<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN
PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant / /
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 249,14a-12
ACCEPTANCE INSURANCE COMPANIES INC.
(Name of Registrant as Specified In Its Charter)
ACCEPTANCE INSURANCE COMPANIES 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:
(4) Date Filed:
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[LOGO]
ACCEPTANCE INSURANCE COMPANIES INC.
222 SOUTH 15TH STREET
SUITE 600 NORTH
OMAHA, NE 68102
(402) 344-8800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1994
To Shareholders:
Please take notice that the Annual Meeting of shareholders of Acceptance
Insurance Companies Inc. (the "Company") will be held at the Radisson-Redick
Tower Hotel, 1504 Harney Street, Omaha, Nebraska, on May 24, 1994, at 11:00
a.m., local time. At the meeting, shareholders will be asked to consider and
vote upon the following matters:
(1) The election of nine directors to hold office until the 1995 Annual
Meeting or until the election and qualification of their successors;
(2) Approval of the amendments to the 1992 Incentive Stock Option Plan and
the Employee Stock Purchase Plan; and
(3) Such other matters as may properly come before the Meeting or any
adjournment thereof.
Only shareholders of record at the close of business on April 22, 1994 will
be entitled to vote at the Meeting or any adjournment thereof. A list of
shareholders entitled to notice of and to vote at the Meeting will be available
for inspection at the offices of the Company during the ten days preceding the
Annual Meeting.
By Order of the Board of Directors,
DONN E. DAVIS
Secretary
Omaha, Nebraska
April 29, 1994
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND
RETURN THE ENCLOSED PROXY PROMPTLY, IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT
AT THE MEETING AND VOTE IN PERSON. IN THE EVENT YOU WISH
TO ATTEND THE MEETING, YOU MAY REVOKE
YOUR PRIOR PROXY BY SO VOTING.
The current directors and executive officers of the Company have advised
the Company that they intend to vote or cause their affiliates to vote an
aggregate of 2,781,150 shares of Common Stock, or approximately 27.2% of the
total outstanding shares, in favor of the nominees for director named herein,
and the amendments to the 1992 Incentive Stock Option Plan and the Employee
Stock Purchase Plan.
<PAGE> 3
ACCEPTANCE INSURANCE COMPANIES INC.
222 SOUTH 15TH STREET
SUITE 600 NORTH
OMAHA, NE 68102
---------------------------
PROXY STATEMENT
---------------------------
MAILING DATE: APRIL 29, 1994
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1994
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Acceptance
Insurance Companies Inc., a Delaware Corporation (the "Company"), in connection
with the solicitation of Proxies to be used in voting at the Annual Meeting of
shareholders of the Company to be held at 11:00 a.m., local time, May 24, 1994,
at the Radisson-Redick Tower Hotel, 1504 Harney Street, Omaha, Nebraska, or at
any adjournments thereof (the "Annual Meeting" or the "Meeting"). The Proxy is
being solicited by the Company on behalf of the board of directors. This Proxy
Statement and the accompanying Proxy are being mailed to shareholders on or
about April 29, 1994.
Only holders of record of the Company's Common Stock at the close of
business on April 22, 1994 (the "Record Date"), will be entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof. Shareholders of
record on the Record Date are entitled to one vote per share on any matter that
may properly come before the Annual Meeting. As of the Record Date, there were
10,223,315 shares of Common Stock, $.40 par value, outstanding and entitled to
vote. The presence, either in person or by properly executed Proxy, of the
holders of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting. In the election of directors, nominees
receiving a plurality of the votes cast at the Meeting will be elected as
directors of the Company; and approval of the amendments to the 1992 Incentive
Stock Option Plan and the Employee Stock Purchase Plan shall require the
affirmative vote of a majority of the votes cast at the Meeting.
Following the original mailing of Proxy soliciting material, directors and
officers and other employees of the Company may solicit, without additional
compensation, or may engage others to solicit, Proxies by any appropriate means,
including personal interview, mail, telephone and telegraph. Arrangements will
also be made with brokerage houses and other custodians, nominees and
fiduciaries, which are holders of record of the Company's Common Stock, to
forward Proxy soliciting material to the beneficial owners of such shares, and
the Company will reimburse such holders of record for their reasonable expenses
incurred in connection therewith. The cost of soliciting Proxies will be borne
by the Company.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a later date than the Proxy, (ii) duly executing a
Proxy relating to the same shares, bearing a later date, and delivering it to
the Secretary of the Company at or before the Annual Meeting, or (iii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of the Proxy).
1
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ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will be asked to elect a board of nine
directors to hold office until the 1995 Annual Meeting or until the election and
qualification of their successors. The following table sets forth information
regarding nominees for election to the Company's board of directors. The shares
represented by properly executed Proxies will be voted in accordance with the
specifications made therein. PROXIES WILL BE VOTED FOR THE ELECTION OF SUCH
NOMINEES UNLESS THE SPECIFICATION IS MARKED ON THE PROXY INDICATING THAT
AUTHORITY TO DO SO IS WITHHELD. If a nominee is unable to serve or, for good
cause, will not serve, the Proxy confers discretionary authority to vote with
respect to the election of any person to the board.
NOMINEES
The nominees receiving a plurality of votes cast at the Meeting will be
elected to the board of directors. All of the nominees currently serve as
directors of the Company.
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Jay A. Bielfield(2), 47........ Mr. Bielfield has been a director of the Company since
December 1992. Mr. Bielfield is an employee and a member of
the board of directors of Little Caesar Enterprises, Inc.
Mr. Bielfield is a director of Major Realty and Detroit
Tigers, Inc.
Kenneth C. Coon(1), 43......... Mr. Coon is Chairman and Chief Executive Officer of the
Company and has been a director of the Company since
December 1992. He served as Interim Chief Executive Officer
of the Company beginning in February 1992, and as Chairman
and President from December 1992 until March 1994. Mr. Coon
has been President and Chief Executive Officer, and a
director, of Acceptance Insurance Holdings Inc. since its
formation and of each of its subsidiaries since their
formation or acquisition; and, since August 1993 has served
as a director of The Redland Group, Inc. Mr. Coon also
serves as a director of Terrano Corporation and Major Realty
Corporation.
Edward W. Elliott, Jr.(1), 50.. Mr. Elliott has been a director of the Company since
December 1992. Mr. Elliott is Vice-Chairman and Chief
Financial Officer of Franklin Enterprises, Inc., an
investment management firm in Deerfield, Illinois. Mr.
Elliott also serves as a director of Warehouse Club, Inc.
Robert LeBuhn(3), 61........... Mr. LeBuhn has been a director of the Company since December
1992. Mr. LeBuhn is Chairman of Investor International
(U.S.), Inc., an investment firm in New York, New York. Mr.
LeBuhn serves as a director of USAir Group, Inc., Cambrex
Corp., Amdura Corp. and Lomas Financial Corp.
Michael R. McCarthy(1), 42..... Mr. McCarthy has been a director of the Company since
December 1992. Mr. McCarthy has been Chairman and a director
of McCarthy & Co., a firm engaged in the investment banking
business in Omaha, Nebraska, since it was organized in 1986.
He is also a director and Chairman of McCarthy Group, Inc.,
which is the parent of McCarthy & Co. Mr. McCarthy also
serves as a director of Major Realty Corporation.
John P. Nelson(1), 53.......... Mr. Nelson has been President and Chief Operating Officer of
the Company since March 1994, and a director since August
1993. Mr. Nelson serves as either Chairman or President and
a director of The Redland Group, Inc., and its insurance
subsidiaries, Redland Insurance Company, American Growers
Insurance Company, Agro International, Inc., American
Agrisurance, Inc., American Agrijusters Co., Crop Insurance
Marketing, Inc., and U.S. Ag Insurance Services, Inc., all
of
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
which are subsidiaries of the Company. Since August 1993 he
has served as a director of Acceptance Insurance Holdings
Inc. and each of its subsidiaries. Mr. Nelson also serves as
a director of Peoples Natural Gas Company and Amigo's Inc.
R. L. Richards(2), 45......... Mr. Richards has been a director of the Company since
January 1991. Mr. Richards has served as the President and a
director of RDT Corp., a privately held investment
corporation, Dublin, Ohio, since 1987 and has held various
positions with that company since 1978. He is a director of
Clinton Gas Systems, Inc.
David L. Treadwell(3), 39..... Mr. Treadwell has been a director of the Company since
December 1992. Mr. Treadwell has been director, Chairman and
Chief Executive Officer of Major Realty since March 1992;
President of Heritage Network, Incorporated which provides
management services for publishing, automobile dealerships
and investment related businesses since January 1991;
President of Heritage Development Company, Detroit,
Michigan, a real estate portfolio management and development
company since 1986; and is a director of Old Kent Bank --
Southeast, Trenton, Michigan.
Doug T. Valassis(3), 41....... Mr. Valassis has been a director of the Company since
December 1992. Mr. Valassis is President and Chief Executive
Officer of Franklin Enterprises, Inc., an investment
management firm in Deerfield, Illinois. Mr. Valassis also
serves as a director of Warehouse Club, Inc., and director
and Chairman of Lindner Fund and Lindner Dividend Fund.
</TABLE>
- -------------------------
(1) Member of the Executive Committee of the Company.
(2) Member of the Audit Committee of the Company.
(3) Member of the Compensation Committee of the Company.
The board of directors recommends a vote "FOR" the election of the director
nominees named above.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based upon the Company's review of Forms 3, 4 and 5, and amendments
thereto, furnished during or with respect to the Company's 1993 fiscal year, and
separate written representations, none of the directors, officers, beneficial
owners of more than 10% of the Common Stock, or any other person subject to
Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), with respect
to the Company, failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during the Company's 1993 fiscal year or prior fiscal
years, except Mr. Gerber, executive officer of the Company, did not report
timely his initial beneficial ownership.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The board of directors met three times and took action by unanimous consent
on one occasion in 1993. All of the nominees for director served on the board of
directors throughout 1993 except for Mr. Nelson, who became a director August
13, 1993.
There are three committees of the board, an Executive Committee, an Audit
Committee and a Compensation Committee. The Company does not have a Nominating
Committee.
The Executive Committee may exercise certain limited powers of the board of
directors and met once in 1993.
The Audit Committee has authority to review internal audit and financial
controls, and to recommend to the board the independent public accountants to
serve as auditors, review with the independent auditors the annual audit plan,
the financial statements, the auditor's report and their evaluation and
recommendations
3
<PAGE> 6
concerning the Company's internal controls and approve the types of professional
services for which the Company may retain the independent auditors. The Audit
Committee met twice in 1993.
The Compensation Committee reviews the compensation of the executive
officers of the Company, and makes recommendations to the board of directors
regarding such compensation and awards under the various compensation plans
adopted by the Company and met twice in 1993.
During 1993, each director attended at least 75% of the meetings of the
board of directors and each committee on which he sat.
EXECUTIVE OFFICERS
The individuals identified below are the executive officers of the Company
who have been appointed by the board of directors and who served in the
capacities indicated at December 31, 1993, except Mr. Nelson, who was appointed
on March 24, 1994. Executive officers are normally appointed annually by the
board of directors and serve at the pleasure of the board.
<TABLE>
<S> <C>
Kenneth C. Coon, 43........... Chairman and Chief Executive Officer of the Company and a
director since December 1992. He served as Interim Chief
Executive Officer of the Company beginning in February 1992,
and as Chairman and President from December 1992 until March
1994. Mr. Coon has been President and Chief Executive
Officer, and a director, of Acceptance Insurance Holdings
Inc. since its formation and of each of its subsidiaries
since their formation or acquisition; and, since August
1993, has served as a director of The Redland Group, Inc.
Mr. Coon also serves as a director of Terrano Corporation
and Major Realty Corporation.
John P. Nelson, 53............ President and Chief Operating Officer of the Company since
March 1994, and a director since August 1993. Mr. Nelson
serves as either Chairman or President and a director of The
Redland Group, Inc., and its insurance subsidiaries, Redland
Insurance Company, American Growers Insurance Company, Agro
International, Inc., American Agrisurance, Inc., American
Agrijusters Co., Crop Insurance Marketing, Inc., and U.S. Ag
Insurance Services, Inc., all of which are subsidiaries of
the Company. Since August 1993 he has served as a director
of Acceptance Insurance Holdings Inc. and each of its
subsidiaries.
Greg D. Ewald, 40............. Senior Vice President of underwriting of the Company since
October 1993. Mr. Ewald has been Vice President of
underwriting for Acceptance Insurance Company and Acceptance
Indemnity Insurance Company since April 1990. Prior thereto,
Mr. Ewald was Vice President, Treaty Underwriting, at
Underwriters Reinsurance Company.
William J. Gerber, 36......... Vice President of the Company since December 1992, and of
Acceptance Insurance Holdings Inc. since July 1, 1991.
Beginning in August 1987, he was Director of Financial
Reporting and Acquisitions for the Company. Prior thereto,
he was a certified public accountant with Coopers & Lybrand.
Georgia M. Mace, 44........... Treasurer and Chief Accounting Officer of the Company since
May 1992. Ms. Mace has been Treasurer and Chief Accounting
Officer of Acceptance Insurance Holdings Inc. since 1983 and
of each of its subsidiaries since their formation or
acquisition. She has also served as a director of Acceptance
Insurance Company and Phoenix Indemnity Insurance Company
since their formation.
Joseph P. Hutelmyer, 40....... President and Chief Operating Officer of Seaboard
Underwriters, Inc., ("Seaboard") since October 1991. He was
Senior Vice President of Seaboard from January 1986 to
October 1991, and has been employed with Seaboard since
1981.
</TABLE>
4
<PAGE> 7
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth for each of the three years ended December
31, 1993, the compensation paid by the Company to its Chief Executive Officer
and the four most highly compensated executive officers receiving total
compensation in excess of $100,000 annually.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
NAME AND ----------------------------- OPTIONS/ ALL OTHER
PRINCIPAL POSITION* YEAR SALARY BONUS(1) SARS(#) COMPENSATION(2)
- ----------------------------------- ---- -------- ------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Kenneth C. Coon(3)................. 1993 $250,300 $88,000 74,000 $11,575(4)
Chairman, Chief Executive 1992 195,300 42,000 848
Officer and Director 1991 195,300 30,000 30,645(5)
William J. Gerber.................. 1993 92,779(6) 23,000(6) 22,500 3,921(7)
Vice President 1992 102,525 27,666 5,474
1991 85,033 5,000 9,798
Georgia M. Mace.................... 1993 98,680 27,000 20,000 4,351(5)
Treasurer, Chief Financial 1992 93,800 12,000 848
Officer 1991 87,800 7,000 17,065
Greg D. Ewald...................... 1993 101,304 8,000 10,000 4,561(8)
Senior Vice President- 1992 98,300 2,000 848
Underwriting 1991 92,800 -- 25,657
Joseph P. Hutelmyer................ 1993 118,365(9) 8,000 10,000 5,132
President, Seaboard 1992 108,030 -- --
Underwriters, Inc. 1991 24,930 -- --
</TABLE>
- -------------------------
* This table does not include Messrs. John P. Nelson and Richard C. Gibson,
respectively the President and Chief Operating Officer of the Company, and
Executive Vice President of The Redland Group, Inc., as the acquisition of
The Redland Group, Inc. occurred August 13, 1993, and they did not receive
compensation from the Company in 1993 in excess of $100,000.
(1) Reflects amounts paid in 1993 under the Management Incentive Compensation
Plan (the "Plan") adopted by the Company pursuant to which cash bonuses may
be awarded to executives and key employees of the Company and its
subsidiaries measured principally by the Company's return on equity. The
Plan was revised beginning in 1993 to base annual bonuses principally on
Company earnings and individual performance. Under the Plan, the amount of
cash bonus earned is payable over a three-year period, provided the bonus
recipient remains employed by the Company. A portion of the cash bonus for
1993 will be payable in 1994, provided the named executive remains employed
by the Company. The amounts of bonus deferred are $17,000 for Mr. Coon,
$5,000 for Mr. Gerber, $5,000 for Ms. Mace, $2,000 for Mr. Ewald, and
$4,000 for Mr. Hutelmyer.
(2) Except where indicated, these amounts reflect the Company's contribution on
behalf of such persons to Defined Contribution Plans maintained by the
Company.
(3) Prior to February 1992, Mr. Coon served as Chief Executive Officer of
Acceptance Insurance Holdings Inc. and its subsidiaries.
(4) Includes $2,500 paid to Mr. Coon as director fees by Major Realty
Corporation, the 33.1% subsidiary of the Company.
(5) Includes for Mr. Coon and Ms. Mace $7,500 paid to them as director fees by
Phoenix Indemnity Insurance Company.
(6) Includes $13,000 in salary and $18,666 in bonus paid to Mr. Gerber in 1992,
which had been voluntarily deferred by him.
(7) Includes $5,000 paid to Mr. Gerber for services in connection with the
acquisition of Seaboard Underwriters, Inc., in 1991.
(8) Includes $15,000 paid to Mr. Ewald in connection with his move from
California to Omaha, Nebraska, to become employed by the Company.
(9) Mr. Hutelmyer became employed by the Company on October 1, 1991.
5
<PAGE> 8
The following table sets forth information concerning options granted by
the Company to its Chief Executive Officer and the named executive officers
during the fiscal year ended December 31, 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
- ------------------------------------------------------------------------------------------- REALIZED VALUE AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS/SARS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM
OPTIONS/SARS IN FISCAL PRICE EXPIRATION ------------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
- --------------------------------- ------------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth C. Coon.................. 50,000 Shares 31.9% $ 8.75 1/26/1998 $ 120,873 $ 267,098
Kenneth C. Coon.................. 24,000 Shares(1) 15.3 11.375 3/28/2003 171,688 435,092
William J. Gerber................ 12,500 Shares 8.0 8.75 1/26/1998 30,218 66,775
William J. Gerber................ 10,000 Shares(1) 6.4 11.375 3/28/2003 71,537 181,288
Georgia M. Mace.................. 10,000 Shares 6.4 8.75 1/26/1998 24,175 53,420
Georgia M. Mace.................. 10,000 Shares(1) 6.4 11.375 3/28/2003 71,537 181,288
Greg D. Ewald.................... 10,000 Shares(1) 6.4 11.375 3/28/2003 71,537 181,288
Joseph P. Hutelmyer.............. 10,000 Shares(1) 6.4 11.375 3/28/2003 71,537 181,288
</TABLE>
- -------------------------
(1) Twenty-five percent of these options vest one year from the date of grant
and 25% annually thereafter, provided that the option holder remains
employed by the Company.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED*
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED FY-END (#) FY-END ($)
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------- --------------- ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kenneth C. Coon
Chief Executive Officer........ None N/A Exercisable $168,750
50,000 Options 4,500
6,000 Options
Unexercisable 13,500
18,000 Options
William J. Gerber
Vice President................. None N/A Exercisable
12,500 Options 42,188
2,500 Options 1,875
Unexercisable
7,500 Options 5,625
Georgia M. Mace
Treasurer and Chief
Financial Officer.............. None N/A Exercisable
10,000 Options 33,750
2,500 Options 1,875
Unexercisable
7,500 Options 5,625
Greg D. Ewald
Senior Vice President,
Underwriting................... None N/A Exercisable
2,500 Options 1,875
Unexercisable
7,500 Options 5,625
Joseph P. Hutelmyer
President, Seaboard
Underwriters, Inc.............. None N/A Exercisable
2,500 Options 1,875
Unexercisable
7,500 Options 5,625
</TABLE>
- -------------------------
* Calculated as the difference between the option exercise price and the closing
price per share on the New York Stock Exchange on December 31, 1993.
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
Kenneth C. Coon, President and Chief Executive Officer of the Company, is
employed under an employment agreement. Under this agreement, upon termination
of his employment without cause or in certain circumstances by him, the Company
is obligated to pay him the amount of his base salary remaining payable over the
balance of his employment term (currently ending December 31, 1995, subject to
annual automatic one year extensions), the amount of his highest annual cash
bonus multiplied by the number of full and partial years remaining in his
employment term, and the amount of any incentive, profit-sharing bonus, stock
option or other plan accrued on his behalf. Similar payments are due upon the
death or disability of Mr. Coon.
John P. Nelson and Richard C. Gibson, respectively the President and Chief
Operating Officer of the Company, and Executive Vice President of The Redland
Group, Inc., one of the Company's subsidiaries, are each employed pursuant to
identical employment agreements for a term currently ending December 31, 1995,
but subject to annual automatic one-year extensions, unless terminated by either
party upon 45 days notice prior to each January 1.
COMPENSATION OF DIRECTORS
Members of the board of directors who are not full-time employees of the
Company receive an annual retainer of $10,000 plus $1,000 for attendance at each
meeting of the board of directors and $1000 for attendance at each meeting of a
Committee on which the director sits occurring other than on a day when the
directors meet, and $500 for each such meeting occurring on a day when the
directors meet. Non-employee directors who serve as Chairman of board
Committees, receive an additional $3,000 annual retainer.
Messrs. Bielfield, Coon and McCarthy are directors, and Mr. Treadwell is
Chairman and Chief Executive Officer and a director, of Major Realty Corporation
("Major Realty"). Non-employee directors of Major Realty are paid $2,500 for
each meeting of directors attended in person. Mr. Treadwell is employed as
Chairman and Chief Executive Officer of Major Realty on a month-to-month basis
under an Employee Lease Agreement with Mr. Treadwell's primary employer,
Heritage Network, Incorporated ("Heritage"). Under the Employee Lease Agreement,
Mr. Treadwell is required to devote such time to his duties as Chief Executive
Officer of Major Realty as he and the Major Realty Board determine to be
necessary, and Major Realty pays to Heritage $100,000 annually for Mr.
Treadwell's services. Major Realty has granted to Mr. Treadwell an option to
purchase, during a period ending with the termination of his employment by Major
Realty or the Employee Lease Agreement, or 10 days after a change of control of
Major Realty, 100,000 shares of Major Realty common stock for $2.7679 per share.
CERTAIN TRANSACTIONS
The following is a description of certain relationships and business
transactions occurring since January 1, 1993.
In January 1993 the Company repaid certain Secured Subordinated Notes (the
"Notes") held by two 5% shareholder affiliates, and affiliates of five
directors, from the proceeds of a Rights Offering to Shareholders. The table
below sets forth the names of such persons and the principal amount of Notes
repaid.
<TABLE>
<S> <C>
Valassis Enterprises, L.P.......................... $5,000,000
Patricia Investments, Inc.......................... 1,500,000
RDT Corp........................................... 500,000
Heritage Network, Inc.............................. 500,000
</TABLE>
Valassis Enterprises, L.P., is a Limited Partnership, of which George F.
Valassis and Franklin Enterprises, Inc., of which Mr. Valassis is the sole
shareholder and Chairman of the Board, and Doug T. Valassis, a director of the
Company, is President and Chief Executive Officer, are the general partners. See
"Security Ownership of Certain Beneficial Owners and Management."
7
<PAGE> 10
Patricia Investments, Inc., is an affiliate of Investor International
(U.S.), Inc., of which Robert LeBuhn, a director of the Company, is Chairman.
See "Election of Directors" and "Security Ownership of Certain Beneficial Owners
and Management."
RDT Corp. is solely owned by R. L. Richards, a director of the Company. See
"Election of Directors" and "Security Ownership of Certain Beneficial Owners and
Management."
David L. Treadwell, a director of the Company, is President of Heritage
Network, Inc. See "Election of Directors" and "Security Ownership of Certain
Beneficial Owners and Management."
Effective April 15, 1993, Acceptance Investors Limited Partnership, of
Omaha, Nebraska ("AILP") exercised its right to exchange a $7 million Secured
Subordinated Note of a subsidiary of the Company and received the 875,000 shares
of Common Stock and warrants to purchase, during a period ending January 27,
1997, 875,000 additional shares of Common Stock ("Warrants"), in exchange for
the principal amount of the note, and the Company paid to AILP $410,075 in lieu
of interest otherwise payable under the note and in consideration of AILP's
waiver of its rights to other cash payments which might have become payable
under the note. AILP has made a distribution to the limited partners and the
general partner of the shares of Common Stock and Warrants to which they are
entitled under the AILP Limited Partnership Agreement, and has been dissolved.
Mr. McCarthy, a director of the Company, is the Chairman, director and
principal shareholder of McCarthy Group, Inc., parent of McCarthy & Co., AILP's
sole general partner. Mr. Coon, Chairman, Chief Executive Officer and a director
of the Company, was a limited partner in AILP and received 29,427 shares of
Common Stock and 29,427 Warrants as a result of his investment in AILP. Mr.
Nelson, President, Chief Operating Officer and a director of the Company, was an
investor, through a family-owned investment corporation controlled by him, in
AILP, and is the beneficial owner of 58,770 shares of Common Stock, and 58,770
Warrants as a result of the distribution of such shares and Warrants to the
Nelson family corporation.
McCarthy & Co. was employed by The Redland Group, Inc. ("Redland") as its
investment banker in connection with a $5,335,000 investment be made by the
Company in Redland, and in connection with the Exchange Agreement between the
Company and Redland. McCarthy & Co. was paid a fee by Redland in connection with
the $5,335,000 investment of $320,100 plus 1,500 Warrants to purchase shares of
Common Stock of Redland, during a seven-year period, at a purchase price of $485
per share, for which it received 28,000 shares of Common Stock in the Exchange.
In connection with its services as an investment banker for Redland in
connection with the Exchange Agreement with the Company, McCarthy & Co. received
a fee of $250,000. McCarthy & Co., d/b/a LongView Capital Management, provides
asset management services to the Company and received fees of approximately
$111,000 in 1993.
Effective August 13, 1993, the Company acquired Redland, in an exchange of
stock, and Mr. Nelson received 400,931 shares of Common Stock and shares voting
power with respect to 247,905 shares of Common Stock owned by his father and
150,800 shares owned by his mother.
Mr. Nelson is Chairman, a director and owner of approximately 30% of
Redland & Associates, Inc., a retail insurance agency formerly owned by Redland.
Office space and certain personnel and services are shared by Redland &
Associates and Redland, and the cost thereof is allocated based upon the
percentage of such shared office space, personnel and services.
Doug T. Valassis, a director of the Company, is the son of George F.
Valassis, a principal shareholder of the Company, and is President and Chief
Executive Officer of Franklin Enterprises, Inc., a general partner of Valassis
Enterprises, L.P. Edward W. Elliott, Jr., a director of the Company, is Vice
Chairman and Chief Financial Officer of Franklin Enterprises, Inc.
Messrs. Bielfield, Coon and McCarthy are directors, and Mr. Treadwell is
Chairman, Chief Executive Officer and director, of Major Realty Corporation, a
33.1% owned subsidiary of the Company.
By virtue of the foregoing positions, relationships and interests, the
persons named above may have an indirect material interest in transactions and
business relationships between the Company and its subsidiaries and such persons
or their affiliates.
8
<PAGE> 11
STOCK PERFORMANCE GRAPHS
The Company has undergone a substantial reorganization, changing its
business from the citrus and real estate business activities in which it had
been engaged, to the specialty property and casualty insurance business in which
it is currently engaged. By mid-1992, with the Company's move of its
headquarters from Bloomfield Hills, Michigan to Omaha, Nebraska, the
headquarters of its insurance operations, the reorganization was effectively
complete. The Company believes that any comparison of its stock performance to
that of comparable companies would require a comparison to property and casualty
insurance companies commencing the last half of 1992, and to small
capitalization food processor companies for the 3 1/2 year period prior thereto.
Thus, stock performance is presented in two graphs, one covering the period of
time from July 1, 1992 to December 31, 1993, comparing the performance of the
Company's Common Stock to the Value Line Property and Casualty Insurance Group
and the Russell 2000. The second graph, covering the period December 31, 1987
through June 30, 1992, comparing the performance of the Company's Common Stock
with the Value Line Food Processors Small Capitalization Group and the Russell
2000.
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
Acceptance Insur Cos., Russell 2000, Peer Group
(Performance results through 12/31/93)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) AIF RUSSELL 2000 Peer Group
<S> <C> <C> <C>
7/92 100.00 100.00 100.00
1992 106.94 118.21 121.41
1993 134.72 140.57 117.72
</TABLE>
Assumes $100 invested at the close of trading on 7/92 in AIF common stock,
Russell 2000, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
9
<PAGE> 12
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
Acceptance Insur Cos., Russell 2000, Peer Group
(Performance results through 6/30/92)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) AIF RUSSELL 2000 Peer Group
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 112.07 116.24 121.10
1990 51.72 93.57 134.54
1991 34.49 136.66 157.08
6/92 36.88 136.89 134.49
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in AIF common stock, Russell
2000, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
10
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
1993 COMPENSATION
The Compensation Committee was appointed following the election of
directors at the Annual Meeting of Shareholders on December 22, 1992. The
reorganization of the Company (i.e., the shift from citrus and real estate
operations to specialty property and casualty insurance operations) was
completed with the move of the Company's headquarters from Bloomfield Hills,
Michigan, to Omaha, Nebraska (the home office of the insurance operations) in
mid-1992. By mid-1992, the Company's executive officers, including Kenneth C.
Coon, Chief Executive Officer, were those who had occupied those positions in
the insurance operations.
The Compensation Committee, after appointment in December of 1992, began
its study of the Company's then current compensation programs and the
development of a new incentive compensation program. The comparable group of
companies identified by Firemark were not suggested by the Company but were
independently selected by Firemark as comparable to the Company for purposes of
its compensation recommendations to the Committee. These were not the property
and casualty companies set forth in the Value Line Property and Casualty
Insurance Group utilized as the peer group of companies in the stock performance
graphs. Firemark advised the Committee that it felt its independently selected
group of comparable property and casualty insurance companies were more
appropriate for compensation comparisons, in terms of size, geographic
distribution of business and management responsibilities, than the broader Value
Line Property and Casualty Insurance Group. The Committee employed The Firemark
Group, of Parsippany, New Jersey, consultants and investment bankers to the
insurance industry, to provide guidance to the Committee regarding appropriate
compensation levels, compensation incentives and similar compensation issues.
Firemark advised the Committee that it had compared salary levels for Mr.
Coon and other executive officers with a comparable group of companies selected
by Firemark. The Committee took action with respect to salaries for 1993,
establishing salary of Mr. Coon at the mid-level of the salary ranges suggested
by Firemark (the Committee noted that Mr. Coon was in his third year without a
salary increase despite assuming increased responsibilities), and at or just
below the mid-level for other executive officers.
Under the Management Incentive Plan then in effect, the return on equity in
1992 was not sufficient to warrant the payment of bonuses, however, the
Committee recognized that 1992 results were adversely impacted by the
non-insurance operations during the first half of the year, and that insurance
operations for the year were satisfactory. Thus, the Committee exercised its
discretion to create a bonus pool of $150,000 designating $50,000 thereof for
Mr. Coon, and the balance to be distributed among other key executives agreed to
by the Committee in consultation with Mr. Coon. Finally, in 1993, the Committee
determined that the Incentive Stock Option Plan approved by shareholders
December 22, 1992, should be implemented through the grant of options to Mr.
Coon and other key executives. Additionally, the Committee exercised its
discretion to award non-qualified options to Mr. Coon and two key members of his
executive staff. The salaries, results of the bonus awards and the stock option
grants to Mr. Coon and the named executives are reflected in the Summary
Compensation Table and Options/SAR Grants in Last Fiscal Year Table appearing in
this Proxy Statement.
CURRENT COMPENSATION PROGRAM
During 1993, the Committee developed the current compensation program
covering Mr. Coon and other executive officers and key employees. Compensation
is composed of a combination of salary, incentive cash bonuses and stock option
grants. The Committee believes that, when operating goals established for the
Company are met, it is in the Company's best interest to maintain the level of
experienced executives and key employees who delivered such results by allowing
such persons to participate in the Company's profits.
The Company intends that the salary portion of executive compensation,
while intended to be competitive in the market place for comparable companies,
is not intended as the principal vehicle for rewarding high-level performance by
such executives. Rather, over time, the compensation policy will limit salary
increases largely to reflect inflation and increased responsibility. A new
Incentive Compensation Plan,
11
<PAGE> 14
calling for the payment of cash bonuses in accordance with the provisions of the
Plan, will be the vehicle for rewarding superior performance.
The new Incentive Compensation Plan includes the following:
(a) Early each year, the Committee, working with Mr. Coon and other
key executives, will establish overall Company performance goals, as a
target net earnings per share for the year. The Committee, working with Mr.
Coon, will also set individual performance goals for executives and key
employees at the staff and operating division levels, which are tied to the
Company's strategic plan for that year. These individual performance goals
are intended to be objective and identifiable in order to measure the
degree of performance by the executives and key employees.
(b) The maximum bonus payable is established as a percentage of base
salary which ranges from 200% for Mr. Coon, to 60% for division heads and
senior support staff, down to 30% for junior department heads, and lower
percentages for others. There is also established, as a percentage of bonus
payable, the extent to which the amount of bonus will be based upon meeting
Company goals, and the extent to which the bonus will be based upon meeting
individual goals; with 20% of the maximum bonus payable to remain at the
discretion of the Committee. Attainment of Company goals is weighted more
heavily for senior executives (70% for Mr. Coon), while individual goals
are weighted more heavily for executives and key employees at the staff and
division levels.
(c) The Plan ties the amount of bonus payable, as a percentage of the
total maximum, to an analysis of the degree to which goals are met,
exceeded or not met. This formula calls for payment of 75% of the maximum
bonus where 100% of the goals are achieved; an additional 1% of maximum
bonus for each 1% that the goals are exceeded (up to the maximum amount of
bonus); a reduction of 2% of maximum bonus for each 1% below 100%
attainment of goals; with no bonus payable if less than 75% of goals are
obtained.
Incentive bonuses are payable over a three year period, with the first such
payment to be made within 120 days following the end of the applicable year as
to which the incentive bonus is earned and calculated, and on a like day each
year thereafter. Incentive bonuses in the aggregate may not exceed 10% of the
Company's net income for the year.
The Committee believes that incentive stock options remain an important
aspect of executive compensation, particularly at the chief executive officer
and senior executive staff level. At present, award of incentive stock options
is made at the discretion of the Committee, although Mr. Coon is consulted with
respect to the grant of stock options to his staff.
The Committee has not yet adopted a policy with respect to qualifying
compensation paid to executive officers under Section 162(m) of the Internal
Revenue Code. The Committee deems it unnecessary at this time to adopt such a
policy, as it does not consider it eminent that annual compensation to any
executive officer will exceed $1 million. The Committee does, however, intend to
monitor executive compensation, including the value of compensation which may
ultimately be received by executive officers, including the Chief Executive
Officer, comprised of salary, cash bonuses and receipt of values under stock
option grants, and will address a policy to qualify compensation paid to
executive officers under Section 162(m) of the Internal Revenue Code at the time
it deems it necessary to do so.
In all respects, the action of the Compensation Committee is subject to
approval by the Board of Directors.
Members of the Compensation Committee are:
Robert LeBuhn, Chairman
David L. Treadwell
Doug T. Valassis
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Treadwell, director and member of the Compensation Committee, is
Chairman, Chief Executive Officer and a director of Major Realty Corporation.
Mr. Coon, Chairman, Chief Executive Officer and a director of the Company, is a
director of Major Realty Corporation. See "Certain Transactions" for information
with respect to compensation paid to or on behalf of Mr. Treadwell by Major
Realty Corporation in 1993. Mr. Coon receives $2,500 per meeting as director
fees from Major Realty Corporation, and received $2,500 in 1993. Major Realty
does not have a compensation committee, and compensation issues are determined
by its Board of Directors.
Mr. Valassis, director and a member of the Compensation Committee, is
President and Chief Executive Officer of Valassis Enterprises, L.P., and the
beneficial owner of approximately 13% of the total outstanding shares of common
stock of the Company. In January 1993, the Company repaid, from proceeds of a
Rights Offering, $5 million in secured subordinated notes held by Valassis
Enterprises, L.P. See "Certain Transactions."
13
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPLE SHAREHOLDERS
The following table provides information as of April 22, 1994, with respect
to beneficial ownership of the Common Stock by each person known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
SOLE OWNERSHIP SHARED OWNERSHIP TOTAL OWNERSHIP
----------------------- ----------------------- -----------------------
NAME OF NUMBER OF PERCENT NUMBER OF PERCENT NUMBER OF PERCENT
BENEFICIAL OWNER SHARES(1) OF CLASS(2) SHARES(1) OF CLASS(2) SHARES(1) OF CLASS(2)
- -------------------------------- --------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
George F. Valassis(3)........... 325,797 3.0% 1,622,079 14.8% 1,947,876 17.8%
1400 North Woodward Avenue
Suite 270
Bloomfield Hills, MI 48304
Doug T. Valassis(4)............. 4,545 * 1,415,118 13.0 1,419,663 13.0
Franklin Enterprises, Inc.
520 Lake Cook Road, Suite 325
Deerfield, IL 60015
FMR Corp.(5).................... 1,000,000 9.5 1,000,000 9.5
82 Devonshire Street
Boston, MA 02109-3614
John P. Nelson(6)............... 463,955 4.5 516,245 5.0 980,200 9.5
Acceptance Insurance Companies
Inc.
Suite 600 North
222 South 15th Street
Omaha, NE 68102
Michael R. McCarthy(7).......... -- 867,935 8.5 867,935 8.5
McCarthy & Co.
McCarthy Group, Inc.
1125 South 103rd Street
Omaha, NE 68124
Patricia Investments, Inc.(8)... -- 707,626 6.8 707,626 6.8
15 West 54th Street
New York, NY 10019
</TABLE>
- -------------------------
* Less than one percent.
(1) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
(2) For purposes of calculating the percentage of Common Stock beneficially
owned by any beneficial owner, but only as to such owner, the shares of
Common Stock issuable to such person under stock options or warrants
exercisable within 60 days are considered outstanding and added to the
shares of Common Stock actually outstanding.
(3) Based on information furnished on behalf of Mr. Valassis. Includes 206,961
shares of Common Stock held pursuant to a Trust Agreement dated February 3,
1986, for which trust Mr. Valassis acts as sole trustee; 714,320 shares of
Common Stock held by Valassis Enterprises, L.P., of which the general
partners are Mr. Valassis, individually, and Franklin Enterprises, Inc., of
which Mr. Valassis is the sole shareholder and Chairman of the Board; and
immediately exercisable warrants to purchase 700,798 shares of Common Stock
held by Valassis Enterprises, L.P. Excludes 55,957 shares of Common Stock
held by Mr. Valassis's spouse, over which Mr. Valassis has no voting power
or dispositive power, and as to which Mr. Valassis disclaims beneficial
ownership.
14
<PAGE> 17
(4) Includes 714,320 shares of Common Stock held by Valassis Enterprises, L.P.,
of which the general partners are Mr. Valassis' father, individually, and
Franklin Enterprises, Inc., of which Mr. Valassis is President and Chief
Executive Officer, and immediately exercisable warrants to purchase 700,798
shares of Common Stock held by Valassis Enterprises, L.P.
(5) Based on Amendment No. 1, dated March 31, 1993, to the statement
on Schedule 13G, filed with the Commission on behalf of FMR Corp. FMR
Corp. is an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940 and, because of affiliate relationships,
may be considered to share beneficial ownership of the shares of Common
Stock with Edward C. Johnson 3d, Chairman of FMR Corp., and Fidelity
Capital Appreciation Fund. Includes immediately exercisable warrants to
purchase 300,000 shares of Common Stock.
(6) Includes 58,770 shares of Common Stock and immediately exercisable warrants
to purchase 58,770 shares of Common Stock held by a family corporation
controlled by Mr. Nelson, and 398,705 shares controlled by Mr. Nelson
through revocable proxies.
(7) Includes 427,019 shares of Common Stock and warrants to purchase 409,516
shares of Common Stock pursuant to investment management agreements entered
into with several clients. Included in the above totals are 35,245 shares
of Common Stock and warrants to purchase 35,245 shares of Common Stock
owned by Mr. McCarthy's wife; 54,298 shares of Common Stock and warrants to
purchase 36,875 shares of Common Stock owned by McCarthy & Co.; 4,080
shares of Common Stock owned by McCarthy & Co. 401(k) PST (1,781 for Mr.
McCarthy's benefit); 8,296 shares of Common Stock and warrants to purchase
8,296 shares of Common Stock owned by McCarthy Group, Inc.; 10,800 shares
of Common Stock and warrants to purchase 20,600 shares of Common Stock in
discretionary investment accounts managed for clients.
(8) Based on Amendment No. 8, dated January 27, 1993, to the statement on
Schedule 13D, filed with the Commission on behalf of Patricia Investments,
Inc. ("Patricia"). Includes immediately exercisable warrants to purchase
202,875 shares of Common Stock. By reason of certain stock ownership
relationships and portfolio management arrangements, Patricia shares voting
and dispositive power over such Common Stock with Patricia AB, AB Duba and
AB Fiducia.
MANAGEMENT
The following table provides information as of April 22, 1994, with respect
to beneficial ownership of the Common Stock by each director and named executive
officer of the Company, individually, and by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED(1) CLASS(2)
--------------------- ----------
<S> <C> <C>
Jay A. Bielfield(3)............................................. 18,875 *
Kenneth C. Coon(4).............................................. 183,560 1.8%
Edward W. Elliott, Jr........................................... 2,000 *
Greg D. Ewald(5)................................................ 12,124 *
William J. Gerber(6)............................................ 22,972 *
Joseph P. Hutelmyer(7).......................................... 3,142 *
Robert LeBuhn(8)................................................ -0- --
Georgia M. Mace(9).............................................. 19,593 *
Michael R. McCarthy(10)......................................... 867,935 8.5
John P. Nelson(11).............................................. 980,200 9.5
R. L. Richards(12).............................................. 81,091 *
David L. Treadwell.............................................. 200 *
Doug T. Valassis(13)............................................ 4,545 *
--------------------- -----
All directors and officers as a group (13 persons).............. 2,222,959 20.4%
</TABLE>
- -------------------------
* Less than one percent.
** Richard C. Gibson, Executive Vice President of The Redland Group, Inc., is
not included in the named executive officers of the Company at December 31,
1993, as he became an officer of the Company after the acquisition of The
Redland Group, Inc. on August 13, 1993, and his 1993 compensation from the
Company did not exceed $100,000. At April 22, 1994, Mr. Gibson owned
beneficially 352,793 shares of Common Stock.
15
<PAGE> 18
(1) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" by the persons named under SEC Rule 13d-3. Each of the
persons in the table has sole voting and investment power with respect to
all shares beneficially owned by him, except as described in the following
footnotes.
(2) For purposes of calculating the percentage of Common Stock beneficially
owned by any beneficial owner, but only as to such owner, the shares of
Common Stock issuable to such person under stock options or warrants
exercisable within 60 days are considered outstanding and added to the
shares of Common Stock actually outstanding.
(3) Includes 5,000 shares owned by Mr. Bielfield's spouse and immediately
exercisable warrants to purchase 4,625 shares of Common Stock.
(4) Includes 503 shares and immediately exercisable warrants to purchase 125
shares of Common Stock owned by Mr. Coon's wife, 7,840 shares of Common
Stock and immediately exercisable warrants to purchase 3,535 shares of
Common Stock held for Mr. Coon's account by the trustee of the Employee
Stock Ownership and Tax Deferred Savings Plan ("KSOP"), immediately
exercisable options to purchase 63,646 shares of Common Stock and
immediately exercisable warrants to purchase 44,936 shares of Common Stock.
(5) Includes 4,872 shares of Common Stock and immediately exercisable warrants
to purchase 3,761 shares of Common Stock held by the trustee of the KSOP
for the account of Mr. Ewald, and immediately exercisable options to
purchase 2,500 shares of Common Stock.
(6) Includes 2,916 shares of Common Stock and immediately exercisable warrants
to purchase 1,594 shares of Common Stock, held by the trustee of the KSOP
for the account of Mr. Gerber; 30 shares of Common Stock and immediately
exercisable warrants to purchase 30 shares of Common Stock held by Mr.
Gerber as custodian for his minor children; and immediately exercisable
options to purchase 16,875 shares of Common Stock.
(7) Includes 642 shares of Common Stock held by the trustee of the KSOP for the
account of Mr. Hutelmyer and immediately exercisable options to purchase
2,500 shares of Common Stock.
(8) Mr. LeBuhn is Chairman of Investor International (U.S.), Inc., an affiliate
of Patricia Investments, Inc., which is the beneficial owner of
approximately 6.8% of the Company's Common Stock. See Note (8) under
"Security Ownership of Certain Beneficial Owners and Management."
(9) Includes 3,551 shares of Common Stock and immediately exercisable warrants
to purchase 1,939 shares of Common Stock held by the trustee under the KSOP
for the account of Ms. Mace, immediately exercisable warrants to purchase
260 shares of Common Stock and immediately exercisable options to purchase
12,500 shares of Common Stock.
(10) Mr. McCarthy shares beneficial ownership with McCarthy & Co. and McCarthy
Group, Inc. See Note (5) under "Security Ownership of Certain Beneficial
Owners and Management."
(11) See Note (6) under "Security Ownership of Certain Beneficial Owners and
Management."
(12) Includes immediately exercisable warrants to purchase 5,125 shares of
Common Stock.
(13) Mr. Valassis is the son of George F. Valassis, beneficial owner of
approximately 17.8% of the Common Stock. See Notes (3) and (4) under
"Security Ownership of Certain Beneficial Owners and Management."
16
<PAGE> 19
COMPENSATION PLAN PROPOSAL
INTRODUCTION
At the Annual Meeting, shareholders will be asked to approve amendments to
the 1992 Incentive Stock Option Plan (the "ISO Plan") and the Employee Stock
Purchase Plan (the "ESPP"). These Plans were originally adopted by the board of
directors of the Company on September 22, 1992, and approved by the shareholders
on December 22, 1992.
1992 INCENTIVE STOCK OPTION PLAN
The Company's board of directors adopted amendments to the ISO Plan,
subject to shareholder approval at this Annual Meeting, in order to provide for
an annual award to each non-employee director of an option to purchase 1,500
shares of the common stock of the Company. As with options granted to employees
pursuant to the ISO Plan, the option exercise price or prices for options
granted to non-employee directors shall be determined by the Company's board of
directors at the time an option is granted, but in no event shall be less than
100% of the fair market value of the common stock on the date the option is
granted. Each non-employee director option vests and becomes exercisable
immediately upon the expiration of such director's then current term as a
director, whereas, options granted to employees vest and become exercisable in
annual increments of 25% beginning one year following the date of grant. The ISO
Plan has also been amended to provide that, subject to shareholder approval at
this Annual Meeting, all options expire ten years from the date of grant.
Employee options will continue to be granted based upon an assessment by the
Compensation Committee of such employee's ability to contribute materially to
the growth and development of the Company and its subsidiaries. The ISO Plan
will continue to be administered by the Compensation Committee which is composed
entirely of persons who are not eligible to participate in the Plan other than
by way of the annual option to purchase 1,500 shares.
The board also adopted amendments intended to comply with new rules
promulgated by the Securities and Exchange Commission pertaining to short-swing
trading by insiders ("Short-Swing Trading Rules"), which become effective
September 1, 1994. The amendments add a six month holding period requirement for
options granted pursuant to the ISO Plan, as well as a restriction against
amendments to the formula award provisions for grants to non-employee directors
more than every six months, other than to comply with certain federal laws. The
remaining provisions of the plan shall continue to operate as originally
adopted. The market value of common stock underlying the options as of April 20,
1994 was $12.125.
A copy of the Amended ISO Plan is furnished herewith as Annex A.
The ISO Plan is designed to qualify for favorable tax treatment to
participants pursuant to Section 422 and related Sections of the Internal
Revenue Code. Under these Sections, a participant who receives an incentive
stock option is not taxed on its value either at the time the option is granted
or at the time it is exercised. Instead, the participant incurs a tax only upon
the eventual sale or other disposition of the shares so acquired. Additionally,
a participant may be subject to any favorable capital gains treatment when the
shares are eventually sold. The Company is not entitled to a deduction for
federal income tax purposes in connection with the grant or any exercise of
incentive stock options.
17
<PAGE> 20
The following table sets forth information with respect to options granted
under the ISO Plan to the persons designated during the year ended December 31,
1993.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE* NUMBER OF UNITS
- ----------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Kenneth C. Coon.................................................. $11.375 24,000 Shares
Chairman and Chief Executive Officer
William J. Gerber................................................ 11.375 10,000 Shares
Vice President
Georgia M. Mace.................................................. 11.375 10,000 Shares
Treasurer
Greg D. Ewald.................................................... 11.375 10,000 Shares
Senior Vice President, Underwriting
Joseph P. Hutelmyer.............................................. 11.375 10,000 Shares
President, Seaboard Underwriters, Inc.
All Current Executive Officers as a Group (5 persons)............ 11.375 64,000 Shares
Non-Executive Officer Director Group (8 persons)................. 13.000 10,500 Shares
Non-Executive Officer Employee Group (2 persons)................. 11.375 to 20,000 Shares
13.00
</TABLE>
- -------------------------
* This figure represents the exercise price of the options. The value of the
options is the difference between the value of the underlying common stock and
the exercise price.
EMPLOYEE STOCK PURCHASE PLAN
The board of directors of the Company also has determined it advisable to
amend the ESPP in order to comply with the new Short-Swing Trading Rules. All
employees who meet the Plan's service requirements will continue to be eligible
under the ESPP. The amendments provide, in part, that employees subject to the
Short-Swing Trading Rules automatically will be re-enrolled in the ESPP under
the same terms as the offering phase immediately preceding such re-enrollment,
subject to such employees right to increase or decrease his or her subscription
or payroll deductions, or terminate participation. The amendments also provide
that, if employees who are subject to the Short-Swing Trading Rules cancel their
subscriptions or have their subscriptions deemed canceled, such employee may not
participate in the ESPP until six months have elapsed from the decision to cease
participation. Finally, the ESPP has been amended to require that employees who
are subject to the Short-Swing Trading Rules may not sell stock purchased
pursuant to the ESPP until at least six months have lapsed from the date the
purchase price is fixed, unless such employee has executed a written waiver of
his or her right to cancel the subscription.
A copy of the Amended ESPP is furnished herewith as Annex B.
The board of directors recommends a vote FOR the Amended 1992 Incentive
Stock Option Plan and the Amended Employee Stock Purchase Plan.
INDEPENDENT AUDITORS
Deloitte & Touche, the Company's independent auditors, will be present at
the Annual Meeting, will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions presented by
shareholders.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal which a holder of Common Stock intends to present at next
year's Annual Meeting of shareholders must have been received by the Secretary
of the Company, at the address appearing on the first page of this Proxy
Statement, no later than January 24, 1995, in order to be included in the Proxy
Statement in the form of a Proxy relating to that meeting.
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OTHER MATTERS
As of the date of this Proxy Statement, the board of directors of the
Company does not know of any matters to be presented at the Annual Meeting other
than those specifically set forth in the Notice of Annual Meeting of
Shareholders. However, if other proper matters should come before the Annual
Meeting, or any adjournment thereof, the persons named in the enclosed Proxy
intend to vote the shares represented by all Proxies held by them in accordance
with their best judgment with respect to any such matters.
MISCELLANEOUS
Shareholders are urged to complete, sign and date the enclosed Proxy and
return it as promptly as possible in the envelope enclosed for that purpose.
Properly executed Proxies will be voted in accordance with shareholder's
directions. If no directions are given, Proxies will be voted "FOR" the election
of the Director Nominees and the Compensation Plan Proposal. The Proxy does not
affect the right to vote in person at the Annual Meeting.
By Order of the Board Of Directors
DONN E. DAVIS, Secretary
April 29, 1994
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ANNEX A
ACCEPTANCE INSURANCE COMPANIES INC.
AMENDED 1992 INCENTIVE STOCK OPTION PLAN
Statement of 1992 Incentive Stock Option Plan, dated December 22, 1992, as
amended, for Acceptance Insurance Companies Inc. (the "Company").
Whereas, the Board of Directors of the Company (the "Board"), deem it in
the best interests of the Company that certain management personnel employed by
the Company and by its subsidiaries, and directors of the Company, be given the
opportunity to acquire a stake in the growth of the Company, as a means of
assuring their maximum effort and continued association with the Company, and
Whereas, the Board believes the Company can best obtain these and other
benefits by granting incentive stock options to designated employees and
directors from time to time, pursuant to Section 422 and related Sections of the
Internal Revenue Code,
Now, therefore, the Board has adopted this 1992 Incentive Stock Option Plan
(the "Plan"), and amendments thereto effective May 24, 1994, effective upon
approval of the affirmative vote of the holders of a majority of all classes of
shares of the Company entitled to vote.
1. POLICY. The Company shall, from time to time, grant options for sale of
shares to management personnel employed by it, and by subsidiary corporations of
the Company, and to directors of the Company, pursuant to the terms of this
Plan. The term "subsidiary corporation" means any corporation in which the
Company owns at least 50% of the voting shares, or any corporation in a chain of
corporations connected with the Company through ownership of at least 50% of its
voting shares by any corporation in the chain.
2. OPTION STOCK. Options under this Plan shall pertain to authorized and
unissued Common Stock of the Company, par value $.40 per share (hereinafter
"Option Shares"). The total number of Option Shares available for option under
this Plan shall not exceed gross limit of 500,000 in the aggregate. The Company
shall at all times while this Plan is in force reserve such number of shares of
Common Stock as shall be sufficient to satisfy the requirements of this Plan.
3. PARTICIPANTS. (a) For the purpose of this Plan, the term "management
personnel" shall be deemed to include only the following full-time employees of
the Company (the term "employees" shall include employees of the Company or its
subsidiary corporations): Officers, Department Heads, Division Managers and
other employees determined by the Board to be Key Employees of the Company. The
Plan shall be administered by the Compensation and Stock Option Committee of the
Board (the "Committee"), the members of which each shall be "disinterested
persons" within the meaning of Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"). From time to time
the Committee, on recommendation of the President or Chief Executive Officer of
the Company, shall designate from the employees of the Company those entitled to
participate in the Plan, and shall prescribe the extent and terms of their
participation, subject to the provisions of the Plan. Such designation shall be
made in the absolute discretion of the Committee and shall be final without
approval of the shareholders. In designating participants the Committee shall
fix the number of shares to be optioned to designees in its absolute discretion.
(b) Directors who are not full-time employees of the Company ("Non-employee
Directors") automatically shall receive an option to purchase 1,500 shares upon
initial election and each re-election, unless the Non-employee Director elects
six months in advance not to receive an option (such automatic grant being
hereinafter referred to as the "Formula"); provided, however, Formula grants
shall not be made to a member of the Committee if such grants would cause the
recipient to no longer be a "disinterested person" within the meaning of Rule
16b-3 of the Exchange Act.
4. PRICE. The option price or prices of the Company's Common Stock offered
to any participant under this Plan shall be determined by the Board in its
absolute discretion at the time of granting of an option; provided, however,
that such price or prices shall in no event be less than 100% of the fair market
value of the
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Common Stock on the date of granting of the option. In the case of options
granted to a person who owns more than 10% of the voting power of the shares of
the Company, or of the parent or any subsidiary of the Company, the option price
for the Common Stock shall in no event be less than 110% of the fair market
value thereof on the date of the granting of the option. For purposes hereof,
the fair market value of the Common Stock shall be the closing sales price on
the New York Stock Exchange, Inc., on the date nearest preceding the granting of
the option. In no event shall an option for Common Stock granted under this Plan
be deemed not to qualify as an incentive stock option, within the meaning of
Section 422 of the 1986 Internal Revenue Code, by reason of the determination of
the purchase price for said shares, so long as the establishment of the fair
market value of such shares on the date of grant of the option shall have been
determined in good faith.
5. TIME OF EXERCISE. Except as to options granted to Non-employee
Directors, any option granted under this Plan shall not be exercisable prior to
the expiration of one year following the date of the granting of such option to
the particular participant, and 25% of the total number of options shall vest
and shall become exercisable each year beginning one year from the date of grant
until fully vested. The option may be exercised in whole or in part at any time,
or from time to time thereafter, until the expiration of the option. An option
shall expire ten years after the date of grant, except that options granted to a
person who owns more than 10% of the voting power of the shares of the Company
or of the parent or any subsidiary of the Company, shall expire five years after
the date of grant. Options automatically granted to Non-employee Directors shall
vest and shall be exercisable immediately upon expiration of such director's
then current term as a director. With respect to options granted to participants
subject to Section 16 of the Exchange Act, at least six months must elapse from
the date of acquisition of any option granted pursuant the Plan to the date of
disposition of the option (other than upon exercise or conversion) or its
underlying common stock.
6. METHOD OF GRANTING. Whenever the Committee shall designate a person for
the receipt of an option, the Secretary (or if the Secretary is himself the
designee, the President) of the Company shall forthwith send notice thereof to
the designee, in such form as the Board shall approve, stating the number of
shares optioned to such designee and the price per share, and attaching a copy
of this Plan. The date of action by the Committee or the Board shall be the date
of the granting of the option to such participant for all purposes of this Plan.
The notice may be accompanied by an option agreement to be signed by the Company
and by the participant if the Board shall so direct, which shall be in such form
and shall contain such provisions as the Board shall deem advisable.
7. ADJUSTMENTS OF OPTION STOCK. (a) If at any time, or from time to time,
after the grant but prior to the exercise of all or any part of an option under
this Plan, the Company shall effect a subdivision or combination of Common
Stock, into a greater or smaller number of shares, or a reclassification of such
Common Stock into shares of another class or into securities, or the Company
shall be consolidated or merged with any other corporation, then there shall be
thereafter deliverable by the Company, or by the corporation surviving a merger
or consolidation, upon any exercise of such option, in lieu of such Common Stock
and for the same price, such shares and securities as shall have been
substituted for the Common Stock in connection with such subdivision,
combination, reclassification, consolidation or merger. Such substituted shares
or securities shall be deemed Option Shares for the purposes of this plan.
(b) If at any time, or from time to time, after the grant but prior to the
exercise of all or any part of the options under this Plan, the Board shall
declare in respect of the Company's Common Stock any dividend payable in shares
of the Company of any class, then there shall be deliverable upon any exercise
thereafter of any option under this Plan, in addition to each Option Share and
for no additional price, such additional share or shares as shall have been
distributable as a result of such share dividend in respect of an Option Share;
except that fractional shares shall not be so deliverable. Any such share
dividend shall be deemed part of the Option Shares for purposes of this Plan.
8. ASSIGNMENTS. Any option granted under this Plan shall be exercisable
only by the participant to whom granted during his or her lifetime, and shall
not be assignable or transferrable otherwise than by will or by the laws of
descent and distribution.
9. SEVERANCE, DEATH, RETIREMENT. (a) Employee Participants. In the event
that an employee participant shall cease to be employed by the Company for any
reason except death or retirement, any option or options
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theretofore granted to him or her under this Plan which shall not have been
exercised, shall be exercisable within three months after termination of his or
her employment. In the event an employee participant dies, or retires, while
employed by the Company, any option or options theretofore granted to him or her
under this Plan which shall not have been exercised shall be exercisable until
the expiration of such options as provided in Section 5 hereof.
(b) Director Participants. In the event that a director participant shall
cease to be a director of the Company for any reason except death, any option or
options theretofore granted to him or her under this Plan which shall not have
been exercised shall be exercisable within three months after expiration of his
or her term as a director. In the event that a director participant shall cease
to be a director of the Company because of death, any option or options
theretofore granted to him or her under this Plan which shall not have been
exercised shall be exercisable until the expiration of such options as provided
in Section 5 hereof.
(c) Exercise in the Event of Death. In the event of the death of any
participant while employed by, or a director of, the Company, any option or
options theretofore granted to him or her under this Plan which shall not have
been exercised shall be exercisable by the estate or heirs of such participant.
10. MANNER OF EXERCISE. Whenever an option is granted under this Plan in
respect of Option Shares, such shares may be purchased by written notice of
election delivered prior to the expiration of the option to the Company at its
principal office by registered or certified mail, stating the number of shares
with respect to which the option is being exercised and specifying a date, not
less than five nor more than fifteen days after the date of such notice, on
which the shares will be taken and payment made for them.
The shares being purchased may be paid for (a) in cash, or (b) by delivery
to the Company of whole shares of Common Stock (including previously owned
shares and shares acquired upon partial exercise of the option) evidenced by
negotiable stock certificates duly endorsed for transfer in blank and not
subject to any applicable restrictions on transfer, valued for such purpose at
the highest sales price of the Common Stock as reported on the New York Stock
Exchange Composite Listing for the day immediately preceding the date of
exercise, or if there were no sales on such date, on the next preceding date on
which there were such sales, or (c) any combination of the foregoing.
11. CLOSING. On the date specified in the notice of election referred to
above, or an adjourned date provided for later in this paragraph, the Company
shall deliver or cause to be delivered to the participant certificates for the
number of shares with respect to which the option is being exercised, against
payment for them. Delivery of the shares may be made at the principal office of
the Company or at the office of a transfer agent appointed for the shares of the
Company. No shares shall be issued until full payment for them has been made in
accordance with Section 10 hereof; and a participant has none of the rights of a
shareholder until the shares are issued as herein provided. In the event of any
failure to take up and pay for the number of shares specified in the notice of
election on the date stated on it, or an adjourned date, the option shall become
inoperative as to such number of shares, but shall continue with respect to any
remaining shares covered by the option and not yet acquired pursuant to it. If
any law, or any regulation of the Securities and Exchange Commission or of any
other body having jurisdiction, shall require the Company or the participant to
take any action in connection with the shares specified in the notice of
election, then the date specified therein for the delivery of the shares shall
be adjourned until the completion of the necessary action.
12. SECURITIES REGISTRATION. The Company shall (a) register the shares
underlying options granted hereunder under the Securities Act of 1933 on Form
S-8, or other appropriate form of registration statement, (b) qualify such
shares where required under state securities laws, and (c) cause such shares to
be listed on the New York Stock Exchange, Inc.
13. AMENDMENT AND DISCONTINUANCE. The Plan shall terminate on December 22,
2002, and an option shall not be granted after that date. The Board may alter,
suspend, or discontinue this Plan; provided, however, that: (1) the Board shall
not, without the written consent of the holders of options, alter or impair
unexercised options that may have been previously granted under this Plan,
except insofar as a merger or consolidation of the Company, or a termination of
employment or directorship of a participant, or a liquidation or dissolution
shall effect a cancellation of an option under the terms of paragraphs 7 or 14
hereof; and (2) that the Formula
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shall not be amended more than once every six (6) months, except an amendment
necessary to comport the Plan with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules and regulations
promulgated thereunder.
14. LIQUIDATION. Upon the complete liquidation of the Company, any
unexercised options previously granted under this Plan shall be deemed canceled.
In the event of the complete liquidation of a subsidiary corporation, or in the
event that such corporation ceases to be a subsidiary corporation as that term
is defined in paragraph 1 above, any unexercised options previously granted to
participants employed by such corporation shall be deemed canceled unless such
participants shall become employed by the Company or by any other subsidiary
corporation upon the occurrence of such event.
15. SHAREHOLDER APPROVAL. This Plan is subject to the approval of the
shareholders of the Company by an affirmative vote of the holders of a majority
of the votes cast at a meeting of such shareholders.
16. SECURITIES LAWS. Anything to the contrary herein notwithstanding, the
Company's obligation to deliver stock pursuant to an option is subject to
compliance with federal and state securities laws, rules and regulations
applying to the authorization, issuance or sale of securities, and applicable
stock exchange requirements, as the Company deems necessary or advisable. The
Company shall not be required to sell or deliver stock pursuant hereto unless
and until it receives satisfactory assurance that the issuance or transfer of
such shares will not violate any of the provisions of the Securities Act of 1933
or the Exchange Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, or the rules and regulations of any stock
exchange on which the securities are traded, or the provision of any state
securities law, or that there have been compliance with the provisions of such
act, rules, regulations and state laws.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the plan administrators fails to comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the plan administrators.
17. EFFECT ON EMPLOYMENT AND SERVICES. Neither the adoption of the Plan,
nor the granting of any Incentive Stock Option under the Plan shall be deemed to
create any right in any individual to be retained or continued in the employment
or services of the Company or its subsidiaries.
IN WITNESS WHEREOF, this Amendment to the 1992 Incentive Stock Option Plan
has been approved by the Board of Directors of Acceptance Insurance Companies
Inc. and is hereby executed as of the 24th day of March, 1994.
ACCEPTANCE INSURANCE COMPANIES INC.
By /s/ KENNETH C. COON
--------------------------------------
Kenneth C. Coon,
Chairman and Chief Executive Officer
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ANNEX B
ACCEPTANCE INSURANCE COMPANIES INC.
AMENDED EMPLOYEE STOCK PURCHASE PLAN
Statement of Employee Stock Purchase Plan, dated December 22, 1992, as
amended May 24, 1994, for Acceptance Insurance Companies Inc. (the "Company").
Whereas the Board of Directors of the Company (the "Board"), deems it in
the best interests of the Company to provide eligible employees who wish to
become shareholders in the Company a convenient method of doing so, and
Whereas the Board believes the Company can best obtain this benefit by
establishing a plan whereby employees may acquire the Company's authorized but
unissued Common Stock directly from the Company and on a payroll deduction
basis, if desired, pursuant to Section 423 and related sections of the Internal
Revenue Code,
Now, therefore, the Board has adopted this Employee Stock Purchase Plan,
effective upon approval by the affirmative vote of the holders of a majority of
all classes of shares of the Company entitled to vote:
1. PURPOSE OF THE PLAN. The purpose of this Plan is to provide
eligible employees who wish to become shareholders in the Company a
convenient method of doing so. The Company wishes to establish a plan
whereby employees may acquire the Company's authorized but unissued Common
Stock directly from the Company and on a payroll deduction basis, if
desired, making it easier for them to acquire such shares. It is felt that
employee participation in the ownership of the business will be to the
mutual benefit of both the employees and to the Company.
2. EMPLOYEES ELIGIBLE TO PARTICIPATE. Any employee of the Company or
any of its subsidiaries who is in the employment of the Company at the
offering date is eligible to participate in the Plan, except (a) employees
who have been employed less than one year, (b) employees whose customary
employment is 20 hours or less per week and (c) employees whose customary
employment is not for more than five months in any calendar year. The word
"employee" shall include officers, but not persons who are solely
directors. Any other employee is eligible to the extent necessary to comply
with Rule 16b-3(d)(2)(i)(A) promulgated under Section 16 of the Securities
and Exchange Act (the "Exchange Act"), which requires that the plan have
broad-based participation and not discriminate in favor of highly
compensated employees.
3. OFFERING DATES. From time to time, the Board of Directors of the
Company may fix a date (hereinafter called the "Offering Date"), on which
the Company will make an offer (hereinafter called an "Offering"), to all
employees then eligible to participate, of an opportunity to purchase
shares. Offerings will be made in one or more phases of six months each,
each phase to start on an Offering Date as the Board of Directors shall
fix, provided that no two phases shall run concurrently. The Board of
Directors may, at its discretion, limit the number of shares available for
purchase during a phase. No phase may be started after termination of the
Plan, but any phase started prior to the Plan's termination may be
completed, even though it runs beyond the Plan's termination date.
Generally, phases commence on January 1, and July 1 of each year. In order
to purchase the shares, an eligible employee must sign a Subscription
Agreement and any other necessary papers between the Offering Date and the
30th day following each Offering Date (or if such 30th day is a Saturday,
Sunday, or legal holiday, then the next succeeding business day).
At the conclusion of an offering phase, participants subject to
Section 16 of the Exchange Act are automatically re-enrolled in the next
offering phase under the same terms as the previous phase; provided,
however, that such participant may increase or decrease his or her
subscription or payroll deductions, subject to the limitations set forth in
Paragraphs 6 and 7, respectively, by executing a new Subscription
Agreement; or may terminate participation in accordance with Paragraph 9.
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4. PRICE. The purchase price for stock for participants enrolling in a
phase will be the lower of the amounts determined under the following
paragraphs (a) and (b):
(a) The purchase price shall be equal to 85% of the closing sale
price of the shares on the New York Stock Exchange on the termination
date of the phase, or when the subscription agreement is paid in full,
whichever first occurs. If there is no sale of the shares on such date,
then the last reported bid price on the Exchange on such date; or
(b) The purchase price shall be equal to 85% of the mean of the
closing sale price of the shares on the New York Stock Exchange on the
commencement date of a phase, and the closing sale price of the shares
on the New York Stock Exchange on the termination date of the phase, or
when the subscription agreement is paid in full, whichever first occurs.
If there is no sale of the shares on such dates, then the last reported
bid price on the Exchange on such dates.
Notwithstanding the foregoing, in no event may the purchase price be
less than the estimated book value of the Company's common stock as of the
termination date of the phase, as determined in good faith by the Board of
Directors.
5. NUMBER OF SHARES TO BE OFFERED. Shares under this Plan shall
pertain to authorized and unissued Common Stock of the Company, par value
$.40 par value per Share ("Post-Split Shares"). The total number of Shares
available for purchase under this Plan shall not exceed 500,000 in the
aggregate. Appropriate adjustments in the above figure, in the subscription
rate and in the minimum and maximum number of shares which an employee may
purchase shall be made to give effect to any mergers, consolidations,
acquisitions, stock splits, stock dividends, or other relevant changes in
the capitalization occurring after the effective date of the Plan, provided
that no fractional shares shall be subject to an option and each option
shall be adjusted downward to the nearest full share.
6. LIMITATION ON PARTICIPATION. An eligible employee may not elect to
contribute to the Plan, whether by payroll deduction or by special
purchase, more than 10% of such eligible employee's compensation for the
calendar year. In addition, an eligible employee may not elect to make such
contributions to the Plan which would permit more than $25,000.00 of common
stock to be purchased for his or her account in any calendar year. For this
purpose, the fair market value of the Company's Common Stock shall be
determined at the time of the Offering Date.
7. METHOD OF PAYMENT. Payment may be made in cash at the time the
shares are subscribed for, or, at the employee's option, through payroll
deductions over a period of not more than 50 weeks at a rate of not less
than 2% nor more than 15% of compensation before deductions.
8. TRUSTEE'S CONTROL OVER EMPLOYEE'S FUNDS AND SHARE ISSUANCE. The
Board of Directors of the Company shall select a financial institution as
Trustee under the Plan, both to handle all money paid in by employees and
to obtain and deliver the shares. Stock certificates will be issued, under
the Trustee's direction, as soon as practicable after the total purchase
price has been paid by the employee, whether in cash or through payroll
deduction.
9. CANCELLATION OF PARTICIPATION IN PLAN. Subject to the provisions of
a waiver executed pursuant to Paragraph 12, each participating employee
shall have the right to cancel his or her subscription at any time prior to
payment in full for the shares for which he or she has subscribed by giving
the Company written notice thereof, whereupon he or she will be refunded
all money he or she has paid in. Should any installment be due and unpaid
for 15 days without satisfactory arrangement for the payment thereof being
made within such 15-day period, the Subscription Agreement shall thereby be
automatically canceled and the money previously paid refunded to the
employee. Participants who are subject to Section 16 of the Exchange Act
and who cancel their subscriptions, or have their subscriptions deemed
canceled, as contemplated herein shall not be eligible to participate in
the Plan until six months have elapsed from the decision to cease
participation pursuant to Rule 16b-3(d)(2)(i)(C) promulgated under Section
16(b) of the Exchange Act.
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10. EMPLOYEES RIGHTS AS SHAREHOLDERS. No participating employee shall
have any rights as a shareholder until full payment has been made for the
shares he or she has subscribed for and a stock certificate actually
issued.
11. INTEREST. Interest shall accrue on funds held by the Trustee
through payroll deductions at a rate to be determined by the Trustee, which
shall be the same rate paid by the Trustee for other similar accounts held
by it in trust.
12. RIGHTS NOT TRANSFERABLE. Except as hereinafter set forth and
unless otherwise provided by law, no participating employee shall have the
right to sell, assign, transfer, pledge, or otherwise dispose of or
otherwise encumber his or her right to participate in the Plan or his or
her interest in the fund accumulated for his or her benefit, and such right
and interest shall not be liable for or subject to the debts, contracts, or
liabilities of such employee. If any such action is taken by the employee
or any claim asserted by another party in respect to such right and
interest, such action or claim will be treated as notice of cancellation,
and except as may otherwise be required by law, refund will be made to such
employee as provided in paragraph 9. Upon the death of a participating
employee, his or her estate shall have the right, for a period of 60 days
from the date of his or her death, to pay the entire balance due and
receive the share subscribed for.
Further, pursuant to Rule 16b-3(d), promulgated under Section 16(b) of
the Exchange Act, stock purchased pursuant to the Plan by participants
subject to Section 16 of the Exchange Act shall not be sold until at least
six months lapse from the date the purchase price is fixed, unless such
participant shall have executed a written waiver of such participant's
cancellation rights under Paragraph 9 on or before the Offering Date.
13. TERMINATION OF EMPLOYMENT. Upon termination of employment for any
reason whatsoever, including, but not limited to, death or retirement, the
participating employee or his or her estate may elect within 60 days after
the happening of such event to pay the entire balance due and receive the
shares subscribed for. The failure to make such election within such period
will be treated as a notice of cancellation and, except as may otherwise be
required by law, refund will be made to such employee or his or her estate
as provided in paragraph 9.
14. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board of Directors of
the Company shall have the right to amend, modify or terminate the Plan at
any time without notice, provided that no employee's existing rights are
adversely affected thereby, and provided further than no such amendment of
the Plan, shall, except as provided in paragraph 15, (a) increase the above
500,000 total number of shares available to be offered; (b) change the
formula by which the price at which the shares shall be sold shall be
determined; and (c) increase the maximum number of shares which an eligible
employee can purchase.
15. SHARE OWNERSHIP. Notwithstanding anything herein to the contrary,
no employee shall be permitted to subscribe for any shares under the Plan
if such employee, immediately after such subscription owns shares
(including all shares which may be purchased under outstanding
subscriptions under the Plan) possessing 5% or more of the total combined
voting power or value of all classes of shares of the Company or of its
parent or subsidiary corporations. For the foregoing purposes the rules of
Section 423(b)(3) of the Internal Revenue Code of 1986 shall apply in
determining share ownership.
16. EXERCISE OF SUBSCRIPTION AGREEMENT. Subject to the provisions of a
waiver of cancellation rights executed pursuant to Paragraph 12, an
employee continues as a participant during an entire phase, at the end of a
phase the employee may choose among three alternatives:
(a) Exercise his or her subscription to buy all the shares of
Common Stock for which the employee has subscribed and for which he or
she has sufficient accumulated deductions, and receive any balance in
the employee's account in cash; or
(b) exercise part of his or her subscription to buy shares of
Common Stock, and receive the balance of the employee's account in cash;
or
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(c) not exercise any part of his or her subscription to buy shares
of Common Stock, and receive all of the employee's account in cash.
An employee should be aware that, under the terms of the Plan, should
the employee as a participant take no action to notify the Company of his
or her intention not to exercise the employee's Subscription Agreement or
to exercise only part of it, the participant's subscription to purchase
shares will be exercised in its entirety for the employee on the
termination date of the phase. Any cash balance in his or her account after
such exercise will be refunded to the employee.
17. ADMINISTRATION. The Plan is administered by the Board, or, if the
Board so directs, by the Compensation and Stock Option Committee of the
Company's Board (the "Compensation Committee"), which shall be composed
entirely of persons who are not eligible to participate in the Plan. The
Board or the Compensation Committee, as the case may be, has the power to
interpret and administer the Plan and to make all decisions on questions
which may arise concerning the Plan. The Board's or the Compensation
Committee's determinations shall be made in accordance with its judgment as
to the best interests of the Company and its shareholders, and in
accordance with the purposes of the Plan. Determinations of the Board or
Compensation Committee shall be binding and conclusive with respect to the
Company and participants. The Company does not intend to charge any
participant a service or other fee in connection with the administration of
the Plan, regardless of whether the participant withdraws from a phase or
exercises all or a portion of the subscription agreed to by the participant
for a phase.
18. SECURITIES LAWS. Anything to the contrary herein notwithstanding,
the Company's obligation to deliver stock pursuant to a Subscription
Agreement is subject to compliance with federal and state securities laws,
rules and regulations applying to the authorization, issuance or sale of
securities, and applicable stock exchange requirements, as the Company
deems necessary or advisable. The Company shall not be required to sell or
deliver stock pursuant hereto unless and until it receives satisfactory
assurance that the issuance or transfer of such shares will not violate any
of the provisions of the Securities Act of 1933 or the Exchange Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or the rules and regulations of any stock exchange on which the
securities are traded, or the provision of any state securities law, or
that there have been compliance with the provisions of such act, rules,
regulations and state laws.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the plan administrators fails
to comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the plan administrators.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been approved by
the Board of Directors of Acceptance Insurance Companies Inc., and is hereby
executed as of the 24th day of March, 1994.
ACCEPTANCE INSURANCE COMPANIES INC.
By /s/ KENNETH C. COON
--------------------------------------
Kenneth C. Coon,
Chairman and Chief Executive Officer
B-4
<PAGE> 30
ACCEPTANCE INSURANCE COMPANIES INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 1994
P The undersigned, a shareholder of Acceptance Insurance Companies
Inc. (the "Company"), hereby appoints Kenneth C. Coon
R and Donn E. Davis, and each of them, attorneys, agents and proxies,
with full power of substitution to each, for and in the name of the
O undersigned to vote, as designated below, all shares of Common
Stock of the Company which the undersigned would be entitled
X to vote at the Annual Meeting of shareholders of the Company to be
held at the Radisson-Redick Tower Hotel, 1504 Harney Street, Omaha,
Y Nebraska, on May 24, 1994, at 11:00 a.m., Local Time, and at any
adjournments thereof:
<TABLE>
<S> <C>
ELECTION OF DIRECTORS, Nominees: (change of address)
_______________________________
Jay A. Bielfield, Kenneth C. Coon, Edward W. Elliott, Jr., _______________________________
_______________________________
Robert LeBuhn, Michael R. McCarthy, John P. Nelson, _______________________________
(If you have written in the above
R. L. Richards, David L. Treadwell, Doug T. Valassis space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
<PAGE> 31
/X/ PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
<TABLE>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Compensation / / / / / / THIS PROXY IS SOLICITED ON BEHALF OF
Directors Plan Proposal. THE BOARD OF DIRECTORS AND, WHEN
(see reverse) PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE
UNDER SIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE
For, except vote withheld from the VOTED FOR THE ELECTION OF THE
following nominee(s): NOMINEES FOR DIRECTORS NAMED
HEREIN AND FOR APPROVAL OF THE
COMPENSATION PLAN PROPOSAL, AND THE
BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR THE ELECTION
OF ALL NOMINEES FOR DIRECTOR AND
APPROVAL OF THE COMPENSATION PLAN
PROPOSAL. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING, INCLUDING
THE ELECTION OF ANY PERSON TO
THE BOARD OF DIRECTORS WHERE A
NOMINEE NAMED IN THE PROXY STATEMENT
IS UNABLE TO SERVE OR, FOR GOOD
CAUSE, WILL NOT SERVE.
The undersigned acknowledges
receipt of the Notice of Annual
Meeting of shareholders and the
Proxy Statement dated April 29, 1994
and ratifies all that the proxies or
any of them or their substitutes may
lawfully do or cause to be done by
virtue hereof and revokes all
former proxies.
When shares are held by joint
Change / / tenants, both should sign. When
of signing as attorney, executor,
Address administrator, 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
Attend / / partnership, please sign in
Meeting partnership name by an authorized
person.
SIGNATURE(S) DATE
------------------------------------------- --------------------
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
SIGNATURE(S) DATE
------------------------------------------- --------------------
</TABLE>
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
