitute the Board of Directors of the Company. Normally
regular meetings of the Board are held six times per year. During 1995, the
Board held a total of six (6) meetings.
The Board of Directors presently maintains three standing committees: an
Audit Committee, Compensation Committee and Nominating Committee, which are
described below. Members of these committees are elected annually at the regular
Board meeting following the annual shareholder's meeting.
AUDIT COMMITTEE
The Audit Committee is presently comprised of Messrs. Schell, Maynard,
Dougherty and Ms. Krummenacker. The Audit Committee meets once each year. The
meeting is scheduled to coincide with the completion of the annual audit by the
Company's independent auditors. The principal responsibilities of and functions
generally performed by the Audit Committee are as follows: (1) recommendation of
the Accounting firm to be employed by the Company as its independent auditors;
(2) consultation with the Company's independent auditors with regard to the
audit plan; (3) review of the Company's financial statements with the
independent auditors prior to publication; (4) determination that no
restrictions are placed by management on the scope of implementation of the
independent auditor's examination of the Company; and (5) consultation with the
independent auditors with respect to the adequacy of internal accounting
controls.
COMPENSATION COMMITTEE
The Compensation Committee is presently comprised of Messrs. Dyer and
Moss. The Compensation Committee holds one regular meeting annually and any
additionally called meetings as required for the purpose of reviewing and
determining the compensation of all Officers and Directors and to approve the
salary philosophy for all other employees. The Compensation Committee held two
(2) meetings in 1995.
NOMINATING COMMITTEE
The Nominating Committee is presently comprised of Messrs. Schell,
Maynard, Turnbull, and Weber. The Nominating Committee meets once each year, at
least thirty days prior to the Company's annual meeting of shareholders for the
purpose of nominating and recommending the selection of Directors to comprise
the Company's Board of Directors for the ensuing year.
The Nominating Committee will consider qualified nominees for election
at the 1997 Annual Meeting. Recommendations should be sent to the Nominating
Committee, c/o Corporate Secretary, Audio Communications Network, Inc., 1000
Legion Place, Suite 1515, Orlando, Florida 32801, no later than February 14,
1997.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Deloitte & Touche, Certified Public Accountants,
Orlando, Florida office have served as Independent Public Accountants for the
Corporation continuously since 1962.
Audit services performed by Deloitte & Touche for the year ended
December 31, 1995, consisted of the examination of the consolidated financial
statements of the Company and its subsidiaries for the year ended December 31,
1995, and preparation of various reports based thereon and services related to
filings
10
<PAGE>
with the Securities and Exchange Commission. Non-audit services were
consultations on various regulatory matters. Each professional service was
approved either in advance or was subsequently approved and the possible effect
on the auditor's independence was considered by the Board of Directors.
A representative of Deloitte & Touche will be present at the annual
meeting of shareholders and will be given an opportunity to make a statement and
will be available to respond to appropriate questions from shareholders.
OTHER MATTERS
If any other matters, not described herein, properly come before the
meeting, it is the intention of the persons designated as proxies to vote in
accordance with their best judgment on such matters.
The election of Directors requires a plurality of votes cast at the
meeting. In general, action to approve any other matter would require a majority
of the votes cast on the matter. An abstention as to any matter does not
constitute a vote "for" or "against" and will be disregarded. With respect to
approval of the Incentive Stock Option Plan, however, which requires a majority
vote of all shares represented at the meeting, an abstention will have the same
effect as a negative vote. "Broker non-votes" (i.e., where a broker or nominee
submits a proxy specifically indicating lack of discretionary authority to vote
on a matter) will be treated in the same manner as abstentions.
Regulations of the Securities and Exchange Commission require proxy
statements to disclose the date by which shareholders' proposals must be
received by the Company in order to be included in the Company's proxy statement
and form of proxy relating to the 1997 Annual Meeting. A written copy of any
such proposal must be received at the principal executive offices of the Company
no later than December 20, 1996. To insure prompt receipt by the Company,
proposals should be sent certified mail, return receipt requested. Proposals
must comply with the proxy rules relating to shareholders' proposals in order to
be included in the Company's proxy materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation of proxies by mail proxies may also be solicited personally, or
by telephone, or telegram, by Officers and employees of the Company without any
additional compensation to them. The Company does not currently expect to pay
any compensation for the solicitation of proxies but may reimburse brokers or
other persons holding stock in their names or in the names of nominees for their
expenses for sending proxy materials to principals and obtaining their proxies.
If the Company does retain a proxy solicitation firm it will do so at customary
costs.
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, THE COMPANY IS REQUIRED
TO FILE AN ANNUAL REPORT WITH THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-
KSB CONTAINING PRESCRIBED INFORMATION. THE COMPANY HAS FILED THE REPORT AND WILL
FURNISH COPIES OF THE REPORT TO SHAREHOLDERS, WITHOUT CHARGE, EXCEPT FOR
EXHIBITS, UPON WRITTEN REQUEST TO THE COMPANY'S SECRETARY AT 1000 LEGION PLACE,
SUITE 1515, ORLANDO, FLORIDA 32801.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN
PROVIDED. A PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
11
<PAGE>
EXHIBIT A TO PROXY STATEMENT
INCENTIVE STOCK OPTION PLAN
OF
AUDIO COMMUNICATIONS NETWORK, INC.
1. Purpose of the Plan
The Incentive Stock Option Plan (hereinafter referred to as the "Plan")
of Audio Communications Network, Inc. (hereinafter referred to as the "Company")
is intended to advance the best interests of the Company by providing key
employees who have substantial responsibility for corporate management and
growth with additional incentive through the grant of options to purchase shares
of Common Stock of the Company, thereby increasing the personal stake of such
key employees in the continued success and growth of the Company and encouraging
them to remain in the employ of the Company.
It is intended that options granted under this Plan shall constitute
Incentive Stock Options, as defined in Section 422 of the Internal Revenue Code
of 1986, as amended from time to time.
2. Administration
A committee of the Board of Directors of the Company (referred to
hereinafter as the "Committee") shall supervise and administer the Plan. The
Committee shall consist of two or more Directors who are "disinterested persons"
within the meaning of Rule 16b-3 (referred hereinafter as "Rule 16b-3") as in
effect under the Securities Exchange Act of 1934 (the "Exchange Act"), for so
long as may be required to exempt the issuance of securities under the Plan (and
further actions in such securities) from Section 16(b) of the Exchange Act. The
Committee shall have authority, subject to the terms of the Plan, to determine
(i) the persons eligible for options and those to whom options shall be granted,
(ii) the number of shares to be covered by each option, (iii) the time or times
at which options shall be granted, and (iv) the terms and provisions of the
instruments by which options shall be evidenced. The Committee shall, in its
sole discretion, have full power to construe and interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, and to
make all determinations and to take all actions necessary or advisable for the
Plan's administration. Any such determinations made by the Committee shall be
final and binding upon all persons. The Board of Directors of the Company and
the Committee shall take all action necessary to cause the Plan to be
administered in accordance with the provisions of Rule 16b-3 or any successor
provision to the extent necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.
3. Eligible Participants
Key employees, including Officers of the Company and its subsidiaries
(as the term is used in Section 422 of the Internal Revenue Code of 1986, as
amended), shall be eligible to participate in the Plan. Directors who are not
employees or Officers of the Company or its subsidiaries shall not be eligible
to participate in the Plan.
4. Other Compensation Programs
The adoption of the Plan contemplates the continuation of any existing
incentive compensation plan of the Company as a compensation program and in no
way limits or is limited by the operation, administration or amendment of any
such plan.
12
<PAGE>
The existence and terms of the Plan shall not limit the authority of the Board
of Directors in compensating employees of the Company in such other forms and
amounts as it may determine from time to time.
5. Limitation on Options
The aggregate number of shares of Common Stock ($.25 par value per share) of the
Company which may be issued upon exercise of Incentive Stock Options may not
exceed 400,000 shares.
The aggregate fair market value (determined as of the time an Incentive Stock
Option is granted) of Common Stock with respect to which Incentive Stock Options
granted hereunder are exercisable for the first time by any individual during
any calendar year (under this Plan and all other plans of the Company and its
subsidiaries) shall not exceed $100,000 or such other limitations imposed by
Section 422 of the Internal Revenue Code of 1986, as the same may be amended
from time to time.
6. Terms and Conditions of Options
Subject to the following provisions, all Incentive Stock Options shall be in
such form and upon such terms and conditions as the Committee, in its
discretion, may from time to time determine.
(a) OPTION PRICE. The option price per share shall be at least the fair market
value (as determined by the Committee) of the Common Stock on the date the
Incentive Stock Option is granted.
(b) TERM OF OPTION. The term of an Incentive Stock Option shall not exceed ten
years from the date of the grant.
(c) PAYMENT. Payment for shares as to which an Incentive Stock Option is
exercised shall be made in cash in such a manner and at such time or times as
shall be provided by the Committee at the time of the grant.
(d) EXERCISE OF OPTION. Incentive Stock Options shall be exercisable in whole or
in part after completion of such periods of service as the Committee shall
specify when granting the options; provided, however, that the absence of any
Committee specification to the contrary, and subject to paragraphs (f) and (g)
below, 100% of the shares subject to the Incentive Stock Option shall have been
earned and the Incentive Stock Option shall become exercisable with respect to
such shares on the second anniversary of the date of grant of the Incentive
Stock Option.
In the event of a change of beneficial ownership of 50% or more of the
voting stock of the Company, or of a merger or acquisition in which the Company
is not a surviving entity, all of the shares subject to the Incentive Stock
Option shall immediately become earned and the Incentive Stock Option shall
become exercisable with respect to such shares.
In no event, however, and notwithstanding paragraphs (f) and (g) below,
may an Incentive Stock Option be exercised after the expiration of ten years
from the date of grant.
(e) NONTRANSFERABILITY OF OPTIONS. Incentive Stock Options shall not be
transferable except that upon the death of the holder, the holder's Incentive
Stock Options may be exercised by the executor or administrator of the holder's
estate, or by a person who acquired the right to exercise such Incentive Stock
Option by bequest or inheritance or by reason of the death of the holder.
(f) TERMINATION OF EMPLOYMENT. A holder's Incentive Stock Option privileges
shall expire three months after the termination of the holder's employment for
any reason other than death
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or disability (as determined by the Committee) and shall be limited to the
shares which could have been purchased by the holder at the date of termination
of employment.
(g) TERMINATION OF EMPLOYMENT BY REASON OF DISABILITY. Upon the termination of
a holder's employment by reason of disability, the holder's Incentive Stock
Option privileges shall expire unless exercised 12 months after the date of such
termination and shall be limited to the shares which could have been purchased
by the holder at the date of such termination, except that the Committee in its
discretion may waive any requirements pursuant to paragraph (d) above that the
right to purchase shares subject to the Incentive Stock Option be earned.
(h) DEATH. The Incentive Stock Option privileges of a holder whose employment
is terminated by reason of death or whose death occurs following termination by
reason of disability (under a retirement program of the Company or one of its
subsidiaries or otherwise as determined by the Committee) shall be limited to
the shares which could have been purchased by the holder at the time of the
holder's death, except that the Committee in its discretion may waive any
requirements pursuant to paragraph (d) above that the right to purchase shares
subject to the Incentive Stock Option be earned. Such Incentive Stock Option
privileges shall expire within three months after the date of the holder's
termination due to death or within 12 months after the date of the holder's
termination due to disability, whichever time period is applicable.
Notwithstanding the foregoing, the expiration period shall be that period
provided for in Section 422 of the Internal Revenue Code of 1986, if longer.
(i) SPECIAL RULE FOR 10% SHAREHOLDERS. If at any time an Incentive Stock Option
is granted, the grantee owns stock possessing more than 10% of the total
combined voting power of all classes of stock in the Company or any of its
subsidiaries, then the terms of the Incentive Stock Option shall specify that
the option price shall be at least 110% of the fair market value of the Common
Stock subject to the option on the date the Incentive Stock Option is granted
and such option shall not be exercisable after the expiration of five years from
the date such Incentive Stock Option is granted.
7. Additional Provisions
(a) GENERAL RESTRICTIONS. Each award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or federal law,
or (ii) the consent or approval of any government regulatory body, or (iii) an
agreement by the recipient of an award with respect to the disposition of shares
of Common Stock is necessary or desirable as a condition of, or in connection
with, the granting of such award or the issuance or purchase of shares of Common
Stock thereunder, such award may not be consummated in whole or in part unless
such listing, registration, qualification, consent, approval or agreement shall
have been effected or obtained free of any conditions not acceptable to the
Board.
(b) AMENDMENTS FOR CHANGES IN CAPITALIZATION. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, rights
offer, liquidation, dissolution, merger, consolidation, spin-off or sale of
assets, or any other change in or affecting the corporate structure or
capitalization of the Company, the Committee shall make such adjustments as the
Committee in its discretion may deem appropriate in the number and kind
14
<PAGE>
of shares authorized by the Plan, in the number, option price or kind of shares
covered by the awards and in any outstanding awards under the Plan or to any
individual under the Plan in order to prevent substantial dilution or
enlargement thereof.
(c) AMENDMENTS. The Board of Directors (the "Board") may discontinue the Plan at
any time, and it may amend it from time to time, but no amendment, without
approval by stockholders, may (i) increase the total number of shares which may
be issued under the Plan or to any individual under the Plan, (ii) reduce the
option price for shares which may be purchased pursuant to the Plan, (iii)
authorize the distribution of cash awards the amount of which is determined by
reference to the value of shares of Common Stock, (iv) extend the period during
which awards may be granted, or (v) change the class of employees to whom awards
may be granted, except as provided in paragraph 7(b) hereof. Other than as
expressly permitted under the Plan, no outstanding award may be revoked or
altered in a manner unfavorable to the holder without the consent of the holder.
(d) CANCELLATION OF AWARDS. Any award granted under the Plan may be cancelled
at any time with the consent of the holder and a new award may be granted to
such holder in lieu thereof.
(e) SHARES SUBJECT TO THE PLAN. Shares distributed pursuant to the Plan shall
be made available from authorized but unissued shares, from shares issued and
held in the treasury of the Company or from shares purchased or otherwise
acquired by the Company for use in the Plan, as shall be determined from time to
time by the Board.
(f) RIGHTS OF A SHAREHOLDER. Holders of awards under the Plan, unless otherwise
provided by the Plan, shall have no rights as shareholders by reason thereof
unless and until certificates for shares of Common Stock are issued to them.
(g) WITHHOLDING. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the holder to remit to the Company an amount sufficient to satisfy
any federal, state or local withholding tax liability prior to the delivery of
any certificate or certificates for such shares. Whenever under the Plan
payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy any federal, state or local withholding tax liability.
(h) NON-ASSIGNABILITY. Except as expressly provided in the Plan, no award under
the Plan shall be assignable or transferable by the holder thereof except by
will or by the laws of descent and distribution. During the lifetime of the
holder, awards under the Plan shall be exercisable only by such holder or,
during the period the holder is under a legal disability, by the guardian or
legal representative of such holder.
(i) NON-UNIFORM DETERMINATIONS. Determinations by the Committee under the Plan
(including, without limitation, determinations of the persons to receive awards,
the form, amount and timing of such awards, and the terms and provisions of such
awards and the agreements evidencing the same) need not be uniform and may be
made by it selectively among persons who receive or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
(j) NO GUARANTEE OF EMPLOYMENT. The grant of an award under the Plan shall not
constitute an assurance of continued employment for any period.
15
<PAGE>
(k) ACCELERATION EVENT. Notwithstanding anything herein to the contrary, if the
Committee determines in its sole discretion that an Acceleration Event has
occurred, then all Incentive Stock Options shall become fully exercisable and
all restrictions shall expire as of the date the Committee so determines.
For the purpose of this paragraph, an Acceleration Event includes any of
the following:
(i) Acquisition by an unrelated party of a majority voting interest in the
Company;
(ii) Acquisition by an unrelated party of a portion of the voting securities of
the Company which is sufficient to cause such unrelated party to be deemed
"in control of" the Company within the meaning of the Securities Act of
1933; or
(iii) Sale of more than 50% of the assets of the Company (as measured by
either book value or current fair market value) to an unrelated party.
As used above, "unrelated party" means any person, corporation,
association, partnership, trust, joint venture, or other entity except (i) 100%
of whose voting securities are owned by the Company as beneficial owner or (ii)
which has been established by the Company as the vehicle for a reincorporation,
acquisition, or similar transaction not substantially affecting the Company's
existing businesses. "Sale" of assets shall mean the transfer of operating
control together with at least the majority of the beneficial interest in any
future income and appreciation on such assets whether or not title to such
assets passes from the Company. Any measurement of the value of assets sold
shall be made or approved by the Company's independent accountants.
(l) GOVERNING LAW. The validity, construction and effect of the Plan, of grant
agreements entered into pursuant to the Plan, and of any rules, regulations,
determinations, or decisions made by the Board or Committee relating to the Plan
or such grant agreements, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
of Florida, without regard to its conflict of law rules and principles.
(m) EFFECTIVE DATE; DURATION. The Plan shall become effective as of February
28, 1996, subject to approval by stockholders at the Company's 1996 Annual
Meeting of Stockholders. No award may be granted under the Plan after February
27, 2006, but awards theretofore granted may extend beyond such date.
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AUDIO PROXY
- ---------------------------- THIS PROXY IS SOLICITED ON BEHALF OF THE
COMMUNICATIONS NETWORK, INC. BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS -- MAY 30, 1996.
1000 Legion Place
Suite 1515
Orlando, FL 32801 The undersigned shareholder of AUDIO COMMUNICATIONS
NETWORK, INC. (the "Company"), does hereby constitute and
appoint RALPH L. WEBER and NAT M. TURNBULL and each of
them, with full power of substitution and revocation, the
true and lawful attorneys and proxies of the undersigned,
to represent and vote all shares of the common stock of the
Company owned by or of record in the name of the
undersigned, at the Annual Meeting of its shareholders, at
the Radisson Plaza Hotel, 60 South Ivanhoe Boulevard,
Orlando, Florida 32804, at 10:30 AM (EDT), on May 30, 1996,
and at any and all adjournments thereof, in the manner
specified below. The undersigned hereby revokes all proxies
heretofore given for said meeting or any adjournment
thereof.
1. ELECTION OF DIRECTORS: THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES.
A. J. Schell, D. K. Krummenacker, R. L. Weber, N. M. Tumbull, B. B. Moss,
C. L. Maynard, P. J. Dougherty, R. Dyer
[_] FOR ALL NOMINEES [_] WITHHOLD AUTHORITY [_] WITHHOLD AUTHORITY TO
to vote for all VOTE FOR THE FOLLOWING
nominees
________________________________________________________________________
(To withhold authority to vote, write the individual's name in the space
provided.)
2. APPROVAL OF INCENTIVE STOCK OPTION PLAN: THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THIS PROPOSAL.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued on reverse)
================================================================================
AUDIO COMMUNICATIONS
NETWORK, INC.
PROXY Should any other matter requiring a vote of the
shareholders arise, the attorneys and proxies named on
reverse side hereof are authorized to vote the same in
their discretion.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO
DIRECTION IS INDICATED, WILL BE VOTED "FOR" ELECTION OF
THE WITHIN NOMINEES AS DIRECTORS AND "FOR" APPROVAL OF
THE INCENTIVE STOCK OPTION PLAN. IF A NOMINEE IS UNABLE
TO SERVE, THIS PROXY MAY BE VOTED FOR A SUBSTITUTE
NOMINEE.
DATED: __________________________________, 1996
_________________________________________(SEAL)
_________________________________________(SEAL)
(Please sign exactly as name or names appear on notice
of meeting addressed to you. Executors, administrators,
trustees or other representatives should so indicate
when signing.)
