PRELIMINARY PROXY MATERIALS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 1, 1995
The Annual Meeting of Shareholders of ACC CORP. (the "Company") will be
held at __________________________, Rochester, New York on Thursday, June 1,
1995, at 10:00 A.M., for the following purposes:
1. To elect Directors of the Company to serve until the next
Annual Meeting of Shareholders and until the election and qualification
of their successors.
2. To act on a proposal to ratify the selection of Arthur Andersen
LLP as auditors of the books and financial records of the Company
for its fiscal year ending December 31, 1995.
3. To act on a proposal to amend the Company's Employee Stock Option
Plan.
4. To act on a proposal to amend the Company's Certificate of
Incorporation to authorize the issuance of Preferred Stock and Class
B non-voting Common Stock and to increase the number of shares
authorized for issuance.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 14, 1995
as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting.
By Order of the Board of Directors
Francis D. R. Coleman, Secretary
Rochester, New York
April [25], 1995
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.
YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON
SHOULD YOU DECIDE TO ATTEND THE MEETING.
<PAGE>
PROXY STATEMENT
1995 ANNUAL MEETING OF SHAREHOLDERS OF ACC CORP.
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ACC Corp. (the "Company") for use at the
Annual Meeting of Shareholders of the Company to be held at
_______________________________, Rochester, New York on Thursday, June 1,
1995, at 10:00 A.M., or at any adjournments thereof.
Any proxy properly given and received prior to the commencement of the
Meeting will be voted with respect to all shares represented by it and will
be voted in accordance with the instructions, if any, given therein. If no
contrary instructions are given, the proxy will be voted (1) FOR the election
as Directors of the nominees named herein, (2) FOR the ratification of the
selection of Arthur Andersen LLP to serve as the Company's auditors for its
fiscal year ending December 31, 1995, (3) FOR the proposal to amend the
Company's Employee Stock Option Plan; (4) FOR the proposal to amend the
Company's Certificate of Incorporation to authorize the issuance of Preferred
Stock and Class B non-voting Common Stock and to increase the number of
shares authorized fo rissuance; and (5) in accordance with the proxyholders'
best judgment on any other matters which may properly come before the
Meeting. A shareholder giving a proxy has the right to revoke it by a duly
executed proxy bearing a later date, by attending the Meeting and voting in
person, or by otherwise notifying the Company in writing prior to the
Meeting.
Under Delaware law, the total votes received, including abstentions and
votes by brokers holding shares in "street name" or other fiduciary capacity
on "routine" matters, are counted in determining the presence of a quorum at
the Meeting. With respect to the election of Directors, votes may be cast
for or withheld from voting with respect to any or all of the Directors.
Votes that are withheld will have no effect on the election of Directors.
Abstentions may be specified on all Proposals other than the election of
Directors and will be counted as present for purposes of the matter with
respect to which the abstention is noted. Under the Company's Certificate of
Incorporation and Bylaws, Directors are elected by a plurality of the votes
cast, the approval of Proposals 2 and 3 will each require the affirmative
vote of a majority of the shares present, in person or by proxy, and
entitled to vote, and the approval of Proposal 4 will require the
affirmative vote of a majority of all outstanding shares. Therefore,
under the Company's Certificate of Incorporation and Bylaws and under
Delaware law, assuming the presence of a quorum at the Meeting, non-votes
by brokers will have no effect on the election of Directors, Proposal 2
or Proposal 3. However, non-votes by brokers would have the effect of "no"
votes with respect to Proposal 4, and abstentions would have the effect
of "no" votes with respect to Proposals 2, 3 and 4.
The close of business on April 14, 1995 has been fixed as the record
date for the determination of the shareholders entitled to notice of, and to
vote at, the Annual Meeting. On that date, there were _____________ shares
of Common Stock outstanding and entitled to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote. For a description of
the principal holders of the Company's Common Stock, see the discussion under
"Principal Holders of Common Stock."
The principal executive offices of the Company are located at 400 West
Avenue, Rochester, New York 14611.
This Proxy Statement and the enclosed proxy card are being furnished to
shareholders on or about April [25], 1995.
Additional copies may be obtained from the Secretary, ACC Corp., 400
West Avenue, Rochester, New York 14611, telephone (716) 987-3000.
PROPOSAL 1
ELECTION OF DIRECTORS
Seven Directors, making up the entire membership of the Board of
Directors of the Company as designated by the Board, are to be elected at the
Annual Meeting to hold office until the next Annual Meeting of Shareholders
and until the election and qualification of their successors. The Board of
Directors intends to nominate the seven persons named below for election to
the Board. All of the nominees are currently Directors of the Company.
Unless authority is withheld with respect to any individual nominee or all of
the nominees, the shares represented by the proxies received as a result of
this solicitation will be voted in favor of the nominees listed below. In the
event any nominee declines or is unable to serve, proxies will be voted for
the election of the others so named and may be voted for such substitute
nominees as the Board may recommend, or the Board may reduce the number of
Directors to eliminate the vacancy. The Board of Directors, however, does not
anticipate that any nominee will decline or be unable to serve.
The Board conducts its business through the meetings and activities of
the full Board and its committees. The Board of Directors held seven meetings
during 1994. Currently, the committees of the Board are the Audit Committee,
the Executive Compensation Committee and the Executive Committee.
The Audit Committee periodically reviews the Company's auditing and
accounting policies and procedures and recommends to the Board the selection
of the Company's independent auditors. Its members are: Daniel D. Tessoni,
Chairman, Hugh F. Bennett, Willard Z. Estey, David K. Laniak and Robert F.
Sykes. This Committee met three times during 1994.
The Executive Compensation Committee sets and reviews the compensation
and benefits paid to the Company's executives. Its members are: Hugh F.
Bennett, Chairman, David K. Laniak, Robert F. Sykes, and Daniel D. Tessoni.
This Committee met five times during 1994.
The Executive Committee was formed for the purpose of acting on behalf
of the Board of Directors between meetings of the full Board should the need
arise, in accordance with the Company's Bylaws. Its members are: Richard T.
Aab, Chairman, David K. Laniak and Daniel D. Tessoni, with Hugh F. Bennett
serving as an alternate member. This Committee took action by written consent
during the year but did not meet during 1994.
During 1993, the Board established a Special Committee, consisting of
David K. Laniak, Chairman, Hugh F. Bennett, now-retired Director Martin F.
Birmingham, Robert F. Sykes and Daniel D. Tessoni, to review and make any
determinations necessary with respect to several proposed transactions
involving the Company that involved potential conflicts-of-interest for
Richard T. Aab, the Company's Chairman and Chief Executive Officer. This
Committee met twice during 1994.
Each of the Directors attended at least 75% of the meetings held during
1994 by the Board and by each Committee of which he is a member.
The following sets forth information concerning the principal
occupations and business experience of the nominees for election as Directors
of the Company:
Richard T. Aab, 46, is a co-founder of the Company who has served as
Chairman of the Board since March, 1983, as Chief Executive Officer since
August, 1983, and as a Director since October, 1982. Mr. Aab also served as
Chairman of the Board of the Company's ACC TelEnterprises Ltd. subsidiary from
April, 1993 through February, 1994.
Hugh F. Bennett, 38, has been a Director of the Company since June,
1988. Since March, 1990, Mr. Bennett has been a Vice President, Director and
Secretary-Treasurer of the Boston, Massachusetts investment banking firm of
Gagan, Bennett & Co., Inc. Previously, Mr. Bennett had been a Vice President-
Corporate Finance at the Boston investment banking firm of McKinley Allsopp,
Inc., from March, 1988 through March, 1990.
Arunas A. Chesonis, 32, was elected the Company's President and Chief
Operating Officer in October, 1994. He previously served as President of the
Company and of its Domestic Group from February, 1994 through October, 1994,
and as President of its ACC Long Distance Corp. subsidiary from January, 1989
through February, 1994. From August, 1990 through March, 1991, he also served
as President of ACC TelEnterprises Ltd. From May, 1987 through January, 1989,
Mr. Chesonis served as Senior Vice President of Operations for ACC Long
Distance Corp. Mr. Chesonis was elected a Director of the Company in October,
1994.
The Hon. Willard Z. Estey, C.C., Q.C., 74, is Counsel to the Toronto,
Ontario law firm of McCarthy, Tetrault. After serving as Chief Justice of
Ontario, Mr. Estey was a Justice of the Supreme Court of Canada from 1977
through 1988. From 1988 through 1990, Mr. Estey was Deputy Chairman of
Central Capital Corporation, Toronto, Ontario. Since May, 1993, Mr. Estey
also serves as a Director of the Company's ACC TelEnterprises Ltd. subsidiary.
Mr. Estey was elected a Director of the Company in October, 1994.
David K. Laniak, 59, has been a Director of the Company since February,
1989. Mr. Laniak is Executive Vice President and Chief Operating Officer of
Rochester Gas and Electric Corporation, Rochester, New York. Mr. Laniak has
worked in a variety of positions for Rochester Gas and Electric Corporation
for more than 30 years. Mr. Laniak also serves as a Director of the Company's
ACC TelEnterprises Ltd. subsidiary, and is a Director of Rochester Gas and
Electric Corporation.
Robert F. Sykes, 71, has been a Director of the Company since August,
1988. Presently, Mr. Sykes is a general partner of Sykes Associates, an
investment partnership. From 1971 through 1986, he served as Chairman and
Chief Executive Officer of Sykes Datatronics, Inc., a manufacturer and
marketer of computerized telephone cost management systems. In 1987, Mr.
Sykes retired as Chief Executive Officer of Sykes Datatronics, and retired as
a member of its Board in 1989. Mr. Sykes also served as a Director of the
Company's ACC TelEnterprises Ltd. subsidiary from June, 1993 through November,
1994, and currently serves as a Director of Everflow Management Corp., an oil
and gas production company.
Daniel D. Tessoni, 47, has been a Director of the Company since May,
1987. Mr. Tessoni is an Associate Professor of Accounting at the College of
Business of the Rochester Institute of Technology, where he has taught since
1977. He holds a Ph.D. degree, is a Certified Public Accountant, and is
Treasurer of several privately-held business concerns.
Securities Owned by Company Management
The following table sets forth, as of April 14, 1995, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
Director or nominee for Director of the Company, by each of the four Named
Executives (in addition to Mr. Aab) named in the compensation tables that
appear hereafter in this Proxy Statement, and by all Directors, nominees for
Director and executive officers of the Company as a group. The Company
believes that each individual in this group has sole investment and voting
power with respect to his or her shares except as otherwise noted:
<TABLE>
Name of Nominee for Director Shares Beneficially Owned
or Executive Officer Number Percentage
<S> <C> <C>
Richard T. Aab 965,582 (1) 11.8
Hugh F. Bennett 3,000 (2) *
Arunas A. Chesonis 53,842 (3) *
Willard Z. Estey -0- *
David K. Laniak 2,700 *
Robert F. Sykes 85,144 (4) 1.0
Daniel D. Tessoni 22,500 (5) *
Richard E. Sayers 74,093 (6) *
Michael R. Daley 19,053 (7) *
Christopher Bantoft 2,500 (8) *
All Directors and Executive Officers
as a Group ( 15 persons, including
those named above) 1,245,222 14.9
(1) (2)
(3) (4)
(5) (6)
(7) (8)
(9)
__________________________________
* Indicates less than 1% of the Company's issued and outstanding shares.
(1) This number excludes 15,000 shares directly owned by Mr. Aab's wife and
1,500 shares that she controls as Custodian for their minor children, as to
all of which shares Mr. Aab disclaims beneficial ownership.
(2) Mr. Bennett shares investment and voting power with his wife with
respect to 1,500 of these shares.
(3) Includes 177 shares owned by Mr. Chesonis's spouse, options to purchase
45,500 shares that are currently exercisable by Mr. Chesonis and options to
purchase 6,650 shares that are currently exercisable by Mr. Chesonis's
spouse.
(4) Of these shares, 81,144 shares are owned by Sykes Associates, a
partnership of which Mr. Sykes is a general partner, and 4,000 shares are
owned by Ontario, Inc., a privately-held company of which Sykes Associates
is a shareholder and Mr. Sykes is a Director.
(5) Mr. Tessoni and his wife share investment and voting power with respect
to all shares which he beneficially owns.
(6) Includes options to purchase 70,000 shares that are currently
exercisable by Mr. Sayers.
(7) Includes options to purchase 16,750 shares that are currently
exercisable by Mr. Daley.
(8) Includes options to purchase 2,500 shares that are currently
exercisable by Mr. Bantoft.
(9) Includes options to purchase a total of 17,000 shares that are or will
become exercisable by four executive officers of the Company, in addition to
those named above, within the next 60 days.
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, Directors and other persons who own more than
ten percent of the Company's Common Stock (collectively, "reporting persons")
to file reports of their ownership of and changes in ownership in their
Company shareholdings with both the Securities and Exchange Commission ("SEC")
and the National Association of Securities Dealers, Inc. ("NASD") and to
furnish the Company with copies of all such forms (known as Forms 3, 4 and 5)
filed.
Based solely on its review of the copies of such forms it received or on
written representations received from certain reporting persons that they were
not required to file a Form 5 report with respect to 1994, the Company
believes that with respect to transactions occurring in 1994, all Form 3, 4
and 5 filing requirements applicable to its reporting persons were complied
with, except that Mr. Sykes was late in filing one Form 4 with respect to one
transaction involving the Company's shares, and Felicity Guest, Anthony M.
Marion, S. Patrick Martin, George H. Murray, Jr. and Daniel J. Venuti took
longer than the ten days allowed under SEC rules to file their respective Form
3 Reports following their being named officers of the Company for Section 16
purposes in November, 1994.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
In compliance with the SEC's executive compensation disclosure rules,
what follows below is a Report of the Company's Executive Compensation
Committee, a series of tables detailing certain cash compensation and stock
option information, and a five-year stock price performance chart, all of
which are intended by the SEC to standardize the reporting of such information
by public companies to their shareholders.
Report of the Executive Compensation Committee of the Board of Directors
Compensation of the Company's Executive Officers. Under the Company's
Bylaws, this Committee is charged with reviewing and setting the compensation
and benefits payable to the Company's senior executives. The Committee has
established two basic components to the compensation awarded to the Company's
senior executives: annual cash compensation and long-term incentive
compensation. In general, the annual cash compensation of the Company's five
highest paid executives consists of a base salary set at the beginning of the
year and a bonus awarded at the end of the year related to the Company's
overall performance for that year -- both financial and otherwise. The long-
term component of the compensation paid to these executives consists of stock
options granted under the Company's Employee Stock Option Plan, which are
awarded at the direction of this Committee with two goals in mind: to aid in
retaining the executive and to ensure that the executive's financial interest
in increasing the value of the Company is closely aligned with that of the
shareholders. Other forms of compensation such as one-time stock bonuses may
occasionally be awarded depending upon unusual or unique circumstances that
the Committee believes should be recognized.
With respect to annual cash compensation, in setting salary levels for
the Company's senior management, the basic objective is to pay competitive
rates to attract and retain competent executives. The Committee determines
competitive pay levels based upon independent industry surveys, proxy
disclosures, salaries paid to attract new managers and its own judgments based
upon past experience.
Annual bonus payments are made at the discretion of this Committee to
the officers and other key employees of the Company and its subsidiaries based
upon the Company's financial performance during the year and the performance
of the individual employee in question, as well as information provided by
independent industry surveys, proxy disclosures and its own judgments based
upon past experience.
Individual bonus awards generally relate to meeting the Company's budget
and forecasted performance which are reviewed and approved by the Board at the
beginning of each year. At the beginning of each year, the Committee
establishes a bonus schedule relating individual bonuses to specific ranges of
operating results tied to budgeted goals.
With respect to long-term incentive compensation, in determining the
timing and the size of stock option grants to its senior executives, the
Committee reviews competitive compensation data from selected peer companies
and available compensation survey information in making these decisions. It
also reviews with the Chief Executive Officer proposed individual awards,
taking into account the individual's scope of accountability, strategic and
operational goals and responsibilities, and anticipated performance
requirements and contributions to the Company's overall success. Under the
Stock Option Plan, this Committee is responsible for granting stock options to
the Company's executives and key employees. In determining the timing and
size of these grants to the Chief Executive Officer, in addition to this same
evaluation process, the Committee also makes its own independent determination
as to its perception of his past and expected future contributions to the
Company's achievement of its long-term performance goals.
At the Company's 1994 Annual Meeting, the shareholders approved an
amendment to the Company's Employee Stock Option Plan that added the language
necessary to enable that Plan to comply with the tax deductibility
requirements for executive compensation that exceeds $1 million per year
imposed by the Revenue Reconciliation Act of 1993. However, because the
Company's executive compensation levels generally do not approach the $1
million per year range for any of its most highly paid executives, the
Committee does not believe that at the present time it is necessary to take
any additional measures to comply with such requirements. The Committee will
continue to monitor this issue and will take further action as developments
warrant.
In November, 1994, this Committee approved a new Executive Compensation
Plan to begin in 1995 that .... [ INSERT FROM GHM RE NEW COMP POLICY--A ONE-
PARAGRAPH SUMMARY]
Compensation of Richard T. Aab, the Company's Chairman and Chief
Executive Officer. For 1994, the Committee determined that it was appropriate
to increase Mr. Aab's base salary approximately 4% after reviewing industry
salary surveys with respect to CEO compensation and to reflect the
performance, as measured by sales and earnings, relative both to prior years
and to 1994's budget.
For 1994, the determination of the bonus to be awarded to Mr. Aab was
linked to the Company's overall performance, as measured by the Company's
overall performance relative to the budget approved by the Board at the
beginning of 1994. The Company's long distance business met its budgeted
revenue goals to the satisfaction of this Committee for 1994, taking account
of the significant costs incurred in expanding the Company's Canadian
operations and the continuing startup costs of its operations in the United
Kingdom. [ADD REFERENCE TO IMPACT OF CANADIAN TAX ACCRUAL]
In recognition of Mr. Aab's key role in achieving these results, the
Committee determined that he should receive significant recognition for these
efforts and approved a bonus of $62,000 for his services rendered to the
Company in 1994.
This report was prepared by the members of this Committee: Hugh F.
Bennett, Chairman, David K. Laniak, Robert F. Sykes and Daniel D. Tessoni.
Executive Compensation
The following table sets forth information concerning the compensation
and benefits paid by the Company for all services rendered during 1994, 1993
and 1992 to five individuals: Richard T. Aab, who is and was, at December 31,
1994, serving as the Company's Chairman and Chief Executive Officer, and
Richard E. Sayers, Arunas A. Chesonis, Michael R. Daley and Christopher
Bantoft, who were, as of December 31, 1994, the other four most highly
compensated executive officers of the Company whose 1994 salary and bonus
exceeded $100,000 in amount (individually, a "Named Executive" and
collectively, the "Named Executives"):
</TABLE>
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Name and Annual
Principal Position Year Salary($) Bonus($) Compensation
<S> <C> <C> <C> <C>
Richard T. Aab, 1994 $315,962 $ 62,000 -- (2)
Chairman and Chief 1993 $304,241 $330,000 (4) -- (2)
Executive Officer 1992 $253,290 $ -0- (5) $27,283 (6)
(1)
Richard E. Sayers, 1994 $166,539 $ 32,000 -- (2)
Vice Chairman (7) 1993 $184,471 $123,000 (10) -- (2)
1992 $134,183 $ -0- (5) $14,425 (12)
Arunas A. Chesonis, 1994 $160,192 $ 32,000 -- (2)
President and Chief 1993 $134,250 $ 44,000 -- (2)
Operating Officer 1992 $128,815 $ 40,000 -- (2)
(7)
Michael R. Daley, 1994 $135,288 $ 27,000 -- (2)
Executive Vice 1993 $112,596 $ 65,000 (19) -- (2)
President and Chief 1992 $ 87,750 $ -0- (5) -- (2)
Financial Officer
(7)
Christopher Bantoft,1994 $134,430 $ 20,400 -- (2)
Managing Director, 1993 NA NA NA
ACC Long Distance 1992 NA NA NA
UK Ltd.
SUMMARY COMPENSATION TABLE: CONTINUED:
</TABLE>
<TABLE>
Long Term Compensation
Awards
Name and Securities Underlying All Other
Principal Position Year Options (#) Compensation ($)
<S> <C> <C> <C>
Richard T. Aab, 1994 -0- $ 6,985 (3)
Chairman and Chief 1993 -0- $ 9,305 (3)
Executive Officer 1992 -0- $ 4,115 (3)
(1)
Richard E. Sayers, 1994 50,000 (8) $183,679 (9)
Vice Chairman (7) 1993 -0- $268,048 (11)
1992 -0- $ 2,277 (13)
Arunas A. Chesonis, 1994 50,000 (14) $ 5,073 (15)
President and Chief 1993 30,000 (16) $ 4,283 (15)
Operating Officer 1992 -0- $ 983 (15)
(7)
Michael R. Daley, 1994 50,000 (17) $ 4,312 (18)
Executive Vice 1993 10,000 (20) $ 3,597 (18)
President and Chief 1992 7,500 (21) $ 663 (18)
Financial Officer
(7)
Christopher Bantoft,1994 50,000 (22) $ 9,017 (23)
Managing Director, 1993 NA NA
ACC Long Distance 1992 NA NA
UK Ltd.
______________________________
NA Indicates Not Applicable, because the particular Named Executive was not
an executive officer of the Company during the year indicated.
(1) The Company has entered into a Severance Agreement with Mr. Aab that
provides that if he is ever terminated without cause or as the result of a
change in control of the Company as defined in the agreement, then he shall
be entitled to receive his then current salary and benefits for two years
following such termination. In addition, should Mr. Aab ever be terminated
without cause while he is disabled, or in the event he dies during the term
of the agreement, any unexercised stock options that he may hold on the
date of either such event shall automatically become fully exercisable for
one year following such date, subject to the original term of the relevant
option grant(s). This agreement expires on February 8, 1999, at which
time it will automatically renew for successive five-year terms if not
terminated by the Company giving at least 24 months' advance notice of its
intent to terminate this agreement at the end of its current or any
renewal term.
(2) Under applicable SEC rules, the value of any perquisites or other
personal benefits provided by the Company to any of the Named Executives need
not be separately detailed and described if their aggregate value does not
exceed the lesser of $50,000 or 10% of that executive's total salary and
bonus for the year shown. For the year indicated, the value of such personal
benefits, if any, provided by the Company to this Named Executive did not
exceed such thresholds.
(3) The amounts shown represent the Company's contributions under its 401(k)
Deferred Compensation and Retirement Savings Plan ("401(k) Plan") in the
amount of: $ 4,601 for 1994; $4,497 for 1993; and $973 for 1992; as well as
taxable group term and single policy life insurance premiums paid on Mr. Aab's
behalf in the amount of: $2,384 in 1994; $4,808 in 1993; and $3,142 in 1992.
(4) Of this total, $155,000 represents Mr. Aab's bonus paid in 1994 for
services rendered in 1993, and $175,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as more
fully described in Note (5) below.
(5) In early 1993, the Executive Compensation Committee of the Board of
Directors determined that certain Company executives, including this Named
Executive, were eligible to receive a special one-time award in 1993
contingent upon the execution of a definitive agreement to sell the cellular
assets of the Company's Danbury Cellular Telephone Co. subsidiary. This award
was paid in lieu of any bonus for services rendered during 1992.
(6) Of this total: $12,671 represents country club dues and miscellaneous
business-related reimbursements paid to Mr. Aab; $3,946 represents
supplemental disability insurance premiums paid on Mr. Aab's behalf; $5,630
represents reimbursements to Mr. Aab under the Company's legal, medical and
financial planning reimbursement plan for its senior executives; and $5,036
represents the value of Mr. Aab's personal use of his Company-provided car.
(7) The Company has entered into Employment Continuation Incentive
Agreements with Mr. Sayers, Mr. Chesonis, Mr. Daley and certain other U.S.
executive officers and key personnel, which agreements provide that if such
employee is ever terminated without cause or as the result of a change in
control of the Company as defined in the agreement, then the employee shall be
entitled to receive his/her then current salary and benefits for up to one
year following such termination. In addition, should such employee be
terminated without cause while he/she is disabled, or in the event the
employee dies during the term of the agreement, any unexercised stock options
that he/she may hold on the date of either such event shall automatically
become fully exercisable for one year following such date, subject to the
original term of the relevant option grant(s). The current term of these
agreements expires on September 30, 1995, at which time they will
automatically renew for successive one-year terms if not terminated by the
Company giving at least twelve months' advance notice of its intent to
terminate these agreements at the end of their current or any renewal term.
(8) On February 8, 1994, Mr. Sayers was awarded Incentive Stock Options
("ISOs") to purchase 50,000 shares of the Company's Common Stock at an
exercise price of $19.25 per share, exercisable over a ten-year term, under
the Company's Employee Stock Option Plan (the "Stock Option Plan"). This
award was cancelled and regranted on August 11, 1994 at an option exercise
price of $14.25 per share, as described further under the heading "Report on
the Repricing of Options by the Executive Compensation Committee" below.
(9) This total is the sum of four items: (i) $5,088 represents the amount
of the Company's 1994 contribution to Mr. Sayers' 401(k) Plan account; (ii)
$3,226 represents the amount of taxable group term life insurance premiums
paid by the Company on Mr. Sayers' behalf in 1994; and (iii) $175,365
represents the amount of incentive compensation vested for Mr. Sayers' benefit
and withdrawn by him during 1994 pursuant to the Incentive Compensation
Agreement between the Company and Mr. Sayers with respect to the sale of the
Company's cellular operations. Pursuant to this Agreement, Mr. Sayers was
entitled to receive as incentive compensation an amount equal to 10% of the
increase in value of the Company's cellular telephone operations known as
Kentucky Rural Service Areas ("RSAs") #5 and #8 as measured by the "per POP"
sale price received on any such disposition allocable to Kentucky RSAs #5 and
#8 less: the purchase price the Company paid to acquire these RSAs; the cost
of all capital investments made by the Company to construct and bring these
cellular telephone systems "on line"; and any sales commissions and corporate
taxes payable by the Company in any such transaction. As previously
disclosed, the Company sold its cellular operations in 1993, and as a result
determined that Mr. Sayers was entitled to receive a total of $596,000 in
compensation pursuant to the terms of this Agreement. The Company placed this
amount in a trust account for Mr. Sayers' benefit. This compensation was to
vest on a pro-rata basis from the date this transaction closed to July 1,
1996. Mr. Sayers was entitled to draw against the pro-rata amount of
principal and interest vested at any time, with all remaining principal and
accrued interest being payable in full on July 1, 1996, provided that he was
still an employee of the Company on that date. The Agreement also provided
for earlier vesting and payment of this compensation in the event of Mr.
Sayers' death or termination without cause prior to July 1, 1996. If he was
terminated for cause prior to July 1, 1996, he was to be paid the amount of
such compensation vested at such termination date. If he voluntarily left the
Company's employ prior to July 1, 1996, he was to have forfeited all such
compensation, whether or not vested. In January, 1995, the Company and Mr.
Sayers amended the terms of this Agreement to repay the Company out of these
escrowed funds the amount of $236,951.35, which represented the outstanding
principal amount of a $225,000 loan that the Company advanced him in 1994,
which is further described under "Certain Transactions" below, plus all
accrued interest on that loan, and to remit the balance of these escrowed
funds, totalling approximately $196,452, to Mr. Sayers in full satisfaction of
the Company's obligations under this Agreement, which was thereby terminated.
(10) Of this total, $63,000 represents Mr. Sayers' bonus paid in 1994 for
services rendered in 1993, and $60,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as more
fully described in Note (5) above.
(11) This total is the sum of four items: (i) $4,497 represents the amount
of the Company's 1993 contribution to Mr. Sayers' 401(k) Plan account; (ii)
$2,530 represents the amount of taxable group term life insurance premiums
paid by the Company on Mr. Sayers' behalf in 1993; (iii) $112,021 represents
personal loans totalling $100,000 in principal amount, together with all
accrued interest, that were extended by the Company to Mr. Sayers in 1991 and
1992 and forgiven in 1993; and (iv) $149,000 represents the amount of the
incentive compensation vested for Mr. Sayers' benefit during 1993 pursuant to
the Incentive Compensation Agreement between the Company and Mr. Sayers with
respect to the sale of the Company's cellular operations, discussed in Note
(9) above.
(12) Of this total: $3,120 represents country club dues and miscellaneous
business-related expense reimbursements paid to Mr. Sayers; $1,975 represents
supplemental disability insurance premiums paid on Mr. Sayers' behalf; $3,830
represents reimbursements paid to Mr. Sayers under the Company's legal,
medical and financial planning reimbursement plan for its senior executives;
and $5,500 represents the value of Mr. Sayers' personal use of his Company-
provided car.
(13) The amounts shown represent taxable group term life insurance premiums
paid by the Company during 1992 on behalf of Mr. Sayers.
(14) On February 8, 1994, Mr. Chesonis was awarded ISOs to purchase 50,000
shares of the Company's Common Stock at an exercise price of $19.25 per share,
exercisable over a ten-year term, under the Stock Option Plan. This award was
cancelled and regranted on August 11, 1994 at an option exercise price of
$14.25 per share, as described further under the heading "Report on the
Repricing of Options by the Executive Compensation Committee" below.
(15) The amounts shown represent the Company's contributions under its
401(k) Plan in the amount of: $4,806 for 1994; $4,132 for 1993; and $805
for 1992; as well as additional group term life insurance premiums paid on
Mr. Chesonis's behalf in the amount of: $267 in 1994; $151 in 1993; and
$178 in 1992.
(16) On September 7, 1993, Mr. Chesonis was awarded ISOs to purchase
30,000 shares of the Company's Common Stock at an exercise price of $15.00
per share, exercisable over a ten-year term, under the Stock Option Plan.
(17) On February 8, 1994, Mr. Daley was awarded ISOs to purchase 50,000
shares of the Company's Common Stock at an exercise price of $19.25 per
share, exercisable over a ten-year term, under the Stock Option Plan.
This award was cancelled and regranted on August 11, 1994 at an option
exercise price of $14.25 per share, as described further under the
heading "Report on the Repricing of Options by the Executive Compensation
Committee" below.
(18) The amounts shown represent the Company's contributions under its 401(k)
Plan in the amount of: $4,086 for 1994; $3,490 for 1993; and $556 for 1992;
as well as additional group term life insurance premiums paid on Mr. Daley's
behalf in the amount of: $226 in 1994; $107 in 1993; and $107 in 1992.
(19) Of this total, $35,000 represents Mr. Daley's bonus paid in 1994 for
services rendered in 1993, and $30,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as
more fully described in Note (5) above.
(20) On September 7, 1993, Mr. Daley was awarded ISOs to purchase 10,000
shares of the Company's Common Stock at an exercise price of $15.00 per
share, exercisable over a ten-year term, under the Stock Option Plan.
(21) On November 10, 1992, Mr. Daley was awarded ISOs to purchase 7,500
shares of the Company's Common Stock at an exercise price of $11.33 per
share, exercisable over a ten-year term, under the Stock Option Plan.
(22) On January 4, 1994, Mr. Bantoft was awarded ISOs to purchase 10,000
shares of the Company's Common Stock at an exercise price of $18.75 per
share, on August 11, 1994, he was awarded ISOs to purchase 15,000 shares
of the Company's Common Stock at an exercise price of $14.25 per share,
and on November 15, 1994, he was awarded ISOs to purchase 25,000 shares
of the Company's Common Stock at an exercise price of $17.25 per share,
each tranche exercisable over a ten-year term, under the Stock Option Plan.
(23) This amount represents U.K. pension payments made on Mr. Bantoft's
behalf during 1994.
Compensation Pursuant to Plans
Employee Stock Option Plan. The Company has an Employee Stock Option
Plan (the "Stock Option Plan" or "Plan"), which it instituted in February,
1982, to provide long-term incentive benefits to key Company employees as
determined by the Executive Compensation Committee of the Board of Directors
(the "Committee"). This Plan is administered by the Committee. Options
granted under this Plan are either intended to qualify as "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended, or are non-qualified stock options ("NQSOs").
Options granted under this Plan represent rights to purchase shares of the
Company's Common Stock within a fixed period of time and at a cash price per
share ("exercise price") specified by the Committee on the date of grant. The
exercise price cannot be less than the fair market value of a share of Common
Stock on the date of award. Payment of the exercise price may be made in cash
or, with the Committee's approval, with shares of the Company's Common Stock
already owned by the optionee and valued at their fair market value as of the
exercise date. Options are exercisable during the period fixed by the
Committee, except that no ISO may be exercised more than ten years from the
date of grant, and no NQSO may be exercised more than ten years and one day
from the date of the grant.
The following table shows information concerning options granted under
this Plan during 1994 to the five Named Executives:
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C>
Richard T. Aab -0- -- $-0- --
Richard E.
Sayers 50,000 (2) 11.6 $14.75 8/11/04
Arunas A.
Chesonis 50,000 (2) 11.6 $14.75 8/11/04
Michael R.
Daley 50,000 (2) 11.6 $14.75 8/11/04
Christopher 10,000 (3) 2.3 $18.75 1/4/04
Bantoft 15,000 (4) 3.5 $14.25 8/9/04
25,000 (5) 5.8 $17.25 11/15/04
OPTION GRANTS IN LAST FISCAL YEAR TABLE: CONTINUED
</TABLE>
<TABLE>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
For Option Term (1)
Name 0% ($) 5% ($) 10% ($)
<S> <C> <C> <C>
Richard T. Aab $ -0- $ -0- $ -0-
Richard E. Sayers $ -0- $463,810 $1,175,385
Arunas A. Chesonis $ -0- $463,810 $1,175,385
Michael R. Daley $ -0- $463,810 $1,175,385
Christopher Bantoft $ -0- $117,918 $ 298,827
$ -0- $134,426 $ 340,662
$ -0- $271,211 $ 687,301
___________________________
(1) These calculations show the potential gain that would be realized if the
options shown were not exercised until the end of their full ten-year term,
assuming the compound annual rate of appreciation of the exercise prices
indicated (0%, 5%, and 10%) over the ten-year terms of the ISOs shown, net of
the exercise prices paid.
(2) These ISOs were granted on August 11, 1994, for a term of ten years, 25%
of which first become exercisable on August 11, 1995, and an additional 25%
of which become exercisable on the second, third and fourth anniversaries
of the grant date. These ISOs are further described below under the
heading "Report on the Repricing of Options by the Executive Compensation
Committee."
(3) These ISOs were granted on January 4, 1994, for a term of ten years, 25%
of which first become exercisable on January 4, 1995, and an additional 25%
of which become exercisable on the second, third and fourth anniversaries
of the grant date.
(4) These ISOs were granted on August 9, 1994, for a term of ten years, 25%
of which first become exercisable on August 9, 1995, and an additional 25% of
which become exercisable on the second, third and fourth anniversaries of the
grant date.
(5) These ISOs were granted on November 15, 1994, for a term of ten years,
25% of which first become exercisable on November 15, 1995, and an additional
25% of which become exercisable on the second, third and fourth anniversaries
of the grant date.
The following table reflects information concerning option exercises
under this Plan by the Named Executives during 1994, together with
information concerning the number and value of all unexercised options
held by each of the Named Executives at year end 1994 under this Plan:
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Value FY-End (#) FY-End ($) (2)
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) (1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Richard T.
Aab 99,000 $1,628,550 -0-/-0- -0-/-0-
Richard E.
Sayers -0- $ -0- 70,000/50,000 $618,100/$-0-
Arunas A.
Chesonis -0- $ -0- 38,000/80,000 $294,035/$66,225
(3)
Michael R.
Daley -0- $ -0- 14,875/63,125 $98,254/$29,381
(4)
Christopher
Bantoft -0- $ -0- -0-/50,000 $ -0-/$11,250 (5)
_______________________________
(1) Value realized is determined by subtracting the per share option
exercise price from the closing price of the Company's Common Stock on the
date of exercise, then multiplying that figure by the number of options
exercised.
(2) For each Named Executive, these values are calculated by subtracting the
per share option exercise price for each block of options held on December
31, 1994 from the closing price of the Company's Common Stock on that
date ($14.75 on December 30, 1994), then multiplying that figure by the
number of options in that block, then aggregating the resulting subtotals.
(3) As of December 31, 1994, the ISOs to purchase 30,000 shares that were
granted to Mr. Chesonis on September 7, 1993 were not in-the-money, as their
exercise price per share ($15.00) exceeded the closing price for the
Company's Common Stock on December 30, 1994 ($14.75); consequently these
options are not included in these calculations.
(4) As of December 31, 1994, the ISOs to purchase 10,000 shares that were
granted to Mr. Daley on September 7, 1993 were not in-the-money, as their
exercise price per share ($15.00) exceeded the closing price for the
Company's Common Stock on December 30, 1994 ($14.75); consequently these
options are not included in these calculations.
(5) As of December 31, 1994, the ISOs to purchase 10,000 shares that were
granted to Mr. Bantoft on January 4, 1994 and the options to purchase 25,000
shares that were granted to him on November 15, 1994 were not in-the-money,
as their respective exercise prices per share ($18.75 and $17.25)
exceeded the closing price for the Company's Common Stock on December 30,
1994 ($14.75); consequently none of these options are included in these
calculations.
As of December 31, 1994, 302,302 shares of the Company's Common Stock
were available for grants under this Plan. As of that date, there were
785,250 options outstanding, with an average exercise price of $13.53 per
share. The expiration dates of these option grants range from May 22, 1999
through November 15, 2004.
Report on the Repricing of Options by the Executive Compensation
Committee. As detailed in the table that appears below, on February 8, 1994,
this Committee awarded certain executive officers of the Company ISOs to
purchase shares at an exercise price of $19.25 per share. Approximately six
months later, on August 11, 1994, the Committee cancelled those option grants
and regranted the same number of ISOs to each such executive officer but at
the then-current exercise price of $14.75 per share. After reviewing several
matters, particularly the volatility in the Company's stock price caused by
its discussions with LDDS Communications, Inc. with respect to a possible
merger which commenced in earnest in mid-March, 1994 and terminated in mid-
May, 1994, the Committee determined that these February, 1994 option grants
might remain "underwater" for some period of time, thus negating much of the
long-term incentive element of this form of compensation to the executives
who received these grants. As required by relevant SEC rules, the specific
information regarding these option repricing grants appears in the following
table:
</TABLE>
<TABLE>
TEN YEAR OPTION REPRICINGS TABLE
Number of Market Length of
Securities Price of Exercise Original
Underlying Stock at Price at Option Term
Options Time of Time of Remaining
Repriced Repricing Repricing at Date of
or Amended or or New Repricing
Amendment Amendment Exercise or
Name Date (#) ($) ($) Price ($) Amendment
<S> <C> <C> <C> <C> <C> <C>
R. Sayers 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
A. Chesonis 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
M. Daley 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
F. Coleman 8/11/94 25,000 $14.75 $19.25 $14.75 9.5 years
T. Ganatra 8/11/94 25,000 $14.75 $19.25 $14.75 9.5 years
This report was prepared by the members of this Committee: Hugh F.
Bennett, Chairman, David K. Laniak, Robert F. Sykes and Daniel D. Tessoni.
401(k) Deferred Compensation and Retirement Savings Plan. The Company
has a 401(k) Deferred Compensation and Retirement Savings Plan in which
employees with a minimum of six months continuous service are eligible to
participate. Contributions to a participating employee's 401(k) account are
made in accordance with the regulations set forth under Section 401 of the
Internal Revenue Code of 1986, as amended. Under this Plan, the Company may
make matching contributions to the account of a participating employee up to
an annual maximum of 50% of the annual salary contributed in that year by
that employee, up to a maximum of 3% of that employee's salary. The Company
makes such contributions on a quarterly basis, based upon its profitability
for that quarter. The Company's contributions vest at the rate of 20% per
year after one year's participation in the Plan and become fully vested
after six years.
Employee Stock Purchase Plan. The Company has an Employee Stock
Purchase Plan ("Stock Purchase Plan"), which the shareholders approved at
their 1994 Annual Meeting, in which all employees who work 20 or more hours
per week are eligible to participate. Under this Plan, employees electing to
participate can, through payroll deductions, purchase shares of the Company's
Common Stock at 85% of market value on the date on which the annual offering
period under this Plan begins or on the last business day of each calendar
quarter in which shares are automatically purchased for a participant during
an offering period, whichever is lower. Participants cannot defer more than
15% of their base pay into this Plan, nor purchase more than $25,000 per year
of the Company's Common Stock through this Plan. As of December 31, 1994,
participants had purchased a total of 12,754 shares through this Plan during
1994, at an average price of $11.89 per share, leaving a total of 487,246
shares available for future purchases under the Plan.
Other Compensation Plans. The Company provides additional group term
life and supplemental disability insurance coverage to its officers. The
additional group term life insurance provides additional life insurance
protection to an officer in the amount of two and one-half times his/her
current salary. The supplemental disability insurance provides additional
disability insurance protection to an officer in an amount selected by the
executive, not to exceed, when combined with the coverage provided by the
Company's basic disability insurance provided to all of its employees, 70%
of his/her current annual salary.
The Company also has a legal, medical and financial planning
reimbursement plan for its senior executives pursuant to which it will
reimburse each of them generally up to $4,000 per year (up to $8,000 per year
for Mr. Aab) for legal, accounting, financial planning and uninsured medical
expenses incurred by the executive.
Compensation of Directors
Directors who are not also employees of the Company are paid an annual
retainer of $6,000, plus a fee of $500 for each Board meeting attended.
Additionally, outside Directors who serve on committees of the Board receive
$300 per committee meeting attended.
During 1994, in connection with the Company's merger discussions with
LDDS Communications, Inc., the Board retained the investment banking firm of
Gagan, Bennett & Co., Inc., in which Hugh F. Bennett, a Director of the
Company, is a principal, to act as the Company's advisor with respect to this
matter, for which services Gagan, Bennett & Co., Inc. was paid a retainer of
$25,000.
Certain Transactions
Through June, 1994, the Company rented the office space where its
principal executive offices were located, at 39 State Street, Rochester, New
York, from a real estate partnership in which Richard T. Aab, the Company's
Chairman and Chief Executive Officer, was a general partner. For 1994, the
Company paid a total of $________ in rent for this space to this partnership,
which the Company believes is comparable to the market rate for similar
office space in the Rochester area. To accommodate its need for increased
space, in June, 1994, the Company moved its principal executive offices to
400 West Avenue, Rochester, New York, which office space also is owned by
a real estate partnership in which Mr. Aab is a general partner. For 1994,
the Company paid a total of $ ______ in rent for this space to this
partnership, which the Company likewise believes is comparable to or below
the market rate for similar office space in the Rochester area.
During 1994, the Board of Directors authorized the Company to enter into
a computer software development contract with AMBIX Systems Corp., in which
company Richard T. Aab, the Company's Chairman and Chief Executive Officer,
is the majority shareholder. Under this agreement, AMBIX is to develop
certain customized telecommunications software to be licensed to the
Company at a cost of approximately $328,000. Through December 31, 1994,
the Company had paid approximately $100,000 of this total under this
agreement.
During 1994, the Company made a personal loan of $225,000 to Richard E.
Sayers, the Company's Vice Chairman, at a per annum interest rate of 1% over
the prime rate, with the loan payable on demand and no later than December
31, 1994. As discussed in Note (9) to the Summary Compensation Table
above, in January, 1995, Mr. Sayers repaid this loan in full with all
accrued interest.
SHAREHOLDER RETURN PERFORMANCE INFORMATION
The SEC requires that the Company include in this Proxy Statement a
line-graph presentation comparing its cumulative, five-year shareholder
returns, on an indexed basis, with a broad equity market index and a
published industry or line-of-business index. The following graph compares
the cumulative total shareholder return on the Company's Common Stock
against the cumulative total return of the Center for Research in Security
Prices Total Return Index for the Nasdaq Stock Market (which includes all
U.S. and foreign common stocks and American Depositary Receipts traded on
the Nasdaq National Market and Nasdaq Small-Cap Market) and the Nasdaq
Telecommunications Total Return Index for the five-year period beginning
December 29, 1989 and ending December 30, 1994, assuming the reinvestment
of all dividends throughout the period shown, and assuming the value of
the investment in the Company and in each Index was $100 on December 29,
1989.
[NOTE: Per Regulation S-T, Rule 304(d), this EDGAR submission contains
the tabular numerical data produced by CRSP on which the performance graph
points are plotted in the printed version of this Proxy Statement, as
follows:
Comparison of Five-Year Cumulative Total Returns
Performance Report for
ACC CORP.
Prepared by the Center for Research in Security Prices
Produced on 02/01/95 including data to 12/30/94
Company Index: CUSIP Ticker Class SIC Exchange
00079410 ACCC 4810 NASDAQ
Fiscal Year-end is 12/31/94
Market Index: Nasdaq Stock Market (US & Foreign)
Peer Index: Nasdaq Telecommunications Stocks
SIC 4800-4899 US & Foreign
</TABLE>
<TABLE>
Date Company Index Market Index Peer Index
<S> <C> <C> <C>
12/29/89 $100.000 $100.000 $100.000
01/31/90 104.348 91.755 83.778
02/28/90 102.899 93.977 83.876
03/30/90 104.348 96.636 84.150
04/30/90 107.723 93.387 79.670
05/31/90 157.217 102.432 93.429
06/29/90 157.679 103.247 91.010
07/31/90 134.319 98.313 84.179
08/31/90 87.599 85.993 71.610
09/28/90 70.460 78.003 63.643
10/31/90 63.120 74.893 61.971
11/30/90 73.395 81.539 64.384
12/31/90 106.235 85.017 67.411
01/31/91 100.333 94.069 73.810
02/28/91 103.284 103.077 77.747
03/28/91 118.511 110.001 80.334
04/30/91 118.511 110.683 84.886
05/31/91 130.362 115.790 87.841
06/28/91 114.541 109.017 78.943
07/31/91 127.929 115.420 84.426
08/30/91 119.004 120.925 85.746
09/30/91 140.332 121.524 89.097
10/31/91 164.218 125.543 89.091
11/29/91 162.725 121.363 83.854
12/31/91 155.261 135.708 92.974
01/31/92 164.705 143.840 95.690
02/28/92 182.673 147.044 100.344
03/31/92 201.119 140.239 95.143
04/30/92 177.105 134.246 95.167
05/29/92 174.103 135.969 94.989
06/30/92 195.596 130.631 94.530
07/31/92 198.605 134.991 95.207
09/30/92 199.110 135.572 97.058
10/30/92 208.160 140.648 94.983
11/30/92 262.463 151.664 108.186
12/31/92 244.707 157.359 114.192
01/29/93 299.086 162.043 118.160
02/26/93 287.757 156.228 121.103
03/31/93 304.162 160.944 126.898
04/30/93 226.986 154.503 123.438
05/28/93 236.066 163.799 139.257
06/30/93 241.161 164.852 145.748
07/30/93 259.362 165.143 152.301
08/31/93 263.912 173.764 169.501
09/30/93 346.435 178.590 171.672
10/29/93 360.110 181.693 189.465
11/30/93 350.993 175.973 170.046
12/31/93 354.038 181.153 175.978
01/31/94 375.140 186.922 175.701
02/28/94 370.450 184.940 167.241
03/31/94 415.555 173.591 151.724
04/29/94 394.425 171.316 146.584
05/31/94 319.296 171.541 152.021
06/30/94 258.254 164.794 145.711
07/29/94 258.823 168.690 153.269
08/31/94 352.940 178.944 159.022
09/30/94 348.792 178.701 158.982
10/31/94 315.798 181.781 160.009
11/30/94 311.084 175.456 153.388
12/30/94 278.091 175.253 145.788
The index level for all series was set to $100.00 on 12/29/89.
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
Arthur Andersen LLP, independent certified public accountants, has been
selected by the Board of Directors to serve as the auditors of the Company's
books and financial records for its current fiscal year. This firm has no
material financial interest in the Company, and its only connection with the
Company during the past fiscal year has been in its role as the Company's
independent auditors. Representatives of Arthur Andersen LLP are expected to
be present at the Annual Meeting of Shareholders to make a statement if they
wish, and to respond to appropriate questions from shareholders.
The Board of Directors recommends that the shareholders vote FOR this
Proposal to ratify the selection of Arthur Andersen LLP to serve as the
Company's independent auditors for the Company's fiscal year ending December
31, 1995. Proxies solicited by the Board of Directors will be voted FOR this
Proposal unless otherwise indicated.
PROPOSAL 3
AMENDMENT OF THE COMPANY'S
EMPLOYEE STOCK OPTION PLAN
In 1982, the shareholders of the Company approved the adoption of the
Company's Employee Stock Option Plan ("Stock Option Plan" or "Plan") for a
term of ten years, which they extended for an additional ten year term by
action at their 1992 Annual Meeting. The Stock Option Plan is designed to
provide long-term incentive benefits to key Company employees as determined
by the Executive Compensation Committee of the Board of Directors (the
"Committee"). The Board of Directors and the Committee have approved an
amendment to the Plan to increase the number of shares of the Company's
Common Stock authorized for issuance under this Plan by 500,000 shares,
to add the ability to grant stock incentive rights ("SIRs")to the Plan,
to require the mandatory withholding of income taxes against the issuance
of shares in respect of SIR awards by withholding a number of shares equal
to the amount of all required tax withholdings, and to change the name of
the Plan to the "Employee Long-Term Incentive Plan." This amendment is
subject to shareholder approval.
The Plan is administered by the Committee, whose duties include
selecting the employees who will receive grants and determining the amount of
the grants. In making its selections and determinations, the Committee has
substantial flexibility and makes its judgments based largely on the
functions and responsibilities of the particular employee, the employee's
past and potential contributions to the Company's profitability and growth,
and the value of the employee's services to the Company. The Committee also
interprets and implements the Stock Option Plan and the grants made
thereunder. Directors who are not employees of the Company are not eligible
for option grants under the Stock Option Plan.
Subject to the provisions of the Stock Option Plan, the individuals to
whom options are granted, the number of shares covered by each option, the
times when options may be exercised, the term of each option, the payment
terms and other provisions of each option grant are fixed by the Committee.
Under the current terms of this Plan, the Committee is permitted to
grant only ISOs or non-qualified stock options ("NQSOs"). Options granted
under this Plan represent rights to purchase shares of the Company's Common
Stock within a fixed period of time and at a cash price per share ("exercise
price") specified by the Committee on the date of grant. The exercise price
cannot be less than the fair market value of a share of Common Stock on the
date of award. Payment of the exercise price may be made in cash or, with
the Committee's approval, with shares of the Company's Common Stock
already owned by the optionee and valued at their fair market value as of
the exercise date. Options are exercisable during the period fixed by the
Committee, except that no ISO may be exercised more than ten years from the
date of grant, and no NQSO may be exercised more than ten years and one day
from the date of the grant.
If the proposed amendment is approved, the Committee will also be
authorized to award SIRs to employees the Committee determines are eligible
to participate in the Plan. SIRs are rights to receive shares of the
Company's Common Stock without any cash payment to the Company, conditioned
only on continued employment with the Company throughout a specified
incentive period of at least three years following the date of award.
Subject to the Committee's discretion, earlier termination of employment,
except in the event of death, permanent disability or normal retirement,
would result in the automatic cancellation of the SIR. Should a recipient
die, become permanently disabled or retire during an SIR incentive period,
he/she, or his/her estate, as the case may be, would receive a pro-rated
number of the shares underlying the SIR award based upon the ratio that the
number of months since the SIR had been granted bore to the full SIR
incentive period set by the Committee at the time of award.
During the SIR incentive period, should the Company declare any cash
dividends on its Common Stock, the holder of an SIR would be entitled to
receive from the Company cash "dividend equivalent" payments equal to any
such cash dividends that the holder would have received had he/she owned
the shares of Common Stock underlying the SIR. However, the holder of an
SIR would not have any other rights with respect to the shares underlying
an SIR award, e.g., the right to vote or pledge such shares, until such
shares are actually issued to the holder.
An employee could be awarded both SIRs and options in any combinations
that the Committee would determine. In such an event, an exercise of an
option would not in any way affect or cancel any SIRs an employee may have
received.
Subject to the provisions of the Plan and if the proposed amendment is
approved, the individuals to whom grants of options and/or SIRs are awarded,
the number of shares covered by each award, the incentive period applicable
to each SIR award, the times when options may be exercised, the term and other
provisions of each option are fixed by the Committee. No ISOs may be granted
to a person who owns at the time of grant, or would own after full exercise of
all options and rights to acquire the Company's shares, more than 10% of the
Company's Common Stock unless, at the time of grant, the exercise price of the
option is at least 110% of the fair market value of the shares subject to the
option and the option is not exercisable for more than five years from the
date of grant.
Since its inception, options under the Stock Option Plan have been
granted to the Company's current executive officers and to approximately 80
other present and former key Company employees.
If approved by the shareholders, this proposed amendment to the Stock
Option Plan will be effective as of June 1, 1995.
The Committee may, without further approval of the shareholders, suspend
or terminate the Stock Option Plan or amend it in any manner, except that the
Stock Option Plan cannot be amended without prior shareholder approval to
increase the number of shares for which grants may be awarded, to change the
eligibility requirements for individuals entitled to receive awards, or to
materially increase the benefits accruing to participants under the Stock
Option Plan.
The recipient of an option grant has no rights as a shareholder until
the option is exercised and certificates for shares of Common Stock are issued
to him or her. Generally, subject to the discretion of the Committee, an
option for more than 2,250 shares becomes exercisable (or "vests") with
respect to 25% of the shares subject thereto on the first anniversary of its
date of grant, and vests with respect to an additional 25% of such shares on
each of the second, third and fourth anniversaries of its date of grant. An
option for 2,250 shares or less vests with respect to 50% of the shares
subject thereto on the first anniversary of its date of grant and vests with
respect to the additional 50% of such shares on the second anniversary of its
date of grant. No grant under the Stock Option Plan may be transferred by the
optionee except by will or by the laws of descent and distribution. During
the life of an optionee, an option may be exercised only by the optionee or
his/her guardian or legal representative. As a general rule, an option
otherwise exercisable will be canceled if not exercised within 30 days
following the optionee's retirement or other termination of employment.
However, if the optionee's employment terminates by reason of permanent
disability, the option will be canceled if not exercised within one year
following a termination of employment due to disability. Additionally, in the
case of NQSOs, the Committee has the discretion to extend from 30 days to one
year the period following retirement or other termination of employment during
which an optionee may exercise his or her NQSOs. However, in no event will
any option be exercisable beyond the expiration of its term as established by
the Committee, nor, as applicable, beyond the ten-year maximum ISO exercise
period or the ten-year and one day maximum NQSO exercise period established by
the Plan. Upon the death of the holder of an option, the holder's estate may
exercise such option, but only to the extent the optionee was entitled to
exercise the option at the date of his/her death and only if it is exercised
prior to the expiration of its term.
With respect to ISOs granted under the Plan, the Company has been
advised by its counsel that an optionee will not be subject to federal income
tax upon either the grant of an ISO or its subsequent exercise. In addition,
the Company generally will not be allowed a business expense deduction with
respect to the grant or exercise of an ISO.
If the optionee holds the shares acquired upon the exercise of an ISO
for more than one year after the date of exercise and two years after the date
of grant, then the optionee's gain upon a subsequent sale or other taxable
disposition of the shares will be taxed as capital gain. "Gain" for this
purpose is measured by the difference between the exercise price and the
selling price of the shares. However, if these holding period rules are not
met, the gain that would have been realized at the time that the option was
exercised constitutes ordinary income to the optionee, rather than capital
gain, in the year of such a disposition (a "disqualifying disposition").
"Gain" for this purpose is equal to the lesser of (1) the amount (if any) by
which the fair market value of the shares on the ISO exercise date exceeds the
exercise price, or (2) the amount realized (if any) upon a disqualifying
disposition less the adjusted basis of such shares. Any gain in excess of the
amount reported as ordinary income is treated as capital gain. In the event
of a disqualifying disposition, the Company is entitled to a federal income
tax deduction equal to the amount of ordinary income realized by the optionee,
provided that applicable tax withholding requirements are met.
There may also be certain alternative minimum tax ("AMT") consequences
attendant to the exercise of ISOs and/or the disposition of shares so
acquired. In general, the spread between the option exercise price and the
fair market value of the option stock at exercise, which receives favorable
treatment under the regular tax system, is considered an "item of adjustment"
for AMT purposes and is included in AMT income. However, if an optionee
acquires shares pursuant to the exercise of an ISO and disposes of such shares
in a disqualifying disposition in the same taxable year, the maximum amount
that will be included as AMT income is the gain on the disposition of such
shares. If a disqualifying disposition occurs in a year other than the year
of exercise, the income on the disqualifying disposition will not be
considered income for AMT purposes. In addition, a disqualifying disposition
could have an impact upon the determination of any corporate AMT to be paid by
the Company. However, due to the AMT credit-carryover provision, this may
merely result in a "prepayment."
With respect to NQSOs, an optionee will not be subject to federal income
tax upon the grant of a NQSO. On the exercise of a NQSO, the difference
between the fair market value of the Company's Common Stock on the exercise
date and the exercise price will be treated as taxable income to the optionee
on that date. The optionee will thus have a tax basis for the shares so
acquired equal to the exercise price plus the amount of taxable income
realized upon exercise. Any subsequent sale or other disposition of any such
shares will be entitled to long-term capital gain or loss treatment if held
for more than one year at the time of such disposition, or short-term capital
gain or loss treatment if held for one year or less at the time of such
disposition. Subject to meeting applicable tax withholding requirements, the
Company is entitled to a federal income tax deduction at the time a NQSO is
exercised equal to the difference between the fair market value of the
Company's Common Stock on the exercise date and the exercise price.
If the proposed amendment is approved, with respect to SIRs granted
under the Plan, the Company has been advised that a recipient of an SIR award
will not realize any income, nor will the Company be entitled to any tax
deduction, at the time of the grant of an SIR. However, upon the expiration
of an incentive period, the recipient of an SIR will recognize ordinary income
equal to the fair market value of the underlying shares issued. Also, upon
receipt of dividend equivalent payments during an incentive period, the
recipient of an SIR will recognize ordinary income in an amount equal to the
cash received. Upon the issuance of shares underlying an SIR award, the
Company will withhold a portion of such shares to satisfy tax withholding
obligations with respect to such issuance. Such shares will be valued at
their fair market value on the date of issuance and the SIR holder will be
taxed on the shares withheld as if he/she had sold them. The Company will be
entitled to a deduction for Federal income tax purposes at the same time and
in the same amounts as the holder of an SIR is considered to have recognized
ordinary income.
The basis of shares acquired under an SIR award is the fair market value
taxed to the SIR holder. When he/she disposes of such shares, any amount
received in excess of that basis will be treated as long-term or short-term
capital gain, depending upon the length of time the shares have been held. If
the amount received is less than the basis of the shares, the loss will be
treated as long-term or short-term capital loss, again depending upon the
length of time the shares have been held.
Shares issued under the Plan are authorized and unissued or treasury
shares of the Company's Common Stock. The number of shares authorized for
issuance under the Plan is reduced one-for-one by each share issued pursuant
to an SIR or the exercise of an option granted thereunder. As of December 31,
1994, there were a total of 302,302 shares that remained available for grants
under the Plan. If this amendment is approved, the number of shares available
for grants will increase to 802,302.
Reference is made to the discussion under "Employee Stock Option Plan"
in Proposal 1 of this Proxy Statement for additional information concerning
option grants and related matters under the Plan. In view of the comprehensive
summary of this Plan presented above, the Company believes that including the
full text of the Plan as a part of this Proxy Statement will not substantially
further enhance the shareholders' understanding of it and therefore has
elected not to include it herein. Any shareholder who wishes a copy of this
Plan may request one by writing to the Office of the Treasurer, ACC Corp., 400
West Avenue, Rochester, New York 14611.
On April __, 1995, the Closing Price for the Company's Common Stock was
$_____ per share, as quoted in The Wall Street Journal.
The Board of Directors recommends a vote FOR approval of this amendment
to the Stock Option Plan. Proxies solicited by the Board of Directors will be
voted FOR the foregoing Proposal unless otherwise indicated. The affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting is
required for approval of this proposed amendment to the Stock Option Plan.
PROPOSAL 4
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO AUTHORIZE THE ISSUANCE OF PREFERRED STOCK AND
NONVOTING CLASS B COMMON STOCK AND TO INCREASE THE NUMBER OF
SHARES AUTHORIZED FOR ISSUANCE
The Board of Directors has unanimously adopted resolutions approving and
recommending that the shareholders consider and approve a Proposal to amend
the Company's Certificate of Incorporation that would: (1) increase the
number of shares the Company is authorized to issue by 7,000,000 shares, from
50,000,000 shares to 57,000,000 shares; (2) redesignate the 50,000,000 shares
of Common Stock, par value $.015 per share, presently authorized for issuance
as 50,000,000 shares of Class A Common Stock; (3) designate 5,000,000 shares
as Class B Common Stock having a par value of $.015 per share; and (4)
designate 2,000,000 shares as Preferred Stock having a par value of $1.00 per
share. The text of this proposed amendment is attached to this Proxy
Statement as Annex 1.
The Company's Certificate of Incorporation does not currently authorize
the issuance of Preferred Stock or Class B non-voting Common Stock. The Board
believes that it would be in the Company's best interests to have the
flexibility to issue different classes of stock in pursuit of its capital
raising transactions, as well as for use in possible acquisitions, joint
ventures and employee benefit plans.
From time to time, the Company receives proposals from private
investment partnerships with an interest in investing in the Company, which
would provide the Company with sources of equity financing to enable it to
pursue its strategic plans and growth objectives. However, such investors
customarily desire to purchase shares of Preferred Stock, often convertible
into Common Stock at a negotiated price or ratio or upon the occurrence of
specified events, etc. Given its current capital structure, the Company has
not been able to successfully negotiate an equity investment when approached
with such proposals by such investors. By having the ability to issue
Preferred Stock, the Board would be in a position to seriously discuss such
investments when it receives such proposals.
In addition, the Company receives proposals from foreign investors from
time to time with an interest in investing in the Company. However, there are
certain limitations imposed upon the Company under the rules and regulations
of the Federal Communications Commission that limit the extent to which the
Company may sell an equity stake with voting rights to a foreign purchaser.
If the Company is authorized to issue Class B non-voting Common Stock, many of
these foreign ownership issues can be minimized and the Company's ability to
negotiate a substantial investment by or a joint venture with a foreign
purchaser would be substantially enhanced.
For the foregoing reasons, the Board of Directors believes that this
amendment is in the best interests of the Company and its shareholders and
recommends its approval.
The Preferred Stock authorized by this amendment is known as "blank
check" Preferred Stock, for the reason that, as is permitted under Delaware
law, the designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof would be determined by the
Board of Directors. Therefore, if this Proposal is approved by the
shareholders, the Board of Directors will be entitled to authorize the
creation and issuance of up to 2,000,000 shares of Preferred Stock, par value
$1.00 per share, in one or more series, with such rights, qualifications,
limitations, and restrictions as may be determined in the Board's sole
discretion, with no further authorization required of the shareholders.
With respect to the authorization of the 5,000,000 shares of Class B
Common Stock, par value $.015 per share, sought as a part of this amendment,
the Board will likewise have the right to fix the preferences, relative and
participating, optional or other special rights, and qualifications,
limitations or restrictions applicable to all of the shares to be issued as
Class B Common Stock in the resolutions providing for the first issuance of
any such shares; except that the shares of Class B Common Stock shall not have
the right to vote on any matter brought before the shareholders of the
Company, nor shall they be entitled to vote as a class upon any proposed
increase or decrease in the aggregate number of shares of Class B Common Stock
authorized for issuance under the Company's Certificate of Incorporation.
The Board of Directors is required to make any determination to issue
shares of Preferred Stock or Class B Common Stock based on its judgment as to
the best interests of the Company and its shareholders. Although the Board
has no present intention of doing so, it could issue shares of Preferred Stock
that could, depending upon the terms of such series, make more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or other means. For example, such shares could be
used to create voting or other impediments or to discourage persons seeking to
gain control of the Company. Such shares could be sold to purchasers that
supported the Board in opposing such action. Additionally, the Board could
authorize holders of a series of Preferred Stock to vote either separately as
a class or with the holders of the Company's Common Stock on any merger, sale
or exchange of assets by the Company or any other extraordinary corporate
transaction. The existence of the authorized shares of Preferred Stock could
have the effect of discouraging unsolicited takeover attempts. The issuance
of new shares could also be used to dilute the stock ownership of a person or
entity seeking to obtain control of the Company should the Board consider the
actions of such person or entity not to be in the best interests of the
Company and its shareholders.
With respect to the authorization to issue 5,000,000 shares of Class B
Common Stock sought as a part of this amendment, since these shares have no
voting rights, the impact of their issuance as an antitakeover measure is not
as potentially significant as is the ability to issue Preferred Stock in such
a situation as discussed above, except to the extent that the issuance of
Class B Common Shares in this context could increase the costs to an entity or
person seeking to acquire control of the Company and thereby make more
difficult or discourage an attempt to obtain control of the Company by means
of a merger, tender offer or other means and could therefore also have the
effect of discouraging unsolicited takeover attempts.
The Company's Common Stock has no cumulative voting, preemptive or
subscription rights, nor is it redeemable. Under Delaware law, shareholders
are not entitled to dissenters' rights of appraisal with respect to the
matters set forth in this Proposal.
The proposed amendment to the Company's Certificate of Incorporation is
set forth in Annex 1 attached hereto, and the foregoing description of the
amendment is qualified in its entirety by the text of the amendment itself,
which is incorporated by reference herein. Shareholders are urged to read the
amendment in its entirety.
While the Company may consider an equity offering of either a series of
Preferred Stock or Class B Common Stock in the future for purposes of raising
additional working capital or otherwise, it currently has no agreements with
any third parties to effect any such offering or issuance and no assurances
are given that any offering will in fact be effected or undertaken.
Therefore, neither the terms of any series of Preferred Stock nor the terms of
the Class B Common Stock can be stated or estimated with respect to any or all
of the shares of such classes authorized.
Financial statements are not included in this Proxy Statement with
respect to this Proposal as they are not deemed material for the exercise of
prudent judgment on this Proposal.
The Board of Directors recommends a vote FOR approval of this Proposal.
Proxies solicited by the Board will be voted FOR this Proposal unless
otherwise indicated. The affirmative vote of a majority of all outstanding
shares entitled to vote at the Meeting is required for approval of this
Proposal.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table reflects the security ownership of those persons who
are known to the Company to have been the beneficial owners of more than 5% (
________ shares) of the Company's outstanding Common Stock as of April 14,
1995:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Richard T. Aab 965,582 (1) 11.8
400 West Avenue
Rochester, New York 14611
(1) This number excludes 15,000 shares directly owned by Mr. Aab's wife and
1,500 shares that she controls as Custodian for their minor children, as to
all of which shares Mr. Aab disclaims beneficial ownership.
OTHER MATTERS
At present, the Board of Directors knows of no other matters which are
likely to come before the Annual Meeting. However, if any other matters are
presented, it is the intention of the persons named in the proxy to vote such
proxy in accordance with their best judgment on any such matters.
In accordance with relevant Securities and Exchange Commission rules,
any proposal which a shareholder wishes to be presented at the 1996 Annual
Meeting of Shareholders must be received by the Secretary of the Company at
its principal executive offices, 400 West Avenue, Rochester, New York 14611,
no later than ___________, 1995.
The cost of solicitation of proxies will be borne by the Company. In
addition to this solicitation by mail, Directors, officers and employees of
the Company may solicit proxies by telephone, telegraph, mail or personal
interviews, and arrangements will be made with banks, brokerage firms and
others to forward proxy material to their principals. The Company will bear
the expense of any such additional solicitations. In addition, MacKenzie
Partners, Inc. has been retained to aid in the solicitation of proxies at an
estimated fee of $_________, plus out-of-pocket expenses.
A copy of the Company's 1994 Annual Report containing financial
statements for the fiscal year ended December 31, 1994, is enclosed with these
proxy materials. Additional copies may be obtained from the Treasurer, ACC
Corp., 400 West Avenue, Rochester, New York 14611.
Shareholders are urged to mark, date, sign and return promptly the
enclosed proxy in the accompanying envelope, which requires no postage if
mailed in the United States.
By Order of the Board of Directors
Francis D. R. Coleman,
Secretary
April [25], 1995<PAGE>
ANNEX 1
PROPOSED AMENDMENT TO ACC CORP. CERTIFICATE OF INCORPORATION
______________________
RESOLVED, that subject to obtaining the approval of the shareholders of
this Corporation, Article FOUR of this Corporation's Certificate of
Incorporation be amended to read in its entirety as follows:
. . . . . . . . . .
ARTICLE FOUR
The total number of shares of stock which the Corporation shall have
authority to issue is 57,000,000 shares, divided into the following classes:
(1) 50,000,000 shares shall be Class A Common Stock having a par value of
$.015 per share; (2) 5,000,000 shares shall be Class B Common Stock having a
par value of $.015 per share; and (3) 2,000,000 shares shall be Preferred
Stock having a par value of $1.00 per share. The following is a statement of
the designations of the authorized classes of stock or any series thereof, and
the powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, or of the
authority of the Board of Directors to fix by resolution(s) such designations
and other terms:
Class A Common Stock
Subject to all of the preferences and rights of both the Preferred Stock
or a series thereof and of the Class B Common Stock, all of which may be fixed
by resolution(s) of the Board of Directors, (i) dividends may be paid on the
Class A Common Stock of the Corporation as and when declared by the Board of
Directors, out of funds of the Corporation legally available for the payment
of such dividends, and (ii) each share of Class A Common Stock shall be
entitled to one vote on all matters on which such stock is entitled to vote.
The 50,000,000 shares of Common Stock, par value $.015 per share, previously
authorized for issuance hereunder are hereby redesignated as 50,000,000 shares
of Class A Common Stock, and all references in this Certificate of
Incorporation to Common Stock are hereby changed to refer to Class A Common
Stock.
Class B Common Stock
Subject to all of the preferences and rights of the Preferred Stock or a
series thereof that may be fixed by resolution(s) of the Board of Directors,
the Class B Common Stock shall have such preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be established in the
resolution(s) providing for the issuance of such stock adopted by the Board of
Directors, except that the shares of Class B Common Stock shall not be
entitled to vote on any matters brought before the stockholders of the
Corporation, nor shall the holders of the Class B Common Stock be entitled to
vote as a class upon any proposed increase or decrease in the aggregate number
of authorized shares of Class B Common Stock.
Preferred Stock
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is expressly authorized to fix by
resolution(s) the designation of each series of Preferred Stock and the
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including,
without limitation, such provisions as may be desired concerning the dividend
rights, the dividend rate, conversion rate, conversion rights, voting rights,
rights in terms of redemption (including sinking fund provisions), the
redemption price or prices, the liquidation preferences and such other
subjects or matters as may be fixed by resolution(s) of the Board of Directors
under the General Corporation Law of Delaware; and to fix the number of shares
constituting any such series, and to increase or decrease the number of shares
of any such series (but not below the number of shares of any such series then
outstanding). In the event that the number of shares of any such series shall
be so decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution(s) originally fixing the
number of shares of such series. All Preferred Stock of the same series shall
be identical in all respects, except for the dates from which dividends, if
any, shall be cumulative.
. . . . . . . . . .
<PAGE>
[FORM OF PROXY CARD]
THE BOARD OF DIRECTORS OF ACC CORP.
Proxy for Annual Meeting of Shareholders - June 1, 1995
The undersigned hereby appoints Richard T. Aab, Arunas A. Chesonis and
Michael R. Daley, and each of them, attorneys and proxies, each with full
power of substitution, to represent the undersigned at the Annual Meeting of
Shareholders of the Company to be held on June 1, 1995, and at all
adjournments thereof, to vote as authorized below all of the shares of Common
Stock which the undersigned may be entitled to vote at said Meeting, as
designated below, and in accordance with their best judgment in connection
with such other business as may come before the Meeting.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
To vote in accordance with the Board of Directors' recommendations, just sign
where indicated on the reverse side; no boxes need be checked. Unless
otherwise marked, this proxy will be voted in accordance with the Board of
Directors' recommendations.
1. Nominees for Directors:
Richard T. Aab David K. Laniak
Hugh F. Bennett Robert F. Sykes
Arunas A. Chesonis Daniel D. Tessoni
Willard Z. Estey
[ ] VOTE FOR all nominees listed above.
Instruction: To withhold authority to vote for an individual nominee named
above, draw a line through that name.
[ ] VOTE WITHHELD from all nominees.
2. Proposal to ratify the selection of Arthur Andersen LLP as the
Company's independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to Amend the Company's Employee Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to Amend the Company's Certificate of Incorporation to
authorize the issuance of Preferred Stock and Class B non-voting Common Stock
and to increase the number of shares authorized for issuance.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: , 1995
_______________________________________________
_______________________________________________
Signature of Shareholder(s)
(Name of shareholder should be signed exactly as it appears
on this proxy.)
</TABLE>
ACC CORP.
EMPLOYEE LONG TERM INCENTIVE PLAN
As Amended through [June 1, 1995]
1. Purpose. The ACC CORP. EMPLOYEE LONG TERM INCENTIVE PLAN
(hereinafter referred to as the "Plan") is designed to furnish additional
incentive to key employees of ACC Corp., a Delaware corporation (hereinafter
referred to as the "Company"), and its parents or subsidiaries, upon whose
judgment, initiative and efforts the successful conduct of the business of
the Company largely depends, by encouraging such key employees to acquire a
proprietary interest in the Company or to increase the same, and to
strengthen the ability of the Company to attract and retain in its employ
persons of training, experience and ability. Such purposes will be
effected through the ability to granttwo types of awards hereunder:
(a) stock options, as herein provided, which may be of two types:
(i) "incentive stock options" ("ISOs") within the meaning of Section 422
of the Internal Revenue Code of 1986, as the same has been and shall be
amended (hereinafter referred to as the "Code"); or (ii) non-qualified stock
options ("NQSOs"); and (b) stock incentive rights ("SIRs"). Collectively,
options and SIRs may sometimes be referred to as "awards," and if not
otherwise specified hereinafter, any reference to "options" shall be deemed
to refer to both ISOs and NQSOs.
2. Eligibility.
(a) General. The persons who shall be eligible to receive awards
under the Plan shall be those employees of the Company, or of any of its
parents or subsidiaries within the meaning of Section 425(e) and (f) of the
Code, who are exempt from the overtime provisions of the Fair Labor Standards
Act of 1938, as amended, by reason of employment in an executive,
administrative or professional capacity under 29 U.S.C. Section 213(a)(1).
(b) Special Provisions Regarding ISOs. With respect to the granting
of ISOs, no ISOs shall be granted to a person who would, at the time of the
grant of such option, own, or be deemed to own for purposes of Section
422(b)(6) of the Code, more than 10% of the total combined voting power of
all classes of shares of stock of the Company or its parents or subsidiaries
unless at the time of the grant of the ISO both of the following conditions
are met:
(i) the ISO option price is at least 110% of the fair market value
of the shares of stock subject to the ISO, as defined in paragraph 4(a)
hereof, and
(ii) the ISO is, by its terms, not exercisable after the
expiration of five years from the date it is granted.
3. Shares Authorized for Awards.
(a) Shares Authorized for Issuance. Subject to the provisions of
paragraph 3(b) hereof, the maximum number of shares of the Company's Common
Stock, par value $.015 per share, that may be issued under the Plan is
[2,500,000] shares of the Company or of its parent or subsidiaries
(hereinafter referred to as the "Shares"), which Shares may, in the
discretion of the Executive Compensation Committee of the Board of
Directors of the Company (the "Committee") consist either in whole or in
part of authorized but unissued Shares or Shares held in the treasury of
the Company. Any Shares subject to an award which for any reason expires,
is terminated unexercised or is forfeited for any reason shall continue to
be available for awards under the Plan. For purposes of complying with Code
Section 162(m), for each fiscal year of the Company during which this Plan
is in effect, no person who is for that year determined to be a "covered
employee" for purposes of Code Section 162(m)(3) shall be eligible to be
granted options to purchase more than the number of shares authorized for
issuance under the Plan.
(b) Anti-Dilution Provisions. The aggregate number and kind of Shares
available for awards under the Plan, and the number and kind of Shares subject
to outstanding awards, and the option price of each outstanding option, shall
be proportionately adjusted by the Committee for any increase, decrease or
change in the total outstanding shares of the Company resulting from a stock
dividend, recapitalization, merger, consolidation, split-up, combination,
exchange of shares or similar transaction (but not by reason of the issuance
or purchase of shares by the Company in consideration for money, services or
property).
(c) General. The Committee may, prospectively or retroactively, amend
the terms of any option granted hereunder, except that anything in this Plan
to the contrary notwithstanding: (i) no such amendment or other action by the
Committee shall impair the rights of any person holding any award under this
Plan without his or her consent; and (ii) no term of this Plan relating to
ISOs shall be interpreted, amended or altered, nor shall any discretion or
authority granted hereunder be so exercised, so as to disqualify this Plan
under Section 422 of the Code, or, without the consent of the optionee(s)
affected, to disqualify under said Section 422 any option granted as an ISO.
However, for all purposes hereunder, should any option granted as an ISO fail
to qualify as an ISO, it shall be treated as an NQSO hereunder.
4. Terms and Conditions of Options. Options shall be granted by the
Committee pursuant to the Plan and shall be subject to the following terms and
conditions:
(a) Price. Each option grant shall state the number of Shares subject
to the option and the option exercise price, which shall be not less than the
fair market value of the Shares with respect to which the option is granted at
the time of the granting of the option; provided, however, that the option
exercise price with respect to ISOs shall be at least 110% of fair market
value in the case of a grant of an ISO to a person who would at the time of
the grant own, or be deemed to own for purposes of Section 422(b)(6) of the
Code, more than 10% of the total combined voting power of all classes of
shares of the Company, its parents or subsidiaries. For purposes of this
paragraph, "fair market value" shall mean:
(i) the Closing Price quoted for the Company's Common Stock in
the National Association of Securities Dealers Automated Quotation System on
the last business day immediately preceding the date of the grant of the
option, or
(ii) the most recent sale price for the Company's Common Stock as
of the date of the grant of the option, or
(iii) such price as shall be determined by the Committee in an
attempt made in good faith to meet the requirements of Section 422(b)(4) of
the Code.
(b) Term. The term of each option grant shall be determined by the
Committee subject to the following:
(i) With respect to ISOs, in no event shall an ISO be
exercisable either in whole or in part after the expiration of ten years from
the date on which it is granted; except that such term shall not exceed five
years with respect to any ISO grant made to a person who would own, or be
deemed to own for purposes of Section 422(b)(6) of the Code, more than 10% of
the total combined voting power of all classes of shares of the Company's
stock, or that of its parents or subsidiaries, at the time of such grant.
(ii) With respect to NQSOs, in no event shall an NQSO be
exercisable either in whole or in part after the expiration of ten years and
one day from the date on which it is granted.
Notwithstanding the foregoing, the Committee and an optionee may, by
mutual agreement, terminate any option granted to such optionee under the
Plan.
(c) Exercisability.
(i) General. Any options granted hereunder in excess of 2,250
Shares shall only be exercisable with respect to 25% of the number of such
optioned Shares on the first anniversary of the date of grant, and with
respect to an additional 25% of such Shares on each of the second, third and
fourth anniversaries of the date of grant. Any options granted hereunder for
2,250 Shares or less shall only be exercisable with respect to 50% of the
number of such optioned Shares on the first anniversary of the date of grant,
and with respect to an additional 50% of such Shares on the second anniversary
of the date of grant. The Committee shall have the right, however, at any
time to waive or modify these exercisability requirements in its sole
discretion, subject to the provisions of Section 422 of the Code with respect
to ISOs.
(ii) Acceleration of Exercisability in the Event of a Change in
Control. Notwithstanding subparagraph 4(c)(i) above, all options then
outstanding under this Plan shall automatically become exercisable in full
upon the occurrence of any of the following events, each of which shall be
deemed a "change in control" of the Company: (1) a merger or other business
combination approved by the Company's shareholders; (2) the acquisition by a
third party of more than 50% of the total outstanding shares of the Company's
Common Stock; or (3) a change in the composition of the Company's Board of
Directors such that a majority of the Board consists of Directors other than
the incumbent Directors and the nominees of the incumbent Directors; provided,
however, that in all events the Committee shall have the discretion to
determine that a particular transaction does not constitute a "change in
control" for purposes of this subparagraph.
(d) Non-Assignment During Life. During the lifetime of the optionee,
options granted hereunder shall be exercisable only by him/her and shall not
be assignable or transferable by him/her, whether voluntarily or by operation
of law or otherwise, and no other person shall acquire any rights therein.
(e) Death of Optionee. In the event that an optionee shall die prior
to the complete exercise of options granted to him/her under the Plan, such
remaining options may be exercised in whole or in part after the date of the
optionee's death only: (i) by the optionee's estate or by or on behalf of
such person or persons to whom the optionee's rights under the option pass
under the optionee's Will or the laws of descent and distribution, (ii) to the
extent that the optionee was entitled to exercise the option at the date of
his/her death, and (iii) prior to the expiration of the term of the option.
(f) Prior Outstanding ISOs.
(i) ISOs Granted Prior to January 1, 1987. With respect to ISOs
granted prior to January 1, 1987, no ISO shall be exercisable in whole or in
part while there is outstanding any ISO to purchase Shares in the Company or
any of its parents or subsidiaries, or in any predecessor corporation of the
Company or parent or subsidiary of such predecessor. For purposes of this
subparagraph (i), an ISO shall be deemed to be outstanding until it is
exercised in full or expires by reason of the lapse of time.
(ii) ISOs Granted After December 31, 1986. With respect to ISOs
granted after December 31, 1986, the sequential exercise rule stated in
subparagraph (i) above is eliminated in all respects. ISOs thus granted need
not be exercised in the order granted, and any ISOs granted prior to January
1, 1987 shall not prevent the exercise, in any order, of any ISOs granted
after December 31, 1986.
(g) Grant Limitation. With respect to ISOs granted under this Plan,
the Company may grant any eligible employee ISOs under all incentive stock
option plans of the Company or in any corporation which is a parent or
subsidiary of the Company, in any amount; provided, however, that the value of
such options, as determined on their date of grant, that shall first become
exercisable by an optionee in any calendar year cannot exceed $100,000.
(h) Termination of Employment. An option shall be exercisable during
the lifetime of the optionee to whom it is granted only if, at all times
during the period beginning on the grant date of the option and ending on the
day 30 days before the date of such exercise, he or she is an employee of the
Company or its parent or any of its subsidiaries, or an employee of a
corporation or a parent or subsidiary of such corporation issuing or assuming
an option granted hereunder in a transaction to which Section 425(a) of the
Code applies, subject to the following exceptions: (i) in the case of an
optionee who is disabled within the meaning of Section 22(e)(3) of the Code,
the 30-day period after cessation of employment during which an option shall
be exercisable shall be one year; and (ii) with respect to NQSOs, the
Committee shall have the discretion to extend from 30 days to one year the
period following an optionee's termination of employment during which time the
optionee may exercise his or her NQSOs that are otherwise exercisable as of
the date of such termination. However, notwithstanding the foregoing, no
option shall be exercisable after the expiration of its term. For purposes of
this subsection, an employment relationship will be treated as continuing
intact while the optionee is on military duty, sick leave or other bona fide
leave of absence, such as temporary employment by the government, if the
period of such leave does not exceed 30 days, or, if longer, so long as a
statute or contract guarantees the optionee's right to re-employment with the
Company, its parent or any of its subsidiaries, or another corporation issuing
or assuming an option granted hereunder in a transaction to which Section
425(a) of the Code applies. When the period of leave exceeds 30 days and the
individual's right to re-employment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
31st day of such leave.
(i) Power to Establish Other Provisions. Options granted under the
Plan shall contain such other terms and conditions as the Committee shall deem
advisable, subject, in the case of ISOs, to the provisions of Section 422 of
the Code and the regulations promulgated thereunder.
5. Exercise of Option. Options shall be exercised as follows:
(a) Notice and Payment. Each option, or any installment thereof,
shall be exercised, whether in whole or in part, by giving written notice to
the Company at its principal office, specifying the number of Shares purchased
and the option price being paid, and accompanied by the payment of the
applicable option price in cash, by certified or bank check payable to the
order of the Company, or, at the discretion of the Committee, by tendering
shares of the Company's Common Stock already owned by the optionee (provided,
however, that the optionee shall have owned such shares for at least six
months). To the extent that the Committee permits payment of the option price
through the tender of Common Stock already owned by the optionee, the fair
market value of the shares of Common Stock tendered shall be determined by
reference to the Closing Price quoted for the Company's Common Stock as of the
close of business on the date on which the Company receives notice of the
optionee's exercise of an option. Each such notice shall also contain
representations on behalf of the optionee that he or she acknowledges that the
Company is selling the Shares to him or her under a claim of exemption from
registration under the Securities Act of 1933, as amended (hereinafter
referred to as the "Act"), as a transaction not involving any public offering;
that he or she represents and warrants that he or she is acquiring such Shares
with a view to "investment" and not with a view to distribution or resale; and
that he or she agrees not to transfer, encumber or dispose of the Shares
unless: (i) a registration statement with respect to the Shares shall be
effective under the Act, together with proof satisfactory to the Company that
there has been compliance with applicable state law; or (ii) the Company shall
have received an opinion of counsel in form and content satisfactory to the
Company to the effect that the transfer qualifies under Rule 144 or some other
disclosure exemption from registration and that no violation of the Act or
applicable state laws will be involved in such transfer, and/or such other
documentation in connection therewith as the Company's counsel may in its sole
discretion require.
(b) Issuance of Certificates. Certificates representing the Shares
purchased by an optionee shall be issued as soon as practicable after the
optionee has complied with the provisions of paragraph 5(a) hereof.
(c) Rights as a Shareholder. The optionee shall have no rights as a
shareholder with respect to the Shares purchased until the date of the
issuance to him or her of a certificate(s) representing such Shares.
(d) Disposition of Shares Received Pursuant to Exercise of an ISO.
Subject to the provisions of paragraph 5(a) hereof, to obtain ISO tax
treatment under the Code, an optionee can make no disposition, within the
meaning of Section 425(c) of the Code, of Shares acquired by the exercise of
an ISO within two years from the date of the grant of the ISO or within one
year following the optionee's exercise of the ISO; provided, however, that the
foregoing holding periods shall not apply to the disposition of Shares after
the death of the optionee by the estate of the optionee, or by a person who
acquired the Shares by bequest or inheritance or otherwise by reason of the
death of the optionee. For purposes of the preceding sentence, in the case of
a transfer of Shares by an insolvent optionee to a trustee, receiver or
similar fiduciary in any proceeding under Title 11 of the United States Code
or any similar insolvency proceeding, neither the transfer, nor any other
transfer of such Shares for the benefit of his or her creditors in such
proceeding, shall constitute a disposition.
(e) Tax Withholding Matters. With respect to the exercise of an NQSO
hereunder, no later than the date as of which any amount first becomes
includible in an optionee's gross income for income tax purposes, the optionee
shall pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state or local taxes of any kind
required by law to be withheld or paid with respect to such income. The
Company's obligations under this Plan shall be conditional on such payment or
arrangements and the Company shall, to the extent permitted by law, have the
right to deduct the amount of any such tax obligations from any payment of any
kind otherwise due the optionee.
6. Stock Incentive Rights.
(a) Award of SIRs. The Committee may from time to time, and subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award one or more SIRs to any eligible employee. SIR
grants shall be evidenced by written Stock Incentive Agreements in such form
as the Committee may from time to time determine on the advice of counsel to
the Company. Each Stock Incentive Agreement shall set forth the number of
Shares of Common Stock issuable under the SIRs awarded. Subject to the
provisions of Sections 6(c) and 6(e) below, a recipient of an SIR grant shall
be entitled to receive that number of Shares of the Company's Common Stock
issuable thereunder, without payment, upon the expiration of the incentive
period established in the Stock Incentive Agreement with respect to those
Shares.
(b) Incentive Period. Each Stock Incentive Agreement shall set forth
the incentive period which shall be applicable to the Shares of Common Stock
issuable thereunder, which shall in no event be less than three years from the
date of award. Subject to the foregoing, the Committee may, in its sole
discretion, establish any vesting schedule with respect to the grant of an SIR
that it deems appropriate.
(c) Termination of Employment. Except as provided in Section 6(e)
below, all SIRs awarded to a grantee shall terminate upon termination of the
grantee's employment with the Company prior to the end of the incentive period
applicable to his/her SIRs, and in such event, the grantee shall not be
entitled to receive any Shares in respect of such award.
(d) Non-Assignment During Life. During the lifetime of the grantee,
SIRs shall not be assignable or transferable by him/her, whether voluntarily
or by operation of law or otherwise, and no other person shall acquire any
rights therein.
(e) Death, Disability or Retirement. In the event that the employment
of a grantee holding SIRs is terminated during an incentive period by reason
of death, permanent disability (as determined by the Committee), or normal
retirement, such grantee shall be entitled to receive, as of the date of any
such event, that number of Shares equal to: (1) the product of (i) the total
number of Shares that the grantee would have been entitled to receive pursuant
to the SIR award upon the expiration of the incentive period had his/her
employment not terminated as a result of death, disability or retirement, and
(ii) a fraction, the numerator of which shall be the number of full calendar
months between the date of award of the SIRs and the date that his/her
employment terminated, and the denominator of which shall be the number of
full calendar months in the incentive period, less (2) the number of Shares
already issued, if any, to the grantee under that SIR award.
(f) Dividend Equivalent Payments. During an incentive period, should
the Company declare and pay any cash dividends on its Common Stock, each
grantee of an SIR shall be entitled to receive from the Company an amount
equal to such cash dividend that the Company would have paid to such grantee
had he/she, on the record date for the payment of such dividend, owned of
record the shares of Common Stock that are covered by the SIR as of the close
of business on such record date. Each such dividend equivalent payment shall
be made by the Company on the payment date of the cash dividend in respect of
which it is to be made.
(g) Issuance of Certificates. Certificates representing the Shares
issued to a grantee at the end of an incentive period shall be issued as soon
as practicable after the end of the relevant incentive period, subject to the
grantee's complying with any conditions to the issuance of such Shares as the
Company's counsel shall require in order that the issuance of such Shares will
be in compliance with the Act and any other laws applicable thereto, and the
Company shall be entitled to receive such other information, assurances,
documents, representations or warranties as it or its counsel may reasonably
require with respect to such compliance. Additionally, if deemed necessary
by Company counsel, appropriate restrictive legends may be placed on any
certificates for Shares issued to a grantee and the Company may cause stop
transfer orders to be placed against such certificate(s).
(h) Rights as a Shareholder. A grantee shall have no rights as a
shareholder with respect to the Shares subject to outstanding SIRs until the
date of the issuance to him/her of a certificate(s) representing such Shares.
7. Term of Plan. Awards may be granted pursuant to this Plan from
time to time within a period of ten years after the date it is adopted by the
Board of Directors of the Company or the date it is approved by the holders of
a majority of the outstanding shares of the Company, whichever date is
earlier. However, the Plan shall not take effect until approved by the
holders of a majority of the outstanding shares of the Company, at a duly
constituted meeting thereof, held within 12 months before or after the date
the Plan is adopted by the Board of Directors.
8. Amendment and Termination of Plan. Without further approval of
the shareholders of the Company, the Board of Directors or the Committee may
at any time suspend or terminate the Plan, or, subject to the terms hereof,
may amend it from time to time in any manner; provided, however, that no
amendment shall be effective without the prior approval of the shareholders of
the Company that would: (i) except as provided in paragraph 3(b) hereof,
increase the maximum number of Shares for which awards may be granted under
the Plan; (ii) change the eligibility requirements for individuals entitled to
receive awards under the Plan; (iii) cause options granted or to be granted
under the Plan as ISOs to fail to qualify as ISOs under Section 422 of the
Code and the regulations promulgated thereunder; or (iv) materially increase
the benefits accruing to participants under the Plan.
9. Administration. The Plan shall be administered by the Committee,
and decisions of the Committee concerning the interpretation and construction
of any provisions of the Plan or of any award granted pursuant to the Plan
shall be final. The Company shall effect the grant of awards under the Plan
in accordance with the decisions of the Committee, which may, from time to
time, adopt rules and regulations for the carrying out of the Plan. For
purposes of the Plan, an option shall be deemed to be granted when a written
Stock Option Contract is signed on behalf of the Company by its duly
authorized officer or representative, and a grant of SIRs shall be deemed to
be made as of the date a written Stock Incentive Agreement is signed on behalf
of the Company by its duly authorized officer or representative. Subject to
the express provisions of the Plan, the Committee shall have the authority, in
its discretion and without limitation: to determine the individuals to
receive awards; the timing and amount of such awards; the incentive period
applicable to each SIR award; the term of each option; the date(s) on which
each option shall become exercisable; whether an option shall be exercisable
in whole, in part, or in installments; the option exercise price of each
option; the terms of payment for Shares purchased by the exercise of each
option; to accelerate the date of exercise of any installment; and to make all
other determinations necessary or advisable for administering the Plan.
Whenever the Company issues Shares with respect to SIRs awarded under this
Plan, it shall withhold an amount sufficient to satisfy any Federal, state
and/or local income tax withholding requirements prior to the delivery of any
certificate(s) representing such Shares. Such withholding shall be
accomplished by withholding that number of Shares from the total to be so
issued as equals the amount of such withholding requirements to be satisfied,
such Shares to be valued at their then-current fair market value (as
determined by the closing price quoted for the Company's Common Stock on the
last business day on which it traded immediately preceding the end of the
relevant incentive period). Any fractional Shares resulting from such tax
withholding shall be paid to the participant in cash. The Plan, all awards
granted and all actions taken hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware.
10. Reservation of Shares. The Company shall be under no obligation
to reserve Shares to fill awards. Likewise, because of the substantial nature
of the conditions which must be met to entitle eligible employees to
deliveries of reserved Shares, the Company shall be under no obligation to
reserve Shares against such deliveries. The optioning or awarding and
reservation of Shares for employees hereunder shall not be construed to
constitute the establishment of a trust of the Shares so optioned or awarded
and reserved, and no particular Shares shall be identified as optioned or
awarded and reserved for employees hereunder. The Company shall be deemed to
have complied with the terms of the Plan if, at the time of the issuance and
delivery pursuant to the exercise of an option, or expiration of an incentive
period with respect to an SIR, or reservation, as the case may be, it has a
sufficient number of Shares authorized and unissued or held in its treasury
for the purposes of the Plan, irrespective of the date when such Shares were
authorized.
11. Application of Proceeds. The proceeds of the sale of Shares by
the Company under the Plan will constitute general funds of the Company and
may be used by the Company for any purpose.
