ADC TELECOMMUNICATIONS INC, DEF 14A, 1995-01-25

ADC TELECOMMUNICATIONS INC
DEF 14A, 1995-01-25
TELEPHONE & TELEGRAPH APPARATUS

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<PAGE>
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

ADC Telecommunications, Inc.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

ADC Telecommunications, Inc.
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 0-11:1

------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:

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<PAGE>

[LOGO]

ADC Telecommunications, Inc.
4900 West 78th Street
Minneapolis, Minnesota 55435-5480
(612) 938-8080

------------------------

NOTICE OF ANNUAL SHAREHOLDERS' MEETING

TO BE HELD FEBRUARY 28, 1995

---------------------

TO THE SHAREHOLDERS OF ADC TELECOMMUNICATIONS, INC.:

NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of ADC
Telecommunications, Inc. (the "Company") will be held at the Lutheran
Brotherhood Building, 625 Fourth Avenue South, Minneapolis, Minnesota 55415, on
Tuesday, February 28, 1995, at 3:30 p.m. Central Standard Time, for the purpose
of considering and acting upon:

(1) The election of one director for a term expiring in 1996 and four
directors for terms expiring in 1998.

(2) A proposal to approve amendments to the Company's 1991 Stock Incentive
Plan to (a) increase the number of shares of the Company's Common Stock
available for issuance pursuant to awards thereunder from 2,743,060 to
4,107,927 and (b) satisfy the requirements of Section 162(m) of the
Internal Revenue Code of 1986.

(3) A proposal to approve amendments to the Company's Nonemployee Director
Stock Option Plan to (a) increase from 2,000 to 4,000 the number of
shares of Common Stock subject to the option automatically granted to
each nonemployee director upon initial election to the Board of
Directors and (b) increase from 1,000 to 2,000 the number of shares
subject to the option automatically granted to each incumbent
nonemployee director annually.

(4) Such other business as may properly come before the meeting and any
adjournments thereof.

Shareholders of record on January 12, 1995, are the only persons entitled to
notice of and to vote at the meeting.

Your attention is directed to the attached Proxy Statement. If you do not
expect to be present at the meeting, please fill in, sign, date and mail the
enclosed Proxy as promptly as possible in order to save the Company further
solicitation expense. There is enclosed with the Proxy an addressed envelope for
which no postage is required if mailed in the United States.

BY ORDER OF THE BOARD OF DIRECTORS

ROBERT E. SWITZ
SECRETARY

January 25, 1995

<PAGE>

[LOGO]

ADC Telecommunications, Inc.
4900 West 78th Street
Minneapolis, Minnesota 55435-5480
(612) 938-8080

------------------------

PROXY STATEMENT

------------------------

ANNUAL SHAREHOLDERS' MEETING

TO BE HELD FEBRUARY 28, 1995

The enclosed Proxy is solicited by the Board of Directors of ADC
Telecommunications, Inc. (the "Company") in connection with the Annual
Shareholders' Meeting of the Company to be held on February 28, 1995, and at any
and all adjournments thereof (the "Annual Meeting"). The costs of solicitation,
including the cost of preparing and mailing the Notice of Annual Shareholders'
Meeting and this Proxy Statement, are being paid by the Company. In addition,
the Company will, upon the request of brokers, dealers, banks, voting trustees
and their nominees who are holders of record of shares of the Company's Common
Stock on the record date specified below, bear their reasonable expenses for
mailing copies of this material to the beneficial owners of such shares.
Officers and other regular employees of the Company who will receive no extra
compensation for their services may solicit Proxies in person or by telephone or
facsimile. In addition, the Company has retained Morrow & Co., Inc. to assist in
the solicitation of Proxies for a fee estimated to be $5,000 plus out-of-pocket
expenses. The Proxy Statement and accompanying form of Proxy will be first
mailed to shareholders on or about January 23, 1995.

The Proxy may be revoked at any time prior to its exercise by giving written
notice of revocation to an officer of the Company or by filing a new written
appointment of a proxy with an officer of the Company. Unless so revoked,
properly executed Proxies will be voted in the manner set forth in this Proxy
Statement or as otherwise specified by the shareholder giving such Proxy.

Shareholders of record on January 12, 1995, are the only persons entitled to
vote at the Annual Meeting. As of that date, there were issued and outstanding
27,982,020 shares of Common Stock, the only outstanding voting securities of the
Company. Each shareholder is entitled to one vote for each share held.

1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 1994, certain information
with respect to all shareholders known to the Company to have been beneficial
owners of more than five percent of its Common Stock, and information with
respect to the Company's Common Stock beneficially owned by directors of the
Company, the executive officers of the Company included in the Summary
Compensation Table set forth under the caption "Executive Compensation" below
and all directors and executive officers of the Company as a group. Except as
otherwise indicated, the shareholders listed in the table have sole voting and
investment powers with respect to the Common Stock owned by them.

<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING
- ---------------------------------------------- ------------------ ------------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company 3,447,874 12.3%
One State Farm Plaza
Bloomington, Illinois 61710
Kopp Investment Advisors, Inc. 2,590,794(1) 9.3%
6600 France Avenue South, Suite 672
Edina, Minnesota 55435
Perrybell Investments, Inc. 1,805,151(2) 6.5%
601 Lakeshore Parkway, Suite 350
Minnetonka, Minnesota 55305
Merrill Lynch Asset Management, L.P. 1,491,600(3) 5.3%
800 Scudders Mill Road
Plainsborough, New Jersey 08356
William J. Cadogan 145,120(4) *
Bruce W. Brown 10,541(4) *
Lynn J. Davis 121,958(4) *
Frederick D. Lawrence 5,500(4) *
William B. Porter 5,800(4) *
Warde F. Wheaton 10,510(5) *
Thomas E. Holloran 9,500(5) *
Charles W. Oswald 9,000(5) *
Donald M. Sullivan 7,000(5) *
John D. Wunsch 5,000(5,6) *
B. Kristine Johnson 4,100(5) *
Jean-Pierre Rosso 3,700(5) *
James C. Castle 0 0
Alan E. Ross 0 0
All executive officers and directors as a 376,810(7) 1.3%
group (19 persons)
<FN>
- ------------------------
* Less than 1%

1 Kopp Investment Advisors, Inc. ("KIA") serves as an investment advisor for
the accounts of individual clients. KIA does not possess voting power
regarding shares held in client accounts but exercises limited investment
power regarding such shares. As of December 31, 1994, numerous
</TABLE>

2
<PAGE>

<TABLE>
<S> <C>
individual clients of KIA owned 1,994,104 shares of Common Stock and the
remaining 596,690 shares of Common Stock were controlled by LeRoy C. Kopp,
President of KIA, and/or members of his family.

2 As of December 31, 1994, Perrybell Investments Inc. ("Perrybell"), an
investment advisory company, had custody of 1,805,151 shares of Common
Stock for accounts of its clients and trusts. Mr. Wunsch is President of
Perrybell. Perrybell may vote shares held on behalf of its clients if they
fail to direct the manner in which the shares are to be voted and may
exercise limited investment powers with respect to the shares. Title to all
shares is held by Forsam & Co. (of which Mr. Wunsch is a general partner)
or Cede & Co., as nominee for Perrybell.

3 Merrill Lynch Asset Management, L.P. ("MLAM"), is an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML&Co."). The positions of MLAM
reported on Form 13F and Schedule 13G regarding shares of Common Stock of
the Company held by MLAM are also reported on behalf of ML&Co., which may
be deemed to share with MLAM investment discretion and voting authority
with respect to such positions. Unless otherwise indicated on its Form 13F
or Schedule 13G, MLAM has sole voting authority with respect to shares of
Common Stock reported thereon.
4 Includes (a) shares issuable pursuant to stock options exercisable within
60 days after the date of this Proxy Statement and (b) shares held in trust
for the benefit of the executive officers pursuant to the Company's
Retirement Savings Plan and (the "Retirement Plan"). For Mr. Cadogan (a)
options to purchase 119,193 shares and (b) 680 shares held through the
Retirement Plan; for Mr. Brown (a) options to purchase 6,666 shares and (b)
75 shares held through the Retirement Plan; for Mr. Davis (a) options to
purchase 81,633 shares and (b) 1,771 shares held through the Retirement
Plan; for Mr. Lawrence (a) options to purchase 5,500 shares and (b) 0
shares held through the Retirement Plan; and for Mr. Porter (a) options to
purchase 493 shares and (b) 750 shares held through the Retirement Plan.
5 Includes shares issuable pursuant to stock options exercisable within 60
days after the date of this Proxy Statement granted under the Company's
Nonemployee Director Stock Option Plan. For Mr. Wheaton options to purchase
5,000 shares; for Mr. Holloran options to purchase 5,000 shares; for Mr.
Oswald options to purchase 5,000 shares; for Mr. Sullivan options to
purchase 5,000 shares; for Mr. Wunsch options to purchase 5,000 shares; for
Ms. Johnson options to purchase 3,000 shares; and for Mr. Rosso options to
purchase 3,000 shares.
6 Does not include 1,805,151 shares held in custody by Perrybell, of which
Mr. Wunsch is President. See footnote 2 above.
7 Includes (a) 267,105 shares issuable pursuant to stock options exercisable
within 60 days after the date of this Proxy Statement and (b) 4,920 shares
held in trust for the benefit of executive officers pursuant to the
Retirement Plan.
</TABLE>

3
<PAGE>
ELECTION OF DIRECTORS

The number of directors is currently set at ten, and the directors are
divided into three classes. The members of each class are elected to serve
three-year terms with the term of office of each class ending in successive
years. James C. Castle was elected a director by the Board of Directors in
November 1994 to fill an existing vacancy. Also in November 1994 the Board of
Directors increased the number of directors from nine to ten, and Alan E. Ross
was elected a director. Thomas E. Holloran, Charles W. Oswald, Alan E. Ross and
Warde F. Wheaton are the directors in the class whose term expires at the Annual
Meeting. The Board of Directors has nominated Dr. Castle for election to the
Board at the Annual Meeting for a term expiring at the Annual Shareholders'
Meeting in 1996, and has nominated Messrs. Holloran, Oswald, Ross and Wheaton
for election to the Board at the Annual Meeting for terms expiring at the Annual
Shareholders(9) Meeting in 1998.

The affirmative vote of a majority of the shares of Common Stock present and
entitled to vote at the meeting is required for the election of the above
nominees to the Board of Directors. Proxies solicited by the Board of Directors
will, unless otherwise directed, be voted to elect Dr. Castle and Messrs.
Holloran, Oswald, Ross and Wheaton. Shares represented by proxies as to which
the authority to vote for a nominee has been withheld will be deemed present and
entitled to vote for purposes of determining the existence of a quorum and
calculating the numbers of votes cast, but will be deemed not to have been voted
in favor of the candidate with respect to whom the proxy authority has been
withheld. In the unlikely event that any of the nominees is not a candidate for
election at the Annual Meeting, the persons named as proxies will vote for such
other person as the Board of Directors or proxies may designate.

The table below gives certain information concerning the nominees and other
directors:

<TABLE>
<CAPTION>
NAME AGE NOMINEE OR CONTINUING DIRECTOR AND TERM
- ------------------------- --- ------------------------------------------------
<S> <C> <C>
James C. Castle, Ph.D. 58 Director; nominee with term expiring in 1996
Thomas E. Holloran 65 Director; nominee with term expiring in 1998
Charles W. Oswald 66 Director; nominee with term expiring in 1998
Alan E. Ross 59 Director; nominee with term expiring in 1998
Warde F. Wheaton 65 Director; nominee with term expiring in 1998
William J. Cadogan 46 Director with term expiring in 1997
B. Kristine Johnson 43 Director with term expiring in 1997
Jean-Pierre Rosso 54 Director with term expiring in 1997
Donald M. Sullivan 59 Director with term expiring in 1996
John D. Wunsch 46 Director with term expiring in 1996
</TABLE>

Dr. Castle has been a director of the Company since November 1994. He has
been the Chairman of the Board and Chief Executive Officer of U.S. Computer
Services, the leading provider worldwide of computer services to the cable
industry and a provider of billing services to the cable, telephony, financial
services and utility industries, since August 1992. For one year prior to such
time, he was President of Teradata Corporation, until that company merged with
NCR Corporation, a subsidiary of AT&T. From October 1987 to August 1991 he was
Chairman of the Board, President, Chief Executive Officer and a director of
Infotron Systems Corporation. Dr. Castle is a director of Par Technology Corp.,
Leasing Solutions, Inc. and Digital Sound Corporation.

Mr. Holloran has been a director of the Company since 1985. He has held the
position of Professor in the Graduate School of Business at the University of
St. Thomas, St. Paul, Minnesota, since 1985. From 1976 to 1985, Mr. Holloran
served as Chairman of the Board and Chief Executive Officer of Inter-Regional
Financial Group, Inc. Mr. Holloran is a director of Flexsteel Industries, Inc.,
Medtronic, Inc., MTS Systems Corporation and National City Bancorporation.

4
<PAGE>
Mr. Oswald has been a director of the Company since 1985. Since 1970 he has
served as Chairman of the Board and a director of National Computer Systems,
Inc., a provider of information systems and services to education, commercial
and financial markets. He was also the Chief Executive Officer of that company
from 1970 to October 1994.

Mr. Ross has been a director of the Company since November 1994. In 1993 he
became President of the Telecommunications Division at Rockwell Corporation,
where he has been employed since 1988. From 1990 to 1993 Mr. Ross was Vice
President of the Digital Communications Division at Rockwell Corporation, and
from 1988 to 1990 he was Vice President and General Manager of the Network
Transmission Systems Division of that company.

Mr. Wheaton has been a director of the Company since 1980. He served as
President of the Defense and Marine Systems Business of Honeywell Inc., a
manufacturer of control and information systems, from January 1988 until his
retirement in April 1989. Prior to such time Mr. Wheaton served as Executive
Vice President of Honeywell's Aerospace and Defense Business.

Mr. Cadogan has been a director of the Company since 1991. He has been
President and Chief Operating Officer of the Company since May 1990, Chief
Executive Officer since November 1991 and Chairman of the Board since February
1994. He was Senior Vice President of the Telecom Group of the Company from June
1989 through May 1990 and served as a Vice President from June 1987 through June
1989. Prior to joining the Company Mr. Cadogan was employed by Intelsat, most
recently as General Manager of Business Development. Mr. Cadogan is a director
of Banta Corp.

Ms. Johnson has been a director of the Company since 1990. She is a Vice
President of Medtronic, Inc., a manufacturer of cardiac pacemakers and other
medical products, and General Manager of its Tachyarrhythmia Management
business. She has served as a Vice President of Medtronic since 1984. Ms.
Johnson is a director of Pentair, Inc.

Mr. Rosso has been a director of the Company since 1993. In April 1994 Mr.
Rosso became President and Chief Executive Officer of J. I. Case Company, a
manufacturer of construction and farm equipment that is a subsidiary of Tenneco
Inc. Mr. Rosso was President of the Home and Building Control Division of
Honeywell Inc. from 1991 to 1994 and President of Honeywell Europe from 1987 to
1991. Mr. Rosso is a director of the Case Corporation.

Mr. Sullivan has been a director of the Company since 1990. He has served as
President and a director of MTS Systems Corporation, a manufacturer of products,
systems and software that analyze engineering designs, evaluate materials and
automate production processes, since 1982. He has been Chief Executive Officer
since 1987 and Chairman of the Board since May 1994 . His prior positions with
MTS included Chief Operating Officer, Executive Vice President and Vice
President. Mr. Sullivan is a director of TSI Incorporated.

Mr. Wunsch has been a director of the Company since 1991. He has served as
President of Perrybell Investments, Inc., a registered investment advisory
company, since August 1990. He was Executive Director of the law firm of Bogle &
Gates from September 1988 through August 1990.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the fiscal year ended October 31, 1994, the Board of Directors held
eight meetings and acted twice by written action. Each director attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors plus the total number of meetings of all committees of the Board on
which he or she served. The Board of Directors has an Audit Committee and a
Compensation and Organization Committee.

The Audit Committee recommends to the Board of Directors the selection of
independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee is comprised of Messrs. Sullivan, Holloran and
Oswald. During fiscal 1994, the Audit Committee held two meetings.

5
<PAGE>
The Compensation and Organization Committee determines the compensation for
executive officers of the Company, establishes the Company's compensation
policies and practices and recommends to the Board of Directors nominees for
directors. No procedures have been established for considering nominations by
shareholders. The Compensation and Organization Committee is comprised of
Messrs. Holloran, Rosso, Wheaton and Wunsch and Ms. Johnson. During fiscal 1994,
the Compensation and Organization Committee held four meetings, and acted four
times by written action.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company are paid an annual retainer
of $16,000 plus a fee of $1,000 for each Board meeting attended and $850 for
each committee meeting attended. In addition, directors acting as chairpersons
of Board committees receive an additional annual retainer of $1,500. Amounts
received by a director may be deferred pursuant to the Company's Restated
Compensation Plan for Directors. Interest is paid on deferred amounts based on
the prime commercial rate of Norwest Bank Minnesota, N.A.

Since 1990, the Company has maintained a Supplemental Retirement Plan for
nonemployee directors. The Supplemental Retirement Plan covers directors who die
or retire from the Board after at least five years of continuous service as a
director. The Supplemental Retirement Plan provides for monthly benefits for a
period of time based on the director's service or, in the event of death before
all benefits are paid, for death benefits payable to the director's estate. The
monthly amount of the benefit is equal to 1/12 of the director's annual retainer
in effect at the director's retirement or death. The benefit is payable monthly
for the period of months equal to the director's service but cannot exceed 120
months. Benefits are payable upon the later of (i) the date the director attains
age 65 or (ii) the date the director ceases to be a director. In the event of a
change in control of the Company, unpaid benefits are commuted to a present
value lump sum and paid within five days of the change in control. In the event
of the director's death, unpaid benefits are commuted to a present value lump
sum and paid to the director's estate.

NONEMPLOYEE DIRECTOR STOCK OPTION PLAN

Since 1991, the Company has maintained a Nonemployee Director Stock Option
Plan under which new nonemployee directors are automatically granted options to
purchase Common Stock of the Company upon initial election to the Board and
incumbent nonemployee directors are automatically granted options to purchase
Common Stock annually. A description of the Nonemployee Director Stock Option
Plan and certain proposed amendments to such plan are set forth below under the
caption "Proposal to Amend the Nonemployee Director Stock Option Plan."

EXECUTIVE COMPENSATION

COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

OVERVIEW AND PHILOSOPHY

The Compensation and Organization Committee (the "Committee") of the Board
of Directors is composed entirely of outside directors and is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. In addition, the Committee, pursuant to
authority delegated by the Board, determines on an annual basis the compensation
to be paid to the Chief Executive Officer and each of the other executive
officers of the Company. The Committee has available to it an outside
compensation consultant and access to independent compensation data.

The objectives of the Company's executive compensation program are to:

- Support the achievement of desired Company performance.

- Provide compensation that will attract and retain superior
talent and reward performance.

6
<PAGE>
- Align the executive officers' interests with the success of the
Company by placing a portion of pay at risk: payout dependent
upon corporate performance.

The executive compensation program provides an overall level of compensation
opportunity that is competitive within the telecommunications and electronics
industries, as well as with a broader group of companies of comparable size and
complexity (collectively, with the industry competitors, the "Comparable
Companies"). Many of these companies are included in the Telecommunications
Equipment Company Index, a stock performance index comprised of approximately
150 companies which appears in the table under the caption "Comparative Stock
Performance" below.

The Committee retains the right to exercise its discretion to set executive
compensation at levels warranted in its judgment by external, internal or an
individual's circumstances. Therefore, actual compensation levels may be greater
or less than average competitive levels in the Comparable Companies based upon
annual and long-term Company performance, as well as individual performance
factors, including achievement of strategic goals and business objectives. The
Committee noted and took into account that in fiscal 1994 the Company grew its
revenue by 23% and its operating income by 28% over fiscal 1993, and that the
total shareholder return on the Common Stock of the Company in fiscal 1994 was
29%.

EXECUTIVE OFFICER COMPENSATION PROGRAM

The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options and restricted stock awards, and various benefits,
including medical, pension and employee stock purchase plans generally available
to employees of the Company.

BASE SALARY

Base salary levels for the Company's executive officers are competitively
set relative to the Comparable Companies. The base salary levels of the
Company's executive officers are initially targeted at the 50th percentile in
comparison to the Comparable Companies. In determining actual salaries, the
Committee also takes into account individual experience and performance in the
preceding 12 months, and other issues particular to the Company. Salary
adjustments are made at the beginning of the third quarter of the fiscal year.

ANNUAL INCENTIVE COMPENSATION

The Management Incentive Plan (the "MIP") is the Company's annual incentive
program for executive officers and key managers. The MIP closely ties Company
financial performance to the executives' annual incentive payment. The purpose
of the MIP is to provide a direct financial incentive in the form of an annual
cash bonus to executives to achieve the annual goals of the Company and their
respective business units. Threshold, target and maximum goals for Company and
business unit performance and personal performance are set at the beginning of
each fiscal year. Target bonus awards are set at a median level within the
Comparable Companies. As to any goal, if the Company and/or the relevant
business unit achieves its threshold results, the bonus award with respect to
that goal would be equal to 30% of the targeted payout, while achievement of the
maximum result would yield a payout equal to 200% of the target for that goal.
No bonus is paid, however, unless the return on shareholder equity in the
measured fiscal year is at least 10%. For the purposes of the MIP, "return on
equity" is defined as the percentage determined by dividing (i) the net income
of the Company for such fiscal year by (ii) the total shareholders' investment
in the Company as of the end of the next preceding fiscal year.

In fiscal 1994, the following measures of Company performance and weighting
were selected: 35% on corporate and business unit revenue, 35% on corporate and
business unit operating income, 10% on international revenue and 20% on
individual performance. In fiscal 1994, the Company significantly exceeded its
revenue and operating income targets. Performance with respect to its
international revenues, while significantly better than 1993, was somewhat below
target.

7
<PAGE>
STOCK OPTION AND RESTRICTED STOCK PROGRAM

The stock option and restricted stock program is the Company's long-term
incentive plan for executive officers and key managers. The objectives of the
program are to align executive and shareholder long-term interest by creating a
strong and direct link between executive pay and shareholder return, and to
enable executives to develop and maintain a significant, long-term ownership
position in the Company's Common Stock.

The 1991 Stock Incentive Plan authorizes the Committee to award key
executives stock options and other stock and stock-based awards, including
shares of restricted stock. The plan permits cash payments to reimburse
executives for personal income taxes incurred upon the lapsing of restrictions
on restricted stock. Awards are made at a level that the Committee believes is
calculated to be competitive with the Comparable Companies. The Committee, at
its discretion, may authorize awards up to 50% less or more than the awards at
the Comparable Companies depending on Company performance. Currently, stock
options are granted in three-year grant intervals at an option price equal to
the fair market value of the Company's Common Stock on the date of grant, have
ten-year terms and have exercise restrictions that lapse ratably over a
three-year period. Restricted stock grants have historically been made in two
year award intervals and upon the hiring of a key manager, and such awards
typically vest 100% three years after grant. In October 1993, the Committee
decided that executive officers would receive only stock options, rather than
stock options and shares of restricted stock, as part of the regular stock award
program. In October 1994, the Committee extended this policy to all regular
stock award participants.

Consistent with the Committee policy to grant awards on a cyclical basis,
there was a restricted stock award made to key managers in November 1993. The
restrictions will lapse on the restricted stock on October 31, 1996. Executive
officers did not receive restricted stock awards but did receive stock option
grants. One-third of the option shares vest on each of October 31, 1994, 1995
and 1996. For stock awards granted in fiscal 1994, the Committee took into
consideration past Company performance in determining the size of awards.

BENEFITS

The Company provides medical and pension benefits to the executive officers
that are generally available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC") relating to executive compensation, did not exceed 10% of
salary for fiscal 1994.

CHIEF EXECUTIVE OFFICER COMPENSATION

During fiscal 1994, the Committee conducted a special review of the Chief
Executive Officer's compensation program. The Committee conducted the special
review to ensure the Chief Executive Officer's total compensation opportunity
was properly positioned vis-a-vis external opportunities, was properly
reflective of past and expected future performance as well as his additional
responsibility as Chairman of the Board, provided an appropriate performance
incentive, and placed a significant retention element in the program. As a
result of this special review, the Committee made two changes to Mr. Cadogan's
compensation program. First, the Committee raised his salary from $305,000 to
$400,000 effective May 7, 1994. Second, the Committee made a special 100,000
share stock option grant on April 12, 1994.

The salary adjustment was based upon a number of factors, including a highly
competitive external pay market and Mr. Cadogan's contribution to the
performance of the Company and its Common Stock. The base salary of $400,000
places Mr. Cadogan's pay at approximately the median of the salaries of chief
executive officers of the Comparable Companies.

Mr. Cadogan received two stock option grants during the fiscal year. As
stated above, he received a special 100,000 share stock option grant on April
12, 1994. One-third of the option shares vest on each

8
<PAGE>
of April 12, 1998, 1999 and 2000. He also received a 4,000 share stock option
grant on November 1, 1993, in accordance with the Committee policy to grant
stock awards on a cyclical basis as described above. One-third of the option
shares vest on each of October 31, 1994, 1995 and 1996.

Mr. Cadogan's bonus in fiscal 1994 was determined in accordance with the
MIP. It was $300,000, which represented 172% of the composite target under the
MIP. Although 1994 bonus information is not available at this time for most of
the Comparable Companies, the Committee believes Mr. Cadogan's fiscal 1994 bonus
of $300,000 will be well above the median of 1994 bonuses awarded to chief
executive officers of the Comparable Companies. In addition to the Company's
financial results, the Committee also considered in connection with the 20%
individual performance component of the MIP, without assigning relative weights
thereto, his individual performance with respect to the following objectives set
at the beginning of the fiscal year: leadership, strategic planning, succession
planning, human resources, communication with stakeholders, and community,
industry and board relations. The Committee believes Mr. Cadogan continues to
demonstrate effective leadership, has placed the Company in a strong position
for future growth, and has enabled the Company to achieve extremely strong
results in fiscal 1994. The Committee believes the Company's financial
performance in fiscal 1994 was significantly above the median financial
performance of the Comparable Companies.

SECTION 162(M)

In order to comply with the proposed guidelines under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the"Code"), the Company is proposing
to amend its 1991 Stock Incentive Plan. See "Proposal to Amend the 1991 Stock
Incentive Plan" below. It is the Committee's understanding that this amendment
will allow future stock option grants to be considered "qualified
performance-based compensation."

The Committee does not believe that annual compensation for Section 162 (m)
purposes for any of the executives named in the table set forth under the
caption "Summary Compensation Table" below will exceed $1,000,000 in fiscal
1995, assuming the proposed changes to the 1991 Stock Incentive Plan are
approved. The Committee will continue to monitor this matter and may propose
additional changes to the executive compensation program in future years if
warranted.

Thomas E. Holloran, Chairman
B. Kristine Johnson
Jean-Pierre Rosso
Warde F. Wheaton
John D. Wunsch
Members
Compensation and Organization
Committee

9
<PAGE>
SUMMARY COMPENSATION TABLE

The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive Officer
of the Company and the four other most highly compensated executive officers of
the Company.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- --------------------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS(1) COMPENSATION AWARDS(2) OPTIONS/ COMPENSATION(3)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) SARS (#) ($)
- ----------------------------------- ---- -------- -------- ------------ ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William J. Cadogan, 1994 $356,780 $300,000 $163,836(4) -0- 104,000/-0- $30,791
Chairman of the 1993 $289,424 $160,000 $132,676(4) -0- -0-/-0- $22,384
Board, President and Chief 1992 $268,212 $ 96,632 -0- $ 50,750 (5) 82,800/-0- $15,939
Executive Officer
Bruce W. Brown, Vice 1994 $219,848 $ 85,938 -0- -0- -0-/-0- $ 4,119
President, and President 1993 $ 70,269 $ 28,000 -0- $ 114,950 (7) 20,000/-0- $97,500
Fibermux Corporation(6)
Lynn J. Davis, Senior Vice 1994 $199,439 $105,033 $122,877(4) -0- 3,375/-0- $20,496
President, General Manager, 1993 $168,769 $ 96,631 $ 76,283(4) -0- -0-/-0- $13,213
Broadband Connectivity 1992 $159,965 $ 29,071 -0- $ 38,063 (5) 28,400/-0- $ 8,756
Division
Frederick D. Lawrence, Senior Vice 1994 $175,577 $123,778 -0- -0- 35,000/-0- -0-
President
Transmission Group(8)
William B. Porter, Vice 1994 $161,390 $187,942 $ 90,110(4) -0- 2,875/-0- $18,516
President, and President 1993 $153,610 $ 66,688 -0- -0- -0-/-0- $ 7,229
Kentrox Industries, Inc.(9) 1992 $125,454 $ 3,682 -0- $ 27,913 (5) 19,600/-0- $ 4,338
<FN>
- ------------------------------
(1) The bonus amounts are payable pursuant to the Company's Management
Incentive Plan described above under the caption "Compensation and
Organization Committee Report on Executive Compensation."

(2) The value of the restricted stock awards was determined by multiplying the
fair market value of the Company's Common Stock on the date of grant by the
number of shares awarded. As of October 31, 1994, none of the executive
officers named in the table held restricted stock awards, except for Mr.
Brown. As of such date Mr. Brown had aggregate restricted stock award
holdings of 3,800 shares valued at $179,075. If any dividends are paid with
respect to the Company's Common Stock, such dividends will be paid on the
restricted stock.

(3) The compensation reported represents (a) Company contributions (excluding
employee earnings reduction contributions) under the Company's Retirement
Savings Plan and (b) amounts credited under the Company's 401(k) Excess
Plan (excluding employee deferred compensation). Company contributions
under the Retirement Savings Plan accrued during fiscal 1994 were as
follows: $8,291 to Mr. Cadogan; $3,357 to Mr. Brown; $8,342 to Mr. Davis;
$0 to Mr. Lawrence; and $7,491 to Mr. Porter. The amounts credited under
the 401(k) Excess Plan were as follows: $21,000 to Mr. Cadogan; $0 to Mr.
Brown; $9,730 to Mr. Davis; $0 to Mr. Lawrence; and $8,714 to Mr. Porter.
In the case of Mr. Brown, the compensation reported for 1993 was a hiring
bonus of $80,000 and a relocation bonus of $17,500.

(4) Represents Company reimbursement of income taxes payable by this executive
officer upon the lapsing in fiscal 1994 and 1993 of restrictions on
previously granted restricted stock awards pursuant to the 1991 Stock
Incentive Plan.

(5) These restricted stock awards were granted on November 25, 1991, and vested
on October 31, 1994. The number of shares awarded was as follows: 4,000
shares to Mr. Cadogan; 3,000 shares to Mr. Davis; and 2,200 shares to Mr.
Porter.

(6) Mr. Brown became employed by the Company in July 1993.

(7) A restricted stock award of 3,800 shares was granted to Mr. Brown on July
12, 1993, and will vest on October 31, 1996, if Mr. Brown is employed by
the Company through such date.

(8) Mr. Lawrence became employed by the Company in March 1994.

(9) Mr. Porter resigned from employment with the Company effective January 1,
1995. In connection with Mr. Porter's resignation from the Company, the
Company entered into an agreement with Mr. Porter under which he will
provide consulting services to the Company. The agreement has a term
extending from January 1, 1995, to December 31, 1995, after which time the
term of the agreement continues on a month-to-month basis unless terminated
by either party upon 30 days notice to the other party. Under the
agreement, the Company will pay Mr. Porter a monthly retainer of $3,000 and
an additional day rate amount of $1,500 for specific projects undertaken by
Mr. Porter at the request of the Company.
</TABLE>

10
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS

The following tables summarize option grants and exercises during fiscal
1994 to or by the executive officers named in the Summary Compensation Table
above, and the value of the options and Stock Appreciation Rights ("SARs") held
by such persons at the end of fiscal 1994. No SARs were granted or exercised
during fiscal 1994.

OPTION/SAR GRANTS IN FISCAL 1994

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS OR OPTION TERM COMPOUNDED
OPTIONS/SARS GRANTED TO BASE ANNUALLY
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 0% 5% 10%
- ---------------------- ------------ ------------ ------- ---------- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
William J. Cadogan 4,000(1) 1.8% $36.750 11/1/03 $ 0 $ 92,448 $ 234,280
100,000(2) 44.6% $39.250 4/12/04 $ 0 $2,468,411 $6,255,439
Bruce W. Brown 0 0% $0 0 $ 0 $ 0 $ 0
Lynn J. Davis 3,375(3) 1.5% $36.750 11/1/03 $ 0 $ 78,003 $ 197,674
Frederick D. Lawrence 35,000(4) 15.6% $38.750 3/22/04 $ 0 $ 852,938 $2,161,513
William B. Porter 2,875(5) 1.3% $36.750 11/1/03 $ 0 $ 66,447 $ 168,389
<FN>
- ------------------------
(1) These options were granted on November 1, 1993, and have or will become
exercisable as follows: 1,333 shares on October 31, 1994; 1,333 shares on
October 31, 1995; and 1,334 shares on October 31, 1996.

(2) These options were granted on April 12, 1994, and have or will become
exercisable as follows: 33,333 shares on October 31, 1998; 33,333 shares on
October 31, 1999; and 33,334 shares on October 31, 2000.

(3) These options were granted on November 1, 1993, and have or will become
exercisable as follows: 1,125 shares on October 31, 1994; 1,125 shares on
October 31, 1995; and 1,125 shares on October 31, 1996.

(4) These options were granted on March 22, 1994, and have or will become
exercisable as follows: 5,500 shares on October 31, 1994; 9,833 shares on
October 31, 1995; 9,833 shares on October 31, 1996; and 9,834 shares on
October 31, 1997.

(5) These options were granted on November 1, 1993. Of the shares subject to
these options, 493 became exercisable on October 31, 1994; options for the
remaining shares terminated on December 31, 1994, as a result of Mr.
Porter's resignation from employment with the Company as of that date.
</TABLE>

11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1994 AND
VALUE OF OPTIONS AND SARS AT END OF FISCAL 1994

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS/SARS AT END VALUE OF UNEXERCISED IN-THE-
SHARES VALUE OF FISCAL 1994 MONEY OPTIONS/SARS AT END OF
ACQUIRED ON REALIZED(1) (EXERCISABLE/ FISCAL 1994 (EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE) UNEXERCISABLE)(2)
- --------------------------- ------------- ----------- --------------------- ----------------------------
<S> <C> <C> <C> <C>
William J. Cadogan 6,600 $ 196,350 121,193/110,547(3) $4,232,989/$1,086,537(3)
8,000 $ 258,000

Bruce W. Brown 0 0 6,666/13,334(4) $112,488/$225,011(4)

Lynn J. Davis 0 0 81,633/2,250(5) $2,991,057/$23,343(5)

Frederick D. Lawrence 0 0 5,500/29,500(4) $46,062/$247,062(4)

William B. Porter 5,000 $ 132,812 10,958/1,917(4) $354,314/$19,888(4)
<FN>
- ------------------------
(1) Value determined by subtracting the exercise price per share from the
market value per share of the Company's Common Stock at date of exercise.

(2) Value determined by subtracting the exercise price per share from the
market value per share of the Company's Common Stock at the end of fiscal
1994.

(3) The amounts indicate the number and value of unexercised options held by
Mr. Cadogan as of October 31, 1994. As of such date, Mr. Cadogan also held
unexercised limited stock appreciation rights ("LSARs") with respect to
33,400 shares, all of which are exercisable in the event of a change in
control of the Company and were valued at $1,573,975 as of the end of
fiscal 1994. Such LSARs were granted in tandem with options granted in
fiscal 1990. The exercise of an option reduces the number of LSARs by a
corresponding number of shares, and the exercise of an LSAR would similarly
reduce the number of shares subject to the related option.

(4) The amounts indicate the number and value of unexercised options held as of
October 31, 1994. As of such date, no SARs or LSARs were held by such
executive officer.

(5) The amounts indicate the number and value of unexercised options held by
Mr. Davis as of October 31, 1994. As of such date, Mr. Davis also held
unexercised LSARs with respect to 20,000 shares, all of which are
exercisable in the event of a change in control of the Company and were
valued at $942,500 as of the end of fiscal 1994. Such LSARs were granted in
tandem with options granted in fiscal 1990. The exercise of an option
reduces the number of LSARs by a corresponding number of shares, and the
exercise of an LSAR would similarly reduce the number of shares subject to
the related option.
</TABLE>

PENSION PLANS

The Company's Pension Plan, which is a tax qualified defined benefit pension
plan, provides for monthly benefits for life upon retirement and survivor
benefits for the spouse of an employee who dies before retirement. Benefit
payments are based on the sum of a "past service benefit" and a "future service
benefit." The past service benefit is calculated on the basis of a formula which
multiplies the number of years of credited service prior to January 1, 1988, by
a dollar amount equal to 1% of the employee's average annual compensation for
the five years prior to January 1, 1988, plus .5% of the employee's average
annual compensation in excess of $30,000. The future service benefit equals the
sum of the benefit amounts determined separately under a formula for each
calendar year of service after December 31, 1987, including the year of
retirement. The benefit amount for the plan year ended December 31, 1988, is
calculated on the basis of a formula which divides the number of days of
employment in 1988 by 365 and multiplies that figure by a dollar amount equal to
1% of the employee's annualized compensation for the year plus .5% of the
employee's annualized compensation in excess of the Social Security table wage
base for that year. The benefit amounts for the plan year

12
<PAGE>
ended December 31, 1989, and all plan years thereafter are calculated on the
basis of a formula which divides the number of days of employment in each such
year by 365 and multiplies that figure by a dollar amount equal to 1% of the
employee's annualized compensation for the year up to the adjusted covered
compensation for the year plus 1.4% of the employee's annualized compensation
for the year in excess of the adjusted covered compensation for that year.
Adjusted covered compensation is a rounded amount which is 150% of the average
of the Social Security taxable wage bases in effect for the 35-year period
ending in the year the benefit is being determined for an individual who attains
Social Security retirement age in such year. Adjusted covered compensation for
the 1994 plan year was $36,600. No more than 30 years can be taken into account
in determining the past and future service benefits. Effective January 1, 1994,
the Pension Plan was amended to provide a minimum benefit for both past and
future service equal to $25 for each month of benefit service. In order to be
eligible for the minimum benefit for service prior to January 1, 1994, a
participant must have had average annual hours of employment for the ten year
period ended December 31, 1993, (or total employment, if less than ten years) of
at least 1,872. Eligibility for the minimum benefit for service since December
31, 1993, requires a minimum of 1,872 total hours of employment for each Plan
Year. The pension benefit will be equal to the greater of (a) the past and
future service formula calculations, or (b) the minimum benefit. If a
participant does not qualify for the minimum benefit, the pension benefit will
be based on the results of the past and future service formulas. The estimated
annual benefits payable to Messrs. Cadogan, Brown, Davis and Lawrence upon
normal retirement at age 65 are $53,593, $0, $52,300 and $35,506, respectively.
These estimates are based on the assumption that each such employee's
compensation remains equal to the employee's current salary plus his current
target bonus payable under the Company's Management Incentive Plan (the "MIP").
The annual benefit payable to Mr. Porter is $10,522, which reflects the actual
rather than the estimated amount as of December 31, 1994, the effective date of
his retirement from employment with the Company. Such benefit will become
payable beginning on February 10, 1997, when Mr. Porter attains age 65.

The Company maintains a Pension Excess Plan intended to compensate certain
employees, as determined in the discretion of the Board of Directors, for the
amount of benefits lost under the Pension Plan due to participation in the
Company's Deferred Compensation Plan (which permits employees to defer until
retirement payments made to them under the MIP) and for benefits which cannot be
paid from the Pension Plan because of maximum benefit and compensation
limitations under the Code. Upon termination of employment, participants receive
a lump sum payment equal to the amount of such benefits. The estimated annual
benefits payable under the Pension Excess Plan to Messrs. Cadogan, Brown, Davis
and Lawrence upon normal retirement at age 65 are $129,705, $0, $41,039 and
$60,042, respectively. These estimates are based on the assumption that each
employee's compensation until retirement remains equal to the individual's
current salary plus his current target bonus payable under the Company's MIP.
The annual benefit payable to Mr. Porter is $4,205, which reflects the actual
rather than the estimated amount as of December 31, 1994, the effective date of
his retirement from employment with the Company. Such benefit became payable on
January 1, 1995.

In March 1993, the Company entered into a Supplemental Executive Retirement
Plan with Mr. Cadogan, effective as of November 1, 1990 (the "SERP"). The SERP
provides for supplemental retirement income benefits that allow Mr. Cadogan,
upon the termination of his employment with the Company and subject to certain
conditions, to receive a single lump sum payment on the first day of the
calendar month following his termination of employment with the Company. The
amount payable to Mr. Cadogan is derived from a formula based upon an amount
equal to 50% of Mr. Cadogan's average monthly compensation during the preceding
five years less the total of all benefits attributable to employer contributions
which are payable to Mr. Cadogan from the Company's Pension Plan, Pension Excess
Plan, Retirement Savings Plan, 401(k) Excess Plan and certain Social Security
benefits payable to him. Reductions from this amount are made if Mr. Cadogan's
employment termination occurs (i) prior to his completion of eight years of
employment with the Company or (ii) prior to his 60th birthday (or both).
Benefits payable under the SERP are unfunded and will be paid only from the
general assets of the Company.

13
<PAGE>
CHANGE IN CONTROL ARRANGEMENTS

The Company maintains a Severance Pay Plan to provide severance pay in the
event of a "change in control" of the Company for executive officers and other
employees of the Company who are participants in the MIP. The Severance Pay Plan
provides for severance pay to those covered employees who terminate employment,
either voluntarily or involuntarily, during the two-year period following a
change in control. Payment is based on the sum of the employee's base salary and
bonus under the MIP, if any. The Severance Pay Plan also provides for a pro rata
payment of the employee's bonus
under the MIP. Payment will be made in a lump sum upon termination. If there had
been a change in control of the Company as of the end of fiscal 1994 and the
employment of the five executive officers named in the Summary Compensation
Table were immediately terminated, then Messrs. Cadogan, Brown, Davis, Lawrence
and Porter would have been entitled to receive, pursuant to the terms of the
Severance Pay Plan, lump sum payments upon termination of $1,970,340, $611,572,
$608,944, $598,710 and $698,664, respectively.

The Company has certain other compensatory arrangements with its executive
officers which will result from a change in control of the Company. All stock
option agreements outstanding under the Company's employee stock option and
stock award plans provide for the acceleration of exercisability of options if
the optionee's employment is terminated within two years following a change in
control (except in certain cases where the optionee is terminated for "cause" or
resigns without "good reason"). All restricted stock award agreements provide
for pro rata vesting of all outstanding shares of restricted stock following a
change in control and for full vesting of such shares if the holder's employment
is terminated within two years following a change in control. The Retirement
Savings Plan and 401(k) Excess Plan prohibit any decrease in benefits payable
under such plans during the two-year period following a change in control of the
Company. The Pension Plan prohibits any decrease in benefits payable under the
Pension Plan during such two-year period and credits up to two years of
additional service for employees who terminate employment during this period.
The Pension Excess Plan prohibits any decrease in benefits during the two-year
period following a change in control of the Company.

14
<PAGE>
COMPARATIVE STOCK PERFORMANCE

The table below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the S&P 500 Index and the Telecommunications Equipment Company
Index (the "Telco Index") over the same period (assuming the investment of $100
in the Company's Common Stock, the S&P 500 Index and the Telecommunications
Equipment Company Index on October 31, 1989, and reinvestment of all dividends).

TOTAL RETURN

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
THE COMPANY S&P 500(1) TELCO INDEX(2)
<S> <C> <C> <C>
1989 100 100 100
1990 107 54 92
1991 159 89 123
1992 236 95 135
1993 475 213 156
1994 613 227 162
<FN>
(1) Total return calculations for the S&P 500 Index were performed by Investor's
Business Daily and are price value calculations. The total return
calculations for the graph in the Company's 1994 proxy statement were
performed by another firm and were market value calculations. Price value
calculations were not available to the Company at the time the 1994 proxy
statement was prepared, but the Company has elected to use price value
calculations for this Proxy Statement because the Company believes price
value calculations are a better indication of stockholder return.
(2) The Telco Index (consisting of approximately 150 companies) is maintained
and reported by Investor's Business Daily. Total return calculations for
this index were performed by Investor's Business Daily and are price value
calculations.
</TABLE>

SECTION 16(A) REPORTING

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company during the fiscal year ended October 31, 1994, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were satisfied.

15
<PAGE>
PROPOSAL TO AMEND THE 1991 STOCK INCENTIVE PLAN

PROPOSED AMENDMENTS

In December 1994, the Company's Board of Directors adopted, subject to
shareholder approval, amendments to the Company's 1991 Stock Incentive Plan, as
amended, (the "Incentive Plan") (a) to increase the number of shares of the
Company's Common Stock available for issuance pursuant to awards thereunder from
2,743,060 to 4,107,927 and (b) in order to satisfy the requirements of Section
162(m) of the Code, to provide that no employee may be granted any options or
other awards under the Incentive Plan (the value of which options or awards
under the Incentive Plan is based solely on an increase in the value of shares
of Common Stock after the date of grant) for more than 250,000 shares in the
aggregate in any calendar year.

The Board of Directors believes that stock options and restricted stock
awards have been, and will continue to be, an important compensation element in
attracting and retaining key employees. As of December 31, 1994, only 998,061
shares of Common Stock remained available for future grants of stock options,
restricted stock and other awards under the Incentive Plan. The Board of
Directors believes that the increase in authorized shares is necessary because
of the need to continue to make awards under the Incentive Plan to attract and
retain key employees.

The amendment to limit the amount of options and certain other awards under
the Incentive Plan that may be made to any employee in any calendar year is
necessary in order to allow the Company to fully deduct certain compensation to
executive officers attributable to such options or awards. The Omnibus Budget
Reconciliation Act of 1993 created a new tax limitation governing the
deductibility of compensation in excess of $1,000,000 paid to any of the
executive officers of a publicly traded company whose compensation is required
to be disclosed in such company's proxy statement. Under Section 162(m) of the
Code, one of the requirements that must be satisfied, in order for certain
executive compensation related to options or certain other awards under the
Incentive Plan to be "qualified performance-based compensation" not subject to
the $1,000,000 cap, is that the Company must place a limit on the number of
shares subject to awards that may be granted to an employee during any calendar
year under the Incentive Plan. Although the Board of Directors does not believe
that compensation levels of the executive officers named above under the caption
"Summary Compensation Table" will reach the Section 162(m) deductibility limits
in fiscal 1995, the Board of Directors believes that it is important for the
Company to take all steps reasonably necessary to ensure that the Company will
be able to take all available tax deductions with respect to compensation
resulting from stock options and certain other awards made under the Incentive
Plan.

If the amendments to the Incentive Plan are approved by the Company's
shareholders, such amendments will be effective on February 28, 1995. If the
amendments are not approved, they will not take effect.

SUMMARY OF INCENTIVE PLAN

The purpose of the Incentive Plan is to aid the Company in maintaining and
developing management personnel capable of assuring the future success of the
Company, to offer such personnel incentives to put forth maximum efforts for the
success of the Company's business and to afford such personnel an opportunity to
acquire a proprietary interest in the Company. All key employees of the Company
and its subsidiaries and affiliates in which the Company has a significant
equity interest are eligible to receive awards under the Incentive Plan. The
Incentive Plan terminates on February 26, 2001, and no awards may be made after
such date. However, unless otherwise expressly provided in the Incentive Plan or
an applicable award agreement, any award granted may extend beyond the
termination date of the Incentive Plan.

The Incentive Plan permits the granting of: (a) stock options, including
"incentive stock options" meeting the requirements of Section 422 of the Code
("Incentive Stock Options") and stock options that do not meet such requirements
("Nonqualified Stock Options"), (b) stock appreciation rights, (c) restricted
stock and restricted stock units, (d) performance awards and (e) dividend
equivalents.

16
<PAGE>
The Incentive Plan is administered by the Compensation and Organization
Committee of the Company's Board of Directors (the "Committee"). The Committee
has the authority to establish rules for the administration of the Incentive
Plan; to select the key employees to whom awards are granted; to determine the
types of awards to be granted and the number of shares of Common Stock covered
by such awards; and to set the terms and conditions of such awards. The
Committee may also determine whether the payment of any amounts received under
any award shall or may be deferred and may authorize payments representing cash
dividends in connection with any deferred award of shares of Common Stock.
Determinations and interpretations with respect to the Incentive Plan are in the
sole discretion of the Committee, whose determinations and interpretations are
binding on all interested parties. The Committee may delegate to one or more
officers the right to grant awards with respect to individuals who are not
subject to Section 16(b) of the Exchange Act. Awards are granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law. Awards may provide that upon the grant or exercise thereof the
holder will receive shares of Common Stock, cash or any combination thereof, as
the Committee shall determine.

The exercise price per share under any stock option or the grant price of
any SAR cannot be less than 100% of the fair market value of the Company's
Common Stock on the date of the grant of such option or SAR. Options may be
exercised by payment in full of the exercise price, either in cash or, at the
discretion of the Committee, in whole or in part by the tendering of shares of
Common Stock or other consideration having a fair market value on the date the
option is exercised equal to the exercise price. Determinations of fair market
value under the Incentive Plan are made in accordance with methods and
procedures established by the Committee. For purposes of the Incentive Plan, the
fair market value of shares of Common Stock on a given date is (i) the last
sales price of the shares as reported on the Nasdaq Stock Market National
Market, if the shares are then being quoted on the Nasdaq Stock Market National
Market or (ii) the closing price of the shares on such date on a national
securities exchange, if the shares are then being traded on a national
securities exchange.

The holder of an SAR is entitled to receive the excess of the fair market
value (calculated as of the exercise date or, if the Committee shall so
determine, as of any time during a specified period before or after the exercise
date) of a specified number of shares over the grant price of the SAR.

The holder of restricted stock may have all of the rights of a shareholder
of the Company, including the right to vote the shares subject to the restricted
stock award and to receive any dividends with respect thereto, or such rights
may be restricted. Restricted stock may not be transferred by the holder until
the restrictions established by the Committee lapse. Holders of restricted stock
units have the right, subject to any restrictions imposed by the Committee, to
receive shares of Common Stock (or a cash payment equal to the fair market value
of such shares) at some future date. Upon termination of the holder's employment
during the restriction period, restricted stock and restricted stock units shall
be forfeited, unless the Committee determines otherwise.

Performance awards provide the holder thereof the right to receive payment,
in whole or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. A performance award
granted under the Incentive Plan may be denominated or payable in cash, shares
of Common Stock or restricted stock. Dividend equivalents entitle the holder
thereof to receive payments (in cash or shares, as determined by the Committee)
equivalent to the amount of cash dividends with respect to a specified number of
shares.

No award granted under the Incentive Plan may be assigned, transferred,
pledged or otherwise encumbered by the individual to whom it is granted,
otherwise than by will, by designation of a beneficiary, or by laws of descent
and distribution. Each award is exercisable, during such individual's lifetime,
only by such individual, or, if permissible under applicable law, by such
individual's guardian or legal representative.

If any shares of Common Stock subject to any award or to which an award
relates are not purchased or are forfeited, or if any such award terminates
without the delivery of shares or other consideration, the shares previously
used for such awards become available for future awards under

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the Incentive Plan. Except as otherwise provided under procedures adopted by the
Committee to avoid double counting with respect to awards granted in tandem with
or in substitution for other awards, all shares relating to awards granted are
counted against the aggregate number of shares available for granting awards
under the Incentive Plan.

If any dividend or other distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Incentive
Plan, the Committee may, in such manner as it deems equitable, adjust (a) the
number and type of shares (or other securities or property) which thereafter may
be made the subject of awards, (b) the number and type of shares (or other
securities or property) subject to outstanding awards, and (c) the exercise
price with respect to any award. The Committee may correct any defect, supply
any omission, or reconcile any inconsistency in the Incentive Plan or any award
agreement in the manner and to the extent it shall deem desirable to carry the
Incentive Plan into effect.

The Board of Directors may amend, alter or discontinue the Incentive Plan at
any time, provided that shareholder approval must be obtained for any change
that (i) absent such shareholder approval, would cause Rule 16b-3 as promulgated
by the SEC under the Exchange Act to become unavailable with respect to the
Incentive Plan; (ii) requires the approval of the Company's shareholders under
any rules or regulations of the National Association of Securities Dealers, Inc.
or any securities exchange applicable to the Company; or (iii) requires the
approval of the Company's shareholders under the Code in order to permit
Incentive Stock Options to be granted under the Incentive Plan.

The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Incentive Plan. The grant of an option
or SAR is not expected to result in any taxable income for the recipient. The
holder of an Incentive Stock Option generally will have no taxable income upon
exercising the Incentive Stock Option (except that a liability may arise
pursuant to the alternative minimum tax), and the Company will not be entitled
to a tax deduction when an Incentive Stock Option is exercised. Upon exercising
a Nonqualified Stock Option, the optionee must recognize ordinary income equal
to the excess of the fair market value of the shares of Common Stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount. Upon exercising an SAR, the
amount of any cash received and the fair market value on the exercise date of
any shares of Common Stock received are taxable to the recipient as ordinary
income and deductible by the Company. The tax consequences to an optionee upon a
disposition of shares acquired through the exercise of an option will depend on
how long the shares have been held and upon whether such shares were acquired by
exercising an Incentive Stock Option or by exercising a Nonqualified Stock
Option or SAR. Generally, there will be no tax consequence to the Company in
connection with a disposition of shares acquired under an option, except that
the Company may be entitled to a tax deduction in the case of a disposition of
shares acquired under an Incentive Stock Option before the applicable Incentive
Stock Option holding periods set forth in the Code have been satisfied.

With respect to other awards granted under the Incentive Plan that are
payable either in cash or shares of Common Stock that are either transferable or
not subject to substantial risk of forfeiture, the holder of such an award must
recognize ordinary income equal to the excess of (a) the cash or the fair market
value of the shares of Common Stock received (determined as of the date of such
receipt) over (b) the amount (if any) paid for such shares of Common Stock by
the holder of the award, and the Company will be entitled at that time to a
deduction for the same amount. With respect to an award that is payable in
shares of Common Stock that are restricted as to transferability and subject to
substantial risk of forfeiture, unless a special election is made pursuant to
the Code, the holder of the award must recognize ordinary income equal to the
excess of (i) the fair market value of the shares of Common Stock received
(determined as of the first time the shares become transferable or not subject

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to substantial risk of forfeiture, whichever occurs earlier) over (ii) the
amount (if any) paid for such shares of Common Stock by the holder, and the
Company will be entitled at that time to a tax deduction for the same amount.

Special rules apply in the case of individuals subject to Section 16(b) of
the Exchange Act. In particular, under current law, unless a special election is
made pursuant to the Code, shares received pursuant to the exercise of a stock
option or SAR may be treated as restricted as to transferability and subject to
a substantial risk of forfeiture for a period of up to six months after the date
of exercise. Accordingly, the amount of any ordinary income recognized, and the
amount of the Company's tax deduction, may be determined as of the end of such
period.

Under the Incentive Plan, the Committee may permit participants receiving or
exercising awards, subject to the discretion of the Committee and upon such
terms and conditions as it may impose, to surrender shares of Common Stock
(either shares received upon the receipt or exercise of the award or shares
previously owned by the optionee) to the Company to satisfy federal and state
withholding tax obligations. In addition, the Committee may grant, subject to
its discretion and such rules as it may adopt, a bonus to a participant in order
to provide funds to pay all or a portion of federal and state taxes due as a
result of the receipt or exercise of (or lapse of restrictions relating to) an
award. The amount of any such bonus will be taxable to the participant as
ordinary income, and the Company will have a corresponding deduction equal to
such amount (subject to the usual rules concerning reasonable compensation).

BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE PROPOSAL TO AMEND THE INCENTIVE PLAN. Unless otherwise
directed, the persons named in the accompanying Proxy intend to vote the Proxies
held by them in favor of such proposal. The affirmative vote of the holders of a
majority of the shares of Common Stock present and entitled to vote at the
Annual Meeting on this item of business is required for the approval of the
proposal (provided that the number of shares voted in favor of the proposal
constitute more than 25% of the outstanding shares of the Common Stock of the
Company).

If a shareholder abstains from voting as to this proposal, then the shares
held by such shareholder shall be deemed present at the Annual Meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to this proposal, but shall not be deemed to have been voted in favor of
this proposal. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on this proposal, then the shares covered by such non-vote
shall be deemed present at the meeting for purposes of determining a quorum, but
not present for purposes of calculating the vote with respect to this proposal.

PROPOSAL TO AMEND THE
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN

PROPOSED AMENDMENTS

In December 1994, the Company's Board of Directors adopted, subject to
shareholder approval, amendments to the Company's Nonemployee Director Stock
Option Plan (the "Nonemployee Director Plan") (a) to increase from 2,000 to
4,000 shares the number of shares of Common Stock subject to the option
automatically granted to each director of the Company who is not an employee of
the Company or any of its subsidiaries (a "Nonemployee Director") following such
Nonemployee Director's initial election to the Board of Directors and (b) to
increase from 1,000 to 2,000 shares the number of shares subject to the option
automatically granted to each incumbent Nonemployee Director who is reelected at
or whose term continues after each annual meeting of the Company's shareholders.
These options are granted with exercise prices equal to the closing price of the
Company's Common Stock on the date the options are granted. The Board of
Directors believes the proposed amendments are necessary to enhance the
Company's competitive ability to attract and

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retain the services of experienced and knowledgeable Nonemployee Directors and
provide additional incentive for such Nonemployee Directors to increase their
interest in the Company's long-term success and progress.

In order to qualify for certain transaction exemptions under the federal
securities laws, it is necessary to obtain shareholder approval of the proposed
amendments to the Nonemployee Director Plan. If the amendments are approved by
the Company's shareholders, such amendments will be effective on February 28,
1995, and all Nonemployee Directors who are reelected at or whose terms continue
after the Annual Meeting will receive an option to purchase 2,000 shares of the
Company's Common Stock on the first business day immediately following the
Annual Meeting. If the amendments are not approved by the Company's
shareholders, such amendments will not take effect.

SUMMARY OF THE NONEMPLOYEE DIRECTOR PLAN

A total of 110,000 shares of Common Stock are reserved for issuance under
the Nonemployee Director Plan. Each Nonemployee Director of the Company is
eligible to participate in the Nonemployee Director Plan. Under the Nonemployee
Director Plan, an initial option to purchase 2,000 shares (the "Initial Option
Grant") is granted automatically on the first business day immediately following
each meeting of the Company's shareholders or Board of Directors to each
Nonemployee Director, if any, who is elected to the Board of Directors for the
first time at such meeting. If the proposed amendments to the Nonemployee
Director Plan are approved by the Company's shareholders at the Annual Meeting,
the amount of the Initial Option Grant will be increased to 4,000 shares. In
addition, under the Nonemployee Director Plan, an option to purchase 1,000
shares (the "Annual Option Grant") is granted automatically on the first
business day immediately following each annual meeting of the Company's
shareholders (the "Annual Option Grant Date") to each Nonemployee Director in
office on such Annual Option Grant Date who prior to such Annual Option Grant
Date has received an Initial Option Grant. If the proposed amendments to the
Nonemployee Director Stock Option Plan are approved by the Company's
shareholders at the Annual Meeting, the amount of the Annual Option Grant will
be increased to 2,000 shares. However, under the terms of the Nonemployee
Director Plan, Annual Option Grants will not be made if the Company's "return on
equity" for the fiscal year ended immediately preceding an Annual Option Grant
Date was less than 10%. For purposes of the Director Option Plan, "return on
equity" is defined as the percentage determined by dividing (i) the net income
of the Company for such fiscal year by (ii) the total stockholders' investment
in the Company as of the end of the next preceding fiscal year.

All options granted under the Nonemployee Director Plan have an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant and become exercisable one year after the date of grant. The option
exercise price is payable in cash. The options expire 10 years from the date of
grant (subject to earlier termination in the event of death) and are not
transferable (except by will or the laws of descent and distribution). If an
optionee dies prior to the time that an option is fully exercised, an option may
be exercised at any time within 12 months after such optionee's death (unless
the option expires) to the extent it was exercisable on the date of death.

The Board of Directors may suspend, discontinue, revise or amend the
Nonemployee Director Plan at any time, but may not, without shareholder
approval, make any revisions or amendments to the Nonemployee Director Plan that
(a) absent such shareholder approval, would cause Rule 16b-3 to become
unavailable with respect to the Nonemployee Director Plan or (b) require the
approval of the shareholders under any rules or regulations of the National
Association of Securities Dealers, Inc. or any securities exchange applicable to
the Company. The Board may not alter or impair any option granted under the
Nonemployee Director Plan without the consent of the holder of the option. The
Nonemployee Director Plan will expire on February 26, 2001.

Under the Nonemployee Director Plan, appropriate adjustments in the Plan and
outstanding options will be made in the event of changes in the Company's Common
Stock through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in corporate structure.

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Options granted under the Nonemployee Director Plan are intended to be
Nonqualified Stock Options, the attributes of which, for federal income tax
purposes, are discussed above under the caption "Proposal to Amend the 1991
Stock Incentive Plan."

BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE NONEMPLOYEE DIRECTOR PLAN. Unless otherwise directed,
the persons named in the accompanying Proxy intend to vote the Proxies held by
them in favor of such proposal. The affirmative vote of the holders of a
majority of the shares of Common Stock present and entitled to vote at the
Annual Meeting on this item of business is required for the approval of the
proposal (provided that the number of shares voted in favor of the proposal
constitute more than 25% of the outstanding shares of the Common Stock of the
Company).

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP has audited the books and records of the Company since
1960, and the Board of Directors intends to reappoint Arthur Andersen LLP for
the Company's fiscal year ending October 31, 1995. Representatives of Arthur
Andersen LLP will be present at the Annual Meeting with the opportunity to make
a statement if they desire and will be available to respond to questions. The
Audit Committee of the Board of Directors meets at least annually with
representatives of Arthur Andersen LLP to review audit and accounting matters
and the scope and level of fees for services rendered.

SHAREHOLDERS PROPOSALS FOR THE NEXT ANNUAL MEETING

Shareholders wishing to present proposals to be considered at the 1996
annual meeting of shareholders should submit the proposals to the Company in
accordance with all applicable rules and regulations of the SEC no later than
September 26, 1995.

OTHER MATTERS

The Company knows of no other matters to come before the Annual Meeting. If
other matters are properly brought before the Annual Meeting, it is the
intention of the persons named as proxies in the enclosed Proxy to vote as they
deem in the best interest of the Company.

BY ORDER OF THE BOARD OF DIRECTORS
ROBERT E. SWITZ
SECRETARY

January 25, 1995

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ADC TELECOMMUNICATIONS, INC.
1991 STOCK INCENTIVE PLAN
(AS AMENDED TO DATE, AND INCLUDING AMENDMENTS PROPOSED FOR APPROVAL
AT THE 1995 ANNUAL SHAREHOLDERS' MEETING)

SECTION 1. PURPOSE; EFFECT ON PRIOR PLAN.

(a) PURPOSE. The purpose of the ADC Telecommunications, Inc. 1991 Stock
Incentive Plan (the "Plan") is to aid in maintaining and developing management
personnel capable of assuring the future success of ADC Telecommunications, Inc.
(the "Company"), to offer such personnel incentives to put forth maximum efforts
for the success of the Company's business and to afford such personnel an
opportunity to acquire a proprietary interest in the Company.

(b) EFFECT ON PRIOR PLAN. From and after the effective date of the Plan,
no stock options or restricted stock awards shall be granted under the Company's
Stock Option and Restricted Stock Plan. All outstanding stock options and
restricted stock awards previously granted under the Stock Option and Restricted
Stock Plan shall remain outstanding in accordance with the terms thereof.

SECTION 2. DEFINITIONS.

As used in the Plan, the following terms shall have the meanings set forth
below:

(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii)
any entity in which the Company has a significant equity interest, as
determined by the Committee.

(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award or Dividend Equivalent
granted under the Plan.

(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.

(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.

(e) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and composed of not
less than three directors, each of whom is a "disinterested person" within
the meaning of Rule 16b-3.

(f) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.

(g) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding the
foregoing, for purposes of the Plan, the Fair Market Value of Shares on a
given date shall be (i) the last sale price of the Shares as reported on the
NASDAQ National Market System on such date, if the Shares are then quoted on
the NASDAQ National Market System or (ii) the closing price of the Shares on
such date on a national securities exchange, if the Shares are then being
traded on a national securities exchange.

(h) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.

(i) "Key Employee" shall mean any employee of the Company or any
Affiliate who the Committee determines to be a key employee.

(j) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.

(k) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.

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(l) "Participant" shall mean a Key Employee designated to be granted an
Award under the Plan.

(m) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.

(n) "Person" shall mean any individual, corporation, partnership,
association or trust.

(o) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.

(p) "Restricted Stock Unit" shall mean any unit granted under Section
6(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.

(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation thereto.

(r) "Shares" shall mean shares of Common Stock, $.20 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.

(s) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.

SECTION 3. ADMINISTRATION.

(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to each Participant
under the Plan; (iii) determine the number of Shares to be covered by (or with
respect to which payments are to be calculated in connection with) Awards; (iv)
determine the terms and conditions of any Award or Award Agreement; (v) amend
the terms and conditions of any Award or Award Agreement and accelerate the
exercisability of Options or the lapse of restrictions relating to Restricted
Stock or Restricted Stock Units; (vi) determine whether, to what extent and
under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances cash or
Shares payable with respect to an Award under the Plan shall be deferred either
automatically or at the election of the holder thereof or the Committee; (viii)
interpret and administer the Plan and any instrument or agreement relating to,
or Award made under, the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon any Participant, any holder or beneficiary of any Award and any employee of
the Company or any Affiliate.

(b) MEETINGS OF THE COMMITTEE. The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
the Committee may determine. A majority of the Committee's members shall
constitute a quorum. All determinations of the Committee shall be made by not
less than a majority of its members. Any decision or determination reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and may make such rules and
regulations for the conduct of its business as it shall deem advisable.

SECTION 4. SHARES AVAILABLE FOR AWARDS.

(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(c),
the number of Shares available for granting Awards under the Plan shall be
4,107,927. If any Shares covered by an Award or to which an Award relates are
not purchased or are forfeited, or if an Award otherwise terminates

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<PAGE>
without delivery of any Shares or cash payments to be received thereunder, then
the number of Shares counted against the aggregate number of Shares available
under the Plan with respect to such Award, to the extent of any such forfeiture
or termination, shall again be available for granting Awards under the Plan. In
addition, any Shares that are used by a Participant as full or partial payment
to the Company of the purchase price of Shares acquired upon exercise of an
Option shall again be available for granting Awards.

(b) ACCOUNTING FOR AWARDS. For purposes of this Section 4,

(i) if an Award entitles the holder thereof to receive or purchase
Shares, the number of Shares covered by such Award or to which such Award
relates shall be counted on the date of grant of such Award against the
aggregate number of Shares available for granting Awards under the Plan; and

(ii) if an Award entitles the holder to receive cash payments but the
amount of such payments are denominated in or based on a number of Shares,
such number of Shares shall be counted on the date of grant of such Award
against the aggregate number of Shares available for granting Awards under
the Plan;

PROVIDED, HOWEVER, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards may be counted or not counted under procedures adopted by the
Committee in order to avoid double counting.

(c) ADJUSTMENTS. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
securities or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or securities or other property)
subject to outstanding Awards and (iii) the exercise price with respect to any
Award; provided, however, that the number of Shares covered by any Award or to
which such Award relates shall always be a whole number.

(d) INCENTIVE STOCK OPTIONS. Notwithstanding the foregoing, the number of
Shares available for granting Incentive Stock Options under the Plan shall not
exceed 4,107,927, subject to adjustment as provided in the Plan and Section 422
or 424 of the Code.

SECTION 5. ELIGIBILITY.

Any Key Employee, including any Key Employee who is an officer or director
of the Company or any Affiliate, shall be eligible to be designated a
Participant; provided, however, that an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code.

SECTION 6. AWARDS.

(a) OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

(i) EXERCISE PRICE. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that such
purchase price shall not be less than the Fair Market Value of a Share on
the date of grant of such Option.

(ii) OPTION TERM. The term of each Option shall be fixed by the
Committee.

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<PAGE>
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other property,
or any combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price) in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.

(b) STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right. Subject to the terms of the Plan and any applicable Award
Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.

(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

(i) RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.

(ii) STOCK CERTIFICATES. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the case
of Restricted Stock Units, no Shares shall be issued at the time such Awards
are granted.

(iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise determined by
the Committee, upon termination of employment (as determined under criteria
established by the Committee) during the applicable restriction period, all
Shares of Restricted Stock and all Restricted Stock Units at such time
subject to restriction shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a waiver would
be in the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or
Restricted Stock Units. Shares representing Restricted Stock that is no
longer subject to restrictions shall be delivered to the holder thereof
promptly after the applicable restrictions lapse or are waived. Upon the
lapse or waiver of restrictions and the restricted period relating to
Restricted Stock Units evidencing the right to receive Shares, such Shares
shall be issued and delivered to the holders of the Restricted Stock Units.

(d) PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash or Shares (including, without limitation,
Restricted Stock) and (ii) shall confer on the holder thereof the right to
receive payments, in whole or in part, upon the achievement of such performance
goals during such performance periods as the Committee shall establish. Subject
to the terms of the Plan and any applicable

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<PAGE>
Award Agreement, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any Performance
Award granted and the amount of any payment to be made pursuant to any
Performance Award shall be determined by the Committee.

(e) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant to
Participants Dividend Equivalents under which such Participants shall be
entitled to receive payments (in cash or Shares, as determined in the discretion
of the Committee) equivalent to the amount of cash dividends paid by the Company
to holders of Shares with respect to a number of Shares determined by the
Committee. Subject to the terms of the Plan and any applicable Award Agreement,
such Dividend Equivalents may have such terms and conditions as the Committee
shall determine.

(f) GENERAL.

(i) NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be required
by applicable law.

(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.

(iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan
and of any applicable Award Agreement, payments to be made by the Company or
an Affiliate upon the grant, exercise or payment of an Award may be made in
Shares, cash or a combination thereof as the Committee shall determine, and
may be made in a single payment, in installments or on a deferred basis, in
each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents with respect to installment or deferred payments.

(iv) LIMITS ON TRANSFER OF AWARDS. No Award and no right under any such
Award shall be assignable, alienable, saleable or transferable by a
Participant otherwise than by will or by the laws of descent and
distribution; provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award upon the death
of the Participant. Each Award or right under any Award shall be exercisable
during the Participant's lifetime only by the Participant or, if permissible
under applicable law, by the Participant's guardian or legal representative.
No Award or right under any such Award may be pledged, alienated, attached
or otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company or
any Affiliate.

(v) TERM OF AWARDS. The term of each Award shall be for such period as
may be determined by the Committee.

(vi) RULE 16B-3 SIX-MONTH LIMITATIONS. To the extent required in order
to comply with Rule 16b-3 only, any equity security offered pursuant to the
Plan may not be sold for at least six months after acquisition, except in
the case of death or disability, and any derivative security issued pursuant
to the Plan shall not be exercisable for at least six months, except in case
of death or disability. Terms used in the preceding sentence shall, for the
purposes of such sentence only, have the meanings, if any, assigned or
attributed to them under Rule 16b-3.

(vii) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for
Shares delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules,

5
<PAGE>
regulations and other requirements of the Securities and Exchange Commission
and any applicable federal or state securities laws, and the Committee may
cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. If the Shares are traded on a
securities exchange, the Company shall not be required to deliver any Shares
covered by an Award unless and until such Shares have been admitted for
trading on such securities exchange.

(viii) AWARD LIMITATIONS UNDER THE PLAN. No Participant may be granted
any Award or Awards under the Plan, the value of which Award or Awards are
based solely on an increase in the value of Shares after the date of grant
of such Award or Awards, for more than 250,000 Shares, in the aggregate, in
any one calendar year period beginning with the 1994 calendar year. The
foregoing annual limitation specifically includes the grant of any Awards
representing "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code.

SECTION 7. AMENDMENT AND TERMINATION; ADJUSTMENTS.

Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that:

(i) absent such approval, would cause Rule 16b-3 to become unavailable
with respect to the Plan;

(ii) requires the approval of the Company's shareholders under any rules
or regulations of the National Association of Securities Dealers, Inc. or
any securities exchange that are applicable to the Company; or

(iii) requires the approval of the Company's shareholders under the Code
in order to permit Incentive Stock Options to be granted under the Plan.

(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof.

(c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.

SECTION 8. INCOME TAX WITHHOLDING; TAX BONUSES.

(a) WITHHOLDING. In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll, withholding,
income or other taxes, which are the sole and absolute responsibility of a
Participant, are withheld or collected from such Participant. In order to assist
a Participant in paying all federal and state taxes to be withheld or collected
upon exercise or receipt of (or the lapse of restrictions relating to) an Award,
the Committee, in its discretion and subject to such additional terms and
conditions as it may adopt, may permit the Participant to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the Shares
otherwise to be delivered upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes or (ii) delivering to the Company Shares other than Shares
issuable upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes. The
election, if any, must be made on or before the date that the amount of tax to
be withheld is determined.

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<PAGE>
(b) TAX BONUSES. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve bonuses to designated Participants to be paid upon their
exercise or receipt of (or the lapse of restrictions relating to) Awards in
order to provide funds to pay all or a portion of federal and state taxes due as
a result of such exercise or receipt (or the lapse of such restrictions). The
Committee shall have full authority in its discretion to determine the amount of
any such tax bonus.

SECTION 9. GENERAL PROVISIONS.

(a) NO RIGHTS TO AWARDS. No Key Employee, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Key Employees, Participants or holders
or beneficiaries of Awards under the Plan. The terms and conditions of Awards
need not be the same with respect to different Participants.

(b) DELEGATION. The Committee may delegate to one or more officers of the
Company or any Affiliate or a committee of such officers the authority, subject
to such terms and limitations as the Committee shall determine, to grant Awards
to Key Employees who are not officers or directors of the Company for purposes
of Section 16 of the Securities Exchange Act of 1934, as amended.

(c) GRANTING OF AWARDS. The granting of an Award pursuant to the Plan
shall take place only when an Award Agreement shall have been duly executed on
behalf of the Company.

(d) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.

(e) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. In addition, the Company or an Affiliate may at any time dismiss
a Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

(f) GOVERNING LAW. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Minnesota.

(g) SEVERABILITY. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

(h) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

(i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

(j) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

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<PAGE>
SECTION 10. EFFECTIVE DATE OF THE PLAN.

The Plan shall be effective as of the date of its approval by the
shareholders of the Company.

SECTION 11. TERM OF THE PLAN.

Awards shall only be granted under the Plan during a 10-year period
beginning on the effective date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.

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<PAGE>
ADC TELECOMMUNICATIONS, INC.
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(AS AMENDED TO DATE, AND INCLUDING AMENDMENTS PROPOSED FOR APPROVAL
AT THE 1995 ANNUAL SHAREHOLDERS' MEETING)

SECTION 1. PURPOSE.

This plan shall be known as the "ADC Telecommunications, Inc. Nonemployee
Director Stock Option Plan" and is hereinafter referred to as the "Plan." The
purpose of the Plan is to promote the interests of ADC Telecommunications, Inc.,
a Minnesota corporation (the "Company"), by enhancing its ability to attract and
retain the services of experienced and knowledgeable outside directors and by
providing additional incentive for such directors to increase their interest in
the Company's long-term success and progress.

SECTION 2. ADMINISTRATION.

The Plan shall be administered by a committee (the "Committee") of three or
more persons appointed by the Board of Directors of the Company. Grants of stock
options under the Plan and the amount and nature of the awards to be granted
shall be automatic as described in Section 6. However, all questions of
interpretation of the Plan or of any options issued under it shall be determined
by the Committee and such determination shall be final and binding upon all
persons having an interest in the Plan.

SECTION 3. PARTICIPATION IN THE PLAN.

Each director of the Company shall be eligible to participate in the Plan
unless such director is an employee of the Company or any subsidiary of the
Company.

SECTION 4. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 hereof, the stock to be subject to
options under the Plan shall be authorized but unissued shares of the Company's
common stock, par value $.20 per share (the "Common Stock"). Subject to
adjustment as provided in Section 11 hereof, the maximum number of shares with
respect to which options may be exercised under this Plan shall be 110,000
shares. If an option under the Plan expires, or for any reason is terminated,
any shares that have not been purchased upon exercise of the option prior to the
expiration or termination date shall again be available for options thereafter
granted during the term of the Plan.

SECTION 5. NONQUALIFIED STOCK OPTIONS.

All options granted under the Plan shall be nonqualified stock options which
do not qualify as incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

Each option granted under this Plan shall be evidenced by a written
agreement in such form as the Committee shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:

(a) INITIAL OPTION GRANTS. An option to purchase 4,000 shares of Common
Stock shall be granted automatically (i) on the first business day immediately
following each meeting of the Company's shareholders or Board of Directors
during the term of the Plan to each eligible director, if any, who is elected to
the Board of Directors for the first time at such meeting.

(b) ANNUAL OPTION GRANTS. Subject to Section 6(c) hereof, an option to
purchase 2,000 shares of Common Stock shall be granted automatically on the
first business day immediately following each annual meeting of the Company's
shareholders held during the term of the Plan beginning with the 1995 annual
meeting of shareholders (the "Annual Option Grant Date") to each eligible
director in office on such Annual Option Grant Date who prior to such Annual
Option Grant Date has received an option pursuant to Section 6(a) hereof.

1
<PAGE>
(c) RETURN ON EQUITY REQUIREMENT. No options shall be granted pursuant to
Section 6(b) hereof on any Annual Option Grant Date if the Company's "return on
equity" (as hereinafter defined) for the fiscal year ended immediately preceding
such Annual Option Grant Date was less than 10%. "Return on equity" shall mean
the percentage determined by dividing (i) the net income of the Company for such
fiscal year by (ii) the total stockholders' investment in the Company as of the
end of the next preceding fiscal year. Net income and total stockholders'
investment shall be determined by reference to the Company's audited financial
statements. If the Company does not have net income for any fiscal year, the
return on equity for such fiscal year shall be deemed to be less than 10%.

(d) OPTIONS NON-TRANSFERABLE. No option granted under the Plan shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution as provided in Section 6(g) hereof. During the lifetime of the
optionee, the options shall be exercisable only by such optionee. No option or
interest therein may be transferred, assigned, pledged or hypothecated by the
optionee during such optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.

(e) PERIOD OF OPTIONS. Options shall terminate upon the expiration of 10
years from the date on which they were granted.

(f) EXERCISE OF OPTIONS.

(i) Options granted under the Plan shall not be exercisable for a period
of one year after the date on which they were granted, but thereafter will
be exercisable in full at any time or from time to time during the term of
the option.

(ii) The exercise of any option granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that
the issuance and delivery of Common Stock pursuant to such exercise will not
violate any federal or state securities or other laws. An optionee desiring
to exercise an option may be required by the Company, as a condition of the
effectiveness of any exercise of an option granted hereunder, to agree in
writing that all Common Stock to be acquired pursuant to such exercise shall
be held for his or her own account without a view to any distribution
thereof, that the certificates for such shares shall bear an appropriate
legend to that effect and that such shares will not be transferred or
disposed of except in compliance with applicable federal and state
securities laws.

(iii) An optionee electing to exercise an option shall give written
notice to the Company of such election and of the number of shares subject
to such exercise. The full purchase price of such shares shall be tendered
with such notice of exercise. Payment shall be made to the Company in cash
(including check, bank draft or money order).

(g) EFFECT OF DEATH. If the optionee shall die prior to the time the
option is fully exercised, such option may be exercised at any time within one
year after his or her death by the personal representatives or administrators of
the optionee or by any person or persons to whom the option is transferred by
will or the applicable laws of descent and distribution, to the extent of the
full number of shares the optionee was entitled to purchase under the option on
the date of death and subject to the condition that no option shall be
exercisable after the expiration of the term of the option.

SECTION 7. OPTION EXERCISE PRICE.

The option exercise price per share for the shares covered by each option
shall be equal to the "fair market value" of a share of Common Stock as of the
date on which the option is granted, as determined pursuant to Section 9 hereof.

SECTION 8. TIME FOR GRANTING OPTIONS.

Unless the Plan shall have been discontinued as provided in Section 13
hereof, the Plan shall terminate upon the expiration of 10 years from the date
upon which it takes effect as provided in

2
<PAGE>
Section 12 hereof. No option may be granted after such termination, but
termination of the Plan shall not, without the consent of the optionee, alter or
impair any rights or obligations under any option theretofore granted.

SECTION 9. FAIR MARKET VALUE OF COMMON STOCK.

For purposes of the Plan, the fair market value of the Common Stock on a
given date shall be (i) the last sale price of the Common Stock as reported on
the NASDAQ National Market System on such date, if the Common Stock is then
quoted on the NASDAQ National Market System, or (ii) the closing price of the
Common Stock on such date on a national securities exchange, if the Common Stock
is then being traded on a national securities exchange. If on the date as of
which the fair market value is being determined the Common Stock is not publicly
traded, the Committee shall make a good faith attempt to determine such fair
market value and, in connection therewith, shall take such actions and consider
such factors as it deems necessary or advisable.

SECTION 10. LIMITATION OF RIGHTS.

(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute,
or be evidence of, any agreement or understanding, express or implied, that the
Company will retain a director for any period of time, or at any particular rate
of compensation.

(b) NO SHAREHOLDER RIGHTS FOR OPTIONS. An optionee shall have no rights as
a shareholder with respect to the shares covered by options until the date of
the issuance to such optionee of a stock certificate therefor, and no adjustment
will be made for cash dividends or other rights for which the record date is
prior to the date such certificate is issued.

SECTION 11. ADJUSTMENTS TO COMMON STOCK.

If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding options and the option exercise prices thereof in order to prevent
dilution or enlargement of option rights.

SECTION 12. EFFECTIVE DATE OF THE PLAN.

The Plan shall take effect immediately upon its approval by the affirmative
vote of the holders of a majority of the shares present in person or by proxy
and voted at a duly held meeting of shareholders of the Company.

SECTION 13. AMENDMENT OF THE PLAN.

The Board may suspend or discontinue the Plan or revise or amend it in any
respect whatsoever; provided, however, that without approval of the shareholders
of the Company no revision or amendment shall be made that (a) absent such
shareholder approval, would cause Rule 16b-3, as promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation thereto, to become unavailable with respect
to the Plan or (b) requires the approval of the Company's shareholders under any
rules or regulations of the National Association of Securities Dealers, Inc. or
any securities exchange that are applicable to the Company. The Board shall not
alter or impair any option theretofore granted under the Plan without the
consent of the holder of the option.

SECTION 14. GOVERNING LAW.

The Plan and all determinations made and actions taken pursuant hereto shall
be governed by the law of the State of Minnesota and construed accordingly.

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<PAGE>
ADC TELECOMMUNICATIONS, INC.
4900 West 78th Street, Minneapolis, Minnesota 55435 PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoint(s) William J. Cadogan and Robert E. Switz as
Proxies, each with power to appoint his substitute, and hereby authorizes them
to represent and to vote, as designated below, all of the shares of Common Stock
of ADC Telecommunications, Inc. (the "Company") held by the undersigned of
record on January 12, 1995, at the annual meeting of the shareholders of the
Company to be held on February 28, 1995 and at any and all adjournments thereof,
and hereby revokes all former proxies:

1. The election of James C. Castle as a director with a term expiring in 1996
and Thomas E. Holloran, Charles W. Oswald, Alan E. Ross and Warde F. Wheaton
as directors with terms expiring in 1998.

/ / FOR all nominees listed above / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed above
below)

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

- --------------------------------------------------------------------------------

2. A proposal to approve amendments to the Company's 1991 Stock Incentive Plan
to (a) increase the number of shares of the Company's Common Stock available
for issuance pursuant to awards thereunder from 2,743,060 to 4,107,927 and
(b) satisfy the requirements of Section 162(m) of the Internal Revenue Code
of 1986.

/ / FOR / / AGAINST / / ABSTAIN

3. A proposal to approve amendments to the Company's Nonemployee Director Stock
Option Plan to (a) increase from 2,000 to 4,000 the number of shares of
Common Stock subject to the option automatically granted to each nonemployee
director upon initial election to the Board of Directors and (b) increase
from 1,000 to 2,000 the number of shares subject to the option automatically
granted to each incumbent nonemployee director annually.

/ / FOR / / AGAINST / / ABSTAIN

(SIGN ON REVERSE SIDE.)
<PAGE>
SHAREHOLDER NUMBER NUMBER OF SHARES

4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EVERY ITEM LISTED ABOVE.

Dated: _____________________, 1995

----------------------------------
Signature

----------------------------------
Signature if held jointly

PLEASE SIGN EXACTLY AS NAME
APPEARS ON THIS CARD. When shares
are held by joint tenants, both
should sign. When signing as
attorney, executor, administra-
tor, trustee or guardian, please
give full title as such. If a
corporation, please sign in full
corporate name by president or
other authorized officer. If a
PLEASE MARK, SIGN, DATE AND RETURN partnership, please sign in
PROXY CARD partnership name by authorized
PROMPTLY USING THE ENCLOSED ENVELOPE. person.