<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
REXENE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
5005 LBJ FREEWAY
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 1995
To the Stockholders of
REXENE CORPORATION:
Notice is hereby given that the annual meeting of stockholders of Rexene
Corporation, a Delaware corporation, will be held on Tuesday, April 25, 1995, at
9:00 a.m., local time, at the Westin Hotel, 13340 Dallas Parkway, Dallas, Texas
75240 for the following purposes:
1. To elect nine directors to serve until the Annual Meeting of
Stockholders in 1996;
2. To consider and vote upon a proposed 1994 Long-Term Incentive Plan;
3. To consider and vote upon a proposed 1995 Stock Option Plan for
Outside Directors; and
4. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on March 16, 1995 are
entitled to notice of, and to vote at, the meeting or any adjournment(s)
thereof.
You are cordially invited and urged to attend the meeting, but if you are
unable to attend, please sign and date the enclosed proxy and return it promptly
in the enclosed self-addressed stamped envelope. A prompt response will be
appreciated. If you attend the meeting, you may vote in person, if you wish,
whether or not you have returned your proxy. In any event, a proxy may be
revoked at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
BERNARD J. McNAMEE
SECRETARY
Dallas, Texas
March 21, 1995
<PAGE>
REXENE CORPORATION
5005 LBJ FREEWAY
DALLAS, TEXAS 75244
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 1995
SOLICITATION OF PROXIES
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is furnished to holders of Rexene Corporation
("Rexene", "New Rexene", "Old Rexene" or the "Company") common stock, $0.01 par
value ("Common Stock"), in connection with the solicitation of proxies on behalf
of the Board of Directors of the Company for use at the annual meeting of
stockholders of Rexene to be held on Tuesday, April 25, 1995, at 9:00 a.m.,
local time, at the Westin Hotel, 13340 Dallas Parkway, Dallas, Texas 75240, and
at any adjournment(s) thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders.
Shares represented by a proxy in the form enclosed, duly signed, dated and
returned to the Company and not revoked, will be voted at the meeting in
accordance with the directions given, but in the absence of directions to the
contrary, such shares will be voted for the election of the Board's nominees for
directors and for the other proposals set forth in the foregoing notice. The
Board of Directors knows of no other matters, other than those stated in the
foregoing notice, to be presented for consideration at the meeting or any
adjournment(s) thereof. If, however, any other matters properly come before the
meeting or any adjournment(s) thereof, it is the intention of the persons named
in the enclosed proxy to vote such proxy in accordance with their judgment on
any such matters. The persons named in the enclosed proxy may also, if it is
deemed to be advisable, vote such proxy to adjourn the meeting from time to
time.
Any stockholder executing and returning a proxy has the power to revoke it
at any time before it is voted by delivering to the Secretary of Rexene, 5005
LBJ Freeway, Dallas, Texas 75244, a written revocation thereof or by duly
executing a proxy bearing a later date. Any stockholder attending the annual
meeting of stockholders may revoke his proxy by notifying the Secretary at such
meeting and voting in person if he desires to do so. Attendance at the annual
meeting will not by itself revoke a proxy.
The approximate date on which this proxy statement and the form of proxy are
first sent to stockholders is March 21, 1995.
The cost of soliciting proxies will be borne by Rexene. Solicitation may be
made, without additional compensation, by directors, officers and regular
employees of Rexene in person or by mail, telephone or telegram. Rexene may also
request banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries to forward solicitation material to the beneficial owners of the
Common Stock held of record by such persons, and Rexene will reimburse the
forwarding expense. All costs of preparing, printing and mailing the form of
proxy and the material used in the solicitation thereof will be borne by Rexene.
1
<PAGE>
SHARES OUTSTANDING AND VOTING RIGHTS
The close of business on March 16, 1995 is the record date for determination
of stockholders entitled to notice of and to vote at the meeting or any
adjournment(s) thereof. The only voting security of Rexene outstanding is the
Common Stock, each share of which entitles the holder thereof to one vote. At
the record date for the meeting, there were outstanding and entitled to be voted
18,717,797 shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tabulation sets forth as of March 16, 1995, information with
respect to each person who was known by Rexene to be the beneficial owner of
more than five percent of the Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
----------------------------
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
- --------------------------------------------------------------------------- --------------- -----------
<S> <C> <C>
State of Wisconsin Investment Board ....................................... 1,860,000(1) 9.94%
P. O. Box 7842
Madison, Wisconsin 53707
Stephen C. Swid and Stephen D. Weinroth ................................... 1,195,336(2)(3) 6.39%
c/o Stephen C. Swid
SCS Communications Inc.
152 West 57th Street
57th Floor
New York, New York 10019
Executive Life Insurance Company of New York .............................. 1,047,144(4) 5.59%
390 North Broadway
Jericho, New York 11753-2167
Capital Growth Management Limited Partnership ............................. 1,023,000(5) 5.47%
One International Place
Boston, Massachusetts 02110
Franklin Resources, Inc. .................................................. 984,000(6) 5.26%
777 Mariners Island Blvd.
San Mateo, California 94404
<FN>
- ------------------------
(1) Based upon information reported in a Schedule 13G dated February 13, 1995
filed by the State of Wisconsin Investment Board with the Securities and
Exchange Commission (the "SEC"). All such shares are directly held with
sole voting and investment power.
(2) Based upon information reported in a Schedule 13D dated March 17, 1995
filed by Stephen C. Swid ("SCS") and Stephen D. Weinroth ("SDW") with the
SEC. SCS has sole voting and investment power with respect to 950,986
shares of Common Stock that he beneficially owns. SCS has shared voting and
investment power (with persons other than SDW) with respect to 11,000
shares that he beneficially owns. SDW has the sole voting and investment
power with respect to the 233,350 shares of Common Stock that he
beneficially owns. Although SCS and SDW may be deemed to be a "group"
within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), each of SCS and SDW disclaims beneficial
ownership of the shares of Common Stock beneficially owned by the other.
(3) Based upon information reported in the Schedule 13D referred to in Note (2)
above and a Schedule 13D dated March 17, 1995 filed by Allen Investments
III ("Allen III"), an affiliate of Allen & Company Incorporated, and
Stanley S. Shuman, an executive officer of Allen & Company
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Incorporated, these shares do not include an aggregate of 236,000 shares of
Common Stock (approximately 1.3% of the outstanding shares of Common Stock)
beneficially owned by Allen III and Mr. Shuman, collectively. On March 9
and 10, 1995, Allen III and Mr. Shuman purchased such shares in
participation with the purchase by SCS and SDW of an aggregate of 575,049
shares in two block trades executed on the New York Stock Exchange. By
virtue of such purchases, Allen III and Mr. Shuman may be deemed to be part
of a "group" together with SCS and SDW within the meaning of Rule 13d-5.
However, no agreement exists between either of SCS and SDW and either of
Allen III and Mr. Shuman with respect to any further acquisitions of shares
of Common Stock or the holding, voting or disposing of shares of Common
Stock. SCS and SDW each disclaims beneficial ownership of shares of Common
Stock beneficially owned by Allen III or Mr. Shuman. Allen III and Mr.
Shuman each disclaims beneficial ownership of shares of Common Stock
beneficially owned by SCS and SDW.
(4) Based upon information reported in a Schedule 13G filed by Kevin E. Foley,
Deputy Superintendent of Insurance of the State of New York, as
Rehabilitator of Executive Life Insurance Company of New York, with the SEC
on November 25, 1992, as amended by an amendment filed with the SEC on
October 11, 1994. All such shares are directly held with sole voting and
investment power.
(5) Based upon information reported in a Schedule 13G dated February 9, 1995
filed by Capital Growth Management Limited Partnership ("CGM") with the
SEC. All such shares are beneficially held with sole voting and shared
investment power. CGM, an investment adviser, disclaims any beneficial
interest in such shares and claims that the client accounts it manages are
not acting as a "group" for purposes of Section 13(d) under the 1934 Act,
and it and such clients are not otherwise required to attribute to each
other the beneficial ownership of securities beneficially owned under Rule
13d-3 promulgated under the 1934 Act.
(6) Based upon information reported in a Schedule 13G filed by Franklin
Resources, Inc. with the SEC on February 6, 1995. All such shares are
beneficially held with sole voting and shared investment power. Franklin
Resources, Inc., its subsidiaries, and investment companies advised by such
subsidiaries claim that they are not acting as a "group" for purposes of
Section 13(d) of the 1934 Act and that they are not otherwise required to
attribute to each other the beneficial ownership of securities beneficially
owned under Rule 13d-3.
</TABLE>
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following tabulation sets forth information with respect to the
beneficial ownership of the Common Stock as of March 16, 1995 by each director
of the Company, each nominee for director of the Company, each executive officer
listed in the Summary Compensation Table included elsewhere in this proxy
statement, and all executive officers and current directors of the Company as a
group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
------------------------------
NUMBER OF PERCENT
NAME SHARES (1)(2) OF CLASS
- -------------------------------------------------------------------------------------- ---------------- ---------
<S> <C> <C>
DIRECTORS AND NOMINEES FOR DIRECTOR
Lavon N. Anderson..................................................................... 16,332 *
Harry B. Bartley, Jr.................................................................. -0- *
R. James Comeaux...................................................................... -0- *
Arthur L. Goeschel.................................................................... 64,000(3) 0.34%
William B. Hewitt..................................................................... 18,750 0.10%
Ilan Kaufthal......................................................................... 18,750 0.10%
Charles E. O'Connell.................................................................. -0- *
Fred P. Rullo, Jr..................................................................... 18,750 0.10%
Phillip Siegel........................................................................ 21,750 0.12%
Andrew J. Smith....................................................................... 37,723 0.20%
Heinn F. Tomfohrde, III............................................................... 18,750 0.10%
NAMED EXECUTIVE OFFICERS (EXCLUDING
ANY DIRECTOR NAMED ABOVE) AND GROUP
Kevin W. McAleer...................................................................... 9,666 *
Jack E. Knott......................................................................... 13,000(4) *
James M. Ruberto...................................................................... 10,000 *
All current directors and executive officers as a group (14 persons).................. 270,636 1.45%
<FN>
- ------------------------
* Less than .1%
(1) All shares listed are directly held with sole voting and investment power
unless otherwise indicated.
(2) Includes shares subject to stock options which are currently exercisable by
the following individuals and group in the following amounts: Dr. Anderson
-14,582; Mr. Kaufthal - 18,750; Mr. Smith - 15,666; Mr. Tomfohrde - 12,500;
Mr. McAleer - 9,666; Mr. Knott - 10,000; Mr. Ruberto - 10,000; and all
directors and executive officers as a group, 112,829.
(3) Includes 1,000 shares held by Mr. Goeschel's spouse.
(4) Includes 3,000 shares held by Mr. Knott's spouse in a custodial capacity
under the Uniform Gift to Minors Act.
</TABLE>
4
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of the Board of Directors, which exercises all corporate powers of the
Company and establishes broad corporate policies. When the Board is not in
session, the Executive Committee may, to the extent permitted by law, exercise
the powers of the Board of Directors in the management of the business and
affairs of the Company. The Executive Committee of the Board of Directors is
composed of Lavon N. Anderson, Arthur L. Goeschel, Ilan Kaufthal, Phillip Siegel
and Andrew J. Smith. During 1994, the Board of Directors held eight meetings.
The Company has standing audit, compensation and nominating committees of
the Board of Directors. The Management Development and Compensation Committee
(the "Compensation Committee"), which held four meetings during 1994, is
composed of William B. Hewitt (Chairman), Arthur L. Goeschel, Fred P. Rullo, Jr.
and Heinn F. Tomfohrde, III. The Compensation Committee exercises the powers of
the Board of Directors in connection with all matters relating to compensation
of executive officers, employee benefit plans and the administration of Rexene's
stock option programs.
The Audit Committee, which held two meetings in 1994, is composed of Ilan
Kaufthal (Chairman), William B. Hewitt, and Phillip Siegel. The Audit
Committee's primary responsibilities are to (i) recommend Rexene's independent
auditors to the Board of Directors, (ii) review with Rexene's auditors the plan
and scope of the auditor's annual audit, the results thereof and the auditors'
fees, (iii) review internal audit procedures and periodically meet with Rexene's
internal auditors to review the results of such procedures, (iv) review Rexene's
financial statements and (v) take such other action as they deem appropriate as
to the accuracy and completeness of financial records of Rexene and financial
information gathering, reporting policies and procedures of Rexene.
The function of the Nominating Committee is to recommend nominees for
election as directors at the annual meeting of stockholders and to recommend the
candidates for election to fill vacancies on the Board as they occur. The Board
of Directors considers and takes action upon the recommendations of the
Nominating Committee. Although this committee has no formal policy on the
subject, the Board of Directors believes that any nominee recommended by a
stockholder in writing to the Secretary of the Company with complete
biographical data regarding the nominee would be considered by the Nominating
Committee. The Nominating Committee, which did not meet in 1994, is composed of
Andrew J. Smith (Chairman), Lavon N. Anderson, Ilan Kaufthal, Fred P. Rullo,
Jr., Phillip Siegel and Heinn F. Tomfohrde, III.
All duly submitted and unrevoked proxies will be voted for the nominees for
directors selected by the Board of Directors, except where authorization so to
vote is withheld. If any nominee(s) should become unavailable for election for
any presently unforeseen reason, the persons designated as proxies will have
full discretion to cast votes for another person(s) designated by the Board.
Effective January 16, 1995, Kevin N. Clowe resigned as a member of the Board of
Directors. Messrs. Fred P. Rullo, Jr. and Phillip Siegel have declined to stand
for re-election to the Board at the annual meeting. The nine nominees of the
Board of Directors of the Company are named below. Each of the nominees has
consented to serve as a director if elected. Set forth below is certain
information with respect to the nominees, including their ages, their principal
occupations and their directorships of publicly held companies. All of the
nominees except Messrs. Harry B. Bartley, Jr., R. James Comeaux and Charles E.
O'Connell are currently directors of the Company and, except as otherwise
indicated, have served as a director of Rexene since September 18, 1992.
LAVON N. ANDERSON, age 59, has served as President and Chief Operating
Officer of the Company since January 1991 and as a director since February 1990.
From May 1988 to January 1991, Dr. Anderson was Executive Vice President --
Manufacturing and Technical of Rexene. Dr. Anderson has held positions in
engineering, manufacturing and research and development at Rexene since 1972.
5
<PAGE>
HARRY B. BARTLEY, JR., age 67, is currently retired. Mr. Bartley served
Celanese Corporation in a number of capacities from 1950 to 1989, including
President of Celanese Chemical Co. from 1976 to 1987, President of Hoechst
Celanese Chemical Group from 1987 to 1989 and director of Hoechst Celanese
Corporation from 1987 to 1989.
R. JAMES COMEAUX, age 56, has served as President of Management Associates,
a consulting firm, since April 1993. From August 1989 to January 1993, Mr.
Comeaux was President, Chief Executive Officer and Director of Arcadian
Corporation, a fertilizer manufacturer. Prior to such time, Mr. Comeaux was
Senior Vice President of FINA, Inc. from 1984 to 1989 and served Gulf Oil
Corporation in a number of capacities from 1967 to 1984.
ARTHUR L. GOESCHEL, age 73, has served as Chairman of the Board of Rexene
since March 1992. He also served as a director of Rexene from April 1988 to May
1989. Mr. Goeschel is presently retired. He is a director of Calgon Carbon
Corporation and a member of the board of trustees of the Laurel Mutual Funds.
WILLIAM B. HEWITT, age 56, has served as a director of the Company since
February 1990. He has been Chairman of the Board and Chief Executive Officer of
Capital Credit Corporation, a receivables management company, since September
1991. Mr. Hewitt was Executive Vice President of First Manhattan Consulting
Group, a management consulting firm, from 1980 to September 1991. He is also a
director of the Union Corporation.
ILAN KAUFTHAL, age 47, has been a managing director of Wertheim Schroder &
Co. Incorporated, an investment banking firm, since 1987. He is also a director
of United Retail Group, Inc. and Cambrex Corporation.
CHARLES E. O'CONNELL, age 63, is currently retired. From 1985 to 1988, Mr.
O'Connell served as President of the Society of Plastics Industry, a trade
association. From 1964 to 1984, he served Gulf Oil Corporation in a variety of
capacities.
ANDREW J. SMITH, age 53, has served as Chief Executive Officer and director
of the Company since March 1992. From December 1991 to March 1992, he was
engaged in private consulting. From June 1991 to December 1991, he was President
and Chief Operating Officer of Itex Enterprises, Inc., an environmental
remediation company. Mr. Smith also served as a consultant to the Company from
January 1991 to June 1991. Immediately prior thereto, he had been a director of
Rexene since May 1988 and the President and Chief Executive Officer of Rexene
since June 1988. Prior thereto, he had held various positions with Rexene since
1976.
HEINN F. TOMFOHRDE, III, age 61, is currently retired. From January 1987 to
his retirement in December 1991, Mr. Tomfohrde served as President and Chief
Operating Officer and a director of GAF Chemicals Corp. and its successor
company, International Specialty Products, Inc., a specialty chemicals company.
He is also a director of Sybron Chemicals Corp., Creative Technologies Group,
Inc., OSI Specialties, Inc. and McWhorter Technologies, Inc.
On July 7, 1992, the United States Bankruptcy Court for the District of
Delaware entered an order confirming a First Amended Plan of Reorganization,
which became effective on September 18, 1992 (the "Effective Date"), relating to
the Company's bankruptcy proceedings pursuant to voluntary petitions filed by
the Company's predecessor ("Old Rexene") under Chapter 11 of the United States
Bankruptcy Code on October 18, 1991. Lavon N. Anderson, Arthur L. Goeschel,
William B. Hewitt and Andrew J. Smith, directors of the Company, were also
directors of the Company's predecessor that filed such petitions.
COMPENSATION OF DIRECTORS
FEES AND EXPENSES. In 1994, each director who is not an employee of the
Company received a fee of $1,000 for each regular meeting of the Board attended,
$1,000 for each special meeting of the Board attended, and $1,000 for each
committee meeting attended which was not held on the same day as a Board
meeting. In addition, on January 1, 1994, each director who is not an employee
of the Company
6
<PAGE>
received options to purchase an aggregate of 12,500 shares of Common Stock
(other than the Chairman of the Board who received options to purchase 16,667
shares of Common Stock) under the Company's 1993 Non-Qualified Stock Option Plan
for Outside Directors. Such 1994 options are exercisable at $0.43 per share,
equal to the average of the fair market value per share of Common Stock for the
last 20 days on which a reported sale occurred on the New York Stock Exchange in
1993, less $2.40. The Company also reimburses directors for travel, lodging and
related expenses they may incur in attending Board and committee meetings.
CONSULTING AGREEMENT. By agreement dated March 16, 1992, Rexene has agreed
to compensate Arthur L. Goeschel, Chairman of the Board, in addition to his
normal director fees, the sum of $2,750 per day plus expenses for each day (over
five days per quarter) that he consults with respect to Company matters. Under
the agreement, the Company paid Mr. Goeschel $49,500 in consulting fees in 1994.
Mr. Goeschel is not entitled to any employee benefits, or to participate in any
benefit plans maintained by Rexene for its employees, other than those in which
non-employee directors are eligible to participate.
PROPOSAL 2. 1994 LONG-TERM INCENTIVE PLAN
INTRODUCTION
In October 1994, the Board approved, subject to stockholder approval, the
Rexene Corporation 1994 Long-Term Incentive Plan (the "Incentive Plan"). The
Incentive Plan is intended to replace the Company's 1993 Non-Qualified Stock
Option Plan and 1988 Stock Incentive Plan. All shares of Common Stock authorized
for issuance under the 1993 Non-Qualified Stock Option Plan have been issued or
are reserved for issuance pursuant to outstanding options. A total of 882,000
shares of Common Stock are reserved for issuance under the Incentive Plan. The
following is a summary of the terms of the Incentive Plan, which is nevertheless
qualified in its entirety by reference to its complete text attached to this
Proxy Statement as Exhibit A.
PURPOSE OF THE INCENTIVE PLAN
The purpose of the Incentive Plan is to encourage and enable key salaried
employees of the Company and its subsidiaries to acquire a proprietary interest
in the Company through the ownership of Common Stock and other rights with
respect to Common Stock and to more closely align management incentives with
appreciation in the value of Common Stock.
SHARES AVAILABLE
The maximum aggregate number of shares of Common Stock available for award
under the Incentive Plan to employees of the Company and its subsidiaries is
882,000 (approximately 4.7% of the Common Stock outstanding on the record date
for the annual meeting); provided, however, that no employee may receive awards
of or relating to more than 100,000 shares of Common Stock in the aggregate in
any fiscal year. The shares of Common Stock available under the Incentive Plan
and all awards are subject to adjustment in certain circumstances as described
below. Shares of Common Stock attributable to lapsed or forfeited awards or
awards paid in cash shall become available for subsequent awards under the
Incentive Plan.
ADMINISTRATION OF THE INCENTIVE PLAN
A Committee of two or more directors (the "Committee") must be designated by
the Board of Directors to administer the Incentive Plan. The Committee must be
composed of disinterested directors. The determination of which members of the
Board may serve on the Committee will be made in accordance with the
requirements of Rule 16b-3 of the 1934 Act. The Committee has the full power in
its discretion to grant awards under the Incentive Plan, to determine the terms
thereof, to interpret the provisions of the Incentive Plan and to take such
action as it deems necessary or advisable for the administration of the
Incentive Plan. The Board of Directors has authorized its Management Development
and Compensation Committee to function as the Committee under the Incentive
Plan.
7
<PAGE>
ELIGIBILITY AND PARTICIPATION
Awards made pursuant to the Incentive Plan may be granted only to
individuals who, at the time of grant, are key employees or officers of the
Company or its subsidiaries. There are presently approximately 50 such persons.
Awards may not be granted to any director of the Company who is not an employee
or officer of the Company or to any member of the Committee. Participation in
the Incentive Plan is at the discretion of the Committee and shall be based upon
the employee's present and potential contributions to the success of the Company
and its subsidiaries and such other factors as the Committee deems relevant.
TYPE OF AWARDS UNDER THE INCENTIVE PLAN
If approved by the stockholders, the Incentive Plan provides that the
Committee may grant awards to employees in any of the following forms, subject
to such terms, conditions and provisions as the Committee may determine to be
necessary or desirable: (i) non-qualified stock options ("NSOs"), (ii) stock
appreciation rights ("SARs"), (iii) shares of Common Stock subject to certain
restrictions ("Restricted Shares"), (iv) units representing shares of Common
Stock ("Performance Shares"), and (v) units which do not represent shares of
Common Stock but which may be paid in the form of Common Stock.
EXERCISE PRICE
The exercise price of options and SARs is determined by the Committee at the
time of grant. At the time of grant of a SAR, the Committee will specify the
exercise price of the shares of Common Stock to be used for determining the
amount of cash and/or number of shares of Common Stock to be distributed upon
the exercise of the SAR. The exercise price of options and SARs will not be less
than the per share par value of the Common Stock. The closing market price of
the Common Stock, as reported in the New York Stock Exchange Consolidated
Trading tables on March 16, 1995, was $11 1/4 per share.
VESTING
The Committee will determine at the time of grant the terms under which
options and SARs shall vest and become exercisable.
EXERCISE OF OPTIONS AND SARS
An option may be exercised in whole or in part in accordance with procedures
to be established by the Committee. The Committee, in its discretion, may
accelerate the exercise date of any option to any date following the date of
grant. Common Stock purchased upon the exercise of the option shall be paid for
in full at the time of purchase. Payment must be made in cash or the Committee
may, at its discretion, accept shares of Common Stock as payment (valued at the
market price on the date of exercise).
SARs are exercisable only to the extent and only for the period determined
by the Committee. SARs may be granted in connection with the grant of an option,
in which case the option agreement will provide that exercise of SARs will
result in surrender of the right to purchase the shares under the option as to
which the SARs were exercised. Alternatively, SARs may be granted independently
of options.
SURRENDER OR EXCHANGE OF SARS
Upon surrender of a SAR, employee will be entitled to receive, subject to
the discretion of the Committee, cash or shares of Common Stock, or a
combination thereof, having an aggregate market price equal to (i) the market
price of the shares covered by the SAR, less (ii) the aggregate base price of
such shares specified by the Committee.
NONTRANSFERABILITY OF AWARDS
Awards are not transferable except by will or applicable laws of descent and
distribution.
8
<PAGE>
EXPIRATION OF OPTIONS
Options will expire at such time as the Committee determines.
TERMINATION OF OPTIONS AND SARS
The Committee, in its sole discretion, shall determine the effect of
termination of employment on exercisability of an option. Generally, no vested
option or SAR shall be exercisable after three months following the termination
of employment for any reason other than death or disability. In the event of
death or disability, options shall generally expire on the earlier of (x) the
normal expiration date of the option or SAR or (y) two years following the date
of such death or disability.
RESTRICTED SHARES
Restricted Shares granted under the Incentive Plan may not be sold,
transferred, pledged or otherwise encumbered or disposed of during the
restricted period established by the Committee. Each grant of Restricted Shares
may be subject to a different restricted period. The Committee may also impose
additional restrictions on an employee's right to dispose of or encumber
Restricted Shares. Subject to the Committee's discretion, holders of Restricted
Shares shall have the right to vote the stock and receive dividends.
PERFORMANCE SHARES
The Committee may award Performance Shares and shall determine performance
periods and performance objectives in connection with each grant of Performance
Shares. Each Performance Share shall be deemed to be equivalent to one share of
Common Stock.
Vesting of awards of Performance Shares will occur upon achievement of the
applicable objectives within the applicable performance period. It is intended
that vesting of awards of Performance Shares and Performance Units will be based
upon performance goals established by the Committee which would include, without
limitation, increases in the market price of a share of Common Stock during the
performance period. Payment for vested Performance Shares may be in cash, Common
Stock or any combination of such forms of payment, as determined by the
Committee. If the performance objectives established for an employee for the
performance period are not met, the Committee may, nonetheless, in its sole
discretion, determine that all or a portion of the Performance Shares have
vested. If the performance objectives for a performance period are exceeded, the
Committee may, in its sole discretion, grant additional, fully vested
performance shares to the employee.
ADJUSTMENTS IN AWARDS
The number and class of shares available under the Incentive Plan may be
adjusted by the Committee to prevent dilution or enlargement of rights in the
event of various changes in the capitalization of the Company. In the event of
subdivisions and combinations of the Common Stock, such adjustment is required.
At the time of grant of any award, the Committee may provide that the number and
class of shares issuable in connection with such award shall be adjusted in
certain other circumstances to prevent dilution or enlargement of rights.
The Committee is required to take action with respect to outstanding awards
under the Incentive Plan in the event of any of the following: (i) the merger,
consolidation or other reorganization of the Company in which the outstanding
Common Stock is converted into or exchanged for a different class of securities
of the Company, a class of securities of any other issuer, cash or other
property; (ii) the sale, lease or exchange of all or substantially all of the
assets of the Company to another entity; (iii) the adoption by the shareholders
of the Company of a plan of liquidation and dissolution; (iv) the acquisition by
any person or entity of beneficial ownership of more than 20% of the Company's
outstanding capital stock; or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board. In such
events, the Committee may (i) accelerate the vesting of awards, (ii) require
surrender of awards in exchange for payment based on the terms of the awards or
(iii) make such other adjustments to such awards as the Committee deems
appropriate to reflect the corporate change.
9
<PAGE>
AMENDMENT AND TERMINATION
The Board of Directors may suspend, amend, modify or terminate the Incentive
Plan; however, the Company's stockholders must approve any amendment that would
(i) materially increase the aggregate number of shares issuable under the
Incentive Plan; (ii) extend the term of the Incentive Plan, (iii) materially
increase the benefits accruing to employees under the Incentive Plan or (iv)
materially modify the requirements as to eligibility for participation in the
Incentive Plan.
Awards granted prior to a termination of the Incentive Plan shall continue
in accordance with their terms following such termination. No amendment,
suspension or termination of the Incentive Plan shall adversely affect the
rights of an employee in awards previously granted without such employee's
consent.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Internal Revenue Code
of 1986, as amended (the "Code"), as currently in effect, existing laws,
judicial decisions, administrative rulings, regulations and proposed
regulations, all of which are subject to change. Moreover, the following is only
a summary of federal income tax consequences and the federal income tax
consequences to employees may be either more or less favorable than those
described below depending on their particular circumstances.
NON-QUALIFIED STOCK OPTIONS. No income will be recognized by an optionee
for federal income tax purposes upon the grant of a NSO. Generally, upon
exercise of a NSO, the optionee will recognize ordinary income in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the option price of the shares. In certain circumstances described
below under "Section 83(b) election", the ordinary income recognized by an
"insider" subject to Section 16(b) of the 1934 Act (an "Insider") may be
calculated differently. Executive officers, directors and 10% stockholders of
the Company will generally be deemed to be Insiders for purposes of Section
16(b) of the 1934 Act.
Income recognized upon the exercise of NSOs will be considered compensation
subject to withholding at the time the income is recognized, and, therefore, the
Company must make the necessary arrangements with the optionee to ensure that
the amount of the tax required to be withheld is available for payment. NSOs are
designed to provide the Company with a deduction equal to the amount of ordinary
income recognized by the optionee at the time of such recognition by the
optionee.
The basis of shares transferred to an optionee pursuant to exercise of a NSO
is the price paid for such shares plus an amount equal to any income recognized
by the optionee as a result of the exercise of the option. If an optionee
thereafter sells shares acquired upon exercise of a NSO, any amount realized
over the basis of the shares will constitute capital gain to the optionee for
federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the exercise
price for shares under a NSO, the number of shares received pursuant to the NSO
which is equal to the number of shares delivered in payment of the exercise
price will be considered received in a nontaxable exchange, and the fair market
value of the remaining shares received by the optionee upon the exercise will be
taxable to the optionee as ordinary income. If the already owned shares of
Common Stock are not "statutory option stock" or the statutory option stock with
respect to which the applicable holding period referred to in Section
424(c)(3)(A) of the Code has been satisfied, the shares received pursuant to the
exercise of the NSO will not be statutory option stock and the optionee's basis
in the number of shares delivered in payment of the exercise price will be equal
to the basis of the shares delivered in payment. The basis of the remaining
shares received upon the exercise will be equal to the fair market value of the
shares. However, if the already owned shares of Common Stock are statutory
option stock with respect to which the applicable holding period has not been
satisfied, it is not presently clear whether the exercise will be considered a
disqualifying disposition of the statutory option stock, whether the shares
received upon such exercise will be statutory option stock or how the optionee's
basis will be allocated among the shares received. In general, "statutory option
stock" (as defined in
10
<PAGE>
Section 424(c)(3)(B) of the Code) is any stock acquired through the exercise of
an incentive stock option, a qualified stock option, an option granted pursuant
to an employee stock purchase plan or a restricted stock option, but not through
the exercise of a NSO.
SARS AND PERFORMANCE SHARES. There will be no federal income tax
consequences to either the employee or the Company upon the grant of SARs or
Performance Shares. Generally, upon the exercise of SARs or vesting of
Performance Shares, the employee will recognize ordinary income in an amount
equal to the fair market value of the Common Stock and the aggregate amount of
cash received. In certain circumstances described below under "Section 83(b)
election", the ordinary income recognized by an Insider may be calculated
differently.
Income recognized upon the exercise of SARs and vesting of Performance
Shares will be considered compensation subject to withholding at the time the
income is recognized, and, therefore, the Company must make the necessary
arrangements with the employee to ensure that the amount of the tax required to
be withheld is available for payment. Subject to the new deduction limitation
described below, the Company generally will be entitled to a corresponding tax
deduction equal to the amount includable in the employee's income at the time of
such inclusion.
RESTRICTED SHARES. Generally, absent a Section 83(b) election, there will
be no federal income tax consequences to either the employee or the Company upon
the grant of Restricted Shares. At the expiration of the restriction period and
the satisfaction of any other restrictions applicable to the Restricted Shares,
the employee will recognize ordinary income and, subject to the new deduction
limitation described below, the Company will be entitled to a corresponding
deduction (if applicable withholding requirements are satisfied) equal to the
fair market value of the Common Stock at that time.
SECTION 83(B) ELECTION. In the absence of an election under Section 83(b)
of the Code, an Insider who either exercises a NSO less than six months from the
date the option was granted, receives shares of Common Stock pursuant to the
exercise of SARs less than six months from the date of grant or receives the
Common Stock pursuant to the vesting of Performance Shares will (i) with respect
to NSO's, recognize income on the date six months after the date of grant in an
amount equal to the excess of the fair market value of the shares on such date
over the option price of the shares, (ii) with respect to SARs, recognize
ordinary income with respect to such shares of Common Stock on the date six
months after the date of grant in an amount equal to the fair market value of
the shares on such date, and (iii) with respect to Performance Shares, recognize
ordinary income with respect to the shares received on the date six months after
the date of receipt. An Insider may avoid the deferral in each case by making a
Section 83(b) election, no later than 30 days after the date of exercise of the
NSOs or SARs or receipt of shares pursuant to Performance Shares.
With respect to Restricted Shares, if a Section 83(b) election is made
within 30 days after the date on which Restricted Shares are received, the
employee will recognize an amount of ordinary income at the time of the receipt
of the Restricted Shares and the Company will be entitled to a corresponding
deduction (if applicable withholding requirements are satisfied) equal to the
fair market value (determined without regard to applicable restrictions) of the
shares at such time. If a Section 83(b) election is made, no additional income
will be recognized by the employee upon the lapse of restrictions on the
Restricted Shares, but, if the Restricted Shares are subsequently forfeited, the
employee may not deduct the income that was recognized pursuant to Section 83(b)
election at the time of the receipt of the Restricted Shares.
LIMITATIONS ON THE COMPANY'S COMPENSATION DEDUCTION. Section 162(m) of the
Code, which became effective in 1994, will limit the deduction which the Company
may take for otherwise deductible compensation payable to certain executive
officers of the Company to the extent that compensation paid to such officers
for such year exceeds $1 million, unless such compensation is performance-based,
is approved by the Company's stockholders and meets certain other criteria. To
date, only proposed, and not final, Treasury Regulations have been issued with
respect to Section 162(m) of the Code. Although the Company intends that NSOs
and SARs granted under the Incentive Plan will
11
<PAGE>
satisfy the requirements to be considered performance-based for purposes of
Section 162(m) of the Code, there is no assurance such NSOs and SARs as well as
Performance Shares and Restricted Stock awarded under the Incentive Plan, will
satisfy such requirements, and, accordingly, the Company may be limited by
Section 162(m) of the Code in the amount of deductions it would otherwise be
entitled to take (as described in the foregoing summary) with respect to awards
under the plan.
TAX WITHHOLDING. The Committee may require payment, or withhold payments
made by the plan, in order to satisfy applicable withholding tax requirements.
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of at least a majority of the Common
Stock present in person or represented by proxy at the meeting and entitled to
vote on this proposal is required to approve the adoption of the Incentive Plan.
BOARD RECOMMENDATION
The Board of Directors believes that the Incentive Plan is in the best
interests of the Company and its stockholders and recommends that the
stockholders vote FOR adoption of the Incentive Plan.
PROPOSAL 3. 1995 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
INTRODUCTION
On February 24, 1995, the Board of Directors approved, subject to
stockholder approval, the Rexene Corporation 1995 Stock Option Plan for Outside
Directors (the "Director Option Plan"). The Director Option Plan is intended to
replace the Company's 1993 Non-Qualified Stock Option Plan for Outside
Directors. All shares of Common Stock authorized for issuance under the 1993
Non-Qualified Stock Option Plan for Outside Directors have been issued or are
reserved for issuance pursuant to outstanding options. A total of 60,000 shares
of Common Stock are reserved for issuance under the Director Option Plan. The
following is a summary of the terms of the Director Option Plan, which is
nevertheless qualified in its entirety by reference to its complete text
attached to this Proxy Statement as Exhibit B.
PURPOSE OF THE DIRECTOR OPTION PLAN
The purpose of the Director Option Plan is to promote the interests of the
Company and its stockholders by attracting and retaining qualified non-employee
directors by giving them the opportunity to acquire a proprietary interest in
the Company and, thus, an increased personal interest in its continued success
and progress. The Director Option Plan will also allow the Company to issue
options to directors in lieu of paying a portion of an annual retainer in cash
and to more closely align the interests of the directors with the interests of
the stockholders.
DESCRIPTION OF THE DIRECTOR OPTION PLAN
The Director Option Plan provides for the granting of stock options, which
shall not be qualified as "incentive stock options" as defined under Section 422
of the Code, to purchase Common Stock to directors of the Company who are not
employees or officers of the Company or any of its affiliates. Each option
granted under the Director Option Plan will be governed by a stock option
agreement between the Company and the optionee.
SHARES AVAILABLE
The Board of Directors has reserved 60,000 shares of Common Stock for
issuance under the Director Option Plan. Options granted under the Director
Option Plan may be subject to complete or partial termination or forfeiture in
the event of the termination of the optionee's position as director of the
Company. No option granted under the Director Option Plan may be transferred by
an optionee other than by will or the laws of descent and distribution and,
during the lifetime of an optionee, the option may be exercised only by him.
12
<PAGE>
ELIGIBILITY AND PARTICIPATION
The Director Option Plan provides for the grant to each non-employee elected
as a member of the Board at the annual meeting of stockholders of the Company in
each of 1995, 1996 and 1997 of options to purchase 2,000 shares of Common Stock
(other than the Chairman of the Board, who shall receive an option to purchase
2,500 shares of Common Stock). Non-employee directors who are elected other than
at an annual meeting to the Board after the 1995 annual meeting and before the
1998 annual meeting will also be awarded a similar grant upon their election to
the Board.
ADMINISTRATION OF THE DIRECTOR OPTION PLAN
The Director Option Plan is administered by the Compensation Committee of
the Board of Directors. The Compensation Committee has no authority, discretion
or power to select the participants who will receive options, to grant options,
to set number of shares of Common Stock to be covered by any option, or to set
the exercise price or the period within which the options may be exercised or to
alter any other terms and conditions specified in the option agreements. Subject
to these limitations, the Compensation Committee is empowered to adopt such
rules and regulations and to take such action as it considers necessary or
advisable for the administration of the Director Option Plan, and to construe
and interpret and administer the Director Option Plan.
EXERCISE OF OPTIONS
The Director Option Plan provides that the option price per share of any
stock option granted thereunder shall be equal to the average of the fair market
value per share of Common Stock for the 20 trading days immediately preceding
the date of grant, less $10.00, provided that in no event shall the exercise
price be less than $0.25 per share. Generally, each option granted under the
Director Option Plan shall remain exercisable until the earliest of the
following to occur; (x) two years following the death of a director who dies in
office, (y) one year following termination of a director's service on the Board
for any reason other than death or removal for cause, and (z) ten years from the
date of grant. Each option granted under the Director Option Plan becomes
exercisable in full one year after the date of grant. The Director Option Plan
provides for the proportionate adjustment of the total number of shares of
Common Stock reserved for the grant of options, the number of shares of Common
Stock represented by each outstanding option and the exercise price of
outstanding options in the event of recapitalization, capital adjustment or a
merger in which the Company is the surviving corporation. The Director Option
Plan also authorizes the Compensation Committee to take such action as it deems
necessary to preserve the interests of the optionees in the event of a
liquidation or reorganization, including a merger, consolidation or sale of
assets.
AMENDMENT AND TERMINATION
Unless sooner terminated by resolution of the Board of Directors, the
Director Option Plan will expire at the time of the 1998 annual meeting of
stockholders. The Board of Directors may amend, suspend or terminate the
Director Option Plan at any time, except that, without stockholder approval, the
Board of Directors may not make any amendment which would increase the total
number of shares of Common Stock as to which options may be granted under the
Director Option Plan or decrease the exercise price at which options may be
granted thereunder, materially alter the class of persons eligible to be granted
options under the Director Option Plan, materially increase the benefits
accruing to optionees under the Director Option Plan or extend the term of the
Director Option Plan or any option granted thereunder. The amendment, suspension
or termination of the Director Option Plan may not materially or adversely
affect the rights of an optionee as set forth in his option agreement, except
with the consent of such optionee.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Code as currently in
effect, existing laws, judicial decisions, administrative rulings, regulations
and proposed regulations, all of which are
13
<PAGE>
subject to change. Moreover, the following is only a summary of federal income
tax consequences and the federal income tax consequences to non-employee
directors may be either more or less favorable than those described below
depending on their particular circumstances.
All options granted under the Director Option Plan are non-statutory options
not entitled to special tax treatment under Section 422 of the Code. The
Director Option Plan is not qualified under Section 401(a) of the Code and is
not subject to the provisions of ERISA.
No income will be recognized by an optionee for federal income tax purposes
upon the grant of an option. Upon exercise of an option, the optionee will
recognize ordinary income in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the option price of such
shares.
The Company will be allowed a deduction equal to the amount of ordinary
income recognized by the optionee due to the exercise of an option at the time
of such recognition by the optionee.
The basis of shares transferred to an optionee pursuant to the exercise of
an option is the price paid for such shares plus an amount equal to any income
recognized by the optionee as a result of the exercise. If an optionee sells
shares acquired upon exercise of an option, any amount realized over the basis
of such shares will constitute capital gain to such optionee for federal income
tax purposes.
BENEFITS
Only non-employee directors are eligible to participate in the Director
Option Plan. If the Director Option Plan is approved by the stockholders,
options to purchase 2,000 shares of Common Stock will be granted to each
non-employee director on April 25, 1995 (except the Chairman of the Board, who
will receive options to purchase 2,500 shares of Common Stock). If the Director
Option Plan is not approved by the stockholders, no options will be granted
under the Director Option Plan. In such event, each director who is not an
employee of the Company shall be entitled to receive an annual retainer of
$30,000 in cash (except for the Chairman of the Board, who shall be entitled to
receive an annual retainer of $35,000).
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of at least a majority of the Common
Stock present in person or represented by proxy at the meeting and entitled to
vote on this proposal is required to approve the adoption of the Director Option
Plan.
BOARD RECOMMENDATION
The Board of Directors believes that the Director Option Plan is in the best
interests of the Company and its stockholders and recommends that the
stockholders vote FOR adoption of the Director Option Plan.
EXECUTIVE COMPENSATION
The following is a report submitted by members of the Compensation Committee
addressing the Company's compensation policy as it related to the executive
officers for fiscal 1994.
The report of the Compensation Committee appearing in this proxy statement
and the information herein under "Executive Compensation -- Performance Graphs"
shall not be deemed to be "soliciting material" or to be "filed" with the SEC or
subject to the SEC's proxy rules, or to the liabilities of Section 18 of the
1934 Act, and such information shall not be deemed to be incorporated by
reference into any filing made by the Company under the Securities Act of 1933
or the 1934 Act.
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<PAGE>
REPORT OF THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE
To the Stockholders of Rexene Corporation:
As members of the Management Development and Compensation Committee (the
"Committee") of the Board of Directors (the "Board"), it is our responsibility
to establish overall policy for the compensation of executive officers of the
Company, to recommend to the Board executive compensation plans for the
executive officers, to administer such plans, and to recommend to the Board
specific levels of compensation to be paid to the executive officers. We also
have the sole authority to determine the timing, pricing and amount of any award
of any rights to any executive officer to acquire Common Stock of the Company.
The Committee's long-term objective for executive compensation is to
attract, motivate and retain qualified individuals for executive positions and
to link incentives to Company performance and enhanced stockholder value. In
establishing executive compensation, the Committee neither bases its decisions
entirely on quantitative relative weights of various factors, nor does it follow
a mathematical formula. Rather, the Committee exercises discretion and makes
judgments after considering all factors that it considers relevant, including
individual performance, level of responsibility, and the achievement of certain
objective targets relating to the Company's financial performance.
In 1994, the Company's executive compensation program consisted of (i)
annual cash compensation of a base salary and a bonus opportunity based upon
Company financial performance, and (ii) stock option awards.
CASH COMPENSATION
BASE SALARY
In making its decisions in 1994 about base salary levels for executive
officers, including the chief executive officer, the Committee considered
primarily individual performance of such officers, including the evaluation of
other executive officers by the chief executive officer, the improving financial
condition and performance of the Company, the level of responsibility of each
such officer, and the fact that no salary increases had been received by any
executive officer since November 1992. The Committee also considered surveys of
executive compensation prepared by the Company's independent compensation
consultant, Towers Perrin. Towers Perrin provided data extrapolated from its
survey of executive compensation at approximately 100 chemical and industrial
concerns. Companies chosen for comparison purposes in the compensation survey do
not include all the companies which comprise the peer group index in the
performance graphs included in this Proxy Statement. The Committee believes that
the Company's competitors for executive talent are not necessarily limited to
those companies that would be included in the peer group established for
comparing stockholder returns. The Towers Perrin data indicated that total cash
compensation of all the executive officers, including the chief executive
officer, was below the mid-point in the range for executives holding similar
positions at other companies in the study.
Effective June 1, 1994, the salary of the chief executive officer was raised
from $350,000 to $380,000 -- an increase of 9 percent. In fixing the chief
executive officer's salary, the Committee took into account the Company's
continued financial and operational progress, the individual performance of the
chief executive officer, and comparable base salary data provided by Towers
Perrin.
BONUS
An integral part of executive officer cash compensation is the use of annual
cash bonuses to reward executive officers for their individual and team results
when Company performance meets or exceeds specified targets adopted by the
Committee on an annual basis. Such targets may vary from year to year depending
upon those elements of Company performance which the Board deems of special
significance in a particular fiscal year, and the competitive environment in
which the Company
15
<PAGE>
operates. The Committee believes that linking a substantial portion of executive
officer cash compensation to annual Company financial performance provides a
meaningful incentive to such officers to enhance Company performance.
In December 1993, the Committee recommended and the Board approved a cash
bonus plan (the "1994 Bonus Plan") that would provide all executive officers,
including the chief executive officer, under a formula set out in the 1994 Bonus
Plan, the opportunity to receive amounts ranging between 30% and 100% of their
1994 year end base salary rates if designated operating cash flow ("OCF")
targets for 1994 were achieved or exceeded. The specific percentages for each
executive officer varied depending upon his position and responsibilities and
the percentage by which the targeted OCF amount was met or exceeded. The chief
executive officer's bonus opportunity ranged between 37.5% and 100% of his year
end base salary rate. No bonus was payable if the actual 1994 OCF did not equal
at least 90% of the targeted amount. Because actual OCF in 1994 exceeded 150% of
targeted OCF, the maximum amount of bonus opportunity was earned by all
executive officers, including the chief executive officer, in 1994.
LONG-TERM COMPENSATION
Long-term incentives strengthen the ability of the Company to attract,
motivate and retain capable executives and more closely align the interests of
management with those of stockholders. In 1994, the Committee determined that
several steps should be implemented to establish a more competitive long-term
compensation program. These steps included the award of stock options under
existing plans and the adoption, subject to stockholder approval, of the 1994
Long-Term Incentive Plan, and the adoption of a supplemental retirement plan for
certain executive officers. See "Proposal No. 2 1994 Long-Term Incentive Plan"
and "Executive Compensation -- Pension Benefits." In adopting these plans and
awarding options, the Committee consulted its compensation consultants.
STOCK OPTIONS
Consistent with the foregoing goal, in 1994 the Committee awarded options to
purchase an aggregate of 289,005 shares of Common Stock to executive officers,
including the award of options to purchase 70,000 shares of Common Stock to the
chief executive officer. These stock options were granted at exercise prices
equal to the prevailing market value of the underlying stock on the date of
grant, and will only have value if the Company's Common Stock price increases,
resulting in a commensurate benefit for the Company's stockholders. Generally,
these options vest in equal amounts over three years and executives generally
must be employed by the Company at the time of vesting in order to exercise the
options. In granting options to each executive officer, the Committee considered
the performance of the executive officer (as evaluated by the chief executive
officer), the position held by the executive and his expected contribution to
the Company's future growth and profitability. The Committee made its stock
option award to the chief executive officer based upon its subjective evaluation
of his performance in leading the Company to an extremely successful year and to
encourage him to continue as chief executive officer of the Company for the long
term.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
William B. Hewitt, Chairman
Arthur L. Goeschel
Fred P. Rullo, Jr.
Heinn F. Tomfohrde, III
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning the
compensation paid or awarded to the Chief Executive Officer of the Company and
the four other highest paid executive officers of the Company in 1994 (the
"named executive officers") for the years indicated.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OPTIONS
(NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) SHARES) COMPENSATION
- --------------------------------------------------- --------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Andrew J. Smith, 1994 $ 367,502 $ 380,000 70,000 $ 4,902(2)
Chief Executive Officer 1993 350,000 -- 22,000 4,361
1992 235,500 25,000 -- 3,153
Lavon N. Anderson, President and Chief Operating 1994 292,000 297,000 40,000 6,273(3)
Officer 1993 285,000 -- 17,000 6,299
1992 260,000 44,000 -- 5,332
Kevin W. McAleer, Executive Vice President & Chief 1994 223,752 184,000 32,000 3,003(4)
Financial Officer 1993 216,000 -- 12,000 2,926
1992 202,500 32,000 -- 2,739
Jack E. Knott, Executive Vice President and 1994 217,921 176,000 38,000 3,209(5)
President of Rexene Products Company ("Rexene 1993 205,000 -- 12,000 2,724
Products"), a division of the Company 1992 194,000 25,000 -- 2,621
James M. Ruberto, Executive Vice President and 1994 217,921 176,000 38,000 3,762(6)
President of Consolidated Thermoplastics Company 1993 205,000 -- 12,000 3,502
("CT Film"), a division of the Company 1992 192,500 25,000 -- 3,969
<FN>
- ------------------------
(1) One-half of the 1994 bonuses were paid in 1994 and the balances were paid
in 1995.
(2) Consists of Company contributions to defined contribution plans (and
related cash supplements) of $2,310, $1,769 and $1,641 in 1994, 1993 and
1992, respectively, and imputed income for life insurance of $2,592, $2,592
and $1,512 for 1994, 1993 and 1992, respectively.
(3) Consists of Company contributions to defined contribution plans of $2,223,
$2,249 and $2,182 in 1994, 1993 and 1992, respectively, and imputed income
for life insurance of $4,050, $4,050 and $3,150 in 1994, 1993 and 1992,
respectively.
(4) Consists of Company contributions to defined contribution plans (and
related cash supplements) of $2,196, $2,151 and $2,025 in 1994, 1993 and
1992, respectively, and imputed income for life insurance of $807, $775 and
$714 in 1994, 1993 and 1992, respectively.
(5) Consists of Company contributions to defined contribution plans (and
related cash supplements) of $2,426, $2,249 and $2,182 in 1994, 1993 and
1992, respectively, and imputed income for life insurance of $783, $475 and
$439 in 1994, 1993 and 1992, respectively.
(6) Consists of Company contributions to defined contribution plans (and
related cash supplements) of $2,426, $2,249 and $2,182 in 1994, 1993 and
1992, respectively, and imputed income for life insurance of $1,336, $1,253
and $1,157 in 1994, 1993 and 1992, respectively.
</TABLE>
17
<PAGE>
OPTION GRANTS
The following table shows information with respect to grants of stock
options pursuant to the Company's 1988 Stock Incentive Plan and 1993
Non-Qualified Stock Option Plan during 1994 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT OPTION
EXPIRATION DATE AT
PERCENTAGE OF ASSUMED RATES OF STOCK
OPTIONS TOTAL OPTIONS PRICE APPRECIATION(2)
(SHARES) GRANTED IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) 1994 PRICE DATE 5% 10%
- ---------------------------------- ----------- ----------------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Smith................... 25,000 5.0% $ 3.71 2/29/2004 $ 390,750 $ 677,250
45,000 9.0 14.63 9/21/2004 211,950 727,650
Lavon N. Anderson................. 20,000 4.0 3.71 2/29/2004 312,600 541,800
20,000 4.0 14.63 9/21/2004 94,200 323,400
Kevin W. McAleer.................. 14,000 2.8 3.71 2/29/2004 218,820 379,260
18,000 3.6 14.63 9/21/2004 84,780 291,060
Jack E. Knott..................... 18,000 3.6 3.71 2/29/2004 281,340 487,620
20,000 4.0 14.63 9/21/2004 94,200 323,400
James M. Ruberto.................. 18,000 3.6 3.71 2/29/2004 281,340 487,620
20,000 4.0 14.63 9/21/2004 94,200 323,400
<FN>
- ------------------------
(1) All of the options granted become exercisable in equal installments of
one-third each on the first, second and third anniversary dates of the date
of grant.
(2) The assumed five percent and ten percent rates of stock price appreciation
are specified by the proxy rules and do not reflect expected actual
appreciation. The amounts shown represent the assumed value of the stock
options (less exercise price) at the end of the ten-year period beginning
on the date of grant and ending on the option expiration date.
</TABLE>
OPTION EXERCISES AND HOLDINGS
No named executive officer exercised options to purchase Common Stock in
1994. The following table sets forth certain information with respect to the
unexercised options to purchase Common Stock held at December 31, 1994 by each
of the Company's named executive officers.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
12/31/94 IN-THE-MONEY OPTIONS
(SHARES) AT 12/31/94
--------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------ --------------- --------------------
<S> <C> <C>
Andrew J. Smith....................................... 7,333/84,667 $ 61,964/$328,183
Lavon N. Anderson..................................... 7,916/51,334 52,113/ 259,172
Kevin W. McAleer...................................... 5,000/40,000 33,800/ 181,980
Jack E. Knott......................................... 4,000/46,000 33,800/ 214,660
James M. Ruberto...................................... 4,000/46,000 33,800/ 214,660
</TABLE>
RETIREMENT PLANS
The Company has a trusteed non-contributory defined benefit pension plan
(the "Retirement Plan") for substantially all non-union employees. The normal
retirement age of participants is 65. An employee is entitled, subject to
various Code limitations, to annual pension benefits equal to 0.9% of the
employee's average annual base salary during the highest paid three consecutive
years of the employee's final ten calendar years of service ("Final Average
Pay") multiplied by years of service under the Retirement Plan, plus 0.5% of the
employee's Final Average Pay which exceeds an average, computed under Internal
Revenue Service rules, of the employee's wages taken into account for social
security purposes, multiplied by the number of years of the employee's
participation in the Retirement Plan (up to a maximum of 35 years).
18
<PAGE>
In October 1994, the Company adopted the Rexene Corporation Supplemental
Executive Retirement Plan (the "SERP"). The purposes of the SERP are to provide
supplemental retirement and survivor benefits, in addition to amounts payable
under the Retirement Plan, for a certain select group of management or highly
compensated employees who complete a specified period of service and otherwise
become eligible under the SERP. The Company intends to fund the SERP from time
to time at the discretion of the Management Development and Compensation
Committee or the Board of Directors; the general assets of the Company are the
source of funds for the SERP. Participants in the SERP are entitled on or after
age 60 and completion of 15 years of service from and after the later to occur
of January 1, 1988 and their employment commencement date to receive monthly
pension benefits which, when aggregated with benefits payable under the
Retirement Plan, equal 65% of the monthly average of Final Average Pay
multiplied by the participant's percentage of vesting under the SERP. Generally,
participants vest 20% for each of the first five years of service, commencing
October 1, 1994. Such pension benefits will be paid to the extent allowable
under the Code from the Qualified Plan and thereafter from the SERP. Pension
payments to be received by Dr. Anderson under the SERP will be further reduced
by any monthly pension benefits received under a predecessor company retirement
plan, but he will be totally vested and given full service credit if he elects
early retirement after August 1997. In addition, benefits payable to
participants in the SERP who have less than 15 years of service will be reduced
at the rate of 6 2/3% per year. If a participant elects to retire prior to age
60, he is eligible to receive benefits upon reaching age 55 and in such event
his benefits under the SERP may be reduced in an amount not to exceed 10% for
each year of early retirement. Under the SERP, pension payments will be
permitted in excess of the limit imposed by the Code under the Retirement Plan,
which in 1994 provides that the highest annual salary on which benefits can be
calculated is $150,000. Messrs. Smith, Anderson, McAleer, Knott and Ruberto and
two other executive officers are the only current participants in the SERP.
The following table illustrates annual pension benefits payable under the
Retirement Plan to participants in specified average annual earnings and years
of service classifications. Benefit payments under the Retirement Plan are not
subject to any deduction for social security benefits or other offset amounts.
<TABLE>
<CAPTION>
ANNUAL BENEFITS FOR YEARS OF SERVICE
---------------------------------------------------------------
FINAL AVERAGE PAY 5 10 15 20 25
- -------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$100,000.............................. $ 6,392 $ 12,790 $ 19,185 $ 25,580 $ 31,975
150,000.............................. 9,890 19,780 29,670 39,560 49,450
200,000.............................. 9,890 19,780 29,670 39,560 49,450
250,000.............................. 9,890 19,780 29,670 39,560 49,450
300,000.............................. 9,890 19,780 29,670 39,560 49,450
</TABLE>
For purposes of calculation of benefits under the Retirement Plan, only
years of service since 1984 count in the benefits formula. As of December 31,
1994, the named executive officers had the following credited years of service
under the Retirement Plan: Mr. Smith -- eleven years; Dr. Anderson -- eleven
years; Mr. McAleer -- four years; Mr. Knott -- nine years; and Mr. Ruberto --
five years. Presently, no employee of Rexene is vested in the SERP.
19
<PAGE>
EXECUTIVE SECURITY PLAN
The beneficiaries of two executive officers of the Company, Dr. Anderson and
Mr. Knott, are entitled to receive under the Executive Security Plan of the
Company (the "Security Plan") death benefits equal to a lump sum of $300,000 in
the event of the death of Dr. Anderson or Mr. Knott while employed by the
Company. The Company purchases life insurance covering such benefits. At the
present time, it is not expected that any additional executive officers will be
selected for participation in the Security Plan.
PERFORMANCE GRAPHS
The following graphs show comparisons of cumulative stockholder returns for
the Common Stock in comparison to returns for the Standard and Poor's 500 Index
and Standard and Poor's Chemical Index of companies. The first graph compares
cumulative stockholder returns since September 18, 1992, the date when the
Company emerged from bankruptcy. The second graph compares cumulative
stockholder returns for the 5 year period since 1990.
The following graph shows a comparison of cumulative total stockholder
returns for the Common Stock of New Rexene, the Standard & Poor's 500 Index and
the Standard & Poor's Chemical Index since the Effective Date.
COMPARISON OF CUMULATIVE STOCKHOLDER TOTAL RETURN(1)
AMONG NEW REXENE, S&P 500 INDEX AND
S&P CHEMICAL INDEX(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NEW REXENE S&P 500 INDEX S&P CHEMICALS INDEX
<S> <C> <C> <C>
Sep-92 100 100 100
1992 129 105 103
1993 96 116 116
1994 396 117 134
</TABLE>
<TABLE>
<CAPTION>
SEPT-92 1992 1993 1994
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
New Rexene.......................................................................... 100 129 96 396
S&P 500 Index....................................................................... 100 105 116 117
S&P Chemicals Index................................................................. 100 103 116 134
<FN>
- ------------------------
(1) Total return assuming reinvestment of dividends. Assumes $100 invested on
the Effective Date in Common Stock of Rexene, the Standard & Poor's 500
Index and the Standard & Poor's Chemical Index.
(2) Fiscal year ending December 31.
(3) No comparison is presented for periods prior to September 1992 when Rexene
emerged from bankruptcy because such numbers would not be meaningful.
</TABLE>
20
<PAGE>
The following graph shows a comparison of cumulative total stockholder
returns for the common stock of Old Rexene, the Standard & Poor's 500 Index and
the Standard & Poor's Chemical Index for the years indicated as prescribed by
the SEC's rules.
COMPARISON OF CUMULATIVE STOCKHOLDER TOTAL RETURN(1)
AMONG OLD REXENE, S&P 500 INDEX AND
S&P CHEMICAL INDEX(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OLD REXENE S&P 500 INDEX S&P CHEMICALS INDEX
<S> <C> <C> <C>
Jun-09 100 100 100
1990 39 97 85
1991 23 126 111
1992 3 136 121
1993 2 150 136
1994 8 152 157
</TABLE>
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Old Rexene.............................................................. 100 39 23 3 2
S&P 500 Index........................................................... 100 97 126 136 150
S&P Chemicals Index..................................................... 100 85 111 121 136
<CAPTION>
1994
---------
<S> <C>
Old Rexene.............................................................. 8
S&P 500 Index........................................................... 152
S&P Chemicals Index..................................................... 157
<FN>
- ------------------------
(1) Total return assuming reinvestment of dividends. Assumes $100 invested on
December 31, 1989 on common stock of Old Rexene, the Standard & Poor's 500
Index and the Standard & Poor's Chemical Index.
(2) Fiscal year ending December 31.
</TABLE>
CERTAIN TRANSACTIONS
A son of Andrew J. Smith, the Chief Executive Officer and a director of the
Company, became a Vice President of Orion Pacific, Inc. ("Orion") in 1990 and a
shareholder of Orion in 1993. In August 1993 the son of Mr. Smith resigned as an
officer and employee of Orion. Pursuant to contractual arrangements originated
in 1988, (i) the Company sells to Orion certain (a) discarded by-products which
Orion extracts from Company landfills and (b) scrap products, and (ii) Orion
packages and processes a portion of the Rextac amorphous polyalphaolefins
("APAO") manufactured by the Company at its plant in Odessa, Texas. During the
year ended December 31, 1994, the Company sold approximately $245,000 of such
by-products and scrap products to Orion in the ordinary course of
21
<PAGE>
business. For the same period, the Company purchased approximately $1,472,000 of
APAO processing and packaging services and miscellaneous materials from Orion.
In 1990, Orion sold its APAO processing and packaging technology to the Company
for $750,000. The Company has also agreed to pay Orion an additional $250,000
per plant for each APAO plant utilizing the technology which the Company builds
or licenses outside the United States (excluding a certain joint venture plant
in Japan). The Company currently licenses this technology to Orion so that Orion
can continue providing these services to the Company.
Ilan Kaufthal, a director of the Company, is a managing director of Wertheim
Schroder & Co. Incorporated ("Wertheim"). In connection with the concurrent
public offerings of 8,000,000 shares of the Company's Common Stock and
$175,000,000 aggregate principal amount of the Company's Senior Notes due 2004
consummated in November 1994, the Company paid Wertheim underwriting fees of
approximately $2.9 million.
Mr. Kevin Clowe, a former director of the Company, is a corporate officer of
The American International Group, Inc. ("AIG"), which provides various types of
insurance for the Company. During 1994 the Company paid approximately $3.1
million in premiums and fees to subsidiaries of AIG in the ordinary course of
business. In addition, a subsidiary of AIG is the beneficiary of a Company
letter of credit in the amount of $1.9 million to ensure payment of premiums.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires directors and officers of the
Company, and persons who own more than 10 percent of the Common Stock, to file
with the SEC initial reports of ownership and reports of changes in ownership of
the Common Stock. Directors, officers and more than 10 percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, during the year ended December 31, 1994,
all Section 16(a) filing requirements applicable to its directors, officers and
more than 10 percent beneficial owners were met.
EMPLOYMENT AGREEMENTS
Andrew J. Smith, Chief Executive Officer and a director of the Company,
Lavon N. Anderson, President and Chief Operating Officer and a director of the
Company, Kevin W. McAleer, Executive Vice President and Chief Financial Officer
of the Company, Jack E. Knott, Executive Vice President of Rexene and President
of Rexene Products, James M. Ruberto, Executive Vice President of Rexene and
President of CT Film, Jonathan Wheeler, Senior Vice President -- Administration,
and Bernard J. McNamee, Vice President, Secretary and General Counsel of the
Company, are each parties to termination agreements entered into in 1993. Each
termination agreement provides that in the event the employee is terminated
without cause (as defined in the agreement) after a change in control of Rexene
or in the event such employee voluntarily resigns his employment in certain
limited circumstances after such a change in control, Rexene is obligated to pay
the employee within 10 business days after the effective date of such
termination, a lump sum cash severance equal to three times his then current
annual base salary less $1.00. The agreements additionally provide that in the
event the employee is terminated without cause by Rexene without a change in
control, Rexene is obligated to pay the employee within 10 business days of such
termination a lump sum cash severance amount equal to one year of such
employee's then current base salary. "Change in control" is defined in the
relevant agreements to generally include: (i) a change in at least two-thirds of
the members of the Board of Directors, whether as the result of a merger;
reorganization or otherwise; (ii) the acquisition by a related group of persons
of beneficial ownership of at least 20% of the Common Stock; (iii) the
liquidation or dissolution of the Company; or (iv) a determination by a majority
of the directors of the Company that such a change of control has occurred or is
imminent.
22
<PAGE>
AUDITORS
Price Waterhouse LLP, which has served as the Company's independent public
accountants since October 1990, has been appointed by the Board of Directors to
audit the financial statements of the Company for the year ending December 31,
1995. Such appointment will not be submitted to stockholders for ratification or
approval. The representatives of Price Waterhouse LLP are expected to be present
at the meeting to respond to appropriate questions from the stockholders and
will be given the opportunity to make a statement should they desire to do so.
OTHER MATTERS
The Board of Directors of the Company does not intend to present any other
matters at the meeting and knows of no other matters which will be presented.
However, if any other matters come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote in accordance with their
judgment on such matters.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy materials for
the 1996 Annual Meeting of Stockholders, stockholder proposals must be received
at the Company's principal executive office in Dallas, Texas no later than
November 21, 1995.
FORM 10-K ANNUAL REPORT
The Company will provide without charge to each person from whom a proxy is
solicited by this proxy statement, upon the written request of any such person,
a copy of the Company's annual report on Form 10-K, including the financial
statements and the schedules thereto, required to be filed with the Securities
and Exchange Commission pursuant to Section 13(a)-1 under the 1934 Act for the
Company's most recent fiscal year. Requests should be directed to the Director
of Communications and Public Affairs, Rexene Corporation, 5005 LBJ Freeway,
Occidental Tower, Dallas, Texas 75244.
23
<PAGE>
EXHIBIT A
REXENE CORPORATION
1994 LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT AND EFFECTIVE DATE. Rexene Corporation, a Delaware
corporation (the "Corporation"), hereby establishes a stock incentive plan to be
known as the "Rexene Corporation 1994 Long-Term Incentive Plan" (the "Plan").
The Plan shall become effective as of October 1, 1994, subject to the approval
of the Corporation's stockholders at the 1995 Annual Meeting of Stockholders. In
the event that such stockholder approval is not obtained, any awards made
hereunder shall be cancelled and all rights of employees with respect to such
awards shall thereupon cease. Upon adoption of the Plan by the Management
Development and Compensation Committee of the Board of Directors of the
Corporation (the "Committee"), awards may be made by the Committee as provided
herein.
1.2 PURPOSE. The purpose of the Plan is to encourage and enable key
salaried employees of the Corporation and its subsidiaries to acquire a
proprietary interest in the Corporation through the ownership of the
Corporation's common stock, par value $.01 per share ("Common Stock"), and other
rights with respect to the Common Stock. Such ownership will provide such
employees with a more direct stake in the future welfare of the Corporation and
encourage them to remain with the Corporation and its subsidiaries. It is also
expected that the Plan will encourage qualified persons to seek and accept
employment with the Corporation and its subsidiaries.
ARTICLE 2
AWARDS
2.1 FORM OF AWARDS. Awards under the Plan may be granted in any one or all
of the following forms: (i) nonqualified stock options ("Options"), as described
in Article 5 hereof; (ii) stock appreciation rights ("Stock Appreciation
Rights"), as described in Article 6 hereof, which may be awarded either in
tandem with Options ("Tandem Stock Appreciation Rights") or on a stand-alone
basis ("Nontandem Stock Appreciation Rights"); (iii) shares of Common Stock
which are restricted as provided in Article 9 hereof ("Restricted Shares"); (iv)
units representing shares of Common Stock, as described in Article 10 hereof
("Performance Shares"); and (v) units which do not represent shares of Common
Stock but which may be paid in the form of Common Stock, as described in Article
11 hereof ("Performance Units").
2.2 MAXIMUM SHARES AVAILABLE. The aggregate number of shares of Common
Stock that may be issued under the Plan shall not exceed 882,000 shares. Shares
of Common Stock issued pursuant to the Plan may be either authorized but
unissued shares or issued shares reacquired by the Corporation. Shares shall be
deemed to have been issued under the Plan only to the extent actually issued and
delivered pursuant to an award. In the event that any Options or Nontandem Stock
Appreciation Rights under the Plan expire unexercised or are terminated,
surrendered or cancelled without being exercised in whole or in part for any
reason, or any Restricted Shares, Performance Shares or Performance Units are
forfeited, or if such awards are settled in cash in lieu of shares of Common
Stock, then the shares subject to such awards shall, to the extent permitted
under Rule 16b-3 (as defined in Section 3.1 hereof), be available for subsequent
awards under the Plan, upon such terms as the Committee may determine; provided,
however, that shares subject to an Option that is cancelled in connection with
the exercise of related Tandem Stock Appreciation Rights shall not be available
for subsequent awards under the Plan to the extent of the shares actually issued
upon exercise of such rights. Upon the exercise of any Stock Appreciation Rights
granted hereunder, the number of shares
A-1
<PAGE>
reserved for issuance under the Plan shall be reduced only to the extent that
shares of Common Stock are actually issued in connection with the exercise of
such rights. The aggregate number of shares of Common Stock that may be issued
under the Plan shall be subject to adjustment in the same manner as is provided
in Article 12 hereof with respect to shares of Common Stock subject to
outstanding Options.
2.3 RETURN OF PRIOR AWARDS. As a condition to any subsequent award under
the Plan, the Committee shall have the right, at its discretion, to require
employees to return to the Corporation awards previously granted under the Plan.
Subject to the provisions of the Plan, such new award shall be upon such terms
and conditions as are specified by the Committee at the time the new award is
granted.
ARTICLE 3
ADMINISTRATION
3.1 COMMITTEE. Awards under the Plan shall be determined, and the Plan
shall be administered, by the Committee as appointed from time to time by the
Board of Directors of the Corporation (the "Board"), which Committee shall be
(a) comprised solely of two or more members of the Board and (b) constituted so
as to permit the Plan to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended ("Rule 16b-3"); provided, however, that with respect to
the grant of Options or Stock Appreciation Rights under the Plan to an employee
who is a "covered employee" under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and other actions to be taken by the Committee
with respect to such Options or Stock Appreciation Rights, the Committee shall
consist solely of those persons otherwise constituting the Committee who meet
the requirements of clauses (a) and (b) above and are also at the time of such
grant or other action "outside directors" for purposes of Section 162(m) of the
Code.
3.2 POWERS OF COMMITTEE. Subject to the express provisions of the Plan,
the Committee shall have the power and authority: (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to determine which Options, if any, shall be accompanied by Tandem
Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation Rights and
Nontandem Stock Appreciation Rights and to determine the terms and conditions of
such rights; (iv) to grant Restricted Shares and to determine the terms of the
restricted period and other conditions and restrictions applicable to such
shares; (v) to grant Performance Shares and Performance Units and to determine
the performance objectives, performance periods and other conditions applicable
to such shares or units; and (vi) to determine the employees to whom, and the
time or times at which, Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares and Performance Units shall be granted. The Committee shall
have such additional powers as are delegated to it by the other provisions of
the Plan.
3.3 DELEGATION. The Committee may delegate to one or more of its members
or to any other person or persons such ministerial duties with respect to the
Plan as it may deem advisable; provided, however, that the Committee may not
delegate any of its responsibilities hereunder if such delegation would cause
the Plan to fail to comply with the "disinterested administration" requirement
of Rule 16b-3 or if such duties are required to be performed by the Committee to
satisfy an exemption from the deduction limits of Section 162(m) of the Code.
The Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 INTERPRETATIONS. The Committee shall have sole discretionary authority
to interpret the terms of the Plan and the respective agreements executed
hereunder, to adopt and revise rules, regulations and policies to administer the
Plan and to make any other determinations and perform such other actions that it
believes to be necessary or advisable for the administration of the Plan. The
A-2
<PAGE>
Committee may correct any defect or supply any omission or reconcile any
inconsistency in any agreement executed under the Plan in the manner and to the
extent the Committee shall deem expedient to carry such agreement into effect.
All actions taken and interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Corporation, all employees who
have received awards under the Plan and all other interested persons.
3.5 LIABILITY; INDEMNIFICATION. No member of the Committee, nor any person
to whom ministerial duties have been delegated, shall be personally liable for
any action, interpretation or determination made with respect to the Plan or
awards made hereunder, and each member of the Committee shall be fully
indemnified and protected by the Corporation with respect to any liability he or
she may incur with respect to any such action, interpretation or determination,
to the extent permitted by applicable law and to the extent provided in the
Corporation's Certificate of Incorporation and Bylaws as amended from time to
time, or under any agreement between any such member and the Corporation.
ARTICLE 4
ELIGIBILITY
Awards under the Plan may be made to all salaried key employees of the
Corporation or any of its subsidiaries (subject to such requirements as may be
prescribed by the Committee); provided, however, that no employee may receive
Options or Stock Appreciation Rights under the Plan relating to more than
100,000 shares of Common Stock in the aggregate in any fiscal year of the
Corporation (subject to adjustment in the same manner as is provided in Article
12 hereof with respect to shares of Common Stock subject to outstanding
Options). The limitation set forth in the proviso of the immediately preceding
sentence shall be applied in a manner that will permit compensation generated
under the Plan to constitute "performance-based" compensation for purposes of
Section 162(m) of the Code, including, without limitation, counting against such
maximum number of shares, to the extent required under Section 162(m) of the
Code, any shares subject to Options or Stock Appreciation Rights that are
cancelled or repriced. Awards may be made to a director of the Corporation who
is not also a member of the Committee, provided that the director is also a
salaried key employee. In determining the employees to whom awards shall be
granted and the number of shares, rights or units to be covered by each award,
the Committee shall take into account the nature of the services rendered by
such employees, their present and potential contributions to the success of the
Corporation and its subsidiaries and such other factors as the Committee in its
sole discretion shall deem relevant. Awards may be granted under the Plan to the
same individual on more than one occasion. As used in the Plan, the term
"subsidiary" shall mean any present or future company (whether a corporation,
partnership, joint venture or other form of entity) in which the Corporation
owns, directly or indirectly, more than 50% of the economic interests.
ARTICLE 5
OPTIONS
5.1 GRANT OF OPTIONS. Options may be granted under the Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, not inconsistent
with the Plan as the Committee shall from time to time determine. Options
granted under the Plan shall be nonqualified stock options which shall not be
treated as incentive stock options under Section 422 of the Code.
5.2 OPTION PRICE. The purchase price per share of Common Stock under each
Option shall be specified by the Committee, but in no event shall it be less
than the per share par value of the Common Stock. The purchase price so
determined shall also be applicable in connection with the exercise of any
Tandem Stock Appreciation Rights granted with respect to such Option.
A-3
<PAGE>
5.3 TERM AND EXERCISE. The term of each Option granted hereunder shall be
determined by the Committee. Options shall be exercisable in whole or in
installments, and at such times, as shall be determined by the Committee. The
Committee, in its discretion, may accelerate the exercise date of any Option to
any date following the date of grant.
5.4 PAYMENT. Common Stock purchased upon the exercise of Options shall be
paid for in full at the time of purchase. Such payment shall be made in cash or,
in the discretion of the Committee, through delivery of already owned shares of
Common Stock or a combination of cash and such shares (including an actual or
deemed multiple series of exchanges of such shares), in accordance with
procedures to be established by the Committee. Any shares so delivered shall be
valued at their Market Price (as defined in Section 15.3 hereof) on the date of
exercise. As soon as practicable after receipt of notice of exercise and payment
in accordance with procedures to be established by the Committee, the
Corporation or its agent shall deliver to the person exercising the Option (or
his or her designee) a certificate for the number of whole shares of Common
Stock purchased upon such exercise. Cash shall be delivered in lieu of any
fractional shares.
5.5 RIGHTS AS A STOCKHOLDER. A recipient of Options shall have no rights
as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date a stock certificate is issued to such recipient
representing such shares. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other distributions on or with respect
to the Common Stock for which the record date is prior to the date such stock
certificate is issued.
5.6 GENERAL RESTRICTIONS.
(a) Each Option granted under the Plan shall be subject to the requirement
that, if at any time the Board shall determine, in its discretion, that the
listing, registration or qualification of the shares issuable or transferable
upon exercise thereof upon any securities exchange or under any federal or state
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issue, transfer or purchase of shares thereunder, such Option
may not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
(b) The Board or the Committee may, in connection with the granting of any
Option, require the individual to whom the Option is to be granted to enter into
an agreement with the Corporation stating that as a condition precedent to each
exercise of the Option, in whole or in part, such individual shall if then
required by the Corporation represent to the Corporation in writing that such
exercise is for investment only and not with a view to distribution, and also
setting forth such other terms and conditions as the Board or the Committee may
prescribe.
5.7 CANCELLATION OF STOCK APPRECIATION RIGHTS. Upon the exercise of all or
a portion of an Option, any related Tandem Stock Appreciation Rights shall be
cancelled with respect to a number of shares of Common Stock equal to the number
of shares purchased pursuant to such exercise.
ARTICLE 6
STOCK APPRECIATION RIGHTS
6.1 GRANT OF STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation Rights
may be awarded by the Committee in connection with all or any portion of any
Option granted under the Plan, either at the time the Option is granted or
thereafter at any time prior to the exercise, termination or expiration of the
Option. Nontandem Stock Appreciation Rights may also be granted by the Committee
at any time. At the time of grant of Nontandem Stock Appreciation Rights, the
Committee shall specify the number of shares of Common Stock covered by such
rights and the base price of shares of Common Stock to be used in connection
with the calculation described in Section 6.4 hereof. The base price of
Nontandem Stock Appreciation Rights shall be determined by the Committee in its
sole discretion and
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may be equal to, or greater or less than, the Market Price of a share of Common
Stock on the date of grant. Stock Appreciation Rights shall be subject to such
terms and conditions not inconsistent with the other provisions of the Plan as
the Committee shall determine.
6.2 LIMITATIONS ON EXERCISE. Tandem Stock Appreciation Rights shall be
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be cancelled with respect to an equal number of shares of Common
Stock. Nontandem Stock Appreciation Rights shall be exercisable during such
period as the Committee shall determine. Subject to the provisions of the first
sentence of this Section 6.2, the Committee, in its discretion, may accelerate
the exercise date of any Stock Appreciation Rights to any date following the
date of grant.
6.3 SURRENDER AND EXCHANGE OF TANDEM STOCK APPRECIATION RIGHTS. Subject to
the provisions of Section 6.6 hereof, Tandem Stock Appreciation Rights shall
entitle the recipient to surrender to the Corporation unexercised the related
Option, or portion thereof, and to receive from the Corporation in exchange
therefor that number of shares of Common Stock having an aggregate Market Price
as of the date of exercise of such Tandem Stock Appreciation Rights equal to (A)
the excess of (i) the Market Price of one share of Common Stock as of the date
the Tandem Stock Appreciation Rights are exercised over (ii) the purchase price
per share specified in such Option, multiplied by (B) the number of shares of
Common Stock subject to the Option, or portion thereof, which is surrendered.
Cash shall be delivered in lieu of any fractional shares.
6.4 EXERCISE OF NONTANDEM STOCK APPRECIATION RIGHTS. Subject to the
provisions of Section 6.6 hereof, the exercise of Nontandem Stock Appreciation
Rights shall entitle the recipient to receive from the Corporation that number
of shares of Common Stock having an aggregate Market Price as of the date of
exercise of such Nontandem Stock Appreciation Rights equal to (A) the excess of
(i) the Market Price of one share of Common Stock as of the date the Nontandem
Stock Appreciation Rights are exercised over (ii) the base price of the shares
covered by the Nontandem Stock Appreciation Rights, multiplied by (B) the number
of shares of Common Stock covered by the Nontandem Stock Appreciation Rights, or
the portion thereof being exercised. Cash shall be delivered in lieu of any
fractional shares.
6.5 SETTLEMENT OF STOCK APPRECIATION RIGHTS. As soon as is reasonably
practicable after the exercise of any Stock Appreciation Rights, the Corporation
shall (i) issue, in the name of the recipient, stock certificates representing
the total number of full shares of Common Stock to which the recipient is
entitled pursuant to Section 6.3 or 6.4 hereof and deliver to the recipient an
amount in cash equal to the Market Price, as of the date of exercise, of any
resulting fractional share, and (ii) if the Committee causes the Corporation to
elect to settle all or part of its obligations arising out of the exercise of
such Stock Appreciation Rights in cash pursuant to Section 6.6 hereof, deliver
to the recipient an amount in cash equal to the Market Price, as of the date of
exercise, of the shares of Common Stock it would otherwise be obligated to
deliver.
6.6 CASH SETTLEMENT. The Committee, in its discretion, may cause the
Corporation to settle all or any part of its obligations arising out of the
exercise of Stock Appreciation Rights by the payment of cash in lieu of all or
part of the shares of Common Stock it would otherwise be obligated to deliver in
an amount equal to the Market Price of such shares on the date of exercise.
ARTICLE 7
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Rights may be transferred, assigned, pledged
or hypothecated (whether by operation of law or otherwise), except as provided
by will or pursuant to the applicable laws of descent and distribution, and no
Option or Stock Appreciation Rights shall be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation
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or other disposition of an Option or Stock Appreciation Rights not specifically
permitted by the Plan shall be null and void and without effect. Options and
Stock Appreciation Rights may be exercised during the recipient's lifetime only
by the recipient or his or her guardian or legal representative, or following
his or her death pursuant to Section 8.3 hereof.
Notwithstanding anything to the contrary in the preceding paragraph, the
Committee may, in its sole discretion, cause the written agreement relating to
any Options or Stock Appreciation Rights granted hereunder to provide that the
recipient of such Options or Stock Appreciation Rights may transfer any of such
Options or Stock Appreciation Rights other than by will or pursuant to the
applicable laws of descent and distribution in any manner authorized under
applicable law; provided, however, that in no event may the Committee permit any
transfers which would cause the Plan to fail to satisfy the applicable
requirements of Rule 16b-3.
ARTICLE 8
EFFECT OF TERMINATION OF EMPLOYMENT,
DISABILITY, RETIREMENT OR DEATH
8.1 GENERAL RULE.
(a) Except as expressly determined by the Committee in its sole discretion,
no Option or Stock Appreciation Rights shall be exercisable after three months
following the recipient's termination of employment with the Corporation or a
subsidiary, unless such termination of employment occurs by reason of Disability
(as defined in Section 8.2 hereof), Retirement (as defined in Section 8.2
hereof) or death.
(b) Options and Stock Appreciation Rights shall not be affected by any
change of employment of the recipient so long as the recipient continues to be
employed by either the Corporation or a subsidiary. The Committee may, in its
sole discretion, cause any Option or Stock Appreciation Rights to be forfeited
immediately upon an employee's termination of employment if the employee was
terminated for one (or more) of the following reasons: (i) conduct involving
moral turpitude or fraud, regardless of the context, which conduct shall be
conclusively presumed if the employee is convicted of, or enters a plea of NOLO
CONTENDERE or similar plea to, a crime involving moral turpitude or fraud; (ii)
repeated intoxication by alcohol or drugs during the performance of the
employee's duties; (iii) malfeasance in the conduct of the employee's duties,
including misuse or diversion of funds of the Corporation or a subsidiary,
embezzlement or willful and material misrepresentations or concealments on any
reports submitted to the Corporation or a subsidiary; (iv) repeated material
failure by the employee to perform his or her duties as an officer; or (v)
material failure to follow or comply with the reasonable and lawful directives
of the Board or the written policies of the Corporation or a subsidiary. It
shall be within the sole discretion of the Committee to determine whether the
employee's termination was for one of the foregoing reasons, and the decision of
the Committee shall be final and conclusive.
8.2 DISABILITY OR RETIREMENT. Except as expressly provided otherwise in
the written agreement relating to any Option or Stock Appreciation Rights
granted under the Plan, in the event of the Disability or Retirement of a
recipient of Options or Stock Appreciation Rights, the Options or Stock
Appreciation Rights that are held by such recipient on the date of such
Disability or Retirement, whether or not otherwise exercisable on such date,
shall be exercisable at any time until the earlier of (i) the expiration date of
the Options or Stock Appreciation Rights or (ii) two years following the date of
such Disability or Retirement, at which time such Options or Stock Appreciation
Rights shall terminate. "Disability" shall mean a termination of employment with
the Corporation or a subsidiary because of a disability, within the meaning of
the disability plans or policies of the Corporation or its subsidiaries
applicable to the employee, as determined by the Committee in its sole
discretion. "Retirement" shall mean a termination of employment with the
Corporation or a subsidiary either
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(i) on a voluntary basis by a recipient who is at least 60 years of age or (ii)
otherwise with the written consent of the Committee in its sole discretion. The
decision of the Committee shall be final and conclusive.
8.3 DEATH.
(a) Except as expressly provided otherwise in the written agreement relating
to any Option or Stock Appreciation Rights granted under the Plan, in the event
of the death of a recipient of Options or Stock Appreciation Rights while an
employee of the Corporation or a subsidiary, the Options or Stock Appreciation
Rights that are held by such employee at the date of death, whether or not
otherwise exercisable on the date of death, shall be exercisable by the
beneficiary designated by the employee for such purpose (the "Designated
Beneficiary"), or if no Designated Beneficiary shall be appointed or if the
Designated Beneficiary shall predecease the employee, by the employee's personal
representatives, heirs or legatees, at any time until the earlier of (i) the
expiration date of the Options or Stock Appreciation Rights or (ii) two years
following the date of death, at which time such Options or Stock Appreciation
Rights shall terminate.
(b) In the event of the death of a recipient of Options or Stock
Appreciation Rights following a termination of employment with the Corporation
or a subsidiary, if such death occurs before the Options or Stock Appreciation
Rights expire or otherwise terminate, the Options or Stock Appreciation Rights
that are held by such recipient at the date of death shall be exercisable by
such recipient's Designated Beneficiary, or if no Designated Beneficiary shall
be appointed or if the Designated Beneficiary shall predecease such recipient,
by such recipient's personal representatives, heirs or legatees, to the same
extent such Options or Stock Appreciation Rights were exercisable by the
recipient at the date of death.
ARTICLE 9
RESTRICTED SHARES
9.1 GRANT OF RESTRICTED SHARES. The Committee may from time to time cause
the Corporation to grant Restricted Shares under the Plan to eligible employees,
subject to such restrictions, conditions and other terms not inconsistent with
the Plan as the Committee may determine.
9.2 RESTRICTIONS. At the time a grant of Restricted Shares is made, the
Committee shall establish a period of time (the "Restricted Period") applicable
to such Restricted Shares. Each grant of Restricted Shares may be subject to a
different Restricted Period. The Committee may, in its sole discretion, at the
time a grant is made, prescribe restrictions in addition to or other than the
expiration of the Restricted Period, including the satisfaction of corporate or
individual performance objectives, which shall be applicable to all or any
portion of the Restricted Shares. The Committee may also, in its sole
discretion, shorten or terminate the Restricted Period or waive all or any
portion of any other restrictions applicable to all or any portion of the
Restricted Shares. None of the Restricted Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the Restricted
Period or prior to the satisfaction of any other restrictions prescribed by the
Committee with respect to such Restricted Shares.
9.3 RESTRICTED SHARE CERTIFICATES. The Corporation shall issue, in the
name of each employee to whom Restricted Shares have been granted (or, at the
option of the Corporation, in the name of a nominee of the Corporation), stock
certificates representing the total number of Restricted Shares granted to the
employee, as soon as reasonably practicable after the grant. The Corporation or
its agent, at the direction of the Committee, shall hold such certificates,
properly endorsed for transfer, for the employee's benefit until such time as
the Restricted Shares are forfeited to the Corporation or the restrictions lapse
or are waived or removed.
9.4 RIGHTS OF HOLDERS OF RESTRICTED SHARES. Holders of Restricted Shares
shall have the right to vote such shares, to receive any cash dividends with
respect to such shares and, except as otherwise
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expressly provided in the Plan or the award agreement relating to such shares,
to enjoy all other stockholder rights. All distributions, if any, received by an
employee with respect to Restricted Shares as a result of any stock split, stock
distribution, a combination of shares or other similar transaction shall be
subject to the restrictions of this Article 9.
9.5 FORFEITURE. Except as expressly provided otherwise in the written
agreement relating to such Restricted Shares, any Restricted Shares granted to
an employee pursuant to the Plan shall be forfeited to the Corporation at no
cost to the Corporation if the employee's employment with the Corporation or its
subsidiaries terminates prior to the expiration or termination of the Restricted
Period and the satisfaction of any other conditions applicable to such
Restricted Shares; provided, however, that, unless the Committee, in its sole
discretion, determines otherwise, Restricted Shares shall become fully vested
upon the employee's termination of employment during the Restricted Period due
to Disability, Retirement or death.
9.6 DELIVERY OF RESTRICTED SHARES. Upon the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed by
the Committee, the restrictions applicable to the Restricted Shares shall lapse
and, as soon as practicable thereafter, a stock certificate for the number of
Restricted Shares with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the employee or the employee's
beneficiary or estate, as the case may be.
9.7 PAYMENT FOR RESTRICTED SHARES. An employee shall not be required to
make any payment for Restricted Shares granted to such employee under the Plan,
except to the extent otherwise required by law and except that the Committee
may, in its discretion, charge the employee an amount in cash not in excess of
the par value of the Restricted Shares so granted.
ARTICLE 10
PERFORMANCE SHARES
10.1 AWARD OF PERFORMANCE SHARES. For each Performance Period (as defined
in Section 10.2 hereof), Performance Shares may be granted under the Plan to
such eligible employees of the Corporation and its subsidiaries as the Committee
shall determine in its sole discretion. Each Performance Share shall be deemed
to be equivalent to one share of Common Stock. Performance Shares granted to an
employee shall be credited to an account (a "Performance Share Account")
established and maintained for such employee.
10.2 PERFORMANCE PERIOD. For purposes of this Article 10, "Performance
Period" shall mean such period of time as shall be determined by the Committee
in its sole discretion over which the performance applicable to the Performance
Share award shall be measured. Different Performance Periods may be established
for different employees receiving Performance Shares and for different grants of
Performance Shares. Performance Periods may run consecutively or concurrently.
10.3 RIGHT TO PAYMENT OF PERFORMANCE SHARES. With respect to each award of
Performance Shares under the Plan, the Committee shall specify at the time of
the award the performance objectives (the "Performance Objectives") that must be
satisfied in order for the employee to vest in the Performance Shares that have
been awarded to him or her for the Performance Period. The Performance
Objectives may relate to the future performance of the employee or of the
Corporation or any subsidiary, division or department thereof by or in which the
employee is employed during the Performance Period, the Market Price of the
Common Stock or the increase thereof during the Performance Period, combinations
thereof, or such other performance measures as the Committee determines to be
appropriate. If the Performance Objectives established for an employee for the
Performance Period are not met, the Committee may, nonetheless, in its sole
discretion, determine that all or a portion of the Performance Shares have
vested. If the Performance Objectives for a Performance Period are exceeded, the
Committee may, in its sole discretion, grant additional, fully vested
Performance Shares to the employee. At the time of an award of Performance
Shares, the Committee may, in its sole discretion, prescribe additional terms,
conditions or restrictions relating to
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the award, including, but not limited to, rules pertaining to the termination of
employment of the employee prior to expiration of the Performance Period;
provided, however, that, unless otherwise determined by the Committee,
Performance Shares awarded to an employee shall become fully vested upon the
employee's termination of employment during the Performance Period due to
Disability, Retirement or death. The Committee may, in its sole discretion,
adjust the Performance Objectives, the Performance Period and the base price of
any Performance Shares to reflect significant, unforeseen events or changes.
10.4 PAYMENT FOR PERFORMANCE SHARES. As soon as practicable following the
end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (and, if
not achieved, whether to permit partial or full vesting pursuant to Section 10.3
hereof). If the Performance Objectives for the Performance Period have been
exceeded, the Committee shall determine whether additional, fully vested
Performance Shares shall be granted to the employee pursuant to Section 10.3
hereof. As soon as reasonably practicable after such determinations, or at such
later date as the Committee shall determine at the time of grant, the
Corporation shall pay to the employee an amount with respect to each vested
Performance Share equal to the Market Price of a share of Common Stock on such
payment date, or if the Committee shall so specify at the time of grant, an
amount equal to (i) the Market Price of a share of Common Stock on such payment
date less (ii) the base price of the Performance Share established by the
Committee at the time of grant. Such base price shall be determined by the
Committee in its sole discretion and may be equal to, or greater or less than,
the Market Price of a share of Common Stock on the date of grant. Payment with
respect to vested Performance Shares shall be made entirely in cash, entirely in
Common Stock (which may include Restricted Shares) or in a combination of cash
and Common Stock, as the Committee shall determine in its sole discretion.
10.5 VOTING AND DIVIDEND RIGHTS. Except as provided in Article 12 hereof,
no employee shall be entitled to any voting rights or to receive any dividends
or other distributions with respect to Performance Shares, or to have his or her
Performance Share Account credited or increased as a result of any dividends or
other distributions with respect to the Common Stock. Notwithstanding the
foregoing, within sixty days from the date of payment of a cash dividend by the
Corporation on the Common Stock, the Committee, in its sole discretion, may
credit an employee's Performance Share Account with additional Performance
Shares having an aggregate Market Price equal to the cash dividend per share
paid on the Common Stock multiplied by the number of Performance Shares credited
to his or her account at the time the cash dividend was declared.
ARTICLE 11
PERFORMANCE UNITS
11.1 AWARD OF PERFORMANCE UNITS. For each Performance Period (as defined
in Section 11.2 hereof), Performance Units may be granted under the Plan to such
eligible employees of the Corporation and its subsidiaries as the Committee
shall determine in its sole discretion. The award agreement relating to such
Performance Units shall specify a value for each Performance Unit or shall set
forth a formula for determining the value of each Performance Unit at the time
of payment (the "Ending Value"). If necessary to make the calculation of the
amount to be paid to the employee pursuant to Section 11.4 hereof, the Committee
shall also state in the award agreement the initial value of each Performance
Unit (the "Initial Value"). Performance Units granted to an employee shall be
credited to an account established and maintained for such employee.
11.2 PERFORMANCE PERIOD. For purposes of this Article 11, "Performance
Period" shall mean such period of time as shall be determined by the Committee
in its sole discretion over which the performance applicable to the Performance
Unit award shall be measured. Different Performance Periods may be established
for different employees receiving Performance Units and for different grants of
Performance Units. Performance Periods may run consecutively or concurrently.
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11.3 RIGHT TO PAYMENT OF PERFORMANCE UNITS. With respect to each award of
Performance Units under the Plan, the Committee shall specify at the time of the
award the Performance Objectives that must be satisfied in order for the
employee to vest in the Performance Units that have been awarded to him or her
for the Performance Period. The Performance Objectives may relate to such
performance measures as the Committee determines to be appropriate, including
those described in Section 10.3 hereof with respect to Performance Shares. If
the Performance Objectives established for an employee for the Performance
Period are not met, the Committee may, nonetheless, in its sole discretion,
determine that all or a portion of the Performance Units have vested. If the
Performance Objectives for a Performance Period are exceeded, the Committee may,
in its sole discretion, grant additional, fully vested Performance Units to the
employee. At the time of an award of Performance Units, the Committee may, in
its sole discretion, prescribe additional terms, conditions or restrictions
relating to the award, including, but not limited to, rules pertaining to the
termination of employment of the employee prior to expiration of the Performance
Period; provided, however, that, unless otherwise determined by the Committee,
Performance Units awarded to an employee shall become fully vested upon the
employee's termination of employment during the Performance Period due to
Disability, Retirement or death. The Committee may, in its sole discretion,
adjust the Performance Objectives, the Performance Period and the Initial Value
or Ending Value of any Performance Units to reflect significant, unforeseen
events or changes.
11.4 PAYMENT FOR PERFORMANCE UNITS. As soon as practicable following the
end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (and, if
not achieved, whether to permit partial or full vesting pursuant to Section 11.3
hereof). If the Performance Objectives for the Performance Period have been
exceeded, the Committee shall determine whether additional, fully vested
Performance Units shall be granted to the employee pursuant to Section 11.2
hereof. As soon as reasonably practicable after such determinations, or at such
later date as the Committee shall determine at the time of grant, the
Corporation shall pay to the employee an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment with respect to vested Performance Units shall be made
entirely in cash, entirely in Common Stock (which may include Restricted Shares)
or in a combination of cash and Common Stock, as the Committee shall determine
in its sole discretion.
ARTICLE 12
RECAPITALIZATION OR REORGANIZATION
12.1 GENERAL. The existence of the Plan and awards granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of the
Corporation to make or authorize any adjustment, recapitalization,
reorganization or other change in the Corporation's capital structure or its
business, any merger or consolidation of the Corporation, any issue of debt or
equity securities of the Corporation having any priority or preference with
respect to or affecting the Common Stock or the rights thereof, the dissolution
or liquidation of the Corporation, any sale, lease, exchange or other
disposition of all or any part of the Corporation's assets or business or any
other corporate act or proceeding.
12.2 CHANGES IN CAPITALIZATION. Except as otherwise provided in this
Article 12, Options, Stock Appreciation Rights, Restricted Shares, Performance
Shares, Performance Units and the agreements evidencing such awards shall be
subject to adjustment by the Committee at its discretion as to the number, price
and value of the shares, units or other consideration subject to such awards, or
in such other respects as the Committee deems appropriate, in the event of
changes in the outstanding Common Stock by reason of stock dividends, stock
splits, recapitalizations, reorganizations, mergers, consolidations,
combinations, spin offs, exchanges or other relevant changes in capitalization
occurring after the date of grant of any such awards; provided, however, that,
except as otherwise provided
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in Section 12.3 hereof, in the case of awards whose price or value is based on
the Market Price of the Common Stock, appropriate adjustments shall be made to
the price or value of such awards to prevent dilution or enlargement of rights
in the event of stock dividends and stock splits with respect to the Common
Stock.
12.3 STOCK SPLITS AND STOCK DIVIDENDS; RECAPITALIZATIONS.
(a) The shares with respect to which Options may be granted under the Plan
are shares of Common Stock as presently constituted but if, and whenever, prior
to the expiration of an Option theretofore granted, the Corporation shall effect
a subdivision or consolidation of shares of Common Stock or the payment of a
stock dividend on Common Stock without receipt of consideration by the
Corporation, the number of shares of Common Stock with respect to which such
Option may thereafter be exercised (i) in the event of an increase in the number
of outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased.
(b) If the Corporation recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
optionee shall be entitled to purchase under such Option, in lieu of the number
of shares of Common Stock as to which such Option shall then be exercisable, the
number and class of shares of stock or other securities or property (including,
without limitation, cash) to which the optionee would have been entitled
pursuant to the terms of the recapitalization or change in capital structure if,
immediately prior to such recapitalization or change, the optionee had been the
holder of record of the number of shares of Common Stock then covered by such
Option.
12.4 CHANGE OF CONTROL.
(a) In the event of a Change of Control of the Corporation (as defined in
Section 12.6 hereof), then no later than (i) two business days prior to any
Change of Control referenced in clause (i), (iii) or (iv) of the definition
thereof or (ii) ten business days after any Change of Control referenced in
clause (ii) of the definition thereof, the Committee, acting in its sole
discretion without the consent or approval of any optionee, shall act to effect
one or more of the following alternatives with respect to outstanding Options
under the Plan, which acts may vary among individual optionees and, with respect
to acts taken pursuant to clause (i) above, may be contingent upon effectuation
of the Change of Control: (A) accelerate the time at which Options then
outstanding may be exercised so that such Options may be exercised in full for a
limited period of time on or before a specified date (before or after such
Change of Control) fixed by the Committee, after which specified date all
unexercised Options and all rights of optionees thereunder shall terminate; (B)
require the mandatory surrender to the Corporation by selected optionees of some
or all of the outstanding Options held by such optionees (irrespective of
whether such Options are then exercisable under the provisions of the Plan) as
of a date (before or after such Change of Control) specified by the Committee,
in which event the Corporation shall thereupon cancel such Options and pay to
each optionee an amount of cash per share of Common Stock subject to such
Options equal to the excess, if any, of the Change of Control Value (as defined
in Section 12.6 hereof) of the Common Stock over the per share exercise price(s)
under such Options for such shares; (C) make such adjustments to Options then
outstanding as the Committee deems appropriate to reflect such Change of Control
(provided, however, that the Committee may determine in its sole discretion that
no adjustment is necessary to Options then outstanding); or (D) provide that
thereafter upon any exercise of an Option theretofore granted the optionee shall
be entitled to purchase under such Option, in lieu of the number of shares of
Common Stock as to which such Option shall then be exercisable, the number and
class of shares of stock or other securities or property (including, without
limitation, cash) to which the optionee would have been entitled pursuant to the
terms of the transaction constituting the Change of Control if, immediately
prior to such transaction, the optionee had been the holder of record of the
number of shares of Common Stock then covered by such Option.
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(b) In the event of a Change of Control of the Corporation, then no later
than (i) two business days prior to any Change of Control referenced in clause
(i), (iii) or (iv) of the definition thereof or (ii) ten business days after any
Change of Control referenced in clause (ii) of the definition thereof, the
Committee, acting in its sole discretion without the consent or approval of any
holder of a Stock Appreciation Right, shall act to effect one or more of the
following alternatives with respect to outstanding Stock Appreciation Rights
under the Plan, which acts may vary among individual holders, may vary among
Stock Appreciation Rights held by individual holders and, with respect to acts
taken pursuant to clause (i) above, may be contingent upon effectuation of the
Change of Control: (A) accelerate the time at which Stock Appreciation Rights
then outstanding may be exercised so that such Stock Appreciation Rights may be
exercised in full for a limited period of time on or before a specified date
(before or after such Change of Control) fixed by the Committee, after which
specified date all unexercised Stock Appreciation Rights and all rights of
holders thereunder shall terminate; (B) require the mandatory surrender to the
Corporation by selected holders of Stock Appreciation Rights of some or all of
the outstanding Stock Appreciation Rights held by such holders (irrespective of
whether such Stock Appreciation Rights are then exercisable under the provisions
of the Plan) as of a date (before or after such Change of Control) specified by
the Committee, in which event the Corporation shall thereupon cancel such Stock
Appreciation Rights and pay to each holder an amount of cash per share of Common
Stock subject to such Stock Appreciation Rights equal to the excess, if any, of
the Change of Control Value of the Common Stock over the per share exercise
price(s) of such Stock Appreciation Rights; or (C) make such adjustments to
Stock Appreciation Rights then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Stock
Appreciation Rights then outstanding).
(c) Notwithstanding any contrary provisions of the Plan, with respect to any
Restricted Shares outstanding at the time a Change of Control of the Corporation
occurs, the Committee may, in its sole discretion, provide (i) for full vesting
of all such Restricted Shares as of the date of such Change of Control and (ii)
that all restrictions applicable to such Restricted Shares shall terminate as of
such date.
(d) Notwithstanding any contrary provisions of the Plan, with respect to any
Performance Shares or Performance Units which have been granted but which are
unpaid at the time a Change of Control of the Corporation occurs, the Committee
may, in its sole discretion, provide (i) for full vesting of such awards as of
the date of such Change of Control, (ii) for payment of the then value of such
awards as soon as administratively feasible following the Change of Control,
with the value of such awards to be based, to the extent applicable, on the
Change of Control Value of the Common Stock, (iii) that any provisions in such
awards regarding forfeiture of unpaid awards shall not be applicable from and
after a Change of Control with respect to awards made prior to such Change of
Control and (iv) that all performance measures applicable to unpaid awards at
the time of a Change of Control shall be deemed to have been satisfied in full
during the performance period upon the occurrence of such Change of Control.
12.5 ISSUANCE OF SECURITIES. Except as hereinbefore expressly provided,
the issuance by the Corporation of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Common Stock subject to Options or
Stock Appreciation Rights theretofore granted, the purchase price per share of
Common Stock subject to Options or the calculation of amounts payable with
respect to Stock Appreciation Rights.
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12.6 CERTAIN DEFINITIONS.
(a) A "Change of Control" of the Corporation shall mean any one of the
following: (i) Continuing Directors (as hereinafter defined) no longer
constitute at least two-thirds of the directors constituting the Board; (ii) any
person or group of persons (as defined in Rule 13d-5 under the Securities
Exchange Act of 1934), together with its affiliates, becomes the beneficial
owner, directly or indirectly, of 20% or more of the Corporation's then
outstanding common stock or 20% or more of the voting power of the Corporation's
then outstanding securities entitled generally to vote for the election of
directors of the Corporation; (iii) the occurrence of or the approval by the
Corporation's stockholders of the merger or consolidation of the Corporation
with any other corporation, the sale of any substantial portion of the assets of
the Corporation or the liquidation or dissolution of the Corporation unless, in
the case of a merger or consolidation, the Continuing Directors in office
immediately prior to such merger or consolidation will constitute at least
two-thirds of the directors constituting the board of directors of the surviving
corporation of such merger or consolidation and any parent (as defined in Rule
12b-2 under the Securities Exchange Act of 1934) of such corporation; or (iv) at
least a majority of the Continuing Directors in office immediately prior to any
other action taken or proposed to be taken by the Corporation's stockholders or
by the Board determines that such action constitutes, or that such proposed
action, if taken, would constitute, a Change of Control of the Corporation and
such action is taken. For purposes of this paragraph (a), "Continuing Director"
means any person who either (i) is a director of the Corporation on the date of
adoption of the Plan by the Committee or (ii) was designated as a Continuing
Director by a majority of the Continuing Directors.
(b) "Change of Control Value" means the amount determined in clause (i),
(ii) or (iii), whichever is applicable, as follows: (i) the per share price
offered to stockholders of the Corporation in any merger, consolidation, sale of
assets or dissolution transaction; (ii) the price per share offered to
stockholders of the Corporation in any tender offer or exchange offer whereby a
Change of Control takes place; or (iii) if a Change of Control occurs other than
as described in clause (i) or clause (ii), the fair market value per share
determined by the Committee as of the date of the Change of Control or such
other relevant date as may be determined by the Committee. If the consideration
offered to stockholders of the Corporation in any transaction described in this
Section 12.6 consists of anything other than cash, the Committee shall determine
the fair cash equivalent of the portion of the consideration offered which is
other than cash.
ARTICLE 13
TERMINATION AND AMENDMENT
13.1 TERM. Subject to the right of the Committee to terminate the Plan
prior thereto, the Plan shall terminate at the expiration of ten years from the
date of approval of the Plan by the stockholders of the Corporation.
13.2 TERMINATION AND AMENDMENT. The Committee may at any time suspend,
terminate, modify or amend the Plan, provided that any amendment that would (i)
extend the term of the Plan, (ii) materially increase the aggregate number of
shares that may be issued under the Plan (other than as provided in Article 12
hereof), (iii) materially increase the benefits accruing to employees under the
Plan or (iv) materially modify the requirements as to eligibility for
participation in the Plan, shall be subject to the approval of the Corporation's
stockholders. Upon termination of the Plan, the terms of the Plan shall,
notwithstanding such termination, continue to apply to awards granted prior to
such termination. No suspension, termination, modification or amendment of the
Plan may, without the consent of the employee to whom an award shall theretofore
have been granted, adversely affect the rights of such employee under such
award.
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ARTICLE 14
AWARD AGREEMENTS
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares and Performance Units under the Plan shall be evidenced by a
written agreement containing such restrictions, terms and conditions, if any, as
the Committee may require. In the event of any conflict between a written
agreement and the Plan, the terms of the Plan shall govern.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 TAX WITHHOLDING; TAX PAYMENTS.
(a) The Corporation shall have the right in connection with awards under the
Plan to (i) require employees or their beneficiaries or legal representatives to
remit to the Corporation or a subsidiary an amount sufficient to satisfy all
federal, state and local withholding tax requirements and (ii) deduct from all
payments under the Plan amounts sufficient to satisfy such withholding tax
requirements. Whenever payments under the Plan are to be made to an employee in
cash, such payments shall be net of any amounts sufficient to satisfy all
federal, state and local withholding tax requirements. The Committee may, in its
sole discretion, permit an employee to satisfy his or her tax withholding
obligation in connection with an award under the Plan either by (i) surrendering
to the Corporation or a subsidiary shares of Common Stock owned by the employee
or (ii) having the Corporation withhold from shares otherwise deliverable to the
employee. Shares surrendered or withheld shall be valued at their Market Price
as of the date of surrender or withholding of such shares.
(b) The Committee shall have the authority at the time of any award under
the Plan or anytime thereafter to grant to employees who have received awards
under the Plan the right to receive from the Corporation or a subsidiary tax
offset payments ("Tax Offset Payments") to assist such employees in paying
income taxes incurred as a result of their participation in the Plan. The Tax
Offset Payments shall be determined by multiplying a percentage established by
the Committee times all or a portion (as the Committee shall determine) of the
taxable income recognized by an employee upon (i) the exercise of Options or
Stock Appreciation Rights for Common Stock, (ii) the termination of restrictions
on Restricted Shares or (iii) payment for Performance Shares or Performance
Units in Common Stock. The percentage shall be established, from time to time,
by the Committee at that rate which the Committee, in its sole discretion,
determines to be appropriate and in the best interests of the Corporation to
assist employees in paying income taxes incurred as a result of the events
described in the preceding sentence. Tax Offset Payment rights shall be subject
to the restrictions on transferability applicable to Options and Stock
Appreciation Rights under Article 7 hereof. Tax Offset Payment rights shall be
evidenced by a written agreement containing such terms and conditions, if any,
not inconsistent with the Plan as the Committee may require. Tax Offset Payments
under the Plan will not be made with respect to more than the maximum number of
shares of Common Stock available for issuance under the Plan.
15.2 COMPLIANCE WITH SECTION 16(B). In the case of employees who are or
may be subject to Section 16 of the Securities Exchange Act of 1934, as amended
(the "Act"), it is the intent of the Corporation that the Plan and any award
granted hereunder satisfy and be interpreted in a manner that satisfies the
applicable requirements of Rule 16b-3, so that such persons will be entitled to
the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Act
and will not be subjected to liability thereunder. If any provision of the Plan
or any award hereunder would otherwise conflict with the intent expressed
herein, that provision, to the extent possible, shall be interpreted and deemed
amended so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, such provision shall be deemed void as
applicable to employees who are or may be subject to Section 16 of the Act.
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15.3 MARKET PRICE OF COMMON STOCK. For purposes of the Plan, the "Market
Price" of the Common Stock on any day shall be determined as follows: (i) if the
Common Stock is listed on a national securities exchange or quoted through the
NASDAQ National Market System, the Market Price on any day shall be the average
of the high and low reported Consolidated Trading sales prices of the Common
Stock for such day, or if no such sale is made on such day, the average of the
closing bid and asked prices of the Common Stock reported on the Consolidated
Trading listing for such day; (ii) if the Common Stock is quoted on the NASDAQ
inter-dealer quotation system, the Market Price on any day shall be the average
of the representative bid and asked prices of the Common Stock at the close of
business for such day; or (iii) if the Common Stock is not listed on a national
securities exchange or quoted on the NASDAQ National Market System or
inter-dealer quotation system, the Market Price on any day shall be the average
of the high bid and low asked prices of the Common Stock reported by the
National Quotation Bureau, Inc. for such day. If the Common Stock is not
publicly traded at the time a determination of its value is required to be made
under the Plan, the determination of the Market Price of the Common Stock shall
be made by the Committee in such manner as it deems appropriate.
15.4 SUCCESSORS. The obligations of the Corporation under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Corporation, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of the Corporation.
15.5 GENERAL CREDITOR STATUS. Employees shall have no right, title or
interest whatsoever in or to any investments that the Corporation may make to
aid it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
or a subsidiary, on the one hand, and any employee or beneficiary or legal
representative of such employee, on the other. To the extent that any person
acquires a right to receive payments from the Corporation under the Plan, such
right shall be no greater than the right of an unsecured general creditor of the
Corporation. All payments to be made hereunder shall be paid from the general
funds of the Corporation and no special or separate fund shall be established
and no segregation of assets shall be made to assure payment of such amounts
except as expressly set forth in the Plan.
15.6 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in any written
agreement entered into pursuant to Article 14 hereof, nor the grant of any
award, shall confer upon any employee any right to continue in the employ of the
Corporation or a subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such written agreement or interfere with or limit
the right of the Corporation or a subsidiary to modify the terms of or terminate
such employee's employment at any time.
15.7 OTHER PLANS. Effective upon the approval of the Plan by the
stockholders of the Corporation, no further awards shall be made under the
Corporation's 1988 Incentive Stock Plan and 1993 Non-Qualified Stock Option Plan
(the "Prior Plans"). Thereafter, all awards made under the Prior Plans prior to
approval of the Plan by the stockholders shall continue in accordance with the
terms of the Prior Plans.
15.8 NOTICES. Notices required or permitted to be made under the Plan
shall be sufficiently made if personally delivered to the employee or sent by
regular mail addressed (a) to the employee at the employee's address as set
forth in the records of the Corporation or its subsidiaries or (b) to the
Corporation or the Committee at the principal executive offices of the
Corporation clearly marked "Attention: Corporate Secretary".
15.9 SEVERABILITY. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
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15.10 NO RESTRICTION OF CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Corporation or any subsidiary from taking any
corporate action which is deemed by the Corporation or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any award made under the Plan. No employee,
beneficiary or other person shall have any claim against the Corporation or any
subsidiary as a result of such action.
15.11 GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Texas.
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<PAGE>
EXHIBIT B
REXENE CORPORATION
1995 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
ARTICLE I
PURPOSE
It is the purpose of the Plan to promote the interests of the Company and
its stockholders by attracting and retaining qualified Outside Directors by
giving them the opportunity to acquire a proprietary interest in the Company and
an increased personal interest in its continued success and progress. The
Options granted under this Plan shall not be qualified as "incentive stock
options" within the meaning of Section 422(b) of the Code.
ARTICLE II
DEFINITIONS
As used in this Plan the following terms have the following meanings:
(a) "Agreement" means any stock option agreement entered into between
the Company and a Outside Director pursuant to Section 4.02 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means any act of (i) fraud upon or with respect to, (ii)
intentional misrepresentation to or with respect to, or (iii) embezzlement,
misappropriation or conversion of assets or opportunities of, the Company or
any direct or indirect majority-owned subsidiary of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Management Development and Compensation
Committee of the Board.
(f) "Common Stock" means the $.01 par value Common Stock of the Company.
(g) "Company" means Rexene Corporation, a Delaware corporation.
(h) "Effective Date" means the date on which this Plan is approved by
the stockholders of the Company which shall be the date on which the Plan
shall be effective.
(i) "Fair Market Value" means the closing sales price on the date in
question (or, if there was no reported sale on such date, on the last
preceding day on which any reported sale occurred) of a share of Common
Stock as reported on the principal national stock exchange on which the
Common Stock is then listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national stock exchange but is
listed as a national market security on the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ"), as reported
on NASDAQ; or, if the Common Stock is not listed or admitted to trading on
any such exchange and is not listed as a national market security on NASDAQ,
but is quoted on NASDAQ or any similar system then in use, "Fair Market
Value" shall mean the average of the closing high bid and low asked
quotations on such system for the Common Stock on the date in question (or,
if no such quotations are available on such date, on the last preceding day
on which such quotations were available).
(j) "Grant Date" means the date of grant of an Option pursuant to
Section 4.02(a) of the Plan.
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(k) "Holder" means a Outside Director to whom an Option has been granted
under the Plan.
(l) "Outside Director" means an individual who (i) is on the Effective
Date, or thereafter becomes, a member of the Board, and (ii) is neither an
employee nor an officer of the Company or any direct or indirect
majority-owned subsidiary of the Company. For purposes of the Plan,
"employee" shall mean an individual whose wages are subject to the
withholding of federal income tax under Section 3402 of the Code, and
"officer" shall mean an individual elected or appointed by the Board or the
board of directors of the subsidiary, as the case may be, or chosen in such
other manner as may be prescribed by the bylaws of the Company or the
subsidiary, to serve as such.
(m) "Option" means any option to purchase shares of Common Stock granted
pursuant to the provisions of the Plan.
(n) "Plan" means this Rexene Corporation 1995 Stock Option Plan for
Outside Directors.
(o) "Option Period" has the meaning assigned to it in Section 4.02(d) of
the Plan.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have no
authority, discretion or power to select the participants who will receive
Options, to set the number of shares to be covered by any Option, to set the
exercise price of any Option, to set the period within which Options may be
exercised, or to alter any other terms or conditions specified in this Plan
document, except in the sense of administering the Plan subject to the express
provisions of the Plan and except in accordance with Section 6.02 of the Plan.
Subject to the foregoing limitations, the Committee shall have authority and
power to adopt such rules and regulations and to take such action as it shall
consider necessary or advisable for the administration of the Plan to determine
if any terms and conditions of any Agreement are inconsistent with the Plan, and
to construe, interpret and administer the Plan. The decisions of the Committee
relating to the Plan shall be final and binding upon the Company, the Holders
and all other persons. No member of the Committee shall incur any liability by
reason of any action or determination made in good faith with respect to the
Plan or any stock option agreement entered into pursuant to the Plan.
ARTICLE IV
OPTIONS
4.01 PARTICIPATION. Each Outside Director shall be granted an Option to
purchase Common Stock under the Plan on the terms and conditions described in
this Plan document.
4.02 TERMS AND CONDITIONS OF OPTIONS; STOCK OPTION AGREEMENTS. Each Option
granted under the Plan shall be evidenced by a written stock option agreement
entered into by the Company and the Holder to whom the Option is granted, which
agreement shall include, incorporate or conform to the following terms and
conditions, and such other terms and conditions not inconsistent with such terms
and conditions or with the other terms and conditions of the Plan.
(a) OPTION GRANT DATES.
(i) An Option shall be granted automatically as of the Effective Date
to each Outside Director who shall have been elected by the stockholders
of the Company on such date to serve as a director on the Board.
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(ii) On the date of the annual meeting of stockholders of the Company
in 1996 and 1997, an Option shall be granted automatically to each
Outside Director who shall have been elected by the stockholders of the
Company at such annual meeting to serve as a director on the Board.
(iii) On the date that a person becomes an Outside Director of the
Board as a result of his/her election to the Board by the other members
of the Board where such election occurs after the Effective Date and
before the annual meeting of stockholders in 1998, an Option shall be
granted automatically to such Outside Director.
(b) NUMBER OF SHARES. Each Option shall entitle the Holder to
purchase, in accordance with the terms of such Option and the Plan, two
thousand (2,000) shares of Common Stock, subject to adjustment in accordance
with Section 5.02 hereof; provided, however, that each Option granted to the
Chairman of the Board shall entitle such Holder to purchase two thousand
five hundred (2,500) shares of Common Stock, subject to adjustment in
accordance with Section 5.02 hereof. If, on the Grant Date of any Option,
fewer shares of Common Stock remain available for grant than are necessary
to permit the grant of an Option covering 2,000 shares of Common Stock
(2,500 shares of Common Stock in the case of the Chairman of the Board) to
each person entitled to receive an Option on such date, then each Option
granted on such date shall cover an equal number of whole shares of Common
Stock, and all Options granted on such date shall cover, in the aggregate,
all shares then available for grant under the Plan (or such smaller number
as may be necessary to permit each such Option to cover an equal number of
whole shares of Common Stock).
(c) PRICE. The price at which each share of Common Stock covered by an
Option may be purchased ("Exercise Price") pursuant to the Plan shall be
equal to the average of the fair Market Value of a share of Common Stock for
the twenty (20) trading days immediately preceding the Grant Date less ten
dollars ($10.00), provided, however, in no event shall the Exercise Price be
less than $0.25 per share subject to adjustment pursuant to Section 5.02 of
the Plan.
(d) OPTION PERIOD. The period within which each Option may be
exercised shall commence on the first anniversary of the Grant Date of the
Option and shall expire on the tenth anniversary of such Grant Date (the
"Option Period"), unless terminated sooner pursuant to Section 4.02(e).
(e) TERMINATION OF SERVICE, DEATH, ETC. The following provisions shall
apply with respect to the exercise of an Option granted hereunder in the
event that the Holder thereof ceases to be a director of the Company for the
reasons described in this Section 4.02(e):
(i) If the directorship of the Holder is terminated within the Option
Period for Cause, all unexercised Options shall automatically terminate
as of the date of such termination;
(ii) If the Holder dies during the Option Period while such Holder is
a director of the Company, all Options may be retained and exercised in
accordance with their terms by the executor or administrator of the
estate of the Holder, or by the person or persons who shall have acquired
the Option directly from the Holder by bequest or inheritance; provided,
however, all such Options must be so exercised upon the earlier of two
years after the Holder's death or the expiration of the Option.
(iii) If the Holder ceases within the Option Period to be a director
of the Company for any reason other than as set forth in paragraphs (i)
and (ii) above, the Options may be retained and exercised in accordance
with their terms; provided, however, that all such Options must be
exercised upon the earlier of one year after the Holder ceases to be a
director of the Company or the expiration of the Option Period.
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(f) TRANSFERABILITY. An Option granted under the Plan shall not be
transferable by the Holder, otherwise than by will or pursuant to the laws
of descent and distribution, and during the lifetime of the Holder the
Option shall be exercisable only by the Holder or his or her guardian or
legal representative.
(g) EXERCISE, PAYMENTS, ETC. Each Option granted hereunder may be
exercised, in whole or in part, by the Holder thereof at any time or (with
respect to partial exercises) from time to time during the Option Period,
subject to the provisions of the Plan and the stock option agreement
evidencing such Option, and the method for exercising an Option shall be by
personal delivery to the Secretary of the Company of, or by the sending by
United States registered or certified mail, postage prepaid, addressed to
the Company (to the attention of its Secretary), of, written notice signed
by the Holder specifying the number of shares of Common Stock with respect
to which such Option is being exercised. Such notice shall be accompanied by
the full amount of the purchase price of such shares, in cash, by check or
by wire transfer. Any such notice shall be deemed to have been given on the
date of receipt by the Secretary of the Company of the notice and payment of
the full amount of the purchase price of such shares. In addition to the
foregoing, promptly after demand by the Company, the exercising Holder shall
pay to the Company an amount equal to applicable withholding taxes, if any,
due in connection with such exercise. No shares of Common Stock need be
issued by the Company upon exercise of an Option until full payment therefor
and for all applicable withholding taxes has been made, and a Holder shall
have none of the rights of a stockholder until shares of Common Stock are
issued to such Holder.
ARTICLE V
AUTHORIZED COMMON STOCK
5.01 COMMON STOCK. The total number of shares as to which Options may be
granted pursuant to the Plan shall be 60,000 shares of Common Stock, in the
aggregate, except as such number of shares shall be adjusted from and after the
Effective Date in accordance with the provisions of Section 5.02 of the Plan. If
any outstanding Option under the Plan shall expire or be terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such
Option shall again be available for grant under the Plan.
5.02 ADJUSTMENTS UPON CHANGES IN COMMON STOCK. In the event the Company
shall effect a split of the Common Stock or a dividend payable in Common Stock,
or in the event the outstanding Common Stock shall be combined into a smaller
number of shares, the maximum number of shares as to which Options may be
granted under the Plan and the number of shares to be covered by any Option not
yet granted under Section 4.02(a) shall be increased or decreased
proportionately. In the event that before delivery by the Company of all the
shares of Common Stock in respect of which any Option has been granted under the
Plan, the Company shall have effected such a split, dividend or combination, the
shares still subject to the Option shall be increased or decreased
proportionately and the purchase price per share shall be increased or decreased
proportionately so that the aggregate purchase price for all the then optioned
shares shall remain the same as immediately prior to such split, dividend or
combination.
In the event of a reclassification of the Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization, including a
merger, consolidation or sale of assets, the Committee shall make such
adjustments, if any, as it may deem appropriate in the number, purchase price
and kind of shares covered by the unexercised portions of Options previously
granted under the Plan. The provisions of this Section 5.02 shall only be
applicable if, and only to the extent that, the application thereof does not
conflict with any valid governmental statute, regulation or rule.
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ARTICLE VI
GENERAL PROVISIONS
6.01 TERMINATION OF PLAN. The Plan shall terminate whenever (whether
before, on or after the Effective Date) the Board adopts a resolution to that
effect. If not sooner terminated in accordance with the preceding sentence, the
Plan shall wholly cease and expire at the time of the meeting of the
stockholders of the Company in 1998. After termination of the Plan, no Options
shall be granted under the Plan, but the Company shall continue to recognize,
and perform its obligations with respect to, any Options previously granted.
6.02 AMENDMENT OF PLAN. The Committee may from time to time (whether
before, on or after the Effective Date) amend, modify or suspend the Plan.
Nevertheless, (a) no such amendment, modification or suspension shall impair any
Options previously granted under the Plan or deprive any Holder of any shares of
Common Stock which such Holder might have acquired through or as a result of the
Plan, and (b) after the stockholders of the Company have approved and adopted
the Plan in accordance with Section 6.04 hereof, no such amendment or
modification shall be made without the approval of the holders of a majority of
the outstanding shares of Common Stock of the Company where such amendment or
modification would (i) increase the total number of shares of Common Stock as to
which Options may be granted under the Plan or decrease the exercise price at
which Options may be granted under the Plan (other than as provided in Section
5.02 hereof), (ii) materially alter the class of persons eligible to be granted
Options under the Plan, (iii) materially increase the benefits accruing to
Holders under the Plan or (iv) extend the term of the Plan or the Option Period
specified in Section 4.02(d) hereof.
Notwithstanding the foregoing, the provisions of the Plan relating to (a)
the number of shares of Common Stock covered by, and the exercise price of,
Options granted under the Plan, (b) the timing of grants of Options under the
Plan and (c) the class of persons eligible to be granted Options under the Plan
shall not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
6.03 TREATMENT OF PROCEEDS. Proceeds from the sale of Common Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Company.
6.04 EFFECTIVENESS. The Plan shall become effective as of the Effective
Date, subject to the satisfaction of the condition stated in the following
sentence. The effectiveness of the Plan and each Option to be granted hereunder
is conditioned on the approval and adoption of the Plan on the Effective Date by
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Company present, or represented, and entitled to vote at a meeting of
stockholders of the Company.
6.05 SECTION HEADINGS. The section headings included herein are only for
convenience, and they shall have no effect on the interpretation of the Plan.
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REXENE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 1995
The undersigned hereby appoints Arthur L. Goeschel and Andrew J. Smith as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated on the reverse, all the shares of
common stock of Rexene Corporation held of record by the undersigned on March
16, 1995, at the Annual Meeting of Stockholders to be held on April 25, 1995 at
9:00 a.m. local time, at the Westin Hotel, 13340 Dallas Parkway, Dallas, Texas
75240, and at any adjournment(s) thereof. Receipt of the Notice of Annual
Meeting of Stockholders and the Proxy Statement in connection therewith, each
dated March 21, 1995, and of a 1994 Annual Report to Stockholders are hereby
acknowledged.
(Continued and to be signed on reverse side)
<PAGE>
[x] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all nomi-
the contrary below) nees listed at right
1. ELECTION OF [ ] [ ]
DIRECTORS
NOMINEES: Lavon N. Anderson
Harry B. Bartley, Jr.
R. James Comeaux
Arthur L. Goeschel
William B. Hewitt
Ilan Kaufthal
Charles E. O'Connell
Andrew J. Smith
Heinn F. Tomfohrde, III
Withhold for the following only: (Write the name of the nominee(s) in the space
below).
___________________________________________________________
FOR AGAINST ABSTAIN
2. Adoption of the proposal to approve the [ ] [ ] [ ]
1994 Long-Term Incentive Plan.
3. Adoption of the proposal to approve the [ ] [ ] [ ]
1995 Stock Option Plan for Outside
Directors
4. In their discretion, the proxies are authorized to vote with respect to any
other matter which may properly come before the meeting or any adjournment(s)
thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS HEREON. IN
THE ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE VOTED FOR THE ELECTION TO
THE BOARD OF DIRECTORS OF THE NOMINEES LISTED ON THIS PROXY, APPROVAL OF THE
1994 LONG-TERM INCENTIVE PLAN, APPROVAL OF THE 1995 STOCK OPTION PLAN FOR
OUTSIDE DIRECTORS AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
The undersigned hereby revokes any proxy or proxies heretofore given to
represent or vote such common stock and hereby ratifies and confirms all action
that said proxies, their substitutes, or any of them, might lawfully take in
accordance with the terms hereof.
SIGNATURE(S)_______________________________________________ DATE___________
NOTE: When signing on behalf of a corporation, partnership, estate, trust or in
any representative capacity, please sign name and title. For joint accounts each
joint owner must sign.
